<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 22, 1999
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-3*
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
---------------------
MAIN PLACE FUNDING, LLC
(Exact name of registrant as specified in its charter)
---------------------
<TABLE>
<S> <C> <C>
DELAWARE
(State or other jurisdiction 56-2110071
of incorporation or (I.R.S. Employer
organization) Identification No.)
</TABLE>
100 NORTH TRYON STREET, CHARLOTTE, NORTH CAROLINA 28255
(704) 388-7436
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
---------------------
JOHN E. MACK, PRESIDENT
MAIN PLACE FUNDING, LLC
100 NORTH TRYON STREET, CHARLOTTE, NORTH CAROLINA 28255
(704) 386-5972
(Name, address, including zip code, and telephone number, including, area code,
of agent for service)
COPIES TO:
<TABLE>
<S> <C> <C>
MICHAEL NEDZBALA, ESQ. ANDREA GOLDENBERG, ESQ. JORDAN M. SCHWARTZ, ESQ.
HUNTON & WILLIAMS BANKAMERICA CORPORATION CADWALADER, WICKERSHAM & TAFT
101 SOUTH TRYON STREET 100 NORTH TRYON STREET 100 MAIDEN LANE
CHARLOTTE, NORTH CAROLINA 28280 CHARLOTTE, NORTH CAROLINA 28255 NEW YORK, NEW YORK 10038
(704) 378-4703 (704) 388-7449 (212) 504-6136
(704) 378-4890 (TELECOPY) (704) 386-6453 (TELECOPY) (212) 504-6666 (TELECOPY)
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement, as determined
by market conditions and other factors.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please 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, please check the following box
and list the Securities Act 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, check the following box and list the Securities Act
registration statement number of 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>
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PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED BE REGISTERED (1) PER UNIT (2) OFFERING PRICE (2) FEE
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<S> <C> <C> <C> <C>
Mortgage-Backed Bonds.............. $1,000,000 100% $1,000,000 $278.00
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</TABLE>
(1) This Registration Statement and the registration fee pertain to the initial
offering of the Bonds registered hereunder by the Registrant, and in
addition cover offers and sales relating to market-making transactions by
NationsBanc Montgomery Securities LLC, an affiliate of the Registrant. The
amount of the Bonds which may be initially offered hereunder and the
registration fee shall not be reduced by any offers and sales relating to
any such market-making transactions.
(2) Estimated solely for purposes 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 WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
* Pursuant to Rule 429 of the General Rules and Regulations under the
Securities Act of 1933, the Prospectus and Prospectus Supplement contained in
this Registration Statement also relate to Registration Statement No. 33-82040
previously filed by a predecessor of the Registrant.
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<PAGE> 2
SUBJECT TO COMPLETION DATED MARCH 22, 1999
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED [ ])
$[ ]
MAIN PLACE FUNDING, LLC
MORTGAGE-BACKED BONDS, SERIES [1999-1]
DUE [ ]
<TABLE>
<CAPTION>
<S> <C>
- ------------------------------------
CONSIDER CAREFULLY THE RISK FACTORS Main Place Funding, LLC is offering $[ ]
BEGINNING ON PAGE [ ] IN THE principal amount of its Mortgage-Backed Bonds, Series
PROSPECTUS [AND PAGE S-[ ] OF THIS [1999-1]. The bonds are being offered by this prospectus
PROSPECTUS SUPPLEMENT]. supplement and the accompanying prospectus, and will have
The bonds represent limited the following characteristics:
recourse obligations of Main Place - Interest Rate [Three]-month LIBOR plus
only and will not represent [ ]%
interests in or obligations of any
other entity. The bonds are not - Interest Paid [Quarterly]
insured or guaranteed by any
government agency or any other - First Interest Payment Date [Date]
entity.
[Persons not residing in the United - Principal Due [Date]
States that are considering
purchasing bonds should read the - Optional Redemption [None]
information under the heading
"Additional Information for - Mandatory Redemption If collateral maintenance
Non-U.S., Persons" in the appendix requirements not met
to this prospectus supplement.]
- Price to Public [ ]%
This prospectus supplement may be
used to offer and sell the bonds - Underwriting Discount [ ]%
only if accompanied by the
prospectus. - Proceeds to Issuer $
- ------------------------------------
</TABLE>
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED THESE BONDS OR
DETERMINED THAT THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IS ACCURATE OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Main Place expects to deliver the bonds to the underwriters on or about the
closing date of [ ], in book-entry form through The Depository
Trust Company, Cedel Bank, S.A. and the Euroclear System.
[NAMES OF UNDERWRITERS]
The date of this Prospectus Supplement is [ ]
THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT IS NOT COMPLETE AND MAY BE
CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS
SUPPLEMENT IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
<PAGE> 3
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TABLE OF CONTENTS
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<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Important Notice About This Prospectus Supplement and the
Accompanying Prospectus................................... S-3
SUMMARY INFORMATION......................................... S-4
THE ISSUER.................................................. S-11
General................................................... S-11
Capitalization............................................ S-11
Summary Financial Data.................................... S-11
Managing Member........................................... S-12
DESCRIPTION OF THE BONDS.................................... S-13
General................................................... S-13
Interest Payments......................................... S-14
Calculation of LIBOR...................................... S-14
Payment of Principal; Redemption.......................... S-16
Security for the Bonds.................................... S-17
Eligible Mortgage Loans................................... S-18
Servicing of Eligible Mortgage Loans...................... S-26
Distribution Account...................................... S-30
Reserve Fund.............................................. S-31
Basic Maintenance Amount.................................. S-32
Withdrawals and Substitutions of Collateral............... S-34
Liquidity................................................. S-35
Purchase and Resale of Bonds.............................. S-36
Reports on Pledged Property............................... S-36
Example of Collection and Distribution of Payments........ S-37
RATIO OF EARNINGS TO FIXED CHARGES.......................... S-39
ERISA CONSIDERATIONS........................................ S-39
UNDERWRITING................................................ S-40
LEGAL MATTERS............................................... S-42
BOND RATINGS................................................ S-42
INDEX OF PROSPECTUS SUPPLEMENT DEFINITIONS.................. S-43
APPENDIX -- ADDITIONAL INFORMATION FOR NON-U.S. PERSONS..... A-1
</TABLE>
S-2
<PAGE> 4
IMPORTANT NOTICE ABOUT THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
Main Place describes the bonds in two separate documents that progressively
provide more detail:
- the accompanying prospectus, which provides general information, some of
which may not apply to your bonds, and
- this prospectus supplement, which describes the specific terms of your
bonds.
IF THE DESCRIPTION OF THE TERMS OF YOUR BONDS VARIES BETWEEN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS, YOU SHOULD RELY ON THE
INFORMATION IN THIS PROSPECTUS SUPPLEMENT.
This prospectus supplement begins with summary information to give you an
initial overview. The summary does not contain all the information that you need
to consider to make your investment decision.
Cross-references are included in this prospectus supplement and the
accompanying prospectus to captions in these materials where you can find
additional information. The table of contents included in this prospectus
supplement and the accompanying prospectus provide the pages on which these
captions are located.
You can find a listing of the pages where some of the terms used in this
prospectus supplement and the accompanying prospectus are defined under the
caption "Index of Prospectus Supplement Definitions" beginning on page S-43 in
this document and under the caption "Index of Significant Definitions" beginning
on page 74 in the prospectus.
---------------------
The prospectus supplement and the accompanying prospectus contain
forward-looking statements relating to future economic performance or
projections and other financial items. These forward-looking statements,
together with related qualifying language and assumptions, are found in the
material set forth under "Risk Factors" in the prospectus and elsewhere in this
prospectus supplement and the prospectus, and may be identified by, among other
things, the use of forward-looking words such as "expects," "intends,"
"anticipates," "estimates," "believes," "may" or other comparable words. These
statements involve known and unknown risks, uncertainties and other important
factors that could cause the actual results or performance to differ materially
from these forward-looking statements. Those risks, uncertainties and other
factors include, among others, general economic and business conditions,
competition, changes in political, social and economic conditions, regulatory
initiatives and compliance with government regulations, customer preference and
various other matters, many of which are beyond the control of Main Place. These
forward-looking statements speak only as of the date of this prospectus
supplement. Main Place expressly disclaims any obligation or undertaking to
update or revise forward-looking statements to reflect any change in Main
Place's expectations or any change in events, conditions or circumstances on
which any forward-looking statement is based.
S-3
<PAGE> 5
SUMMARY INFORMATION
This summary highlights selected information from this document and does
not contain all of the information that you need to consider in making an
investment decision. To understand the terms of the bonds, you should read this
entire prospectus supplement and the accompanying prospectus carefully.
<TABLE>
<S> <C>
ISSUER: Main Place Funding, LLC
TITLE OF SERIES: Mortgage-Backed Bonds, Series [1999-1]
TRUSTEE: [Name]
SERVICERS: [Names](each, a "SERVICER")
RATING AGENCIES: [Rating Agencies](each, a "RATING AGENCY")
INTEREST PAYMENT DATE: The [ ] day of [month], [month],[month], and
[month], or, if not a business day, the next business
day,beginning [date]
PRINCIPAL DUE: [Date](the "STATED MATURITY")
CLOSING DATE: [Date]
CUT-OFF DATE: [Date]
RECORD DATE: The [ ]business day preceding an interest payment
date
</TABLE>
---------------------
INTEREST PAYMENTS
- Interest is paid [quarterly] on each interest payment date.
- Interest accrues on the unpaid principal balance of your bonds during
each interest period at a floating rate equal to LIBOR plus
[ ]%.
Each interest period begins on and includes an interest payment date, or,
in the case of the initial interest payment date, begins on and includes the
closing date, and ends on and excludes the next interest payment date.
"LIBOR" is the rate for deposits in U.S. dollars for a [three]-month period
which appears on the Dow Jones Telerate page 3750, or similar replacement page,
as of 11:00 a.m., London time, on the LIBOR determination date for the interest
payment date. In addition, see "Description of the Bonds -- Calculation of
LIBOR" if that rate does not appear on Dow Jones Telerate page 3750. The "LIBOR
DETERMINATION DATE" is the second London business day prior to the first day of
the interest period for an interest payment date.
S-4
<PAGE> 6
The amount of interest that will accrue on your bonds each interest period
is based on the actual number of days in the interest period over a 360-day year
multiplied by the product of:
- the interest rate for the bonds for that interest period; and
- the outstanding principal balance of your bonds at the beginning of each
interest period.
See "Description of the Bonds -- Interest Payments" and "-- Calculation of
LIBOR" in this prospectus supplement for more detail.
PAYMENT OF PRINCIPAL; REDEMPTION
- Your bonds will mature and will be paid their entire principal balance,
plus accrued interest, at the stated maturity.
- To fund the return of principal at the stated maturity, Main Place will
be required, prior to the stated maturity, to pledge cash or certain
government securities (collectively, "DEPOSIT SECURITIES") maturing on
or prior to the stated maturity or make other arrangements acceptable
to each rating agency to provide liquidity for this payment of
principal.
- The bonds are not redeemable at the option of Main Place, although Main
Place may purchase bonds in open market transactions.
- The bonds are required to be redeemed in part if the collateral
maintenance requirements described in this prospectus supplement are
not met.
See "Description of the Bonds -- Payment of Principal; Redemption" and
"-- Liquidity" in this prospectus supplement for more detail.
BOOK-ENTRY REGISTRATION
The bonds will be issued in book-entry form only in minimum denominations
of [$ ] and integral multiples of [$ ] in excess of such
amount.
See "Description of the Bonds -- Registration of the Bonds" and "-- Book-
Entry Registration" in the prospectus.
SECURITY FOR THE BONDS
The eligible collateral securing the bonds may include the following:
- Residential first [and second] lien mortgage loans meeting the
requirements for eligible mortgage loans set forth in the prospectus
under
S-5
<PAGE> 7
"Description of the Bonds -- Eligible Mortgage Loans," subject to
permitted changes in their characteristics as described in this
prospectus supplement (such mortgage loans are referred to in the
prospectus supplement as "ELIGIBLE MORTGAGE LOANS").
- Freddie Mac, Fannie Mae and Ginnie Mae certificates (collectively,
"AGENCY CERTIFICATES") and other government securities described under
"Description of the Bonds -- Government Securities" in the prospectus.
- Cash, including cash on deposit in various accounts held by or for the
benefit of the trustee.
Eligible collateral for the bonds will not include [multi-class agency
certificates, eligible mortgage pass-through certificates or short-term money
market instruments] that are described in the prospectus.
Investors should be aware that:
- Main Place may withdraw or substitute collateral at any time if, after
giving effect to these actions, the discounted value of the eligible
collateral pledged to secure the bonds is at least equal to the basic
maintenance amount determined as described in this prospectus
supplement and no event of default has occurred and is continuing with
respect to the bonds.
- the types, characteristics and permitted amounts of eligible collateral
may change at any time without the consent of bondholders if the
changes do not adversely affect the ratings then assigned to the bonds
by the rating agencies.
See "Description of the Bonds -- Security for the Bonds" and
"-- Withdrawals and Substitution of Collateral" in the prospectus supplement for
more detail.
INITIAL COLLATERAL
The eligible collateral initially pledged to secure the bonds will consist
of eligible fixed-rate and adjustable-rate mortgage loans. [All] of the mortgage
loans were originated or acquired by [NationsBank Mortgage Corporation] [Bank of
America, FSB] [ ], [which are affiliates of Main Place].
S-6
<PAGE> 8
The mortgage loans are expected to have the following approximate
characteristics:
SELECTED MORTGAGE LOAN DATA AS OF [DATE]
<TABLE>
<CAPTION>
TOTAL ADJUSTABLE-RATE FIXED-RATE
MORTGAGE MORTGAGE MORTGAGE
LOANS LOANS LOANS
-------- --------------- ----------
<S> <C> <C> <C> <C>
Number of mortgage loans.................
Aggregate unpaid principal balance.......
Range of unpaid principal balance........
[Percentage of first lien mortgage
loans.................................. ]
[Percentage of second lien mortgage
loans.................................. ]
Range of mortgage loan interest rates....
Weighted average mortgage loan interest
rate...................................
Weighted average [combined] original
loan-to-value ratio....................
Range of remaining term to maturity in
months.................................
Weighted average remaining term to
maturity in months.....................
Weighted average original term to
maturity in months.....................
Range of origination dates...............
[Percentage of balloon loans]............
Number of states with geographic
concentration of mortgaged properties
in excess of 5% of the aggregate unpaid
principal balance......................
</TABLE>
Main Place may remove mortgage loans, or may make substitutions for
mortgage loans, in advance of, and following, the closing date as described in
this prospectus supplement.
Additional information about the mortgage loans to be pledged to secure the
bonds appears under "Description of the Bonds -- Eligible Mortgage Loans" in
this prospectus supplement.
COLLATERAL VALUATION AND MAINTENANCE
Main Place is required to maintain eligible collateral pledged to secure
the bonds having a discounted value at least equal to the basic maintenance
amount, determined as described under "Description of the Bonds -- Basic
Maintenance Amount" in this prospectus supplement. The trustee is required to
value the collateral on the [ ] day of each month, or, if not a
S-7
<PAGE> 9
business day, on the next business day, commencing on [date] and to deliver a
report concerning its valuation to Main Place and each rating agency within two
business days of each valuation date.
In the event that on any valuation date the discounted value of the pledged
collateral is less than the basic maintenance amount, Main Place is required,
within [10] days of receipt of the valuation report, to take one of the
following actions:
- deliver to the trustee or custodian additional eligible collateral and/or
substitute eligible collateral; or
- repurchase outstanding bonds; or
- if Main Place is unable to deliver or substitute eligible collateral or
to repurchase outstanding bonds, redeem outstanding bonds;
in each case, to the extent that, after these actions are taken, the discounted
value of the eligible collateral pledged to secure the bonds is at least equal
to the basic maintenance amount.
See "Description of the Bonds -- Basic Maintenance Amount," "-- Withdrawals
and Substitutions of Collateral," "Purchase and Resale of Bonds" and "Reports on
Pledged Collateral" in this prospectus supplement for more detail.
ACCOUNTS
The following accounts shall be established in connection with the issuance
of the bonds:
- COLLECTION ACCOUNT -- A collection account shall be established by the
servicer in the name of the trustee in which all payments in respect
of any eligible mortgage loans pledged to secure the bonds shall be
deposited.
- DISTRIBUTION ACCOUNT -- A distribution account shall be established by
the trustee for deposit of all payments in respect of the eligible
collateral securing the bonds, including amounts deposited from the
collection account.
- RESERVE FUND -- A reserve fund shall be established by the trustee.
Amounts held in the reserve fund may be released to Main Place if, as
of the immediately preceding valuation date, the discounted value of
the remaining eligible collateral is at least equal to the basic
maintenance amount and no event of default has occurred and is
continuing.
S-8
<PAGE> 10
Amounts held in the collection account, distribution account and reserve
fund will constitute a portion of the pledged collateral securing the bonds and
eligible collateral for purposes of satisfying the basic maintenance amount.
See "Description of the Bonds -- Servicing of Eligible Mortgage Loans --
Collection Account," and "Description of the Bonds -- Distribution Account" and
"-- Reserve Fund" in this prospectus supplement.
USE OF PROCEEDS
Main Place intends to use substantially all of the net proceeds from the
sale of the bonds for one or more of the following:
- Purchase additional mortgage loans;
- Pay dividends to its shareholders; and
- Reduce subordinated indebtedness of Main Place.
RATINGS
Main Place will not issue the bonds unless they are rated
[ ] by [rating agency] and [ ] by [rating
agency].
- The ratings of the rating agencies are not recommendations to buy, sell
or hold the bonds. A rating may be revised or withdrawn at any time by
the assigning rating agency.
- If the ratings on your bonds are downgraded or withdrawn, you may have
difficulty selling your bonds.
See "Bond Ratings" in this prospectus supplement for more detail.
TAX STATUS
Special federal income tax counsel is of the opinion that under existing
law, the bonds will be treated as debt of Main Place for federal income tax
purposes.
You should consult your tax advisors and review "United States Federal
Income Tax Consequences" in the prospectus for a discussion of the United States
federal income tax consequences of the acquisition, ownership, and disposition
of the bonds.
ERISA
Subject to important considerations discussed under "ERISA Considerations"
in this prospectus supplement and the prospectus, it is expected that the bonds
will be eligible for purchase by pension, profit sharing and other
S-9
<PAGE> 11
employee benefit plans and individual retirement accounts and annuities
("IRAS"). A plan or IRA fiduciary should carefully review with its lawyer and
tax advisor whether the purchase or holding of the bonds could give rise to a
prohibited transaction.
See "ERISA Considerations" in this prospectus supplement and the prospectus
for more detail.
LEGAL INVESTMENT
The bonds will not constitute "mortgage related securities" for purposes of
the Secondary Mortgage Market Enhancement Act of 1984, as amended. If your
investment activities are subject to legal investment laws and regulations,
regulatory capital requirements or review by regulatory authorities, then you
may be subject to restrictions on investment in the bonds. You should consult
your legal, tax and accounting advisors for assistance in determining the
suitability of and consequences to you of the purchase, ownership and sale of
the bonds.
For additional information, see "Legal Investment" in the prospectus.
S-10
<PAGE> 12
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THE ISSUER
- --------------------------------------------------------------------------------
GENERAL
The issuer of the bonds is Main Place Funding, LLC (referred to in this
prospectus supplement and the prospectus as "MAIN PLACE"), a Delaware limited
liability company and an indirect subsidiary of NationsBank, N.A., which is
itself an indirect, wholly-owned subsidiary of BankAmerica Corporation. Main
Place is the successor by merger of Main Place Real Estate Investment Trust with
and into Main Place. That merger was effective on December 23, 1998, as more
fully described under "The Issuer" in the prospectus. Main Place has no
subsidiaries. The financial statements of Main Place and its predecessors are
included in the consolidated financial statements of BankAmerica Corporation.
CAPITALIZATION
The following table sets forth the capitalization of Main Place as of
December 31, 1998 and a pro forma capitalization table of Main Place as of the
same date. The pro forma capitalization table gives effect to the issuance of
the bonds offered hereby. There have been no material adverse changes in the
capitalization of Main Place since December 31, 1998.
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
1998
----------------------
ACTUAL PRO FORMA
--------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Indebtedness
Mortgage-Backed Bonds, Series 1995-2....................
Mortgage-Backed Bonds, Series 1997-1....................
Mortgage-Backed Bonds, Series 1999-1....................
Total indebtedness...................................
Members' equity
Membership interests....................................
Additional paid-in capital..............................
Retained earnings.......................................
Net unrealized gains on securities available for sale...
Total members' equity................................
Total indebtedness and members' equity.............
</TABLE>
SUMMARY FINANCIAL DATA
The following summary data of Main Place for the years ended December 31,
1998 and December 31, 1997, is derived from the audited financial statements and
should be read in conjunction with the financial statements that are contained
in Main Place's Annual Report on Form 10-K
S-11
<PAGE> 13
for the year ended December 31, 1998, which has been incorporated by reference
in this prospectus supplement and the prospectus. The financial data for the
year ended December 31, 1998 reflects the transactions described in the
accompanying prospectus under "The Issuer."
See "Listing of Bonds and Related Matters" in the appendix to this
prospectus supplement and "Incorporation of Certain Documents by Reference" in
the prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1998 1997
---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Income Statement Data Interest and fees on loans........... $ $
Interest on securities...................................
Other income.............................................
Interest Expense.........................................
Other expenses...........................................
Income before income taxes...............................
Net Income...............................................
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-----------------------
1998 1997
---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Balance Sheet Data
Total assets............................................. $ $
Loans, net of unearned income............................
Securities...............................................
Securities sold under agreements to repurchase from
affiliate.............................................
Mortgage-backed bonds....................................
Total members' equity............................
</TABLE>
MANAGING MEMBER
The managing member of Main Place is NationsBank, N.A., an indirect,
wholly-owned subsidiary of BankAmerica Corporation.
S-12
<PAGE> 14
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DESCRIPTION OF THE BONDS
- --------------------------------------------------------------------------------
GENERAL
The issuance of the bonds has been duly authorized by Main Place. The bonds
will be issued under an indenture (the "INDENTURE") dated as of
[ ], between Main Place and the trustee. As of any date, all
bonds so issued will be deemed to be "OUTSTANDING," except bonds (1) previously
canceled or to be canceled by the trustee; (2) held by Main Place or its
affiliates, other than [NationsBanc Montgomery Securities LLC]; and (3) for
whose payment eligible government securities or cash in the necessary amount
have been delivered to the trustee or other arrangements satisfactory to each
rating agency have been made as described below under "-- Liquidity."
The following summaries of some of the provisions of the indenture are not
complete. Where particular provisions of the indenture are referred to, the
actual provisions are incorporated by reference as a part of those summaries,
and those summaries are qualified in their entirety by reference to the
indenture. Copies of the indenture may be obtained by writing to the principal
corporate trust office of the trustee, [address], Attention: [department], and
will also be available for inspection during normal business hours at the
principal executive offices of Main Place, and at the principal corporate trust
office of the trustee.
The bonds will be limited to $[ ] aggregate principal
amount, all of which are being offered hereby and will be direct obligations of
Main Place. The principal amount of each bond is due and payable on the stated
maturity. The bonds will bear interest on the unpaid principal balance thereof
at a floating rate calculated as set forth below under "-- Interest Payments,"
payable in arrears on each interest payment date commencing on
[ ], to the persons in whose names the bonds are registered
(this person may be referred to as a "BONDHOLDER" or "HOLDER") at the close of
business on the record date preceding that interest payment date, except in the
case of defaulted interest, as provided in the indenture. The bonds and
indenture will be governed by the laws of the State of New York.
The bonds will be secured by collateral as described below under
"-- Security for the Bonds." Under the indenture, Main Place is required to
maintain collateral of the type permitted under the indenture (this collateral
is referred to in this prospectus supplement as "ELIGIBLE COLLATERAL") having a
discounted value sufficient to meet levels of collateralization required from
time to time as described below under "-- Basic Maintenance Amount." The
eligible collateral will be valued by the trustee on the [ ]
day of each month, or, if such day is not a business day, on the next business
day, commencing on [ ] (each of these dates, a "VALUATION
DATE"),
S-13
<PAGE> 15
using market values, as defined in the prospectus under "Description of the
Bonds -- Basic Maintenance Amount," for this property obtained no more than
three business days prior to the applicable valuation date. The trustee will
deliver reports to the issuer and to each rating agency for each valuation date
within two business days after that date. See "-- Reports on Pledged
Collateral."
The indenture will provide that if any payment of interest or principal on
the bonds remains unclaimed by holders for two years after that payment has
become due, whether at the stated maturity or otherwise, the trustee will remit
the amount of the payment to Main Place at its request. Thereafter, the payment
will constitute a general unsecured obligation of Main Place only, and holders
may look only to Main Place for payment. Prior to making the remittance, the
trustee may, at the expense of Main Place, give notice to the holders that the
payment remains unclaimed and that, after a specified date, any remaining
portion of the payment will be remitted to Main Place.
INTEREST PAYMENTS
- Interest is paid [quarterly] on each interest payment date.
- Interest accrues on the unpaid principal balance of your bonds during
each interest period at a floating rate equal to LIBOR plus
__________%.
Each interest period begins on and includes an interest payment date, or,
in the case of the initial interest payment date, begins on and includes the
closing date, and ends on and excludes the next interest payment date.
The amount of interest that will accrue on your bonds each interest period
is based on [the actual number of days in the interest period over a 360-day
year] multiplied by the product of:
- the interest rate for the bonds for that interest period; and
- the outstanding principal balance of your bonds at the beginning of each
interest period.
CALCULATION OF LIBOR
The following terms are used for purposes of describing the calculation of
LIBOR below:
- LIBOR BUSINESS DAY means a day that is not a Saturday, Sunday or other
day on which banking institutions in London, New York City or the
state in which the principal office of the trustee is located are
authorized or required by law, regulation or executive order to be
closed.
S-14
<PAGE> 16
- LIBOR DETERMINATION DATE means the second LIBOR business day preceding
the first day of each interest period.
- TELERATE PAGE 3750 means the display page designated "3750" on the Dow
Jones Telerate Service, or replacement page or successor service for
displaying comparable rates.
- REUTERS PAGE LIBO means Reuters Money Monitor Rates Page LIBO.
- REFERENCE BANKS means four banks in the London interbank market selected
by the trustee. Each reference bank will be a leading bank engaged in
transactions in Eurodollar deposits in the international Eurocurrency
market with an established place of business in London, which does not
control, is not controlled by or is not under common control with Main
Place and which has been designated by the trustee and is able and
willing to provide these quotations to the trustee on each LIBOR
determination date.
The trustee will determine LIBOR for the succeeding interest period on the
basis of the rate that appears on the Telerate Page 3750 as of 11:00 a.m. London
time on that LIBOR determination date.
If on any LIBOR determination date, no rate appears on Telerate Page 3750
or Telerate Page 3750 is no longer available, the trustee will determine LIBOR
on the basis of the rate that appears on Reuters Page LIBO as of 11:00 a.m.
London time on that LIBOR determination date for [three]-month U.S. dollar
deposits.
If the rate does not appear on Reuters Page LIBO as of 11:00 a.m. London
time on the LIBOR determination date, the trustee will determine LIBOR on the
basis of quotations provided by the reference banks to leading banks in the
London interbank market for a period of [three] months as of 11:00 a.m. London
time on the LIBOR determination date. LIBOR as determined by the trustee is the
arithmetic mean of these quotations, rounding the arithmetic mean upwards, if
necessary, to the nearest whole multiple of 1/16%. If on any LIBOR determination
date at least two of the reference banks provide quotations, LIBOR will be
determined in accordance with the preceding sentence on the basis of the offered
quotations of those reference banks providing the quotations. If on the LIBOR
determination date only one or none of the reference banks provides the offered
quotations, the trustee will request four major New York City banks to provide
their offered quotations to leading European banks for loans in Eurodollars
having a [three]-month maturity as of 11:00 a.m. London time on the LIBOR
determination date. If at least two of these quotations are provided, LIBOR will
be the arithmetic mean of these quotations, rounding this arithmetic mean
upwards, if necessary, to the nearest whole multiple of 1/16%, or if fewer than
two of these quotations are
S-15
<PAGE> 17
provided, LIBOR will be LIBOR as determined on the previous LIBOR determination
date.
The establishment of LIBOR on each LIBOR determination date for each
interest period and the trustee's calculation of the rate of interest applicable
to the bonds for the related interest period will, in the absence of manifest
error, be final and binding. Each rate of interest may be obtained by
telephoning the trustee at [telephone number].
PAYMENT OF PRINCIPAL; REDEMPTION
Your bonds will mature and will be paid their entire principal balance,
plus accrued interest, at the stated maturity. See "-- Liquidity" below.
The bonds are not subject to redemption at the option of Main Place,
although Main Place may purchase bonds in open market transactions. See
"-- Purchase and Resale of Bonds" below.
The bonds are subject to mandatory partial redemption upon not more than 10
nor less than 5 days' notice, in the event that:
- on any [monthly] valuation date, the discounted value of the eligible
collateral pledged to secure the bonds is less than the basic
maintenance amount determined as described under "-- Basic Maintenance
Amount" below; and
- Main Place is unable within a maximum of 10 days after receipt of the
trustee's valuation report following the valuation date (the "CURE
DATE"): (1) to pledge and deliver enough additional eligible
collateral and/or to substitute enough eligible collateral so that,
after the pledge, the discounted value of the eligible collateral is
at least equal to the basic maintenance amount; and (2) Main Place
does not deliver to the trustee, prior to the cure date for
cancellation, bonds reacquired by it in a principal amount sufficient
to cause the discounted value of the eligible collateral to be at
least equal to the basic maintenance amount.
However, Main Place will not be required to make a mandatory redemption of
the bonds if the report, prepared by the trustee for any valuation date
following the cure date and prior to the date on which the trustee gives notice
of redemption to the bondholders, shows that the discounted value of the
eligible collateral is at least equal to the basic maintenance amount as of the
valuation date.
Any mandatory partial redemption will require the redemption of bonds in an
aggregate principal amount that is the smallest principal amount, rounded to the
next higher integral multiple of $1,000, necessary to make the discounted value
of the eligible collateral at least equal to the basic maintenance amount,
S-16
<PAGE> 18
calculated in each case as of the valuation date immediately preceding the date
on which the trustee gives notice of redemption to the bondholders, after giving
effect to: (1) the pledge of any additional eligible collateral and/or
substitution of eligible collateral by the issuer; (2) the delivery to the
trustee for cancellation of any bonds repurchased by or on behalf of Main Place;
and (3) the redemption.
Any mandatory partial redemption will be made within 30 days after the cure
date at a redemption price equal to 100% of the principal amount, or portion
thereof, of the bonds to be redeemed together with accrued interest to the date
fixed for redemption. Any partial redemption may be made on a pro rata basis or
by any method deemed fair and appropriate by the trustee, provided that the
method will not result in an outstanding bond in a denomination of less than
$100,000.
After notice of any redemption has been given to the bondholders, the
principal amount, or portion thereof, of the bonds to be redeemed will be due
and payable on the date fixed for that redemption at the place set forth in the
notice. From and after the date fixed for redemption, the bonds chosen to be
redeemed will cease to bear interest, unless Main Place defaults in the payment
of the redemption price, in which case the principal amount of the bonds will
continue to bear interest at the rate borne by the bonds until paid. Further,
the only right of bondholders will be to receive the redemption price; except
that, in the case of any redemption date on which bonds are redeemed in part,
new bonds representing the principal amounts of those bonds that have not been
redeemed will be issued to those bondholders. The holders of the new bonds will
continue to have the right to receive the principal amount of the bonds and
interest payments on that principal amount. Bonds that are redeemed will be
canceled by the trustee.
If Main Place fails to cure a collateral shortfall by the applicable cure
date, the trustee must liquidate pledged property securing the bonds to the
extent required to pay the redemption price of the bonds to be redeemed, unless
Main Place delivers on the cure date cash or other deposit securities to the
trustee, as described under "-- Liquidity," in an amount sufficient to provide
for the full payment of the redemption price of the bonds required to be
redeemed.
SECURITY FOR THE BONDS
The bonds will be secured by the pledged property, which will include the
initial collateral described below under "-- Eligible Mortgage Notes" and may
include any of the types of eligible collateral described in the prospectus or
otherwise as provided in this prospectus supplement. Eligible collateral for the
bonds of this series will not include [multi-class agency certificates, eligible
mortgage pass-through certificates or short-term money market instruments]
S-17
<PAGE> 19
that are described in the prospectus. See "Security for the Bonds" in the
prospectus.
The pledged property also will include, and the bonds will be secured from
time to time by:
- cash held in the collection account from time to time, representing
scheduled monthly interest and principal payments, principal
prepayments and various other amounts with respect to the eligible
mortgage loans received during each collection period, as described
below under "-- Collection Account";
- cash held in the reserve fund as described below under "-- Reserve Fund";
- cash held in the distribution account representing payments on all types
of pledged property other than eligible mortgage notes and any amounts
that are transferred from the collection account for payment on the
bonds, as described below under "-- Distribution Account"; and
- the deposit securities described below under "-- Liquidity."
Investors should be aware that the types and characteristics of eligible
collateral, the percentage limitations on some types of eligible collateral as
described in the prospectus, the frequency of the valuation dates, the discount
factors used in valuing the eligible collateral, the methodology used in
calculating the market value of the eligible collateral and the definition of
basic maintenance amount may change from time to time, without the consent of
the bondholders, if the changes: (1) are permitted by applicable law; and (2)
will not adversely affect the rating then assigned to the bonds by each rating
agency, as confirmed in writing by those rating agencies. The rating agencies
are not obligated to review or approve any of the proposed changes set forth in
the preceding sentence and may, at any time, change or withdraw any rating on
the bonds.
ELIGIBLE MORTGAGE LOANS
GENERAL
The mortgage loans constituting the initial collateral or which are pledged
from time to time to secure the bonds will be "eligible mortgage loans," having
the characteristics set forth in the prospectus under "Security for the Bonds --
Eligible Mortgage Loans," subject to permitted changes in the characteristics as
described above.
S-18
<PAGE> 20
INITIAL COLLATERAL
All of the eligible mortgage loans constituting the initial collateral were
sold or contributed to Main Place by [NationsBank, N.A.] or its affiliates.
These eligible mortgage loans were either originated or purchased by
[NationsBanc Mortgage Corporation] [Bank of America, FSB] [NationsBank, N.A.],
which [is] [are] affiliated with Main Place.
As of the cut-off date, the initial collateral consisted of approximately
[ ] eligible mortgage loans with an aggregate principal balance
of $[ ]. The average unpaid principal balance of those mortgage
loans is $[ ] as of the cut-off date, with each mortgage loan
having an unpaid principal balance of not less than $[ ] and
not more than $[ ]. Approximately [ ]% of the
initial mortgage loans consist of eligible fixed-rate mortgage loans and
approximately [ ]% of the initial mortgage loans consists of
eligible adjustable-rate mortgage loans. [Approximately [ ]% of
the eligible mortgage loans are jumbo mortgage loans, i.e., mortgage loans
originated in an amount in excess of Fannie Mae or Freddie Mac purchase limits,
currently $[240,000], otherwise generally underwritten in accordance with
guidelines of Fannie Mae and Freddie Mac.] Approximately [ ]%
of the eligible mortgage loans are [describe non-jumbo mortgage loans]
[Approximately [ ]% of the initial mortgage loans are secured
by a second mortgage that is junior to a mortgage lien on the related mortgage
property.]
Each initial fixed-rate mortgage loan has an original term to maturity of
not more than 30 years and provides for a schedule of payments that will be, if
timely paid, sufficient to amortize fully the principal balance of that mortgage
loan over its remaining term to maturity[, except [ ]% of those
mortgage loans are balloon loans]. [describe balloon loans] Interest on the
initial fixed rate mortgage loans will accrue based [either] on an actuarial
interest method [or a simple interest method]. See "Security for the Bonds --
Eligible Fixed-Rate Mortgage Loans" in the prospectus.
Each initial adjustable-rate mortgage loan has an original term to maturity
of not more than 30 years and provides for a fixed rate of interest for an
initial period of approximately either [ ],
[ ] or [ ] years. All of these eligible
adjustable-rate mortgage notes provide for level, amortizing payments over those
initial periods. Thereafter, the interest rate on each of those eligible
adjustable-rate mortgage note will adjust annually to a rate based on the level
of [insert relevant index], plus the applicable fixed percentage (the "GROSS
MARGIN"), subject to a maximum annual interest rate increase or decrease and a
maximum lifetime interest rate (the "LIFETIME CAP") specified in the related
mortgage note. As of the cut-off date, the weighted average gross margin of the
initial adjustable-rate mortgage loans was approximately [ ]%,
and the weighted average lifetime
S-19
<PAGE> 21
cap on these adjustable-rate mortgage loans was approximately
[ ]%. [The interest rates on the initial adjustable-rate
mortgage loans are not subject to maximum lifetime decreases.] [As of the
cut-off date, approximately [ ]% of the initial adjustable-rate
mortgage loans are convertible into fixed-rate loans at the option of the
mortgagor.]
The interest rate for each initial adjustable-rate mortgage loan will
generally adjust on the first day of the month in which the initial fixed-rate
period ends and annually thereafter (each, an "ARM INTEREST ADJUSTMENT DATE").
Effective with the first payment due on each of those adjustable-rate mortgage
loans after each related ARM interest adjustment date, the monthly principal and
interest payment will be adjusted to an amount that will fully amortize the
then-outstanding principal balance of this loan over its remaining term to
maturity and that will be sufficient to pay interest at the adjusted interest
rate for this loan. [The "CONSTANT MATURITY TREASURY INDEX" is the weekly
average yield on U.S. Treasury securities adjusted to a constant maturity of one
year as published by the Federal Reserve Board in Statistical Release H.15 (519)
or any similar publication or, if not so published, as reported by any Federal
Reserve Bank or by any U.S. Government department or agency and made available
to the applicable servicer as of a date 45 days prior to each ARM interest
adjustment date for this adjustable-rate mortgage loan. Should the Constant
Maturity Treasury Index not be published or become otherwise unavailable, the
applicable servicer will select a comparable alternative index over which it has
no control and which is readily verifiable.]
Set forth below is a description of some additional characteristics of the
initial mortgage loans as of the cut-off date, except as otherwise indicated.
Main Place believes that the information set forth below with respect to the
initial mortgage loans is representative of the characteristics of the initial
mortgage loans as it will be constituted on the closing date. For purposes of
the following tables, the initial mortgage loans have been divided into two
groups: fixed-rate mortgage loans and adjustable-rate mortgage loans. The sums
of the percentage columns set forth in the following tables may not equal 100%
due to rounding.
S-20
<PAGE> 22
MORTGAGE LOAN INTEREST RATES
<TABLE>
<CAPTION>
INITIAL FIXED-RATE MORTGAGE LOANS INITIAL ADJUSTABLE-RATE MORTGAGE LOANS(1)
------------------------------------- -----------------------------------------
PERCENTAGE OF PERCENTAGE OF
CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID
PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE
----------------- ----------------- ------------------- -------------------
<S> <C> <C> <C> <C>
%.................... $ % $ %
%....................
%....................
%....................
%....................
%....................
%....................
%....................
%....................
---------------- ---------------- ---------------- ----------------
Total $ 100.00% $ 100.00%
================ ================ ================ ================
Weighted Average Weighted Average
Interest Rate Interest Rate
is [ ]% is [ ]%
</TABLE>
- -------------------------
(1) With the exception of approximately [ ]% of the aggregate unpaid
principal balance of the initial adjustable-rate mortgage loans, none of the
remaining initial adjustable-rate mortgage loans had reached their first ARM
interest adjustment date as of the cut-off date. As of the cut-off date, the
weighted average remaining period of time until the next ARM interest
adjustment date for the initial adjustable-rate mortgage loans was
approximately [ ] months.
MORTGAGE LOAN NET INTEREST RATES
<TABLE>
<CAPTION>
INITIAL FIXED-RATE MORTGAGE LOANS INITIAL ADJUSTABLE-RATE MORTGAGE LOANS
------------------------------------- ---------------------------------------
PERCENTAGE OF PERCENTAGE OF
CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID
NET INTEREST PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE
----------- ----------------- ----------------- ------------------ ------------------
<S> <C> <C> <C> <C>
%.................... $ % $ %
%....................
%....................
%....................
%....................
%....................
%....................
%....................
%....................
%....................
---------------- ---------------- ---------------- ----------------
Total $ 100.00% $ 100.00%
================ ================ ================ ================
Weighted Average Weighted Average
Net Interest Rate Net Interest Rate
is [ ]% is [ ]%
</TABLE>
S-21
<PAGE> 23
REMAINING TERMS TO STATED MATURITY
<TABLE>
<CAPTION>
INITIAL FIXED-RATE MORTGAGE LOANS INITIAL ADJUSTABLE-RATE MORTGAGE LOANS
REMAINING ------------------------------------- --------------------------------------
TERM TO PERCENTAGE OF PERCENTAGE OF
STATED CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
MATURITY AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID
(MONTHS) PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE
--------- ----------------- ----------------- ------------------ -----------------
<S> <C> <C> <C> <C>
..................... $ % $ %
.....................
.....................
.....................
.....................
.....................
.....................
----------------- ---------------- ----------------- ----------------
Total.............. $ 100.00% $ 100.00%
================= ================ ================= ================
Weighted Average
Remaining Term to Weighted Average
Stated Maturity Remaining Term to
is Stated Maturity is
[ ] months [ ] months
</TABLE>
YEARS OF ORIGINATION
<TABLE>
<CAPTION>
INITIAL FIXED-RATE MORTGAGE LOANS INITIAL ADJUSTABLE-RATE MORTGAGE LOANS
------------------------------------- ---------------------------------------
PERCENTAGE OF PERCENTAGE OF
CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
YEAR OF AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID
ORIGINATION PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE
----------- ----------------- ----------------- ------------------ ------------------
<S> <C> <C> <C> <C>
..................... $ % $ %
.....................
.....................
.....................
.....................
.....................
.....................
---------------- ---------------- ---------------- ----------------
Total.............. $ 100.00% $ 100.00%
================ ================ ================ ================
</TABLE>
The earliest month and year of origination of any initial mortgage loan is
expected to be [date] and the latest month and year of origination is expected
to be [date].
S-22
<PAGE> 24
ORIGINAL LOAN-TO-VALUE RATIO
<TABLE>
<CAPTION>
INITIAL FIXED-RATE MORTGAGE LOANS INITIAL ADJUSTABLE-RATE MORTGAGE LOANS
------------------------------------- ---------------------------------------
PERCENTAGE OF PERCENTAGE OF
CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
ORIGINAL LOAN-TO- AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID
VALUE RATIO PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE
----------------- ----------------- ----------------- ------------------ ------------------
<S> <C> <C> <C> <C>
..................... $ % $ %
.....................
.....................
.....................
.....................
.....................
.....................
.....................
---------------- --------------- ---------------- ---------------
Total.............. $ 100.00% $ 100.00%
================ =============== ================ ===============
Weighted Average Weighted Average
Original Loan-to- Original Loan-to
Value Ratio is Value Ratio is
[ ]% [ ]%
</TABLE>
- -------------------------
* The loan-to-value ratio of an eligible mortgage loan is calculated using the
lesser of: (1) the appraised value of the related mortgaged property, as
established by an appraisal obtained by the originator from an appraiser in
connection with the origination of the eligible mortgage loan; and (2) the
sale price for the property. For the purpose of calculating the loan-to-value
ratio of any eligible mortgage loan that is the result of the refinancing,
including a refinancing for "equity take-out" purposes, of an existing
mortgage loan, the appraised value of the related mortgaged property is
generally determined by reference to an appraisal obtained in connection with
the origination of the replacement loan.
ORIGINAL MORTGAGE LOAN PRINCIPAL BALANCES
<TABLE>
<CAPTION>
INITIAL FIXED-RATE MORTGAGE LOANS INITIAL ADJUSTABLE-RATE MORTGAGE LOANS
---------------------------------------- ----------------------------------------
PERCENTAGE OF PERCENTAGE OF
ORIGINAL CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
PRINCIPAL AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID
BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE
--------- -------------------- ----------------- -------------------- -----------------
<S> <C> <C> <C> <C>
..................... $ % $ %
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
.....................
-------------------- ---------------- -------------------- ----------------
Total.............. $ 100.00% $ 100.00%
==================== ================ ==================== ================
Average Original Average Original
Principal Balance is Principal Balance is
$[ ] $[ ]
</TABLE>
S-23
<PAGE> 25
CURRENT MORTGAGE LOAN PRINCIPAL BALANCES
<TABLE>
<CAPTION>
INITIAL FIXED-RATE MORTGAGE LOANS INITIAL ADJUSTABLE-RATE MORTGAGE LOANS
------------------------------------- ---------------------------------------
PERCENTAGE OF PERCENTAGE OF
CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
CURRENT PRINCIPAL AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID
BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE
----------------- ----------------- ----------------- ------------------ ------------------
<S> <C> <C> <C> <C>
$ % $ %
.....................
.....................
.....................
.....................
.....................
.....................
.....................
--------------- --------------- --------------- ---------------
Total.............. $ 100.00% $ 100.00%
=============== =============== =============== ===============
Average Current Average Current
Principal Balance Principal Balance
is $[ ] is $[ ]
</TABLE>
TYPES OF MORTGAGED PROPERTIES
<TABLE>
<CAPTION>
INITIAL FIXED-RATE MORTGAGE NOTES INITIAL ADJUSTABLE-RATE MORTGAGE LOANS
------------------------------------- ---------------------------------------
PERCENTAGE OF PERCENTAGE OF
CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID
PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE
----------------- ----------------- ------------------ ------------------
<S> <C> <C> <C> <C>
Condominium.......... $ % $ %
Planned Unit.........
Development..........
1 to 4 Family........
Town House...........
--------------- --------------- --------------- ---------------
Total.............. $ 100.00% $ 100.00%
=============== =============== =============== ===============
</TABLE>
S-24
<PAGE> 26
GEOGRAPHIC DISTRIBUTION OF MORTGAGED PROPERTIES
<TABLE>
<CAPTION>
INITIAL FIXED-RATE MORTGAGE LOANS INITIAL ADJUSTABLE-RATE MORTGAGE LOANS
------------------------------------- --------------------------------------
PERCENTAGE OF PERCENTAGE OF
CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID
STATE PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE
----- ----------------- ----------------- ------------------ -----------------
<S> <C> <C> <C> <C>
AL................... $ % $ %
AR...................
AZ...................
CA...................
CO...................
CT...................
DC...................
DE...................
FL...................
GA...................
HI...................
ID...................
IL...................
IN...................
KS...................
KY...................
LA...................
ME...................
MA...................
MD...................
MI...................
MN...................
MO...................
MS...................
NC...................
ND...................
NE...................
NH...................
NJ...................
NM...................
NV...................
NY...................
OH...................
OK...................
OR...................
PA...................
SC...................
SD...................
TN...................
TX...................
UT...................
VA...................
WA...................
WI...................
WV...................
WY...................
----------------- ---------------- ----------------- ----------------
Total.............. $ 100.00% $ 100.00%
================= ================ ================= ================
</TABLE>
No more than approximately [ ]% of the initial fixed-rate
mortgage loans and approximately [ ]% of the initial
adjustable-rate mortgage loans are secured by mortgaged properties located in
any one five-digit zip code region.
S-25
<PAGE> 27
PURPOSES OF INITIAL MORTGAGE LOANS
<TABLE>
<CAPTION>
INITIAL FIXED-RATE MORTGAGE LOANS INITIAL ADJUSTABLE-RATE MORTGAGE LOANS
------------------------------------- ---------------------------------------
PERCENTAGE OF PERCENTAGE OF
CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE CUT-OFF DATE
AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID AGGREGATE UNPAID
LOAN PURPOSE PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE PRINCIPAL BALANCE
------------ ----------------- ----------------- ------------------ ------------------
<S> <C> <C> <C> <C>
Purchase............. $ % $ %
Refinance -- No
Cashout............
Refinance --
Cashout............
----------------- ---------------- ---------------- ----------------
Total.............. $ 100.00% $ 100.00%
================= ================ ================ ================
</TABLE>
In the case of an initial mortgage loan made for "No Cashout" refinance
purposes, substantially all of the proceeds are used to pay in full the
principal balance of a previous mortgage loan of the mortgagor with respect to a
mortgaged property and to pay origination and closing costs associated with the
refinancing. However, in the case of an initial mortgage loan made for "Cashout"
refinance purposes, all or a portion of the proceeds are generally retained by
the mortgagor for uses unrelated to the mortgaged property. The amount of the
proceeds retained by the mortgagor may be substantial.
UNDERWRITING GUIDELINES FOR INITIAL MORTGAGE LOANS
Each initial mortgage loan has satisfied the credit, appraisal and
underwriting guidelines established by [ ], [NationsBanc
Mortgage Corporation] [Bank of America, FSB], which may be varied in cases
deemed appropriate by [ ], [NationsBanc Mortgage Corporation]
[Bank of America, FSB].
See "Mortgage Loan Programs" in the prospectus for a discussion of the
underwriting guidelines of [NationsBanc Mortgage Corporation] [Bank of America,
FSB].
[Insert underwriting guidelines if not NationsBanc Mortgage Corporation or
Bank of America, FSB]
SERVICING OF ELIGIBLE MORTGAGE LOANS
THE SERVICER
The servicer is a wholly-owned subsidiary of [NationsBank, N.A., which is
an indirect, wholly-owned subsidiary of] [BankAmerica Corporation]. [The
servicer has entered into a sub-servicing agreement with NationsBank, N.A. under
which NationsBank, N.A. shall be required to service the eligible mortgage
loans.] The servicer [is primarily engaged in the business of: (1) originating
and purchasing residential mortgage loans in its own name; and (2) servicing
residential mortgage loans for its own account and for the account of others].
The servicer's principal executive offices are located at [address] and the
telephone number is [telephone number], and the servicer's operations offices
are located at [address] and the telephone number is [telephone number].
S-26
<PAGE> 28
SERVICING PROCEDURES
Under a servicing agreement with Main Place [or assigned to Main Place],
the servicer will be responsible for servicing and administering the eligible
mortgage loans. The servicer will at all times remain responsible for the
performance of its duties under the servicing agreement. On the closing date,
Main Place will assign its rights under the servicing agreement to the trustee
for the benefit of the bondholders.
The servicer is required to perform diligently all services and duties
customary to the servicing by prudent mortgage lending institutions of mortgages
of the same type as the eligible mortgage loans in those jurisdictions where the
related mortgaged properties are located. The duties to be performed by a
servicer include:
- collection and remittance of principal and interest payments;
- administration of mortgage escrow accounts, to which the servicer will be
expected to make advances when a deficiency exists, as described more
fully in the servicing agreement;
- collection of insurance claims; and
- if necessary, foreclosure.
The servicer will not be required to make advances in respect of delinquent
monthly payments of principal and interest on eligible mortgage loans.
The servicer will be entitled to a monthly servicing fee for each eligible
mortgage loan, payable only from the interest portion of any monthly payment
collected on an eligible mortgage loan, ranging from [ ]% to
[ ]% of the unpaid principal balance of such eligible mortgage
loan, based on, among other things, its date of origination, the size of its
original principal balance and whether it is a fixed- or adjustable-rate
mortgage loan. The servicer will be entitled to retain its servicing fee from
interest payments collected prior to depositing the payments into the collection
account. In addition, the servicer will be entitled to investment income from
amounts on deposit in the collection account as described below and to retain
late payment charges and other fees and expenses related to loan assumptions,
delinquencies, modifications, partial releases of security and releases for
payment in full, if any, to the extent collected from mortgagors.
For a more detailed description of the servicing procedures applicable to
the servicer with respect to the eligible mortgage loans, see "Servicing of
Eligible Mortgage Loans" in the prospectus.
S-27
<PAGE> 29
COLLECTION ACCOUNT
The servicer will establish the collection account into which it will
collect and deposit payments on the eligible mortgage loans in accordance with
the procedures described in the prospectus under "Servicing of Eligible Mortgage
Loans." Amounts on deposit from time to time in the collection account may be
invested by the servicer in eligible investments. "ELIGIBLE INVESTMENTS" include
deposit securities and any other investments that are acceptable to each rating
agency. Amounts received on the eligible mortgage loans on deposit in the
collection account from time to time will constitute a portion of the pledged
property securing the bonds and eligible collateral for purposes of satisfying
the basic maintenance amount. The collection account may be a commingled account
containing other servicer funds if certain conditions are satisfied as described
under "Servicing of Eligible Mortgage Loans -- Payments on Eligible Mortgage
Loans" in the prospectus.
On the [ ] day of each month, or, if this day is not a
business day, the preceding business day, the servicer will deliver a report to
the trustee: (1) detailing collections on the eligible mortgage loans during the
preceding calendar month (each, a "COLLECTION PERIOD"); and (2) stating the
total amount of funds received on the eligible mortgage loans on deposit in the
collection account and the aggregate principal balance of the eligible mortgage
loans, in each case, as of the end of the preceding day. On the
[ ] day of each month or, if not a business day, the preceding
business day (each, a "SERVICER REMITTANCE DATE"), the servicer will withdraw
and remit to the trustee the amount of cash on deposit in the collection account
that was collected during the preceding collection period after deducting
amounts permitted to be withdrawn by the servicer, including its fee, as
described under "Servicing of Eligible Mortgage Loans -- Payments on Eligible
Mortgage Loans" in the prospectus (the "AVAILABLE AMOUNT"). In addition, on the
[ ] day of each month or, if not a business day, the preceding
business day, the servicer will deliver a similar report to the trustee stating:
(1) the total amount of funds on deposit in the collection account; and (2) the
aggregate principal balance of the eligible mortgage loans, in each case, as of
the end of the preceding day.
THE SERVICER'S FORECLOSURE AND DELINQUENCY EXPERIENCE
[Historically, a variety of factors, including the appreciation of real
estate values, have limited the servicer's loss and delinquency experience on
its portfolio of mortgage loans. Factors beyond the servicer's control, such as
national or local economic conditions or downturns in the real estate markets in
its lending areas, may result in increased rates of delinquencies and
foreclosure losses in the future.
S-28
<PAGE> 30
The information in the table below has not been adjusted to eliminate the
effect of the significant growth in the size of the portfolio of mortgage loans
serviced by the servicer during the periods shown. Accordingly, foreclosures and
delinquencies as percentages of aggregate principal balance of mortgage loans
serviced for each period may be higher than those that would be shown if a group
of mortgage loans were artificially isolated at a point in time and the
information disclosed the activity only in that isolated group. However, because
most of the mortgage loans in the portfolio of mortgage loans serviced by the
servicer during the periods shown are not fully seasoned, the foreclosure and
delinquency information for this type of isolated group would also be distorted
to some degree.
The following table summarizes the delinquency and foreclosure experience,
on the dates indicated, on non-conforming and Freddie Mac- and Fannie
Mae-conforming first deed of trust or mortgage loans serviced by the servicer,
excluding some recent bulk acquisitions of servicing rights, at its Louisville
servicing center and which were originated in a manner consistent with the
underwriting criteria of the servicer described in the prospectus under
"Mortgage Loan Programs -- Underwriting Standards of NationsBanc Mortgage
Corporation." The servicer's portfolio of non-conforming and Freddie Mac- and
Fannie Mae-conforming, first deed of trust and mortgage loans described below
contains fixed- and adjustable-rate mortgage loans having a variety of original
terms to maturity and payment characteristics. Investors should be aware that:
- This portfolio may differ significantly from the eligible mortgage loans
securing the bonds at any time in terms of interest rates, principal
balances, geographic distribution, loan-to-value ratios and other
possibly relevant characteristics.
- It is highly likely that the delinquency and foreclosure experience with
respect to the eligible mortgage loans will differ from that reflected
in the table below.
- It is highly likely that any losses experienced on liquidation of
defaulted mortgage loans will occur at different rates than those
shown below.
- The actual delinquency and foreclosure experience on the mortgage loans
will depend, among other things, upon the value of the real estate
securing the mortgage loans and the ability and willingness of
mortgagors to make required payments.
S-29
<PAGE> 31
DELINQUENCY AND FORECLOSURE EXPERIENCE
<TABLE>
<CAPTION>
AT DECEMBER 31, 1998 AT DECEMBER 31, 1997 AT DECEMBER 31, 1996
------------------------- ------------------------- -------------------------
NUMBER/% OUTSTANDING NUMBER/% OF OUTSTANDING NUMBER/% OF OUTSTANDING
OF MORTGAGE PRINCIPAL MORTGAGE PRINCIPAL MORTGAGE PRINCIPAL
LOANS AMOUNT LOANS AMOUNT LOANS AMOUNT
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Total Portfolio...... $ $ $
- --------------------------------------------------------------------------------------------------------
Delinquencies*
One installment
delinquent....... $ $ $
Percent
delinquent....... % % %
- --------------------------------------------------------------------------------------------------------
Two installments
delinquent....... $ $ $
Percent
delinquent....... % % %
- --------------------------------------------------------------------------------------------------------
Three or more
installments
delinquent....... $ $ $
Percent
delinquent....... % % %
- --------------------------------------------------------------------------------------------------------
In Foreclosure....... $ $ $
Percent in
Foreclosure...... % % %
- --------------------------------------------------------------------------------------------------------
Delinquent and in
Foreclosure........ $ $ $
Percent Delinquent
and in
Foreclosure...... % % %
- --------------------------------------------------------------------------------------------------------
</TABLE>
* A mortgage loan is deemed to have "one installment delinquent" if any
scheduled payment of principal or interest is delinquent past the end of the
month in which the payment was due, "two installments delinquent" if this
delinquency persists past the end of the month following the month in which
the payment was due, and so forth.
The sums of the Percent Delinquent and Percent in Foreclosure set forth in
this table may not equal the Percent Delinquent and in Foreclosure due to
rounding.]
DISTRIBUTION ACCOUNT
On the closing date, the trustee will establish the distribution account
for the benefit of the bondholders. All payments in respect of any eligible
collateral securing the bonds from time to time other than eligible mortgage
loans will be made directly to the trustee for deposit into the distribution
account. In addition, if an event of default under the indenture should occur
and be continuing, all payments on eligible mortgage loans will be remitted
directly to the trustee for deposit into the distribution account.
On each servicer remittance date, upon receipt of the available amount from
the servicer, the trustee will apply those funds in the following order of
priority:
- first, for deposit into the distribution account, an amount, first from
the interest portion of the available amount and then from the
principal portion of the available amount, equal to: (1) in the case
of servicer remittance dates occurring in months in which the interest
payment
S-30
<PAGE> 32
date does not occur, the amount of interest accrued or to accrue on
the bonds from and including the [ ] day of the
preceding month to and including the [ ] day of the
month of the servicer remittance date less any amounts deposited in
the distribution account since the immediately preceding servicer
remittance date and available for payment on the bonds; and (2) in the
case of servicer remittance dates occurring in months in which the
interest payment date does occur, the amount payable on the interest
payment date occurring in that month, less any amounts then on deposit
in the distribution account and available for payments on the bonds;
and
- second, for deposit into the reserve fund, the remaining portion of the
available amount.
On each interest payment date, the trustee will withdraw from the
distribution account an amount equal to the amount of interest accrued on the
principal amount of the bonds during the related interest period and distribute
this amount to the bondholders as of the immediately preceding record date.
On any mandatory redemption date and at the stated maturity of the bonds,
the trustee will withdraw sufficient amounts from the distribution account to
make required interest and principal payments on the bonds on those dates and
distribute these amounts to the bondholders as of the immediately preceding
record date.
If, on any interest payment date or mandatory redemption date or at the
stated maturity of the bonds, the amount on deposit in the distribution account
is less than the amount necessary to make required interest and principal
payments on the bonds on that date, the trustee will withdraw from the reserve
fund and deposit into the distribution account, to the extent of amounts
available in the reserve fund, an amount equal to the difference between the
required amount and the amount then on deposit in the distribution account.
At the direction of Main Place, the trustee will invest amounts on deposit
in the distribution account in eligible investments. Investment earnings from
eligible investments will be credited to the distribution account. Amounts held
in the distribution account will constitute a portion of the pledged property
securing the bonds and eligible collateral for purposes of satisfying the basic
maintenance amount.
RESERVE FUND
On the closing date, the trustee will establish the reserve fund for the
benefit of the bondholders. On each servicer remittance date, the trustee will
deposit into the reserve fund the portion of the available amount remaining
after making the required deposit into the distribution account described above.
S-31
<PAGE> 33
At the direction of Main Place, the trustee will invest amounts on deposit
in the reserve fund in eligible investments. Investment earnings from eligible
investments will be credited to the reserve fund. Amounts held in the reserve
fund will constitute a portion of the pledged property securing the bonds and
eligible collateral for purposes of satisfying the basic maintenance amount.
At the request of Main Place, the trustee will withdraw amounts on deposit
in the reserve fund and release those amounts to Main Place free of the lien of
the indenture if: (1) as of the valuation date immediately preceding the
release, the discounted value of the eligible collateral, after giving effect to
the release, is at least equal to the basic maintenance amount; and (2) no event
of default has occurred and is continuing. Main Place currently intends to cause
the trustee to release to Main Place on each servicer remittance date, subject
to the limitations described in the preceding sentence, any portion of the
related available amount deposited in the reserve fund on that date representing
principal and interest payments on the eligible mortgage loans. In addition, as
more fully described above under "-- Distribution Account," the trustee will
withdraw amounts from the reserve fund and deposit those amounts into the
distribution account to the extent amounts on deposit in the distribution
account are insufficient to make required payments of interest and principal on
the bonds on any date.
BASIC MAINTENANCE AMOUNT
The terms of the indenture will require Main Place to maintain eligible
collateral with an aggregate discounted value of at least equal to the basic
maintenance amount, which means that the eligible collateral would have a market
value of (1) as much as [ ]% to [ ]% of the
basic maintenance amount to the extent that the eligible collateral consists of
collateral other than cash; and (2) 100% of the basic maintenance amount if the
eligible collateral consisted solely of cash or specified cash equivalents. The
determination of "MARKET VALUE" is set forth under "Security for the Bonds --
Basic Maintenance Amount" in the prospectus. For purposes of this calculation,
eligible collateral will include amounts on deposit in the collection account,
the distribution account and the reserve fund. In determining the market value
of eligible mortgage loans as to which there is currently a late payment, the
market value will be reduced as follows:
- by [ ]% if the mortgage loan is one installment delinquent;
- by [ ]% if the mortgage loan is two installments delinquent;
- by [ ]% if the mortgage loan is three installments delinquent; and
- by 100% if the mortgage loan is more than three installments delinquent.
S-32
<PAGE> 34
The "BASIC MAINTENANCE AMOUNT" as of each valuation date, or any other date
of valuation, means an amount equal to the sum of: (1) the aggregate principal
amount of outstanding loans plus (2) an amount equal to 90 days' accrued
interest on the outstanding loans at a rate of [ ]% per annum.
The "DISCOUNTED VALUE" of the eligible collateral as of any date will be
calculated as follows:
- multiplying for each rating agency (1) its discount factor for the
applicable type of eligible collateral by (2) the market value of that
eligible collateral; and
- summing the lesser of the discounted amounts so calculated for each
rating agency for each applicable type of eligible collateral.
The ranges of "DISCOUNT FACTORS" required by the rating agencies for some
types of eligible collateral, including the types of eligible mortgage loans
included in the initial collateral, are as follows:
<TABLE>
<CAPTION>
DISCOUNT
FACTORS
--------
<S> <C>
Cash, demand deposits and next business day's repurchase
agreements................................................
Repurchase agreements/other than next business day's
repurchase agreements and other short-term money market
instruments...............................................
Direct obligations of the United States Government.......... (a)
Ginnie Mae Certificates.....................................
Freddie Mac Certificates or Fannie Mae Certificates.........
Eligible fixed-rate Mortgage Loans [specify types]..........
Eligible adjustable-rate Mortgage Loans [specify types].....
Eligible mortgage pass-through certificates that are rated
at least "AAA" by [rating agency] and "AAA" by [rating
agency] which are:
Backed by fixed-rate mortgage loans.......................
Backed by adjustable-rate mortgage loans..................
</TABLE>
- -------------------------
(a) The discount factor applied within the range shown depends upon the
particular rating agency as well as the period to maturity of each
obligation, which varies from 30 days to 30 years.
The indenture requires the trustee to deliver a report containing the
information described below under "-- Reports on Pledged Property" to Main Place
within two business days after each valuation date relating to the status of the
pledged property as of the valuation date using market values determined as of a
date not more than three business days prior to that valuation date (a
"DETERMINATION DATE"). Scheduled reductions in the principal amounts of the
eligible collateral included in the pledged property or possible prepayments or
decreases in the market value of the pledged property may cause the discounted
value of the eligible collateral to be less than the basic maintenance
S-33
<PAGE> 35
amount. In that event, the indenture requires Main Place, no later than the cure
date, to take one of the following actions:
- to deliver additional eligible collateral to the trustee or if eligible
mortgage loans are delivered, to the custodian and/or substitute
eligible collateral; and/or
- to the extent it elects to do so, to repurchase a number of outstanding
bonds so that the trustee can, no later than the cure date, deliver a
new report showing that, as of the date of the report, the discounted
value of the eligible collateral, determined as of the date that the
basic maintenance amount was not met, or, at the option of Main Place,
as of a later date of valuation, but no later than the cure date, is
at least equal to the basic maintenance amount.
If Main Place elects to satisfy its obligation to restore the discounted
value of the eligible collateral to the basic maintenance amount by delivering
mortgage loans to the custodian, the mortgage loans included in the pledged
property after the delivery of those mortgage loans must meet the requirements
relating to the limits on the types and characteristics of those mortgage loans
in order to ensure that all mortgage loans delivered to the custodian are
eligible mortgage loans.
In the event that Main Place is unable by the cure date to cause the
discounted value of the eligible collateral to be at least equal to the basic
maintenance amount by pledging additional eligible collateral or substituting
eligible collateral or repurchasing outstanding bonds to the extent necessary to
cause the discounted value of the eligible collateral to be at least equal to
the basic maintenance amount, then Main Place must redeem bonds no more than 30
days after the cure date, as described above under "-- Redemption."
WITHDRAWALS AND SUBSTITUTIONS OF COLLATERAL
Main Place may, at its option, at any time and from time to time, withdraw
or substitute pledged property if either:
- the discounted value of the eligible collateral, based upon the then most
recent report of the trustee valuing the eligible collateral,
remaining as pledged property following the proposed withdrawal or
substitution, after giving effect to withdrawals from, and
substitutions of, pledged property during the period following such
report, would at least equal the basic maintenance amount as of the
then most recent report of the trustee valuing the eligible
collateral; or
- Main Place causes the trustee to prepare a new report, containing
information as of its date, showing that the discounted value of the
eligible collateral, calculated no more than three business days prior
to
S-34
<PAGE> 36
the date of the report, included in the pledged property following the
proposed withdrawal, and after giving effect to any proposed
substitution, will at least equal the basic maintenance amount as
calculated in the new report.
Pledged property which was not included in the discounted value of the
eligible collateral as of the most recent valuation date may be withdrawn at any
time so long as: (1) the discounted value of the eligible collateral was at
least equal to the basic maintenance amount as of that valuation date; and (2)
no withdrawals of eligible collateral were made after that valuation date.
During the continuance of any event of default, Main Place may not withdraw or
substitute pledged property.
Main Place may pledge additional eligible collateral at any time.
The indenture permits Main Place to consent to some modifications or
waivers with respect to the eligible collateral, including, for example,
assumptions of mortgage notes and related mortgages.
LIQUIDITY
No later than 15 days before the stated maturity, Main Place must either:
(1) pledge deposit securities to the trustee; or (2) make other arrangements
acceptable to each rating agency to deposit cash on the business day preceding
the stated maturity, in each case in an amount sufficient, together with the
amount of cash that will otherwise be available in the distribution account and
the reserve fund on the stated maturity, to pay all of the interest and
principal payable on the bonds on the stated maturity. If, as of the 45th day
preceding the stated maturity, the rating of the long-term unsecured debt of
[BankAmerica Corporation] has fallen below ["BBB" or "Baa2"], then no later than
30 days before the stated maturity, Main Place must pledge deposit securities to
the trustee as described in the preceding sentence. In order to satisfy the
foregoing obligations, Main Place may, for example, sell all or a portion of the
pledged property at fair market value to one or more purchasers which may
include affiliates of Main Place, although no affiliate of Main Place or any
other entity has any obligation to make any purchase of pledged property and
deposit the proceeds of the sale with the trustee.
If Main Place fails to effect any of the options described above within the
prescribed period, then the trustee must immediately liquidate pledged property
in an amount sufficient to pay all of the interest and principal payable on the
bonds on the stated maturity. Upon delivery of the required amount of deposit
securities or cash, the bonds will no longer be deemed to be outstanding, and
the trustee will be obligated to release all other pledged property held by the
trustee from the lien of the indenture.
S-35
<PAGE> 37
In addition, if Main Place elects to deliver deposit securities to the
trustee to provide for payment of the redemption price pursuant to a mandatory
partial redemption of the bonds instead of having the trustee liquidate pledged
property, then, on the cure date on which it is required to notify the trustee
of the redemption, Main Place must deliver deposit securities in the full amount
of the redemption price of the bonds to be redeemed.
Deposit securities delivered in accordance with the preceding paragraphs
must mature prior to the date for which those deposit securities were delivered.
Deposit securities include (1) cash and (2) government securities, other than
agency certificates, provided that these investments must have a remaining term
to maturity of 30 days or less on the date they are delivered to the trustee.
[In addition, in order to maintain liquidity for the payment of interest on
the bonds on each interest payment date, Main Place will enter into a liquidity
agreement, or other liquidity arrangement acceptable to each rating agency, with
[NationsBank, N.A.], which agreement may be replaced from time to time with a
liquidity agreement or other liquidity arrangement from some other bank as may
be acceptable to each rating agency, in the amount of one month's interest on
the bonds at an interest rate on the bonds of [ ]% per annum (the
"LIQUIDITY FACILITY"). This liquidity facility may be drawn upon by the trustee
only if on any servicer remittance date the trustee fails to receive the
available amount from the servicer.]
PURCHASE AND RESALE OF BONDS
Main Place may at any time and from time to time purchase outstanding bonds
on the open market or by private sale. Bonds held by the issuer or its
affiliates [other than NationsBanc Montgomery Securities LLC] will not be deemed
to be outstanding for purposes of determining the basic maintenance amount or
for other purposes under the indenture. The indenture provides that Main Place
will not, and it will not permit any affiliate [other than NationsBanc
Montgomery Securities LLC] to, sell any bonds acquired by Main Place or any
affiliate of Main Place unless the trustee is able to prepare a report dated no
more than five days prior to the date of sale, showing that, after giving effect
to the sale, the discounted value of the eligible collateral, determined at the
option of Main Place, as of the then most recent valuation date or as of any
date subsequent to that date but no later than the date of that report, would
not be less than the basic maintenance amount.
REPORTS ON PLEDGED PROPERTY
Upon issuance of the bonds, Main Place is required to deliver to the
trustee, and, within two business days after each valuation date commencing with
the [date] valuation date, the trustee is required to deliver to Main Place
reports regarding the status of the pledged property which set forth the
S-36
<PAGE> 38
discounted value of the eligible collateral. Copies of these reports will also
be delivered to each rating agency. Main Place may also cause the trustee to
deliver similar reports in connection with the withdrawal or substitution of
pledged property, as described above under "-- Withdrawals and Substitutions of
Collateral."
In preparing these reports, the trustee will use information provided by
the servicer in its semi-monthly reports preceding the related valuation dates
as to the amounts on deposit in the collection account, the aggregate principal
balance of the eligible mortgage loans and the weighted average interest rate,
weighted average maturity and principal balance of specified groups of eligible
mortgage loans. These reports will also contain information obtained from the
servicer concerning the occurrence of late payments with respect to the eligible
mortgage loans. In addition: (1) the report to be delivered by Main Place upon
issuance of the bonds; (2) each report delivered by the trustee in connection
with the withdrawal or substitution of pledged property; and (3) each report
delivered by the trustee in connection with the valuation date following the
pledge by Main Place of additional eligible collateral, other than in connection
with a substitution, will also contain information on specified characteristics
of the mortgage loans, as described in the prospectus under "Security for the
Bonds -- Eligible Mortgage Loans," and the percentages of the mortgage loans
having those characteristics.
Main Place's initial report upon the issuance of the bonds, the trustee's
report delivered in connection with each cure date and some of the trustee's
[monthly] valuation date reports will be accompanied by letters from a firm of
independent accountants selected by Main Place regarding the calculations made
by Main Place and the trustee in the applicable reports. With respect to the
trustee's reports, the accountant's letter will be delivered quarterly,
commencing with the report delivered in connection with the [date] valuation
date, and will relate to one of the trustee's reports delivered during the
three-month period ending on the last day of the preceding month, which report
will be selected at random by the firm of independent accountants.
EXAMPLE OF COLLECTION AND DISTRIBUTION OF PAYMENTS
The following chart sets forth an example of: (1) the application of
collections on the eligible collateral received during a collection period to
the payment of the bonds and other amounts on the following interest payment
date; and (2) a one-month cycle of collateral valuations and reports. Each month
in a three month period will be the same except that the record date, LIBOR
determination date and interest payment date will occur only in [month],
[month], [month] and [month]. For purposes of the following chart, each day
shown is assumed to be a business day.
S-37
<PAGE> 39
[May] [ ]-[May] [ ]..... Collection Period. The servicer receives
scheduled monthly payments, prepayments, and
other payments in respect of the eligible
mortgage loans and deposits them in the
collection account, net of its servicing fee.
The trustee receives payments on all other
eligible collateral and deposits them in the
distribution account.
[June] [ ]............... Determination date for the [June] [ ]
valuation date.
[June] [ ]............... The servicer delivers a report to the trustee
detailing collections on the eligible mortgage
loans during the preceding collection period and
stating the total amount of funds on deposit in
the collection account and the aggregate
principal balance of the eligible mortgage
loans, in each case, as of the end of the
preceding day.
[June] [ ]............... Valuation date. The trustee prepares a valuation
report showing the discounted value of the
eligible collateral as of a date no earlier than
the preceding determination date.
[June] [ ]............... The trustee delivers the valuation report to
Main Place. If the discounted value of the
eligible collateral is less than the basic
maintenance amount as of the [June] [ ]
valuation date, Main Place has until the next
cure date, 10 days following receipt of the
report, to pledge additional eligible collateral
and/or substitute eligible collateral and/or
repurchase bonds so as to make them no longer
outstanding in order to remove the collateral
shortfall.
[June] [ ]............... Cure date. If Main Place has not remedied the
collateral shortfall described above by this
date, the trustee will be required to cause a
partial mandatory redemption of the bonds within
30 days of the cure date in an amount that,
after giving effect to the redemption, makes the
discounted value of the eligible collateral at
least equal to the basic maintenance amount,
unless the collateral value test is met on a
subsequent valuation date and no notice of
redemption has yet been sent to the holders.
[June] [ ]............... Record date for the [June] [ ] interest
payment date.
[June] [ ]............... Servicer remittance date. The servicer remits
the available amount to the trustee. The
trustee: (1) deposits into the distribution
account and the reserve fund, as applicable, the
required portions of the available amount; and
(2) upon request of the issuer and subject to
the limitations discussed above under
"-- Reserve Fund," releases amounts on deposit
in the reserve fund
S-38
<PAGE> 40
to Main Place, free of the lien of the
indenture, if the discounted value of the
eligible collateral as of the most recent
valuation date, after giving effect to the
release, is at least equal to the basic
maintenance amount.
[June] [ ]............... LIBOR determination date. The trustee determines
LIBOR and the applicable interest rate on the
bonds for the next interest period, [June]
[ ]through [September] [ ].
[June] [ ]............... Interest payment date. The trustee distributes
to the holder, DTC, interest payable on the
bonds on this date.
- --------------------------------------------------------------------------------
RATIO OF EARNINGS TO FIXED CHARGES
- --------------------------------------------------------------------------------
Set forth below is the ratio of earnings to fixed charges for Main Place
for the periods indicated. Earnings represent net income plus applicable income
taxes and fixed charges less capitalized interest. Fixed charges consist of
interest expense, capitalized interest, amortization of debt discount and
appropriate issuance costs and one-third, the amount deemed to represent an
appropriate interest factor, of net rent expense under all lease commitments.
For the periods indicated, Main Place's sole fixed charge consisted of interest
expense.
<TABLE>
<CAPTION>
FISCAL YEAR
DECEMBER 31,
----------------------------------------- JUNE 24 THROUGH
1998 1997 1996 1995 DECEMBER 31, 1994(1)
---- ---- ---- ---- --------------------
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges..................
</TABLE>
- -------------------------
(1) Main Place's predecessor, Main Place Funding Corporation, was incorporated
on June 24, 1994.
- --------------------------------------------------------------------------------
ERISA CONSIDERATIONS
- --------------------------------------------------------------------------------
The bonds may be purchased by employee benefit plans or other retirement
arrangements that are subject to the Employee Retirement Income Security Act of
1974, as amended, or individual retirement accounts or annuities (IRAs) that are
subject to the prohibited transaction rules of the federal income tax laws. Upon
acquiring a bond, an employee benefit plan or IRA will be deemed to represent
that an exemption from the prohibited transaction rules will be applicable to
its purchase and holding of that bond.
See "ERISA Considerations" in the prospectus for a discussion of the
potential prohibited transactions relating to the acquisition and holding of a
bond for which exemptive relief is required.
S-39
<PAGE> 41
- --------------------------------------------------------------------------------
UNDERWRITING
- --------------------------------------------------------------------------------
Main Place and the underwriters named below (the "UNDERWRITERS") have
entered into an underwriting agreement ("UNDERWRITING AGREEMENT") under which
the underwriters have agreed to purchase, and Main Place has agreed to sell, the
principal amounts of the bonds set forth opposite their names below.
<TABLE>
<CAPTION>
UNDERWRITER PRINCIPAL AMOUNT
----------- ----------------
<S> <C>
[NationsBanc Montgomery Securities LLC]..................... $
----------
[Other underwriters]........................................
----------
Total..................................................... $
==========
</TABLE>
Subject to the terms of the underwriting agreement, the underwriters have
agreed to purchase all of the bonds offered if any of the bonds are purchased.
The underwriters propose initially to offer the bonds in part to the public
at the price set forth on the cover page of this prospectus supplement and in
part to certain dealers at that price less concessions not in excess of
[ ]% of the principal amount of the bonds. The underwriters may allow, and
those dealers may reallow, concessions not in excess of [ ]% of the
principal amount of the bonds to certain brokers and dealers. After the initial
public offering, the public offering price and other selling terms may be
changed by the underwriters.
[The bonds will be offered simultaneously in the United States and abroad.]
[Each underwriter has represented and agreed that: (1) it has not offered
or sold and will not offer or sell in the United Kingdom any bonds to persons in
the United Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments, as principal or agent,
for the purposes of their businesses or otherwise in circumstances which have
not resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulation 1995 or the
Financial Services Act 1986 (the "FINANCIAL SERVICES ACT"); and (2) it has only
issued or passed on, and will only issue or pass on, in the United Kingdom any
document received by it in connection with the issue of the bonds, other than
any document which consists of or any part of listing particulars, supplementary
listing particulars or any other document required or permitted to be published
by listing rules under Part IV of the Financial Services Act, to a person who is
of a kind described in Article 11(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1996 or is a person to whom the
document may otherwise lawfully be issued or passed on.]
S-40
<PAGE> 42
[The bonds have not been and will not be registered under the Securities
and Exchange Law of Japan (the "SECURITIES AND EXCHANGE LAW") and each
underwriter has agreed and each other purchaser will be required to agree that
it will not offer or sell any bonds, directly or indirectly, in Japan or to, or
for the benefit of, any resident of Japan, which term as used herein means any
person resident in Japan, including any corporation or other entity organized
under the laws of Japan, except pursuant to an exemption from the registration
requirements of, and otherwise in compliance with, the Securities and Exchange
Law and any relevant laws and regulations of Japan.]
Main Place has agreed to indemnify the underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
There currently is no secondary market for this series of bonds. The
underwriters intend to make a secondary market in the bonds, but none of the
underwriters has any obligation to do so. There is no assurance that a secondary
market in the bonds will develop or, if one does develop, that it will continue
until the bonds are paid in full.
[NationsBanc Montgomery Securities LLC] is an affiliate of Main Place and
is a registered broker/dealer. This prospectus supplement and the prospectus may
be used by [NationsBanc Montgomery Securities LLC] in connection with offers and
sales related to market-making transactions in the bonds. [NationsBanc
Montgomery Securities LLC] may act as principal or agent in these transactions.
In connection with the offering, the underwriters and selling group members
and their respective affiliates may engage in transactions that stabilize,
maintain or otherwise affect the market price of the bonds:
- These transactions may include stabilization transactions effected in
accordance with Rule 104 of Regulation M, pursuant to which a person
may bid for or purchase bonds for the purpose of stabilizing their
market price.
- The underwriters may create a short position for the account of the
underwriters by selling more bonds in connection with the offering
than it is committed to purchase from Main Place, and in that case may
purchase bonds in the open market following completion of the offering
to cover all or a portion of the short position. [NationsBanc
Montgomery Securities LLC], on behalf of the underwriters, may impose
"penalty bids" under contractual arrangements with the underwriters
whereby it may reclaim from an underwriter, or dealer participating in
the offering, for the account of the other underwriters, the selling
concessions with respect to the bonds that are distributed in the
offering but subsequently purchased for the account of the
underwriters in the open market.
S-41
<PAGE> 43
- Any of the transactions described above may result in the maintenance of
the price of the bonds at a level above that which might otherwise
prevail in the open market.
- None of the transactions described above is required, and, if they are
undertaken, they may be discontinued at any time.
Main Place estimates that its expenses relating to the issuance and
offering of the bonds will be approximately $[ ].
- --------------------------------------------------------------------------------
LEGAL MATTERS
- --------------------------------------------------------------------------------
The legality of the bonds will be passed upon for Main Place by [Hunton &
Williams, Charlotte, North Carolina] [Cadwalader, Wickersham & Taft, New York,
New York and Charlotte, North Carolina] and for the underwriters by [Hunton &
Williams, Charlotte, North Carolina] [Cadwalader, Wickersham & Taft, New York,
New York and Charlotte, North Carolina]. Certain other legal matters with
respect to the issuance of the bonds will be passed upon by Andrea Goldenberg,
Counsel of BankAmerica Corporation, Charlotte, North Carolina.
- --------------------------------------------------------------------------------
BOND RATINGS
- --------------------------------------------------------------------------------
The bonds will not be issued unless they are rated "[ ]"
by [rating agency] and "[ ]" by [rating agency]. A security
rating is not a recommendation to buy, sell or hold securities and may be
revised or withdrawn at any time by the assigning rating agency.
Main Place has not requested a rating of the bonds by any rating agency
other than the rating agencies specified above. However, another rating agency
could rate the bonds lower than the ratings assigned by the rating agencies
specified above.
S-42
<PAGE> 44
- --------------------------------------------------------------------------------
INDEX OF PROSPECTUS SUPPLEMENT DEFINITIONS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
agency certificates................ S-6
ARM interest adjustment date....... S-20
available amount................... S-28
basic maintenance amount........... S-33
bondholder......................... S-13
closing date....................... S-4
collection period.................. S-28
constant maturity treasury index... S-20
cure date.......................... S-16
cut-off date....................... S-4
deposit securities................. S-5
determination date................. S-33
discount factors................... S-33
discounted value................... S-33
eligible collateral................ S-13
eligible investments............... S-28
eligible mortgage loans............ S-6
Financial Services Act............. S-40
gross margin....................... S-19
holder............................. S-13
indenture.......................... S-13
interest payment date.............. S-4
IRAs............................... S-10
LIBOR.............................. S-4
LIBOR determination date........... S-4
lifetime cap....................... S-19
liquidity facility................. S-36
listing agent...................... A-3
Main Place......................... S-11
market value....................... S-32
outstanding........................ S-13
rating agency...................... S-4
record date........................ S-4
Securities and Exchange Law........ S-41
servicer........................... S-4
servicer remittance date........... S-28
servicers.......................... S-4
stated maturity.................... S-4
trustee............................ S-4
underwriters....................... S-40
underwriting agreement............. S-40
valuation date..................... S-13
</TABLE>
S-43
<PAGE> 45
APPENDIX
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION FOR NON-U.S. PERSONS
- --------------------------------------------------------------------------------
THIS APPENDIX CONTAINS SOME ADDITIONAL LIMITED INFORMATION ABOUT THE
OFFERING OF THE BONDS WHICH IS RELEVANT TO NON-U.S. PERSONS. DETAILED
INFORMATION CONCERNING THE OFFERING IS CONTAINED IN THE PROSPECTUS AND
PROSPECTUS SUPPLEMENT AND PURCHASERS ARE URGED TO READ BOTH THIS APPENDIX AND
THE PROSPECTUS AND PROSPECTUS SUPPLEMENT IN FULL.
The distribution of the prospectus supplement containing this appendix and
the prospectus and the offering of the bonds in some jurisdictions may be
restricted by law. Main Place requires that persons who obtain the prospectus
supplement containing this appendix and the prospectus inform themselves about
and observe these restrictions.
The prospectus supplement containing this appendix and the prospectus do
not constitute an offer to sell or the solicitation of an offer to buy the bonds
in any jurisdiction in which this offer or solicitation is unlawful.
As used in the prospectus supplement containing this appendix and the
prospectus, all references to "dollars" and "$" are to United States dollars.
Sales of the bonds may not be consummated unless the purchaser has received
both the prospectus supplement containing this appendix and the prospectus.
MATTERS RELATED TO THE BONDS
DEFINITIVE BONDS
If definitive bonds are issued, Main Place will appoint a paying and
transfer agent in Luxembourg at whose offices the definitive bonds may be
presented for payment and/or transfer for so long as they are outstanding. The
paying and transfer agent that is expected to be appointed in these
circumstances is the listing agent, whose name and address is set forth at the
end of this appendix. In addition, at the stated maturity of the bonds or
otherwise upon final payment, the definitive bonds may be presented for payment
at the offices of the paying and transfer agent in Luxembourg up to two years
after the stated maturity or final payment. See "Description of the
Bonds -- General" in the prospectus supplement. Pending the issuance of the
definitive bonds, the listing agent will serve as a special agent to act as an
intermediary in Luxembourg between holders of the bonds and Main Place.
A-1
<PAGE> 46
NOTICES
Any notices required to be given to holders under the indenture will be
given to DTC or its nominee, as the registered holder of the bonds, and by
publication in a daily newspaper in Luxembourg, which is expected to be the
Luxemburger Wort. Promptly after the determination of the interest rate on the
bonds applicable to each interest period, and in no event later than the first
day of each interest period, the trustee, as defined in the prospectus
supplement, will give notice of: (1) the interest rate; (2) the related interest
payment date; and (3) the amount of interest payable on the bonds interest
payment date to the listing agent and the Luxembourg Stock Exchange. If
definitive bonds are issued, notices to holders will also be given by mail to
the addresses of these bondholders as they appear in the register maintained by
the trustee. See "Description of the Bonds -- Definitive Bond Registration" in
the prospectus. In addition, Main Place will cause to be published in a daily
newspaper in Luxembourg, as described above: (1) the interest rate on the bonds
applicable to each interest period; and (2) the related interest payment date
and the amount of interest payable on the bonds for the interest payment date.
Any changes of the type described under "Description of the Bonds -- Security
for the Bonds" in the prospectus supplement will be published as set forth above
and made available to the listing agent.
REDEMPTION
The bonds will be subject to mandatory redemption upon notice to the
holders and under the circumstances described in the prospectus supplement under
"Description of the Bonds -- Redemption." In the event that definitive bonds
have been issued and notice of redemption has been given to the holders, the
principal amount, or portion thereof, of the bonds to be redeemed will be due
and payable in Luxembourg on the date fixed for the redemption at the place set
forth in the notice. In the case of any redemption of those definitive bonds in
part, new definitive bonds representing the principal amounts of the bonds that
have not been redeemed will be issued to the holders of the definitive bonds at
the office of the transfer agent in Luxembourg.
TAXATION
For a discussion of the United States federal income tax consequences of
the acquisition of the bonds by foreign investors, including the possible
imposition of withholding taxes, see "United States Federal Income Tax
Consequences" in the prospectus. Foreign holders of the bonds should consult
their tax advisors as to the tax consequences of holding a bond in the
applicable foreign jurisdictions.
A-2
<PAGE> 47
LISTING OF BONDS AND RELATED MATTERS
Application has been made to list the bonds on the Luxembourg Stock
Exchange. Main Place does not intend to list the bonds on any other securities
exchange. Prior to listing, a legal notice relating to the issuance of the
bonds, the limited liability company agreement for Main Place, the indenture and
the underwriting agreement will be deposited with the Chief Registrar of the
District Court of Luxembourg, where the documents may be inspected and copies
thereof obtained upon request.
As long as any of the bonds are outstanding, copies of the limited
liability company agreement for Main Place, the indenture and the underwriting
agreement and copies of the documents referred to under "Available Information"
in the accompanying Prospectus, including the Current Report on Form 8-K to be
filed by Main Place with the Commission shortly after completion of the
offering, will be available at the offices of Kredietbank S.A. Luxembourgeoise
(the "LISTING AGENT") in the City of Luxembourg. In addition, the [year] and
[year] annual financial statements and all future quarterly and annual financial
statements commencing with the [date] statements of [BankAmerica Corporation]
will be available on demand free of charge at the offices of the listing agent
in the City of Luxembourg. Also, upon request the trustee's periodic valuation
date reports, together with any letters from a firm of independent accountants
as described in "The Indenture -- Reports on Pledged Property" in the prospectus
will be made available at the office of the listing agent.
Copies of all documents incorporated by reference in this document will be
available on demand free of charge from the listing agent in Luxembourg.
There has been no material adverse change in the consolidated financial
condition of Main Place since December 31, [year].
Main Place is not a party to any legal proceeding which, if determined
adversely, would materially and adversely affect its condition or operations or
would materially and adversely affect its ability to perform its obligations
under the indenture.
The bonds have been accepted for clearance through Euroclear and Cedel with
a Common Code number of [ ] and an international securities
identification number of US [ ]. The CUSIP number of the bonds
is [ ].
A-3
<PAGE> 48
SUBJECT TO COMPLETION DATED MARCH 22, 1999
PROSPECTUS
MAIN PLACE FUNDING, LLC
ISSUER
MORTGAGE-BACKED BONDS
ISSUABLE IN SERIES
---------------------
<TABLE>
<CAPTION>
<S> <C>
- ------------------------------------
EACH SERIES OF BONDS --
CONSIDER CAREFULLY THE RISK FACTORS
BEGINNING ON PAGE OF THIS - will consist of a single class; and
PROSPECTUS. - will be secured by eligible collateral, such as mortgage
loans, mortgage pass-through certificates and government
The bonds represent limited securities.
recourse obligations of Main Place
and they will not represent EACH BONDHOLDER --
interests in or obligations of any
other entity. They are not insured - will be entitled to payments of interest on the interest
or guaranteed by the government or payment date indicated in the prospectus supplement; and
any other entity. - will be entitled to a return of principal at the stated
maturity of the bonds.
This prospectus may be used to
offer and sell a particular series MAIN PLACE --
of bonds only if accompanied by the
prospectus supplement for that - has the option or may be required to redeem bonds prior
series. to the stated maturity;
- will be required to deliver additional collateral to the
trustee in some circumstances; and
- will be required before stated maturity to deliver cash,
government securities or other instruments to provide
available funds for final payments on the bonds.
- ------------------------------------
</TABLE>
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED THE BONDS OR DETERMINED THAT THIS PROSPECTUS IS ACCURATE
OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------
The date of this Prospectus is March , 1999
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE> 49
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Important Notice About This Prospectus and the Prospectus
Supplement................................................ 4
RISK FACTORS................................................ 5
Limited Liquidity......................................... 5
Limited Recourse Obligation............................... 5
Deficiency on Sale of Collateral.......................... 6
Insolvency Related Matters................................ 6
Book-Entry Registration................................... 7
Year 2000 Compliance...................................... 7
THE ISSUER.................................................. 9
Background................................................ 9
Structure................................................. 9
Business Activities....................................... 10
DESCRIPTION OF THE BONDS.................................... 10
General Information....................................... 10
Registration of the Bonds................................. 11
Book-Entry Registration................................... 11
Definitive Bond Registration.............................. 16
Payment of Principal; Redemption.......................... 17
SECURITY FOR THE BONDS...................................... 19
Eligible Mortgage Loans................................... 20
Manufactured Home Contracts............................... 26
Eligible Mortgage Pass-Through Certificates............... 26
Government Securities..................................... 27
Short-Term Money Market Instruments....................... 29
Basic Maintenance Amount.................................. 30
MORTGAGE LOAN PROGRAMS...................................... 35
Underwriting Standards of NationsBanc Mortgage
Corporation............................................ 35
Underwriting Standards of Bank of America, FSB............ 38
THE INDENTURE............................................... 40
General................................................... 40
Pledge of Eligible Mortgage Loans......................... 40
Withdrawals and Substitutions of Collateral............... 43
Liquidity................................................. 43
Purchase and Resale of the Bonds.......................... 44
Reports on the Pledged Property........................... 45
Payments on the Pledged Property.......................... 45
Modifications of the Indenture............................ 46
Events of Default under the Indenture..................... 48
Authentication and Delivery of Bonds...................... 50
List of Bondholders....................................... 51
Annual Compliance Statement............................... 51
Trustee's Annual Report................................... 51
</TABLE>
2
<PAGE> 50
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Trustee................................................... 52
Satisfaction and Discharge of the Indenture............... 52
SERVICING OF ELIGIBLE MORTGAGE LOANS........................ 53
General................................................... 53
Servicing................................................. 53
Payments on Eligible Mortgage Loans....................... 53
Collection and other Servicing Procedures................. 55
Hazard Insurance.......................................... 57
Private Mortgage Insurance................................ 58
Maintenance of Insurance Policies; Claims thereunder and
other Realization upon Defaulted Eligible Mortgage
Loans.................................................. 58
Servicing Compensation and Payment of Expenses............ 59
Evidence as to Compliance................................. 60
Resignation of the Servicer; Successor Servicer........... 60
Events of Default under the Servicing Agreement........... 61
Rights upon Event of Default.............................. 61
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES............... 62
General................................................... 62
Interest, Discount, and Premium........................... 62
Market Discount........................................... 63
Premium................................................... 64
Sale, Exchange, and Retirement of Bonds................... 64
Backup Withholding........................................ 65
Tax Treatment of Non-U.S. Investors....................... 66
ERISA CONSIDERATIONS........................................ 67
Fiduciary Standards....................................... 68
Prohibited Transaction Rules.............................. 68
Plan Asset Regulations.................................... 69
PLAN OF DISTRIBUTION........................................ 69
USE OF THE PROCEEDS......................................... 70
LEGAL MATTERS............................................... 70
EXPERTS..................................................... 71
LEGAL INVESTMENT............................................ 71
ADDITIONAL INFORMATION...................................... 72
Incorporation of Information by Reference................. 72
Where You Can Find More Information....................... 73
INDEX OF SIGNIFICANT DEFINITIONS............................ 74
</TABLE>
3
<PAGE> 51
IMPORTANT NOTICE ABOUT THIS PROSPECTUS
AND THE PROSPECTUS SUPPLEMENT
Information about the bonds is provided to you in two separate documents
which progressively provide more detail: (a) this prospectus, which provides
general information, some of which may not apply to a particular series of
bonds, including your series; and (b) the accompanying prospectus supplement,
which will describe the specific terms of your bonds, including:
- the aggregate principal amount of the bonds;
- the interest rate of the bonds, or the method of calculating the interest
rate;
- the authorized denominations of the bonds;
- information concerning the property securing the bonds;
- the stated maturity of the bonds;
- the interest payment dates for the bonds; and
- additional information about the plan of distribution of the bonds.
In addition, if a series of bonds is to be offered in whole or in part to
foreign investors, the prospectus supplement will contain information about that
series of bonds relevant to those investors, including any information regarding
the listing of those bonds on a foreign stock exchange.
IF THE TERMS OF A PARTICULAR SERIES OF BONDS VARY BETWEEN THIS PROSPECTUS
AND THE 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. No one has been authorized to provide you with different information.
The bonds are not being offered in any state where the offer is not permitted.
Cross-references are included in this prospectus and the accompanying
prospectus supplement to captions in these materials where you can find
additional information. The table of contents included in this prospectus and
the accompanying prospectus supplement provide the pages on which these captions
are located.
You can find a listing of the pages where terms used in this prospectus are
defined under the caption "Index of Significant Definitions" beginning on page
74 in this prospectus.
Main Place's principal offices are located at 100 North Tryon Street, 23rd
Floor, Charlotte, North Carolina and its phone number is (704) 388-7436.
4
<PAGE> 52
- --------------------------------------------------------------------------------
RISK FACTORS
- --------------------------------------------------------------------------------
Investors should consider, among other things, the following description of
the risks associated with the purchase of the bonds.
LIMITED LIQUIDITY
The liquidity of your bonds may be limited. You should consider that:
- a secondary market for the bonds may not develop, or if it does, it may
not provide you with the liquidity of investment that you want, or it
may not continue for the life of the bonds;
- the prospectus supplement for any series of bonds may indicate that an
underwriter intends to establish a secondary market for the bonds, but
no underwriter will be obligated to do so; and
- unless specified in the applicable prospectus supplement, the bonds will
not be listed on any securities exchange.
LIMITED RECOURSE OBLIGATION
The bonds represent the obligations of Main Place and no one else. If
collateral maintenance requirements are not met for a series of bonds, Main
Place must:
- pledge additional collateral to secure the bonds;
- substitute new collateral for collateral previously pledged; and/or
- repurchase those bonds in order to remedy the shortfall.
If Main Place is unable to pledge additional collateral to the trustee for
the series of the bonds, you may receive mandatory unscheduled redemptions of
principal in an amount sufficient to remedy the collateral shortfall. In
addition, Main Place will be required within a specified number of days prior to
the stated maturity for the series of the bonds to do one of the following:
- to pledge deposit securities to the trustee; or
- to make other arrangements to pay all of the interest and principal
payable on the bonds of that series at their stated maturity in a
manner acceptable to each rating agency that rates the series of
bonds.
Main Place may be unable to take the actions stated above. In that event,
the trustee will be obligated immediately to liquidate the pledged property
securing the series of the bonds and to use the proceeds to pay all of the
interest and principal payable on those bonds at their stated maturity. However,
5
<PAGE> 53
there can be no assurance that the proceeds of that liquidation will be
sufficient to pay all of the interest and principal due on the bonds.
DEFICIENCY ON SALE OF COLLATERAL
In the event of an acceleration of the payment of the bonds following an
event of default for a series, if the assets securing the bonds of the series
were to be sold, there can be no assurance that the proceeds of the sale would
be sufficient to pay in full the outstanding principal amount of the related
bonds and interest payments due on them. The market value of the assets
generally will fluctuate with changes in prevailing rates of interest.
Consequently, the collateral for a series may be liquidated at a discount, in
which case the proceeds of liquidation might be less than the aggregate
outstanding principal amount and interest payable on the bonds of that series.
For more information on the risks identified in this section, see the
sections in the prospectus entitled "Description of the Bonds -- Payment of
Principal; Redemption" and "The Indenture -- Liquidity."
INSOLVENCY RELATED MATTERS
Main Place is a Delaware limited liability company. As such, Main Place is
eligible for bankruptcy relief. However, Main Place has been structured as a
limited purpose entity with the specific intent to reduce its risk of filing for
bankruptcy. If Main Place were to file for bankruptcy, delays and reductions in
payments of principal and interest on the bonds could result.
Unless otherwise specified in the prospectus supplement, the seller of
eligible mortgage loans included in a series will be a national bank. As such,
the FDIC can be appointed as a receiver or conservator for the seller. If the
FDIC is appointed receiver or conservator of the seller, the FDIC's
administrative expenses may have priority over the interests of Main Place and/
or the trustee in the mortgage loans. In addition, the Federal Deposit Insurance
Act, as amended by the Financial Institutions Reform, Recovery and Enforcement
Act of 1989, gives the FDIC some powers in its capacity as a receiver or
conservator of the seller that if exercised could result in delays or reductions
in payments of principal and interest on the bonds.
As receiver or conservator, the FDIC has the power to disaffirm or
repudiate any of the seller's contracts or leases if performing the contracts or
leases would be burdensome and if disaffirming or repudiating them would promote
the orderly administration of the seller's affairs. It is unclear whether the
FDIC can use this power to repudiate the transfer of the mortgage loans to Main
Place and administer the mortgage loans as part of any receivership or
conservatorship of the seller. Any attempt by the FDIC to repudiate the transfer
of the mortgage loans to Main Place in a receivership or conservator-
6
<PAGE> 54
ship of the seller, even if unsuccessful, could result delays or reductions in
payments of principal and interest on the bonds.
The FDIC recently proposed a statement of policy outlining the
circumstances under which the FDIC will not seek to repudiate transfers made as
part of a securitization, such as the transfer of the mortgage loans to Main
Place. Although that statement of policy is not yet final, much of it reiterates
pre-existing law, and substantive changes are not expected. The transfer of the
mortgage loans to Main Place will be structured with the intent to satisfy the
requirements of the statement of policy.
BOOK-ENTRY REGISTRATION
Unless otherwise specified in the prospectus supplement, the bonds will not
be registered in your name after you purchase them. The bonds will be
represented by one or more certificates in the name of Cede & Co. ("CEDE") the
nominee of the Depository Trust Company ("DTC"), unless otherwise specified in
the accompanying prospectus supplement. Thus, you will be able to exercise your
rights of ownership only indirectly through DTC and its participating
organizations.
Similarly, if you are an investor outside the United States, you will be
able to exercise your rights of ownership only indirectly through Cedel Bank,
societe anonyme ("CEDEL") or Euroclear System ("EUROCLEAR") and their
participating organizations. This means your ability to pledge the book-entry
bonds to someone who does not participate in the DTC system, Cedel or the
Euroclear systems as applicable, or to act otherwise with the book-entry bonds,
may be limited because of the lack of an actual certificate in your name.
In addition, if the bonds are book-entry bonds, you may experience a delay
in payment because payments will be forwarded to DTC, and DTC will credit its
participants, which will then credit you either directly or indirectly through
any indirect participant. See "Description of the Bonds -- Book-Entry
Registration."
YEAR 2000 COMPLIANCE
The following is a Year 2000 readiness disclosure within the meaning of the
Year 2000 Information and Readiness Disclosure Act.
SERVICERS
NationsBanc Mortgage Corporation and/or Bank of America, FSB (each, an
"AFFILIATED SERVICER") may act as servicer of eligible mortgage loans
representing pledged property for a series of bonds. Each of the affiliated
servicers and their ultimate corporate parent, BankAmerica Corporation, like all
financial institutions, are faced with the challenge of correctly stating and
7
<PAGE> 55
processing data containing dates from the Year 2000 and beyond, i.e. becoming
Year 2000 ready. Computers programmed with a two-digit field for identifying the
year interpret "98" as "1998," but may interpret "00" as "1900" rather than
"2000." If not remedied, this problem could create system errors and failures
resulting in the disruption of normal business operations. BankAmerica
Corporation has established project teams to address these Year 2000 issues.
The affiliated servicers and their major vendors of mortgage servicing
software are preparing contingency plans which will be implemented, if required
to minimize interruptions to mortgage servicing operations. However, due to the
size and complexity of some systems, some of which are provided by outside
vendors, and the necessity for these systems to interface correctly, both within
and outside the affiliated servicers, there is the possibility that some systems
may not handle date-related data correctly after January 1, 2000. Nevertheless,
based on their efforts and those of their major vendors and the information
available to date, and assuming the continued availability to the affiliated
servicers and to their significant vendors of staff and other technical
resources and no unexpected difficulty in implementing system enhancements, each
affiliated servicer believes that it will not incur significant operational
disruptions to mortgage servicing operations as a result of the Year 2000
problem. Each affiliated servicer has made its mission critical mortgage
servicing systems Year 2000 ready, and expects the mission critical systems
provided by vendors will be Year 2000 ready before January 1, 2000. However, the
affiliated servicers are heavily dependent on their outside vendors and the
systems of third parties. There can be no assurance that the systems of third
parties with which the affiliated servicers deal will be timely converted.
Likewise, the affiliated servicers do not have the same ability to monitor and
control their outside vendors as they have for their internal systems.
If either of the affiliated servicers or any of their vendors or third
party service providers is not Year 2000 ready, that servicer most likely will
not be able to process payments on the mortgage loans on a timely basis or
accurately. These problems could lead to the occurrence of an event of default
under the servicing agreement. See "Servicing of Eligible Mortgage
Loan -- Events of Default under the Servicing Agreement."
TRUSTEE
If the trustee or any of its vendors or third party service providers is
not Year 2000 ready, the trustee may not be able to make timely or accurate
payments to bondholders of a series. Replacement of a trustee could lead to
payment delays on the bonds of a series during any transition period.
With respect to year 2000 issues, DTC has informed members of the financial
community that it has developed and is implementing a program so that its
systems, as they relate to the timely payment of distributions, including
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principal and interest payments, to security holders, book-entry deliveries, and
settlement of trades within DTC, continue to function appropriately on and after
January 1, 2000. 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, its participating
organizations, through which bondholders will hold their bonds, as well as the
computer systems of third party service providers. DTC has informed the
financial community that it is contacting, and will continue to contact, third
party vendors from whom DTC acquires services to: (1) impress upon them the
importance of these services being year 2000 compliant; and (2) determine the
extent of their efforts for year 2000 remediation, and, as appropriate, testing,
of their services. In addition, DTC has stated that it is in the process of
developing these contingency plans as it deems appropriate.
If problems associated with the Year 2000 issue were to occur with respect
to DTC and the services described above, payments to bondholders could be
delayed or otherwise adversely affected.
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THE ISSUER
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BACKGROUND
On December 10, 1998, Main Place changed its name from Main Place Holding,
LLC, to Main Place Funding, LLC. Then, in December 23, 1998, Main Place merged
with Main Place Real Estate Investment Trust, with Main Place Funding, LLC, as
the surviving corporate entity and assuming the obligations of Main Place Real
Estate Investment Trust under various indentures relating to outstanding series
of mortgage-backed bonds.
STRUCTURE
Main Place is a limited liability company organized under the laws of the
State of Delaware. It is an indirect subsidiary of NationsBank, N.A., which
holds a 99% membership interest in Main Place. The other 1% percent interest is
held by Main Place Trust. Main Place Trust is a Delaware business trust.
NationsBank, N.A. is a wholly-owned, indirect subsidiary of BankAmerica
Corporation.
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BUSINESS ACTIVITIES
Main Place will limit its business activities to:
- consolidating the acquisition, holding and management of certain
residential mortgage assets of NationsBank, N.A., and its affiliates;
- issuing and selling the bonds for each series under a separate indenture
and acquiring, owning, holding and pledging the related pledged
property;
- issuing subordinated indebtedness; and
- engaging in other activities which are necessary, suitable or convenient
to carry out the company's business purposes.
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DESCRIPTION OF THE BONDS
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GENERAL INFORMATION
Main Place will issue bonds secured by mortgage loans, mortgage pass-
through certificates, government securities and other collateral.
Main Place will issue the bonds in separate series. Each series of bonds
will be issued under a separate indenture between Main Place and an independent
trustee. All bonds issued will be considered "OUTSTANDING" except for the
following:
- those bonds previously canceled by the trustee;
- those bonds held by Main Place or its affiliates, other than NationsBank
Montgomery Securities LLC; and
- those bonds for which deposit securities have been delivered to the
trustee or other arrangements satisfactory to the rating agencies have
been made.
The bonds of each series will be direct obligations of Main Place. The
prospectus supplement for a series of bonds will tell you:
- when the bonds will mature;
- the interest rate of the bonds or the method of calculating the interest
rate;
- the record date applicable to the series of bonds you purchased;
- how accrued interest on the bonds will be calculated; and
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- if principal payments may be made prior to their stated maturity.
The bonds of a series will be secured by collateral (the "PLEDGED
PROPERTY") of the type permitted under the indenture for that series of bonds
("ELIGIBLE COLLATERAL"). The eligible collateral must have a discounted value
that is sufficient to meet those levels of collateralization required from time
to time under that indenture (the "BASIC MAINTENANCE AMOUNT"). The discounted
value is determined as described under "-- Basic Maintenance Amount."
The trustee will value the collateral at times established in the
prospectus supplement. These values will be based on the market values for the
collateral described under "-- Basic Maintenance Amount" obtained no more than
three business days prior to the date the trustee makes its determination. The
trustee will give valuation reports on the collateral to Main Place on dates
established in the prospectus supplement.
REGISTRATION OF THE BONDS
There are two ways that the bonds may be registered: (1) you may be the
fully registered holder of a bond and hold an actual certificate representing
the bond; or (2) your bond may be represented by a certificate registered in the
name of the nominee of DTC.
The prospectus supplement will tell you:
- how the bonds will be registered;
- the minimum denominations that may be purchased; and
- the integral multiples in excess of the minimum denominations that may be
purchased.
BOOK-ENTRY REGISTRATION
BACKGROUND
Your bonds may be registered by book entry. Bonds of this kind are known as
"BOOK-ENTRY BONDS." In short, book-entry means that you will not be the
registered holder of your bond and you will not actually have a physical bond to
hold in your hands. Instead, if the bonds in a series are book-entry bonds, the
bonds initially will be registered in the name of Cede, the nominee of DTC. If
you are in the United States, you will hold a beneficial interest in your bonds
through DTC, either directly with DTC if you are a participant in DTC, or
indirectly through a broker or other financial intermediary, who either is a
participant in DTC or holds its interest through a participant in DTC.
Alternatively, if you are located in Europe, you may hold a beneficial
interest in your bonds through Cedel or Euroclear. Cedel and Euroclear hold
positions on behalf of their participants through customers' securities accounts
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in Cedel's and Euroclear's names on the books of their depositaries. In turn,
the depositaries hold these positions in customers' securities accounts in the
depositaries' name on the books of DTC. Cedel's depositary is Citibank, N.A.,
known as "CITIBANK," and Euroclear's is Morgan Guaranty Trust Company of New
York, known as "MORGAN GUARANTY."
HOW THE BOOK-ENTRY SYSTEM DIRECTLY APPLIES TO YOU
Under the rules, regulations and procedures creating and affecting DTC and
its operations, DTC is required to make book-entry transfers among participants
on whose behalf it acts with respect to the bonds and is required to receive and
transmit distributions of principal and interest on the bonds. Participants and
indirect participants with which you have accounts for your bonds are also
required to make book-entry transfers and receive and transmit those payments on
behalf of their respective bond owners. Accordingly, although you will not have
a physical certificate representing your bond, you will receive payments and
will be able to transfer your interests in your bond.
Here is some additional information which may help you understand how the
book-entry system applies to you:
- You will receive payments on the bonds indirectly. The trustee will make
payments on the bonds to DTC, who in turn will forward the payments to
its participants, who in turn will forward the payments on to those
who hold interests in the bonds through them.
- Under a book-entry format, you may experience some delay in your receipt
of payments, since the payments will be forwarded by the trustee to
Cede, as nominee for DTC. DTC will forward these payments to its
participants which then will forward them to indirect participants or
you.
- If you are not a participant or indirect participant in this book-entry
system, but desire to purchase, sell or otherwise transfer ownership
of, or other interest in, your bonds you must use a participant or
indirect participant.
- Because DTC can only act on behalf of participants, who in turn act on
behalf of indirect participants and certain banks, your ability to
pledge your bonds to persons or entities that do not participate in
the DTC system, or to take other actions with your bonds, may be
limited due to the lack of a physical certificate for these bonds.
- It is anticipated that only Cede, the nominee of DTC, will actually hold
the bonds which you own. You will not be recognized by the trustee as
the holder, and you will be permitted to exercise the rights of a
holder of the bond only indirectly through the participants, who in
turn will exercise the rights of a holder through DTC.
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TRANSFERS UNDER THE BOOK-ENTRY SYSTEM
Transfers between DTC participants will occur in accordance with DTC rules.
Transfers between Cedel participants and Euroclear participants will occur in
the ordinary way and in accordance with their applicable rules and operating
procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC in the United States, 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 its depository. These cross-market transactions
will require delivery of instructions to the relevant European international
clearing system by the counterparty in the system in accordance with its rules
and procedures and within its established deadlines. The relevant European
international clearing system will, if the transaction meets its settlement
requirements, deliver instructions to its depository 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 depositories.
Because of time-zone differences, credits or securities in Cedel or
Euroclear of a transaction with a DTC participant will be made during the
subsequent securities settlement processing, dated the business day following
the DTC settlement date, and the credits or any transactions in the securities
settled during the processing will be reported to the relevant Cedel participant
or Euroclear participant on that business day. Cash received by Cedel or
Euroclear as a result of sales of securities by or through a Cedel participant
or a Euroclear participant to a DTC participant will be received with value on
the DTC settlement date, but it will not be available in the relevant Cedel or
Euroclear cash account until the business day following settlement in DTC.
THE DEPOSITORY TRUST COMPANY
DTC has the following characteristics:
- it is a limited-purpose trust company organized under the laws of the
State of New York;
- it is a member of the Federal Reserve System;
- it is a "clearing corporation" within the meaning of the New York Uniform
Commercial Code; and
- it is a "clearing agency" registered pursuant to the provisions of
Section 17A of the Securities and Exchange Act of 1934.
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DTC was created to hold securities for its participating organizations and
to facilitate the clearance and settlement of securities transactions between
participants through electronic book-entry changes in the accounts of its
participants. The benefit of this system is that it eliminates the need for
physical movement of certificates. Participants include securities brokers and
dealers who may include the underwriters of the bonds, banks, trust companies
and clearing corporations and may include other organizations. Indirect access
to the DTC system also is available to others as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly by indirect participants.
SOME MORE INFORMATION ABOUT HOW DTC INTENDS TO OPERATE
DTC advised Main Place that it will only take actions on your bonds if:
- the action is permitted by the indenture for your bonds; and
- the holder of your bond who requests the action is a participant who has
an account with DTC for those bonds.
Additionally, DTC advised Main Place that it will take actions in specified
percentages of the bonds only at the direction of, and on behalf of,
participants whose holdings include undivided interests that satisfy the
percentage requirements. DTC may take conflicting actions on other undivided
interests if those actions are also on behalf of participants whose holdings
include undivided interests.
CEDEL
Cedel is incorporated under the laws of Luxembourg as a professional
depository. Cedel holds securities for its participating organizations and
facilitates the clearance and settlement of securities transactions between
Cedel participants through electronic book-entry changes in accounts of Cedel
participants, which eliminates the need for physical movement of certificates.
Transactions may be settled by Cedel in any of 32 currencies, including United
States dollars.
Cedel provides to its Cedel participants, among other things, services for
safekeeping, administration, clearance and settlement of internationally traded
securities and securities lending and borrowing. Cedel works with domestic
markets in several countries. As a professional depository, Cedel is subject to
regulation by the Luxembourg Monetary Institute. Cedel participants are
recognized financial institutions around the world, including underwriters,
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations and may include the underwriters of any series
of the bonds. Indirect access to Cedel is also available to others, such as
banks,
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brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a Cedel participant, either directly or indirectly.
EUROCLEAR
Euroclear was created in 1968 to hold securities for participants of
Euroclear 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 now be
settled in any of 32 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 Morgan Guaranty Trust Company of New York,
Brussels, Belgium office, which functions as the Euroclear operator. The
Euroclear operator is under contract with Euroclear Clearance System, S.C., a
Belgian cooperative corporation. 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.
The Euroclear operator is the Belgian branch of Morgan Guaranty, a New York
banking corporation that 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 Euroclear and applicable Belgian law
(collectively, known as the "terms and conditions"). The terms and conditions
govern transfers of securities and cash within Euroclear, withdrawal of
securities and cash from Euroclear, and receipts of payments with respect to
securities in Euroclear. All securities in Euroclear are held on a fungible
basis without 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.
Euroclear participants include banks, securities brokers and dealers and
other professional financial intermediaries and may include the underwriters of
the bonds. Indirect access to Euroclear is also available to other firms that
clear through or maintain a custodial relationship with a Euroclear participant,
either directly or indirectly.
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SOME MORE INFORMATION ABOUT HOW CEDEL AND EUROCLEAR INTEND TO
OPERATE
Distributions for the bonds 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, as received by its
depository. These distributions will be subject to tax reporting in accordance
with relevant United States tax laws and regulations. See "United States Federal
Income Tax Consequences -- Tax Treatment of Non-U.S. Investors" in this
prospectus.
Cedel or Euroclear will only take actions on your bonds if:
- the action is permitted by the indenture for your bonds;
- these actions are in accordance with its rules and procedures; and
- Cedel or Euroclear is able to make those actions on its behalf through
DTC.
Although DTC, Cedel and Euroclear have agreed to the foregoing procedures
in order to facilitate transfers of the bonds among participants of DTC, Cedel
and Euroclear, they are under no obligation to perform or continue to perform
those procedures and those procedures may be discontinued at any time.
DEFINITIVE BOND REGISTRATION
Your bonds may be registered directly in your name or the name of your
nominee. These bonds will be given to a holder and you will be given a
certificate representing your interest in the bonds. Bonds registered in this
manner are commonly called "DEFINITIVE BONDS." The prospectus supplement will
tell you if your bond is registered as a definitive bond.
Your bond may also become a definitive bond, even though it was issued as a
book-entry bond under the indenture. This may happen only if:
- Main Place advises the trustee in writing that DTC is no longer willing
or able to discharge properly its responsibilities as a depository of
the bonds, and neither Main Place nor the trustee can find a
successor; or
- Main Place, at its option, advises the trustee in writing that it wants
to stop using DTC's book-entry system.
If either of these happens, DTC is required to notify all of its
participants of the availability through DTC of the definitive bonds.
After DTC surrenders the bonds and provides instructions for re-
registration of the bonds, the trustee will issue the bonds as definitive bonds.
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Then the trustee will recognize the holders of the definitive bonds as the
holders of the bonds as described in the indenture for those bonds.
Principal and interest on the bonds will be:
- paid by the trustee directly to the holders of the definitive bonds, as
described in the indenture;
- paid on each interest payment date to the holders in whose name the
definitive bonds were registered at the close of business on the
record date; and
- distributed by a check mailed to the holder at the address in the
register of the trustee, or by wire transfer to the holder's account.
The holder must hold the minimum aggregate principal amount of the bonds
specified in the prospectus supplement.
Final payment on your bond, whether book-entry or definitive, will be made
only if the holder gives your certificate to the person or business that has
been designated to receive it. The trustee will notify the holder not later than
the fifth day of the month of the final payment.
Definitive bonds will be transferable and exchangeable at the offices of
the authenticating agent. Initially, the trustee will be the authenticating
agent. There will not be a service charge for any registration of transfer or
exchange of the definitive bonds, but the authenticating agent may require
payment for taxes or other government required charges.
PAYMENT OF PRINCIPAL; REDEMPTION
GENERAL
The bonds of each series will mature and will be paid at 100% of their
principal amounts plus accrued interest at the stated maturity specified in the
prospectus supplement for that series. Your bonds may be subject to "REDEMPTION"
at the option of Main Place if specified in the prospectus supplement for your
bonds.
WHEN THERE WILL BE MANDATORY PARTIAL REDEMPTION
Your bonds may be subject to mandatory partial redemption. The prospectus
supplement will inform you of the number of days of notice you will receive.
Mandatory partial redemption will take place if:
- on any applicable valuation date, the discounted value of the eligible
collateral is less than the basic maintenance amount;
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- Main Place is unable to "cure" the deficiency in the valuation of the
collateral by providing additional eligible collateral within the
number of days stated in the prospectus supplement; and
- Main Place does not deliver to the trustee, prior to the cure date,
outstanding bonds reacquired by Main Place for cancellation in
principal amounts sufficient to make the discounted value of the
eligible collateral at least equal to the basic maintenance amount.
When the discounted value of the eligible collateral is less than the basic
maintenance amount, Main Place may cure that deficiency by taking the following
actions:
- by pledging and delivering additional eligible collateral; and/or
- substituting eligible collateral.
To be considered cured, the discounted value of the eligible collateral
after these actions are taken must at least be equal to the basic maintenance
amount.
There is an exception to these mandatory redemption requirements. If,
before the holders of the bonds are given notice of redemption, the valuation
report prepared by the trustee provides that the discounted value of the
eligible collateral is at least equal to the basic maintenance amount on the
next valuation date after the cure date, Main Place will not have to undertake
mandatory partial redemption of the bonds.
HOW MANDATORY PARTIAL REDEMPTION WILL TAKE PLACE
The bonds will be redeemed in an aggregate principal amount that is the
smallest principal amount, rounded to the next higher integral multiple of
$1,000, necessary to make the discounted value of the eligible collateral at
least equal to the basic maintenance amount. This calculation will be based on
the valuation date prior to the date the trustee provides notice of redemption
to the bondholders and will take into account:
- Main Place's pledge of additional collateral;
- the delivery to the trustee for cancellation of any bonds repurchased by
Main Place; and
- any redemption of the bonds.
Mandatory partial redemption will be made within the number of days
specified in the prospectus supplement. The redemption price will equal 100% of
the principal amount, or portion thereof, of the bonds to be redeemed. It will
also include accrued interest up to the date of the redemption.
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Any partial redemption may be made on a pro rata basis or by any method
deemed fair and appropriate by the trustee. This alternate method, however,
shall not result in an outstanding bond in a denomination of less than the
minimum permitted denomination of that series of bonds.
After holders of the bonds are given notice of redemption for their series
of bonds, the principal amount of the bonds to be redeemed will be due and
payable on the date for which redemption is set and at the place identified in
the notice. For those bonds to be redeemed, they will cease to bear interest on
the redemption date. In cases where Main Place defaults in the payment of the
redemption price, those bonds will continue to bear interest at their
established rate until paid. The holders of the bonds will only have the right
to receive the redemption price, except that if the bonds are only redeemed in
part, then new bonds representing the principal amounts of those bonds will be
issued to those holders. The holders of the new bonds will continue to have the
right to receive the principal amount remaining and interest payments on that
amount.
If Main Place fails to cure a collateral shortfall by the applicable cure
date, the trustee must liquidate the pledged property to the extent required to
pay the redemption price of the bonds to be redeemed.
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SECURITY FOR THE BONDS
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Main Place will pledge collateral to secure each series of bonds. The
collateral will be described in the prospectus supplement, and may include:
- residential mortgage loans;
- manufactured housing contracts;
- mortgage pass-through certificates;
- government securities, including those issued or guaranteed by Freddie
Mac, Fannie Mae and Ginnie Mae;
- short-term money market instruments; and
- cash.
There are several accounts in which cash can be held as collateral for a
series of bonds. First, if the collateral for a series includes mortgage loans,
then the servicer of the mortgage loans will deposit payments on the mortgage
loans into an account called a "COLLECTION ACCOUNT." Second, the trustee will
establish another account, known as a "DISTRIBUTION ACCOUNT," to hold cash until
it is distributed to the bondholders. Once a month, the servicer will wire money
from the collection account to the distribution account. If a series includes
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collateral other than mortgage loans, payments on that collateral will be
deposited directly into the distribution account. Third, if specified in the
prospectus supplement for a series, the trustee will establish a "RESERVE FUND"
where cash will be held.
Main Place and the trustee can change the types and characteristics of
eligible collateral, the percentage limitations on types of eligible collateral,
the frequency of the valuation dates, the discount factors used in valuing the
eligible collateral, the methodology used in calculating the market value of the
eligible collateral and the definition of basic maintenance amount, without the
consent of bond owners, as long as the changes are permitted by applicable law
and will not impair the rating assigned to the bonds by each of the nationally
recognized statistical rating organizations rating that series, known as "RATING
AGENCIES," as confirmed in writing by the rating agencies. If any of the changes
in the preceding sentence are made before issuing a new series of bonds, they
will be described in the prospectus supplement.
ELIGIBLE MORTGAGE LOANS
Mortgage loans eligible as collateral for a series of bonds ("ELIGIBLE
MORTGAGE LOANS") are loans that are secured by first or second lien mortgages on
real estate. Eligible mortgage loans can include mortgage loans insured by the
FHA ("FHA INSURED MORTGAGE LOANS") or partially guaranteed by the VA ("VA
GUARANTEED MORTGAGE LOANS"). In addition, mortgage loans that are not insured or
guaranteed by FHA or VA, known as "CONVENTIONAL MORTGAGE LOANS," can be included
as collateral for a series of bonds. Eligible mortgage loans will be secured by
one of the following types of property, called "MORTGAGED PROPERTIES":
- one-to four-family residences;
- townhouses;
- condominium units;
- units within planned unit developments; or
- manufactured homes.
Whenever eligible mortgage loans are included in the collateral for a
series of bonds, Main Place will enter into a servicing agreement with an
eligible servicer to provide for the servicing of the mortgage loans. See
"Servicing of Eligible Mortgage Loans" for a description of the servicing
procedures applicable to a series of bonds secured by eligible mortgage loans.
In addition, unless otherwise disclosed in the prospectus supplement, Main Place
will deliver the mortgage notes and other mortgage documents to a custodian,
which will hold the mortgage notes and other documents on behalf of the
bondholders.
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ELIGIBLE FIXED-RATE MORTGAGE LOANS
"ELIGIBLE FIXED-RATE MORTGAGE LOANS" provide that the borrower must make
monthly payments of principal and interest. In most cases, an eligible
fixed-rate mortgage loan requires the borrower to make an equal payment each
month for the term of the mortgage loan, and at the end of the term no further
payments are required. This kind of mortgage loan is known as a "FULLY
AMORTIZING MORTGAGE LOAN." Eligible fixed-rate mortgage notes also may include
balloon mortgage loans. "BALLOON MORTGAGE LOANS" require the borrower to make
monthly payments, generally equal monthly payments, until the end of the term,
and then at the end of the term, the borrower must make a large final payment,
known as the "BALLOON PAYMENT." The monthly payments on many balloon mortgage
loans consist of both principal and interest determined at a rate that would
amortize the mortgage loan over a long period, such as 30 years, but require
full payment of remaining principal at an earlier time, such as five years after
origination. Other balloon mortgage loans require payments only of interest, and
no principal, until the balloon payment is due.
A mortgage loan will generally provide for level monthly installments,
except, in the case of balloon loans, the final payment, consisting of interest
equal to one-twelfth of the interest rate on the mortgage (called the "MORTGAGE
INTEREST RATE") times the unpaid principal balance, with the remainder of the
payment applied to principal. These kinds of loans are known as "ACTUARIAL
MORTGAGE LOANS." No adjustment is made if a payment on an actuarial mortgage
loan is made earlier or later than the due date, although the mortgagor may be
subject to a late payment charge.
If specified in the prospectus supplement, some mortgage loans may be
simple interest mortgage loans. A "SIMPLE INTEREST MORTGAGE LOAN" provides for
the amortization of the amount financed under the mortgage loan over a series of
equal monthly payments, except, in the case of a balloon loan, the final
payment. Each monthly payment consists of an installment of interest that is
calculated on the basis of the outstanding principal balance of the mortgage
loan multiplied by the mortgage interest rate. This product is further
multiplied by a fraction, the numerator of which is the number of days in the
period elapsed since the preceding payment of interest was made and the
denominator of which is the number of days in the annual period for which
interest accrues on the mortgage loan. As payments are received under a simple
interest mortgage loan, the amount received is applied first to interest accrued
to the date of payment and the balance is applied to reduce the unpaid principal
balance. Accordingly, if a borrower pays a fixed monthly installment on a simple
interest mortgage loan before its scheduled due date, the portion of the payment
allocable to interest for the period since the preceding payment was made will
be less than it would have been had the payment been made as scheduled, and the
portion of the payment applied to reduce the unpaid principal balance will be
correspondingly greater. The next scheduled payment,
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however, will result in an allocation of a greater amount to interest if that
payment is made on its scheduled due date. Conversely, if a borrower pays a
fixed monthly installment after its scheduled due date, the portion of the
payment allocable to interest for the period since the preceding payment was
made will be greater than it would have been had the payment been made as
scheduled, and the remaining portion, if any, of the payment applied to reduce
the unpaid principal balance will be correspondingly less. Accordingly, if the
borrower consistently makes scheduled payments after the scheduled due date, the
mortgage loan will amortize more slowly than scheduled. If a mortgage loan is
prepaid, the borrower is required to pay interest only to the date of
prepayment.
ELIGIBLE ADJUSTABLE-RATE MORTGAGE LOANS
"ELIGIBLE ADJUSTABLE-RATE MORTGAGE LOANS" can be actuarial mortgage loans
or simple interest mortgage loans. They bear interest at a rate that adjusts
periodically, but no more frequently than annually. The interest rate is
calculated by adding a percentage, known as a "MARGIN" of between 1% and 5% to
one of the following "INDICES":
(1) the average yields for U.S. Treasury Securities, adjusted to a
constant maturity of one year as published by the Federal Reserve
Board, known as "ONE MONTH TREASURY";
(2) the cost of funds index published by the Eleventh District Federal
Home Loan Bank, known as "COFI";
(3) the London interbank offered rates for Eurodollar deposits of
various maturities, known as "LIBOR";
(4) the prime lending rate of NationsBank, N.A., known as "PRIME"; or
(5) any other index acceptable to the rating agencies.
Eligible adjustable-rate mortgage loans are either fully amortizing
mortgage loans or balloon mortgage loans, and may be convertible into fixed-rate
mortgage loans. Like eligible fixed rate mortgage loans, eligible
adjustable-rate mortgage loans generally have monthly payments due on the first
day of each month, but if they have a different due date that will be specified
in the prospectus supplement.
Some adjustable-rate mortgage loans may have an ultimate maximum limit,
called a "LIFETIME CAP," on the mortgage interest rate, or a minimum limit,
called a "MINIMUM MORTGAGE INTEREST RATE." Other loans can provide for
limitations, known as "PERIODIC CAPS," in the amount the mortgage interest rate
can increase for a single adjustment period. Some loans provide for limits,
known as "PAYMENT CAPS," on the amount that scheduled monthly payments
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can increase. To the extent that the interest rate on a mortgage loan is
adjusted, but the monthly payment on the mortgage loan is subject to a payment
cap, the mortgage loan may accrue interest that the borrower is not required to
pay at the time of accrual. Generally, this excess interest, called "DEFERRED
INTEREST," is added to the principal of the mortgage loan. This is called
"NEGATIVE AMORTIZATION."
If specified in the prospectus supplement, eligible collateral may include
mortgage loans with a fixed mortgage interest rate for an initial period of a
specified number of years, after which the mortgage interest rate adjusts at
one-month, six-month, one-year or other intervals, based on the sum of an index
and a specified margin, just as the mortgage interest rate on an adjustable-rate
mortgage loan adjusts. Changes in the mortgage interest rate result in
corresponding changes to the amount of monthly payments.
OTHER ELIGIBLE MORTGAGE LOANS
If specified in the prospectus supplement, the collateral may include a
mortgage loan subject to a temporary buydown plan, known as a "BUY-DOWN LOAN."
The borrower under a buy-down loan makes monthly payments during the early years
that are less than the scheduled monthly payments on the loans, and the
remaining funds come from another source, such as the originator of the loan. If
specified in the prospectus supplement, the originator will have deposited the
additional funds into a custodial account, known as a "BUY-DOWN FUND," held by
the servicer of the mortgage loan.
Collateral for a series also may include mortgage loans known as "GRADUATED
PAY MORTGAGE LOANS" or "GPMS." These mortgage loans provide for monthly payments
during the first year calculated based on an assumed rate of interest that is
lower than the actual interest rate on the mortgage loan. Unpaid interest is
added to the principal balance of the mortgage loan, resulting in negative
amortization. In later years, the monthly payments are increased to the extent
needed to amortize the mortgage loan in full over the remainder of the term.
"GROWING EQUITY MORTGAGE LOANS" are similar to GPMs, except that the monthly
payments increase over time at a rate that has the effect of amortizing the loan
over a period shorter than the stated term. "TIERED PAYMENT MORTGAGE LOANS" are
GPMs, but the interest not paid by the borrower is paid from a subsidy account,
which generally is established by the builder of the mortgaged property or one
of the borrower's family members at the closing of the mortgage loan.
If specified in the prospectus supplement, collateral may include loans
known as "SUBSIDY LOANS." A subsidy loan permits the borrower to make monthly
payments that are less than the scheduled monthly payments on the mortgage loan.
The borrower's employer pays a "SUBSIDY PAYMENT" equal to the present value of
the difference between the scheduled monthly payments and
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the monthly payments required from the borrower. Generally, the employer makes a
subsidy payment annually, and the servicer deposits the subsidy payment into a
custodial account, known as a "SUBSIDY ACCOUNT." The borrower remains primarily
liable for all scheduled payments on the mortgage loan. If the borrower dies or
leaves his employment, the employer can require the borrower to refinance the
mortgage loan, which would result in a prepayment.
Collateral for a series also may include loans known as "PLEDGED ASSET
MORTGAGE LOANS," if the prospectus supplement specifies. Pledged asset mortgage
loans are secured not only by a lien on a mortgaged property, but also are
secured by additional collateral, such as securities, owned by the borrower, or
are supported by a third-party guarantee, typically the borrower's parent, and
the guarantee is secured by a security interest in collateral, generally
securities, owned by the guarantor. The amount of the additional collateral
generally cannot exceed 30% of the amount of the loan. Generally, the
requirement to maintain the additional collateral terminates when the loan is
paid down to a predetermined amount.
If specified in the prospectus supplement, other types of residential
mortgage loans can be pledged under the indenture to secure the bonds.
LIMITATIONS ON ELIGIBLE MORTGAGE LOANS
To be eligible for a series, a mortgage loan must have an original term to
maturity of no more than 30 years. In addition, at the time the mortgage loan is
pledged as collateral, it must:
(1) have a remaining term to maturity of at least one year;
(2) have an unpaid principal balance of at least $1,000 and no more
than $1,000,000;
(3) have an original loan-to-value ratio not greater than 95%;
(4) be secured by a mortgage that creates a valid first or second lien
on a mortgaged property, is recorded and either is covered by a
title insurance policy or other evidence of title is obtained,
such as an attorney's opinion of title or certificate of title, a
preliminary title report, a title search or a property information
report;
(5) is accompanied by appropriate documents or is otherwise
acceptable, as is more fully described under the heading
"Servicing of Eligible Mortgage Loans -- Pledge of Eligible
Mortgage Loans;"
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(6) is not a mortgage loan as to which any scheduled payment of
principal or interest is 30 days or more contractually delinquent;
and
(7) if it is an FHA insured or VA guaranteed mortgage loan, is secured
by a mortgage on a one- to four-family dwelling.
If specified in the prospectus supplement, eligible mortgage loans with
original loan-to-value ratios in excess of 80% may be insured by private
mortgage insurance covering that portion of the principal amount that exceeds
the amounts specified under Fannie Mae and Freddie Mac guidelines. As is
required by law, however, the private mortgage insurance generally will be
discharged when the principal balance of the mortgage loan is reduced to a
specified level. The issuer of the private mortgage insurance must have a rating
in one of the two highest rating categories from at least one rating agency
rating the applicable series, unless otherwise provided in the related
prospectus supplement.
In addition, in selecting eligible mortgage loans to include as collateral
for a series of bonds, Main Place considers the characteristics of the entire
pool of loans. In doing so, Main Place follows these guidelines:
(1) Main Place uses its best efforts to include mortgage loans with a
geographical dispersion similar to that of the entire portfolio of
mortgage loans of the same type serviced by NationsBanc Mortgage
Corporation and Bank of America, FSB affiliates of Main Place;
(2) Main Place includes at least 100 eligible mortgage loans in the
pool;
(3) Main Place ensures that no more than 15% of all mortgage loans
included in the collateral have unpaid principal balances in
excess of $600,000. These larger mortgage loans are known as "HIGH
BALANCE LOANS";
(4) No more than 25% of all mortgage loans included in the collateral
for a series may be loans with loan-to-value ratios over 80%,
which are known as "OVER 80% LOANS." No more than 10% of all
mortgage loans included in the collateral for a series may have
original loan-to-value ratios over 90%; and
(5) No more than 10% of all mortgage loans included in the collateral
for a series may be "CONDOMINIUM LOANS," which are mortgage loans
secured by condominium units.
Eligible mortgage loans must meet these additional limitations as of the
date the series of bonds are issued and as of any date on which Main Place
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pledges additional eligible mortgage loans to the trustee or withdraws any
eligible mortgage loan from the lien of the indenture for the series.
MANUFACTURED HOME CONTRACTS
Eligible collateral may include manufactured housing conditional sales
contracts and installment sales or loan agreements, secured by manufactured
homes. These "MANUFACTURED HOME CONTRACTS" may be conventional, insured by the
FHA or partially guaranteed by the VA, as specified in the related prospectus
supplement. Each manufactured home contract generally will be fully amortizing
and will bear interest at a fixed rate of interest. Manufactured home contracts
will have individual principal balances at origination of not less than $10,000
and not more than $1,000,000 and original terms to stated maturity of 5 to 40
years, or other individual principal balances at origination and/or original
terms to stated maturity as are specified in the related prospectus supplement.
The "MANUFACTURED HOMES" securing the manufactured home contracts generally
will consist of manufactured homes within the meaning of 42 United States Code,
Section 5402(6), which defines a "manufactured home" as "a structure,
transportable in one or more sections, which in the traveling mode, is eight
body feet or more in width or forty body feet or more in length, or, when
erected on site, is three hundred twenty or more square feet, and which is built
on a permanent chassis and designed to be used as a dwelling with or without a
permanent foundation when connected to the required utilities, and includes the
plumbing, heating, air conditioning, and electrical systems contained in the
structure; except that the term shall include any structure which meets all the
requirements of [this] paragraph except the size requirements and with respect
to which the manufacturer voluntarily files a certification required by the
Secretary of Housing and Urban Development and complies with the standards
established under [this] chapter."
ELIGIBLE MORTGAGE PASS-THROUGH CERTIFICATES
Eligible collateral for a series includes not only mortgage loans, but also
eligible mortgage pass-through certificates. "ELIGIBLE MORTGAGE PASS-THROUGH
CERTIFICATES" are certificates or other instruments that:
(1) evidence an undivided interest in pools of fixed or
adjustable-rate residential mortgage loans; and
(2) have either:
- been rated by each rating agency rating the bonds in a rating
category at least as high as the rating of the bonds; or
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- been rated by one of the rating agencies, and the other rating
agency has consented in writing to including the
certificates in the eligible collateral for the series; or
- been otherwise approved for inclusion in the eligible
collateral by all of the rating agencies rating the bonds,
as confirmed in writing by each of the rating agencies.
In addition, before including a mortgage pass-through certificate in the
eligible collateral for a series, Main Place must obtain a written confirmation
from each rating agency rating the series that including the certificates will
not affect the ratings of the bonds.
Unless otherwise specified in the prospectus supplement, the mortgage note
and other mortgage documents related to the mortgage loans underlying an
eligible mortgage pass-through certificate to be held by a trustee or an
independent custodian. In addition, unless otherwise specified in the prospectus
supplement, the underlying mortgage loans are required to be serviced by a
servicer that is approved by Ginnie Mae, Fannie Mae or Freddie Mac. The servicer
is also required to advance funds in the event of payment delinquencies, which
is known as making an "ADVANCE." A servicer is not required to make advances
unless the servicer reasonably believes that the advance is recoverable from
future collections or recoveries on the mortgage loan.
GOVERNMENT SECURITIES
Government securities are eligible as collateral for the bonds. "GOVERNMENT
SECURITIES" consist of the following:
- direct obligations of the United States, entitled to the full faith and
credit of the United States;
- Freddie Mac certificates;
- Fannie Mae certificates; and
- Ginnie Mae certificates.
Government securities that, by their terms, do not bear interest are not
eligible collateral unless they mature in less than one year.
FREDDIE MAC CERTIFICATES
"FREDDIE MAC CERTIFICATES" are issued by Federal Home Loan Mortgage
Corporation, known as "FREDDIE MAC." Freddie Mac is a publicly held
government-sponsored enterprise created pursuant to Title III of the Emergency
Home Finance Act of 1970. Freddie Mac's statutory mission is to provide
stability in the secondary market for home mortgages, to respond appropriately
to the private capital market and to provide ongoing assistance to
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the home mortgage secondary market and promote nationwide access to residential
mortgage credit by increasing the liquidity of mortgage investments and
improving the distribution of investment capital available for home mortgage
financing. Freddie Mac's principal activity consists of purchasing first lien
residential mortgage loans and participation interests in mortgage loans from
mortgage lending institutions and reselling those loans and participations in
the form of guaranteed mortgage securities.
Each Freddie Mac certificate represents an undivided interest in a pool of
mortgage loans. The mortgage loans may be fixed or adjustable-rate mortgage
loans or participation interests in mortgage loans, including conventional
mortgage loans, FHA insured mortgage loans or VA guaranteed mortgage loans. Most
loans underlying a Freddie Mac certificate are secured by first liens on one-to
four-family residential properties.
Freddie Mac guarantees to each registered holder of a Freddie Mac
certificate the timely payment of interest by each borrower at the rate provided
for by the guarantee, whether the borrower actually makes the payment or not.
Freddie Mac also guarantees to each registered holder of a Freddie Mac
certificate that all principal on the underlying mortgage loans eventually will
be paid through to the registered holders of the Freddie Mac certificate. In the
case of some Freddie Mac certificates, Freddie Mac guarantees the timely payment
of scheduled principal. The Freddie Mac guarantee is an obligation solely of
Freddie Mac. It is not backed by, nor entitled to, the full faith and credit of
the United States. There is currently an active secondary market for Freddie Mac
certificates, but there is no assurance that this market will continue.
FANNIE MAE CERTIFICATES
"FANNIE MAE CERTIFICATES" are mortgage pass-through certificates issued by
Federal National Mortgage Association, known as "FANNIE MAE." Fannie Mae is a
federally chartered and privately owned corporation organized and existing under
the Federal National Mortgage Association Charter Act. Fannie Mae was originally
established in 1938 as a United States government agency and was transformed
into a stockholder-owned and privately managed corporation by legislation
enacted in 1968.
Fannie Mae provides funds to the mortgage market primarily by purchasing
mortgage loans from lenders, thereby replenishing the lenders' funds for
additional lending. Fannie Mae acquires funds to purchase mortgage loans from
many capital market investors. By attracting these investors, who may not
ordinarily invest in mortgages, Fannie Mae expands the total amount of funds
available for housing. Fannie Mae issues mortgage-backed securities primarily in
exchange for pools of mortgage loans from lenders.
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Each Fannie Mae certificate represents an undivided interest in a pool of
mortgage loans, which may consist of FHA insured mortgage loans, VA guaranteed
mortgage loans or conventional mortgage loans. Fannie Mae guarantees the full
and timely payment of scheduled principal and interest at the applicable
certificate rate, and full collection of principal on the mortgage loans in the
pool represented by each Fannie Mae certificate. The obligations of Fannie Mae
under its guarantees are obligations solely of Fannie Mae and are not backed by,
nor entitled to, the full faith and credit of the United States. There is
currently an active secondary market for Fannie Mae certificates, but there is
no assurance that this market will continue.
GINNIE MAE CERTIFICATES
"GINNIE MAE CERTIFICATES" are guaranteed by Government National Mortgage
Association, known as "GINNIE MAE." Ginnie Mae is a wholly-owned corporate
instrumentality of the United States within the Department of Housing and Urban
Development. Section 306(g) of Title III of the National Housing Act of 1934,
authorizes Ginnie Mae to guarantee the timely payments of the principal of, and
interest on, certificates that are based on and backed by a pool of eligible
loans, including FHA-insured and VA-guaranteed mortgage loans.
The full faith and credit of the United States is pledged to the payment of
any amounts owed under a Ginnie Mae guaranty.
Each Ginnie Mae certificate is a "fully-modified pass-through" mortgage-
backed certificate issued and serviced by a mortgage banking company or other
financial concern approved by Ginnie Mae or Fannie Mae as a seller-servicer of
FHA insured or VA guaranteed mortgage loans. Each Ginnie Mae certificate
evidences a proportional undivided interest in a pool of FHA insured or VA
guaranteed mortgage loans secured by single family residences. Ginnie Mae
guarantees the timely payment of principal and interest at the applicable
certificate rate on, and the full collection of the principal of, the mortgage
loans underlying each Ginnie Mae certificate. There is currently an active
secondary market in Ginnie Mae certificates, but there is no assurance that this
market will continue.
SHORT-TERM MONEY MARKET INSTRUMENTS
"SHORT-TERM MONEY MARKET INSTRUMENTS" include cash and any of the following
instruments, but only if the instrument has a remaining term to maturity not in
excess of 90 days from the date on which the instrument is pledged to the
trustee:
(1) demand deposits in, certificates of deposit of, or bankers'
acceptances issued by, any depository institution or trust company
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organized under the laws of the United States or any State and
subject to the supervision of and examination by Federal and/or
State banking or depository institution authorities, so long as
the commercial paper, if any, of the depository institution or
trust company (or, in the case of the principal depository
institution in a holding company system, the commercial paper, if
any, of the holding company) at the time of the investment or
contractual commitment providing for such investment has the
highest commercial paper credit rating from each rating agency (or
which meets the other criteria as will not result in a downgrading
or removal of the rating of the bonds by either rating agency);
(2) repurchase obligations with respect to government securities
entered into either:
- pursuant to a written agreement with an entity that has
received the highest short-term credit rating from each
rating agency, where the trustee has taken delivery of any
such security; or
- with a depository institution or trust company described in
clause (1) above; and
(3) commercial paper rated by each rating agency rating the bonds in
its highest short-term rating category or that meets other
criteria that will not result in a downgrading or removal of the
rating of the bonds by any rating agency.
BASIC MAINTENANCE AMOUNT
The indenture for a series will require Main Place to maintain eligible
collateral with an aggregate discounted value at least equal to the basic
maintenance amount. If the only eligible collateral pledged to secure bonds in a
series were cash, then the amount of cash could equal the basic maintenance
amount. Because the market value of other eligible collateral must be
discounted, eligible collateral other than cash will have a market value
significantly higher than the basic maintenance amount.
The "BASIC MAINTENANCE AMOUNT" as of the date of a valuation means an
amount equal to the sum of:
(1) the aggregate principal amount of the outstanding bonds; plus
(2) an amount equal to interest accrued on the outstanding bonds for
the number of days specified in the prospectus supplement.
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Notwithstanding the foregoing, the basic maintenance amount for a
particular series of bonds may be changed in accordance with the requirements of
the rating agencies rating the series.
Each rating agency for a series of bonds will determine the "DISCOUNT
FACTORS" that it deems appropriate for each type of eligible collateral. The
discount factors will be set forth in the prospectus supplement. The "DISCOUNTED
VALUE" of the eligible collateral for a series will be the sum of the market
values of the eligible collateral multiplied by the applicable discount factors
determined by each rating agency. If more than one rating agency rates a series
of bonds, then those rating agencies might assign different discount factors to
the collateral. In that case, the discounted value will be determined using the
lower discount value.
The "MARKET VALUE" of eligible collateral as of a valuation date is
determined as of a date, called the "DETERMINATION DATE," not more than three
business days, or another number of days if specified in the prospectus
supplement relating to a series, before the relevant valuation date. The market
value of any security or instrument may not exceed the unpaid principal balance
of the security or instrument, and is determined as follows:
(1) The market value of cash, demand deposits, and next business day's
repurchase agreements is equal to the face value of the security
or instrument.
(2) The market value of Freddie Mac certificates, Fannie Mae
certificates, Ginnie Mae certificates and other government
securities, with a remaining term to maturity of more than 90
days, is equal to the product of:
(a) the aggregate principal amount of the mortgage loans
evidenced by each Freddie Mac, Fannie Mae or Ginnie Mae
certificate, as shown in the most recent report received by
the trustee, or the aggregate principal amount of the other
government securities, and
(b) the lower bid price for the same kind of certificate having
as nearly as practicable the same interest rate and
maturity, as quoted to the trustee by two nationally
recognized securities dealers.
If only one bid price is available, then the market value
will equal the aggregate principal amount multiplied by the
bid price. If no bid prices are available, the market value
will equal the aggregate principal amount multiplied by the
bid price that would result in the yield for the same type
of certificate having as nearly as practicable the same
interest rate and maturity, as published on an applicable
determina-
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tion date in The Wall Street Journal or The New York Times.
(3) The market value of a short-term money market instrument (other
than those described in (1) above), or any government security,
other than Fannie Mae, Freddie Mac or Ginnie Mae certificates,
having a remaining term to maturity 90 days or less, is equal to
the face amount of the instrument multiplied by the lower of the
bid prices therefor obtained by the trustee as of the close of
business on the determination date from two nationally recognized
securities dealers making a market in securities of that type.
(4) The market value of eligible mortgage pass-through certificates is
equal to the lesser of:
(a) the outstanding aggregate principal balance of the eligible
mortgage pass-through certificates; and
(b) the outstanding aggregate principal balance of the mortgage
loans underlying the eligible mortgage pass-through
certificates, as shown by the most recent report related to
each such certificate received by the trustee, multiplied
by:
- the lower of the bid prices per dollar of outstanding
principal amount on the determination date for the
eligible mortgage pass-through certificates; the
trustee will seek the bid prices as of the
determination date from two nationally recognized
securities dealers making a market in the mortgage
pass-through certificates;
- if only one bid price for the certificates is available,
the dollar value of that bid price;
- if no bid price for the certificates is available, then
the dollar value of the lower of the bid prices per
dollar of outstanding principal amount for
conventional mortgage pass-through certificates with
comparable pass-through rates and with underlying
mortgage loans of comparable terms, as quoted to the
trustee as of the determination date by two nationally
recognized securities dealers selected by the trustee
and making a market in conventional mortgage
pass-through certificates;
- if only one bid price for comparable certificates is
available, the dollar value of that bid price.
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In the event the trustee cannot obtain bid prices for the certificates or
for comparable certificates, the market value will equal the lesser of:
(1) the outstanding aggregate principal balance of the eligible
mortgage pass through certificates; and
(2) the outstanding aggregate principal balance of the mortgage loans
underlying the eligible mortgage pass-through certificates, as
shown by the most recent report related to each such certificate
received by the trustee before the determination date, multiplied
by the price per dollar of outstanding principal amount that would
result in a yield, computed on the basis of the same prepayment
assumptions then accepted in the market for use in calculating
yields on Ginnie Mae certificates, 0.10% greater than the yield on
the determination date, as published by The Wall Street Journal or
The New York Times, for Ginnie Mae certificates with the same
pass-through rate, or, if there are none with the same, then the
next higher pass-through rate as the eligible mortgage
pass-through certificates.
To determine the market value of eligible mortgage loans, the trustee first
will group the loans according to weighted average interest rate and weighted
average maturity, and other group criteria provided for in the indenture. Then
the trustee will obtain market quotations for each group of eligible mortgage
loans. The market value of the eligible mortgage loans will equal the lower of
the market quotations for the eligible mortgage loans obtained from any two
nationally recognized dealers in mortgage instruments selected by the trustee.
If only one quotation is available, then the market value will equal that
quotation. Market value is determined as of the determination date based upon
unpaid principal balances shown in the most recent report prepared by or for the
trustee. The report must contain information as of a date no more than 30 days
prior to the determination date.
If market quotations are not available, the market value of eligible
mortgage loans will be determined by discounting the remaining scheduled
payments of principal of, and interest on, the eligible mortgage loans. If a
borrower is delinquent in payments on an eligible mortgage loan, its market
value is discounted by an amount, if any, required by each rating agency rating
the series. This amount will be described in the prospectus supplement. The rate
at which the payments are discounted to derive market value is known as the
market value rate. "MARKET VALUE RATE" means:
(1) As to conventional mortgage loans (other than mortgage loans known
as "JUMBO MORTGAGE LOANS" having principal balances at origination
in excess of the applicable maximum amounts established by Fannie
Mae and Freddie Mac for mortgage loan purchases), a rate (rounded
to the nearest one-hundredth of one
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percent) equivalent to the yields at which either Fannie Mae or
Freddie Mac, at the election of the trustee, committed itself to
purchase conventional mortgage loans of the same type for the
shortest available delivery period, determined as of the
determination date; and
(2) As to FHA insured or VA guaranteed mortgage loans, a rate (rounded
to the nearest one-hundredth of one percent) equivalent to the
yields at which Fannie Mae committed itself to purchase FHA
insured and VA guaranteed mortgage loans, as the case may be (or
either, if commitments for both were not made), for the shortest
available delivery period, determined as of the determination
date.
The trustee will find the yields used to determine the market value rate in
The Wall Street Journal or The New York Times or will obtain them directly by
Fannie Mae or Freddie Mac. In each case, the yields will be reduced by any
servicing fee that is included in the gross yield quotations.
In the event that the Fannie Mae and Freddie Mac rates are not available as
of a determination date, then the trustee will make this calculation using a
rate 0.50% greater than the yield Fannie Mae quotes as of the determination date
for a Fannie Mae certificate with the same coupon interest rate as the weighted
average coupon interest rate of the eligible mortgage loans, or, if there are
none with the same, then the next higher coupon interest rate. This alternative
method also will be used with respect to conventional mortgage loans, including
jumbo mortgage loans, in the event that Fannie Mae or Freddie Mac cease to
conduct auctions or post rates with respect to those kinds of mortgage loans,
and with respect to FHA insured or VA guaranteed mortgage loans, in the event
that Fannie Mae ceases to post FHA-VA commitment rates.
Main Place and the trustee may change the definition of basic maintenance
amount, the frequency of valuation dates, the discount factors, or any other
aspect of the method for determining the market value of any item of eligible
collateral without the consent of the holders of the bonds if those changes are
permitted by law and will not impair the rating assigned to the bonds by each
rating agency rating the series, as confirmed in writing by the rating agencies.
To the extent these items are changed before a series of bonds is issued, the
changes will be explained in the prospectus supplement.
The trustee is required to deliver a report containing information about
the market value of the collateral to Main Place within two business days after
each valuation date. The information required to be included in the report is
described in more detail under "The Indenture -- Reports on Pledged Property."
Scheduled reductions in the principal amounts of the eligible collateral or
possible prepayments or decreases in the market value of the
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eligible collateral may cause the discounted value of the eligible collateral to
be less than the basic maintenance amount. In that event, the indenture requires
that Main Place, no later than the cure date, deliver additional eligible
collateral to the trustee or the custodian, substitute eligible collateral, or,
if it elects to do so, repurchase a number of outstanding bonds so that the
trustee can, no later than the cure date, deliver a new report showing that the
discounted value of the eligible collateral, determined as of a date no later
than the cure date is at least equal to the basic maintenance amount. If Main
Place elects to satisfy the foregoing obligation to restore the discounted value
of the eligible collateral to the basic maintenance amount by delivering
mortgage loans to the custodian, the mortgage loans included in the pledged
property after the delivery of the mortgage loans must meet the requirements
relating to the limits on the types and characteristics of those mortgage loans
to ensure that all mortgage loans delivered to the trustee or custodian are
eligible mortgage loans.
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MORTGAGE LOAN PROGRAMS
- --------------------------------------------------------------------------------
As specified in the prospectus supplement, Main Place expects to acquire
mortgage loans that are originated by parties who may or may not be affiliated
with Main Place. The mortgage loans will be underwritten in accordance with the
underwriting guidelines of the originator of the loans. The underwriting
guidelines of two of Main Place's affiliates are described below. To the extent
the underwriting guidelines used to originate mortgage loans included in the
collateral for a series differ from the description below, the underwriting
guidelines used will be summarized in the prospectus supplement.
UNDERWRITING STANDARDS OF NATIONSBANC MORTGAGE CORPORATION
NATIONSBANC MORTGAGE
Main Place may purchase mortgage loans originated or acquired by
NationsBanc Mortgage Corporation ("NATIONSBANC MORTGAGE"). NationsBanc Mortgage
is a wholly-owned subsidiary of NationsBank, N.A., which is an indirect,
wholly-owned subsidiary of BankAmerica Corporation. NationsBanc Mortgage is
primarily engaged in the business of:
(1) originating and purchasing residential mortgage loans in its own
name; and
(2) servicing residential mortgage loans for its own account or for
the account of others.
NationsBanc Mortgage's principal executive offices are located at 201 North
Tryon Street, 14th Floor, Charlotte, North Carolina 28255 and the
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telephone number is (704) 388-4545, and NationsBanc Mortgage's operations
offices are located at 101 East Main Street, Suite 400, Louisville, Kentucky
40202 and the telephone number is (502) 566-5100. NationsBanc Mortgage is
approved by Ginnie Mae, Fannie Mae and Freddie Mac as a seller/servicer.
UNDERWRITING STANDARDS
Each mortgage loan originated or acquired by NationsBanc Mortgage has
satisfied the company's credit, appraisal and underwriting guidelines, which can
be varied when NationsBanc Mortgage deems the variation appropriate. NationsBanc
Mortgage's underwriting guidelines are intended to evaluate the borrower's
credit standing and repayment ability and the value and adequacy of the
mortgaged property as collateral. These underwriting guidelines are applied in a
standard procedure intended to comply with applicable federal and state laws and
regulations.
The underwriting procedure generally includes a set of specific criteria
pursuant to which the underwriting evaluation is made. However, the loan does
not need to satisfy each of the criteria individually. NationsBanc Mortgage will
have considered a mortgage loan to be originated in accordance with a given set
of underwriting guidelines if, based on an overall qualitative evaluation, the
loan is in substantial compliance with the underwriting guidelines. A mortgage
loan may be considered to comply with a set of underwriting standards, even if
one or more specific criteria included in the underwriting standards were not
satisfied, if other factors compensated for those criteria or if for other
reasons the mortgage loan is considered to be in substantial compliance with the
underwriting standards.
Initially, a prospective borrower is required to fill out a detailed
industry standard application designed to provide pertinent credit information.
As part of the description of the prospective borrower's financial condition,
the applicant must provide current information describing assets and liabilities
and a statement of income and expenses. The applicant also authorizes
NationsBanc Mortgage to apply for a credit report summarizing the applicant's
credit history with merchants and lenders and any record of bankruptcy. In most
cases, NationsBanc Mortgage obtains an employment verification in which the
applicant's employer confirms the length of the applicant's employment, the
applicant's current salary and an indication whether the employer expects the
applicant to continue that employment in the future. In the alternative,
NationsBanc Mortgage may verify employment and earnings through analysis of
copies of IRS W-2 federal withholding forms, current payroll earnings statements
and account statements of the applicant. If a prospective borrower is
self-employed, the applicant is required to submit copies of signed tax returns.
The applicant also authorizes deposit verification at all financial institutions
where the applicant has accounts. NationsBank Mortgage may, as part of its
overall evaluation of the applicant's creditworthiness, use a credit scoring
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system or mortgage scoring system to evaluate in a statistical manner the
expected performance of a mortgage loan. These credit scoring systems are based
on the pertinent credit information concerning the applicant provided through
national credit bureaus, other information provided by the applicant and an
assessment of specific mortgage loan characteristics, including loan-to-value
ratio and type of loan product.
NationsBanc Mortgage has employed alternative underwriting guidelines (the
"limited or reduced documentation guidelines") for some qualifying mortgage
loans underwritten by NationsBanc Mortgage through an underwriting program
designed to streamline the loan review process. Some of these reduced loan
documentation programs may not require income, employment or asset
verifications. Generally, in order to be eligible for a reduced loan
documentation program, the mortgaged property must have a loan-to-value ratio
that supports the amount of the mortgage loan and the borrower must have a good
credit history. Eligibility for this type of program may be determined by use of
a credit scoring model.
Once all applicable employment and deposit documentation and the credit
report are received, NationsBanc Mortgage determines whether the prospective
borrower has sufficient monthly income available: (1) to meet the borrower's
monthly obligations on the proposed mortgage loan and other expenses related to
the mortgaged property, such as property taxes, hazard insurance and maintenance
and utility costs; and (2) to meet other financial obligations and monthly
living expenses.
To determine the adequacy of the mortgaged property as collateral, an
independent appraisal is made of each mortgaged property considered for
financing. The appraiser is required to inspect the mortgaged property and
verify that it is in acceptable condition and that construction, if recent, has
been completed. The appraisal is based on the appraiser's estimate of values,
giving appropriate weight to both the market value of comparable housing, as
well as the cost of replacing the mortgaged property.
Certain states where the mortgaged properties securing the mortgage loans
are located are "anti-deficiency" states where, in general, lenders providing
credit on one- to four-family properties must look solely to the property for
repayment in the event of foreclosure. NationsBanc Mortgage's underwriting
guidelines in all states require that the value of the mortgaged property being
financed, as indicated by the independent appraisal, currently supports and is
anticipated to support in the future the outstanding loan balance and provides
sufficient value to mitigate the effects of adverse shifts in real estate
values. There can be no assurance, however, that the value of the mortgaged
property will support the outstanding loan balance in the future.
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UNDERWRITING STANDARDS OF BANK OF AMERICA, FSB
BANK OF AMERICA, FSB
Bank of America, FSB, is a wholly-owned subsidiary of BankAmerica
Corporation. Bank of America, FSB originates and services home loans nationwide
through retail, wholesale, and other specialized channels.
Bank of America, FSB's headquarters are located at 121 SW Morrison Street,
Portland, Oregon, and its administrative offices are located at 555 California
Street, San Francisco, California 94104, and the telephone number is (415)
622-2220. Bank of America, FSB has been approved as a mortgagee and
seller/servicer by the Department of Housing and Urban Development, the VA,
Ginnie Mae, Fannie Mae and Freddie Mac.
UNDERWRITING STANDARDS
Bank of America, FSB, and certain "affiliated sellers" have written, and
are continuously updating, underwriting guides for the origination of one- to
four-family residential first mortgage loans (as modified from time to time, the
"guides"). The underwriting standards as set forth in the guides are
continuously revised based on prevailing conditions in the residential mortgage
market, evolving credit standards of the affiliated sellers and the investment
market for residential mortgage loans. Each mortgage loan originated or acquired
by Bank of America, FSB, has satisfied the underwriting standards set forth in
the guides.
The underwriting standards set forth in the guides are intended to assess
the prospective borrower's ability and willingness to repay the debt and the
adequacy of the property as collateral for the loan requested. Credit policies
of the affiliated sellers require that loan underwriters be satisfied that the
value of the property being financed supports the outstanding loan balance with
sufficient value at loan origination to mitigate the effects of adverse shifts
in real estate values. The emphasis, however, remains on the borrowers' ability
to repay debt.
The real estate lending processes of the affiliated sellers for one- to
four-family mortgage loans follow standard procedures, designed to comply with
federal and state laws. Initially, a prospective borrower is required to
complete a detailed application designed to provide to the underwriter pertinent
information about the prospective borrower, the property to be financed and the
type of loan desired. Information regarding the property to be financed may be
provided by the prospective borrower after the applicable affiliated seller has
approved, subject to review of the property to be financed, a loan to the
prospective borrower. As part of the description of the prospective borrower's
financial condition, the affiliated sellers generally require a description of
assets and liabilities and income and expenses and obtain a credit report that
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summarizes the prospective borrower's credit history with merchants and lenders
and any public records, such as bankruptcy. In most cases, employment
verification is obtained providing current and historical income information.
The affiliated seller often obtains employment verification through an analysis
of the prospective borrower's W-2 forms for the most recent two years and
year-to-date earnings statement or most recent two years' tax returns. In the
alternative, the affiliated seller can obtain this information from the
prospective borrower's employer, who is asked to report the length of employment
and current salary with that organization. Self-employed prospective borrowers
generally are required to submit their federal tax returns for the past two
years, plus year-to-date financial statements if the loan application is made
120 days or longer after the end of the most recent tax year for which a federal
tax return was provided. With respect to some loans, the affiliated seller
telephones the employer to verify employment.
Beginning in April 1994, the affiliated sellers began using an automated
process to assist in making credit decisions on some residential real estate
loans. As part of this process, a prospective borrower's credit history is
assigned a score based on standard criteria designed to predict the possibility
of a default by the prospective borrower on a mortgage loan. An application from
a prospective borrower whose score indicates a high probability of a default
will receive scrutiny from a senior underwriter who may override a decision
based on the credit score. An application from a prospective borrower whose
score indicates a low probability of default is eligible for the affiliated
sellers' rapid processing program (the "RAPID PROCESSING PROGRAM"). Loans in the
rapid processing program are subject to less stringent underwriting guidelines
and documentation standards to verify the information in the application.
With respect to most mortgage loans originated by the affiliated sellers,
once the underwriter considering the loan application receives employment
verification, or confirmation, and the credit report, the underwriter determines
whether the prospective borrower has sufficient monthly income available to meet
the borrower's monthly obligations on the proposed loan and other expenses
related to the residence, as well as to meet other financial obligations and
monthly living expenses. Where there are two individuals co-signing any mortgage
note, the income and payment obligations of both may be included in the
computation.
Prior to final loan approval a prospective borrower generally is expected
to have liquid assets sufficient to cover the down-payment, closing costs and
cash reserves that could be used to pay future housing expenses in a depository
or related account of the borrower. However, the affiliated sellers generally do
not require prospective borrowers to have these liquid assets when they
originate refinance loans.
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An appraisal is made of each property to be financed. The appraisal is
conducted by either a staff appraiser of the applicable affiliated seller, or in
some instances, an independent fee appraiser licensed in the jurisdiction where
the property is located. Generally, as part of the loan origination process, the
appraiser personally visits the property and estimates its market value on the
basis of comparable properties and other factors.
The affiliated sellers generally have not made one- to four-family mortgage
loans having loan-to-value ratios above 80% unless they have obtained or caused
the borrowers to obtain primary mortgage insurance policies.
The mortgaged properties may be located in states where, in general, a
lender providing credit on a single-family property may not seek a deficiency
judgment against the borrower but rather must look solely to the property for
repayment in the event of foreclosure.
The underwriting standards contained in the guides applicable to all states
require that the value of the property being financed, as indicated by the
appraisal, currently supports and is anticipated to support in the future the
outstanding loan balance. There can be no assurance, however, that the value
will support the loan balance in the future.
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THE INDENTURE
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GENERAL
For each series, Main Place will pledge collateral to a trustee under an
"INDENTURE" to secure payments on the bonds issued under that indenture.
The following summaries describe some of the provisions of the indenture.
When particular provisions or terms used in the indenture are referred to, the
actual provisions, including definitions of terms, are incorporated by reference
as part of those summaries.
PLEDGE OF ELIGIBLE MORTGAGE LOANS
Some or all of the bonds will be secured in whole or in part by eligible
mortgage loans. If these types of bonds are issued, Main Place will pledge
eligible mortgage loans, together with all principal and interest received on
the eligible mortgage loans after a specified date, known as the "CUT-OFF DATE,"
for the related series. It will not include principal and interest due on or
before the cut-off date for those bonds. Each eligible mortgage loan included in
the initial pledged property will be identified in a schedule appearing as an
exhibit to the servicing agreement. This exhibit will be amended from time to
time to reflect
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the addition or deletion of eligible mortgage loans. The schedule will include
information as to the principal balance of each eligible mortgage loan, the
address of the property, the interest rate and the maturity of each mortgage
loan.
If specified in the prospectus supplement, Main Place will not be required
to deliver mortgage notes and other loan documents related to a mortgage loan to
the trustee or a document custodian (the "CUSTODIAN") at closing or at any later
time unless there is a trigger event described in the prospectus supplement.
Otherwise, Main Place will be required, as to each eligible mortgage loan,
to deliver to the trustee or the custodian:
- the mortgage note endorsed in blank; and
- an assignment of the related mortgage in blank in a form for recording or
filing as may be appropriate for the state where the mortgaged
property is located.
In lieu of delivering an individual mortgage assignment, Main Place may
instead deliver a blanket assignment by county, which will also be in recordable
form. In addition, Main Place also will deliver to the trustee or the custodian
the original recorded mortgage with evidence of recording or filing indicated on
it, or a copy of the mortgage certified by the recording office in those
jurisdictions where the original is retained by the recording office. In the
event that recorded documents cannot be delivered due to delays in connection
with recording, the indenture permits Main Place to deliver to the trustee
copies of them, certified by Main Place or the servicer to be true and complete
copies of the documents sent for recording. In that event, the indenture
requires Main Place to deliver the original recorded documents to the trustee
promptly upon receipt by Main Place.
For any mortgage that has been recorded in the name of Mortgage Electronic
Registration Systems, Inc. ("MERS"), or its designee, no mortgage assignment in
favor of the trustee will be required to be prepared or delivered. Instead, the
trustee and the applicable servicers will be required to take all actions as are
necessary to cause the trustee to be shown as the owner of the related Mortgage
Loan on the records of MERS for purposes of the system of recording transfers of
beneficial ownership of mortgages maintained by MERS.
The custodian will review the mortgage documents within a specified number
of days of receipt to ascertain that all required documents have been executed
and received and are in proper form on their face. The custodian will hold
mortgage documents for each series of bonds in trust for the benefit of holders
of the bonds for that series. If any document is found by the custodian not to
have been properly executed or received or to be unrelated to the eligible
mortgage loans identified in the servicing agreement, and this defect cannot be
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cured within the permitted time period, Main Place will pledge and deliver
enough additional collateral so that, after the pledge, the discounted value of
the eligible collateral is at least equal to the basic maintenance amount. This
additional collateral may include:
- additional eligible mortgage loans;
- other eligible collateral and/or substitute eligible mortgage loans; or
- other eligible collateral.
Under the indenture for a series of bonds secured in whole or in part by
eligible mortgage loans, the trustee will require that Main Place record the
assignments of the mortgages securing the eligible mortgage loans be pledged to
the trustee when it receives notification that the ratings of NationsBank,
N.A.'s debt obligations have fallen below the rating specified in the prospectus
supplement.
Main Place will use its best efforts to record these assignments at its own
expense promptly following a demand by the trustee. If the assignments are not
recorded after demand by the trustee, the trustee will itself record the
assignments of the mortgages, at the expense of Main Place. Main Place will not
be required to record any assignment prior to its receipt of a demand from the
trustee.
Recordation is not necessary to make the pledge of the eligible mortgage
loans to the trustee effective as between Main Place and the trustee. However,
if Main Place makes a sale, assignment, satisfaction or discharge for any of the
eligible mortgage loans prior to recording the assignments to the trustee, the
other parties to the sales, assignments, satisfactions or discharges might have
rights superior to those of the trustee. If Main Place takes this type of action
without having the authority to do so under the indenture, Main Place will be
liable to the trustee and the holders of those bonds. Moreover, if insolvency
proceedings relating to Main Place are commenced prior to a recording, creditors
of Main Place may be able to assert rights in the affected eligible mortgage
loans superior to those of the trustee.
The indenture for your series of bonds will allow Main Place to grant
modifications or waivers with respect to the eligible collateral, including, for
example, assumption of mortgage loans and related mortgages.
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WITHDRAWALS AND SUBSTITUTIONS OF COLLATERAL
Main Place may, from time to time as it chooses, withdraw or substitute the
pledged property. In order for Main Place to withdraw or substitute the pledged
property, it must either:
(1) Demonstrate that the discounted value of the eligible collateral
of the remaining pledged property after the withdrawal or
substitution would at least equal the basic maintenance amount.
This shall be based on the most recent report of the trustee
valuing the eligible collateral and it will include withdrawals
and substitutions of pledged property which occurred after the
report was made;
or
(2) Main Place has the trustee prepare a new report showing that the
discounted value of the eligible collateral of the pledged
property after the proposed withdrawal or substitution will at
least equal the basic maintenance amount. This calculation of the
discounted value of the eligible collateral will be based on value
no more than three business days, or other number of days as
specified in the prospectus supplement, prior to the date of the
trustee's report.
Pledged property which was not included in the discounted value of the
eligible property as of the most recent valuation date may be withdrawn at any
time:
- so long as the discounted value of the eligible collateral was at least
equal to the basic maintenance amount as of the valuation date; and
- no withdrawals of eligible collateral were made after the valuation date.
During the continuance of any event of default, Main Place may not withdraw
or substitute pledged property. Main Place may pledge additional eligible
collateral at any time.
LIQUIDITY
Main Place will be obligated to pledge deposit securities to the trustee or
make other arrangements acceptable to the rating agencies for the bonds that are
sufficient to pay all interest and principal on the bonds on their stated
maturity. The prospectus supplement for a series of bonds will tell you the
number of days before the stated maturity for those bonds in which Main Place
will be required to make the pledge or other arrangement. The amount of cash
that will be available in the distribution account and the reserve fund on the
stated maturity shall be taken into account with the deposit securities or other
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arrangement in determining that there is a sufficient amount to pay all interest
and principal on the bonds at the stated maturity.
If Main Place does not use any of these options, the trustee will be
obligated immediately to liquidate the "PLEDGED PROPERTY" in an amount
sufficient to pay all of the interest and principal payable on the bonds on the
stated maturity.
When the deposit securities are delivered, or other arrangements completed,
the bonds of that series will no longer be deemed outstanding and the trustee
will be obligated to release all other pledged property held by the trustee
under the lien of the indenture.
In addition, Main Place may choose to deliver deposit securities to the
trustee as payment for the redemption price pursuant to a mandatory partial
redemption of the bonds. Main Place may do this instead of having the trustee
liquidate the pledged property. If Main Place chooses this option, it must:
- notify the trustee on the cure date of the redemption; and
- deliver the deposit securities in the full amount of the redemption price
of the bonds to be redeemed.
Deposit securities delivered in accordance with the preceding paragraphs
must mature prior to the date on which those deposit securities were delivered.
"DEPOSIT SECURITIES" include:
- cash;
- government securities, other than Freddie Mac certificates, Fannie Mae
certificates or Ginnie Mae certificates;
- short-term money market instruments; and
- other instruments specified in the prospectus supplement for the series
of bonds.
PURCHASE AND RESALE OF THE BONDS
Main Place may, from time to time, purchase outstanding bonds of a series
on the open market or by private sale. Bonds held by Main Place or its
affiliates, other than NationsBanc Montgomery Securities LLC, will not be deemed
outstanding for the purposes of determining the basic maintenance amount or for
other purposes under the indenture for that series of bonds.
Under the indenture, Main Place will not, and will not permit its
affiliates, other than NationsBanc Montgomery Securities LLC, to sell any bonds
acquired by Main Place or its affiliates unless the trustee prepares a report
dated no more than five days prior to the sale. This report must also show that
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after the sale, the discounted value of the eligible collateral will not be less
than the basic maintenance amount. The discounted value of the eligible
collateral will be determined at Main Place's option as of the most recent
valuation date or any subsequent date, but no later than the date of the report.
REPORTS ON THE PLEDGED PROPERTY
When the bonds are issued, Main Place will deliver to the trustee reports
as to the pledged property securing the series of bonds. Likewise, the trustee
will deliver to Main Place reports after each valuation date on the pledged
property securing the series of bonds. The reports will include:
- the discounted value of the eligible collateral for the series of bonds;
- information concerning the occurrence of late payments with respect to
the eligible mortgage loans and the mortgage loans underlying the
eligible mortgage pass-through certificates if included in the pledged
property for the series of bonds;
Market values will be determined as of the applicable determination dates.
The reports may also contain information on specified characteristics of
the mortgage loans and the percentages of mortgage loans having those
characteristics.
The first report made after the issuance of the series of bonds and some of
the trustee's periodic valuation date reports on the series of bonds will be
accompanied by letters from a firm of independent accountants regarding the
calculations of Main Place and the trustee. Main Place will select the
accounting firm.
PAYMENTS ON THE PLEDGED PROPERTY
Under the indenture for the bonds, the trustee will be entitled to receive
payments on the pledged property securing the bonds. This will include
prepayments and payments as a result of default, but it will not include
payments on eligible mortgage loans. Payments on eligible mortgage loans will be
made directly to the servicer for deposit in the collection account.
The servicer will not be entitled to payments if an event of default has
occurred and is continuing. In this event, all those payments will be made
directly to the trustee. Payments for other types of pledged property will be
made directly to the trustee for deposit in the distribution account.
Some funds, as described in the prospectus supplement, will be deposited
into the reserve fund for that series of bonds.
If specified in the prospectus supplement for the bonds, the trustee will
remit to Main Place, upon Main Place's request, any excess funds in the
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distribution account and the reserve fund. This remittance will be made after
required payments of interest and principal on the bonds in the series have been
made or provided, so long as the discounted value of the eligible collateral,
after giving effect to the request, will be equal to the basic maintenance
account. This will not occur if an event of default occurred and is continuing.
Some of the funds may be retained in the reserve fund for that series of
bonds to pay some expenses of Main Place, if those expenses are not otherwise
paid by Main Place.
MODIFICATIONS OF THE INDENTURE
The indenture for each series of bonds, including the terms and conditions
of the related bonds, may be modified or amended by Main Place and the trustee
without the consent of the holders of the bonds. The modifications or amendments
may be made for the following purposes:
- evidencing the succession of another entity to Main Place;
- adding to the covenants of Main Place for the benefit of the holders of
the bonds of that series or surrendering any right or power conferred
upon Main Place;
- securing the bonds of the series in any manner which is in addition to
the manner in which the bonds are secured by the indenture and the
pledged property;
- correcting any ambiguity or defective or inconsistent provisions
contained in the indenture or making any other provisions as to
matters or questions arising under the indenture, but these changes
must not adversely affect the interests of the holders of the bonds of
the series in any material respect; or
- modifying, eliminating or adding to the provisions of the indenture as
necessary to continue compliance of the indenture under the Trust
Indenture Act of 1939.
In addition, the indenture may be modified or amended by Main Place and the
trustee, without the consent of the holder of any bond, for the following
reasons:
- to provide for the addition of new types of eligible collateral to the
types of eligible collateral currently allowed under the indenture;
- changing the characteristics of, or percentage limitations applicable to,
some types of eligible collateral;
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- providing for reductions in the discount factors used in valuing the
eligible collateral;
- providing for an increase in the frequency of valuation dates; or
- providing for a change in the definition of basic maintenance amount or
the methodology used in calculating market value if these additions,
changes, reductions or increases are approved of by each rating agency
rating the bonds of series and will not impair the rating then
assigned to those bonds by each of the rating agencies, as confirmed
in writing by the rating agencies.
Modifications and amendments to the indenture relating to a series may also
be made, and future compliance with, or past default under, by Main Place may be
waived, either:
- with the written consent of the holders of at least 66 2/3% in aggregate
principal amount of the bonds of the series at the time outstanding;
or
- by the adoption of a resolution, at a meeting of the holders of the bonds
of the series at which a quorum, as defined below, is present, by at
least 66 2/3% in aggregate principal amount of the outstanding bonds
represented at this meeting.
However, no modification or amendment to the indenture mentioned above may,
without the written consent or the affirmative vote of the holder of each bond
of the series affected:
- change the time of payment of the principal of bond when the principal is
due, whether at stated maturity, upon call for redemption,
acceleration or otherwise;
- change the time of payment of any installment of interest on the bond
when the payment is due, whether on any interest payment date, at the
stated maturity, on any redemption date, upon acceleration of the
principal of the bonds, or otherwise;
- reduce the principal of or interest on the bond;
- make the principal or interest of the bonds payable in any coin or
currency other than that provided in the bonds;
- impair the right to institute suit for the enforcement of any payment as
to the bond;
- permit the creation of any lien, other than the lien of the indenture, on
the pledged property or terminate the lien of the indenture on the
pledged property, except in such cases as permitted by, and pursuant
to, the indenture, or deprive the bonds of the security afforded by
the lien of the indenture and the pledged property;
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- reduce the percentage of the principal amount of the outstanding bonds
necessary to modify or amend the indenture or to waive any future
compliance with it or past default under it; or
- reduce the percentage of votes required for the adoption of a resolution
or the quorum required at any meeting of the holders of the bonds at
which a resolution is adopted or remove the obligation of Main Place
to maintain an office or agency in the place described in the
indenture to make payments on the bonds.
The quorum, at any meeting called to adopt a resolution, will be persons
holding or representing a majority in aggregate principal amount of the
outstanding bonds and, at any reconvened meeting adjourned for lack of a quorum,
25% of the aggregate principal amount.
EVENTS OF DEFAULT UNDER THE INDENTURE
The indenture for the bonds define an event of default. An "EVENT OF
DEFAULT" will be:
(1) failure by Main Place to deliver to the trustee deposit securities
or to make other arrangements satisfactory to the rating agencies
to provide for the payment of the principal and accrued interest
on the bonds, when this principal becomes due and payable at the
stated maturity;
(2) default in the payment of any interest on the bonds when the
interest becomes due and payable, whether on any interest payment
date, at stated maturity, on any redemption date, upon
acceleration of the principal of the bonds, or otherwise and
continuation of this default for a period of five days;
(3) default in the payment of the principal of the bonds when this
principal becomes due and payable, whether at stated maturity,
upon call for redemption, or by acceleration or otherwise;
(4) material breach or inaccuracy of any representation or warranty of
Main Place made in, or pursuant to, the indenture and Main Place
has been given notice of default, or notice has been given to Main
Place and the trustee by the holders of at least 10% in the
aggregate principal amount of the outstanding bonds, which shall
occur if Main Place does not remedy the breach or inaccuracy
within 30 days after it is given notice;
(5) material default in the performance or observance by Main Place of
any other material covenant or condition to be performed or
observed by it in the indenture and continuance of this default
for a period of 30 days after notice to Main Place by the trustee
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or to Main Place and the trustee by the holders of at least 10% in
aggregate principal amount of the outstanding bonds;
(6) the entry of a decree or order by a court having jurisdiction in
the premises adjudging Main Place bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of, or in respect to, Main
Place under any bankruptcy, insolvency or any other applicable
law, or appointing a receiver, liquidator, assignee, trustee,
conservator, sequestrator, or other similar official, of Main
Place or of any substantial part of the Main Place's property, or
ordering the winding up or liquidation of Main Place's affairs,
and the continuance of this decree or order unstayed and in effect
for a period of 60 consecutive days; or
(7) the institution by Main Place of proceedings to be adjudicated
bankrupt or insolvent, or Main Place's consent to the institution
of bankruptcy or insolvency proceedings against it, or the filing
by Main Place of a petition or answer or consent seeking
reorganization or relief under any bankruptcy, insolvency or any
other applicable law or the consent by Main Place to the filing of
this type of petition or to the appointment of a receiver,
liquidator, assignee, trustee, conservator, sequestrator, or other
similar official, of Main Place, or of any substantial part of
Main Place's property, or the making by Main Place of an
assignment for the benefit of creditors, or the admission by Main
Place in writing of its inability to pay its debts generally as
they become due, or the taking of limited liability company action
which furthers those actions.
In the case of an event of default of the type described in clauses (1),
(2) or (3) of the preceding paragraph, the entire principal amount of the bonds
shall automatically become due and payable immediately. If an event of default
of the type described in clauses (4), (5), (6) or (7) of the preceding paragraph
shall have occurred and be continuing, the trustee or the holders of not less
than 25% in aggregate principal amount of the outstanding bonds may declare the
entire principal amount of the bonds to be due and payable immediately.
In realizing upon the pledged property upon the occurrence of an event of
default on a series of bonds, the trustee will be permitted:
- to register and/or record in its name any of the pledged property not yet
registered and/or recorded;
- to sell the pledged property in one lot or several lots as it may be
deemed appropriate; and
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- to exercise otherwise the remedies of a secured party under the Uniform
Commercial Code.
These actions will occur unless an event of default has been annulled or
waived by the holders of at least 66 2/3% in aggregate principal amount of the
outstanding bonds, or such lesser amount as shall have acted at a meeting
pursuant to the provisions of the indenture.
The trustee also will be authorized to institute suits against Main Place
for the collection of all unpaid principal of and interest on the bonds, to
collect the deficiency, if any, after the sale of the pledged property, and to
file proofs of claim in any bankruptcy, insolvency or similar proceedings
involving Main Place. The trustee may also take other appropriate action to
enforce payment of the bonds or to enforce any of the above-described rights or
powers under the indenture, but shall not be required to take any action that
would involve the trustee in personal liability or expense.
In addition, following an acceleration of the bonds of a series arising out
of an event of default, the trustee will be required to use its best efforts to
arrange for the sale of the pledged property and the repayment of the bonds on a
date not later than 15 days, or 30 days if eligible mortgage loans or eligible
mortgage pass-through certificates are included in the eligible collateral,
following the date on which payment of principal of the bonds has been
accelerated.
Under the indenture for the series of bonds, the trustee will have a lien
on the pledged property superior to that of the holders of the bonds. This
superior lien will be used for the payment of all expenses, liabilities and
advances incurred or made by the trustee in connection with the collection or
other realization upon the pledged property upon the occurrence of an event of
default. These expenses, liabilities and advances include reasonable
compensation for any required servicing of eligible mortgages and for
extraordinary time spent by the officers, employees, agents or attorneys of the
trustee directly in connection with the collection or other realization upon the
pledged property because of the event of default.
If, following an event of default on a series of bonds, the proceeds of
liquidation of the related pledged property are not sufficient to pay the entire
amount remaining payable on the bonds of that series, those holders would, as to
the deficiency, be general creditors of Main Place, and upon any liquidation of
Main Place, the holders of those bonds would rank on a parity with the general
creditors of Main Place.
AUTHENTICATION AND DELIVERY OF BONDS
Main Place may deliver, from time to time, bonds executed by it to the
trustee and request that the trustee authenticate those bonds. Upon the receipt
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of the bonds and the request, and subject to Main Place's compliance with the
conditions specified in the indenture, the trustee will authenticate and deliver
the bonds as Main Place may direct.
LIST OF BONDHOLDERS
Three or more bondholders of the bonds of a series, each of whom has owned
a bond of a series for at least six months, may, by written request to the
trustee, obtain access to the list of all bondholders of bonds of the same
series or of all bonds, as specified in the request, maintained by the trustee
for the purpose of communicating with other bondholders with respect to their
rights under the indenture. The trustee may elect not to afford the requesting
bondholders access to the list of bondholders if it agrees to mail the desired
communication or proxy, on behalf and at the expense of the requesting
bondholders, to these bondholders. In addition, if the trustee believes the
mailing would not be in the best interests of bondholders or in violation of
law, the trustee may file an objection with the SEC and the requesting
bondholders. If the SEC overrules the trustee's objections, then the trustee
will mail the communications to the bondholders.
ANNUAL COMPLIANCE STATEMENT
Main Place will be required to file annually with the trustee a written
statement as to fulfillment of its obligations under the indenture.
TRUSTEE'S ANNUAL REPORT
The trustee under present law is required to mail each year to all
registered bondholders of bonds of a series a brief report about any of the
following events that may have occurred within the previous year, but if no
event of this type has occurred, no report is required:
- any change in its eligibility and qualifications to continue as the
trustee under the indenture;
- any amounts advanced by it under the indenture;
- the amount, interest rate and maturity date of indebtedness owing by Main
Place to it in the trustee's individual capacity;
- any change in the property and funds relating to the series physically
held by the trustee;
- any additional issue of bonds of the series not previously reported, any
change in the release or release and substitution of any property
relating to the series subject to the lien of the indenture; and
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- any action taken by it that materially affects the bonds or collateral
and that has not been previously reported. In any event, the trustee
will make this information available to all bondholders on an annual
basis.
TRUSTEE
The trustee of each series of bonds will be specified in the prospectus
supplement. The commercial bank or trust company serving as trustee may have
normal banking relationships with Main Place or any of its affiliates.
The trustee may resign at any time, in which event Main Place will be
obligated to appoint a successor trustee. Main Place may remove the trustee and
appoint a successor trustee if the trustee ceases to be eligible to act as
trustee under the indenture, except in some cases in which a co-trustee is
appointed that is eligible, or if the trustee becomes insolvent or otherwise
incapable of acting with respect to any series of bonds. Main Place may also
remove the trustee and appoint a successor trustee for any series of bonds at
any time provided that Main Place receives confirmation that the appointment of
the successor trustee will not result in the lowering of the rating of that
series of bonds. The trustee with respect to a series of bonds may also be
removed at any time by the holders of a majority in principal amount of the
bonds of that series then outstanding.
Any resignation and removal of the trustee, and the appointment of a
successor trustee, will not become effective until acceptance of this
appointment by the successor trustee. The trustee, and any successor trustee,
each will have a combined capital and surplus of at least $50,000,000, or will
be a member of a bank holding system, the aggregate combined capital and surplus
of which is at least $50,000,000. The trustee's and the successor trustee's
separate capital and surplus must at all times be at least the amount required
by the Trust Indenture Act of 1939. Moreover, the trustee and the successor
trustee will be subject to supervision or examination by federal or state
authorities and will have an office in the United States.
SATISFACTION AND DISCHARGE OF THE INDENTURE
The indenture will be discharged as a series upon the cancellation of all
of the bonds and that series or, with some limitations, upon deposit with the
trustee of funds sufficient for the payment or redemption thereof.
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SERVICING OF ELIGIBLE MORTGAGE LOANS
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GENERAL
For each series of bonds for which the pledged property includes eligible
mortgage loans, Main Place will enter into a servicing agreement with a
servicer, which may be an affiliate of Main Place. The servicer will be
responsible for servicing and administering the eligible mortgage loans pursuant
to the servicing agreement. Main Place's rights under the servicing agreement
for a series of bonds will be pledged to the trustee as additional security for
the those bonds. The servicer will be paid a servicing fee.
The servicer may enter into a subservicing agreement with a subservicer to
perform various servicing functions for the servicer. The subservicer will be an
independent contractor and will be subject to the supervision of the servicer. A
subservicing agreement will not contain any terms or conditions that are
inconsistent with the servicing agreement and will be approved by Main Place.
The subservicer will receive a fee for its services and the fee will be paid by
the servicer out of the fee paid to the servicer. The servicer will have the
right to remove the subservicer of any eligible mortgage loan at any time for
cause and at any other time upon the giving of the required notice and the
payment of any required fee. If this happens, the servicer will continue to be
responsible for servicing the eligible mortgage loan and will designate a
replacement subservicer, which may include an affiliate of Main Place or the
servicer.
SERVICING
The servicer will perform diligently all services and duties customary by
prudent mortgage lending institutions to the servicing of mortgages of the same
type as the eligible mortgage loans in those jurisdictions where the related
mortgaged properties are located. The servicer may perform these duties directly
or, pursuant to subservicing contracts, through subservicers. The servicer will
monitor each subservicer's performance and will have the right to remove a
subservicer at any time if it considers this removal to be in the best interest
of holders. The duties of the servicer include collection and remittance of
principal and interest payments received, administration of mortgage escrow
accounts, collection of insurance claims and, if necessary, foreclosure. Unless
otherwise specified in the prospectus supplement relating to a series of bonds,
the servicer will not be obligated to make any advances with respect to
delinquent payments on eligible mortgage loans.
PAYMENTS ON ELIGIBLE MORTGAGE LOANS
Pursuant to the servicing agreement relating to a series of bonds, the
servicer will establish and maintain a collection account in the name of the
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trustee for the benefit of the holders. The servicer will remit directly to the
collection account for the related series of bonds payments on the related
eligible mortgage loans as they are received. The collection account may be
maintained as an interest-bearing account, or the funds held may be invested
from time to time in eligible investments, as defined in the related prospectus
supplement. The servicer or its designee will be entitled to receive any such
interest or other income earned on funds in the collection account as additional
compensation and will be obligated to deposit in or credit to the collection
account the amount of any loss immediately as realized.
The collection account for a series of bonds must be maintained as a trust
account or with a depository institution. This depository institution may be an
affiliate of the servicer or Main Place, but its short-term debt obligations
must be rated in at least as one of the two highest rating categories by each
rating agency. In particular, if NationsBank, N.A. or an affiliate is the
servicer for the series of bonds, the account may be a money market savings
account maintained with NationsBank, N.A., or an affiliated bank. In addition,
the collection account shall not be required to be invested in eligible
investments and may be a commingled account containing other servicer funds so
long as NationsBank, N.A. or an affiliate is servicer and BankAmerica
Corporation or other party has (1) a rating acceptable to each rating agency
rating the bonds and (2) guarantees the performance by the servicer to make the
required remittances from the collection account to the distribution account.
The servicer will deposit in the collection account payments and
collections its received and credit payments and collections received on its
behalf. The credits and deposits will be made on a daily basis, to the extent
applicable, and after the date of the pledge to the trustee for the related
series of bonds, other than payments due on or before the date of the pledge.
The payments and collections will include:
- all payments on account of principal and interest received by the
servicer on the eligible mortgage loans, which, at its option, may be
net of the servicing fee, including principal prepayments, in whole or
in part;
- all amounts received by foreclosure or otherwise in connection with the
liquidation of defaulted eligible mortgage loans, net of expenses
incurred in connection with the liquidation;
- all proceeds received under any private mortgage insurance policy or
title, hazard or other insurance policy covering any eligible mortgage
loan, other than proceeds to be applied to the restoration or repair
of the related mortgaged property;
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- any amounts required to be deposited or credited by the servicer in
connection with losses realized on investments for the benefit of the
servicer of the funds held in the collection account; and
- all other amounts required to be deposited in or credited to the
collection account under the servicing agreement.
Under the servicing agreement for each series of bonds, the servicer will
be authorized to make withdrawals from the collection account:
- to reimburse the servicer from related insurance or liquidation proceeds
for amounts expended by the servicer in connection with the
restoration of property damaged by an uninsured cause or the
liquidation of an eligible mortgage loan;
- to pay to the servicer its servicing fee from interest payments received,
if not previously retained, and any earnings from the investment of
funds in the collection account in eligible investments, as defined in
the related prospectus supplement;
- to pay any expenses which were incurred and are reimbursable pursuant to
the servicing agreement;
- to pay to the servicer any amounts deposited in or credited to the
collection account in error or any amounts for which a mortgagor's
check has been returned and not honored by the mortgagor's bank for
any reason;
- to remit funds to the trustee for deposit into the applicable
distribution account or reserve fund;
- to clear and terminate the collection account upon the stated maturity of
the related series of bonds; and
- for other purposes as provided in the servicing agreement.
COLLECTION AND OTHER SERVICING PROCEDURES
The servicer will collect with diligence all required payments under the
eligible mortgage loans securing the series of bonds. To do this, the servicer
may, in its discretion:
- waive any prepayment charge, assumption fee, late payment charge or any
other charge in connection with the prepayment of an eligible mortgage
loan; and
- arrange with a mortgagor a plan of relief, including a modification or
extension of the mortgage loan, when appropriate, rather than
recommending liquidation.
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In addition, the servicer may permit the modification of an eligible
mortgage loan for the loan which the mortgagor has indicated its desire to
refinance, but the mortgage loan must continue to be an eligible mortgage loan
following the modification. Any arrangement of this kind will be made only upon
determining that the coverage of the eligible mortgage loan by any private
mortgage insurance policy will not be affected.
Under the servicing agreement for a series of bonds, the servicer will be
required to enforce "due-on-sale" clauses for the eligible mortgage loans to the
extent contemplated by the terms of the eligible mortgage loans and permitted by
applicable law. Where an assumption of, or substitution of liability to, an
eligible mortgage loan is required by law, the servicer may permit the
assumption of an eligible mortgage loan. If an assumption is to be allowed:
- the mortgagor will remain liable on the mortgage loan, or a substitution
of liability of the eligible mortgage loan; and
- the new mortgagor will be substituted for the original mortgagor as being
liable on the mortgage loan.
Before allowing assumption, the servicer must receive assurance that the
private mortgage insurance policy covering the eligible mortgage loan will not
be affected.
The servicing agreement may require the servicer to establish and maintain
one or more escrow accounts to receive mortgagors' deposit amounts sufficient to
pay taxes, assessments, hazard insurance premiums or comparable items.
Withdrawals from the mortgagors' escrow accounts may, among other things, be
made:
- to make timely payment of taxes, assessments and hazard insurance
premiums or comparable items;
- to reimburse the servicer out of related assessments for maintaining
hazard insurance;
- to refund to mortgagors amounts determined to be overages;
- to remit to mortgagors, if required, interest earned, if any, on balances
in any of the escrow accounts; and/or
- to repair or otherwise protect the mortgaged property and to clear and
terminate any of the escrow accounts.
The servicer will be solely responsible for administration of the escrow
accounts and will be expected to make advances to such accounts when a
deficiency exists.
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HAZARD INSURANCE
Under the servicing agreement for a series of bonds, unless otherwise
provided in the prospectus supplement for that series, the servicer will be
required to maintain for each eligible mortgage loan a hazard insurance policy
providing coverage against loss by fire and other hazards which are covered
under the standard extended coverage endorsement customary in the state in which
the mortgaged property is located. The coverage will be in an amount at least
equal to the lesser of the outstanding principal balance of the eligible
mortgage loan or the replacement cost of the related mortgaged property.
As set forth above, all amounts collected by the servicer under any hazard
policy will be deposited in the collection account, except for amounts to be
applied to the restoration or repair of the mortgaged property or released to
the mortgagor in accordance with the servicer's normal servicing procedures.
In the event that the servicer maintains a blanket policy insuring against
hazard losses for those eligible mortgage loans, it shall conclusively be deemed
to have satisfied its obligation relating to the maintenance of hazard
insurance. The servicer is required to maintain a fidelity bond and errors and
omissions policy, or their equivalent, with respect to officers and employees.
This bond or policy must provide coverage against losses which may be sustained
as a result of an officer's or employee's misappropriation of funds or errors
and omissions in failing to maintain insurance. The bond or policy will be
subject to limitations as to amount of coverage, deductible amounts, conditions,
exclusions and exceptions in the form and amount specified in the servicing
agreement.
In general, the standard form of fire and extended coverage policy covers
physical damage to or destruction of the improvements on the property by fire,
lightning, explosion, smoke, windstorm and hail, and riot, strike and civil
commotion, subject to the conditions and exclusions particularized in each
policy. Because policies relating to the eligible mortgage loans will be
underwritten by different insurers, under different state laws, in accordance
with different applicable state forms and laws, they will not contain identical
terms and conditions. But most policies typically do not cover, among other
things, any physical damage resulting from the following: war, revolution,
governmental actions, floods and other water-related causes, earth movement,
including earthquakes, landslides and mud flows, nuclear reactions, wet or dry
rot, vermin, rodents, insects or domestic animals, theft and, in some cases,
vandalism.
If, however, any mortgaged property is located in an area identified by the
Federal Emergency Management Agency as having special flood hazards and flood
insurance has been made available, then the servicer will maintain a flood
insurance policy with a generally acceptable insurance carrier. This policy will
meet the requirements of the current guidelines of the Federal Insurance
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Administration. The flood insurance policy will provide coverage in an amount
not less than the least of:
- the unpaid principal balance of the eligible mortgage note;
- the insurable value of the mortgaged property; or
- the maximum amount of insurance available under the Flood Disaster
Protection Act of 1973, as amended.
The hazard insurance policies covering the mortgaged properties typically
contain a clause which, in effect, requires the insured at all times to carry
insurance of a specified percentage, generally 80% to 90%, of the full
replacement value of the improvements on the property in order to recover the
full amount of any partial loss. If the insured's coverage falls below this
specified percentage, that clause provides that the insurer's liability in the
event of partial loss does not exceed the larger of: (1) the replacement cost of
the improvements less physical depreciation; or (2) the proportion of the loss
as the amount of insurance carried bears to the specified percentage of the full
replacement cost of these improvements. To the extent residential properties
appreciate in value over time, in the event of partial loss, hazard insurance
proceeds may be insufficient to restore fully the damaged property.
PRIVATE MORTGAGE INSURANCE
To the extent specified by the prospectus supplement for a series, an
eligible mortgage loan secured by a mortgaged property having an original loan-
to-value ratio in excess of 80% must have a private mortgage insurance policy.
This policy must insure against default of all, or a specified portion, of the
principal amount which is in excess of a percentage of the appraised value of
the mortgaged property as specified under Fannie Mae and Freddie Mac guidelines.
If applicable, evidence of each private mortgage insurance policy will be
provided to the trustee simultaneously with the pledge to the trustee of the
related eligible mortgage loan.
MAINTENANCE OF INSURANCE POLICIES; CLAIMS THEREUNDER AND OTHER REALIZATION UPON
DEFAULTED ELIGIBLE MORTGAGE LOANS
The servicer will exercise its best reasonable efforts to keep each private
mortgage insurance policy, if any, in full force and effect at least until the
outstanding principal balance of the related mortgage loan is equal to the
percentage of the appraised value of the mortgaged property specified in the
prospectus supplement. The servicer has agreed or will agree to pay the premium
for each private mortgage insurance policy on a timely basis in the event that
the mortgagor does not make these payments.
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The servicer, on behalf of the trustee and the holders, will present claims
to the insurer under an applicable private mortgage insurance policy and will
take reasonable steps necessary to permit recovery under the insurance policy
for the defaulted eligible mortgage loans. All collections by the servicer under
the policies that are not applied to the restoration of the related mortgaged
property are to be deposited in the collection account subject to withdrawals as
described in the servicing agreement for each series of bonds.
If any property securing a defaulted eligible mortgage loan is damaged and
the proceeds, if any, from the hazard insurance policy are insufficient to
restore the damaged property to a condition sufficient to permit recovery under
any applicable private mortgage insurance policy, the servicer will not be
required to expend its own funds to restore the damaged property unless the
servicer determines:
(1) that the restoration will increase the proceeds to holders upon
liquidation of the eligible mortgage loan after reimbursement of
the servicer for its expenses; and
(2) that the expenses will be recoverable to it through liquidation
proceeds.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The servicer's primary compensation for its activities as servicer will
come from the payment to it, with respect to each interest payment on an
eligible mortgage loan, of an amount equal to the servicing fee. As principal
payments are made on the eligible mortgage loans, the portion of each monthly
payment which represents interest will decline, and, as a result, servicing
compensation to the servicer will decrease as the eligible mortgage loans
amortize. Prepayments and liquidations of eligible mortgage loans prior to
maturity will also cause servicing compensation to the servicer to decrease.
In addition, the servicer will be entitled to retain late payment charges
and other fees and expenses related to loan assumptions, delinquencies,
modifications, partial releases of security and releases for payment in full, if
any, to the extent collected from mortgagors and investment income earned on
funds in the collection account.
The servicer will pay all expenses incurred in connection with its
activities as servicer, subject to limited reimbursement as described above,
including payment of expenses incurred in connection with distributions and
reports to the trustee for each series of bonds.
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EVIDENCE AS TO COMPLIANCE
The servicing agreement relating to a series of bonds secured in whole or
in part by eligible mortgage loans will provide that the servicer, at its
expense, will have a firm of independent public accountants furnish a report
annually to the trustee. The report will state that the firm has examined
certain documents relating to the servicing of the eligible mortgage loans and
that this review has disclosed no items of material noncompliance with the
provisions of the servicing agreement, except for the items of material
noncompliance as will be described in the report.
The trustee will provide an annual statement, signed by an officer of the
servicer, stating the servicer has fulfilled its obligations under the servicing
agreement throughout the preceding year.
RESIGNATION OF THE SERVICER; SUCCESSOR SERVICER
The servicer may not resign from its obligations and duties as servicer,
except upon:
(1) the appointment of a successor servicer and receipt by the trustee
of a letter from each rating agency that the resignation and
appointment will not result in the withdrawal, qualification or
downgrading of the ratings not assigned to the bonds for that
series; or
(2) the determination that its duties thereunder are no longer
permissible under applicable law and this incapacity cannot be
cured by the servicer.
No resignation under (2) above will become effective until the trustee or a
successor has assumed the servicer's obligations and duties under the servicing
agreement.
An entity which executes an agreement to assume and to perform every
obligation of the servicer will be the successor to the servicer under the
servicing agreement. The entity may be one:
- into which the servicer may be merged or consolidated;
- which may result from any merger or consolidation to which the servicer
is a party; or
- which may succeed to the properties and assets of the servicer
substantially as a whole.
This succession will not require the execution or filing of any paper or
any further act on the part of any of the parties to the servicing agreement.
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EVENTS OF DEFAULT UNDER THE SERVICING AGREEMENT
Events of default by the servicer under the servicing agreement for each
series of bonds secured in whole or in part by eligible mortgage loans will
consist of:
- any failure by the servicer to distribute to the trustee on behalf of
holders any required payment which continues unremedied for five days;
- any failure by the servicer to observe or perform, in any material
respects, any other of its covenants or agreements in the servicing
agreement and which continues unremedied for 60 days after the giving
of written notice of the failure to the servicer by the trustee, or to
the servicer by the holders of not less than 25% in aggregate
principal amount of the outstanding bonds; and
- events of insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings and actions by the servicer
indicating insolvency, reorganization or inability to pay its
obligations.
RIGHTS UPON EVENT OF DEFAULT
As long as an event of default under the servicing agreement for a series
of bonds secured in whole or in part by eligible mortgage loans remains
unremedied, the trustee or holders of not less than 50% in aggregate principal
amount of the outstanding bonds may terminate all of the rights and obligations
of the servicer under the servicing agreement. Then the trustee will succeed to
all the responsibilities, duties and liabilities of the servicer under the
servicing agreement and will be entitled to similar compensation arrangements
and limitations on liability.
In the event that the trustee is unwilling or unable to so act, it may
appoint or petition a court of competent jurisdiction for the appointment of a
successor. The successor will be:
- a housing and home finance institution with a net worth of at least
$50,000,000;
- which is an approved seller-servicer of conventional residential mortgage
loans for Fannie Mae or Freddie Mac;
- an FHA approved mortgagee;
- a VA approved lender; and
- will act under the servicing agreement.
Pending an appointment of a successor, the trustee is obligated to act in
this capacity. The trustee and the successor may agree upon the servicing
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compensation to be paid, which in no event may be greater than the compensation
to the servicer under the servicing agreement.
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UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
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GENERAL
This section summarizes the United States federal income tax issues that
you, as a bondholder, may consider relevant. Hunton & Williams and Cadwalader,
Wickersham & Taft, Main Place's counsel, have reviewed this section and have
given us an opinion that this section correctly describes the relevant law and
fairly summarizes the federal income tax issues that may be material to you in
connection with your acquisition, ownership, and disposition of the bonds of any
series, except as otherwise set forth in an applicable prospectus supplement.
Because this section is a summary, it does not address all of the tax issues
that may be important to you. In addition, this section does not address all of
the tax issues that may be important to particular categories of investors, some
of which may be subject to special treatment under the federal income tax laws.
The statements in this section and the opinions of Hunton & Williams and
Cadwalader, Wickersham & Taft are based on current federal income tax laws and
judicial and administrative interpretations thereof. We cannot assure you that
new laws, interpretations thereof, or court decisions, any of which may take
effect retroactively, will not cause any statement in this section to become
inaccurate.
WE URGE YOU TO CONSULT YOUR OWN TAX ADVISOR REGARDING THE SPECIFIC TAX
CONSEQUENCES TO YOU OF INVESTING IN THE BONDS. SPECIFICALLY, YOU SHOULD CONSULT
YOUR OWN TAX ADVISOR REGARDING THE FEDERAL, STATE, LOCAL, FOREIGN, AND OTHER TAX
CONSEQUENCES OF YOUR INVESTMENT, AND REGARDING POTENTIAL CHANGES IN APPLICABLE
TAX LAWS.
INTEREST, DISCOUNT, AND PREMIUM
In the opinion of Hunton & Williams and Cadwalader, Wickersham & Taft, the
bonds will be treated as indebtedness of Main Place for federal income tax
purposes. Consequently, if you are a U.S. person, you will take into account
interest paid on the bonds as ordinary income from U.S. sources as it
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is paid or accrues, depending on your method of accounting. The term "U.S.
PERSON" means:
- a citizen or resident of the United States;
- a corporation or partnership organized in or under the laws of the United
States, any State, or the District of Columbia (including an entity
treated as a corporation or partnership for tax purposes);
- an estate the income of which is includible in gross income for U.S. tax
purposes, regardless of its connection with the conduct of a trade or
business within the United States; or
- any trust with respect to which: (1) a U.S. court is able to exercise
primary supervision over the administration of the trust; and (2) one
or more U.S. persons have the authority to control all substantial
decisions of the trust.
Unless otherwise provided in the prospectus supplement for a series, we expect
that initial bond owners of each series will acquire the bonds at par or at a
discount to par that is considered de minimis under the federal income tax laws.
As a result, if you are an initial bond owner, you will have neither original
issue discount, market discount, nor premium amortization with respect to the
bonds.
If you acquire a bond after its issuance, you will be treated as purchasing
an interest in the bond at a price determined by allocating the purchase price
paid for the bond as follows:
- first, to accrued interest from the preceding interest payment date to
the day prior to the date of purchase; and
- second, to the principal amount of the bond.
To the extent that you purchase a bond for an amount that is less than its
stated principal amount, you will be deemed to have acquired the bond at a
discount. To the extent that you purchase a bond for an amount that is greater
than its stated principal amount, you will be deemed to have acquired the bond
at a premium.
MARKET DISCOUNT
If you acquire a bond after its issuance for an amount that is less than
its stated principal amount, the excess of the stated principal amount over your
purchase price will be treated as "MARKET DISCOUNT" under the federal income tax
laws, unless the excess is less than a specified de minimis amount. You will be
required to treat any gain recognized upon the maturity or sale of the bond as
ordinary income to the extent of the accrued, but not previously taxed, market
discount on the bond, unless you elect to report this market discount
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over the life of the bond using either a ratable accrual or a constant yield
method, as described below. In addition, you generally will be required to defer
interest deductions attributable to any debt you incur to purchase or carry the
bond to the extent that your interest deductions for any year exceed your
interest income on the bond for that year. The amount of deferred interest
expense is limited to the amount of market discount income that accrues, but is
not recognized currently. You generally will be allowed to deduct the deferred
interest expense no later than the year in which you recognize the related
market discount income, the bond matures, or you sell the bond.
Market discount generally will accrue ratably over the life of a bond
unless you elect to accrue it on a constant interest basis. In addition, you may
elect to include market discount in income currently as it accrues. If you make
the current inclusion election, you will not be subject to the interest deferral
rule described above. Once made, the current inclusion election will apply to
all market discount debt instruments that you acquire during or after the
taxable year of the election and may be revoked only with the consent of the
Internal Revenue Service. You should consult your own tax advisor as to the
application of the market discount rules to you.
A provision in the Clinton Administration's budget proposal for fiscal year
2000 would require you, if you use the accrual method of accounting, to include
market discount in your income as it accrues. That proposal would be effective
for debt instruments acquired on or after the date of enactment of the
provision. It is unclear whether that provision will be enacted into law in its
currently proposed form and, if so, when such enactment will occur.
PREMIUM
If you acquire a bond after its issuance for an amount that is greater than
its stated principal amount, the excess of your purchase price over the stated
principal amount will be treated as "PREMIUM" under the federal income tax laws.
If you hold the bond as a capital asset, you may elect under the federal income
tax laws to amortize the premium over the remaining term of the bond on the
basis of a constant interest rate, based on the applicable compounding period.
The premium amortized in any year will not be a separate deduction item, but
instead will offset your interest income on the bond. An election to amortize
bond premium will apply to all taxable debt instruments that you acquire at a
premium during or after the taxable year of the election and may be revoked only
with the consent of the Internal Revenue Service.
SALE, EXCHANGE, AND RETIREMENT OF BONDS
Upon the sale, exchange, retirement, or other disposition of a bond, you
generally will recognize gain or loss equal to the difference between the amount
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realized in the transaction and your adjusted tax basis in the bond. In general,
your adjusted tax basis will equal:
- the amount you paid for the bond;
- plus any market discount that you previously included in your income with
respect to the bond; and
- minus any amortized premium that you previously deducted from your income
with respect to the bond.
Any gain or loss generally will be capital gain or loss if you held the bond as
a capital asset, except in the following situations:
- to the extent of accrued market discount on the bond that you have not
previously included in income;
- if you are a bank or other financial institution that is subject to
special provisions of the federal income tax laws; or
- if you hold a bond as part of a "conversion transaction," as defined in
the federal income tax laws, in which case a portion of the gain will
be treated as ordinary income.
The highest marginal individual income tax rate is 39.6%. The maximum tax rate
on long-term capital gain applicable to non-corporate taxpayers is 20% for sales
and exchanges of assets held for more than one year. Thus, the tax rate
differential between capital gain and ordinary income for non-corporate
taxpayers may be significant. The maximum tax rate for corporations is the same
with respect to both ordinary income and capital gains.
BACKUP WITHHOLDING
You may be subject to backup withholding under the federal income tax laws
at the rate of 31% on payments on the bonds and proceeds from the sale of the
bonds to or through some brokers unless you either:
- are a corporation or come within another exempt category and, when
required, demonstrate this fact; or
- provide us or our paying agent with a taxpayer identification number,
certify as to no loss of exemption from backup withholding, and
otherwise comply with the applicable requirements of the backup
withholding rules.
Any amounts we withhold from payments on the bonds will be creditable against
your federal income tax liability.
The Treasury Department has issued final regulations regarding the backup
withholding rules as applied to non-U.S. persons. Those regulations alter the
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<PAGE> 113
current system of backup withholding compliance and are effective for payments
made after December 31, 1999.
TAX TREATMENT OF NON-U.S. INVESTORS
This section does not address all aspects of U.S. federal income tax
taxation that may be relevant to you in connection with your acquisition,
ownership, and disposition of the bonds if you are not a U.S. person, as defined
above. YOU ARE ADVISED TO CONSULT YOUR OWN TAX ADVISOR FOR SPECIFIC TAX ADVICE
CONCERNING THE ACQUISITION, OWNERSHIP, AND DISPOSITION OF THE BONDS.
As a non-U.S. bond owner, if payments that you receive on the bonds are not
effectively connected with your conduct of a U.S. trade or business, you will
not be subject to the 30% U.S. withholding tax that generally applies to
payments of interest to non-U.S. persons on registered debt issued by U.S.
persons, as long as:
- you provide us with appropriate documentation of your foreign status on
Internal Revenue Service Form W-8;
- you do not actually or constructively own more than 10% of the capital or
profits interests in Main Place;
- you are not a "controlled foreign corporation," within the meaning of the
federal income tax laws, that is related, directly or indirectly, to
Main Place; and
- you are not a bank receiving interest on a loan made in the ordinary
course of your business.
If you do not meet the requirements set forth in the previous paragraph, we
will withhold U.S. income tax at the rate of 30% on the gross amount of any
interest payments made to you on the bonds unless either:
- a lower treaty rate applies and you file the required form evidencing
eligibility for that reduced rate with us or our paying agent; or
- you file Internal Revenue Service Form 4224 with us or our paying agent
claiming that the interest is effectively connected with your conduct
of a U.S. trade or business.
The U.S. Treasury Department has issued final regulations that modify the
manner in which we will comply with the withholding requirements. Those
regulations are effective for payments made after December 31, 1999.
If payments that we make to you on the bonds are treated as effectively
connected with your conduct of a U.S. trade or business, you generally will be
subject to federal income tax on the payments at graduated rates, in the same
manner as U.S. bond owners are taxed with respect to these payments and also
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<PAGE> 114
may be subject to the 30% branch profits tax in the case of a non-U.S. bond
owner that is a corporation.
You generally will not be subject to U.S. federal income taxation,
including U.S. withholding tax, on any gain or income that you realize upon the
sale, exchange, retirement, or other disposition of the bonds unless:
- the gain or income is effectively connected with your conduct of a U.S.
trade or business, in which case you will be subject to the same
treatment as U.S. bond owners with respect to the gain or income; or
- you are a nonresident alien individual who was present in the United
States for 183 days or more during the taxable year and some other tax
requirements are met, in which case you will incur a 30% tax on your
gain.
- --------------------------------------------------------------------------------
ERISA CONSIDERATIONS
- --------------------------------------------------------------------------------
This section summarizes the material issues arising under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") ) and the
prohibited transaction provisions of the federal income tax laws. Because this
section is a summary, it does not address all of the issues that may be
important to you under ERISA and the federal income tax laws. It also does not
address all of the issues that may be important to you under state law, to the
extent state law is not preempted, if you are:
- a pension, profit sharing, or other employee benefit plan or a tax-
qualified retirement plan (collectively, "PLANS") subject to Title I
of ERISA;
- an individual retirement account or annuity ("IRA") subject to the
prohibited transaction provisions of the federal income tax laws; or
- a governmental plan or church plan that is exempt from ERISA and the
prohibited transaction provisions of the federal income tax laws but
that may be subject to similar state law requirements.
A FIDUCIARY DECIDING WHETHER TO BUY BONDS ON BEHALF OF A PLAN OR IRA SHOULD
CONSULT ITS OWN LEGAL ADVISOR REGARDING THE SPECIFIC CONSIDERATIONS ARISING
UNDER ERISA, THE FEDERAL INCOME TAX LAWS, AND STATE LAW WITH RESPECT TO AN
INVESTMENT IN THE BONDS BY THE PLAN OR IRA. A FIDUCIARY ALSO SHOULD CONSIDER THE
ENTIRE DISCUSSION UNDER THE HEADING "UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES," BECAUSE THE DISCUSSION IN THAT SECTION IS RELEVANT TO A PLAN OR
IRA'S DECISION TO PURCHASE THE BONDS.
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FIDUCIARY STANDARDS
In accordance with ERISA's general fiduciary standards, before investing in
a bond of any series, a plan fiduciary should determine whether the investment
is:
- prudent and in the best interests of the plan, its participants, and its
beneficiaries;
- diversified in order to minimize the risk of large losses, unless it is
clearly prudent not to do so; and
- authorized under the terms of the plan's governing documents, provided
the documents are consistent with ERISA.
PROHIBITED TRANSACTION RULES
ERISA and the federal income tax laws forbid "prohibited" transactions
involving:
- the assets of a plan or IRA; and
- "parties in interest" or "disqualified persons" with respect to the plan
or IRA.
In order to avoid engaging in a transaction that is a prohibited
transaction, plans and IRAs first should identify the parties to the transaction
that could be considered "parties in interest" or "disqualified persons" with
respect to the plan or IRA. "PARTIES IN INTEREST" and "DISQUALIFIED PERSONS"
generally include the following:
- a fiduciary, or its affiliate, of a plan or IRA;
- the IRA owner and beneficiaries;
- a person providing services to a plan or IRA; and/or
- an employer whose employees are covered by a plan or IRA.
Main Place, the underwriter, the trustee, and the loan servicer might each
be considered a party in interest or disqualified person with respect to a plan
or IRA that purchases the bonds. In this case, the acquisition or holding of
bonds by or on behalf of the plan or IRA could be considered to give rise to a
prohibited transaction.
A "party in interest" or "disqualified person" with respect to a plan or
IRA will incur the following taxes:
- an initial 15% excise tax on the amount involved in any prohibited
transaction involving the assets of the plan or IRA; and
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<PAGE> 116
- an excise tax equal to 100% of the amount involved if any prohibited
transaction is not corrected.
If the disqualified person who engages in the transaction is the individual
on behalf of whom an IRA is maintained, or his beneficiary, the IRA will lose
its tax-exempt status. In addition, the assets in the IRA will be deemed to have
been distributed to the individual in a taxable distribution, and no excise tax
will be imposed, on account of the prohibited transaction. Furthermore, a
fiduciary who permits a plan to engage in a transaction that the fiduciary knows
or should know is a prohibited transaction may be liable to the plan for any
loss the plan incurs as a result of the transaction or for any profits earned by
the fiduciary in the transaction. The Department of Labor has exempted specified
categories of transactions from the prohibited transaction rules.
When you purchase a bond, you will be deemed to represent either that:
- you are not a plan and are not purchasing the bond for, or on behalf of,
a plan; or
- your acquisition and holding of the bond qualify for an exemption from
the prohibited transaction rules.
PLAN ASSET REGULATIONS
Department of Labor Regulations defining "plan assets" (the "PLAN ASSET
REGULATIONS") generally provide that when an "ERISA INVESTOR" acquires an equity
interest in an entity, the ERISA Investor's assets include both the equity
interest and an undivided interest in each of the underlying assets of the
issuer of the equity interest, unless one or more exceptions specified in the
plan asset regulations are satisfied. The plan asset regulations define an
equity interest as a security other than a security that is treated as debt for
state law purposes and that has no substantial equity features. Main Place
believes that the bonds will be treated as debt obligations without substantial
equity features for purposes of the plan asset regulations. Accordingly, a plan
that acquires a bond should not be treated as having acquired a direct interest
in the assets of Main Place.
- --------------------------------------------------------------------------------
PLAN OF DISTRIBUTION
- --------------------------------------------------------------------------------
Main Place may sell a series of bonds through one or more of the following
methods:
- by negotiated firm commitment underwriting and public re-offering by
underwriters specified in the prospectus supplement;
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<PAGE> 117
- by placements by Main Place with investors through dealers; and/or
- by direct placements by Main Place with investors.
The prospectus supplement for a series will describe the method of offering
used for that series and will state the initial public offering price of the
bonds, the discounts and commissions to the underwriters and any discounts or
concessions allowed or reallowed to dealers, or the method by which that price
will be determined. It also will disclose the net proceeds to Main Place from
the offering and Main Place's use of those proceeds.
The underwriters will be obligated to purchase all of the bonds described
in the prospectus supplement if any bonds are purchased. The underwriters may
acquire bonds for their own account and may resell them from time to time in one
or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. Main Place
will indemnify the underwriters against liabilities under the securities laws.
NationsBanc Montgomery Securities LLC, an affiliate of Main Place, may act
as underwriter of a series of bonds, or may represent an underwriting syndicate.
NationsBanc Montgomery's participation in any offering will comply with the
requirements of National Association of Securities Dealers, Inc.
The place and time of delivery for each series of bonds will be set forth
in the prospectus supplement for that series.
To the extent required by law, this prospectus will be used by NationsBanc
Montgomery in connection with offers and sales related to market-making
transactions. NationsBanc Montgomery may act as principal or agent in these
transactions. Sales may be made at negotiated prices determined at the time of
sale.
- --------------------------------------------------------------------------------
USE OF THE PROCEEDS
- --------------------------------------------------------------------------------
Main Place intends to use all or most of the net proceeds from the sale of
a series of bonds to purchase additional mortgage loans, and/or pay dividends to
its shareholders and/or reduce certain subordinated indebtedness of Main Place.
- --------------------------------------------------------------------------------
LEGAL MATTERS
- --------------------------------------------------------------------------------
Some legal matters, including the legality of the bonds and the federal
income tax consequences of an investment in the bonds, will be passed upon for
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Main Place and the underwriters by Hunton & Williams, Charlotte, North Carolina
or Cadwalader, Wickersham & Taft, New York, New York and Charlotte, North
Carolina, as specified in the prospectus supplement. Certain other legal matters
with respect to the issuance of the bonds will be passed upon by Andrea
Goldenberg, counsel of BankAmerica Corporation, Charlotte, North Carolina.
- --------------------------------------------------------------------------------
EXPERTS
- --------------------------------------------------------------------------------
The financial statements and financial statement schedule of Main Place
Real Estate Investment Trust, predecessor to Main Place, which are incorporated
in this prospectus by reference to the Main Place Real Estate Investment Trust's
Annual Reports on Form 10-K and on Form 10-K/A, respectively, for the year ended
December 31, 1997, have been incorporated in reliance on the reports of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
- --------------------------------------------------------------------------------
LEGAL INVESTMENT
- --------------------------------------------------------------------------------
Unless otherwise provided in the prospectus supplement, no bonds in any
series will constitute "mortgage related securities" for purposes of the
Secondary Mortgage Market Enhancement Act of 1984, as amended.
No representation is made as to the proper characterization of the bonds
for legal investment purposes, financial institution regulatory purposes, or
other purposes, or as to the ability of particular investors to purchase
certificates under applicable legal investment restrictions. The uncertainties
described above and any unfavorable future determinations concerning legal
investment or financial institution regulatory characteristics of the
certificates may adversely affect the liquidity of the bonds.
Accordingly, all investors whose investment activities are subject to legal
investment laws and regulations, regulatory capital requirements or review by
regulatory authorities should consult with their legal advisors in determining
whether and to what extent the certificates of any class constitute legal
investments or are subject to investment, capital or other restrictions.
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- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
INCORPORATION OF INFORMATION BY REFERENCE
The SEC allows Main Place to "incorporate by reference" information it
files with the SEC, which means that Main Place can disclose important
information to you by referring you to those documents filed separately with
SEC. The information incorporated by reference is considered to be part of this
prospectus. Information that Main Place files later with the SEC will
automatically update the information in this prospectus. In all cases, you
should rely on the later information rather than on any different information
included in this prospectus or the accompanying prospectus supplement.
This prospectus incorporates by reference the documents listed below that
Main Place Real Estate Investment Trust, predecessor to Main Place, has
previously filed with the SEC. These documents contain important information
about Main Place.
- Main Place Real Estate Investment Trust's annual report on Form 10-K and
Form 10-K/A for the year ended December 31, 1997; and
- Main Place Real Estate Investment Trust's quarterly reports on Form 10-Q
for the quarters ended March 31, 1998, June 30, 1998 and September 30,
1998.
We incorporate by reference any additional documents that we may file with
the SEC under Section 13(a), 13(c), 14 or 15 of the Securities Exchange Act
between the date of this prospectus and the termination of the offering of the
bonds. These documents may include periodic reports, like annual reports on Form
10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. Any
material that we subsequently file with the SEC will automatically update and
replace the information previously filed with the SEC.
You can obtain any of the documents incorporated by reference in this
prospectus from the SEC on its web site which is located at http://www.sec.gov.
You can also obtain these documents from Main Place, without charge, by
requesting them in writing or by telephone at the following address:
Main Place Funding, LLC
100 North Tryon Street
Charlotte, North Carolina 28255
Telephone: (704) 388-7436
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<PAGE> 120
WHERE YOU CAN FIND MORE INFORMATION
Main Place has filed with the SEC a registration statement under the
Securities Act that registers the distribution of bonds. The registration
statement, including the attached exhibits, contains additional relevant
information about Main Place and the bonds. The rules and regulations of the SEC
allow us to omit certain information included in the registration statement from
this prospectus.
In addition, we file annual, quarterly and special reports and other
information with the SEC. You may read and copy this information and the
registration statement at the following locations of the SEC:
<TABLE>
<S> <C> <C>
Public Reference Room Chicago Regional Office
450 Fifth Street, N.W. New York Regional Office Citicorp Center
Room 1024 7 World Trade Center 500 West Madison Street
Washington, DC 20549 Suite 1300 Suite 1400
New York, New York 10048 Chicago, Illinois 60661
</TABLE>
You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, at prescribed rates. You may obtain information on the operation of
the public reference room by calling the SEC at 1-800-SEC-0330.
The SEC also maintains an Internet world wide web site that contains
reports, proxy statements and other information about issuers, like us, who file
electronically with the SEC. The address of that site is http://www. sec.gov at
which you can view and download copies of reports, proxy and information
statements and other information filed electronically through the electronic
data gathering, analysis and retrieval ("EDGAR") system. The depositor has filed
the registration statement, including all exhibits, through the EDGAR system and
therefore these materials should be available by logging onto the SEC's web
site. The commission maintains computer terminals providing access to the EDGAR
system at each of the offices referred to above.
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- --------------------------------------------------------------------------------
INDEX OF SIGNIFICANT DEFINITIONS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
actuarial mortgage loans........... 21
advance............................ 27
affiliated servicer................ 7
balloon mortgage loans............. 21
balloon payment.................... 21
basic maintenance amount........... 30
book-entry bonds................... 11
buy-down fund...................... 23
buy-down loan...................... 23
Cede............................... 7
Cedel.............................. 7
Cedel participants................. 14
Citibank........................... 12
COFI............................... 22
collection account................. 19
condominium loans.................. 25
conventional mortgage loans........ 20
custodian.......................... 41
cut-off date....................... 40
deferred interest.................. 23
definitive bonds................... 16
deposit securities................. 44
determination date................. 31
discount factors................... 31
discounted value................... 31
disqualified persons............... 68
distribution account............... 19
DTC................................ 7
eligible adjustable-rate mortgage
loans............................ 22
eligible collateral................ 11
eligible fixed-rate mortgage
loans............................ 21
eligible mortgage loans............ 20
eligible mortgage pass-through
certificates..................... 26
ERISA.............................. 67
ERISA Investor..................... 69
Euroclear.......................... 7
Euroclear operator................. 15
Euroclear participants............. 15
event of default................... 48
Fannie Mae......................... 28
Fannie Mae certificates............ 28
FHA insured mortgage loans......... 20
Freddie Mac........................ 27
Freddie Mac certificates........... 27
fully amortizing mortgage loan..... 21
Ginnie Mae......................... 29
Ginnie Mae certificates............ 29
government securities.............. 27
GPMs............................... 23
graduated pay mortgage loans....... 23
growing equity mortgage loans...... 23
high balance loans................. 25
indenture.......................... 40
indices............................ 22
IRA................................ 67
jumbo mortgage loans............... 33
LIBOR.............................. 22
lifetime cap....................... 22
manufactured home contracts........ 26
manufactured homes................. 26
margin............................. 22
market discount.................... 63
market value....................... 31
market value rate.................. 33
MERS............................... 41
minimum mortgage interest rate..... 22
Morgan Guaranty.................... 12
mortgage interest rate............. 21
mortgaged properties............... 20
NationsBanc Mortgage............... 35
negative amortization.............. 23
one month treasury................. 22
outstanding........................ 10
over 80% loans..................... 25
parties in interest................ 68
payment caps....................... 22
periodic caps...................... 22
plan asset regulations............. 69
plans.............................. 67
pledged asset mortgage loans....... 24
pledged property................... 11, 44
premium............................ 64
prime.............................. 22
rapid processing program........... 39
</TABLE>
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<TABLE>
<S> <C>
rating agencies.................... 20
redemption......................... 17
reserve fund....................... 20
short-term money market
instruments...................... 29
simple interest mortgage loan...... 21
subsidy account.................... 24
subsidy loans...................... 23
subsidy payment.................... 23
tiered payment mortgage loans...... 23
U.S. person........................ 63
VA guaranteed mortgage loans....... 20
</TABLE>
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$[ ]
MAIN PLACE FUNDING, LLC
MORTGAGE-BACKED BONDS, SERIES 1999-1
DUE [ ]
---------------------
PROSPECTUS SUPPLEMENT
---------------------
You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus. No one
has been authorized to provide you with different information.
The offered bonds are not being offered in any state where the offer is not
permitted.
Main Place does not claim the accuracy of the information in this
prospectus supplement and the accompanying prospectus as of any date other than
the dates states on their respective covers.
Dealers will deliver a prospectus supplement and prospectus when acting as
underwriters of the offered bonds and with respect to their unsold allotments or
subscriptions. In addition, all dealers selling the offered bonds will deliver a
prospectus supplement and prospectus until ninety days following the date of
this prospectus supplement.
[NAME OF UNDERWRITERS]
The date of this supplement is [ ]
<PAGE> 124
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Set forth below are the expenses expected to be incurred by Main Place
Funding, LLC (the "REGISTRANT") in connection with the issuance and distribution
of the securities being registered other than underwriting discounts and
commissions and costs represented by the salaries and wages of regular employees
and officers of the Registrant. All such expenses other than the Filing Fee, are
estimated expenses.
<TABLE>
<S> <C>
Filing Fee for Registration Statement....................... $278
Legal Fees and Expenses..................................... *
Accounting Fees and Expenses................................ *
Trustees' Fees and Expenses (including counsel fees)........ *
Printing and Engraving Fees................................. *
Rating Agency Fees.......................................... *
Miscellaneous............................................... *
---------
Total............................................. *
=========
</TABLE>
- -------------------------
* To be provided by amendment.
ITEM 15. INDEMNIFICATION OF MEMBERS.
Section 18-108 of the Delaware Limited Liability Company Act (the "DLLCA")
empowers a limited liability company to indemnify and hold harmless any member
or manager or person from and against any and all claims and demands whatsoever.
The Amended and Restated Limited Liability Company Agreement of Main Place
Funding, LLC (the "Agreement") prevents the recovery by Main Place Funding, LLC
of monetary damages against its members ("Indemnified Persons") to the fullest
extent permitted by the DLLCA. In accordance with the provisions of the DLLCA,
the Agreement provides that Main Place Funding, LLC shall indemnify and hold
harmless each Indemnified Person against any losses, claims, damages or
liabilities (including reasonable attorneys fees) to which such Indemnified
Person may become subject in connection with any matter arising from, related
to, or in connection with the Agreement or Main Place Funding, LLC's business or
affairs, except for such losses, claims, damages or liabilities as are
determined by final judgment of a court of competent jurisdiction to have
resulted from such Indemnified Person's gross negligence or willful misconduct.
Notwithstanding anything else in the Agreement, the indemnity obligations
of Main Place Funding, LLC shall (a) be in addition to any liability that Main
Place Funding, LLC may otherwise have; (b) extend upon the same terms and
conditions to the directors, committee members, officers, stockholders,
partners, members, control person, employees, agents and representatives of each
Indemnified Person; (c) be binding upon and inure to the benefit of any
successors, assigns, heirs and personal representatives of each Indemnified
Person and any such person; (d) be limited to the assets of Main Place Funding,
LLC; and (e) be subordinate to Main Place Funding, LLC's obligations in
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respect of Bonds (as defined in Section 3.1(a)(vii) of the Agreement) as set
forth in Section 11.1(b)(xii) of the Agreement.
The foregoing is only a general summary of certain aspects of Delaware law
dealing with indemnification of members and managers and does not purport to be
complete. It is qualified in its entirety by reference to the relevant statutes.
ITEM 16. EXHIBITS.
<TABLE>
<C> <C> <S>
1.1* -- Form of Underwriting Agreement.
3.1 -- Amended and Restated Limited Liability Company Agreement of
Main Place Funding, LLC dated as of December 14, 1998.(1)
4.1* -- Form of Indenture.
4.2 -- Indenture dated as of October 31, 1995 between Main Place
Funding Corporation and First National Trust Association, as
Trustee.(2)
4.3 -- Indenture dated as of March 18, 1997 between Main Place
Funding Corporation and First National Trust Association, as
Trustee.(3)
4.4 -- First Supplemental Indenture dated as of November 1, 1996
between Main Place Funding Corporation and First Trust
National Association, as Trustee, in connection with the
Indenture dated October 31, 1995.(4)
4.5 -- Second Supplemental Indenture, dated as of December 23,
1998, between Main Place Funding, LLC and U.S. Bank National
Association, as Trustee, in connection with the Indenture
dated October 31, 1995.(1)
4.6 -- First Supplemental Indenture, dated as of December 23, 1998,
between Main Place Funding, LLC and U.S. Bank National
Association, as Trustee, in connection with the Indenture
dated March 18, 1997.(1)
5.1 -- Opinion of Hunton & Williams with respect to the legality of
the Bonds.
5.2 -- Opinion of Cadwalader, Wickersham & Taft with respect to the
legality of the Bonds.
8.1 -- Opinion of Hunton & Williams with respect to certain of tax
matters.
8.2 -- Opinion of Cadwalader, Wickersham & Taft with respect to
certain of tax matters.
10.1* -- Form of Servicing Agreement.
23.1 -- Consent of Hunton & Williams (included as part of Exhibit
5.1 and Exhibit 8.1).
23.2 -- Consent of Cadwalader, Wickersham & Taft (included as part
of Exhibit 5.2 and Exhibit 8.2).
23.3 -- Consent of PricewaterhouseCoopers LLP.
24.1 -- Power of Attorney (included on signature page).
25.1 -- Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 (Form T-1) of U.S. Bank National
Association.
</TABLE>
- -------------------------
* To be filed by amendment.
II-2
<PAGE> 126
(1) Previously filed as an Exhibit to Post-Effective Amendment No. 3 to the Main
Place Funding, LLC Registration Statement (No. 33-82040) filed on January 6,
1999.
(2) Previously filed as an Exhibit to the Form 8-K Current Report of Main Place
Funding Corporation filed on October 31, 1995.
(3) Previously filed as an Exhibit to Form 10-Q Quarterly Report of Main Place
Funding Corporation filed on May 15, 1997.
(4) Previously filed as an Exhibit to Form 10-Q Quarterly Report of Main Place
Real Estate Investment Trust filed on November 14, 1996.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to the Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(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 percent change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) 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 Exchange Act that are incorporated by reference in
the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, 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.
(3) 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.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant
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<PAGE> 127
to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Exchange Act) 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.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant 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, the Registrant 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 Securities Act and will be governed by the final
adjudication of such issue.
(d) In addition, the undersigned registrant undertakes that:
(1) 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
the form of prospectus filed by the registrant pursuant to Rule 424(b)(1)
or (4) or 497(h) under the Securities Act of 1933 shall be deemed to be
part of this Registration Statement as of the time it was declared
effective.
(2) 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.
II-4
<PAGE> 128
POWER OF ATTORNEY
Each person whose signature appears below on this Registration Statement
hereby constitutes and appoints John E. Mack and Gary S. Williams, and each of
them, with full power to act without the other, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities (until
revoked in writing) to sign any and all amendments to this Registration
Statement (including post-effective amendments and amendments thereto), 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 ratifying and confirming all that said
attorneys-in-fact and agents or any of them, of their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
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, hereunto duly
authorized, in the City of Charlotte, State of North Carolina, on March 22,
1999.
MAIN PLACE FUNDING, LLC
(Registrant)
By: /s/ JOHN E. MACK
-----------------------------------
John E. Mack
President
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>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JOHN E. MACK President March 22, 1999
- ----------------------------------------------------- (Principal
John E. Mack Executive Officer)
/s/ NEIL A. COTTY Treasurer and Senior March 22, 1999
- ----------------------------------------------------- Vice President/
Neil A. Cotty Principal
Financial and
Accounting
Officer (Principal
Financial and
Accounting
Officer)
NATIONSBANK, N.A.
By: /s/ JOHN E. MACK Managing Member March 22,1999
-------------------------------------------------
John E. Mack
MAIN PLACE TRUST
By: /s/ JOHN E. MACK Special Managing March 22, 1999
------------------------------------------------- Member
John E. Mack
Business Trustee
</TABLE>
II-5
<PAGE> 1
Exhibit 5.1
March 22, 1999
Main Place Funding, LLC
100 North Tryon Street
Charlotte, North Carolina 28255
Re: Main Place Funding, LLC
Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as special counsel for Main Place Funding, LLC, a Delaware
limited liability company (the "Company"), in connection with the issuance from
time to time in one or more series of Mortgage-Backed Bonds (the "Bonds"). A
Registration Statement on Form S-3 relating to the Bonds (the "Registration
Statement") has been filed with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Securities
Act"). As set forth in the Registration Statement, the issuer with respect to a
series of Bonds will be the Company. Each series of Bonds is to be issued
pursuant to an Indenture (each, an "Indenture") between the Company and an
independent trustee (the "Trustee").
We have examined copies of the certificate of formation and limited
liability company agreement of the Company, forms of the Indenture and forms of
the Bonds included therein, and forms of the agreements and other documents
filed or to be filed as exhibits to the Registration Statement. We also have
examined the original or reproduced or certified copies of all such records of
the Company, all such agreements, certificates of officers and members of the
Company and others, and such other documents, papers, statutes and authorities
as we deemed necessary to form the basis of the opinions hereinafter expressed.
In such examinations, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and the conformity to
original documents of copies of documents supplied to us by the Company and
others. As to certain matters of fact relevant to the opinions hereinafter
expressed, we have relied upon statements and certificates of officers of the
Company and others.
<PAGE> 2
March 22, 1999
Page 2
Based upon the foregoing, we are of the opinion that:
1. When each Indenture has been duly authorized by all necessary action and
has been duly executed and delivered, each will constitute the valid and binding
obligations of the Company, enforceable in accordance with its terms, subject to
the effect of bankruptcy, insolvency, moratorium, fraudulent conveyance and
similar laws relating to or affecting creditors' rights generally and court
decisions with respect thereto and we express no opinion with respect to the
application of equitable principles in any proceeding, whether at law or in
equity.
2. When the issuance, execution and delivery of each series of Bonds has
been authorized by all necessary action of the Company in accordance with the
provisions of the Indenture, and when such Bonds have been duly executed,
authenticated and delivered by the Trustee and sold as described in the
Registration Statement, (a) such Bonds will constitute valid and binding
obligations of the Company, enforceable in accordance with their terms, subject
to the effect of bankruptcy, insolvency, moratorium, fraudulent conveyance and
similar laws relating to or affecting creditors' rights generally and court
decisions with respect thereto and we express no opinion with respect to the
application of equitable principles in any proceeding, whether at law or in
equity, and (b) the holders of such Bonds will be entitled to the benefits
provided by the Indenture.
In rendering the foregoing opinions, we express no opinion as to the
laws of any jurisdiction other than the State of New York and the federal laws
of the United States of America.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, to the reference to us in the prospectus and the related
prospectus supplement forming a part of the Registration Statement, and to the
filing of this opinion as an exhibit to any application made by or on behalf of
the Company or any dealer in connection with the registration of the Bonds under
the securities or blue sky laws of any state or jurisdiction. In giving such
permission, we do not admit hereby that we come within the category of persons
whose consent is required under Section 7 of the Securities Act or the rules and
regulations of the Commission thereunder.
Very truly yours,
/s/ HUNTON & WILLIAMS
<PAGE> 1
Exhibit 5.2
March 22, 1999
Main Place Funding, LLC
100 North Tryon Street
Charlotte, North Carolina 28255
Re: Main Place Funding, LLC
Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as special counsel for Main Place Funding, LLC, a Delaware
limited liability company (the "Company"), in connection with the issuance from
time to time in one or more series of Mortgage-Backed Bonds (the "Bonds"). A
Registration Statement on Form S-3 relating to the Bonds (the "Registration
Statement") has been filed with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Securities
Act"). As set forth in the Registration Statement, the issuer with respect to a
series of Bonds will be the Company. Each series of Bonds is to be issued
pursuant to an Indenture (each, an "Indenture") between the Company and an
independent trustee (the "Trustee").
We have examined copies of the certificate of formation and limited
liability company agreement of the Company, forms of the Indenture and forms of
the Bonds included therein, and forms of the agreements and other documents
filed or to be filed as exhibits to the Registration Statement. We also have
examined the original or reproduced or certified copies of all such records of
the Company, all such agreements, certificates of officers and members of the
Company and others, and such other documents, papers, statutes and authorities
as we deemed necessary to form the basis of the opinions hereinafter expressed.
In such examinations, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and the conformity to
original documents of copies of documents supplied to us by the Company and
others. As to certain matters of fact relevant to the opinions hereinafter
expressed, we have relied upon statements and certificates of officers of the
Company and others.
<PAGE> 2
March 22, 1999
Page 2
Based upon the foregoing, we are of the opinion that:
1. When each Indenture has been duly authorized by all necessary action and
has been duly executed and delivered, each will constitute the valid and binding
obligations of the Company, enforceable in accordance with its terms, subject to
the effect of bankruptcy, insolvency, moratorium, fraudulent conveyance and
similar laws relating to or affecting creditors' rights generally and court
decisions with respect thereto and we express no opinion with respect to the
application of equitable principles in any proceeding, whether at law or in
equity.
2. When the issuance, execution and delivery of each series of Bonds has
been authorized by all necessary action of the Company in accordance with the
provisions of the Indenture, and when such Bonds have been duly executed,
authenticated and delivered by the Trustee and sold as described in the
Registration Statement, (a) such Bonds will constitute valid and binding
obligations of the Company, enforceable in accordance with their terms, subject
to the effect of bankruptcy, insolvency, moratorium, fraudulent conveyance and
similar laws relating to or affecting creditors' rights generally and court
decisions with respect thereto and we express no opinion with respect to the
application of equitable principles in any proceeding, whether at law or in
equity, and (b) the holders of such Bonds will be entitled to the benefits
provided by the Indenture.
In rendering the foregoing opinions, we express no opinion as to the
laws of any jurisdiction other than the State of New York and the federal laws
of the United States of America.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, to the reference to us in the prospectus and the related
prospectus supplement forming a part of the Registration Statement, and to the
filing of this opinion as an exhibit to any application made by or on behalf of
the Company or any dealer in connection with the registration of the Bonds under
the securities or blue sky laws of any state or jurisdiction. In giving such
permission, we do not admit hereby that we come within the category of persons
whose consent is required under Section 7 of the Securities Act or the rules and
regulations of the Commission thereunder.
Very truly yours,
/s/ CADWALADER, WICKERSHAM & TAFT
<PAGE> 1
Exhibit 8.1
March 22, 1999
Main Place Funding, LLC
100 North Tryon Street
Charlotte, North Carolina 28255
Re: Main Place Funding, LLC
Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as special counsel for Main Place Funding, LLC, a Delaware
limited liability company (the "Company"), in connection with the issuance from
time to time in one or more series of Mortgage-Backed Bonds (the "Bonds"). A
Registration Statement on Form S-3 relating to the Bonds (the "Registration
Statement") has been filed with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Securities
Act"). As set forth in the Registration Statement, the issuer with respect to a
series of Bonds will be the Company. The Bonds are to be issued under and
pursuant to the provisions of an Indenture between the Company and an
independent trustee.
We have examined the prospectus and the form of prospectus supplement
contained in the Registration Statement (collectively, the "Prospectus") and
such other documents and instruments as we have considered necessary for the
purposes of this opinion.
On the basis of the foregoing, we are of the opinion that the discussion in
the Prospectus under the caption "United States Federal Income Tax
Consequences," to the extent that it constitutes matters of law or legal
conclusions, is correct in all material respects and addresses all material
United States federal income tax consequences of the acquisition, ownership and
disposition of the Bonds in each series. The discussion, however, does not
address all federal income tax consequences applicable to particular categories
of investors that may be subject to special rules under the federal tax laws. In
addition, we are of the opinion that the Bonds will be treated as indebtedness
of the Company for federal income tax purposes.
<PAGE> 2
March 22, 1999
Page 2
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, to the reference to Hunton & Williams in the Prospectus
and to the filing of this opinion as an exhibit to any application made by or on
behalf of the Company or any dealer in connection with the registration of the
Bonds under the securities or blue sky laws of any state or jurisdiction. In
giving such permission, we do not admit hereby that we come within the category
of persons whose consent is required under Section 7 of the Securities Act or
the rules and regulations of the Commission thereunder.
Very truly yours,
/s/ HUNTON & WILLIAMS
<PAGE> 1
Exhibit 8.2
March 22, 1999
Main Place Funding, LLC
100 North Tryon Street
Charlotte, North Carolina 28255
Re: Main Place Funding, LLC
Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as special counsel for Main Place Funding, LLC, a Delaware
limited liability company (the "Company"), in connection with the issuance from
time to time in one or more series of Mortgage-Backed Bonds (the "Bonds"). A
Registration Statement on Form S-3 relating to the Bonds (the "Registration
Statement") has been filed with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Securities
Act"). As set forth in the Registration Statement, the issuer with respect to a
series of Bonds will be the Company. The Bonds are to be issued under and
pursuant to the provisions of an Indenture between the Company and an
independent trustee.
We have examined the prospectus and the form of prospectus supplement
contained in the Registration Statement (collectively, the "Prospectus") and
such other documents and instruments as we have considered necessary for the
purposes of this opinion.
On the basis of the foregoing, we are of the opinion that the discussion in
the Prospectus under the caption "United States Federal Income Tax
Consequences," to the extent that it constitutes matters of law or legal
conclusions, is correct in all material respects and addresses all material
United States federal income tax consequences of the acquisition, ownership and
disposition of the Bonds in each series. The discussion, however, does not
address all federal income tax consequences applicable to particular categories
of investors that may be subject to special rules under the federal tax laws. In
addition, we are of the opinion that the Bonds will be treated as indebtedness
of the Company for federal income tax purposes.
<PAGE> 2
March 22, 1999
Page 2
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, to the reference to Cadwalader, Wickersham & Taft in the
Prospectus and to the filing of this opinion as an exhibit to any application
made by or on behalf of the Company or any dealer in connection with the
registration of the Bonds under the securities or blue sky laws of any state or
jurisdiction. In giving such permission, we do not admit hereby that we come
within the category of persons whose consent is required under Section 7 of the
Securities Act or the rules and regulations of the Commission thereunder.
Very truly yours,
/s/ CADWALADER, WICKERSHAM & TAFT
<PAGE> 1
Exhibit 23.3
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
March 30, 1998 appearing on page 5 of Main Place Real Estate Investment Trust's
Annual Report on Form 10-K for the year ended December 31, 1997 and our report
dated March 30, 1998 appearing on page 2 of Main Place Real Estate Investment
Trust's Annual Report on Form 10-K/A for the year ended December 31, 1997. We
also consent to the reference to us under the heading "Experts" in such
Prospectus.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Charlotte, North Carolina
March 17, 1999
<PAGE> 1
Exhibit 25.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM T-1
Statement of Eligibility and Qualification Under the
Trust Indenture Act of 1939 of a Corporation
Designated to Act as Trustee
U.S. BANK NATIONAL ASSOCIATION
(Exact name of Trustee as specified in its charter)
United States 41-0417860
(State of Incorporation) (I.R.S. Employer
Identification No.)
U.S. Bank Trust Center
180 East Fifth Street
St. Paul, Minnesota 55101
(Address of Principal Executive Offices) (Zip Code)
MAIN PLACE FUNDING, LLC
(Exact name of registrant as specified in its charter)
Deleware 56-2110071
(State of Incorporation) (I.R.S. Employer
Identification No.)
100 North Tryon Street
Charlotte, North Carolina 28255
(Address of Principal Executive Offices) (Zip Code)
MORTGAGE-BACKED BONDS
(Title of the Indenture Securities)
<PAGE> 2
GENERAL
1. GENERAL INFORMATION Furnish the following information as to the Trustee.
(a) Name and address of each examining or supervising authority to which
it is subject.
Comptroller of the Currency
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes
2. AFFILIATIONS WITH OBLIGOR AND UNDERWRITERS If the obligor or any
underwriter for the obligor is an affiliate of the Trustee, describe
each such affiliation.
None
See Note following Item 16.
Items 3-15 are not applicable because to the best of the Trustee's
knowledge the obligor is not in default under any Indenture for which the
Trustee acts as Trustee.
16. LIST OF EXHIBITS List below all exhibits filed as a part of this statement
of eligibility and qualification.
1. Copy of Articles of Association.*
2. Copy of Certificate of Authority to Commence Business.*
3. Authorization of the Trustee to exercise corporate trust powers
(included in Exhibits 1 and 2; no separate instrument).*
4. Copy of existing By-Laws.*
5. Copy of each Indenture referred to in Item 4. N/A.
6. The consents of the Trustee required by Section 321(b) of the act.
7. Copy of the latest report of condition of the Trustee published
pursuant to law or the requirements of its supervising or examining
authority incorporated by reference to File Number 333-56865.
*Incorporated by reference to File Number 333-30939.
<PAGE> 3
NOTE
The answers to this statement insofar as such answers relate to what
persons have been underwriters for any securities of the obligors within three
years prior to the date of filing this statement, or what persons are owners of
10% or more of the voting securities of the obligors or affiliates, are based
upon information furnished to the Trustee by the obligors, While the Trustee has
no reason to doubt the accuracy of any such information, it cannot accept any
responsibility therefor.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, U.S. Bank National Association, an Association organized and existing
under the laws of the United States, has duly caused this statement of
eligibility and qualification to be signed on its behalf by the undersigned,
thereunto duly authorized, and its seal to be hereunto affixed and attested, all
in the City of Saint Paul and State of Minnesota on the 21st day of March 11,
1999.
U.S. BANK NATIONAL ASSOCIATION
/s/ Eve D. Kaplan
-----------------
Eve D. Kaplan
Vice President
/s/ Jo Ann M. Schalk
- --------------------
Jo Ann M. Schalk
Assistant Secretary
<PAGE> 4
EXHIBIT 6
CONSENT
In accordance with Section 321(b) of the Trust Indenture Act of 1939, the
undersigned, U.S. BANK NATIONAL ASSOCIATION hereby consents that reports of
examination of the undersigned by Federal, State, Territorial or District
authorities may be furnished by such authorities to the Securities and Exchange
Commission upon its request therefor.
Dated: March 11, 1999
U.S. BANK NATIONAL ASSOCIATION
/s/ Eve D. Kaplan
-----------------
Eve D. Kaplan
Vice President
