SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 12 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 28, 1998
MERIT Securities Corporation
(Exact name of registrant as specified in charter)
Virginia 03992 54-1736551
(State or other (Commission (IRS Employer
jurisdiction File Number) Identification No.)
of incorporation)
10900 Nuckols Rd. 3rd Floor, Glen Allen, Virginia 23060
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (804) 217-5800
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Item 1. Changes in Control of Registrant.
Not Applicable.
Item 2. Acquisition or Disposition of Assets.
Not Applicable.
Item 3. Bankruptcy or Receivership.
Not Applicable.
Item 4. Changes in Registrant's Certifying Accountant.
Not Applicable.
Item 5. Other Events.3) Gross Margin on Adjustable Rate Loans
On May 28, 1998, the Registrant issued $1,591,150,815 initial principal
balance of its Collateralized Mortgage Bonds, Series 11, Class 1A-1, Class 2A-1,
Class 2A-2, Class 2A-3, Class 3A-1 (the "Bonds") pursuant to the Series 11
Supplement dated as of March 1, 1998 (the "Series 11 Supplement"), to the
Indenture dated as of November 1, 1994 (the "Original Indenture" and,
collectively with the Series 11 Supplement, the "Indenture"), between the
Registrant and Chase Bank Texas National Association, as trustee (the
"Trustee"). Capitalized terms used but not defined herein shall have the
meanings assigned to them in the Indenture. The Bonds were issued with the
initial principal amount as set forth below. The Class Interest Rates and the
Stated Maturities of the Bonds are as follows:
Original Class Interest Stated
Designation Principal Amount Rate Maturity
Class 1A-1 $262,000,000.00 6.58% July 28 2022
Class 1A-2 $238,000,000.00 (1) December 28, 2028
Class 2A-1 $300,000,000.00 (1) March 28, 2018
Class 2A-2 $200,000,000.00 (1) November 28, 2022
Class 2-A3 $166,560,000.00 (1) September 28, 2025
Class 3-A1 $258,173,000.00 (1) April 28, 2027
Class B1 $59,600,000.00 (1) September 28, 2032
Class B2 $34,500,000.00 (1) September 28, 2032
Class B3 $20,000,000.00 (1) September 28, 2032
(1) With respect to each Payment Date, the Class Interest rate per annum
will initially equal (except for Class 2-A1, see below), subject to the
Applicable Cap, One-Month LIBOR, as deter- mined on the Floating Rate
Determination Date, plus, in each case, the Applicable Spread. The Applicable
Spread is initially 0.40% for the Class 1-A2 Bonds, 0.30% for the Class 2-A2
Bonds, 0.45% for the Class 2-A3 Bonds 0.31% for the Class 3-A1 Bonds, 0.70% for
the Class B-1 Bonds, 1.00% for the Class B-2 Bonds, and 1.75% for the Class B-3
Bonds. . The Applicable Cap is 9.50% for the Class 1-A2 Bonds, Class 2-A2 Bonds
and Class 2-A3 Bonds, 11.00% for the Class 3-A1 Bonds, 10.20% for the Class B-1
Bonds, 10.50% for the Class B-2 Bonds and 11.00% for the Class B-3 Bonds. For
the initial Payment Date, the Class Interest Rates per annum will be 6.05% for
the Class 1-A2 Bonds, 5.95% for the Class 2-A2 Bonds, 6.10% for the Class 2-A3
Bonds, 5.96% for the Class 3-A1 Bonds, 6.35% for the Class B-1 Bonds, 6.65%, for
the Class B-2 Bonds and 7.40% for the Class B-3 Bonds. If the Issuer does not
exercise its option to redeem the Bonds when it is first permitted to do so, the
Applicable Spread and Cap will thereafter be increased as described in the
Prospectus Supplement.
As security for the Bonds, the Registrant pledged a pool of conventional,
one- to four-family, fully amortizing first lien Mortgage Loans to the Trustee
pursuant to the Indenture. The Mortgage Loans were purchased by the Registrant
in a privately-negotiated transaction with Issuer Holding Corp. ("IHC") pursuant
to a Sales Agreement dated May 25, 1998, between the Registrant and RMCI.
All Bonds have been sold by the Registrant to
Lehman Brothers Inc. (the "Underwriter") pursuant to an Underwriting
Agreement dated as of September 20, 1996, among the Underwriter, the
Registrant and RMCI.
The description of the Mortgage Loans pledged to the Trustee pursuant
to the Indenture begins on the following page. The amounts contained in the
following tables have been rounded to the nearest dollar amount or
percentage, as applicable. Asterisks (*) in the following tables indicate
values between 0.0% and 0.5%.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
June 1, 1998 MERIT SECURITIES CORPORATION
By: Lisa Cooke
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Description of the Mortgage Pool and Mortgaged Premises
Except as otherwise indicated, the Mortgage Loans underlying the Merit 10
Securities have the following characteristics as of May 28, 1998 (the
"Cut-off Date"):
(Due to rounding conventions in the Scheduled Principal Balance and Percent of
Scheduled Principal Balance columns in each of the following tables, column
totals may not equal the sum of the amounts in such columns.)
Gross Margin (%) % of Scheduled Principal Balance
Group I Group II
2.250 - 2.499 * 0
2.500 - 2.749 100 *
2.750 - 2.999 0 71
3.000 - 3.249 0 26
3.250 - 3.499 0 1
3.500 - 3.749 0 1
3.750 - 3.999 0 1
4.000 - 4.249 0 *
4.250 - 4.499 0 *
4.500 - 4.500 0 *
Totals 100 100
Weighted Average 2.75 2.88
The weighted average Gross Margin of the ARM Loans is 2.83%.
4) Remaining Term to Stated Maturity
Remaining Term (months) % of Scheduled Principal Balance
Group I Group II Group III
1 - 275 0 * 23
276 - 290 * 51 *
291 - 300 * 49 7
301 - 310 1 0 0
311 - 320 1 0 0
321 - 330 53 0 *
331 - 340 21 0 *
341 - 350 4 0 1
351 - 362 20 0 68
Total 100 100 100
The weighted average remaining term to stated maturity is 309 months for
the Loans (for Group I 335 months, for Group II 287 months, Group III 317
months.)
5) Original Loan-to-Value Ratio
Loan-to-Value Ratio % of Scheduled Principal Balance
Group I Group II Group III
50.00 and Below 3 3 1
50.01 - 55.00 2 2 *
55.01 - 60.00 3 2 1
60.01 - 65.00 4 3 1
65.01 - 70.00 8 6 1
70.01 - 75.00 12 9 1
75.01 - 80.00 51 17 6
80.01 - 85.00 2 36 10
85.01 - 90.00 16 4 23
90.01 - 95.00 1 12 40
95.01 - 100.00 * 5 17
Totals 100 100 100
Weighted Average 76.59 77.86 88.99
The weighted average Loan-to-Value is 78.76%.
6) State Distribution
State % of Scheduled Principal Balance
Group I Group II Group III
Alabama 0 0 1
Arizona * * 3
Arkansas 0 0 3
California 84 88 *
Colorado * * *
Florida * 2 4
Georgia 0 * 11
Idaho * * *
Kentucky 0 0 2
Maryland * 2 *
Michigan 0 0 7
Mississippi 0 0 2
Nevada * 1 0
New Jersey * * 0
New Mexico * * *
New York * * *
North Carolina * * 8
Ohio 0 0 2
Oklahoma 0 0 1
Oregon 1 1 2
Pennsylvania * * *
South Carolina 0 * 15
Tennessee 0 0 4
Texas 7 1 26
Utah * * 0
Virginia * 2 3
Washington 6 2 2
Washington DC * 1 0
West Virginia 0 0 3
Others * * *
Totals 100 100 100
*Others include: Connecticut, Delaware, Hawaii, Illinois, Indiana, Louisiana,
Massachusetts, Minnesota, Missouri, Montana, Rhode Island.
