AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 28, 1999
REGISTRATION NO. 333-72621
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
PRE-EFFECTIVE AMENDMENT NO. 2 TO
REGISTRATION STATEMENT
ON FORM S-3/A
UNDER
THE SECURITIES ACT OF 1933
----------------
OAKWOOD MORTGAGE INVESTORS, INC.
(Registrant)
(Exact name of registrant as specified in its charter)
NEVADA 88-0396566
(State of Incorporation) (I.R.S. Employee I.D. No.)
101 CONVENTION CENTER DRIVE, SUITE 850
LAS VEGAS, NEVADA 89109
(702) 949-0056
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
----------------------------
DOUGLAS R. MUIR COPY TO:
7800 MCCLOUD ROAD JACK A. MOLENKAMP
GREENSBORO, NORTH CAROLINA 27409-9634 DAVID B. RICH, III
(336) 664-2360 HUNTON & WILLIAMS
(336) 664-3224 (TELECOPY) RIVERFRONT PLAZA, EAST TOWER
(Name, address, including zip code 951 EAST BYRD STREET
number, and telephone including area RICHMOND, VIRGINIA 23219-4074
code, of agent for service) (804) 788-8200
(804) 788-8218 (TELECOPY)
_______________________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO
THE PUBLIC: FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF
THIS REGISTRATION STATEMENT.
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|
<TABLE>
<CAPTION>
-----------------------
CALCULATION OF REGISTRATION FEE
====================================================================================================================
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
BEING REGISTERED REGISTERED* PER UNIT* OFFERING PRICE* REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Pass-Through Certificates $2,500,000,000 100% $2,500,000,000 $695,000**
- --------------------------------------------------------------------------------------------------------------------
Limited Guarantee of
Oakwood Homes Corporation *** *** *** ***
====================================================================================================================
</TABLE>
* Estimated solely for calculating the registration fee pursuant to Rule
457(a).
** $278 of which was previously paid with the initial filing on February
19, 1999.
*** No additional consideration will be paid for the Limited Guarantee;
accordingly no separate filing fee is being paid herewith pursuant to
Rule 457(m).
----------------------------------
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 THE 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.
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 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 the earlier effective registration statement
for the same offering. | |
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. | |
<PAGE>
Prospectus Supplement to Prospectus dated May 28, 1999
[LOGO]
OMI TRUST 1999-___
ISSUER
OAKWOOD MORTGAGE INVESTORS, INC.
DEPOSITOR
$----------------
SENIOR/SUBORDINATED PASS-THROUGH CERTIFICATES, SERIES 1999-___
OAKWOOD ACCEPTANCE CORPORATION
SELLER AND SERVICER
-------------------------
The trust initially will consist of contracts and mortgage loans secured by
manufactured homes and related real estate with an aggregate principal balance
of approximately $___________. An election will be made to treat a portion of
the assets of the trust as one or more REMICs under the Internal Revenue Code,
and the offered certificates will be regular interests in one of the REMICs. The
underlying accounts, contracts, and mortgage loans are not insured or guaranteed
by any governmental agency. [Oakwood Homes will guaranty some collections on the
contracts and mortgage loans.]
INVESTING IN THE CERTIFICATES INVOLVES RISKS. SEE "RISK FACTORS" ON PAGE S-4 OF
THIS PROSPECTUS SUPPLEMENT AND PAGE 1 OF THE PROSPECTUS.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED
OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS TO WHICH IT RELATES IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
Underwriting
Principal Class Monthly Price to Discounts and Proceeds to
Amount Interest Rate Public Commissions Issuer
------ ------------- ------ ----------- ------
<S> <C> <C> <C> <C> <C>
A-1 Certificates......... $__________ One Month Libor + __%(*) __________% ______% __________%
A-2 Certificates......... $__________ ______% __________% ______% __________%
A-3 Certificates......... $__________ ______% __________% ______% __________%
A-4 Certificates......... $__________ ______% __________% ______% __________%
A-5 Certificates......... $__________ ______% __________% ______% __________%
M-1 Certificates......... $__________ ______%(*) __________% ______% __________%
M-2 Certificates......... $__________ ______%(*) __________% ______% __________%
B-1 Certificates......... $__________ ______%(*) __________% ______% __________%
B-2 Certificates......... $__________ ______%(*) __________% ______% __________%
Total.................... $__________ $___________ $_________ $____________
</TABLE>
*Capped at the weighted average net asset rate.
The price to the public is per certificate, plus accrued interest from
_____ 1, 199___ in the case of the class A-2, A-3, A-4, A-5, M and B
certificates and from the date the certificates are issued, in the case of
the class A-1 certificates. Proceeds to issuer has been calculated before
deducting expenses payable by Oakwood Mortgage, estimated to be
approximately $__________.
The first monthly distribution date will be __________ 15, 199__. The record
date for each distribution date will be the last business day of the month
preceding a distribution date. Delivery of the certificates will be made through
The Depository Trust Company on or about _________ __, 199___, against payment
in immediately available funds.
[Underwriters]
Prospectus Supplement dated _______________.
<PAGE>
IMPORTANT NOTICE ABOUT THE INFORMATION WE PRESENT IN THIS PROSPECTUS
PROSPECTUS SUPPLEMENT AND IN THE ACCOMPANYING PROSPECTUS.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR
TO WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS DOCUMENT MAY ONLY BE USED WHERE IT IS LEGAL
TO SELL THESE SECURITIES. THE INFORMATION IN THIS DOCUMENT MAY ONLY BE ACCURATE
ON THE DATE OF THIS DOCUMENT.
We provide information to you about the certificates in two separate
documents that progressively provide more detail: the accompanying prospectus,
which provides general information, some of which may not apply to your
certificates and this prospectus supplement, which describes the specific terms
of your certificates.
Your certificates will not be listed on any securities exchange.
This prospectus supplement and the accompanying prospectus include
cross-references to captions in these materials where you can find further
related discussions. The following table of contents and the table of contents
included in the accompanying prospectus provide the pages on which these
captions are located.
Although the underwriters intend to make a secondary market in your
certificates, it is not required to do so. A secondary market for your
certificates may not develop. If one does develop, it may not continue or
provide sufficient liquidity.
[We have filed preliminary information regarding the trust's assets and
the certificates with the SEC. The information contained in this document
supersedes all of that preliminary information, which was prepared by the
underwriters for prospective investors.]
Until ____________ all dealers that sell the offered certificates,
whether or not participating in this offering, may be required to deliver a
prospectus and prospectus supplement. This requirement is in addition to the
dealer's obligation to deliver a prospectus and prospectus supplement when
acting as underwriters with respect to their unsold allotments or subscriptions.
<PAGE>
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
Page
----
Summary of Terms.........................................S-1
Risk Factors.............................................S-5
Description of the Offered Certificates..................S-6
General.............................................S-6
[Book-Entry Certificates............................S-7
Collection of Payments on Assets....................S-8
Realized Losses on Liquidated Loans.................S-9
Allocation of Writedown Amounts....................S-10
Distributions......................................S-10
Subordination of the Subordinated
Certificates.......................................S-19
[The Limited Guarantee.............................S-19
The Asset Pool..........................................S-20
General............................................S-20
Fixed Rate Assets..................................S-21
Adjustable Rate Assets.............................S-23
Selected Data......................................S-24
Underwriting Guidelines............................S-33
Conveyance of Assets...............................S-33
[Conveyance of Subsequent Assets and
Pre-Funding Account................................S-36
Maturity and Prepayment Considerations..................S-38
Weighted Average Lives of the Offered Certificates.S-38
Modeling Assumptions and MHP Tables................S-39
[Pre-Funding.......................................S-45
Factors Affecting Prepayments......................S-46
Yield on the Offered Certificates..................S-47
The Trust...............................................S-50
General............................................S-50
The Trustee........................................S-50
Optional Termination...............................S-51
Auction Sale.......................................S-52
Termination of the Agreement.......................S-53
Voting Rights......................................S-53
Reports to Certificateholders......................S-53
Servicing of the Assets.................................S-55
The Servicer.......................................S-55
Servicing Portfolio................................S-56
Delinquency and Loan Loss/Repossession Experience..S-57
Collection and Other Servicing
Procedures.........................................S-59
Servicing Compensation and Payment of Expenses.....S-60
Advances...........................................S-60
Successors to Servicer, Delegation
of Duties..........................................S-61
Use of Proceeds.........................................S-62
Underwriting............................................S-62
Legal Matters...........................................S-64
ERISA Considerations....................................S-64
Ratings.................................................S-68
Legal Investment Considerations.........................S-68
PROSPECTUS
Page
----
Risk Factors.................................................1
Description of the Certificates..............................5
General...................................................5
Book-Entry Procedures.....................................7
Allocation of Collections from the Assets.................9
Optional Redemption or Termination.......................10
Maturity and Prepayment Considerations......................11
Maturity.................................................11
Prepayment Considerations................................11
Yield Considerations........................................12
The Trusts..................................................13
General..................................................13
The Assets...............................................13
Substitution of Contracts or Mortgage Loans..............17
Pre-Funding..............................................18
Distribution Account.....................................19
Reserve Funds............................................19
Insurance................................................19
Delivery of Additional Assets............................24
Investment of Funds......................................24
Certificate Guarantee Insurance..........................25
Oakwood Homes Guarantee..................................25
Alternate Credit Enhancement.............................25
Underwriting Policies.......................................25
<PAGE>
Oakwood's Contract Underwriting Guidelines...............25
General Underwriting Standards for Mortgage Loans...........27
Sale and Servicing of Contracts and Mortgage Loans.........27
Assignment of Contracts and Mortgage Loans...............27
Representations and Warranties...........................29
Servicing................................................30
Advances.................................................33
Compensating Interest....................................34
Maintenance of Insurance Policies and Other Servicing
Procedures...............................................34
The Pooling and Servicing Agreements........................36
The Servicer.............................................36
The Trustee..............................................36
Reports to Certificateholders............................37
Events of Default........................................37
Certificateholder Rights.................................38
Amendment................................................38
Termination..............................................39
Legal Aspects of Contracts and Mortgage
Loans....................................................39
The Contracts............................................39
The Mortgage Loans.......................................44
Environmental Considerations.............................48
Enforceability of Considerations.........................49
Use of Proceeds............................................49
The Company.................................................50
The Servicer................................................50
Federal Income Tax Consequences.............................50
General..................................................51
REMIC Certificates.......................................51
Tax Treatment of Residual Certificates...................64
Taxation of Certain Foreign Holders of REMIC
Certificates.............................................75
Reporting and Tax Administration.........................76
Non-REMIC Certificates...................................77
State Tax Considerations....................................83
ERISA Considerations........................................83
Available Information.......................................85
Incorporation of Certain Documents by
Reference................................................86
Plan of Distribution........................................86
Legal Investment Considerations.............................87
Experts ..................................................88
Legal Matters...............................................88
Index of Terms ............................................89
<PAGE>
SUMMARY OF TERMS
o THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS DOCUMENT AND DOES
NOT CONTAIN ALL OF THE INFORMATION THAT YOU NEED TO CONSIDER IN MAKING YOUR
INVESTMENT DECISION. TO UNDERSTAND MORE COMPLETELY ALL OF THE TERMS OF AN
OFFERING OF THE CERTIFICATES, READ CAREFULLY THIS ENTIRE DOCUMENT AND THE
PROSPECTUS.
O THIS SUMMARY PROVIDES AN OVERVIEW OF CALCULATIONS, CASH FLOWS AND OTHER
INFORMATION TO AID YOUR UNDERSTANDING AND IS QUALIFIED BY THE FULL
DESCRIPTION OF THIS INFORMATION IN THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS.
INFORMATION ABOUT YOUR TRUST
Your certificates are being offered by OMI trust 1999-___, which will be
established by Oakwood Mortgage Investors, Inc., a Nevada corporation. On May
28, 1999 Oakwood Mortgage merged with Oakwood Mortgage Investors, Inc., a North
Carolina corporation. The Nevada company now possesses all of the rights and
obligations of the North Carolina company. In Oakwood Mortgage's view this
change will have no effect on you. Oakwood Mortgage maintains its principal
office at 101 Convention Center Drive, Suite 850, Las Vegas, Nevada 89109. Its
telephone number is (702) 949-0056. Your trust will acquire contracts and
mortgage loans from Oakwood Mortgage. These contracts and mortgage loans will
secure payment of your certificates.
Only the class A-1, class A-2, class A-3, class A-4, class A-5, class M-1, class
M-2, class B-1 and class B-2 certificates are being offered by this prospectus
supplement.
The trustee is _________________________. The trustee's corporate trust
office's address is ______________________________. Its telephone number is
_____________.
NEITHER YOUR CERTIFICATES NOR THE UNDERLYING ASSETS WILL BE GUARANTEED OR
INSURED BY ANY GOVERNMENT AGENCY [OR ANY OTHER INSURER].
Issuance of your certificates is scheduled for _______________.
CREDIT ENHANCEMENT AND SUBORDINATION
The subordination of the class M-1, M-2, B-1, B-2, X and R certificates provides
credit support for the class A-1, A-2, A-3, A-4 and A-5 certificates. The
subordination of the class M-2, B-1, B-2, X and R certificates provides credit
support for the class M-1 certificates. The subordination of the class B-1, B-2,
X and R certificates provides credit support for the class M-2 certificates. The
subordination of the class B-2, X and R certificates provides credit support for
the class B-1 certificates. The subordination of the class X and R certificates
[and the limited guarantee of Oakwood Homes] provide credit support for the
class B-2 certificates.
SEE "DESCRIPTION OF THE OFFERED CERTIFICATES" IN THIS PROSPECTUS SUPPLEMENT.
DISTRIBUTIONS OF INTEREST AND PRINCIPAL
S-1
<PAGE>
In the ordinary course, monies received on the contracts and mortgage loans will
be applied first to distributions of interest on each class
of certificates in the order of their priority, and then to principal. Until the
occurrence of events described in this prospectus supplement, principal
distributions will be applied first to the class A certificates, and only
thereafter to the other classes of certificates. If performance criteria are
met, a portion of principal may be distributed to subordinated classes
simultaneously with principal distributions on the class A certificates.
SEE "DESCRIPTION OF THE OFFERED CERTIFICATES" IN THIS PROSPECTUS SUPPLEMENT.
SERVICING OF THE ASSETS OF YOUR TRUST
Oakwood Acceptance will act as servicer for the assets. It will make advances in
respect of delinquent payments on the assets and in respect of liquidation
expenses and taxes and insurance premiums not paid by an obligor on a timely
basis, if recoverable.
Oakwood Acceptance will be entitled to a monthly fee for servicing the assets
equal to 1.00% per annum of the scheduled principal balance of the assets.
SEE "SERVICING OF THE ASSETS" IN THIS PROSPECTUS SUPPLEMENT.
THE ASSETS CONTAINED IN YOUR TRUST
The primary assets of your trust are:
o manufactured housing installment sales contracts secured by interests in
manufactured homes and, in some cases, by liens on the real estate on
which the manufactured homes are located, and
o mortgage loans secured by first liens on the real estate on which
manufactured homes are permanently affixed.
The total number of assets is ______. Their total principal balance is
approximately $______. Of the total number of assets, ______ are fixed-rate
assets and ______ are variable-rate assets.
SEE "THE ASSET POOL" IN THIS PROSPECTUS SUPPLEMENT.
[YOUR TRUST CONTAINS A PRE-FUNDING ACCOUNT
A portion of your trust's initial assets will consist of cash in a pre-funding
account. The pre-funded amount initially will equal the difference between the
principal balance of the certificates and the principal balance of the initial
assets. Funds in the pre-funding account may be used to purchase additional
manufactured housing installment sales contracts and mortgage loans during the
[first 3 months] following the closing date. These additional assets will have
characteristics very similar to the existing assets. If all of the pre-funded
amount is not used to acquire pre-funded assets, then amounts left in the
pre-funding account after the [3-month] period will be distributed to you as a
principal prepayment. Interest income earned on the pre-funded amount during the
pre-funding period will not be allocated to you, but will belong to Oakwood
Mortgage.
SEE "THE ASSET POOL - CONVEYANCE OF ASSETS" AND " - CONVEYANCE OF SUBSEQUENT
S-2
<PAGE>
ASSETS AND PRE-FUNDING" IN THIS PROSPECTUS SUPPLEMENT.]
THE FINAL SCHEDULED DISTRIBUTION DATE
The final scheduled distribution date for each class of offered certificates is
the distribution date occurring in ________. Because the rate of principal
distributions on the certificates will depend upon the rate of principal
payments, including prepayments, on the assets, the actual final distribution on
the classes of certificates could occur significantly earlier than this date.
[LIMITED GUARANTEE ON THE CLASS B-2 CERTIFICATES
[Oakwood Homes will provide a limited guarantee of distributions on the class
B-2 certificates. This limited guarantee will not be available to support any
other class of certificates.
SEE "DESCRIPTION OF THE OFFERED CERTIFICATES -- THE LIMITED GUARANTEE" IN THIS
PROSPECTUS SUPPLEMENT.]
OPTIONAL TERMINATION OF YOUR TRUST BY THE SERVICER
The servicer may terminate the trust by buying all of the assets at any time
when the current aggregate principal balance of all certificates is less than
______% of their original amount. THE TERMINATION PRICE PAID FOR YOUR TRUST'S
ASSETS DURING AN OPTIONAL TERMINATION MAY, IN SOME CIRCUMSTANCES, BE LESS THAN
THE OUTSTANDING PRINCIPAL BALANCE AND UNPAID INTEREST OF THE CERTIFICATES.
The servicer may also terminate the trust if it determines that there is a
substantial risk that either the pooling REMIC or the issuing REMIC will lose
its REMIC status.
SEE "THE TRUST--OPTIONAL TERMINATION" IN THIS PROSPECTUS SUPPLEMENT.
AUCTION SALE OF YOUR TRUST'S ASSETS
If the servicer does not exercise its optional termination rights when it is
initially permitted to do so, the trustee will solicit bids on the assets
remaining in the trust. THE TERMINATION PRICE PAID FOR YOUR TRUST'S ASSETS
DURING AN AUCTION SALE MAY, IN SOME CIRCUMSTANCES, BE LESS THAN THE OUTSTANDING
PRINCIPAL BALANCE AND UNPAID INTEREST OF THE CERTIFICATES.
SEE "THE TRUST -- AUCTION SALE" IN THIS PROSPECTUS SUPPLEMENT.
FEDERAL INCOME TAX CONSEQUENCES TO YOU
The assets of the trust will be treated as a pooling REMIC for federal income
tax purposes. The regular interests of the pooling REMIC will be treated as a
different REMIC, an issuing REMIC, for federal income tax purposes. Class A-1,
A-2, A-3, A-4, A-5, M-1, M-2, B-1, B-2 and X certificates will be regular
interests in the issuing REMIC. Therefore, your certificates will evidence
debt obligations under the Internal Revenue Code of 1986, as amended, and
interest paid or accrued will be taxable to you. By acceptance of your
certificates, you will be deemed to have agreed to treat your certificate as a
debt instrument for purposes of federal and state income tax, franchise tax, and
any other tax measured by income. The class A-2, A-3, A-4 and A-5 certificates
earn interest at a fixed rate and will be issued with original issue discount
only if their stated principal amount exceeds their issue prices. The class A-1,
M-1, M-2, B-1 and B-2 certificates are variable rate certificates that will be
S-3
<PAGE>
treated as issued with original issue discount, regardless of their issue
prices. We will use ______% MHP as the prepayment assumption to calculate the
accrual rate of original issue discount, if any. However, there is no assurance
as to what the rate of prepayment will be.
SEE "FEDERAL INCOME TAX CONSEQUENCES" IN THE PROSPECTUS.
ERISA CONSIDERATIONS FOR PLANS AND PLAN INVESTORS
Fiduciaries of employee benefit plans and certain other retirement plans that ^
propose to cause a plan to acquire any of the offered certificates should
consult with their own counsel to determine whether the purchase or holding of
the offered certificates could give rise to a transaction that is prohibited
either under ERISA or the Internal Revenue Code. Certain prohibited transaction
exemptions may be applicable to the purchase and holding of the class A
certificates.
BECAUSE THE CLASS M-1, M-2, B-1 AND B-2 CERTIFICATES ARE SUBORDINATED TO OTHER
CLASSES OF CERTIFICATES, THE REQUIREMENTS OF CERTAIN PROHIBITED TRANSACTION
EXEMPTIONS WILL NOT BE SATISFIED. AS A RESULT, THE PURCHASE OR HOLDING OF ANY OF
THESE CERTIFICATES BY A PLAN INVESTOR MAY CONSTITUTE A NON-EXEMPT PROHIBITED
TRANSACTION OR RESULT IN THE IMPOSITION OF EXCISE TAXES OR CIVIL PENALTIES.
ACCORDINGLY, THE CLASS M-1, M-2, B-1 AND B-2 CERTIFICATES ARE NOT OFFERED TO OR
TRANSFERABLE TO PLAN INVESTORS UNLESS THE PLAN INVESTOR MEETS CERTAIN
REQUIREMENTS.
SEE "ERISA CONSIDERATIONS" IN THIS PROSPECTUS SUPPLEMENT AND IN THE PROSPECTUS.
YOUR CERTIFICATES MAY BE LEGAL INVESTMENTS FOR REGULATED ORGANIZATIONS
The class A and M-1 certificates will be mortgage related securities for
purposes of SMMEA as long as they are rated in one of the two highest rating
categories by one or more nationally recognized statistical rating
organizations.
[If pre-funding account is used, classes become mortgage related securities
for SMMEA after pre-funded amount is reduced to zero.]
THE CLASS M-2, B-1 AND B-2 CERTIFICATES WILL NOT BE MORTGAGE RELATED
SECURITIES FOR PURPOSES OF SMMEA BECAUSE THEY ARE NOT RATED IN ONE OF THE TWO
HIGHEST RATING CATEGORIES.
SEE "LEGAL INVESTMENT CONSIDERATIONS" IN THIS PROSPECTUS SUPPLEMENT AND IN THE
PROSPECTUS.
THE RATINGS ASSIGNED TO YOUR CERTIFICATES
It is a condition to the issuance of the certificates that the classes of
certificates obtain the following ratings by ______________ and ______________:
Class A-1 ____ ____
Class A-2 ____ ____
Class A-3 ____ ____
Class A-4 ____ ____
Class A-5 ____ ____
Class M-1 ____ ____
Class M-2 ____ ____
Class B-1 ____ ____
Class B-2 ____ ____
SEE "RATINGS" IN THIS PROSPECTUS SUPPLEMENT.
S-4
<PAGE>
RISK FACTORS
In addition to the risk factors in the prospectus, you should note
the following:
YOU MAY EXPERIENCE A LOSS ON YOUR INVESTMENT IF LOSSES AND DELINQUENCIES ON
ASSETS IN THE TRUST ARE HIGH
Manufactured housing usually depreciates in value. Over time, the market values
of the manufactured homes could be less than the loans they secure. This may
cause delinquencies and may increase the amount of loss following default. In
this event, your trust may not be able to recover the full amount owed, which
may result in a loss on your certificates. We can provide you with no assurance
that the performance of your trust's assets will be similar to the statistical
information provided, in part because the values of manufactured homes can be
sharply affected by downturns in regional or local economic conditions.
Generally, the statistical information provided reflects higher delinquencies
and loan losses since 1994. The statistical information related to the loss
experience of Oakwood Acceptance as servicer is available under "SERVICING OF
THE ASSETS" in this prospectus supplement.
[THE LIMITED GUARANTEE WILL PROVIDE CREDIT ENHANCEMENT FOR THE CLASS B-2
CERTIFICATES ONLY]
[The limited guarantee is an unsecured obligation of Oakwood Homes, and will not
be supported by any credit arrangement. The limited guarantee will not benefit
any class other than the class B-2 certificates.]
LOSSES WILL AFFECT SUBORDINATED CERTIFICATES BEFORE AFFECTING MORE SENIOR
CERTIFICATES
The class M-1, class M-2, class B-1 and class B-2 certificates are subordinated
to the class A-1, A-2, A-3, A-4 and A-5 certificates. Losses in excess of the
credit support provided by the class X and R certificates will be experienced
first by the class B-2 certificates, next by the class B-1 certificates, next by
the class M-2 certificates, and next by the class M-1 certificates. Thereafter,
losses on the assets exceeding the amount of the subordinated certificates could
result in a loss being realized by the class A-1, A-2, A-3, A-4 and A-5
certificates.
PREPAYMENTS MAY CAUSE CASH SHORTFALLS
Obligors are not required to pay interest on their assets after the date of a
full prepayment of principal. As a result, a full prepayment may reduce the
amount of interest received from obligors during that collection period to less
than one month's interest on the assets. If a sufficient number of assets are
prepaid in full, then interest payable on the assets during that collection
period may be less than the interest due on the certificates.
S-5
<PAGE>
[CLASS A-1 CERTIFICATES HAVE AN UNCERTAIN YIELD]
[Class A-1 certificates bear interest based on one-month LIBOR, which is
variable and which changes differently than do other indices. In addition,
regardless of the level of one-month LIBOR, the interest rate of the class A-1
certificates may not exceed the weighted average net asset rate.]
[YEAR 2000 INFORMATION SYSTEMS PROCEDURES]
[The servicer has analyzed the potential effects of year 2000 issues on the
computer systems that support its business. This review included issues
associated with the servicer's internally developed software and software
licensed from others. The servicer also is in the process of reviewing year 2000
issues faced by significant third parties with whom it conducts business.
The servicer has begun remediation of internally developed software to resolve
year 2000 compliance issues. The costs incurred by the servicer to date have not
been material, and the servicer does not anticipate that the expected remaining
costs will be material. Based upon its assessment of internally developed and
licensed software and the status of remediation undertaken to date, the servicer
believes that all of its significant computer systems will be year 2000
compliant before January 1, 2000. The servicer continues to test and monitor
year 2000 compliance issues, and this testing may or may not be successful. You
may experience losses or delays in payment if the servicer does not achieve year
2000 compliance.]
Capitalized terms used in this prospectus supplement but not defined
will have the definitions given to them in the accompanying prospectus. SEE
"INDEX OF TERMS" IN THE PROSPECTUS.
DESCRIPTION OF THE OFFERED CERTIFICATES
GENERAL
The Senior/Subordinated Pass-Through Certificates, Series 1999-___,
will consist of the class A-1, class A-2, class A-3, class A-4, class A-5, class
M-1, class M-2, class B-1, class B-2, class X and class R certificates. Only the
class A-1, class A-2, class A-3, class A-4, class A-5, class M-1, class M-2,
class B-1 and class B-2 certificates are offered by this prospectus supplement.
The class M-1, class M-2, class B-1, class B-2, class X and class R certificates
will
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be subordinated to the class A certificates in respect of distributions of
principal and interest. The offered certificates will be issued in book-entry
form only, in denominations of $1,000 and integral multiples of $1 in excess of
this amount. Definitive certificates, if issued, will be transferable and
exchangeable at the corporate trust office of ______________ at its Corporate
Trust Department. No service charge will be made for any registration of
exchange or transfer, but the trustee may require payment of a sum sufficient to
cover any tax or other governmental charge incurred in connection with the
exchange or transfer.
Distributions of principal and interest on the offered certificates
will be made on the 15th day of each month, or, if this day is not a business
day, on the next succeeding business day, beginning in ____________, to the
persons in whose names the certificates are registered on the record date, which
is the close of business on the last business day of the month preceding the
month in which the distribution date occurs. Each distribution with respect to a
book-entry certificate will be paid to the Depository, which will credit the
amount of this distribution to the accounts of its Participants in accordance
with its normal procedures. Each Participant will be responsible for disbursing
this distribution to the Beneficial Owners that it represents and to each
indirect participating brokerage firm (a "brokerage firm" or "indirect
participating firm") for which it acts as agent. Each brokerage firm will be
responsible for disbursing funds to the Beneficial Owners that it represents.
All credits and disbursements with respect to book-entry certificates are to be
made by the Depository and the Participants in accordance with the Depository's
rules.
The class X certificates are interest-only securities that have no
stated certificate principal balance, but are entitled to receive a distribution
on each distribution date of certain interest amounts, as more fully set forth
in the pooling and servicing agreement. The class R certificates will have no
stated certificate principal balance or Pass-Through Rate, and will represent
the beneficial ownership of the residual interest in each of the REMICs.
[BOOK-ENTRY CERTIFICATES
The offered certificates will be book-entry certificates as described
in the prospectus under "DESCRIPTION OF THE CERTIFICATES -- BOOK-ENTRY
PROCEDURES." The offered certificates will initially be registered in the name
of Cede & Co., the nominee of the Depository Trust Company.
Unless and until the offered certificates are issued in certificated,
fully-registered form, it is anticipated that the only certificateholder of the
offered certificates will be Cede & Co., as nominee of DTC. Beneficial Owners
will not be certificateholders as that term is used in the pooling and servicing
agreement. Beneficial Owners are only permitted to exercise the rights of
certificateholders indirectly through Depository Participants and DTC.
DTC management is aware that some computer applications, systems, and
the like for processing data that are dependent upon calendar dates, including
dates before, on, and after January 1, 2000, may encounter Year 2000 problems.
DTC has informed its Participants and other members of the financial community
that it has developed and is implementing a program so that its systems, as the
same relate to the timely payment of distributions, including principal and
income payments, to certificateholders, book-entry deliveries, and settlement of
S-7
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trades within DTC continue to function appropriately. This program includes a
technical assessment and a remediation plan, each of which is complete.
Additionally, DTC's plan includes a testing phase, which is expected to be
completed within appropriate time frames.
However, DTC's ability to perform properly its services is also
dependent upon other parties, including but not limited to issuers and their
agents, as well as third party vendors from whom DTC licenses software and
hardware, and third party vendors on whom DTC relies for information or the
provision of services, including telecommunication and electrical utility
service providers, among others. DTC has informed the industry that it is
contacting, and will continue to contact, third party vendors from whom DTC
acquires services to:
o impress upon them the importance of these services being Year 2000
compliant; and
o determine the extent of their efforts for Year 2000 remediation ---
and, as appropriate, testing --- of their services.
In addition, DTC is in the process of developing contingency plans as it deems
appropriate.
According to DTC, the foregoing information with respect to DTC has
been provided for informational purposes only and is not intended to serve as a
representation, warranty, or contract modification of any kind.]
COLLECTION OF PAYMENTS ON ASSETS
Oakwood Acceptance Corporation (in this capacity, the "Servicer") will
establish and maintain the Certificate Account for the benefit of the trustee.
The Certificate Account must be an Eligible Account. The Certificate Account is
to be held in trust for the benefit of the trustee on behalf of the
certificateholders, and shall be either in the trustee's name or designated in a
manner that reflects the custodial nature of the account and that all funds in
this account are held for the benefit of the trustee. A single Certificate
Account may be maintained for more than one series of certificates provided that
in this event, the Servicer shall cause separate accounting and records to be
maintained within the Certificate Account with respect to each separate series.
Funds in the Certificate Account will be invested in Eligible Investments that
will mature or be redeemed not later than the business day preceding the
applicable monthly distribution date. Earnings on amounts deposited into the
Certificate Account shall be credited to the account of the Servicer as
servicing compensation in addition to the Servicing Fee and may be used to
offset P&I Advances due from the Servicer in respect of the distribution date
next succeeding the date on which these earnings were made or, at the Servicer's
option, may be released to the Servicer on the related distribution date. The
amount of any losses incurred in respect of any of these investments shall be
deposited into the Certificate Account by the Servicer out of its own funds
promptly after any of these losses are incurred.
All payments in respect of principal and interest on the assets
received by the Servicer on or after the Cut-off Date, exclusive of collections
relating to scheduled payments due on or prior to the Cut-off Date, including
principal prepayments and net liquidation proceeds, will be deposited into the
Certificate Account no later than the second business day following the
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<PAGE>
Servicer's receipt. Amounts collected as late payment fees, extension fees,
assumption fees or similar fees will be retained by the Servicer as part of its
servicing compensation. In addition, amounts paid by Oakwood Acceptance for
assets repurchased as a result of breach of a representation or warranty under
the pooling and servicing agreement and amounts required to be deposited upon
substitution of a qualified substitute asset because of a breach of a
representation or warranty, as described under "THE ASSET POOL -- CONVEYANCE OF
ASSETS" IN THIS PROSPECTUS SUPPLEMENT, will be paid into the Certificate
Account.
On or prior to the business day before each distribution date, the
Servicer will remit all scheduled payments of principal and interest due on the
assets during the Collection Period and collected by the Servicer and all
unscheduled collections in respect of principal and interest on the assets
received during the related Prepayment Period, in each case to the extent these
collections comprise part of the Available Distribution Amount for the upcoming
distribution date, together with the amount of any required Advances to the
trustee for deposit into the Distribution Account. If, however, the Certificate
Account is maintained by the trustee, the trustee may withdraw this amount, and
any portion of the P&I Advance to be covered by investment earnings on the
Certificate Account, from the Certificate Account on the applicable distribution
date and deposit it into the Distribution Account. In such event, the Servicer
will remit the portion, if any, of the required P&I Advance that is not to be
covered by investment earnings on the Certificate Account to the trustee on
business day preceding the distribution date for deposit into the Distribution
Account. The Distribution Account shall be an Eligible Account established and
maintained by the trustee.
The trustee or its Paying Agent will withdraw funds from the
Distribution Account, but only to the extent of the Available Distribution
Amount, to make distributions to certificateholders as specified under " --
DISTRIBUTIONS -- PRIORITY OF DISTRIBUTIONS" IN THIS PROSPECTUS SUPPLEMENT.
From time to time, as provided in the pooling and servicing agreement,
the Servicer will also withdraw funds from the Certificate Account for other
purposes as permitted by the pooling and servicing agreement.
REALIZED LOSSES ON LIQUIDATED LOANS
The Principal Distribution Amount for any distribution date is intended
to include the Scheduled Principal Balance of each asset that became a
liquidated loan during the related Prepayment Period. A Realized Loss will be
incurred on a liquidated loan in the amount, if any, by which the net
liquidation proceeds from the liquidated loan are less than the unpaid principal
balance of the liquidated loan, plus accrued and unpaid interest thereon, plus
amounts reimbursable to the Servicer for previously unreimbursed Servicing
Advances. To the extent that the amount of the Realized Loss is in excess of
interest collected on the nondefaulted assets in excess of certain interest
payments due to be distributed on the offered certificates and any portion of
this interest required to be paid to a Servicer other than Oakwood Acceptance as
servicing compensation ("Excess Interest"), then the amount of this shortfall
will be allocated to
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the subordinated certificates as a Writedown Amount. SEE " -- ALLOCATION OF
WRITEDOWN AMOUNTS".
ALLOCATION OF WRITEDOWN AMOUNTS
Any Writedown Amount on a distribution date will be allocated to reduce
to zero the certificate principal balance of a class, as adjusted for
write-downs, in the following order:
o first, to the class B-2 certificates;
o second, to the class B-1 certificates;
o third, to the class M-2 certificates; and
o fourth, to the class M-1 certificates.
DISTRIBUTIONS
AVAILABLE DISTRIBUTION AMOUNT
The Available Distribution Amount for a distribution date will include
o Monthly Payments of principal and interest due on the assets
during the related Collection Period, regardless of whether these
payments were actually collected from the obligors or advanced by
the Servicer and unscheduled payments received with respect to the
assets during the related Prepayment Period, including principal
prepayments, proceeds of repurchases, net liquidation proceeds and
net insurance proceeds, less
o if Oakwood Acceptance is not the Servicer, Servicing Fees for the
related Collection Period, amounts required to reimburse the
Servicer for previously unreimbursed Advances in accordance with
the pooling and servicing agreement, amounts required to reimburse
Oakwood Mortgage or the Servicer for reimbursable expenses in
accordance with the pooling and servicing agreement and amounts
required to reimburse any party for an overpayment of a Repurchase
Price for an asset.
DISTRIBUTIONS
Distributions will be made on each distribution date to holders of
record on the preceding record date. Distributions on a class of certificates
will be allocated among the certificates of the class in proportion to their
percentage interests.
INTEREST
On each distribution date, holders of the class A certificates will be
entitled to receive, to the extent of the Available Distribution Amount:
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<PAGE>
o interest accrued on their class during the related Interest
Accrual Period at the then-applicable Pass-Through Rate on the
certificate principal balance of their class immediately prior to
the distribution date (the "Interest Distribution Amount"), plus
o any interest amounts remaining unpaid from a previous distribution
date, plus interest accrued on this amount during the related
Interest Accrual Period, at the then applicable Pass-Through Rate.
On each distribution date, holders of the subordinated certificates
will be entitled to receive, to the extent of the Available Distribution Amount
and on a subordinated basis as described under " -- PRIORITY Of DISTRIBUTIONS"
[and, in the case of the class B-2 certificates, to the extent of any Limited
Guarantee Payment Amounts:]
o interest accrued on their class during the related Interest
Accrual Period at the then-applicable Pass-Through Rate on the
certificate principal balance immediately following the most
recently preceding distribution date, reduced by all Writedown
Amounts allocated on that distribution date, of their class
immediately prior to the distribution date (the "Interest
Distribution Amount"), plus
o any interest amounts remaining unpaid from a previous distribution
date, plus interest accrued on this amount during the related
Interest Accrual Period, at the then applicable Pass-Through Rate.
Interest Accrual Period shall mean, with respect to each distribution
date:
o for the class A-1 certificates, the period commencing on the 15th
day of the preceding month through the 14th day of the month in
which this distribution date is deemed to occur, except that the
first Interest Accrual Period for the class A-1 certificates will
be the period from the closing date through ______________, and
o for the other classes of offered certificates, the calendar month
preceding the month in which the distribution date occurs.
Interest on the class A-1 certificates will be calculated on the basis of a
360-day year and the actual number of days elapsed in the applicable Interest
Accrual Period. Interest on the other classes of offered certificates will be
calculated on the basis of a 360-day year consisting of twelve 30-day months.
The Pass-Through Rate for the classes of offered certificates on any
distribution date will be the per annum rates set forth on the cover page of
this prospectus supplement.
In addition, on each distribution date, to the extent of the Available
Distribution Amount and on a subordinated basis as described under " -- PRIORITY
OF DISTRIBUTIONS" [and, in the case of the class B-2 certificates, the extent of
any Limited Guarantee Payment Amounts] the holders of the subordinated
certificates will be entitled to receive
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<PAGE>
o interest accrued during the related Interest Accrual Period at the
applicable Pass-Through Rate on any related Writedown Amount (the
class' "Writedown Interest Distribution Amount"), plus
o any interest amounts remaining unpaid from a previous distribution
date, plus interest accrued on this amount during the related
Interest Accrual Period at the then applicable Pass-Through Rate
(the class' "Carryover Writedown Interest Distribution Amount").
SEE " -- REALIZED LOSSES ON LIQUIDATEd LOANS."
[FLOATING RATE DETERMINATION
[Generally, the Floating Rate Determination Date for any Interest
Accrual Period is the second London banking day prior to the Interest Accrual
Period. For the initial Interest Accrual Period the Floating Rate Determination
Date is the closing date. On each Floating Rate Determination Date, the Servicer
will determine the arithmetic mean of the LIBOR quotations for one-month
Eurodollar deposits ("One-Month LIBOR") for the succeeding Interest Accrual
Period on the basis of the Reference Banks' offered LIBOR quotations provided to
the Servicer as of 11:00 a.m., London time, on the Floating Rate Determination
Date. With respect to a Floating Rate Determination Date, Reference Banks means
leading banks engaged in transactions in Eurodollar deposits in the
international Eurocurrency market with an established place of business in
London, whose quotations appear on the Bloomberg Screen US0001M Index page on
the Floating Rate Determination Date in question and which have been designated
as such by the Servicer and are able and willing to provide these quotations to
the Servicer on each Floating Rate Determination Date; and Bloomberg Screen
US0001M Index Page means the display designated as page US0001M on the Bloomberg
Financial Markets Commodities News, or another page as may replace this page on
that service for the purpose of displaying LIBOR quotations of major banks. If
any Reference Bank should be removed from the Bloomberg Screen US0001M Index
Page or in any other way fails to meet the qualifications of a Reference Bank,
the Servicer may, in its sole discretion, designate an alternative Reference
Bank.
o On each Floating Rate Determination Date, One-Month LIBOR for the
next succeeding Interest Accrual Period will be established by the
Servicer as follows:
o if, on any Floating Rate Determination Date, two or more of the
Reference Banks provide offered One-Month LIBOR quotations on the
Bloomberg Screen US0001M Index Page, One-Month LIBOR for the next
applicable Interest Accrual Period will be the arithmetic mean of
the offered quotations, rounding the arithmetic mean, if
necessary, to the nearest five decimal places.
o if, on any Floating Rate Determination Date, only one or none of
the Reference Banks provides offered quotations, One-Month LIBOR
for the next applicable Interest Accrual Period will be the higher
of:
o One-Month LIBOR as determined on the previous Floating Rate
Determination date, and
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o the Reserve Interest Rate.
The Reserve Interest Rate will be the rate per annum that the Servicer
determines to be either
o the arithmetic mean, rounding the arithmetic mean upwards if
necessary to the nearest five decimal places, of the one-month
Eurodollar lending rate that New York City banks selected by the
Servicer are quoting, on the relevant Floating Rate Determination
Date, to the principal London offices of at least two leading
banks in the London interbank market, or
o in the event that the Servicer can determine no arithmetic mean,
the lowest one-month Eurodollar lending rate that the New York
City banks selected by the Servicer are quoting on the Floating
Rate Determination Date to leading European banks.
If, on any Floating Rate Determination Date, the Servicer is required but is
unable to determine the Reserve Interest Rate in the manner provided, One-Month
LIBOR for the next applicable Interest Accrual Period will be One-Month LIBOR as
determined on the previous Floating Rate Determination Date.
One-Month LIBOR for an Interest Accrual Period shall not be based on
One-Month LIBOR for the previous Interest Accrual Period for two consecutive
Floating Rate Determination Dates. If One-Month LIBOR for an Interest Accrual
Period would be based on One-Month LIBOR for the previous Floating Rate
Determination Date for the second consecutive Floating Rate Determination Date,
the Servicer shall select an alternative index over which the Servicer has no
control used for determining one-month Eurodollar lending rates that is
calculated and published or otherwise made available by an independent third
party.
The establishment of One-Month LIBOR, or an alternative index, by the
Servicer and the Servicer's subsequent calculation of the Pass-Through Rate on
the class A-1 certificates for the relevant Interest Accrual Period, in the
absence of manifest error, will be final and binding.
This table provides you with monthly One-Month LIBOR rates on the last
day of the related calendar month beginning in 1995, as published by Bloomberg.
The following does not purport to be a prediction of the performance of
One-Month LIBOR in the future.
<TABLE>
<CAPTION>
MONTH 1999 1998 1997 1996 1995
- ----- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
January...................... 4.94% 5.60% 5.44% 5.44% 6.09%
February..................... 4.96 5.69 5.44 5.31 6.13
March........................ 4.94 5.69 5.69 5.44 6.13
April........................ 4.90 5.66 5.69 5.44 6.06
May.......................... 5.66 5.69 5.43 6.06
June......................... 5.66 5.69 5.47 6.13
July......................... 5.66 5.63 5.46 5.88
August....................... 5.63 5.66 5.44 5.88
September.................... 5.38 5.66 5.43 5.88
October...................... 5.25 5.65 5.38 5.83
November..................... 5.62 5.97 5.56 5.98
December..................... 5.06 5.72 5.50 5.69]
</TABLE>
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PRINCIPAL
The Principal Distribution Amount for any distribution date will equal
the sum of the following amounts:
o the sum of the principal components of all Monthly Payments
scheduled to be made on the Due Date occurring during the related
Collection Period on the assets that were outstanding at the
opening of business on this Due Date, regardless of whether such
Monthly Payments were received by the Servicer from the obligors,
not including any Monthly Payments due on liquidated loans or
repurchased assets;
o the sum of the amounts of all principal prepayments received by
the Servicer on the assets during the related Prepayment Period;
o the Scheduled Principal Balance of any asset that became a
liquidated loan during the related Prepayment Period; and
o the Scheduled Principal Balance of any asset that was purchased or
repurchased by the Servicer, Oakwood Acceptance or Oakwood
Mortgage during the related Prepayment Period.
The Class A Principal Distribution Amount for any distribution date
will equal
o prior to the Cross-over Date, the Principal Distribution Amount,
o on any distribution date as to which the Principal Distribution
Tests are not met, the Principal Distribution Amount, or
o on any other distribution date, the class A percentage of the
Principal Distribution Amount.
The Class M-1 Principal Distribution Amount for any distribution date
will equal
o as long as any class A certificates remain outstanding and prior
to the Cross-over Date, zero,
o on any distribution date as to which the Principal Distribution
Tests are not met and any class A certificates remain outstanding,
zero,
o on any distribution date as to which the Principal Distribution
Tests are not met and the class A certificates have been retired,
the Principal Distribution Amount, or
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o on any other distribution date, the class M-1 percentage of the
Principal Distribution Amount.
The Class M-2 Principal Distribution Amount for a distribution date
will equal
o as long as any class A certificates or any class M-1 certificates
remain outstanding and prior to the Cross-over Date, zero;
o on any distribution date as to which the Principal Distribution
Tests are not met and any class A certificates or any class M-1
certificates remain outstanding, zero,
o on any distribution date as to which the Principal Distribution
Tests are not met and the class A certificates and the class M-1
certificates have been retired, the Principal Distribution Amount,
or
o on any other distribution date, the class M-2 percentage of the
Principal Distribution Amount.
The Class B-1 Principal Distribution Amount for any distribution date
will equal
o as long as any class A certificates or any class M certificates
remain outstanding and prior to the Cross-over Date, zero,
o on any distribution date as to which the Principal Distribution
Tests are not met and any class A certificates or any class M
certificates remain outstanding, zero,
o on any distribution date as to which the Principal Distribution
Tests are not met and the class A certificates and the class M
certificates have been retired, the Principal Distribution Amount,
or
o on any other distribution date, the class B-1 percentage of the
Principal Distribution Amount.
The Class B-2 Principal Distribution Amount for any distribution date
will equal
o as long as any class A certificate, any class M certificates or
any class B-1 certificates remain outstanding and prior to the
Cross-over Date, zero,
o on any distribution date as to which the Principal Distribution
Tests are not met and any class A certificates, any class M
certificate or any class B-1 certificates remain outstanding,
zero,
o on any distribution date as to which the Principal Distribution
Tests are not met and the class A certificates, the class M
certificates and the class B-1 certificates have been retired, the
Principal Distribution Amount, or
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<PAGE>
o on any other distribution date, the class B-2 percentage of the
Principal Distribution Amount.
For any distribution date, if the Principal Distribution Amount for a
class exceeds the certificate principal balance of that class, less any
Principal Distribution Amounts remaining unpaid from previous distribution
dates, with respect to this class and distribution date, then these amounts
shall be allocated to the Principal Distribution Amount of the relatively next
junior class of certificates. If the class A, class, class M and class B
certificates have not been reduced to zero on or before a distribution date,
then amounts then allocable to the Class B-2 Principal Distribution Amount shall
be allocated first to the Class B-1 Principal Distribution Amount, next to the
Class M-2 Principal Distribution Amount, next to the Class M-1 Principal
Distribution Amount, next to the Class A Principal Distribution Amount, and
finally to the Class B-2 Principal Distribution Amount, to the extent that
allocation of these amounts to the Class B-2 Principal Distribution Amount would
reduce the class B-2 certificate principal balance below the Class B-2 Floor
Amount.
The principal distribution percentage for any class is the percentage
derived from the fraction, which shall not be greater than 1, the numerator of
which is the certificate principal balance of the class, as adjusted for
write-downs, immediately prior to the related distribution date, and the
denominator is the sum of the aggregate certificate principal balances, as
adjusted for write-downs, of all other classes of certificate immediately prior
this distribution date.
PRIORITY OF DISTRIBUTIONS
On each distribution date the Available Distribution Amount will be
distributed in the following amounts and in the following order of priority:
(1) first, concurrently, to each class of the class A certificates,
their Interest Distribution Amount for that distribution date pro rata among the
class A certificates based on their respective Interest Distribution Amounts and
then any Interest Distribution Amounts remaining unpaid from any previous
distribution date, plus interest on this carryover amount, if any, for that
distribution date, pro rata among the classes of class A certificates based on
their respective carryover amounts;
(2) second, to the class M-1 certificates, their Interest Distribution
Amount for that distribution date and then any Interest Distribution Amounts
remaining unpaid from any previous distribution date, plus interest on this
carryover amount, if any, for that distribution date;
(3) third, to the class M-2 certificates, their Interest Distribution
Amount for that distribution date and then any Interest Distribution Amounts
remaining unpaid from any previous distribution date, plus interest on this
carryover amount, if any, for that distribution date;
(4) fourth, to the class B-1 certificates, their Interest Distribution
Amount for that distribution date and then any Interest Distribution Amounts
remaining unpaid from any
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previous distribution date, plus interest on this carryover amount, if any, for
that distribution date;
(5) fifth, to the class B-2 certificates, their Interest Distribution
Amount for that distribution date and then any Interest Distribution Amounts
remaining unpaid from any previous distribution date, plus interest on this
carryover amount, if any, for that distribution date;
(6) sixth, concurrently, to each class of the class A certificates, any
Principal Distribution Amounts remaining unpaid previous distribution dates, to
be allocated among the class A certificates pro rata based on their respective
unpaid Principal Distribution Amounts;
(7) seventh, to the class A certificates, the Class A Principal
Distribution Amount, allocated in the following sequential order:
o first, to the class A-1 certificates in reduction of its
certificate principal balance, until reduced to
zero;
o second, to the class A-2 certificates in reduction of its
certificate principal balance, until reduced
to zero;
o third, to the class A-3 certificates in reduction of its
certificate principal balance, until reduced to
zero;
o fourth, to the class A-4 certificates in reduction of its
certificate principal balance, until reduced
to zero; and
o fifth, to the class A-5 certificates in reduction of its
certificate principal balance, until reduced to
zero;
PROVIDED, HOWEVER, that on any distribution date on which the Pool Scheduled
Principal Balance is less than the aggregate certificate principal balance of
the class A certificates immediately prior to the related distribution date, the
Class A Principal Distribution Amount will be allocated among the class A
certificates PRO RATA based upon their respective certificate principal
balances.
(8) eighth, to the class M-1 certificates, any related Writedown
Interest Distribution Amount for the related distribution date, any related
Carryover Writedown Interest Distribution Amount for the related distribution
date, any related Principal Distribution Amounts remaining unpaid from previous
distribution dates, and any related Principal Distribution Amount until the
class M-1 certificate principal balance is reduced to zero;
(9) ninth, to the class M-2 certificates, any related Writedown
Interest Distribution Amount for the related distribution date, any related
Carryover Writedown Distribution Amount for the related distribution date, any
related Principal Distribution Amounts remaining
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unpaid from previous distribution dates, and any related Principal Distribution
Amount until the class M-2 certificate principal balance is reduced to zero;
(10) tenth, to the class B-1 certificates, any related Writedown
Interest Distribution Amount for the related distribution date, any related
Carryover Writedown Interest Distribution Amount for the related distribution
date, any related Principal Distribution Amounts remaining unpaid from previous
distribution dates, and any related Principal Distribution Amount until the
class B-1 certificate principal balance is reduced to zero;
(11) eleventh, to the class B-2 certificates, any related Writedown
Interest Distribution Amount for the related distribution date, any related
Carryover Writedown Interest Distribution Amount for the related distribution
date, any related Principal Distribution Amounts remaining unpaid from previous
distribution dates, and any related Principal Distribution Amount until the
class B-2 certificate principal balance is reduced to zero;
(12) twelfth, if Oakwood Acceptance is the Servicer, to the Servicer in
the following sequential order:
(i) the Servicing Fee with respect to the related distribution
date; and
(ii) any Servicing Fees from previous distribution dates
remaining unpaid;
(13) thirteenth, to the class X certificates, in the following
sequential order:
(i) the current Class X Strip Amount; and
(ii) any Class X Strip Amounts from previous distribution
dates remaining unpaid; and
(14) finally, any remainder to the class R certificates.
The Cross-over Date will be the later to occur of
o the distribution date occurring in _________ and
o the first distribution date on which the percentage equivalent
of a fraction, which shall not be greater than 1, the numerator
of which is the aggregate certificate principal balance as
adjusted for write-downs of the subordinated certificates for the
related distribution date and the denominator of which is the Pool
Scheduled Principal Balance on the related distribution date,
equals or exceeds ____ times the percentage equivalent of a
fraction, which shall not be greater than 1, the numerator of
which is the initial aggregate certificate principal balance as
adjusted for write-downs of the subordinated certificates and the
denominator of which is the Pool Scheduled Principal Balance as of
the Cut-off Date.
The Principal Distribution Tests are met in respect of a distribution
date if the following conditions are satisfied:
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o the Average Sixty Day Delinquency Ratio as of the related
distribution date does not exceed ___%; (2) the Average Thirty-Day
Delinquency Ratio as of the related distribution date does not
exceed ___%;
o the Cumulative Realized Losses as of the related distribution date
do not exceed a specified percentage of the original Pool
Scheduled Principal Balance, depending on the year in which the
related distribution date occurs; and
o the Current Realized Loss Ratio as of the related distribution
date does not exceed ___%.
The Average Sixty-Day Delinquency Ratio and the Average Thirty-Day
Delinquency Ratio are, in general, the ratios of the average of the aggregate
principal balances of assets delinquent 60 days or more and 30 days or more,
respectively, for the preceding three Collection Periods to the average Pool
Scheduled Principal Balance for these periods. Cumulative Realized Losses are,
in general, the aggregate Realized Losses incurred in respect of liquidated
loans since the Cut-off Date. The Current Realized Loss Ratio is, in general,
the ratio of the aggregate Realized Losses incurred on liquidated loans for the
periods specified in the pooling and servicing agreement to an average Pool
Scheduled Principal Balance specified in the pooling and servicing agreement.
With respect to any distribution date the Class B-2 Floor Amount will
mean
o ____% of the Pool Scheduled Principal Balance as of the Cut-off
Date, if the class A, class M and class B-1 certificates have not
been reduced to zero immediately prior to the related distribution
date, and
o zero, if the class A, class M and class B-1 certificates have been
reduced to zero immediately prior to the related distribution
date.
SUBORDINATION OF THE SUBORDINATED CERTIFICATES
The primary credit support for the class A certificates is the
subordination of the subordinated certificates, effected by the allocation of
Writedown Amounts as described in this prospectus supplement and by the
preferential application of the Available Distribution Amount to the class A
certificates relative to the subordinated certificates to the extent described
in this prospectus supplement. SEE " -- DISTRIBUTIONS -- PRIORITY OF
DISTRIBUTIONS" IN THIS PROSPECTUS SUPPLEMENT.
[THE LIMITED GUARANTEE
The class B-2 certificateholders will have the benefit of a limited
guarantee (the "Limited Guarantee") provided by Oakwood Homes. The Limited
Guarantee will not be available to support the other classes of certificates.
Pursuant to the Limited Guarantee, the trustee shall be entitled to receive on
each distribution date for application on the class B-2 certificates the Limited
Guarantee Payment Amount, if any, for the related distribution date. The
S-19
<PAGE>
Limited Guarantee Payment Amount for any distribution date after giving effect
to the allocation of the Available Distribution Amount for this date will equal
the amount of shortfalls in amounts due on the class B-2 certificates on the
related distribution date, but will not exceed the sum of any unpaid Interest
Distribution Amount and carryover amounts payable pursuant to clause (5) under "
- -- PRIORITY Of DISTRIBUTIONS" IN THIS PROSPECTUS SUPPLEMENT, and any unpaid
Writedown Interest Distribution Amount, Carryover Writedown Interest
Distribution Amount, any Principal Distribution Amounts remaining unpaid from
previous distribution dates, and Principal Distribution Amount payable on the
related distribution date pursuant to clause (11) under " -- PRIORITY OF
DISTRIBUTIONS" IN THIS PROSPECTUS SUPPLEMENT.
The Limited Guarantee will be an unsecured general obligation of
Oakwood Homes and will not be supported by any letter of credit or other credit
enhancement arrangement. Payments under the Limited Guarantee will be allocated
only to the class B-2 certificates and these payments will not benefit in any
way, or result in any payment to, the other classes of certificates.
The consolidated financial statements of Oakwood Homes and its
subsidiaries as of September 30, ____ and ____ and for each of the three years
in the period ended September 30, ____, included in the Annual Report on Form
10-K of Oakwood Homes for the year ended September 30, ____, are incorporated by
reference into the prospectus and this prospectus supplement and shall be deemed
to be a part of the prospectus and this prospectus supplement. Any statement
contained in a document incorporated by reference in the prospectus and this
prospectus supplement shall be modified or superseded for purposes of the
prospectus and this prospectus supplement to the extent that a statement
contained in the prospectus or this prospectus supplement, or in any other
subsequently filed document which also is incorporated by reference in the
prospectus or this prospectus supplement, modifies or supersedes the statement.
Any statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of the prospectus or this
prospectus supplement.
All financial statements of Oakwood Homes and its subsidiaries included
in the documents filed by Oakwood Homes pursuant to Section 13(a), 13(d), 14 or
15(d) of the Securities Exchange Act of 1934, as amended, subsequent to the date
of this prospectus supplement and prior to the termination of the offering of
the offered certificates shall be deemed to be incorporated by reference into
this prospectus supplement and to be a part hereof from the respective dates of
filing those documents.
This table presents selected financial information of Oakwood Homes and
its subsidiaries:
S-20
<PAGE>
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SEPTEMBER 30,
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Net sales................................... $_______ $________ $________
Total revenues.............................. $_______ $________ $________
Net income.................................. $_______ $________ $________
Earnings per common share
Basic.................................... $_______ $________ $________
Diluted.................................. $_______ $________ $________
Total assets................................ $_______ $________ $________
Notes and bonds payable..................... $_______ $________ $________]
</TABLE>
THE ASSET POOL
GENERAL
The certificates represent the entire beneficial ownership interest in
OMI trust 1999-___. This trust will be established by the pooling and servicing
agreement dated as of __________, together with the standard terms, July 1998
Edition, among Oakwood Mortgage Investors, Inc., the Servicer and the trustee.
Oakwood Mortgage will acquire the assets from Oakwood Acceptance under a sales
agreement on the closing date. Oakwood Acceptance will have funded the
origination of each asset, either in its own name or in the name of Oakwood
Mobile Homes, Inc. or another manufactured housing dealer. Each asset not
originated directly in Oakwood Acceptance's name will have been assigned to
Oakwood Acceptance immediately after its origination. Each asset will be either
an installment sales contract secured by a unit of manufactured housing or a
residential mortgage loan secured by a lien on the real estate on which the
manufactured home is deemed permanently affixed. You will find a description of
Oakwood Acceptance's general practices with respect to the origination of
manufactured housing contracts and mortgage loans in the prospectus under
"UNDERWRITING POLICIES."
Under the pooling and servicing agreement, the manufactured homes
securing the assets are required to comply with federal law requirements. These
statutes require that the manufactured homes have a minimum of 400 square feet
of living space, a minimum width of 102 inches and be of a kind customarily used
at a fixed location. These statutes also require that the manufactured homes be
transportable in one or more sections, be built on a permanent chassis and
designed to be used as dwellings, with or without permanent foundations, when
connected to the required utilities. The manufactured homes include the
plumbing, heating, air conditioning and electrical systems. Oakwood Acceptance's
management estimates that in excess of 90% of the manufactured homes are used as
primary residences by the obligors.
The pooling and servicing agreement requires the Servicer to maintain
or cause to be maintained standard hazard insurance policies with respect to
each manufactured home and mortgaged property. Generally, no other insurance
will be maintained with respect to the manufactured homes, the mortgaged
properties or the assets. SEE "THE TRUSTS -- INSURANCE -- HAZARD INSURANCE --
STANDARD HAZARD INSURANCE POLICIES" IN THE PROSPECTUS.
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<PAGE>
Oakwood Mortgage will convey to the trustee the assets and all rights
to receive payments due after _________ 1, 19___ (the "Cut-off Date"), including
scheduled payments due after the Cut-off Date but received prior to this date,
and prepayments and other unscheduled collections on the assets received on or
after the Cut-off Date. The right to payments that were due on or prior to the
Cut-off Date but which are received later will not be conveyed to Oakwood
Mortgage by Oakwood Acceptance, and these payments will be the property of
Oakwood Acceptance when collected. The Servicer will retain physical possession
of the contract documents. Except to the extent required to service a mortgage
loan, the trustee will maintain physical possession of the mortgage loan
documents. SEE " -- CONVEYANCE OF ASSETS" IN THIS PROSPECTUS SUPPLEMENT.
FIXED RATE ASSETS
The assets will consist of ________ Fixed Rate Assets having an
aggregate Scheduled Principal Balance as of the Cut-off Date of approximately
$______________. A total of _______ Fixed Rate Assets, representing
approximately ____% of the Fixed Rate Assets, are step-up rate loans. The
remainder of the Fixed Rate Assets are Level Payment Loans. Step-up rate loans
are assets that provide for periodic increases of 0.50%, 0.75%, 1.00%, 1.25% or
1.50% in the applicable asset rates at the end of intervals of twelve months
during the first five years following origination (the "Step-up Periods"), after
which the asset rates are fixed. The total amount and the principal portion of
each Monthly Payment on any step-up rate loan during any period is determined on
a basis that would cause the asset to be fully amortized over its term if the
asset were to bear interest during its entire term at the asset rate applicable
during this period and as if the asset were to provide for level payments over
its entire term based on the asset rate. In addition to interest rate
adjustments during their Step-up Periods, some step-up rate loans will
experience a one-time increase in their asset rates with respect to their final
Monthly Payments. The statistical information concerning the Fixed Rate Assets
sets forth only the asset rates borne by these assets as of the Cut-off Date.
SEE "THE TRUST -- THE ASSETS" IN THE PROSPECTUS.
Except in the case of the step-up rate loans during their Step-up
Periods, each Fixed Rate Asset bears interest at a fixed annual percentage rate
and provides for level payments over the term of the asset that fully amortize
the principal balance of the asset. All of the Fixed Rate Assets are actuarial
obligations. The portion of each Monthly Payment for any Fixed Rate Asset
allocable to principal is equal to the total amount of the Monthly Payment less
the portion allocable to interest. The portion of each Monthly Payment due in a
particular month that is allocable to interest is a precomputed amount equal to
one month's interest on the principal balance of the Fixed Rate Asset, which
principal balance is determined by reducing the initial principal balance by the
principal portion of all Monthly Payments that were due in prior months,
regardless of whether the Monthly Payments were made in a timely fashion, and
all prior partial principal prepayments. Thus, each scheduled Monthly Payment on
an asset will be applied to interest and to principal in accordance with the
precomputed allocation regardless of whether the Monthly Payment was received in
advance of or subsequent to its Due Date. SEE "SERVICING OF THE ASSETS --
COLLECTION AND OTHER SERVICING PROCEDURES" IN THIS PROSPECTUs SUPPLEMENT.
S-22
<PAGE>
As of the Cut-off Date, approximately _____% of the Fixed Rate Assets
were mortgage loans or Land Secured Contracts. For each Land Secured Contract,
the originator financed the purchase of the related manufactured home and either
took as additional security a mortgage on the property on which the manufactured
home is located or took a mortgage on the property on which the manufactured
home is located in lieu of all or a portion of the obligor's required down
payment. As of the Cut-off Date, approximately _____% of the Fixed Rate Assets
were mortgage loans.
As of the Cut-off Date, each Fixed-Rate Asset had an asset rate of at
least ________% per annum and not more than _____% per annum. The weighted
average asset rate of the Fixed-Rate Assets was approximately ____% per annum,
without giving effect to any subsequent increase in the asset rates of the
step-up rate loans. The Fixed Rate Assets had remaining terms to stated maturity
as of the Cut-off Date of at least ___ months but not more than 360 months and
original terms to stated maturity of at least ___ months but not more than 360
months. Each Fixed Rate Asset was originated on or after ___________. As of the
Cut-off Date, the Fixed Rate Assets had a weighted average original term to
stated maturity of approximately ____ months, and a weighted average remaining
term to stated maturity of approximately ____ months. The remaining term to
stated maturity of an asset is calculated as the number of Monthly Payments
scheduled to be made on the asset over its term less the number of Monthly
Payments made or scheduled to have been made on or before the Cut-off Date. The
average Scheduled Principal Balance of the Fixed Rate Assets as of the Cut-off
Date was approximately $_________ and the Scheduled Principal Balance of the
Fixed Rate Assets as of the Cut-off Date ranged from $______ to $_______.
Approximately ________% of the Fixed Rate Assets have Loan-to-Value
Ratios greater than 95%. Oakwood Acceptance computes each Contract Loan-to-Value
Ratio with respect to which a lien on land has been granted in lieu of a cash
down payment by determining the ratio of the principal amount of the related
contract to the sum of the purchase price of the home, including taxes,
insurance and any land improvements, the tax value or the appraised value of the
land and the amount of any prepaid finance charges or closing costs that are
financed. Oakwood Acceptance computes each Contract Loan-to-Value Ratio for all
other contracts by determining the ratio of the principal amount of the contract
to the purchase price of the home, including taxes, insurance and any land
improvements, and the amount of any prepaid finance charges or closing costs
that are financed. Oakwood Acceptance computes each Mortgage Loan-to-Value Ratio
by determining the ratio of the principal amount of the mortgage loan to either
o the sum of the appraised value of the land and improvements,
and the amount of any prepaid finance
charges or closing costs that are financed, or
o the sum of the purchase price of the home, including taxes,
insurance and any land improvements, the appraised value of the
land and the amount of any prepaid finance charges or closing
costs that are financed.
Manufactured homes, unlike site-built homes, usually depreciate in value.
Consequently, at any time after origination it is possible, especially in the
case of assets with high Loan-to-Value
S-23
<PAGE>
Ratios at origination, that the market value of a manufactured home may be lower
than the asset's principal amount outstanding.
The Fixed Rate Assets are secured by manufactured homes or mortgaged
properties, or Real Properties, in the case of Land Secured Contracts, located
in ___ states. Approximately [>10]% and [>10]% of the Fixed Rate Assets were
secured as of the Cut-off Date by mortgaged properties or manufactured homes, or
Real Properties, in the case of Land Secured Contracts, located in ______ and
_______, respectively. As of the Cut-off Date, no fewer than approximately
_____% of the Fixed Rate Assets were secured by manufactured homes which were
new at the time the related assets were originated. As of the Cut-off Date, no
more than approximately ____%, ____% and ____% of the Fixed Rate Assets were
secured by manufactured homes which were used, repossessed or transferred to an
assignee of the original obligor, respectively, at the time the related assets
were originated.
ADJUSTABLE RATE ASSETS
The asset pool will consist of ___ Adjustable Rate Assets having an
aggregate Scheduled Principal Balance as of the Cut-off Date of approximately
$________.
Each Adjustable Rate Asset has an asset rate that adjusts annually
based on __________, and provides for [level] payments over the term of the
asset that fully amortize the principal balance of the asset. All of the
Adjustable Rate Assets are actuarial obligations.
Each Adjustable Rate Asset has an annual cap of ___% per annum. The
weighted average lifetime cap of the Adjustable Rate Assets as of the Cut-off
Date was approximately ___% per annum. The Adjustable Rate Assets had Gross
Margins as of the Cut-off Date of at least ___% per annum but not more than ___%
per annum, with a weighted average Gross Margin of approximately ___% per annum.
The portion of each Monthly Payment for any Adjustable Rate Asset allocable to
principal is equal to the total amount of the Monthly Payment less the portion
allocable to interest. The portion of each Monthly Payment due in a particular
month that is allocable to interest is a precomputed amount equal to one month's
interest on the principal balance of the Adjustable Rate Asset, which principal
balance is determined by reducing the initial principal balance by the principal
portion of all Monthly Payments that were due in prior months, regardless of
whether the Monthly Payments were made in a timely fashion, and all prior
partial principal prepayments. Thus, each scheduled Monthly Payment on an asset
will be applied to interest and to principal in accordance with the precomputed
allocation regardless of whether the Monthly Payment was received in advance of
or subsequent to its Due Date. As of the Cut-off Date all of the Adjustable Rate
Assets were mortgage loans. SEE "SERVICING OF THE ASSETS -- COLLECTION AND OTHER
SERVICINg PROCEDURES" IN THIS PROSPECTUS SUPPLEMENT.
As of the Cut-off Date, each Adjustable Rate Asset had an asset rate of
at least ____% per annum and not more than ____% per annum. The weighted average
asset rate of the Adjustable Rate Assets was approximately ____% per annum,
without giving effect to any subsequent adjustment in the asset rates of the
Adjustable Rate Loans. The Adjustable Rate Assets had remaining terms to stated
maturity as of the Cut-off Date of at least ____ months but not more
S-24
<PAGE>
than ____ months and original terms to stated maturity of ____ months. Each
Adjustable Rate Asset was originated on or after ____________. As of the Cut-off
Date, the Adjustable Rate Assets had a weighted average original term to stated
maturity of approximately ______ months, and a weighted average remaining term
to stated maturity of approximately ____ months. The remaining term to stated
maturity of an asset is calculated as the number of Monthly Payments scheduled
to be made on the asset over its term less the number of Monthly Payments made
or scheduled to have been made on or before the Cut-off Date. The average
Scheduled Principal Balance of the Adjustable Rate Assets as of the Cut-off Date
was approximately $________ and the Scheduled Principal Balance of the
Adjustable Rate Assets as of the Cut-off Date ranged from $________ to
$________. Approximately ____% of the Adjustable Rate Assets have Loan-to-Value
Ratios greater than 95%.
The Adjustable Rate Assets are secured by mortgaged properties located
in ____ states. Approximately [ >10 ]%, [ >10 ]%, [ >10 ]%, [ >10 ]% and [ >10
]% of the Adjustable Rate Assets were secured as of the Cut-off Date by
mortgaged properties located in __________, __________, __________, __________
and __________, respectively.
SELECTED DATA
It is possible that some of the assets may be repaid in full or in
part, or otherwise removed from the asset pool. In this event, other assets may
be transferred to the trust. Consequently, the actual asset pool may vary
slightly from the presentation in this prospectus supplement.
Whenever reference is made to a percentage of the assets, or to a
percentage of the Scheduled Principal Balance of the assets, the percentage is
calculated based on the Scheduled Principal Balances of the assets as of the
Cut-off Date. In addition, numbers in any columns in these tables may not sum
exactly to the total number at the bottom of the column due to rounding.
FIXED RATE ASSETS
GEOGRAPHIC DISTRIBUTION OF MANUFACTURED HOMES -- FIXED RATE ASSETs
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF AGGREGATE FIXED RATE
FIXED RATE SCHEDULED ASSET POOL
GEOGRAPHIC LOCATION ASSETS PRINCIPAL BALANCE BY SPB
- ------------------- ------ ----------------- ------
<S> <C> <C> <C>
Alabama............................ _____ _________ ____
Arizona............................ _____ _________ ____
Arkansas........................... _____ _________ ____
California......................... _____ _________ ____
Colorado........................... _____ _________ ____
Delaware........................... _____ _________ ____
Florida............................ _____ _________ ____
Georgia............................ _____ _________ ____
Idaho.............................. _____ _________ ____
</TABLE>
S-25
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF AGGREGATE FIXED RATE
FIXED RATE SCHEDULED ASSET POOL
GEOGRAPHIC LOCATION ASSETS PRINCIPAL BALANCE BY SPB
- ------------------- ------ ----------------- ------
<S> <C> <C> <C>
Illinois........................... _____ _________ ____
Indiana............................ _____ _________ ____
Kansas............................. _____ _________ ____
Kentucky........................... _____ _________ ____
Louisiana.......................... _____ _________ ____
Maine.............................. _____ _________ ____
Maryland........................... _____ _________ ____
Michigan........................... _____ _________ ____
Minnesota.......................... _____ _________ ____
Mississippi........................ _____ _________ ____
Missouri........................... _____ _________ ____
Montana............................ _____ _________ ____
Nevada............................. _____ _________ ____
New Jersey......................... _____ _________ ____
New Mexico......................... _____ _________ ____
New York........................... _____ _________ ____
North Carolina..................... _____ _________ ____
Ohio............................... _____ _________ ____
Oklahoma........................... _____ _________ ____
Oregon............................. _____ _________ ____
Pennsylvania....................... _____ _________ ____
South Carolina..................... _____ _________ ____
Tennessee.......................... _____ _________ ____
Texas.............................. _____ _________ ____
Utah............................... _____ _________ ____
Virginia........................... _____ _________ ____
Washington......................... _____ _________ ____
West Virginia...................... _____ _________ ____
Wisconsin.......................... _____ _________ ____
Wyoming............................ _____ _________ ____
Total......................... $ %
====== ========= ====
- ------------
Based on the mailing address of the obligor on the related Fixed Rate Asset as
of the Cut-off Date.
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION OF ORIGINAL FIXED RATE ASSET AMOUNTS
NUMBER OF AGGREGATE PERCENTAGE OF
FIXED RATE SCHEDULED FIXED RATE ASSET
ORIGINAL FIXED RATE ASSET AMOUNT ASSETS PRINCIPAL BALANCE POOL BY SPB
- -------------------------------- ------ ----------------- -----------
<S> <C> <C> <C>
$4,999 or less ....................... _____ _________ ____
$5,000 - $9,999................... _____ _________ ____
$10,000 - $14,999.................. _____ _________ ____
</TABLE>
S-26
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF AGGREGATE PERCENTAGE OF
FIXED RATE SCHEDULED FIXED RATE ASSET
ORIGINAL FIXED RATE ASSET AMOUNT ASSETS PRINCIPAL BALANCE POOL BY SPB
- -------------------------------- ------ ----------------- -----------
<S> <C> <C> <C>
$15,000 - $19,999.................. _____ _________ ____
$20,000 - $24,999.................. _____ _________ ____
$25,000 - $29,999.................. _____ _________ ____
$30,000 - $34,999.................. _____ _________ ____
$35,000 - $39,999.................. _____ _________ ____
$40,000 - $44,999.................. _____ _________ ____
$45,000 - $49,999.................. _____ _________ ____
$50,000 - $54,999.................. _____ _________ ____
$55,000 - $59,999.................. _____ _________ ____
$60,000 - $64,999.................. _____ _________ ____
$65,000 - $69,999.................. _____ _________ ____
$70,000 - $74,999.................. _____ _________ ____
$75,000 - $79,999.................. _____ _________ ____
$80,000 - $84,999.................. _____ _________ ____
$85,000 - $89,999.................. _____ _________ ____
$90,000 - $94,999.................. _____ _________ ____
$95,000 - $99,999.................. _____ _________ ____
$100,000 or more........................ _____ _________ ____
Total ...................... $ %
===== ========= ====
</TABLE>
The highest original Fixed Rate Asset amount was $_________, which
represents approximately _____% of the aggregate principal balance of the Fixed
Rate Assets at origination. The average original principal amount of the Fixed
Rate Assets was approximately $______ as of the Cut-off Date.
<TABLE>
<CAPTION>
DISTRIBUTION OF ORIGINAL LOAN-TO-VALUE RATIOS OF FIXED RATE ASSETS
NUMBER OF AGGREGATE PERCENTAGE OF
FIXED RATE SCHEDULED FIXED RATE ASSET
LOAN-TO-VALUE RATIO ASSETS PRINCIPAL BALANCE POOL BY SPB
- ------------------- ------ ----------------- -----------
<S> <C> <C> <C>
50% or less............................. _____ _________ ____
51% - 55%.............................. _____ _________ ____
56% - 60%.............................. _____ _________ ____
61% - 65%.............................. _____ _________ ____
66% - 70%.............................. _____ _________ ____
71% - 75%.............................. _____ _________ ____
76% - 80%.............................. _____ _________ ____
81% - 85%.............................. _____ _________ ____
86% - 90%.............................. _____ _________ ____
91% - 95%.............................. _____ _________ ____
96% - 100%.............................. _____ _________ ____
101%-110% .............................. _____ _________ ____
Total.......................... $ %
====== ========= ====
</TABLE>
S-27
<PAGE>
The weighted average original Loan-to-Value Ratio of the Fixed Rate
Assets was approximately ____% as of the Cut-off Date. Rounded to nearest 1%.
<TABLE>
<CAPTION>
FIXED RATE ASSET RATES
NUMBER OF AGGREGATE PERCENTAGE OF
FIXED RATE SCHEDULED FIXED RATE ASSET
ASSET RATE ASSETS PRINCIPAL BALANCE POOL BY SPB
- ---------- ------ ----------------- -----------
<S> <C> <C> <C>
6.000 - 6.999%................... _____ _________ ____
7.000 - 7.999%................... _____ _________ ____
8.000 - 8.999%................... _____ _________ ____
9.000 - 9.999%................... _____ _________ ____
10.000 - 10.999%................... _____ _________ ____
11.000 - 11.999%................... _____ _________ ____
12.000 - 12.999%................... _____ _________ ____
13.000 - 13.999%................... _____ _________ ____
14.000 - 14.999%................... _____ _________ ____
Total ........................ $ %
===== ========= ====
</TABLE>
The weighted average Fixed Rate Asset Rate was approximately _____1%
per annum as of the Cut-off Date. This table reflects the Fixed Rate Asset Rates
of the step-up rate loans as of the Cut-off Date and does not reflect any
subsequent increases in the Rates of the step-up rate loans.
<TABLE>
<CAPTION>
YEAR OF ORIGINATION OF FIXED RATE ASSETS
NUMBER OF AGGREGATE PERCENTAGE OF
FIXED RATE SCHEDULED FIXED RATE ASSET
YEAR OF ORIGINATION ASSETS PRINCIPAL BALANCE POOL BY SPB
- ------------------- ------ ----------------- -----------
<S> <C> <C> <C>
1996.................................. _____ _________ ____
1997.................................. _____ _________ ____
1998.................................. _____ _________ ____
Total................................. $ %
===== ========= ====
</TABLE>
The weighted average seasoning of the Fixed Rate Assets was
approximately ___ months as of the Cut-off Date.
S-28
<PAGE>
REMAINING TERMS TO MATURITY, IN MONTHS, OF FIXED RATE ASSETS
<TABLE>
<CAPTION>
NUMBER OF AGGREGATE PERCENTAGE OF
FIXED RATE SCHEDULED FIXED RATE ASSET
REMAINING TERM TO MATURITY ASSETS PRINCIPAL BALANCE POOL BY SPB
- -------------------------- ------ ----------------- -----------
<S> <C> <C> <C>
1 - 60 months..................... _____ _________ ____
61 - 96 months..................... _____ _________ ____
97 - 120 months.................... _____ _________ ____
121 - 156 months.................... _____ _________ ____
157 - 180 months.................... _____ _________ ____
181 - 216 months.................... _____ _________ ____
217 - 240 months.................... _____ _________ ____
241 - 300 months.................... _____ _________ ____
301 - 360 months.................... _____ _________ ____
Total............................. $ %
====== ========= ====
</TABLE>
The weighted average remaining term to maturity of the Fixed Rate
Assets was approximately ____ months as of the Cut-off Date.
S-29
<PAGE>
<TABLE>
<CAPTION>
ORIGINAL TERMS TO MATURITY, IN MONTHS, OF FIXED RATE ASSETS
NUMBER OF AGGREGATE PERCENTAGE OF
FIXED RATE SCHEDULED FIXED RATE ASSET
ORIGINAL TERM TO MATURITY ASSETS PRINCIPAL BALANCE POOL BY SPB
- ------------------------- ------ ----------------- -----------
<S> <C> <C> <C>
1 - 60 months................... _____ _________ ____
61 - 96 months................... _____ _________ ____
97 - 120 months.................. _____ _________ ____
121 - 156 months.................. _____ _________ ____
157 - 180 months.................. _____ _________ ____
181 - 216 months.................. _____ _________ ____
217 - 240 months.................. _____ _________ ____
241 - 300 months.................. _____ _________ ____
301 - 360 months.................. _____ _________ ____
Total............................ $ %
===== ========= ====
</TABLE>
The weighted average original term to maturity of the Fixed Rate Assets
was approximately ___ months as of the Cut-off Date.
ADJUSTABLE RATE ASSETS
<TABLE>
<CAPTION>
GEOGRAPHIC DISTRIBUTION OF MANUFACTURED HOMES - ADJUSTED RATE ASSETS
NUMBER OF AGGREGATE PERCENTAGE OF
FIXED RATE SCHEDULED FIXED RATE ASSET
GEOGRAPHIC LOCATION ASSETS PRINCIPAL BALANCE POOL BY SPB
- ------------------- ------ ----------------- -----------
<S> <C> <C> <C>
Arizona............................ _____ _________ ____
California......................... _____ _________ ____
Colorado........................... _____ _________ ____
Florida............................ _____ _________ ____
Georgia............................ _____ _________ ____
Idaho.............................. _____ _________ ____
Kentucky........................... _____ _________ ____
New Mexico......................... _____ _________ ____
North Carolina..................... _____ _________ ____
Oregon............................. _____ _________ ____
South Carolina..................... _____ _________ ____
Tennessee.......................... _____ _________ ____
Virginia........................... _____ _________ ____
Washington......................... _____ _________ ____
Total.............................. $ %
===== ========= ====
</TABLE>
Based on the mailing address of the obligor on the related Adjustable
Rate Asset as of the Cut-off Date.
S-30
<PAGE>
<TABLE>
<CAPTION>
DISTRIBUTION OF ORIGINAL ADJUSTABLE RATE ASSET AMOUNTS
NUMBER OF AGGREGATE PERCENTAGE OF
FIXED RATE SCHEDULED FIXED RATE ASSET
ORIGINAL ADJUSTABLE RATE ASSET AMOUNT ASSETS PRINCIPAL BALANCE POOL BY SPB
- ------------------------------------- ------ ----------------- -----------
<S> <C> <C> <C>
$45,000 - $49,999............................. _____ _________ ____
$55,000 - $59,999............................. _____ _________ ____
$60,000 - $64,999............................. _____ _________ ____
$65,000 - $69,999............................. _____ _________ ____
$70,000 - $74,999............................. _____ _________ ____
$75,000 - $79,999............................. _____ _________ ____
$80,000 - $84,999............................. _____ _________ ____
$85,000 - $89,999............................. _____ _________ ____
$90,000 - $94,999............................. _____ _________ ____
$95,000 - $99,999............................. _____ _________ ____
$100,000 or more................................ _____ _________ ____
Total .................................... $ %
====== ========= ====
</TABLE>
The highest original Adjustable Rate Asset amount was $__________,
which represents approximately _____% of the aggregate principal balance of the
Adjustable Rate Assets at origination. The average original principal amount of
the Adjustable Rate Assets was approximately $_______ as of the Cut-off Date.
<TABLE>
<CAPTION>
DISTRIBUTION OF ORIGINAL LOAN-TO-VALUE RATIOS OF ADJUSTABLE RATE ASSETS
NUMBER OF AGGREGATE PERCENTAGE OF
FIXED RATE SCHEDULED FIXED RATE ASSET
LOAN-TO-VALUE RATIO ASSETS PRINCIPAL BALANCE POOL BY SPB
- ------------------- ------ ----------------- -----------
<S> <C> <C> <C>
51% -- 55%........................... _____ _________ ____
66% -- 70%........................... _____ _________ ____
71% -- 75%........................... _____ _________ ____
76% -- 80%........................... _____ _________ ____
81% -- 85%........................... _____ _________ ____
86% -- 90%........................... _____ _________ ____
91% -- 95%........................... _____ _________ ____
96% -- 100%........................... _____ _________ ____
101% -- 105%........................... _____ _________ ____
Total ............................... $ %
===== ========= ====
</TABLE>
The weighted average original Loan-to-Value Ratio of the Adjustable
Assets was approximately _____% as of the Cut-off Date. Rounded to nearest 1%.
S-31
<PAGE>
<TABLE>
<CAPTION>
CURRENT ASSET RATES OF ADJUSTABLE RATE ASSETS
NUMBER OF AGGREGATE PERCENTAGE OF
FIXED RATE SCHEDULED FIXED RATE ASSET
ASSET RATE ASSETS PRINCIPAL BALANCE POOL BY SPB
- ---------- ------ ----------------- -----------
<S> <C> <C> <C>
7.000% - 7.999%......................... _____ _________ ____
8.000% - 8.999%......................... _____ _________ ____
9.000% - 9.999%......................... _____ _________ ____
Total............................... $ %
===== ========= ====
</TABLE>
The weighted average Adjustable Rate Asset Rate was approximately
_____% per annum as of the Cut-off Date. This table reflects the Asset Rates of
the Adjustable Rate Assets as of the Cut-off Date and does not reflect any
subsequent adjustments in the Asset Rates of the Adjustable Rate Assets.
<TABLE>
<CAPTION>
DISTRIBUTION OF GROSS MARGINS OF ADJUSTABLE RATE ASSETS
NUMBER OF AGGREGATE PERCENTAGE OF
FIXED RATE SCHEDULED FIXED RATE ASSET
GROSS MARGIN ASSETS PRINCIPAL BALANCE POOL BY SPB
- ------------ ------ ----------------- -----------
<S> <C> <C> <C>
3.250% - 3.500%.......................... _____ _________ ____
4.500% - 4.750%.......................... _____ _________ ____
Total................................. $ %
===== ========= ====
</TABLE>
The weighted average Gross Margin of the Adjustable Rate Assets was
approximately ____% per annum as of the Cut-off Date.
<TABLE>
<CAPTION>
MAXIMUM ASSET RATES OF ADJUSTABLE RATE ASSETS
NUMBER OF AGGREGATE PERCENTAGE OF
FIXED RATE SCHEDULED FIXED RATE ASSET
MAXIMUM ASSET RATES ASSETS PRINCIPAL BALANCE POOL BY SPB
- ------------------- ------ ----------------- -----------
<S> <C> <C> <C>
13.000% to 13.625%....................... _____ _________ ____
14.000% to 14.625%....................... _____ _________ ____
Total................................. $ %
===== ========= ====
</TABLE>
The weighted average maximum Asset Rate of the Adjustable Rate Assets
was approximately ______% per annum as of the Cut-Off Date.
S-32
<PAGE>
<TABLE>
<CAPTION>
YEAR OF ORIGINATION OF ADJUSTABLE RATE ASSETS
NUMBER OF AGGREGATE PERCENTAGE OF
FIXED RATE SCHEDULED FIXED RATE ASSET
YEAR OF ORIGINATION ASSETS PRINCIPAL BALANCE POOL BY SPB
- ------------------- ------ ----------------- -----------
<S> <C> <C> <C>
1997................................. _____ _________ ____
1998................................. _____ _________ ____
Total............................. $ %
===== ========= ====
</TABLE>
The weighted average seasoning of the Adjustable Rate Assets was
approximately ___ months as of the Cut-off Date.
<TABLE>
<CAPTION>
REMAINING TERMS TO MATURITY, IN MONTHS, OF ADJUSTABLE RATE ASSETS
NUMBER OF AGGREGATE PERCENTAGE OF
FIXED RATE SCHEDULED FIXED RATE ASSET
REMAINING TERM TO MATURITY ASSETS PRINCIPAL BALANCE POOL BY SPB
- -------------------------- ------ ----------------- -----------
<S> <C> <C> <C>
348 - 360 months........................... _____ _________ ____
Total................................... $ %
===== ========= ====
</TABLE>
The weighted average remaining term to maturity of the Adjustable Rate
Assets was approximately ____ months as of the Cut-off Date.
<TABLE>
<CAPTION>
ORIGINAL TERMS TO MATURITY, IN MONTHS, OF ADJUSTABLE RATE ASSETS
NUMBER OF AGGREGATE PERCENTAGE OF
FIXED RATE SCHEDULED FIXED RATE ASSET
ORIGINAL TERMS TO MATURITY ASSETS PRINCIPAL BALANCE POOL BY SPB
- -------------------------- ------ ----------------- -----------
<S> <C> <C> <C>
360 months............................ _____ _________ ____
Total.............................. $ %
===== ========= ====
</TABLE>
The weighted average original term to maturity of the Adjustable Rate
Assets was approximately ___ months as of the Cut-off Date.
S-33
<PAGE>
<TABLE>
<CAPTION>
DATE OF NEXT ASSET RATE ADJUSTMENT OF ADJUSTABLE RATE ASSETS
NUMBER OF AGGREGATE PERCENTAGE OF
FIXED RATE SCHEDULED FIXED RATE ASSET
DATE OF NEXT ASSET RATE ADJUSTMENT ASSETS PRINCIPAL BALANCE POOL BY SPB
- ---------------------------------- ------ ----------------- -----------
<S> <C> <C> <C>
April 1, 1999.......................... _____ _________ ____
April 15, 1999......................... _____ _________ ____
May 1, 1999............................ _____ _________ ____
June 1, 1999........................... _____ _________ ____
August 1, 1999......................... _____ _________ ____
August 15, 1999........................ _____ _________ ____
October 1, 1999........................ _____ _________ ____
November 1, 1999....................... _____ _________ ____
December 1, 1999....................... _____ _________ ____
January 1, 2000........................ _____ _________ ____
Total............................... $ %
====== ========= ====
</TABLE>
UNDERWRITING GUIDELINES
The assets were underwritten by Oakwood Acceptance and were
underwritten and originated substantially in accordance with the guidelines
described in the prospectus under "UNDERWRITING POLICIES."
CONVEYANCE OF ASSETS
On the date of issuance of the certificates [or on each Subsequent
Transfer Date], Oakwood Mortgage will transfer to the trustee, without recourse,
all of its right, title and interest in and to the assets, including all
principal and interest received on or with respect to the assets, not including
principal and interest due on the assets on or before the Cut-off Date and any
other amounts collected on the assets before the Cut-off Date other than early
collections of Monthly Payments that were due after the Cut-off Date, and all
rights under the standard hazard insurance policies maintained with respect to
the related manufactured homes, Real Properties and mortgaged properties. [The
pooling and servicing agreement permits the trust to purchase Subsequent Assets
on one or more dates through the close of business on ________ (each, a
"Subsequent Transfer Date"). The asset schedule will identify the Scheduled
Principal Balance of each asset, the amount of each Monthly Payment due on each
asset, and the asset rate on each asset, in each case as of the Cut-off Date.
Prior to the conveyance of the assets to the trustee, Oakwood Acceptance's
operations department will complete a review of all of the contract files,
including the certificates of title to, or other evidence of a perfected
security interest in, the manufactured homes and the mortgages relating to the
Land Secured Contracts to check the accuracy of the contract schedule delivered
to the trustee. The trustee will complete a review of the mortgage loan files to
check the accuracy of the mortgage loan schedule.
Oakwood Mortgage will represent and warrant only that:
S-34
<PAGE>
o the information set forth in the asset schedule was true and
correct as of the date or dates on which the information was
furnished;
o Oakwood Mortgage is the owner of, or holder of a first-priority
security interest in, each asset;
o Oakwood Mortgage acquired its ownership of, or security interest
in, each asset in good faith without notice of any adverse claim;
o except for the sale of the assets to the trustee, Oakwood Mortgage
has not assigned any interest or participation in any asset that
has not been released; and
o Oakwood Mortgage has the full right to sell the trust estate to the
trustee.
The Servicer, on behalf of the certificateholders, will hold the
original contracts and copies of documents and instruments relating to each
contract and the security interest in the manufactured home and any Real
Property relating to each contract. In order to provide notice of the assignment
of the assets to the trustee, UCC-1 financing statements identifying the trustee
as the secured party or purchaser and identifying all the assets as collateral
will be filed in the appropriate offices in the State of Nevada. Despite these
filings, if a subsequent purchaser were able to take physical possession of the
contracts without notice of the assignment of the contracts to the trustee, the
trustee's interest in the contracts could be defeated. To provide some
protection against this possibility, in addition to filing UCC-1 financing
statements, within one week after the initial delivery of the certificates or
after each Subsequent Transfer Date, as applicable, the contracts will be
stamped or otherwise marked to reflect their assignment to the trustee. The
trustee, on behalf of the certificateholders, will hold the original mortgage
notes and mortgages, and copies of documents and instruments relating to each
mortgage loan. SEE "LEGAL ASPECTS OF CONTRACTS AND MORTGAGE LOANS" IN THE
PROSPECTUS.
Oakwood Acceptance will make representations and warranties regarding
the assets in the sales agreement. These representations and warranties are
detailed in the prospectus under the heading "SALE AND SERVICING OF THE
CONTRACTS AND MORTGAGE LOANS --- REPRESENTATIONS AND WARRANTIES."
Under the terms of the pooling and servicing agreement and the sales
agreement, and subject to Oakwood Acceptance's option to effect a substitution
as described in the next paragraph, Oakwood Acceptance will be obligated to
repurchase any asset for its Repurchase Price within 90 days after Oakwood
Acceptance's discovery, or receipt of written notice from the trustee or the
Servicer, of a breach of any representation or warranty made by Oakwood
Acceptance in the sales agreement that materially and adversely affects the
trustee's interest in any asset, if the breach has not been cured by the 90th
day. The Repurchase Price for any asset will be the unpaid principal balance of
the asset at the close of business on the date of repurchase, plus accrued and
unpaid interest thereon to the next Due Date for the asset following the
repurchase. Prior to being distributed to certificateholders, this Repurchase
Price will be used to reimburse the Servicer for any previously unreimbursed
Advances made by the Servicer in
S-35
<PAGE>
respect of the repurchased asset and, if the repurchaser is the Servicer, the
Repurchase Price may be remitted net of reimbursement amounts.
In lieu of repurchasing an asset as specified in the preceding
paragraph, during the two-year period following the date of the initial issuance
of the certificates, Oakwood Acceptance may, at its option, substitute a
qualified substitute asset for any asset to be replaced. A qualified substitute
asset is any asset that, on the date of substitution,
o has an unpaid principal balance not greater than, and not more
than $10,000 less than, the unpaid principal balance of the
replaced asset,
o has an asset rate not less than, and not more than one percentage
point in excess of, the asset rate of the replaced asset,
o has a net rate at least equal to the net rate of the replaced
asset,
o has a remaining term to maturity not greater than, and not more
than one year less than, that of the replaced asset,
o has a Loan-to-Value Ratio as of the first day of the month in
which the substitution occurs equal to or less than the
Loan-to-Value Ratio of the replaced asset as of such date, in each
case, using the appraised value at origination, and after taking
into account the Monthly Payment due on this date, and
o complies with each representation and warranty in Section 2.05 of
the pooling and servicing agreement and in the sales agreement.
In the event that more than one asset is substituted for a replaced asset, the
unpaid principal balances may be determined on an aggregate basis, and the asset
rate, net rate and term on a weighted average basis, provided that no qualified
substitute asset may have an original term to maturity beyond the latest
original term to maturity of any asset assigned to the trust on the closing
date. In the case of a trust for which a REMIC election has been made, a
qualified substitute asset also shall satisfy the following criteria as of the
date of its substitution for a replaced asset:
o the asset shall not be 30 or more days delinquent,
o the asset file for such asset shall not contain any material
deficiencies in documentation, and shall include an executed
contract or mortgage note, as applicable, and, if it is a Land
Secured Contract or a mortgage loan, a recorded mortgage;
o the Loan-to-Value Ratio of the asset must be 125% or less either
on the date of origination of the asset, or, if any of the terms
of such asset were modified other than in connection with a
default or imminent default on such asset, on the date of such
modification, or on the date of the substitution, based on an
appraisal conducted within the 60 day period prior to the date of
the substitution;
S-36
<PAGE>
o no property securing such asset may be the subject of foreclosure,
bankruptcy, or insolvency proceedings; and
o such asset, if a Land Secured Contract or a mortgage loan, must be
secured by a valid first lien on the related Real Property or
mortgaged property.
In addition, any replaced asset that is a mortgage loan may only be
replaced by another mortgage loan.
Oakwood Acceptance will deposit cash into the Certificate Account in
the amount, if any, by which the aggregate of the unpaid principal balances of
any replaced assets exceeds the aggregate of the unpaid principal balances of
the assets being substituted for the replaced assets. Also, if it is discovered
that the actual Scheduled Principal Balance of an asset is less than the
Scheduled Principal Balance identified for the asset on the asset schedule,
Oakwood Acceptance may, at its option, deposit the amount of the discrepancy
into the Certificate Account instead of repurchasing the asset. Any deposit will
be treated as a partial principal prepayment.
In addition, Oakwood Acceptance is required to indemnify Oakwood
Mortgage and its assignees, including the trust, against losses and damages they
incur as a result of breaches of Oakwood Acceptance's representations and
warranties. Oakwood Acceptance's obligation to repurchase or substitute for an
asset affected by a breach of a representation or warranty and to indemnify
Oakwood Mortgage and its assignees for losses and damages caused by a breach
constitute the sole remedies available to the trustee and the certificateholders
for a breach of a representation or warranty under the pooling and servicing
agreement or the sales agreement with respect to the assets.
[CONVEYANCE OF SUBSEQUENT ASSETS AND PRE-FUNDING ACCOUNT
A Pre-Funding Account will be established by the trustee and funded by
Oakwood Mortgage on the closing date to provide the trust with funds to purchase
Subsequent Assets. The Subsequent Assets will be purchased by the trust during
the Pre-Funding Period, which will begin on the closing date and end on ______
__, 1999. The Pre-Funded Amount will initially equal the difference between the
aggregate certificate principal balance of the offered certificates on the
closing date and the aggregate Scheduled Principal Balance of the initial assets
as of the Cut-Off Date. In the event that the trust is unable to acquire
sufficient qualifying assets by _______, any amounts remaining in the
Pre-Funding Account will be applied as a partial principal prepayment to
certificateholders entitled to the payment on the first date distributions are
made. The Pre-Funding Account will be part of the trust but not part of the
Pooling REMIC or the Issuing REMIC. Any investment income earned on amounts on
deposit in the Pre-Funding Account will be paid to Oakwood Mortgage and will not
be available for distribution to certificateholders.
Under the pooling and servicing agreement, the trust will be obligated
to purchase Subsequent Assets from Oakwood Mortgage during the Pre-Funding
Period, if available. Subsequent Assets will be transferred to the trust
pursuant to subsequent transfer instruments between Oakwood Mortgage and the
trust. Each Subsequent Asset will have been underwritten
S-37
<PAGE>
in accordance with Oakwood Mortgage's standard underwriting criteria. In
connection with the purchase of Subsequent Assets on each Subsequent Transfer
Date, the trust will be required to pay to Oakwood Mortgage from amounts on
deposit in the Pre-Funding Account a cash purchase price of 100% of the
Scheduled Principal Balance of the Subsequent Assets as of the related Cut-Off
Date. Any conveyance of Subsequent Assets on a Subsequent Transfer Date must
satisfy conditions including, but not limited to:
o each Subsequent Asset must satisfy the representations and
warranties specified in the related subsequent transfer instrument
and the pooling and servicing agreement;
o Oakwood Mortgage will not select Subsequent Assets in a manner that
it believes is adverse to the interests of the certificateholders;
o each Subsequent Asset must not be more than 30 days delinquent as
of its Cut-off Date;
o as a result of the purchase of the Subsequent Assets, the
certificates will not receive from _______ or ________ a lower
credit rating than the rating assigned at the initial issuance of
the certificates; and
o an independent accountant will provide a letter stating whether or
not the characteristics of the Subsequent Assets conform to the
characteristics described in this prospectus supplement.
Following the end of the Pre-Funding Period, the asset pool must satisfy the
following criteria:
o the weighted average asset rate must not be less than ____% or more
than ____%;
o the weighted average remaining term to stated maturity must not be
less than ____ months or more than ___ months;
o the weighted average Loan-to-Value Ratio must not be greater than
____%;
o not less than ____% of the asset pool, by Scheduled Principal
Balance, must be attributable to loans to purchase new
manufactured homes;
o not more than ____%, ____% and ____% of the assets located in
_______________, ______________, or any other individual state,
respectively, and
o not less than ____% of the assets will be either Land Secured
Contracts or mortgage loans.
Information regarding Subsequent Assets comparable to the disclosure
regarding the initial assets provided in this prospectus supplement will be
filed on a report on Form 8-K with the SEC within 15 days following the end of
the Pre-Funding Period.]
S-38
<PAGE>
MATURITY AND PREPAYMENT CONSIDERATIONS
The assets had terms to maturity at origination ranging from ___ months
to 360 months, but may be prepaid in full or in part at any time. The prepayment
experience of the assets, including prepayments due to liquidations of defaulted
assets, will affect the weighted average life of each class of the certificates.
Based on Oakwood Acceptance's experience with the portfolio of conventional
manufactured housing contracts it services, Oakwood Mortgage anticipates that a
number of assets will be liquidated or prepaid in full prior to their respective
maturities. A number of factors, including homeowner mobility, general and
regional economic conditions and prevailing interest rates may influence
prepayments. In addition, any repurchases of assets on account of breaches of
representations and warranties will have the same effect as prepayments of the
assets and accordingly will affect the life of the certificates. Natural
disasters may also influence prepayments. Most of the assets contain provisions
that prohibit the obligors from selling an underlying manufactured home or
mortgaged property without the prior consent of the holder of the asset. These
provisions may not be enforceable in some states. The Servicer's policy is to
permit most sales of manufactured homes and mortgaged properties without
accelerating the assets where the proposed buyer meets Oakwood Acceptance's
then-current underwriting standards and either enters into an assumption
agreement or executes a new contract for the unpaid balance of the existing
asset. The execution of a new contract or mortgage note and mortgage would have
the same effect as a prepayment of the existing asset in full. SEE "LEGAL
ASPECTS OF CONTRACTS AND MORTGAGE LOANS" IN THE PROSPECTUS.
WEIGHTED AVERAGE LIVES OF THE OFFERED CERTIFICATES
The following information is given solely to illustrate the effect of
prepayments of the assets on the weighted average life of each class of the
offered certificates under the stated assumptions and is not a prediction of the
prepayment rate that might actually be experienced with respect to the assets.
Weighted average life refers to the average amount of time that will
elapse from the date of issuance of a security until each dollar of principal of
the security will be repaid to the investor. The weighted average lives of the
offered certificates will be affected by the rate at which principal on the
assets is paid. Principal payments on assets may be in the form of scheduled
amortization or prepayments --- for this purpose, the term prepayment includes
any voluntary prepayment by an obligor, the receipt of Liquidation Proceeds upon
disposition of the property securing any defaulted asset and the receipt of the
Repurchase Price for any asset upon its repurchase by Oakwood Acceptance as a
result of any breaches of its representations and warranties. Prepayments on
contracts and mortgage loans may be measured relative to a prepayment standard
or model. The Prepayment Model (the "MHP") is based on an assumed rate of
prepayment each month of the then unpaid principal balance of a pool of new
manufactured housing installment sales contracts and mortgage loans. A
prepayment assumption of 100% MHP assumes constant prepayment rates of 3.7% per
annum of the then unpaid principal balance of the contracts and mortgage loans
in the first month of the life of the contracts and mortgage loans and an
additional 0.1% per annum in each month thereafter until the 24th month.
Beginning in the 24th month and in each month thereafter during the life of all
S-39
<PAGE>
of the contracts and mortgage loans, 100% MHP assumes a constant prepayment rate
of 6.0% per annum each month.
As used in the following tables "0% MHP" assumes no prepayments on the
assets; "100% MHP" assumes the assets will prepay at rates equal to 100% of the
MHP assumed prepayment rates; "200% MHP" assumes the assets will prepay at rates
equal to 200% of the MHP assumed prepayment rates; and so on.
There is no assurance, however, that the rate of prepayments of the
assets will conform to any level of the MHP model, and no representation is made
that the assets will prepay at the prepayment rates shown or any other
prepayment rate. Oakwood Mortgage makes no representations as to the
appropriateness of the MHP model.
MODELING ASSUMPTIONS AND MHP TABLES
The manufactured housing prepayment tables (the "MHP Tables") were
prepared based upon the assumptions that there are no delinquencies on the
assets and that there will be a sufficient Available Distribution Amount to
distribute all accrued interest and the Principal Distribution Amount due
(collectively, the "Modeling Assumptions").
The percentages and weighted average lives in the following tables were
determined assuming that
o scheduled interest and principal payments on the assets will be
received each month on their Due Dates and full prepayments on and
liquidations of the assets will be received on the last day of
each month, commencing in ________ 1999, and will include 30 days
of interest thereon;
o the Servicer exercises the right of optional termination at the
earliest possible date;
o the assets have the characteristics set forth in the two tables
provided;
o the initial certificate principal balance and Pass-Through Rate of
each class of the offered certificates are as described in this
prospectus supplement;
o no Due Date Interest Shortfalls will arise in connection with
prepayments in full or liquidations of the assets;
o no losses will be experienced on any assets included in the asset
pool;
o the closing date for the issuance of the certificates will be
_________________;
o cash distributions will be received by the holders of the
certificates on ____________ and on the 15th day of each month
thereafter until retirement of the certificates;
o 1 year CMT is assumed to be ____% per annum, and One-Month LIBOR
is assumed to be ____% per annum; and
S-40
<PAGE>
o the assets will prepay monthly at the percentages of MHP indicated
in the MHP Tables.
No representation is made that the assets will experience delinquencies or
losses at the respective rates assumed or at any other rates.
<TABLE>
<CAPTION>
ASSUMED FIXED RATE ASSET CHARACTERISTICS
SCHEDULED REMAINING
PRINCIPAL BALANCE TERM TO
AS OF THE MATURITY SEASONING
CUT-OFF-DATE ASSET RATE (MONTHS) (MONTHS)
------------ ---------- -------- --------
<S> <C> <C> <C> <C>
LEVEL PAY ASSETS
1........................... ____________ _________ ____ _____
2........................... ____________ _________ ____ _____
3........................... ____________ _________ ____ _____
4........................... ____________ _________ ____ _____
5........................... ____________ _________ ____ _____
</TABLE>
<TABLE>
<CAPTION>
STEP-UP RATE ASSETS
SCHEDULED REMAINING
PRINCIPAL BALANCE TERM TO MONTHS TO MONTHS TO MONTHS TO FIRST STEP SECOND STEP THIRD STEP
AS OF THE ASSET MATURITY SEASONING FIRST SECOND THIRD RATE RATE RATE
CUT-OFF DATE RATE (MONTHS) (MONTHS) STEP STEP STEP STEP STEP STEP
------------ ---- -------- -------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1.... __________ ______ ____ ___ ___ ___ ___ _____ ____ ____
2.... __________ ______ ____ ___ ___ ___ ___ _____ ____ ____
3.... __________ ______ ____ ___ ___ ___ ___ _____ ____ ____
- ----------
</TABLE>
* Not applicable.
<TABLE>
<CAPTION>
ASSUMED ADJUSTABLE RATE ASSET CHARACTERISTICS
SCHEDULED REMAINING
PRINCIPAL BALANCE TERM TO MONTHS TO LIFETIME PERIODIC RESET
AS OF THE ASSET MATURITY SEASONING GROSS NEXT RATE RATE RATE FREQUENCY
CUT-OFF DATE RATE (MONTHS) (MONTHS) MARGIN CHANGE CAP CAP INDEX MONTHS
------------ ---- -------- -------- ------ ------ --- --- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1.... $____________ ___% ___ __ % ___ ____% ____% 1 year CMT ___
__
</TABLE>
There will be discrepancies between the assets actually included in the
trust and the assumptions made as to the characteristics of the assets in
preparing the MHP Tables. There is no assurance that prepayment of the assets
will conform to any of the constant percentages of MHP described in the MHP
Tables or any other constant rate. Among other things, the MHP Tables assume
that the assets prepay at the indicated constant percentages of MHP, even though
the assets may vary substantially as to asset rates and original terms to
maturity. Variations in actual prepayment experience for the assets will
increase or decrease the percentages of initial principal balances and weighted
average lives shown in the MHP Tables. Assuming no prepayments, the step-up rate
loans and the Adjustable Rate Loans will cause the
S-41
<PAGE>
Weighted Average Net Asset Rate for the assets to rise from approximately _____%
per annum at the Cut-off Date to a maximum of approximately _____% per annum, as
the asset rates on the step-up rate loans and the Adjustable Rate Loans
increase. Weighted Average Net Asset Rate means for any distribution date, a
rate equal to
o the weighted average of the asset rates applicable to the
scheduled Monthly Payments that were due in the related Collection
Period on outstanding assets, less
o the Servicing Fee Rate.
The MHP Tables indicate the weighted average life of each class of the
offered certificates and set forth the percentage of the initial certificate
principal balance of each class of the offered certificates that would be
outstanding after each of the dates shown assuming prepayments of the assets
occur at various percentages of MHP. The weighted average life of each class set
forth in the MHP Tables has been determined by multiplying the amount of each
principal payment on the class by the number of years from the date of delivery
of the certificates of the class to the related distribution date, summing the
results and dividing the sum by the total principal to be paid on the
certificates of the class. SEE "MATURITY AND PREPAYMENT CONSIDERATIONS" IN THE
PROSPECTUS.
Please make your investment decisions on a basis that includes your
determination as to anticipated prepayment rates based on your own assumptions
as to the matters discussed in this prospectus supplement.
S-42
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF INITIAL CERTIFICATE PRINCIPAL BALANCES OUTSTANDING
CLASS A-1 CERTIFICATES AT THE FOLLOWING CLASS A-2 CERTIFICATES AT THE FOLLOWING
PERCENTAGES OF MHP PERCENTAGES OF MHP
----------------------------------------------- -------------------------------------------------
0% 100% 150% 200% 250% 300% 0% 100% 150% 200% 250% 300%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Initial Percent.... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2000..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2001..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2002..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2003..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2004..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2005..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2006..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2007..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2008..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2009..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2010..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2011..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2012..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2013..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2014..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2015..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2016..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2017..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2018..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2019..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2020..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2021..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2022..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2023..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2024..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2025..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2026..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2027..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2028..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2029..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
Avg Life In Years:. ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
</TABLE>
These MHP Tables have been prepared based on the Modeling
Assumptions, including the assumptions regarding the characteristics
and performance of the assets, which will differ from their actual
characteristics and performance, and should be read in conjunction with
these assumptions.
S-43
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF INITIAL CERTIFICATE PRINCIPAL BALANCES OUTSTANDING
CLASS A-3 CERTIFICATES AT THE CLASS A-4 CERTIFICATES AT THE CLASS A-5 CERTIFICATES AT THE
FOLLOWING PERCENTAGES OF MHP FOLLOWING PERCENTAGES OF MHP FOLLOWING PERCENTAGES OF MHP
0% 100% 150% 200% 250% 300% 0% 100% 150% 200% 250% 300% 0% 100% 150% 200% 250% 300%
-- ---- ---- ---- ---- ---- -- ---- ---- ---- ---- ---- -- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Initial Percent... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2000.... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2001.... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2002.... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2003.... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2004.... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2005.... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2006.... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2007.... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2008.... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2009.... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2010.... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2011.... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2012.... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2013.... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2014.... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2015.... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2016.... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2017.... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2018.... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2019.... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2020.... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2021.... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2022.... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2023.... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2024.... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2025.... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2026.... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2027.... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2028.... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2029.... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
Avg Life In Years: ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
</TABLE>
These MHP Tables have been prepared based on the Modeling
Assumptions, including the assumptions regarding the characteristics
and performance of the assets, which will differ from their actual
characteristics and performance, and should be read in conjunction with
these assumptions.
S-44
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF INITIAL CERTIFICATE PRINCIPAL BALANCES OUTSTANDING
CLASS M-1 CERTIFICATES AT THE FOLLOWING CLASS M-2 CERTIFICATES AT THE FOLLOWING
PERCENTAGES OF MHP PERCENTAGES OF MHP
------------------------------------------------ ---------------------------------------------------
0% 100% 150% 200% 250% 300% 0% 100% 150% 200% 250% 300%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Initial Percent.... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2000..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2001..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2002..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2003..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2004..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2005..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2006..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2007..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2008..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2009..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2010..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2011..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2012..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2013..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2014..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2015..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2016..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2017..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2018..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2019..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2020..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2021..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2022..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2023..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2024..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2025..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2026..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2027..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2028..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2029..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
Avg Life In Years:. ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
</TABLE>
These MHP Tables have been prepared based on the Modeling
Assumptions, including the assumptions regarding the characteristics
and performance of the assets, which will differ from their actual
characteristics and performance, and should be read in conjunction with
these assumptions.
S-45
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF INITIAL CERTIFICATE PRINCIPAL BALANCES OUTSTANDING
CLASS B-1 CERTIFICATES AT THE FOLLOWING CLASS B-2 CERTIFICATES AT THE FOLLOWING
PERCENTAGES OF MHP PERCENTAGES OF MHP
------------------------------------------------ ---------------------------------------------------
0% 100% 150% 200% 250% 300% 0% 100% 150% 200% 250% 300%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Initial Percent.... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2000..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2001..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2002..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2003..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2004..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2005..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2006..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2007..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2008..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2009..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2010..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2011..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2012..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2013..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2014..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2015..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2016..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2017..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2018..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2019..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2020..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2021..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2022..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2023..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2024..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2025..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2026..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2027..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2028..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
_____ 15, 2029..... ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
Avg Life In Years:. ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___ ___
</TABLE>
These MHP Tables have been prepared based on the Modeling Assumptions,
including the assumptions regarding the characteristics and performance of the
assets, which will differ from their actual characteristics and performance, and
should be read in conjunction with these assumptions.
[PRE-FUNDING
The certificates will be prepaid in part on the first distribution date
after the Pre-Funding Period if any Pre-Funding Amount remains in the
Pre-Funding Account on this distribution date. These amounts will be treated as
a partial principal prepayment. It is expected that substantially all of the
Pre-Funded Amount will be used to acquire Subsequent Assets. It is unlikely,
however, that the aggregate Scheduled Principal Balance of the Subsequent Assets
purchased by the trust will be identical to the Pre-Funded Amount, and
consequently, certificateholders will likely receive some prepayment of
principal.]
S-46
<PAGE>
FACTORS AFFECTING PREPAYMENTS
The rate of principal payments on pools of manufactured housing
contracts and mortgage loans is influenced by a variety of economic, geographic,
social and other factors, including the prevailing level of interest rates from
time to time and the rate at which owners of manufactured homes sell their
manufactured homes or default on their contracts or mortgage loans. Other
factors affecting prepayment of manufactured housing contracts and mortgage
loans include changes in obligors' housing needs, job transfers, unemployment
and obligors' net equity in the manufactured homes and mortgaged properties.
In general, if prevailing interest rates fall significantly below the
interest rates on the assets in your pool, these assets are likely to experience
higher prepayment rates than if prevailing interest rates remained at or above
the rates borne by these assets, because the obligors may refinance and obtain
new loans with lower interest rates and lower monthly payments. Conversely, if
prevailing interest rates rise above the interest rates on these assets, the
rate of prepayment would be expected to decrease because new loans would bear
higher interest rates and require higher monthly payments. The outstanding
principal balances of manufactured housing contracts tend to be smaller than
mortgage loan balances and the original terms to maturity of the contracts are
generally shorter than those of mortgage loans. As a result, changes in interest
rates will not affect the monthly payments on available new manufactured housing
contracts to the same degree that changes in interest rates will affect the
monthly payments on available new mortgage loans.
The assets may be prepaid by the obligors at any time without
imposition of any prepayment fee or penalty. In addition, defaults on assets
leading to repossession, and foreclosure in the case of Land Secured Contracts
and mortgage loans, and the ultimate liquidation of the related manufactured
homes and mortgaged properties and Real Properties, in the case of Land Secured
Contracts, may occur with greater frequency during their early years.
Prepayments, liquidations and repurchases of the assets will result in
distributions of principal to certificateholders of amounts that would otherwise
have been distributed over the remaining terms of the assets. SEE "YIELD ON THE
OFFERED CERTIFICATES" IN THIS PROSPECTUS SUPPLEMENT.
Oakwood Acceptance, as seller under the sales agreement, may be
required to repurchase assets if it breaches its representations and warranties
contained in the sales agreement, including those relating to the qualification
of the assets for REMIC purposes. Any repurchase of an asset will have the same
effect as a prepayment in full of the asset and will affect your yield to
maturity. SEE "THE ASSET POOL -- CONVEYANCE Of CONTRACTS" IN THIS PROSPECTUS
SUPPLEMENT.
The Servicer has the option to terminate the trust, thereby causing the
retirement of all outstanding certificates, on any distribution date on or after
the distribution date on which the sum of the certificate principal balance of
the certificates is less than ___% of the sum of their original certificate
principal balance. If the Servicer does not exercise its optional termination
rights within 90 days after becoming eligible to do so, the trustee shall
solicit bids for the purchase of all assets, REO properties and repo properties
remaining in the trust. This
S-47
<PAGE>
purchase, if consummated, would likewise cause the retirement of all outstanding
certificates. SEE "THE TRUST" IN THIS PROSPECTUS SUPPLEMENT.
YIELD ON THE OFFERED CERTIFICATES
Distributions of interest on the offered certificates, other than the
class A-1 certificates, on any distribution date will include interest accrued
thereon through the last day of the month preceding the month in which this
distribution date occurs. Because interest will not be distributed on the
certificates until the 15th day, or, if this day is not a business day, then on
the next succeeding business day, of the month following the month in which this
interest accrues, the effective yield to the holders of the classes of offered
certificates will be lower than the yield otherwise produced by the Pass-Through
Rate and purchase price.
The yield to maturity of, and the amount of distributions on, each
class of the offered certificates will be related to the rate and timing of
principal payments on the assets. The rate of principal payments on the assets
will be affected by the amortization schedules of the assets and by the rate of
principal prepayments, including for this purpose payments resulting from
refinancings, liquidations of the assets due to defaults, casualties,
condemnations and repurchases by or on behalf of Oakwood Mortgage or Oakwood
Acceptance, as the case may be. NO ASSURANCE CAN BE GIVEN AS TO THE RATE OF
PRINCIPAL PAYMENTS OR ON THE PREPAYMENTS ON THE ASSETS.
Delinquencies on assets could produce payment delays and could lead to
repossessions of manufactured homes and foreclosures in the case of Land Secured
Contracts and mortgage loans. Repossession of a manufactured home or foreclosure
on a Real Property or mortgaged property and the subsequent resale of the home
securing a contract or a property securing a mortgage loan may produce net
liquidation proceeds that are less than the Scheduled Principal Balance of the
related asset plus interest accrued and the expenses of sale. This shortfall
upon repossession and disposition of a manufactured home or foreclosure on a
Real Property or mortgaged property would result in a Realized Loss on the
asset.
The timing of changes in the rate of prepayments and defaults on the
assets may affect an investor's actual yield to maturity significantly, even if
the average rate of principal payments and defaults experienced over time is
consistent with an investor's expectations. In general, the earlier a prepayment
of principal of or a default on an asset, the greater will be the effect on the
investor's yield to maturity. As a result, the effect on an investor's yield of
principal payments or defaults occurring at a rate higher --- or lower --- than
the rate anticipated by the investor during the period immediately following the
issuance of the certificates would not be fully offset by a subsequent like
reduction --- or increase --- in the rate of principal payments or defaults.
If a purchaser of certificates of a class calculates its anticipated
yield based on an assumed rate of default and an assumed amount of Realized
Losses that are lower than the default rate and amount of Realized Losses
actually incurred and the amount of Realized Losses actually incurred is not
entirely covered by Excess Interest or by the subordination of the certificates
of classes subordinated to the purchaser's class, the purchaser's actual yield
to maturity will be lower than that so calculated. The timing of Realized Losses
on liquidated loans will also affect an investor's actual yield to maturity,
even if the rate of defaults and severity of
S-48
<PAGE>
losses are consistent with an investor's expectations. There can be no assurance
that the delinquency or repossession experience set forth in this prospectus
supplement under the heading "SERVICING OF THE ASSETS -- DELINQUENCY AND LOAN
LOSS/REPOSSESSION EXPERIENCE" will be representative of the results that may be
experienced with respect to the assets. There can be no assurance as to the
delinquency, repossession, foreclosure or loss experience with respect to the
assets.
If the purchaser of a certificate offered at a discount from its Parity
Price calculates its anticipated yield to maturity based on an assumed rate of
payment of principal that is faster than that actually experienced on the
assets, the actual yield to maturity will be lower than that so calculated.
Similarly, if the purchaser of a certificate offered at a premium above its
Parity Price calculates its anticipated yield to maturity based on an assumed
rate of payment of principal that is slower than that actually experienced on
the assets, the actual pre-tax yield to maturity will be lower than that so
calculated. Parity Price is the price at which a security will yield its coupon.
Generally, a class A certificate will not receive principal until each
class of class A certificates with a lower numerical designation has been paid
in full. The allocation of distributions will have the effect of amortizing the
class A-1, class A-2, class A-3, class A-4 and class A-5 certificates,
particularly the class A-1 certificates, at a faster rate than the rate at which
the certificates would have been amortized if the Principal Distribution Amount
were required to be allocated among the classes of the certificates pro rata
prior to the Cross-over Date.
The holders of the offered subordinated certificates will not be
entitled to receive any distributions of principal on any distribution date
unless either the Cross-over Date has occurred and the Principal Distribution
Tests are satisfied for this distribution date or the certificate principal
balance of the class A certificates has been reduced to zero. Further, payments
of principal will be made on the class B-2 certificates only if tests with
respect to the class B-2 Floor Amount are met. It is not possible to predict
with certainty the timing of the date, if any, on which the Cross-over Date will
occur, or whether the Principal Distribution Tests will be met as to any
distribution date. A high level of Realized Losses or delinquencies could result
in the Principal Distribution Tests not being met for one or more distribution
dates. This would delay the amortization of the offered subordinated
certificates, particularly the class B-2 certificates, beyond what would
otherwise be the case.
While partial prepayments of principal on the assets are applied on Due
Dates for the assets, obligors are not required to pay interest on the assets
after the date of a full prepayment of principal. As a result, full prepayments
of assets in advance of their Due Dates during the Collection Period will reduce
the amount of interest received from obligors during that Collection Period to
less than one month's interest on all the assets. If a sufficient number of
assets are prepaid in full during the Prepayment Period in advance of their
respective Due Dates, then interest payable on all of the assets during the
related Collection Period may be less than the interest payable on all of the
certificates with respect to the Collection Period. If the level of Due Date
Interest Shortfalls was large enough, these shortfalls could result in a
Writedown Amount being allocated to the subordinated certificates. A Writedown
Amount is, with respect to each
S-49
<PAGE>
distribution date, the amount, if any, by which the aggregate certificate
principal balance of all the certificates, after all distributions have been
made on the certificates on that distribution date, exceeds the Pool Scheduled
Principal Balance of the assets for the next distribution date. SEE "DESCRIPTION
OF THE OFFERED CERTIFICATES" IN THIS PROSPECTUS SUPPLEMENT.
[Investors in the class A-1 certificates should understand that the
Pass-Through Rate of the class A-1 certificates will not exceed the Weighted
Average Net Asset Rate. Investors in this class should also consider the risk
that lower than anticipated levels of One-Month LIBOR could result in actual
yields to investors that are lower than anticipated yields.]
[Investors in the class A-1 certificates should understand that the
timing of changes in the level of One-Month LIBOR may affect the actual yields
to investors even if the average level is consistent with the investor's
expectations. Each investor must make an independent decision as to the
appropriate One-Month LIBOR assumption to be used in deciding whether to
purchase a class A-1 certificate. ]
Because the Pass-Through Rate on the offered subordinated certificates
may vary on the basis of the Weighted Average Net Asset Rate, the Pass-Through
Rate and the yield on these certificates could be affected by disproportionate
collections of principal in respect of assets with different asset rates,
including obligor prepayments and collections resulting from liquidations and
repurchases of assets. Accordingly:
o the yield to maturity of the class M-1 certificates will be lower
than that which would otherwise result if all or a substantial
portion of the assets with net rates higher than _____% per annum
prepaid prior to those with net rates lower than _____% per annum,
o the yield to maturity of the class M-2 certificates will be lower
than that which would otherwise result if all or a substantial
portion of the assets with net rates higher than _____% per annum
prepaid prior to those with net rates lower than _____% per annum,
o the yield to maturity of the class B-1 certificates will be lower
than that which would otherwise result if all or a substantial
portion of the assets with net rates higher than _____% per annum
prepaid prior to those with net rates lower than _____% per annum,
and
o the yield to maturity of the class B-2 certificates will be lower
than that which would otherwise result if all or a substantial
portion of the assets with net rates higher than _____% per annum
prepaid prior to those with net rates lower than _____% per annum.
The aggregate amount of distributions and the yield to maturity of the
offered certificates will also be affected by early payments of principal on the
assets resulting from any purchases of assets not conforming to representations
and warranties of Oakwood Acceptance and by the exercise by the Servicer of its
option to purchase the assets and other assets of the trust, thereby effecting
early retirement of any outstanding classes of offered certificates. If the
Servicer does not exercise its optional termination right within 90 days after
it first becomes eligible to do so, the trustee shall solicit bids for the
purchase of all assets, REO Properties and Repo Properties
S-50
<PAGE>
remaining in the trust. The trustee shall sell these assets, REO Properties and
Repo Properties only if the net proceeds to the trust from the sale would at
least equal the Termination Price The net proceeds from the sale will be
distributed first to the Servicer to reimburse it for all previously
unreimbursed Liquidation Expenses paid and Advances made by, and not previously
reimbursed to, it with respect to the assets and second to the Holders of the
certificates and the Servicer. ACCORDINGLY, IT IS POSSIBLE THAT YOUR
CERTIFICATES COULD BE REDEEMED AT A PRICE LESS THAN THEIR OUTSTANDING PRINCIPAL
AMOUNT PLUS ACCRUED AND UNPAID INTEREST.
If the net proceeds from the sale would not at least equal the
Termination Price, the trustee shall decline to sell the assets, REO Properties
and Repo Properties and shall not be under any obligation to solicit any further
bids or otherwise negotiate any further sale of the assets, REO Properties and
Repo Properties.
THE TRUST
GENERAL
The certificates will be issued pursuant to the pooling and servicing
agreement. This summary of the provisions of the pooling and servicing agreement
does not purport to be complete. Reference is made to the prospectus for
important information in addition to that set forth in this prospectus
supplement regarding the terms and conditions of the offered certificates. A
copy of the standard terms to pooling and servicing agreement, July 1998
Edition, has been filed with the SEC as an exhibit to Oakwood Mortgage's
Registration Statement on Form S-3 of which the prospectus is a part. A copy of
the pooling and servicing agreement relating to the certificates, in the form in
which it was executed by Oakwood Mortgage, the Servicer and the trustee, without
exhibits, will be filed with the SEC in a Current Report on Form 8-K within 15
days after the closing date.
The trust created pursuant to the pooling and servicing agreement will
consist of the assets, including all rights to receive payments due on the
assets after the Cut-off Date; assets as from time to time are identified as
deposited in any account held for the benefit of certificateholders, including
the Certificate Account and the Distribution Account; any manufactured home,
Real Property or mortgaged property acquired on behalf of certificateholders by
repossession, foreclosure or by deed in lieu of foreclosure; the rights of the
trustee to receive the proceeds of any standard hazard insurance policies
maintained with respect to the manufactured homes and mortgaged properties in
accordance with the pooling and servicing agreement and of any FHA insurance
maintained with respect to the assets; and certain rights of Oakwood Mortgage
relating to the enforcement of representations and warranties made by Oakwood
Acceptance relating to the assets.
THE TRUSTEE
The trustee is _______________________________________. Any notices to
the trustee relating to the certificates or the pooling and servicing agreement
should be sent to _____________________________________________________________.
S-51
<PAGE>
Investors may contact the trustee's corporate trust office by telephone
to ascertain the certificate principal balance of each class of offered
certificates and the then current Pass-Through Rate applicable to each class of
the offered certificates. The telephone number currently maintained by the
trustee for the purpose of reporting this information is (___) ___________.
Oakwood Mortgage will file a Current Report on Form 8-K with the SEC within 15
days following the closing date. This Current Report on Form 8-K will specify
the initial principal amount of each class of the certificates.
The trustee may resign at any time, in which event Oakwood Mortgage
will be obligated to appoint a successor trustee. Oakwood Mortgage may also
remove the trustee if the trustee ceases to be eligible to continue as such
under the pooling and servicing agreement or if the trustee becomes insolvent.
In these circumstances, Oakwood Mortgage will also be obligated to appoint a
successor trustee. Any resignation or removal of the trustee and appointment of
a successor trustee will not become effective until acceptance of the
appointment by the successor trustee.
The pooling and servicing agreement requires the trustee to maintain,
at its own expense, an office or agency where certificates may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the trustee and the Certificate Registrar in respect of the certificates
pursuant to the pooling and servicing agreement may be served.
OPTIONAL TERMINATION
The Servicer may terminate the trust by purchasing all assets, REO
Properties and Repo Properties remaining in the trust on any distribution date
(the "Call Option Date") occurring on or after the distribution date on which
the sum of the Certificate Balance of the certificates is less than ____% of the
sum of the original certificate principal balance of the certificates. The trust
also may be terminated and the certificates retired on any distribution date
upon the Servicer's determination, based on an opinion of counsel, that the
REMIC status of either the Pooling REMIC or the Issuing REMIC has been lost or
that a substantial risk exists that this status will be lost for the then
current taxable year. SEE "DESCRIPTION OF THE CERTIFICATES -- OPTIONAL
REDEMPTION OR TERMINATION" IN THE PROSPECTUS.
The Termination Price will equal the greater of
o the sum of
o any Liquidation Expenses incurred by the Servicer in
respect of any asset that has not yet been liquidated;
o all amounts required to be reimbursed or paid to the
Servicer in respect of previously unreimbursed Advances;
and
o the sum of
S-52
<PAGE>
o the aggregate unpaid principal balance of the
assets, plus accrued and unpaid interest thereon
at the asset rates borne by your assets through
the end of the Interest Accrual Period in respect
of the date of the terminating purchase, plus
o the lesser of
o the aggregate unpaid principal balance
of each asset that had been secured by
any REO Property or Repo Property
remaining in the trust, plus accrued
interest thereon at the asset rates
borne by assets through the end of the
month preceding the month of the
terminating purchase, and
o the current appraised value of any REO
Property or Repo Property, net of
Liquidation Expenses to be incurred in
connection with the disposition of this
property estimated in good faith by the
Servicer, the appraisal to be conducted
by an appraiser mutually agreed upon by
the Servicer and the trustee, plus all
previously unreimbursed P&I Advances
made in respect of the REO Property or
Repo Property, and
o the aggregate fair market value of the assets of the trust, as
determined by the Servicer, plus all previously unreimbursed P&I
Advances made with respect to the assets.
The fair market value of the assets of the trust as determined for purposes of a
terminating purchase shall be deemed to include accrued interest at the
applicable asset rate on the unpaid principal balance of each asset, including
any asset that has become a REO Property or a Repo Property, which REO Property
or Repo Property has not yet been disposed of by the Servicer, through the end
of the month preceding the month of the terminating purchase. ACCORDINGLY, IT IS
POSSIBLE THAT YOUR CERTIFICATES COULD BE REDEEMED BY AN OPTIONAL TERMINATION AT
A PRICE LESS THAN THEIR OUTSTANDING PRINCIPAL AMOUNT PLUS ACCRUED AND UNPAID
INTEREST. The basis for a valuation shall be furnished by the Servicer to the
certificateholders upon request. SEE "DESCRIPTION OF THE CERTIFICATES --
OPTIONAL REDEMPTION OR TERMINATION" IN THE PROSPECTUS.
On the date of any termination of the trust, the Termination Price
shall be distributed first to the Servicer to reimburse it for all previously
unreimbursed Liquidation Expenses paid and Advances made by and not previously
reimbursed to the Servicer with respect to the assets and second to the
certificateholders in accordance with the distribution priorities set forth
under " -- DISTRIBUTIONS -- PRIORITY OF DISTRIBUTIONS" in THIS PROSPECTUS
SUPPLEMENT. The Termination Price shall be deemed to be a principal prepayment
in full, together with related interest, received during the related Prepayment
Period for purposes of determining the allocation of the distributions. Upon the
termination of the trust and payment of all amounts due on the certificates and
all administrative expenses associated with the trust, any remaining assets of
the REMICs shall be sold and the proceeds distributed pro rata to the holders of
the class R
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<PAGE>
certificates. SEE "DESCRIPTION OF THE CERTIFICATES -- OPTIONAL REDEMPTION OR
TERMINATION" IN THE PROSPECTUS.
AUCTION SALE
If the Servicer does not exercise its optional termination right within
90 days after it first becomes eligible to do so, the trustee shall solicit bids
for the purchase of all assets, REO Properties and Repo Properties remaining in
the trust. The trustee shall sell the assets, REO Properties and Repo Properties
only if the net proceeds to the trust from the sale would at least equal the
Termination Price, and the net proceeds from the sale will be distributed first
to the Servicer to reimburse it for all previously unreimbursed Liquidation
Expenses paid and Advances made by, and not previously reimbursed to, it with
respect to the assets and second to the certificateholders and the Servicer in
accordance with the distribution priorities set forth under "DESCRIPTION OF THE
OFFERED CERTIFICATEHOLDERS -- DISTRIBUTIONS -- PRIORITY OF DISTRIBUTIONS" IN
THIS PROSPECTus SUPPLEMENT. ACCORDINGLY, IT IS POSSIBLE THAT YOUR CERTIFICATES
COULD BE REDEEMED BY REASON OF AN AUCTION SALE AT A PRICE LESS THAN THEIR
OUTSTANDING PRINCIPAL AMOUNT PLUS ACCRUED AND UNPAID INTEREST. If the net
proceeds from the sale would not at least equal the Termination Price, the
trustee shall decline to sell the assets, REO Properties and Repo Properties and
shall not be under any obligation to solicit any further bids or otherwise
negotiate any further sale of the assets, REO Properties and Repo Properties.
TERMINATION OF THE AGREEMENT
The pooling and servicing agreement will terminate upon the last action
required to be taken by the trustee on the final distribution date following the
later of the purchase by the Servicer of all assets and all property acquired in
respect of any asset remaining in the trust estate, as described under " --
OPTIONAl TERMINATION" AND "AUCTION SALE" IN THIS PROSPECTUS SUPPLEMENT and the
final payment or other liquidation, or any related advance, of the last asset
remaining in the trust estate or the disposition of all property acquired upon
repossession of any manufactured home or foreclosure on any mortgaged property.
Upon presentation and surrender of the certificates, the trustee shall
cause to be distributed, to the extent of available funds, to the
certificateholders on the final distribution date the amounts due them in
accordance with the pooling and servicing agreement. The amount remaining on
deposit in the Certificate Account, other than amounts retained to meet claims,
after all required distributions have been made to the holders of the offered
certificates and the X certificates, or to the Termination Account, will be paid
to the class R certificateholders pro rata, based upon the holders' respective
percentage interests, in accordance with the provisions of the pooling and
servicing agreement.
VOTING RIGHTS
The voting rights of the trust will be allocated 0.5% to the class R
certificates, 0.5% to the class X certificates and 99% to the other certificates
in proportion to their respective certificate principal balances. For a
description of the limited matters on which the certificateholders may vote, SEE
"THE POOLING AND SERVICING AGREEMENTS" IN THE PROSPECTUS.
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<PAGE>
REPORTS TO CERTIFICATEHOLDERS
The trustee will furnish the certificateholders with monthly statements
prepared by the Servicer (each, a "Remittance Report") containing information
with respect to principal and interest distributions on the certificates and
Realized Losses on the assets. Any financial information contained in these
reports will not have been examined or reported upon by an independent public
accountant. Copies of the monthly statements and any annual reports prepared by
the Servicer evidencing the status of its compliance with the provisions of a
pooling and servicing agreement will be furnished to related certificateholders
upon request addressed to the trustee.
A Remittance Report for a distribution date will identify the following
items:
o the Available Distribution Amount for the related distribution
date;
o the Interest Distribution Amount and the carryover amounts, as
well as any Writedown Interest Distribution Amount and any
Carryover Writedown Interest Distribution Amount, for each class
of the certificates for the related distribution date, and the
amount of interest of each category to be distributed on each
class based upon the Available Distribution Amount for the related
distribution date;
o the amount to be distributed on the related distribution date on
each class of the certificates to be applied to reduce the
certificate principal balance of each class, separately
identifying any portion of the amount attributable to prepayments,
and the aggregate of any Principal Distribution Amounts remaining
unpaid from previous distribution dates for each class of the
certificates for the related distribution date, and the amount to
be distributed to reduce any Principal Distribution Amounts
remaining unpaid from previous distribution dates on each class
based upon the Available Distribution Amount for the related
distribution date;
o the aggregate amount of P&I Advances required to be made by the
Servicer with respect to the related distribution date;
o the amount of any Realized Losses incurred on the assets during
the related Prepayment Period and in the aggregate since the
Cut-off Date and the amount of any Writedown Amount to be
allocated to any class of the subordinated certificates;
o [the amount of the Limited Guarantee Payment Amount, if any, for
the related distribution date and the aggregate amount of any
unpaid Limited Guarantee Payment Amounts for any previous
distribution date; ]
o the certificate principal balance of each class of the
certificates and the certificate principal balance as adjusted for
write-downs of each class of the subordinated certificates after
giving effect to the distributions to be made, and any Writedown
Amounts to be allocated, on the related distribution date;
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<PAGE>
o the aggregate Interest Distribution Amount remaining unpaid, if
any, and the aggregate carryover amount remaining unpaid, if any,
for each class of certificates, after giving effect to the
distributions to be made on the related distribution date;
o the aggregate Writedown Interest Distribution Amount remaining
unpaid, if any, and the aggregate Carryover Writedown Interest
Distribution Amount remaining unpaid, if any, for each class of
certificates, after giving effect to the distributions to be made
on the related distribution date;
o the aggregate of any Principal Distribution Amounts remaining
unpaid from previous distribution dates, if any, for each class of
certificates, after giving effect to the distributions to be made
on the related distribution date;
o the amount of the aggregate Servicing Fee in respect of the related
distribution date;
o the aggregate number and the aggregate of the unpaid principal
balances of outstanding assets that are delinquent one month ---
30 to 59 days --- as of the end of the related Prepayment
Period, delinquent two months --- 60 to 89 days --- as of
the end of the related Prepayment Period, delinquent three
months --- 90 days or longer --- as of the end of the related
Prepayment Period and as to which repossession, foreclosure
or other comparable proceedings have been commenced as
of the end of the related Prepayment Period;
o the aggregate number and the aggregate unpaid principal balance of
outstanding contracts and outstanding mortgage loans, stated
separately, for which the obligor is also a debtor, whether
voluntary or involuntary, in a proceeding under the Bankruptcy
Code; and the aggregate number and the aggregate Unpaid Principle
Balance of outstanding contracts and outstanding mortgage loans for
which the obligor is also a debtor, whether voluntary or
involuntary, in a proceeding under the Bankruptcy Code, stated
separately, that are delinquent one month --- 30 to 59 days --- as
of the end of the related Prepayment Period, delinquent two months
--- 60 to 89 days --- as of the end of the related Prepayment
Period, and delinquent three months --- 90 days or longer --- as of
the end of the related Prepayment Period;
o [the Pre-Funded Amount, if any, in the Pre-Funding Account on the
related distribution date, the amount of funds, if any, used to
purchase Subsequent Assets during the Pre-Funding Period and the
amount of funds, if any allocated as a prepayment of principal at
the end of the Pre-Funding Period;] and
o any other information required to be provided to certificateholders
by the REMIC Provisions.
In the case of information furnished pursuant to the second and third
bullet points, the amounts shall be expressed, with respect to any certificate,
as a dollar amount per $1,000 denomination.
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<PAGE>
SERVICING OF THE ASSETS
THE SERVICER
Oakwood Acceptance was incorporated in 1984 in the state of North
Carolina as a wholly-owned subsidiary of Oakwood Homes. Oakwood Acceptance is
primarily engaged in the business of underwriting, originating, pooling, selling
and servicing installment sales contracts for sales of manufactured housing
units. Oakwood Acceptance's principal offices are located at 7800 McCloud Road,
Greensboro, North Carolina 27409-9634, telephone (336) 664-2500.
Oakwood Homes is a vertically-integrated manufacturer and retailer of
manufactured homes. Homes manufactured by Oakwood Homes are sold primarily at
retail through its approximately ____, as of _________________, sales centers
located in ___ states. Oakwood Homes also sells manufactured homes purchased
from other manufacturers at its sales centers.
Oakwood Acceptance underwrites and funds the origination of
manufactured housing contracts and residential mortgage loans, secured by a lien
on the real estate on which the related manufactured home is deemed permanently
affixed, on an individual basis from its principal office and from additional
loan origination offices in Austin, Texas, Mesa, Arizona and Tallahassee,
Florida. Contracts for the financing of sales of manufactured homes at Oakwood
Acceptance's sales centers as well as mortgage loans are typically originated in
the name of Oakwood Mobile, a wholly-owned retailing subsidiary of Oakwood
Homes, or in the name of a third party manufactured housing dealer, in either
case using funds provided by Oakwood Acceptance, and are assigned to Oakwood
Acceptance following origination, although some assets are originated directly
in Oakwood Acceptance's name. Oakwood Acceptance underwrites all of these
assets. From time to time, Oakwood Acceptance purchases seasoned portfolios of
manufactured housing contracts from third parties.
SERVICING PORTFOLIO
Oakwood Acceptance services all of the manufactured housing contracts
it originates or purchases --- except for some contract portfolios which it
sells on a servicing-released basis --- collecting loan payments, insurance
premiums and other payments from borrowers and remitting principal and interest
payments to the holders of the contracts. The following table shows the
composition of Oakwood Acceptance's servicing portfolio of manufactured housing
contracts and residential mortgage loans, secured by a lien on the real estate
on which the related manufactured home is deemed permanently affixed, on the
dates indicated.
S-57
<PAGE>
<TABLE>
<CAPTION>
ASSET SERVICING PORTFOLIO
AT SEPTEMBER 30, AT MARCH 31,
-------------------------------------------------------------- -------------------------
1994 1995 1996 1997 1998 1998 1999
---------- ---------- --------- --------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Total Number of Serviced
Assets
Oakwood Acceptance Originated.. 39,273 51,566 67,120 89,411 111,351 99,878 117,673
Acquired Portfolios............ 5,773 4,872 4,177 3,602 2,818 3,221 2,471
Aggregate Outstanding Principal
Balance of Serviced Assets
Oakwood Acceptance Originated.. $757,640 $1,130,378 $1,687,406 $2,499,794 $3,536,657 $2,937,886 $3,874,548
Acquired Portfolios............ $85,227 $70,853 $57,837 $47,027 $35,882 $40,919 $30,532
Average Outstanding Principal
Balance per Serviced Asset
Oakwood Acceptance Originated.. $19.3 $21.9 $25.1 $28.0 $31.8 $29.4 $32.9
Acquired Portfolios............ $14.8 $14.5 $13.8 $13.1 $12.7 $12.7 $12.4
Weighted Average Interest Rate
of Serviced Assets
Oakwood Acceptance Originated.. 12.2% 12.0% 11.5% 11.0% 10.8% 11.0% 10.7%
Acquired Portfolios............ 11.0% 11.3% 11.2% 11.1% 11.0% 11.1% 10.9%
</TABLE>
DELINQUENCY AND LOAN LOSS/REPOSSESSION EXPERIENCE
The following tables set forth information concerning the delinquency
experience and the loan loss and repossession experience of the portfolio of
manufactured housing installment sales contracts and residential mortgage loans,
secured by a lien on the real estate on which the related manufactured home is
deemed permanently affixed, serviced by Oakwood Acceptance, in each case for
each of Oakwood Acceptance's fiscal years from 1994 through 1998. Because
delinquencies, losses and repossessions are affected by a variety of economic,
geographic and other factors, there can be no assurance that the delinquency and
loss experience of the assets will be comparable to that set forth.
<TABLE>
<CAPTION>
DELINQUENCY EXPERIENCE
AT SEPTEMBER 30, AT MARCH 31,
------------------------------------------------------------- ------------------------
1994 1995 1996 1997 1998 1998 1999
--------- ---------- ---------- --------- -------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Total Number of Serviced Assets
Oakwood Acceptance Originated... 39,273 51,566 67,120 89,411 111,351 99,878 117,673
Acquired Portfolios............. 5,773 4,872 4,177 3,602 2,818 3,221 2,471
Number of Delinquent Assets
Oakwood Acceptance Originated:
30 to 59 days past due.......... 350 601 835 1,171 2,345 1,445 1,560
60 to 89 days past due.......... 97 185 308 476 906 499 630
90 days or more past due........ 198 267 492 716 1,222 1,004 1,475
Total Number of Assets
Delinquent................... 645 1,053 1,635 2,363 4,473 2,948 3,665
Acquired Portfolios:
30-59 days past due............. 127 63 66 90 75 72 32
60-89 days past due............. 49 17 23 23 31 31 14
90 days or more past due........ 98 76 62 75 57 61 59
Total Number of Assets
Delinquent................... 274 156 151 188 163 164 105
Total Delinquencies as a Percentage of
Serviced Assets, by Number of
Assets
Oakwood Acceptance Originated... 1.6% 2.0% 2.4% 2.6% 4.0% 3.0% 3.1%
Acquired Portfolios............. 4.7% 3.2% 3.6% 5.2% 5.8% 5.1% 4.2%
- --------------
</TABLE>
Assets that are already the subject of repossession or foreclosure procedures
are not included in "delinquent assets" for purposes of this table. The period
of delinquency is based on the number of days payments are contractually past
due, assuming 30-day months. Consequently, a payment due on the first day of a
month is not 30 days delinquent until the first day of the following month.
S-58
<PAGE>
<TABLE>
<CAPTION>
LOAN LOSS/REPOSSESSION EXPERIENCE
AT OR FOR THE
SIX MONTHS
AT SEPTEMBER 30, ENDED MARCH 31,
1994 1995 1996 1997 1998 1998 1999
---------- ---------- --------- --------- ------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Total Number of Serviced Assets at Period End 45,046 56,438 71,297 93,013 114,169 103,099 120,144
Average Number of Serviced Assets During
Period.................................... 37,788 50,742 63,868 82,155 103,591 98,056 117,157
Number of Serviced Assets Repossessed........ 1,241 1,718 2,746 3,885 5,411 2,429 3,810
Serviced Assets Repossessed as a Percentage
of Total Serviced Assets (1).............. 2.75% 3.04% 3.85% 4.18% 4.74% 4.71% 6.34%
Serviced Assets Repossessed as a Percentage
of Average Number of
Serviced Assets........................... 3.28% 3.39% 4.30% 4.73% 5.22% 4.95% 6.50%
Average Outstanding Principal Balance of
Assets
Oakwood Acceptance Originated............. $701,875 $976,905 $1,409,467 $2,065,033 $2,978,235 $2,677,949 $3,663,991
Acquired Portfolios....................... $30,432 $30,235 $27,351 $22,943 $19,179 $20,088 $15,721
Net Losses from Asset Liquidations (2):
Total Dollars
Oakwood Acceptance Originated............. $4,630 $7,303 $14,248 $26,872 $45,189 $19,767 $36,984
Acquired Portfolios....................... $203 $473 $592 $528 $220 $135 $105
As a Percentage of Average Outstanding
Principal Balance of Assets(3)
Oakwood Acceptance Originated.......... 0.66% 0.75% 1.01% 1.30% 1.52% 1.48% 2.02%
Acquired Portfolios.................... 0.67% 1.56% 2.16% 2.30% 1.15% 1.34% 1.34%
</TABLE>
Percentages expressed in the six month tables are annualized.
(1) Total number of serviced assets repossessed during the applicable period
expressed as a percentage of the total number of serviced assets at the end
of the applicable period.
(2) Net losses represent all losses incurred on Oakwood Acceptance-serviced
portfolios. Such amounts include estimates of net losses with respect to
certain defaulted assets. The length of the accrual period for the amount
of accrued and unpaid interest included in the calculation of the net loss
varies depending upon the period in which the loss was charged and whether
the asset was owned by an entity other than Oakwood Acceptance.
(3) Total net losses incurred on assets liquidated during the applicable period
expressed as a percentage of the average outstanding principal balance of
all assets.
[NOTE THAT DATA PRESENTED IN THE FOREGOING TABLES IN ANY PROSPECTUS SUPPLEMENT
WILL BE AS OF A DATE NO MORE THAN 135 DAYS PRIOR TO THE DATE OF SUCH PROSPECTUS
SUPPLEMENT.]
Oakwood Acceptance owns few of the assets in the foregoing tables, and
accordingly does not maintain loan loss reserves or charge-off loans. The policy
with respect to the vast majority of loans reflected in these tables, which
Oakwood Acceptance services primarily for the accounts of securitization trusts,
is to reflect credit loss only when an REO Property or a Repo Property has been
finally disposed of and not before. In most cases, disposition occurs shortly
after the asset becomes 90 days delinquent; however it may occur before this
time and it may occur later. This policy exists because only at the final
disposition of the collateral does Oakwood Acceptance know with certainty the
amount of the loss, if any, for reporting purposes.
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<PAGE>
Oakwood Acceptance has informed Oakwood Mortgage that Oakwood
Acceptance believes that its historical loss experience has been favorably
affected by its ability to resell repossessed units through Oakwood Mobile and
dealers supervised by Oakwood Mobile, and its engagement of Oakwood Mobile to
make needed repairs on repossessed units through the facilities of these
dealers, rather than having to hire unaffiliated parties to perform these
services at higher rates. If Oakwood Acceptance is replaced as Servicer of the
assets, the successor Servicer will not have access to Oakwood Mobile or its
network of dealers and, as a consequence, the loss experience on the assets,
particularly the contracts, may be adversely affected. The September 30, 1998
delinquency information provided in this prospectus supplement notes a material
increase over year-end 1997 results. A continuation likely would cause losses
higher than historical credit losses. SEE "RISK FACTORS -- YOU MAY EXPERIENCE A
LOSS On YOUR INVESTMENT IF LOSSES AND DELINQUENCIES ON ASSETS IN THE TRUST ARE
HIGH" IN THIS PROSPECTUS SUPPLEMENT.
The data in the foregoing tables are presented for illustrative
purposes only, and there is no assurance that the delinquency, loan loss and
repossession experience of the assets will be similar to that set forth. The
delinquency, loan loss and repossession experience of manufactured housing
contracts historically has been sharply affected by downturns in regional or
local economic conditions. For instance, a downturn was experienced in areas
dependent on the oil and gas industry in the 1980s, causing increased levels of
delinquencies, repossessions and loan losses on manufactured housing installment
sales contracts in the affected areas. The asset pool consists primarily of
contracts. Regional and local economic conditions are often volatile, and no
predictions can be made regarding their effects on future economic losses upon
repossessions or as to the levels of losses that will be incurred as a result of
any repossessions of or foreclosures on assets. SEE "RISK FACTORS -- YOU MAY
EXPERIENCE A LOSS ON YOUR INVESTMENT IF LOSSES AND DELINQUENCIES ON ASSETS IN
THE TRUST ARE HIGH" IN THIS PROSPECTUS SUPPLEMENT.
COLLECTION AND OTHER SERVICING PROCEDURES
The Servicer will administer, service and make collections on the
assets, exercising the degree of care that the Servicer exercises with respect
to similar contracts serviced by the Servicer.
Except for the step-up rate loans during their Step-up Periods, each
Fixed Rate Asset bears interest at a fixed annual percentage rate and provides
for level payments over the term of the asset that fully amortize the principal
balance of the asset. All payments received on the assets --- other than
payments allocated to items other than principal and interest or payments
sufficient to pay the outstanding principal balance of and all accrued and
unpaid interest on the assets --- will be applied when received first to any
previously unpaid scheduled Monthly Payments, and then to the currently due
Monthly Payment, in the chronological order of occurrence of the Due Dates for
the Monthly Payments. Any payments on an asset that exceed the amount necessary
to bring the asset current are applied to the partial prepayment of principal of
the asset if the Servicer determines, based on specific directions from the
obligor as to the payment or on a course of dealing with the obligor, that the
obligor intended the payment as a partial principal prepayment. If the Servicer
cannot determine the obligor's intent with respect to
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<PAGE>
any excess payment, the Servicer will apply the excess payment as an early
payment of scheduled Monthly Payments for subsequent Due Dates to the extent the
excess payment is an integral multiple of the obligor's scheduled Monthly
Payment, and will apply the remainder of the excess payment as a partial
principal prepayment.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
On each distribution date, the Servicer will be entitled to receive a
monthly Servicing Fee equal to 1.00% per annum (the "Servicing Fee Rate")
multiplied by the aggregate Scheduled Principal Balance of the assets at the
beginning of the related Collection Period, without giving effect to any
principal prepayments, net liquidation proceeds and Repurchase Prices received
(or Realized Losses incurred, during the related Prepayment Period). If Oakwood
Acceptance is the Servicer, the Servicing Fee in respect of a distribution date
will be paid pursuant to clause (12) under "DESCRIPTION OF THE OFFERED
CERTIFICATES -- DISTRIBUTIONS" IN THIS PROSPECTUS SUPPLEMENT and only to the
extent of funds available pursuant to clause (12), except that it may retain its
Servicing Fee out of collections on the assets to the extent that the amount
already on deposit in the Certificate Account for the related distribution date
will allow the full distribution of all amounts required to be distributed
pursuant to clauses (1) through (11) under "DESCRIPTION OF THE OFFERED
CERTIFICATES -- DISTRIBUTIONS -- PRIORITY OF DISTRIBUTIONS" IN THIS PROSPECTUS
on the related distribution date. If Oakwood Acceptance is not the Servicer, the
Servicing Fee in respect of each asset may be retained by the Servicer at the
time of the related collection on the asset or may be withdrawn from the
Certificate Account at a later time, in which case the amount will not be part
of the Available Distribution Amount.
The Servicing Fee provides compensation for customary manufactured
housing contract third-party servicing activities to be performed by the
Servicer for the trust and for additional administrative services performed by
the Servicer on behalf of the trust. Customary servicing activities include
collecting and recording payments, communicating with obligors, investigating
payment delinquencies, providing billing and tax records to obligors and
maintaining internal records with respect to each asset. Administrative services
performed by the Servicer on behalf of the trust include calculating
distributions to certificateholders and providing related data processing and
reporting services for certificateholders and on behalf of the trustee. Expenses
incurred in connection with servicing of the assets and paid by the Servicer
from its monthly Servicing Fee include, without limitation, payment of fees and
expenses of accountants, payment of all fees and expenses incurred in connection
with the enforcement of contracts or mortgage loans, except Liquidation
Expenses, and payment of expenses incurred in connection with distributions and
reports to certificateholders. The Servicer will be reimbursed out of the
Liquidation Proceeds of a defaulted asset for all reasonable, out-of-pocket
Liquidation Expenses incurred by it in repossessing, foreclosing on and
liquidating the related manufactured home or mortgaged property.
As part of its servicing fees, the Servicer will also be entitled to
retain, as compensation for the additional services provided in connection with
the pooling and servicing agreement, any late payment fees made by obligors,
extension fees paid by obligors for the extension of scheduled payments and
assumption fees paid in connection with permitted assumptions of
S-61
<PAGE>
assets by purchasers of the related manufactured homes and mortgaged properties,
as well as investment earnings on funds in the Certificate Account.
ADVANCES
On or prior to the business day preceding each distribution date, the
Servicer will either
o deposit from its own funds the related aggregate P&I Advance into
the Certificate Account;
o cause appropriate entries to be made in the records of the
Certificate Account that funds in the Certificate Account that are
not part of the Available Distribution Amount for the related
distribution date have been used to make the aggregate P&I
Advance;
o if the Certificate Account is maintained by the trustee, instruct
the trustee to use investment earnings on the Certificate Account
to defray the Servicer's P&I Advance obligation; or
o make or cause to be made the aggregate P&I Advance through any
combination of the methods described.
Any funds held for future distribution and used in accordance with the second
bullet point must be restored by the Servicer from its own funds or from early
payments collected on the assets when they become part of a future Available
Distribution Amount. The aggregate required P&I Advance for a distribution date
is the sum of delinquent scheduled Monthly Payments due in the related
Collection Period, exclusive of all Non-Recoverable Advances.
P&I Advances are intended to maintain a regular flow of scheduled
interest and principal payments to certificateholders rather than to guarantee
or insure against losses.
The Servicer will also be obligated to make advances ("Servicing
Advances"), to the extent the Servicer deems the Advances recoverable out of
Liquidation Proceeds of, or from collections on, the related contract or
mortgage loan, in respect of Liquidation Expenses and taxes and insurance
premiums not paid by an obligor on a timely basis.
The Servicer may reimburse itself for Servicing Advances out of
collections of the late payments in respect of which the Advances were made and,
upon the determination that a Non-recoverable Advance has been made in respect
of an asset or upon an asset becoming a liquidated loan, out of Funds in the
Certificate Account for unreimbursed amounts advanced by it in respect of the
asset. In addition, the Servicer may reimburse itself out of funds in the
Certificate Account for unreimbursed amounts advanced by it in respect of P&I
Advances.
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<PAGE>
SUCCESSORS TO SERVICER, DELEGATION OF DUTIES
Any entity with which the Servicer is merged or consolidated, or any
entity resulting from any merger, conversion or consolidation to which the
Servicer is a party, or any entity succeeding to the business of the Servicer,
will be the successor to the Servicer under the pooling and servicing agreement
so long as each Rating Agency has delivered to the trustee a letter to the
effect that the successorship will not result in a downgrading of the rating
then assigned by the Rating Agency to any class of the certificates. The
Servicer may delegate computational, data processing, collection and
foreclosure, including repossession, duties under the pooling and servicing
agreement without any notice to or consent from Oakwood Mortgage or the trustee,
provided that the Servicer will remain fully responsible for the performance of
these duties.
USE OF PROCEEDS
Substantially all of the net proceeds to be received from the sale of
the certificates will be used to purchase the assets and to pay other expenses
connected with pooling the assets and issuing the certificates.
UNDERWRITING
Oakwood Mortgage and Oakwood Acceptance have entered into an
underwriting agreement dated ______________________ with
_________________________________ and _______________________________________
(the "Underwriters"), for whom __________________________________ is acting as
representative (the "Representative"). In the underwriting agreement, Oakwood
Mortgage has agreed to sell to the Underwriters, and the Underwriters have
agreed to purchase, the principal amount of the offered certificates set forth
opposite each of their names:
<TABLE>
<CAPTION>
CLASS A-1 CLASS A-2 CLASS A-3 CLASS A-4 CLASS A-5
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
[Underwriter]............ $_________ $_________ $_________ $__________ $_________
[Underwriter]............ $_________ $_________ $_________ $__________ $_________
Total............... $_________ $_________ $_________ $__________ $_________
CLASS M-1 CLASS M-2 CLASS B-1 CLASS B-2
--------- --------- --------- ---------
[Underwriter]............................ $_________ $_________ $__________ $_________
[Underwriter]............................ $_________ $_________ $__________ $_________
Total............................... $_________ $_________ $__________ $_________
</TABLE>
The underwriting agreement provides that there are conditions precedent
to the obligations of the several Underwriters and that the Underwriters will be
obligated to purchase all of the offered certificates if any of the offered
certificates are purchased. In the event of
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<PAGE>
default by any Underwriter, the underwriting agreement provides that, in some
circumstances, the purchase commitments of the nondefaulting Underwriter may be
increased or the underwriting agreement may be terminated.
Oakwood Mortgage has been advised by the Representative that the
several Underwriters propose to offer the offered certificates to the public
initially at the respective public offering prices set forth on the cover page
of this prospectus supplement, and to dealers at such prices less a concession
not in excess of the amount set forth for each class. The Underwriters and
dealers may allow a discount not in excess of the amount set forth for each
class to other dealers. After the initial public offering of the offered
certificates, the public offering prices and concessions and discounts to
dealers may be changed by the Representative.
<TABLE>
<CAPTION>
CONCESSION DISCOUNT
(PERCENT OF (PERCENT OF
PRINCIPAL PRINCIPAL
AMOUNT) AMOUNT)
<S> <C> <C>
Class A-1..................................... _____% _____%
Class A-2..................................... _____% _____%
Class A-3..................................... _____% _____%
Class A-4..................................... _____% _____%
Class A-5..................................... _____% _____%
Class M-1..................................... _____% _____%
Class M-2..................................... _____% _____%
Class B-1..................................... _____% _____%
Class B-2..................................... _____% _____%
</TABLE>
The Underwriters and any dealers that participate with the Underwriters
in the distribution of the offered certificates may be deemed to be
underwriters, and any discounts, concessions or commissions received by them,
and any profit on the resale of the offered certificates purchased by them, may
be deemed to be underwriting discounts and commissions under the Securities Act
of 1933, as amended (the "Act").
Oakwood Mortgage and Oakwood Acceptance have agreed to indemnify the
Underwriters against certain liabilities, including civil liabilities under the
Act, or contribute to payments which the Underwriters may be required to make.
The Underwriters may engage in over-allotment, stabilizing
transactions, syndicate covering transactions and penalty bids in accordance
with Regulation M under the Securities Exchange Act of 1934 (the "Exchange
Act"). Over-allotment involves syndicate sales in excess of the offering size,
which creates a syndicate short position. Stabilizing transactions permit bids
to purchase the underlying security so long as the stabilizing bids do not
exceed a specified maximum. Syndicate covering transactions involve purchases of
the offered certificates in the open market after the distribution has been
completed in order to cover syndicate short positions. Penalty bids permit the
Underwriters to reclaim a selling concession from a syndicate member
S-64
<PAGE>
when the offered certificates originally sold by syndicate member are purchased
in a syndicate covering transaction to cover syndicate short positions.
Stabilizing transactions, syndicate covering transactions and penalty bids may
cause the price of the offered certificates to be higher than it would otherwise
be in the absence of these transactions. These transactions, if commenced, may
be discontinued at any time.
Oakwood Mortgage estimates that its expenses in connection with the
issuance and offering of the certificates will be approximately $________. This
information concerning Oakwood Mortgage's fees and expenses is an approximation
and may be changed by future contingencies.
LEGAL MATTERS
Legal matters will be passed upon for Oakwood Mortgage by Hunton &
Williams, Richmond, Virginia, and for the Underwriter by
______________________________________________________. The material federal
income tax consequences of the offered certificates will be passed upon for
Oakwood Mortgage by Hunton & Williams.
ERISA CONSIDERATIONS
Fiduciaries of employee benefit plans and certain other retirement
plans and arrangements, including individual retirement accounts and annuities,
Keogh plans, and collective investment funds in which such plans, accounts,
annuities or arrangements are invested, that must follow the requirements of
ERISA or corresponding provisions of the Code (collectively, "Plans"), persons
acting on behalf of a Plan, or persons using the assets of a Plan ("Plan
Investors") should carefully review with their legal advisors whether the
purchase or holding of any certificates could result in unfavorable consequences
for the Plan or its fiduciaries under the Plan Asset Regulations or the
prohibited transaction rules of ERISA or the Code. Prospective investors should
be aware that, although exceptions from the application of the Plan Asset
Regulations and the prohibited transaction rules exist, there can be no
assurance that any such exception will apply with respect to the acquisition of
a certificate. SEE "ERISA CONSIDERATIONS" IN THE PROSPECTUS.
Sections 406 and 407 of ERISA and Section 4975 of the Code prohibit
certain transactions that involve:
o a Plan that must follow the requirements of ERISA and any party in
interest or disqualified person with respect to the Plan and
o plan assets.
The Plan Asset Regulations define plan assets to include not only securities,
such as the certificates, held by a Plan but also the underlying assets of the
issuer of any equity securities (the "Look-Through Rule"), unless one or more
exceptions specified in the regulations are
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<PAGE>
satisfied. The offered certificates will be treated as equity securities for
purposes of the Plan Asset Regulations. The Look-Through Rule would not apply to
the offered certificates if one or more of the exceptions specified in the Plan
Asset Regulations are satisfied. However, based on the information available to
the Underwriters at the time of the printing of the prospectus, there can be no
assurance that either the Publicly Offered Exception or the Insignificant
Participation Exception will apply to the initial or any subsequent purchases of
the offered certificates. SEE "ERISA CONSIDERATIONS" IN THE PROSPECTUS.
The U.S. Department of Labor has granted an administrative exemption to
_____________________________ (Prohibited Transaction Exemption ____; Exemption
Application No. ____, ____Fed. Reg. ____ (____), referred to in this prospectus
supplement as the "Exemption") from certain of the prohibited transaction rules
of ERISA and the related excise tax provisions of Section 4975 of the Code with
respect to the initial purchase, the holding and the subsequent resale by Plans
of certificates in pass-through trusts that consist of receivables, loans, and
other obligations and that meet the conditions and requirements of the
Exemption. The receivables covered by the Exemption include manufactured housing
installment sales contracts such as the contracts and mortgage loans such as the
mortgage loans.
Among the general conditions that must be satisfied for the Exemption
to apply are the following:
o the acquisition of the certificates by a Plan is on terms,
including the price for the certificates, that are at least as
favorable to the Plan as they would be in an arm's-length
transaction with an unrelated party;
o the rights and interests evidenced by the certificates acquired by
the Plan are not subordinated to the rights and interests
evidenced by other certificates of the related trust;
o the certificates acquired by the Plan have received a rating at
the time of such acquisition that is in one of the three highest
generic rating categories from either Moody's Investors Service,
Inc. ("Moody's"), Standard & Poor's Rating Services, a division of
The McGraw-Hill Companies, Inc. ("S&P"), Fitch IBCA, Inc.
("Fitch") or Duff & Phelps Credit Rating Co. ("D&P")
(collectively, the "Exemption Rating Agencies");
o the trustee of the related trust must not be an affiliate of any
other member of the Restricted Group;
o the sum of all payments made to and retained by the Underwriters
in connection with the distribution of the certificates represents
not more than reasonable compensation for underwriting the
certificates;
o the sum of all payments made to and retained by Oakwood Mortgage
pursuant to the assignment of the loans to the trust represents
not more than the fair market value of such loans; and
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<PAGE>
o the sum of all payments made to and retained by the Servicer
represents not more than reasonable compensation for such person's
services under any servicing agreement and reimbursement of the
Servicer's reasonable expenses.
The Exemption defines the term reasonable compensation by reference to
DOL Regulation ss. 2550.408c-2, 29 C.F.R. ss. 2550.480c-2, which states that
whether compensation is reasonable depends upon the particular facts and
circumstances of each case. Each fiduciary of a Plan considering the purchase of
an offered certificate should satisfy itself that all amounts paid to or
retained by the Underwriters, Oakwood Mortgage and the Servicer represent
reasonable compensation for purposes of the Exemption. In addition, it is a
condition to application of the Exemption that the Plan investing in the
certificates is an accredited investor as defined in Rule 501(a)(1) of
Regulation D of the SEC under the Act. Furthermore, in order for its
certificates to qualify under the Exemption, a trust must meet the following
requirements:
o the corpus of the trust must consist solely of assets of the type
that have been included in other investment pools;
o certificates in such other investment pools must have been rated
in one of the three highest rating categories of S&P, Moody's, D&P
or Fitch for at least one year prior to the Plan's acquisition of
certificates; and
o certificates evidencing interests in such other investment pools
must have been purchased by investors other than Plans for at
least one year prior to any Plan's acquisition of certificates.
The Exemption does not apply to Plans sponsored by Oakwood Mortgage,
the Underwriters, Oakwood Acceptance, the trustee, the Servicer and any obligor
with respect to assets included in the trust constituting more than five percent
of the aggregate unamortized principal balance of the assets in the trust, or
any affiliate of such parties (the "Restricted Group"). Moreover, the Exemption
provides certain Plan fiduciaries relief from certain self-dealing/conflict of
interest prohibited transactions only if, among other requirements,
o in the case of an acquisition in connection with the initial
issuance of certificates, at least 50% of each class of
certificates in which Plans have invested is acquired by persons
independent of the Restricted Group and at least 50% of the
aggregate interest in the trust is acquired by persons independent
of the Restricted Group;
o such fiduciary or its affiliate is an obligor with respect to five
percent or less of the fair market value of the obligations
contained in the trust;
o the Plan's investment in certificates of any class does not exceed
25% of all of the certificates of that class outstanding at the
time of the acquisition; and
o immediately after the acquisition, no more than 25% of the assets
of the Plan with respect to which such person is a fiduciary is
invested in certificates representing an interest in one or more
trusts containing assets sold or serviced by the same entity.
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<PAGE>
The Exemption may apply to the acquisition and holding of the class A
certificates by Plans provided that all conditions to application of the
Exemption are met. Based upon information provided to Oakwood Mortgage by
members of the Restricted Group, Oakwood Mortgage expects that the conditions
set forth in the second, third and fourth bullet points of the fifth paragraph
of this section will be satisfied with respect to the class A certificates.
Prospective investors should be aware, however, that even if all of the
conditions specified in the Exemption are met, the scope of the relief provided
by the Exemption might not cover all acts that might be construed as prohibited
transactions. However, one or more alternative exemptions may be available with
respect to certain prohibited transactions to which the Exemption is not
applicable, depending in part upon the class of certificate to be acquired, the
type of Plan fiduciary that is making the decision to acquire such certificate
and the circumstances under which such decision is made, including, but not
limited to,
o PTCE 96-23, regarding investment decisions by in-house asset
managers;
o PTCE 95-60, regarding investments by insurance company general
accounts;
o PTCE 91-38, regarding investments by bank collective investment
funds;
o PTCE 90-1, regarding investments by insurance company pooled
separate accounts; or
o PTCE 84-14, regarding investment decisions made by a qualified plan
asset manager.
Before purchasing class A certificates, a Plan that must follow the
fiduciary responsibility provisions of ERISA or described in Section 4975(e)(1)
of the Code should consult with its counsel to determine whether the conditions
to application of the Exemption or any other exemptions would be met. In
addition, any Plan Investor contemplating an investment in the class A
certificates should note that the duties and obligations of the trustee and the
Servicer are limited to those expressly set forth in the pooling and servicing
agreement, and such specified duties and obligations may not comport with or
satisfy the provisions of ERISA setting forth the fiduciary duties of Plan
fiduciaries.
BECAUSE THE OFFERED SUBORDINATED CERTIFICATES ARE SUBORDINATED
SECURITIES, AND THE CLASS B CERTIFICATES ARE NOT EXPECTED TO BE RATED IN ONE OF
THE THREE HIGHEST RATING CATEGORIES BY THE RATING AGENCIES, THE EXEMPTION WILL
NOT APPLY TO THE PURCHASE, SALE OR HOLDING OF THE OFFERED SUBORDINATE
CERTIFICATES. ACCORDINGLY, THE OFFERED SUBORDINATED CERTIFICATES WILL NOT BE
OFFERED FOR SALE, AND ARE NOT TRANSFERABLE, TO PLAN INVESTORS UNLESS SUCH PLAN
INVESTOR PROVIDES OAKWOOD ACCEPTANCE AND THE TRUSTEE WITH A BENEFIT PLAN
OPINION, OR THE CIRCUMSTANCES DESCRIBED IN CLAUSE (II) BELOW ARE SATISFIED. A
BENEFIT PLAN OPINION IS AN OPINION OF COUNSEL TO THE EFFECT THAT THE PURCHASE OF
AN OFFERED SUBORDINATED CERTIFICATE WILL NOT (A) CAUSE THE ASSETS OF THE TRUST
TO BE REGARDED AS PLAN ASSETS FOR PURPOSES OF THE PLAN ASSET REGULATIONS, (B)
GIVE RISE TO A FIDUCIARY DUTY UNDER ERISA ON THE PART OF OAKWOOD ACCEPTANCE, THE
SERVICER OR THE TRUSTEE OR (C) BE TREATED AS, OR RESULT IN, A PROHIBITED
TRANSACTION UNDER SECTIONS 406 OR 407 OF ERISA OR SECTION 4975 OF THE CODE.
UNLESS THIS OPINION IS DELIVERED, EACH PERSON ACQUIRING AN OFFERED SUBORDINATED
CERTIFICATE WILL BE DEEMED TO REPRESENT TO THE TRUSTEE, OAKWOOD
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<PAGE>
ACCEPTANCE AND THE SERVICER THAT EITHER (I) SUCH PERSON IS NOT A PLAN INVESTOR
THAT MUST FOLLOW ERISA OR SECTION 4975 OF THE CODE OR (II) SUCH PERSON IS AN
INSURANCE COMPANY THAT IS PURCHASING AN OFFERED SUBORDINATED CERTIFICATE WITH
FUNDS FROM ITS GENERAL ACCOUNT AND THE PROVISIONS OF PROHIBITED TRANSACTION
CLASS EXEMPTION 95-60 WILL APPLY TO EXEMPT THE ACQUISITION AND HOLDING OF THE
OFFERED SUBORDINATED CERTIFICATE AND THE TRANSACTIONS IN CONNECTION WITH THE
SERVICING, MANAGEMENT AND OPERATION OF THE TRUST FROM THE PROHIBITED TRANSACTION
RULES OF ERISA AND THE CODE.
RATINGS
It is a condition to the issuance of the certificates that each class
of offered certificates obtain the following ratings by _____ and ______:
<TABLE>
<CAPTION>
[Rating Agencies]
<S> <C> <C>
Class A-1 _____ _____
Class A-2 _____ _____
Class A-3 _____ _____
Class A-4 _____ _____
Class A-5 _____ _____
Class M-1 _____ _____
Class M-2 _____ _____
Class B-1 _____ _____
Class B-2 _____ _____
</TABLE>
The ratings on asset-backed pass-through certificates address the
likelihood of the receipt by certificateholders of all distributions on the
underlying assets to which they are entitled. Rating opinions address the
structural, legal and issuer-related aspects associated with the securities,
including the nature of the underlying assets. Ratings on pass-through
certificates do not represent any assessment of the likelihood that principal
prepayments will be made by borrowers with respect to the underlying assets or
of the degree to which the rate of prepayments might differ from that originally
anticipated. As a result, the ratings do not address the possibility that
holders of the offered certificates purchased at a premium might suffer a lower
than anticipated yield in the event of rapid prepayments of the assets or in the
event that the trust is terminated prior to the Final Scheduled distribution
date for the certificates.
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
organization. Each security rating should be evaluated independently of any
other security rating.
Oakwood Mortgage will request _______ and _______ to rate the offered
certificates. There can be no assurance as to whether any rating agency not
requested to rate the offered certificates will nonetheless issue a rating and,
if so, what the rating would be. A rating assigned to the offered certificates
by a rating agency that has not been requested by Oakwood Mortgage
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<PAGE>
to do so may be lower than the rating assigned by a Rating Agency pursuant to
Oakwood Mortgage's request.
LEGAL INVESTMENT CONSIDERATIONS
[If pre-funding account is used, classes become mortgage related
securities for SMMEA after pre-funded amount is reduced to zero.] The class A
certificates and the class M-1 certificates will constitute mortgage related
securities for purposes of the Secondary Mortgage Market Enhancement Act of 1984
for so long as they are rated in one of the two highest rating categories by one
or more nationally recognized statistical rating organizations. As mortgage
related securities, the class A certificates and the class M-1 certificates will
be legal investments for entities to the extent provided in SMMEA, unless there
are state laws overriding SMMEA. A number of states have enacted legislation
overriding the legal investment provisions of SMMEA. SEE "LEGAL INVESTMENT
CONSIDERATIONS" IN THE PROSPECTUS.
THE CLASS M-2 AND CLASS B CERTIFICATES WILL NOT CONSTITUTE MORTGAGE
RELATED SECURITIES FOR PURPOSES OF SMMEA BECAUSE THEY ARE NOT RATED IN ONE OF
THE TWO HIGHEST RATING CATEGORIES BY A NATIONALLY RECOGNIZED STATISTICAL RATING
ORGANIZATION. These are significant interpretive uncertainties in determining
the appropriate characterization of the class M-2 and class B certificates under
various legal investment restrictions, and thus the ability of investors that
face legal restrictions to purchase the class M-2 and class B certificates. Any
financial institution regulated by the Comptroller of the Currency, the Board of
Governors of the Federal Reserve System, the Federal Deposit Insurance
Corporation, the Office of Thrift Supervision, the National Credit Union
Administration, any state insurance commission or any other federal or state
agency with similar authority should review any applicable rules, guidelines and
regulations prior to purchasing any certificates. Financial institutions should
review and consider the applicability of the Federal Financial Institutions
Examination Counsel Supervisory Policy Statement on the Selection of Securities
Dealers and Unsuitable Investment Practices, to the extent adopted by their
respective federal regulators, which, among other things, sets forth guidelines
for investing in certain types of mortgage related securities and prohibits
investment in high-risk mortgage securities.
Oakwood Mortgage makes no representations as to the proper
characterization of any class of the offered certificates for legal investment
or other purposes, or as to the legality of investment by particular investors
in any class of the offered certificates under applicable legal investment
restrictions. Accordingly, all institutions that must observe legal investment
laws and regulations, regulatory capital requirements or review by regulatory
authorities should consult with their own legal advisors in determining whether
and to what extent the offered certificates constitute legal investments under
SMMEA or must follow investment, capital or other restrictions. SEE "LEGAL
INVESTMENT CONSIDERATIONS" IN THE PROSPECTUS.
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<PAGE>
PROSPECTUS
OAKWOOD MORTGAGE INVESTORS, INC.
DEPOSITOR
PASS-THROUGH CERTIFICATES, ISSUABLE IN SERIES
<TABLE>
<CAPTION>
<S> <C>
- ------------------------------------
o YOUR TRUST:
will issue certificates backed by contracts and mortgage loans in one
or more series with one or more classes; and
will own contracts and mortgage loans and other property described on
the cover page of the accompanying prospectus supplement.
CONSIDER CAREFULLY THE RISK
FACTORS BEGINNING ON PAGE 1 IN YOUR CERTIFICATES:
------------------
THIS PROSPECTUS.
will be secured by the property of your trust and will be paid
only from your trust's assets;
Your certificates will represent
obligations of your trust only and
will not represent interests in or will be rated in one of the four highest rating categories by at
obligations of Oakwood Mortgage or least one nationally recognized rating organization;
any of its affiliates. Your
certificates are not insured or may have one or more forms of credit enhancement; and
guaranteed by any person. Except
as noted in this prospectus and will be issued as part of a designated series that may include
the accompanying prospectus one or more classes of certificates and credit enhancement.
supplement, the underlying
accounts, contracts, and mortgage INVESTORS:
----------
loans are not insured or
guaranteed by any government will receive interest and principal payments from collections on
agency. the contracts and mortgage loans and their trust's other assets, if
any; and
This prospectus may be used and to
offer and sell any series of are entitled to receive payments from collections on contracts
certificates only if accompanied and mortgage loans and other assets securing their series of
by the prospectus supplement for certificates, but have no entitlement to payments from contracts,
that series. mortgage loans, or other assets.
</TABLE>
- ------------------------------------
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED THESE
CERTIFICATES OR DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
MAY 28, 1999
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT
We provide information to you about your investment in two separate
documents that progressively provide more detail: this prospectus, which
provides general information, some of which may not apply to your series of
certificates and the accompanying prospectus supplement, which will describe the
specific terms of your series of certificates, including:
o the timing of interest and principal payments;
o statistical and other information about the contracts and mortgage loans;
o information about credit enhancement for each class;
o the ratings for each class; and
o the method for selling your certificates.
You should rely only on the information provided in this prospectus and
the accompanying prospectus supplement, including the information incorporated
by reference. We have not authorized anyone to provide you with different
information. Your certificates are not offered in any state where the offer is
not permitted.
We have included cross-references in this prospectus and in the
accompanying prospectus supplement to captions in these materials where you can
find further related discussions. The table of contents included in the
accompanying prospectus supplement provides the pages on which these captions
are located.
ii
<PAGE>
RISK FACTORS
You should consider the following risk factors in deciding whether to purchase
the certificates.
THE TIMING AND AMOUNT OF PREPAYMENTS ON YOUR
CERTIFICATES COULD REDUCE THE YIELD TO
MATURITY OF YOUR INVESTMENT
PREPAYMENT.
Prepayment levels are affected by a variety of economic, geographic, tax, legal,
and other factors, including defaults on the assets, required repurchases of the
assets and current interest rates. The assets may be prepaid at any time. When
interest rates are going down, home buyers are more likely to prepay so that
they may obtain lower alternative financing on their homes. In this event, you
may not be able to reinvest the proceeds of prepayments in another investment of
similar credit risk and yield. Conversely, prepayments are likely to decline if
interest rates rise and you could reinvest prepayment proceeds in investments of
similar credit risk and higher yield.
YIELD.
In general, if you purchased your certificates at a price greater than their par
value, your investment will become less valuable if prepayments are higher than
you anticipate and will become more valuable if prepayments are lower than you
anticipate. Conversely, if you purchased your certificates at a price less than
their par value, your investment will become more valuable if prepayments are
higher than you anticipate and will become less valuable if prepayments are
lower than you anticipate. Your certificates' sensitivity to prepayments will be
magnified by any disproportionate allocation of principal or interest. You could
fail to recover your initial investment if your certificates receive a
disproportionate amount of principal or interest, and if prepayments occur
differently than you anticipate. Your yield also may be reduced by the fact that
payments of interest to fixed-rate certificateholders are made in the month
following the month in which such certificates accrue interest. Losses on assets
1
<PAGE>
that are allocated to your class of certificates also will reduce your yield.
REGIONAL ECONOMIC DOWNTURNS AND THE DECLINE
IN THE VALUE OF MANUFACTURED HOMES COULD
RESULT IN LOSSES ON YOUR CERTIFICATES.
Downturns in regional or local economic conditions will affect the frequency of
delinquency and amount of losses on the assets in your trust. If the residential
real estate market experiences a decline and the outstanding balances of the
assets exceed the value of the manufactured homes and mortgaged properties, the
rates of delinquencies, foreclosures and losses on the assets could increase.
Contracts may experience a higher level of delinquencies than conventional
mortgage loans because these borrowers are usually more severely affected by
economic, social and other factors that diminish their ability to repay. Losses
incurred upon repossession of manufactured homes tend to be higher than on
corresponding mortgage loans on stationary homes because, unlike stationary
homes, manufactured homes generally loose value over time. This may result in
losses to you if the losses on homes are too great to be absorbed by classes of
certificates that are subordinated to the certificates held by you and other
credit enhancement features. You will have to look primarily to the value of the
manufactured homes and mortgaged properties for recovery of the outstanding
principal of and unpaid interest on the defaulted mortgage loans not covered by
credit enhancement.
SEE "THE TRUSTS -- THE ASSETS -- THE MORTGAGE LOANS" IN THIS
PROSPECTUS.
STATE LAW MAY LIMIT THE SERVICER'S ABILITY TO
SERVICE THE ASSETS IN A MANNER THAT MAXIMIZES
YOUR RETURN
State laws, such as the uniform commercial code and motor vehicle titling
statutes, may limit the servicer's ability to repossess, foreclose, or liquidate
the assets in order to pay off certificates. State law may also limit the amount
the servicer may collect in a liquidation to less than the amount due on any
particular asset. For example, state laws regulate how a repossession can be
conducted and whether the servicer may obtain a deficiency judgment if the
proceeds of foreclosure are not sufficient to repay the loan.
2
<PAGE>
CONTESTING THE TRUSTEE'S SECURITY INTEREST IN
THE MANUFACTURED HOMES COULD REDUCE OR DELAY
DISTRIBUTIONS
The steps necessary to create and perfect a security interest in the
manufactured homes differ from state to state. Because of the expense involved,
the servicer will not take any steps to name the company or the trustee, on
behalf of the trust, as the lien-holders of any manufactured home. As a
consequence, a person may contest the security interest of the trustee. Whether
successful or unsuccessful, any contest of the security interest could reduce or
delay distributions to you.
YOUR ABILITY TO RESELL CERTIFICATES WILL BE
LIMITED
A secondary market for any series of certificate may not develop. If a secondary
market does develop, it might not continue or it might not be sufficiently
liquid to allow you to resell any of your certificates. Also, ERISA plans may be
prohibited from purchasing your certificates, if noted in the prospectus
supplement.
THE ENFORCEMENT OF CONSUMER PROTECTION LAWS
MAY BE A LIABILITY TO YOUR TRUST
A failure by Oakwood Acceptance to comply with federal or state consumer
protection laws could create liabilities on behalf of your trust for amounts due
under the assets. These liabilities could include a reduction in the amount
payable under the assets, the inability to foreclose on the manufactured home or
mortgaged property, or liability of your trust to an obligor. Oakwood Acceptance
will warrant that the origination of each asset materially complied with all
requirements of law and that there exists no right of rescission, set-off,
counterclaim or defense in favor of the obligor under any asset and that each
asset is enforceable against the related obligor in accordance with its terms. A
breach of any warranty that materially and adversely affects your trust's
interest in any asset would create an obligation on the part of Oakwood
Acceptance to repurchase or substitute for the asset unless the breach is cured.
However, the failure of Oakwood Acceptance to repurchase the defective asset or
pay the liability could expose your trust to losses.
3
<PAGE>
CREDIT ENHANCEMENT OFTEN DOES NOT COVER ALL
TYPES OF LOSSES ON YOUR CERTIFICATES
Insurance policies and other forms of credit enhancement only cover the matters
expressly addressed by their terms and detailed in your prospectus supplement,
and will not provide protection against all risks of loss.
SEE "THE TRUSTS -- INSURANCE" IN THIS PROSPECTUS.
THE SUBORDINATION OF OTHER CLASSES TO YOUR
CLASS WILL NOT INSULATE YOU FROM LOSS
The fact that some classes are paid after the classes of certificates which you
hold does not protect you from all risks. If losses cannot be absorbed by the
subordinated certificates or other items of credit support, like a reserve fund,
then you may have losses on your certificates.
YOU MAY HAVE INCOME FOR TAX PURPOSES PRIOR TO
YOUR RECEIPT OF CASH
Certificates purchased at a discount and other classes of certificates purchased
at a premium that are deemed to have original issue discount may incur tax
liabilities prior to a holder's receiving the related cash payments.
SEE "FEDERAL INCOME TAX CONSEQUENCES" IN THIS PROSPECTUS.
YOU WILL EXPERIENCE DELAYS OR REDUCTIONS OF
DISTRIBUTIONS ON YOUR CERTIFICATES IF THE
CONSIDERED A SALE IN THE EVENT OF BANKRUPTCY
The acquisition of the contracts and mortgage loans by the trust from Oakwood
Mortgage is intended to be a sale. However, in the event that Oakwood Mortgage
or one of its affiliates becomes insolvent, a court may decide that this
acquisition was a loan and not a sale. This could delay or reduce distributions
to you. Likewise, if an affiliate of Oakwood Mortgage becomes insolvent, a court
might decide to consolidate the assets and liabilities of Oakwood Mortgage and
its affiliates. This could also delay or reduce distributions to you. On the
closing date for your series, counsel to Oakwood Mortgage will provide a legal
opinion that, in the event the servicer were to become bankrupt or insolvent, a
court properly presented with this issue would not consolidate Oakwood Mortgage
or the trust with the servicer and would regard the transfer as a sale. However,
this opinion contains a number of conditions and assumptions and, in any event,
is not binding on any court.
4
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YOUR CERTIFICATES MAY BE REDEEMED AT A PRICE
LESS THAN THEIR PRINCIPAL AMOUNT PLUS ACCRUED
AND UNPAID INTEREST
In the event your certificates are redeemed, the purchase price will equal 100%
of your certificates' then outstanding principal amount, plus accrued and unpaid
interest thereon at the applicable pass-through rate, less any unreimbursed
advances and unrealized losses allocable to the certificate. Accordingly, if
unreimbursed advances and losses are too high, your certificates could be
redeemed at a price less than their outstanding principal amount plus accrued
and unpaid interest.
THE ASSETS MAY CONTAIN VARIOUS PAYMENT
PROVISIONS, WHICH COULD AFFECT PAYMENTS TO YOU
The assets of your trust have various payment provisions. Some may have changing
monthly payments, some may begin with lower payments followed by higher
payments, and still others may have unusually large payments due at maturity.
There is a higher risk of default on these assets than on level payment assets.
The likelihood that you will have a loss is greater with respect to these assets
than with respect to level payment assets.
The interest rates on adjustable rate assets will adjust periodically. They will
equal the sum of an index, for example, one-month LIBOR, and a margin. When an
index adjusts, the amount of obligor's monthly payments likely will change. As a
result, obligors on adjustable rate assets may be more likely to default on
their obligations than obligors on assets bearing interest at fixed rates.
The seller of convertible loans may be required to repurchase convertible loans
if the obligor elects to convert the asset rate from an adjustable rate to a
fixed rate. This repurchase of a convertible loan will have the same effect on
you as a repayment in full of the asset. You certificates may experience a
higher rate of prepayment than would otherwise be the case if the your trust
includes convertible loans and a repurchase obligation.
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THE RATINGS PROVIDED BY THE RATING AGENCIES
DO NOT PURPORT TO ADDRESS ALL RISKS CONTAINED
IN YOUR INVESTMENT
Your certificates will be rated in one of the four highest rating categories by
one or more rating agencies. A rating is not a recommendation to buy, sell or
hold your certificates and may be revised or withdrawn at any time. You may
obtain further details with respect to any rating on your certificates from the
rating agency that issued the rating. A rating generally is based on the credit
quality of the underlying assets, and will represent only an assessment of the
likelihood of receipt by you of payments with respect to the assets. The rating
is not an assessment of the prepayment experience, and does not rate the
possibility that you may fail to recover your initial investment if you purchase
your certificates at a premium over par. Security ratings assigned to the
certificates representing a disproportionate entitlement to principal or
interest on the assets should be evaluated independently of similar security
ratings assigned to other kinds of securities.
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DESCRIPTION OF THE CERTIFICATES
GENERAL
Each series of certificates will be issued pursuant to a pooling and
servicing agreement among Oakwood Mortgage, as seller of the certificates,
Oakwood Acceptance or another servicer, as the Servicer, and the trustee named
in the prospectus supplement. A copy of the form of the pooling and servicing
agreement, together with standard terms, is filed as an exhibit to the
Registration Statement of which this prospectus is a part. The prospectus
supplement for each series will describe any provisions of the pooling and
servicing agreement relating to a series that differ materially from the form of
the pooling and servicing agreement filed as an exhibit to the Registration
Statement.
Oakwood Mortgage may sell to investors one or more classes of a series
of certificates in transactions not requiring registration under the Securities
Act of 1933, as amended.
The offered certificates of each series of certificates will be rated
upon issuance as specified in the related prospectus supplement by a
nationally-recognized statistical securities rating organization, such as
Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies,
Inc., Moody's Investors Service, Inc., Fitch IBCA, Inc., and Duff & Phelps
Credit Rating Co. (each, a "Rating Agency" ). The following summaries describe
provisions common to each series of certificates. The summaries do not purport
to be complete. When particular provisions or terms used in the pooling and
servicing agreement are referred to, the actual provisions are incorporated by
reference.
The certificates of each series will represent interests in a separate
trust created pursuant to the related pooling and servicing agreement, as
specified in the related prospectus supplement. The trust estate for a series
will be held by the related trustee for the benefit of the related
certificateholders. Each trust estate, to the extent specified in the related
prospectus supplement, will include the assets transferred under the pooling and
servicing agreement from time to time, including, as described in the prospectus
supplement:
o assets as from time to time are identified as deposited in any
account held for the benefit of the certificateholders, including
the Certificate Account, which is an account maintained by the
Servicer, into which the Servicer must deposit collections in
respect of the related assets; and the Distribution Account, which
is the account maintained by the trustee from which distributions
are made on the certificates;
o manufactured housing installment sales contracts and mortgage
loans, including all rights to receive payments due on and after
the Cut-off Date, which is the date specified in the prospectus
supplement as the date after which scheduled principal and
interest payments on the assets, and on and after which
unscheduled collections of principal on the related contracts and
mortgage loans;
o with respect to the assets;
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o the standard hazard insurance policies maintained with respect to
the underlying manufactured homes and mortgaged properties,
o the related pool insurance policy, if any,
o the related special hazard insurance policy, if any,
o the related obligor bankruptcy insurance, if any,
o any primary mortgage insurance policies, FHA insurance and VA
guarantees,
o the buy-down fund, if any, and
o the GPM fund, which is a custodial Eligible Account established by
the Servicer for any GPM Loan, to be funded with an amount which,
together with projected reinvestment earnings at a rate specified
in the prospectus supplement, will provide funds sufficient to
support the payments required on such GPM Loan on a level debt
service basis, and a GPM Loan means a graduated payment asset the
terms of which provide for payments during the initial years of
its term that are less than the actual amount of principal and
interest that would be payable on a level debt service basis, if
any;
o any reserve fund established and funded to make payments on the
certificates to the extent funds are not otherwise available, if
any;
o any letter of credit, guarantee or surety bond, insurance policy
or other credit enhancement securing payment of all or part of the
related series of certificates;
o a Pre-Funding Account, if any;
o other property as may be specified in the related prospectus
supplement; and
o proceeds of any of the foregoing, as specified in the prospectus
supplement.
The pooling and servicing agreement for a series will provide that
certificates may be issued up to the aggregate principal amount authorized by
Oakwood Mortgage. Each series will consist of one or more classes of
certificates and may include:
o one or more classes of senior certificates entitled to
preferential rights to distributions of principal and interest;
o one or more classes of subordinated certificates;
o one or more Strip Classes of certificates, which represent an
interest only in a specified portion of interest payments on the
assets in the related trust and that may
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have no principal balance, a nominal principal balance, or a
fictional principal balance that may be assigned to a certificate
or class that is used solely for purposes of determining the
amount of interest distributions and certain other rights (a
"Notional Principal Amount");
o one or more classes of certificates representing an interest only
in specified payments of principal on the assets ("Principal Only
Classes");
o one or more classes of certificates upon which interest will
accrue but will not be distributed until other classes of
certificates of the same series have received their final
distributions ("Compound Interest Classes" and "Capital
Appreciation Classes" and, collectively, "Accretion Classes"); and
o one or more classes of certificates entitled to fixed principal
payments under identified conditions ("PAC Classes") and companion
classes thereto ("Companion Classes").
Each series as to which a REMIC election has been or is to be made will
consist of one or more classes of REMIC Regular Certificates, which may consist
of certificates of the types specified in the preceding sentence, and one class
of Residual Certificates for each related REMIC. A Residual Certificate is a
certificate evidencing a residual interest in a REMIC. A REMIC is a real estate
mortgage investment conduit as defined in the Internal Revenue Code.
The certificates of each series will be issued in fully-registered
certificated or book-entry form in authorized denominations for each class as
specified in the prospectus supplement. The certificates of each series issued
in certificated form may be transferred or exchanged at the corporate trust
office of the trustee without the payment of any service charge, other than any
tax or other governmental charge payable in connection with a transfer. The
trustee will make distributions of principal and interest on each certificated
certificate by check or wire transfer to each person in whose name the
certificate is registered as of the close of business on the record date for the
distribution at the address appearing in the Certificate Register, except that
the final distributions in retirement of each certificated certificate will be
made only upon presentation and surrender of the certificate at the corporate
trust office of the trustee. The Certificate Register means, for any series, the
register maintained by or at the direction of the trustee containing the names
and addresses of all current holders of certificates of each class, and noting
the class and denomination of each certificate of the series held by each
holder.
Book-Entry Procedures
The prospectus supplement for a series may specify that some classes of
certificates initially will be issued as book-entry certificates in the
authorized denominations specified in the prospectus supplement. Each book-entry
class will be represented by a single certificate registered in the Certificate
Register in the name of a nominee of the depository, which is expected to be The
Depository Trust Company (together with any successor or other depository
selected by Oakwood Mortgage, "DTC"). No person acquiring a book-entry
certificate (a "Beneficial Owner" will be entitled to receive a definitive
certificate representing its certificate.
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DTC performs services for its Participants, some of whom, including
their representatives, own DTC. Participants means the participating
organizations that utilize the services of DTC, including securities brokers and
dealers, banks and trust companies and clearing corporations and may include
certain other organizations. In accordance with its normal procedures, DTC is
expected to record the positions held by each DTC Participant in the book-entry
certificates, whether held for its own account or as a nominee for another
person. In general, beneficial ownership of book-entry certificates will be
subject to the rules, regulations and procedures governing DTC and Depository
Participants as in effect from time to time.
A Beneficial Owner's ownership of a book-entry certificate will be
reflected in the records of the brokerage firm, bank, thrift institution or
other financial intermediary (any of the foregoing, a "Financial Intermediary"
that maintains such Beneficial Owner's account for such purpose. In turn, the
Financial Intermediary's ownership of a book-entry certificate will be reflected
in the records of DTC, or of a participating firm that acts as agent for the
Financial Intermediary whose interest in turn will be reflected in the records
of DTC, if the Beneficial Owner's Financial Intermediary is not a direct
Depository Participant. Therefore, the Beneficial Owner must rely on the
procedures of its Financial Intermediary or Intermediaries and of DTC in order
to evidence its beneficial ownership of a book-entry certificate, and beneficial
ownership of a book-entry certificate may only be transferred by compliance with
the procedures of Financial Intermediaries and Depository Participants.
DTC is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a clearing
corporation within the meaning of the New York Uniform Commercial Code, and a
clearing agency registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934, as amended. DTC accepts securities for deposit
from its participating organizations ("Depository Participants" and facilitates
the clearance and settlement of securities transactions between Depository
Participants in securities through electronic book-entry changes in accounts of
Depository Participants, thereby eliminating the need for physical movement of
certificates. Depository Participants include securities brokers and dealers,
banks and trust companies and clearing corporations and may include other
organizations. Indirect access to the DTC system is also available to others
like banks, brokers, dealers and trust companies that clear through or maintain
a custodial relationship with a Depository Participant, either directly or
indirectly ("indirect participants").
Distributions of principal and interest on the book-entry certificates
will be made to DTC. DTC will be responsible for crediting the amount of these
distributions to the accounts of the applicable Depository Participants in
accordance with DTC's normal procedures. Each Depository Participant will be
responsible for disbursing these payments to the Beneficial Owners of the
book-entry certificates that it represents and to each Financial Intermediary
for which it acts as agent. Each Financial Intermediary will be responsible for
disbursing funds to the Beneficial Owners of the book-entry certificates that it
represents. As a result of the foregoing procedures, Beneficial Owners of the
book-entry certificates may experience some delay in their receipt of payments.
While the offered certificates are outstanding, except if the offered
certificates are subsequently issued in certificated, fully-registered form,
under the rules, regulations and
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procedures creating and affecting DTC and its operations (the "Rules"), DTC is
required to make book-entry transfers among Participants on whose behalf it acts
with respect to the offered certificates and is required to receive and transmit
distributions of principal of, and interest on, the offered certificates. Unless
and until the offered certificates are issued in certificated form, Beneficial
Owners who are not Participants may transfer ownership of the offered
certificates only through Participants by instructing Participants to transfer
the offered certificates, by book-entry transfer, through DTC for the account of
the purchasers of certificates, which account is maintained with the purchasers'
respective Participants. Under the Rules and in accordance with DTC's normal
procedures, transfers of ownership of the offered certificates will be executed
through DTC and the accounts of the respective Participants at DTC will be
debited and credited. Because transactions in book-entry certificates can be
effected only through DTC, participating organizations, indirect participants
and banks, the ability of a Beneficial Owner of a book-entry certificate to
pledge a certificate to persons or entities that are not Depository
Participants, or otherwise to take actions in respect of a certificate, may be
limited due to the lack of a physical certificate representing the certificate.
Issuance of the book-entry certificates in book-entry form may reduce the
liquidity of your certificates in the secondary trading market because investors
may be unwilling to purchase book-entry certificates for which they cannot
obtain physical certificates.
The book-entry certificates will be issued in fully-registered,
certificated form to Beneficial Owners of book-entry certificates or their
nominees, rather than to DTC or its nominee, only if
o Oakwood Mortgage advises the trustee in writing that DTC is no
longer willing or able to discharge properly its responsibilities
as depository with respect to the book-entry certificates and
Oakwood Mortgage is unable to locate a qualified successor within
30 days or
o Oakwood Mortgage, at its option, elects to terminate the
book-entry system maintained through DTC.
Upon the occurrence of either event described in the preceding
sentence, the trustee is required to notify DTC, which in turn will notify all
Beneficial Owners of book-entry certificates through Depository Participants, of
the availability of certificated certificates. Upon surrender of DTC of the
certificates representing the book-entry certificates and receipt of
instructions for re-registration, the trustee will reissue the book-entry
certificates as certificated certificates to the Beneficial Owners of the
book-entry certificates. Upon issuance of certificated certificates to
Beneficial Owners, they will be transferable directly, and not exclusively on a
book-entry basis, and registered holders will deal directly with the trustee
with respect to transfers, notices and distributions.
DTC has advised Oakwood Mortgage and the trustee that, unless and until
the offered certificates are issued in certificated, fully-registered form under
the circumstances described, DTC will take any action permitted to be taken by a
certificateholder under the pooling and servicing agreement only at the
direction of one or more Participants to whose DTC accounts the certificates are
credited. DTC has advised Oakwood Mortgage that DTC will take this action with
respect to any percentage interests of the offered certificates only at the
direction of and on behalf of Participants with respect to percentage interests
of the offered certificates. DTC may
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take action, at the direction of the related Participants, with respect to some
offered certificates which conflict with actions taken with respect to other
offered certificates.
Neither Oakwood Mortgage, Oakwood Acceptance, the Servicer nor the
trustee will have any liability for any aspect of the records relating to or
payment made on account of beneficial ownership interests of the book-entry
certificates held by DTC, or for maintaining, supervising or reviewing any
records relating to beneficial ownership interests.
ALLOCATION OF COLLECTIONS FROM THE ASSETS
The prospectus supplement will specify the Available Distribution
Amount for a series, which in general will be equal to the amount of principal
and interest paid on the assets with respect to the due date in the current
month and the amount of principal prepaid during the preceding month, net of
applicable servicing, administrative, guarantee and other fees, insurance
premiums, the costs of any other credit enhancement and amounts required to
reimburse any unreimbursed advances. The Available Distribution Amount will be
allocated among the classes of certificates of the related series in the
proportion and order of application set forth in the related pooling and
servicing agreement and described in the related prospectus supplement. The
Available Distribution Amount may be allocated so that amounts paid as interest
on the assets may be distributed as principal on the certificates and amounts
paid as principal on the assets may be distributed as interest on the
certificates.
A class of certificates entitled to distributions of interest may
receive interest at a specified rate (a "Pass-Through Rate"), which may be fixed
or adjustable. The classes of certificates within a series may have the same or
different Pass-Through Rates. The related prospectus supplement will specify the
Pass-Through Rate, or the method for determining the Pass-Through Rate, for each
applicable class, and the method of determining the amount to be distributed on
any Strip Classes on each distribution date. Residual Certificates offered
hereby may or may not have a Pass-Through Rate. In addition to representing
entitlement to regular distributions of principal and interest, if any, that are
allocated to the Residual Certificates, Residual Certificates also generally
will represent entitlement to receive amounts remaining in the Distribution
Account on any distribution date after allocation of scheduled distributions to
all other outstanding classes of certificates of that series and after all
required deposits have been made into any related reserve funds. Classes of
certificates may have a Notional Principal Amount, which is a fictional
principal balance used solely for determining the class' amount of distributions
and other rights. Interest distributions on the certificates generally will
include interest accrued through the accounting date preceding the distribution
date. Interest will be computed on the basis of a 360-day year consisting of
twelve 30-day months, or on the basis of actual elapsed days, as specified in
the related prospectus supplement.
With respect to a series that includes one or more classes of
subordinated certificates, the senior certificates will generally not bear any
Realized Losses on the related contracts or mortgage loans, until the
subordinated certificates of that series have borne Realized Losses up to a
specified subordination amount or loss limit or until the principal amount of
the subordinated certificates has been reduced to zero, either through the
allocation of Realized Losses, distributions of principal, or
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both. Distributions of interest may be reduced to the extent the amount of
interest due on the assets exceeds the amount of interest collected or advanced,
which may be due to Due Date Interest Shortfall or Soldiers' and Sailors'
Shortfall on the assets. Soldiers' and Sailors' Shortfall means a shortfall in
respect of an asset resulting from application of the federal Soldiers' and
Sailors' Civil Relief Act of 1940, as amended. With respect to a series that
includes a class of subordinated certificates, any shortfall may result in a
reallocation of amounts otherwise distributable to less senior certificates for
distribution to more senior certificates.
Realized Loss means
o the amount of any loss realized by a trust in respect of any
related liquidated loan, which may be a special hazard loss or a
fraud loss, which shall generally equal the unpaid principal
balance of the liquidated loan, plus accrued and unpaid interest
on such liquidated loan, plus amounts reimbursable to the Servicer
for previously unreimbursed Servicing Advances, minus net
liquidation proceeds in respect of the liquidated loan or
o the amount of any principal cramdown in connection with any asset
that was the subject of a principal cramdown in bankruptcy during
the the calendar month immediately preceding the month in which
the related distribution date occurs (a "Prepayment Period"
preceding a distribution date. The amount of any principal
cramdown is the amount by which the unpaid principal balance of
the asset exceeds, as applicable, depending upon the type of
principal cramdown that was applied to the asset, either the
portion of the unpaid principal balance that remains secured by
the manufactured home or mortgaged property after taking the
principal cramdown into account or the unpaid principal balance
after taking into account the permanent forgiveness of debt
ordered by the bankruptcy court in connection with the principal
cramdown.
Due Date Interest Shortfall means, for any asset that is prepaid in
full or liquidated on other than a Due Date for the asset, the difference
between the amount of interest that would have accrued on the asset through the
day preceding the first Due Date after the prepayment in full or liquidation had
the asset not been prepaid in full or liquidated, net of any other
administrative fees payable out of such interest had it accrued and been paid,
and the amount of interest that actually accrued on the asset prior to the
prepayment in full or liquidation, net of an allocable portion of any other
administrative fees payable from interest payments on the asset during the
period commencing on the second day of the calendar month preceding the month in
which the distribution date occurs and ending on the first day of the month in
which the distribution date occurs (each, a "Collection Period").
Principal and interest distributable on a class of certificates may be
distributed among the certificates of a class pro rata in the proportion that
the outstanding principal or notional amount of each certificate of the class
bears to the aggregate outstanding principal or notional
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amount of all certificates of the class, or in another manner as may be detailed
in the related prospectus supplement. Interest distributable on a class of
certificates will be allocated among the certificates of the class pro rata in
the proportion that the outstanding principal or notional amount of each
certificate of the class bears to the aggregate outstanding principal or
notional amount of all certificates of the class, or in another manner as may be
detailed in the related prospectus supplement.
The Final Scheduled Distribution Date for each class of certificates
will be the date on which the last distribution of the principal thereof is
scheduled to occur, assuming no prepayments of principal with respect to the
assets included in the trust for that series, as defined in the prospectus
supplement.
OPTIONAL REDEMPTION OR TERMINATION
To the extent and under the circumstances specified in the related
prospectus supplement, the certificates of a series may be redeemed prior to
their Final Scheduled Distribution Date at the option of Oakwood Mortgage, the
Servicer or another party as specified in the related prospectus supplement by
purchase of the outstanding certificates of the series. The right so to redeem
the certificates of a series may be conditioned upon
o the passage of a date specified in the prospectus supplement, the
decline of the aggregate Scheduled Principal Balance of the assets
in the trust to less than a percentage specified in the related
prospectus supplement of the aggregate Scheduled Principal Balance
of the assets in the trust at the related Cut-off Date, and
o the decline of the aggregate certificate principal balance of a
specified class or classes of certificates to less than a
percentage specified in the related prospectus supplement of the
aggregate certificate principal balance of the applicable class or
classes of certificates at the closing date for the series.
Scheduled Principal Balance means, as of any date of determination with
respect to any contract, Repo Property, mortgage loan or REO Property, the
principal balance as of the Cut-off Date of the asset, or of the related asset,
in the case of a Repo Property or REO Property, minus the sum of
o the principal components of the scheduled monthly payments of
principal and interest due on the asset (the "Monthly Payment" or
on the related asset, in the case of a Repo Property or REO
Property, after the Cut-off Date and on or before the date of
determination, regardless of whether the Monthly Payments were
received from the obligor, plus
o all principal prepayments received by the Servicer on the asset,
or on the related asset, in the case of a Repo Property or REO
Property, including the principal portion of net liquidation
proceeds and the principal portion of all amounts paid by Oakwood
Acceptance or another party to repurchase the asset, on or after
the Cut-off Date and on or prior to the date of determination,
plus
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o all Realized Losses incurred on the asset, or the related asset,
in the case of a Repo Property or REO Property, on or after the
Cut-off Date and on or prior to the date of determination.
The percentage balances of the aggregate Scheduled Principal Balance of
the assets and the aggregate certificate principal balance of a class in order
to trigger optional redemption or termination may range from 5% to 25%. In the
event the option to redeem the certificates is exercised, the purchase price
distributed with respect to each certificate offered hereby and by the related
prospectus supplement will equal 100% of its then outstanding certificate
principal balance, plus accrued and unpaid interest thereon at the applicable
Pass-Through Rate, less any unreimbursed principal or interest advances or other
advances by the Servicer, and unrealized losses allocable to the certificates.
Unrealized losses are losses that have not yet been recorded. For example, until
your trust is able to resell a mortgage that it acquired at a foreclosure sale,
it cannot calculate the exact amount of its loss with respect to that mortgage.
Under these provisions real estate owned is required to be valued, which will
then permit the amount of any loss to be calculated and allocated to the
appropriate securities. Accordingly, it is possible that your certificates could
be redeemed at a price less than their outstanding principal amount plus accrued
and unpaid interest. Notice of the redemption of the certificates will be given
to certificateholders as provided in the related pooling and servicing
agreement.
In addition, Oakwood Mortgage or the Servicer or the holders of a
majority in interest of any class of Residual Certificates of the related series
may at their respective options repurchase all related contracts and mortgage
loans remaining outstanding at a time specified in the related prospectus
supplement, which will be when the aggregate Scheduled Principal Balance of the
contracts or mortgage loans is less than a percentage specified in the related
prospectus supplement, but may range from 5% to 25% of the aggregate Scheduled
Principal Balance of the contracts or mortgage loans on the Cut-off Date, or
when the aggregate certificate principal balance of a specified class or classes
of certificates is less than a percentage specified in the related prospectus
supplement, but may range from 5% to 25% of the aggregate certificate principal
balance of the class or classes at the closing date.
The termination price for a trust will be specified in the related
pooling and servicing agreement.
The fair market value of the assets of a trust as determined for
purposes of a terminating purchase shall be deemed to include accrued interest
through the accounting date preceding the date of the purchase at the applicable
asset rate on the unpaid principal balance of each contract and mortgage loan,
including any contract that has become a Repo Property and any mortgage loan
that has become a REO Property, which Repo Property or REO Property has not yet
been disposed of by the Servicer. The basis for any valuation shall be furnished
by the Servicer to the certificateholders upon request.
REO Property means a mortgaged property acquired by the Servicer on
behalf of a trust pursuant to a foreclosure or other similar proceeding in
respect of a mortgage loan. Repo Property means a manufactured home and any
related Real Property acquired by the Servicer on
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behalf of a trust pursuant to a repossession, foreclosure or other similar
proceeding in respect of a contract.
On the date set for termination of a trust, the termination price shall
be distributed first to the Servicer to reimburse it for all previously
unreimbursed liquidation expenses paid and Advances made by the Servicer with
respect to the related assets and second to the certificateholders in accordance
with the payment priorities that apply on each distribution date as described in
the related prospectus supplement. Advances means any P&I Advance or Servicing
Advance.
MATURITY AND PREPAYMENT CONSIDERATIONS
MATURITY
No more than 1% of the contracts and mortgage loans securing a series
will have maturities at origination of more than 30 years.
PREPAYMENT CONSIDERATIONS
The prepayment experience on an asset pool will affect
o the average life of the related certificates and each class
thereof issued by the related trust;
o the timing of the final distribution for each class, and whether
the final distribution occurs prior to its Final Scheduled
Distribution Date; and
o the effective yield on each class of certificates.
Because prepayments will be passed through to the holders of certificates of
each series as distributions of principal, it is likely that in the event of
prepayments, the final distribution on each class of certificates of a series
will occur prior to its Final Scheduled Distribution Date.
Contracts and mortgage loans may be prepaid in full or in part without
penalty. Oakwood Mortgage anticipates that a significant number of the contracts
and mortgage loans will be paid in full prior to their maturity. A number of
factors, including homeowner mobility, national and local economic conditions,
age of the contracts and mortgage loans, interest rates and the availability of
alternative financing may affect the prepayment experience of a particular asset
pool.
The rate of prepayments with respect to conventional mortgage loans has
fluctuated significantly in recent years. In general, if prevailing market
interest rates fall significantly below the interest rates borne by particular
contracts or mortgage loans, the contracts and mortgage loans are likely to
experience higher prepayment rates than if prevailing interest rates remain at
or above the interest rates borne by the contracts and mortgage loans. However,
the rate of principal prepayments on contracts and mortgage loans is influenced
by a variety of
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economic, geographic, social, tax, legal and other factors. Accordingly, there
can be no assurance that any contracts or mortgage loans included in an asset
pool will conform to past prepayment experience or any assumed rate of
prepayment.
It is customary in the mortgage industry in quoting yields on a pool of 30-year
fixed-rate, level payment mortgages, to compute the yield as if the pool were a
single loan that is amortized according to a 30-year schedule and is then
prepaid in full at the end of the 12th year and on a pool of 15-year fixed-rate,
level payment mortgages, to compute the yield as if the pool were a single loan
that is amortized according to a 15-year schedule and then is prepaid in full at
the end of the seventh year.
Information regarding the prepayment model utilized in preparing any prospectus
supplement will be set forth in the prospectus supplement with respect to a
series of certificates.
YIELD CONSIDERATIONS
Distributions of interest on the certificates generally will include
interest accrued through the accounting date, which is, for any distribution
date, the last day of the preceding calendar month for certificates that pay
interest at a fixed rate, and the 14th day of the same calendar month for
certificate that pay at a floating rate. Your effective yield will be lower than
the yield otherwise produced by the applicable Pass-Through Rate and purchase
price for your certificates, because distributions to you will not be made until
the distribution date following the accounting date, which causes a delay in
distributions.
The yield to maturity of any certificate will be affected by the rate
and timing of payment of principal of the underlying contracts and mortgage
loans. If the purchaser of a certificate offered at a discount from its Parity
Price, which is the price at which a certificate will yield its coupon, after
giving effect to any payment delay, calculates the anticipated yield to maturity
of a certificate based on an assumed rate of payment of principal that is faster
than that actually received on the underlying contracts and mortgage loans, the
actual yield to maturity will be lower than that so calculated. Similarly, if
the purchaser of a certificate offered at a premium over its Parity Price
calculates the anticipated yield to maturity of a certificate based on an
assumed rate of payment of principal that is slower than that actually received
on the underlying contracts and mortgage loans, the actual yield to maturity
will be lower than that so calculated.
The timing of changes in the rate of prepayments on the contracts and
mortgage loans may significantly affect an investor's actual yield to maturity,
even if the average rate of principal payments experienced over time is
consistent with an investor's expectation. In general, the earlier a prepayment
of principal on an asset, the greater will be the effect on a related investor's
yield to maturity. As a result, the effect on an investor's yield of principal
payments occurring at a rate higher --- or lower --- than the rate anticipated
by the investor during the period immediately following the issuance of the
certificates would not be fully offset by a subsequent like reduction --- or
increase --- in the rate of principal payments. Because the rate of principal
payments on the underlying assets affects the weighted average life and other
characteristics of any class of certificates, prospective investors are urged to
consider their own estimates as to the anticipated rate of future prepayments on
the underlying contracts and
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mortgage loans and the suitability of the applicable certificates
to their investment objectives. For a discussion of factors affecting principal
prepayments on the contracts and mortgage loans underlying a series of
certificates, see "Maturity and Prepayment Considerations" in this prospectus.
The yield on your certificates also will be affected by Realized Losses
or shortfalls allocated to your certificates. If Realized Losses and shortfalls
are not absorbed by certificates subordinated to your certificates or other
items of credit support, like a reserve fund, then you may have losses or delays
in payment on your certificates. Losses on your certificates will, in turn,
reduce distributions to you. Delays in payment will interrupt the timely
distribution of amounts owed to you. Losses or delays in payment will reduce
your yield.
THE TRUSTS
GENERAL
A trust estate may include contracts and mortgage loans. Each
trust estate also may include
o assets as from time to time are identified as deposited in
accounts held for the benefit of the certificateholders, including
the Certificate Account and the Distribution Account;
o any manufactured home or Real Property --- which is a parcel of
real estate securing a Land Secured Contract --- which initially
secured a related contract and which is acquired by repossession,
foreclosure or otherwise;
o any property which initially secured a related mortgage loan and
which is acquired by foreclosure or deed in lieu of foreclosure or
otherwise;
o any related reserve fund;
o any related Pre-Funding Account;
o any insurance policies, guarantees and any other credit
enhancement maintained with respect to the related certificates,
the related contracts, the related mortgage loans or all or any
part of the trust estate that is required to be maintained
pursuant to the related pooling and servicing agreement; and
o other property as is specified in the related prospectus
supplement.
THE ASSETS
GENERAL
Each certificate will evidence an interest in one trust estate,
containing one or more asset pools comprised of contracts and mortgage loans
having the aggregate principal balance as of the Cut-off Date specified in the
related prospectus supplement. Holders of certificates of a series
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will have interests only in the related asset pool(s) and will have no interest
in any asset pools created with respect to any other series of certificates.
Oakwood Mortgage will acquire the underlying contracts and mortgage
loans from Oakwood Acceptance, which may have originated the contracts and
mortgage loans or may have acquired them in the open market or in privately
negotiated transactions. Specific information respecting the contracts and
mortgage loans included in a particular trust estate will be provided in the
related prospectus supplement and, to the extent this information is not fully
provided in the related prospectus supplement, in a Current Report on Form 8-K
to be filed with the SEC within fifteen days after the initial issuance of the
certificates. A copy of the pooling and servicing agreement with respect to each
series of certificates will be attached to the related Current Report on Form
8-K and will be available for inspection at the corporate trust office of the
trustee.
Whenever in this prospectus terms like "asset pool," "trust estate,"
"pooling and servicing agreement" or "Pass-Through Rate" are used, those terms
apply, unless the context otherwise indicates, to one specific asset pool, trust
estate, pooling and servicing agreement and the Pass-Through Rates applicable to
the related series of certificates.
For each series of certificates, Oakwood Mortgage will cause the
contracts and mortgage loans included in the related asset pool to be assigned
to the trustee named in the related prospectus supplement. Oakwood Acceptance,
as servicer (the "Servicer"), the parent of Oakwood Mortgage, will service the
contracts and mortgage loans and administer the certificates, either exclusively
or through other servicing institutions. With respect to those contracts and
mortgage loans serviced by the Servicer through a subservicer, the Servicer will
remain liable for its servicing obligations under the pooling and servicing
agreement as if the Servicer alone were servicing the contracts and mortgage
loans. The Servicer may delegate computational, data processing, collection and
foreclosure, including repossession, duties under any pooling and servicing
agreement without appointing a subservicer and without any notice to or consent
from Oakwood Mortgage or the trustee, provided that the Servicer remains fully
responsible for the performance of these duties. See "Sale and Servicing of the
Contracts and Mortgage Loans -- Servicing" in this prospectus.
TYPES OF ASSETS
The assets included in the trust for a series may contain various
payment provisions. The assets may consist of
o Level Payment Loans, which may provide for the payment of interest
and full repayment of principal in level Monthly Payments with a
fixed rate of interest computed on their declining principal
balances;
o Adjustable Rate Assets, which may provide for periodic adjustments
to their rates of interest to equal the sum, which may be rounded,
of a fixed margin and an index;
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o Buy-Down Loans, which are assets for which funds have been
provided by someone other than the related obligors to reduce the
obligors' Monthly Payments during a period after origination of
the assets;
o Increasing Payment Loans, which provide for monthly payments to
increase over the life of the loan, resulting in a shorter term;
o Interest Reduction Loans, which provide for the one-time reduction
of the interest rate payable thereon;
o GEM loans, which provide for
o Monthly Payments during the first year after origination that are
at least sufficient to pay interest due thereon, and
o an increase in Monthly Payments in subsequent years at a
predetermined rate resulting in full repayment over a shorter term
than the initial amortization terms of the assets;
o GPM loans, which allow for payments during a portion of their
terms which are or may be less than the amount of interest due on
their unpaid principal balances, and which unpaid interest will be
added to the principal balances of the assets and will be paid,
together with interest, in later years;
o step-up rate loans, which provide for asset rates that increase
over time;
o Balloon Payment Loans, which include assets on which only interest
is payable until maturity, as well as assets that provide for the
full amortization of principal over an amortization period, but
require all remaining principal to be paid at the end of a shorter
period;
o Convertible Loans, which are Adjustable Rate Assets that have
provisions pursuant to which the related obligors generally may
exercise an option to convert the adjustable asset rate to a fixed
asset rate; and
o Bi-Weekly Loans, which provide for obligor payments to be made on
a bi-weekly basis.
DUE-ON-SALE CLAUSES
A contract or the mortgage note or the mortgage, deed of trust or other
instrument creating a first lien on a first priority ownership interest in or
estate in fee simple in real property securing the mortgage note used in
originating a conventional mortgage loan secured by a first lien on a one- to
four-family residential real property included in your trust may contain a
due-on-sale provision permitting the holder of the contract or mortgage loan to
accelerate the maturity of the contract or mortgage loan upon the obligor's
conveyance of the underlying
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manufactured home or mortgaged property. Enforcement of a due-on-sale clause
applicable to a contract or mortgage loan will have the same effect on
certificates backed by a contract or mortgage loan as a prepayment in full of
the contract or mortgage loan. See "Legal Aspects of Contracts and Mortgage
Loans" in this prospectus.
The weighted average lives of certificates of a series will be
decreased to the extent that sales of manufactured homes and mortgaged
properties result in prepayments of the assets underlying the certificates. See
"Maturity and Prepayment Considerations" and "Yield Considerations" in this
prospectus for a discussion of the effect of asset prepayments on the weighted
average lives of and yields to maturity on the related certificates.
To the extent the assets underlying a series do not contain due-on-sale
clauses, or to the extent the Servicer does not enforce due-on-sale clauses, the
weighted average lives of the certificates of the series may be expected to be
longer than would have been the case had the assets contained due-on-sale
clauses and had the Servicer enforced these clauses, because the assumption of a
contract or mortgage loan by the buyer of the underlying manufactured home or
mortgaged property would have the effect of avoiding a prepayment of the assumed
contract or mortgage loan. While it is expected that most contracts will contain
due-on-sale provisions, the Servicer will be permitted to allow proposed
assumptions of contracts in accordance with the guidelines described in the next
paragraph. To the extent the Servicer has knowledge of any conveyance or
prospective conveyance by any mortgagor of any property securing a mortgage
loan, the Servicer will be required to exercise the right to accelerate the
maturity of the mortgage loan under any applicable due-on-sale clause to the
extent, under the circumstances, and in the manner in which the Servicer
enforces the clauses with respect to other mortgage loans held in its own
portfolio. The Servicer will not be permitted to allow assumptions of assets if
prohibited by law from doing so or if the exercise of these rights would affect
adversely or jeopardize any coverage under any applicable insurance policy, and
the Servicer will only be permitted to allow the assumption of an asset if the
Servicer has reasonably determined that the assumption will not increase
materially the risk of nonpayment of amounts due under the asset.
If the Servicer determines not to enforce a due-on-sale clause, the
Servicer will be required to enter into an assumption or modification agreement
with the person to whom the property has been conveyed or is proposed to be
conveyed, pursuant to which this person becomes liable under the asset and
pursuant to which, to the extent permitted by applicable law and deemed
appropriate in the Servicer's reasonable judgment, the original obligor remains
liable thereon. FHA Contracts, FHA Mortgage Loans, VA Contracts and VA Mortgage
Loans are not permitted to contain due-on-sale clauses, and so are freely
assumable. The rate of prepayments of FHA Contracts, FHA Mortgage Loans, VA
Contracts and VA Mortgage Loans therefore may be lower than the rate of
prepayments of conventional mortgage loans bearing interest at comparable rates.
Prepayments on manufactured housing installment sales contracts and
mortgage loans are commonly measured relative to a prepayment standard or model
(a "Prepayment Model"), which represents an assumed rate of prepayment of assets
in an asset pool relative to the aggregate outstanding principal balance of the
asset pool from time to time. The prospectus supplement for a
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series of certificates may contain a table setting forth percentages of the
original certificate principal balances of some classes of certificates of the
series anticipated to be outstanding on dates specified in the table assuming
that prepayments of the underlying assets occur in accordance with the
applicable Prepayment Model and at different rates determined by applying
different percentages to the rates of prepayment assumed under the Prepayment
Model. It is unlikely that the prepayment of the assets of any trust will
conform to any of the percentages of the rates assumed under the applicable
Prepayment Model set forth in any table.
THE CONTRACTS
The contracts supporting a series of certificates will consist of
manufactured housing installment sales contracts originated by Oakwood
Acceptance, which may have been originated in the name of Oakwood Mobile or
another manufactured housing dealer with funds provided by Oakwood Acceptance,
or originated by other originators not affiliated with Oakwood Acceptance, in
any case in the ordinary course of the originator's business. The contracts may
be conventional manufactured housing contracts or contracts insured by the FHA
or partially guaranteed by the VA. Each contract is secured by a manufactured
home. The contracts will be fully amortizing and will bear interest at a fixed
or adjustable annual percentage rate or at an asset rate which steps up on a
particular date.
THE MORTGAGE LOANS
The mortgage loans supporting a series of certificates will consist of
conventional mortgage loans, FHA-insured mortgage loans or VA-guaranteed
mortgage loans evidenced by promissory notes secured by mortgages or deeds of
trust or other similar security instruments creating first liens on one-to
four-family residential properties. To the extent specified in the related
prospectus supplement, the mortgaged properties may include investment
properties, vacation and second homes, or land upon which a residence is to be
built. Oakwood Mortgage expects that the mortgage loans will have been
originated by FHA-approved mortgagees or Fannie Mae/Freddie Mac-approved
seller/servicers in the ordinary course of their real estate lending activities.
Each mortgage loan will bear interest at a fixed or adjustable annual
rate of interest or at an asset rate which steps up on a particular date, as
specified in the prospectus supplement. Each registered holder of a certificate
will be entitled to receive periodic distributions of all or a portion of the
payments of principal and interest collected on the underlying mortgage loans.
INFORMATION IN PROSPECTUS SUPPLEMENT REGARDING CONTRACTS AND MORTGAGE LOANS
With respect to the assets expected to be contained in an asset pool,
the prospectus supplement will specify, to the extent known,
o the range of dates of origination of the assets;
o the range of asset rates on the contracts and mortgage loans and
the weighted average asset rate as of the Cut-off Date, and in the
case of Adjustable Rate Assets,
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the range of initial adjustable rates, the index, if any, used to
determine the adjustable rate and the range of maximum permitted
adjustable rates, if any, and the range of then-current adjustable
mortgage rates
o the range of contract loan-to-value ratios, which means, as to
each contract with respect to which a lien on land is required for
underwriting purposes, the ratio, expressed as a percentage, of
the principal amount of the contract to the sum of the purchase
price of the home, including taxes, insurance and any land
improvements, the tax value or appraised value of the land and the
amount of any prepaid finance charges or closing costs that are
financed; and as to each other contract, the ratio, expressed as a
percentage, of the principal amount of the contract to the
purchase price of the home, including taxes, insurance and any
land improvements, and the amount of any prepaid finance charges
or closing costs that are financed; and the range of mortgage
loan-to-value ratios, which is the ratio, expressed as percentage,
of the principal amount of a mortgage loan at the time of
determination, to either the sum of the appraised value of the
land and improvements, and the amount of any prepaid finance
charges or closing costs that are financed or the sum of the
purchase price of the home, including taxes, insurance and any
land improvements, the appraised value of the land and the amount
of any prepaid finance charges or closing costs that are financed;
o the minimum and maximum outstanding principal balances of the
assets as of the Cut-off Date and the weighted average outstanding
principal balance of the assets as of the Cut-off Date;
o the range of original terms to maturity of the assets, the range
of remaining terms to maturity of the assets and the last maturity
date of the assets;
o the geographic distribution of the underlying manufactured homes
and mortgaged properties; and
o the range of original principal balances of the assets.
SUBSTITUTION OF CONTRACTS OR MORTGAGE LOANS
Oakwood Mortgage may, within three months after the closing date,
deliver to the trustee other assets in substitution for any one or more assets
initially included in the trust estate for the series. In addition, if there is
a breach of any representation or warranty made as to an asset by Oakwood
Mortgage or Oakwood Acceptance, or there is defective or incomplete
documentation with respect to an asset, which breach, defect or incompleteness
is not cured within 90 days after the breaching party's receipt of notice of the
breach, defect or incompleteness, the breaching party generally must repurchase
the affected asset for its Repurchase Price, but generally may, as an
alternative to a repurchase, substitute one or more new assets for the affected
asset, but only if the substitution is to take place no later than two years
after the related closing date. The Repurchase Price for an asset will equal the
unpaid
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principal balance of the asset, plus unpaid interest thereon at the applicable
asset rate through the end of the month of purchase. In general, any substitute
asset must, on the date of substitution:
o have an unpaid principal balance not greater than --- and not more
than $10,000 less than --- the unpaid principal balance of the
replaced asset;
o have an asset rate not less than, and not more than one percentage
point in excess of, the asset rate of the replaced asset;
o have a net rate equal to the net rate of the replaced asset; have
a remaining term to maturity not greater than --- and not more
than one year less than --- that of the replaced asset; and
o comply with each representation and warranty relating to the
replaced asset.
If contracts or mortgage loans are being substituted, the substitute contract or
mortgage loan must have a loan-to-value ratio as of the first day of the month
in which the substitution occurs equal to or less than the loan-to-value ratio
of the replaced contract or mortgage loan as of this date, using the value of
the underlying manufactured home or mortgaged property at origination, and after
taking into account the payments due on the substituted asset and the replaced
asset on the date of substitution. Further, no Adjustable Rate Asset may be
substituted for any asset in a trust estate unless the deleted asset is also an
Adjustable Rate Asset. A substituted Adjustable Rate Asset must
o have a minimum lifetime asset rate that is not less than the
minimum lifetime asset rate on the replaced Adjustable Rate Asset;
o have a maximum lifetime asset rate that is not less than the
maximum lifetime asset rate on the replaced Adjustable Rate Asset;
o provide for a lowest possible net rate that is not lower than the
lowest possible net rate for the replaced Adjustable Rate Asset
and a highest possible net rate that is not lower than the highest
possible net rate for the replaced Adjustable Rate Asset;
o have a Gross Margin not less than the Gross Margin of the replaced
Adjustable Rate Asset;
o have a Periodic Rate Cap equal to the Periodic Rate Cap on the
replaced Adjustable Rate Asset;
o have a next interest adjustment date that is the same as the next
interest adjustment date for the replaced Adjustable Rate Asset or
occurs not more than two months prior to the next interest
adjustment date for the replaced Adjustable Rate Asset; and
o not have an interest rate that is convertible from an adjustable
rate to a fixed rate unless the asset rate on the replaced
Adjustable Rate Asset is so convertible.
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In the event that more than one asset is substituted for one or more replaced
assets, one or more of the foregoing characteristics may be applied on a
weighted average basis as described in the pooling and servicing agreement.
Gross Margin means, for any Adjustable Rate Asset, the fixed percentage per
annum specified in the related contract or mortgage note that is added to the
index on each interest adjustment date to determine its new asset rate. Periodic
Rate Cap means, with respect to any Adjustable Rate Asset, the limit on the
percentage increase that may be made to the related asset rate on any interest
adjustment date. Mortgage loan documents has the meaning assigned in the pooling
and servicing agreement.
PRE-FUNDING
If so specified in the related prospectus supplement, a portion of the
issuance proceeds of the certificates of a particular series (the "Pre-Funded
Amount" will be deposited in an account (the "Pre-Funding Account" to be
established with the trustee, which will be used to acquire additional contracts
or mortgage loans from time to time during the time period specified in the
related prospectus supplement (the "Pre-Funding Period" Prior to the investment
of the Pre-Funded Amount in additional contracts or mortgage loans, the
Pre-Funded Amount may be invested in one or more Eligible Investments. Any
Eligible Investment must mature no later than the Business Day prior to the next
distribution date. The distribution date will be the 15th day of each month, or
the next business day if the 15th day is not a business day, commencing in the
month following the closing date.
During any Pre-Funding Period, Oakwood Mortgage will be obligated,
subject only to the availability thereof, to transfer to the related trust
additional contracts or mortgage loans from time to time during the Pre-Funding
Period. Additional contracts or mortgage loans will be required to satisfy
eligibility criteria more fully set forth in the related prospectus supplement.
This eligibility criteria will be consistent with the eligibility criteria of
the contracts or mortgage loans included in the trust as of the closing date,
but exceptions may expressly be stated in the prospectus supplement.
Use of a Pre-Funding Account with respect to any issuance of
certificates will be conditioned upon the following general conditions:
o the Pre-Funding Period will not exceed three months from the
related closing date,
o the additional assets to be acquired during the Pre-Funding Period
will satisfy the same underwriting standards, representations and
warranties as the contracts or mortgage loans included in the
related trust on the closing date, although additional criteria
may also be required to be satisfied, as described in the related
prospectus supplement,
o the Pre-Funded Amount will be not exceed 25% of the principal
amount of the certificates issued pursuant to a particular
offering,
o the Pre-Funded Amount will not exceed 25% of the Scheduled
Principal Balance of the assets, inclusive of the related
Pre-Funded Amount, as of the Cut-off Date, and
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o the Pre-Funded Amount shall be invested in Eligible Investments.
To the extent that amounts on deposit in the Pre-Funding Account have
not been fully applied to the purchase of additional contracts or mortgage loans
by the end of the Pre-Funding Period, the certificateholders of the related
series of certificates then entitled to receive distributions of principal will
receive a prepayment of principal in an amount equal to the related Pre-Funded
Amount remaining in the Pre-Funding Account on the first distribution date
following the end of the Pre-Funding Period. Any prepayment of principal would
have an adverse effect on the yield to maturity of certificates purchased at a
premium, and would expose certificateholders to the risk that alternative
investments of equivalent value may not be available at a later time.
Information regarding additional assets acquired by a trust estate
during the Pre-Funding Period comparable to the disclosure regarding the assets
in the related prospectus supplement will be filed on a Current Report in Form
8-K within fifteen days following the end of the Pre-Funding Period.
DISTRIBUTION ACCOUNT
Payments on the contracts and mortgage loans included in the trust for
a series will be remitted to the Certificate Account and then to the
Distribution Account for the series. Deposits may be made net of amounts
required to pay servicing fees and any amounts which are to be included in any
reserve fund as set forth in the related prospectus supplement. All or a portion
of the amounts in the Distribution Account, together with reinvestment income
thereon if payable to the certificateholders, will be available, to the extent
specified in the related prospectus supplement, for the payment of previously
unpaid servicing and administrative fees and distributions of principal and
interest on each class of the certificates of the series in the manner described
in the related prospectus supplement.
RESERVE FUNDS
If so stated in the prospectus supplement for a series, Oakwood
Mortgage will establish one or more reserve funds, which may be used by the
trustee to make any required distributions of principal or interest on the
certificates of the series to the extent funds are not otherwise available.
Oakwood Mortgage may fund a reserve fund by depositing cash, certificates of
deposit or letters of credit on the closing date, or a reserve fund may be
funded by the trustee's deposit of Available Distribution Amounts not required
to pay servicing or administrative fees or to make distributions on the
certificates on each distribution date until amounts on deposit in the reserve
fund equal an initial required amount. The method of funding any reserve fund
will be described in the related prospectus supplement. Any reserve fund will be
maintained in trust but may or may not constitute a part of the trust estate for
the related series. Oakwood Mortgage may have rights on any distribution date to
cause the trustee to make withdrawals from the reserve fund for a series and to
pay these amounts in accordance with the instructions of Oakwood Mortgage to the
extent that funds are no longer required to be maintained for the
certificateholders.
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INSURANCE
The trust estate for any series may be supported by insurance policies
or alternate forms of credit enhancement.
HAZARD INSURANCE
The following descriptions are a summary of the material aspects of
hazard insurance. In general, coverage under standard hazard insurance policies
and special hazard insurance policies varies among insurers.
STANDARD HAZARD INSURANCE POLICIES. The obligor of each asset is
required to maintain a hazard insurance policy with respect to the related
manufactured home or mortgaged property. The insurers under standard hazard
insurance policies are selected by the related obligors and are generally not
required to meet any credit rating criteria. With respect to contracts, each of
these policies will provide, at a minimum, the same coverage as that provided by
a standard fire and extended coverage insurance policy that is customary for
manufactured housing and issued by a company authorized to issue the policies in
the state in which the related manufactured home is located. The standard hazard
insurance policies maintained for mortgage loans will provide coverage at least
equal to the applicable state standard form of fire insurance policy with
extended coverage. In general, the standard form of fire and extended coverage
policy will cover physical damage to, or destruction of, the improvements on the
related manufactured home or mortgaged property caused by fire, lightning,
explosion, smoke, windstorm, hail, riot, strike and civil commotion. Because the
standard hazard insurance policies relating to the contracts and mortgage loans
will be underwritten by different insurers and will cover manufactured homes and
mortgaged properties located in various states, the policies will not contain
identical terms and conditions. The basic terms, however, generally will be
determined by state law and generally will be similar. Most policies typically
will not cover any physical damage resulting from war, revolution, governmental
actions, floods and other water-related causes, earth movement, earthquakes,
landslides, mudflows, nuclear reaction, wet or dry rot, vermin, rodents, insects
or domestic animals, theft and, in some cases, vandalism. The foregoing list is
merely indicative of some uninsured risks and is not intended to be
all-inclusive. When a manufactured home or mortgaged property is located in a
flood area identified by HUD pursuant to the National Flood Insurance Act of
1968, as amended, the Servicer will cause to be maintained flood insurance
providing coverage in the same amount as that provided by the related standard
hazard insurance policy with respect to the manufactured home or mortgaged
property, to the extent such coverage is available.
To the extent permitted by applicable law and if so specified in the
related prospectus supplement, the Servicer may require obligors on assets
secured by manufactured homes, Real Properties or mortgaged properties located
in California to maintain earthquake insurance on their manufactured homes, Real
Properties or mortgaged properties. Otherwise, no earthquake or other additional
insurance is to be required of any obligor or maintained on property acquired in
respect of a contract or mortgage loan, other than as required by applicable
laws and regulations.
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Each standard hazard insurance policy must provide coverage in an
amount at least equal to the lesser of the maximum insurable value of the
manufactured home or Mortgage Property or the principal balance due from the
obligor on the related contract or mortgage loan; provided, however, that the
amount of coverage provided by each standard hazard insurance policy must in any
event be sufficient to avoid the application of any co-insurance clause
contained in the policy.
Each standard hazard insurance policy may contain a coinsurance clause
which, in effect, will require the insured at all times to carry insurance of a
specified percentage, generally 80% to 90%, of the full replacement value of the
dwellings, sturctures and other improvements on the related manufactured home or
mortgaged property in order to recover the full amount of any partial loss. If
the insured's coverage falls below this specified percentage, this clause will
provide that the insurer's liability in the event of partial loss will not
exceed the lesser of the actual cash value of the dwellings, structures and
other improvements damaged or destroyed or the proportion of the loss, without
deduction for depreciation, as the amount of insurance carried bears to the
specified percentage of the full replacement cost of such dwellings, structures
and other improvements.
Each standard hazard insurance policy shall contain a standard loss
payee clause in favor of the Servicer and its successors and assigns. If any
obligor is in default in the payment of premiums on its standard hazard
insurance policy or policies, the Servicer may pay these premiums out of its own
funds, and may add these premium to the obligor's obligation as provided by the
contract or mortgage loan, but may not add these premium to the remaining
principal balance of the contract or mortgage loan. All amounts collected by the
Servicer under any standard hazard insurance policy maintained with respect to a
mortgage loan, less amounts to be applied to the restoration or repair of the
mortgaged property and other amounts necessary to reimburse the Servicer for
previously incurred advances or approved expenses, which may be retained by the
Servicer, will be deposited to the applicable Certificate Account.
To the extent a standard hazard insurance policy is not maintained with
respect to a manufactured home or mortgaged property, the related contract or
mortgage loan will be covered by one or more blanket insurance policies
maintained by the Servicer to insure against losses on the contracts and
mortgage loans resulting from the absence or insufficiency of individual
standard hazard insurance policies. The Servicer shall pay the premium for this
blanket policy and shall pay any deductible amount with respect to claims under
this blanket policy.
If the Servicer repossesses a manufactured home or forecloses on a
mortgaged property on behalf of the trustee, the Servicer shall either maintain
at its expense hazard insurance with respect to the manufactured home or
mortgaged property, or indemnify the trustee against any damage to the
manufactured home or mortgaged property prior to resale, foreclosure sale, or
other disposition.
Any losses incurred with respect to contracts or mortgage loans due to
uninsured risks, including earthquakes, mudflows and floods, or insufficient
hazard insurance proceeds may, to
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the extent the losses are not covered by the special hazard insurance policy for
a series, affect payments to holders of certificates of the series.
SPECIAL HAZARD INSURANCE POLICY. To the extent provided in the related
prospectus supplement, a special hazard insurance policy will be obtained from
the insurer or insurers specified in the related prospectus supplement. A
special hazard insurance policy will insure against loss by reason of damage to
manufactured homes or mortgaged properties underlying defaulted assets caused by
hazards, including vandalism and earthquakes and, except where the related
obligor is required to obtain flood insurance, floods and mudflows not covered
by the standard hazard insurance policies covering the contracts or mortgage
loans and loss from partial damage to the manufactured homes or mortgaged
properties securing these defaulted assets caused by reason of the application
of the coinsurance clause contained in the applicable standard hazard insurance
policies. The special hazard insurance policy for a series, however, will not
cover losses occasioned by war, extreme governmental actions, nuclear reaction
and other perils. The amount of coverage, if any, under the special hazard
insurance policy with respect to a series will be specified in the related
prospectus supplement.
The special hazard insurance policy with respect to a series will
provide that, when there has been damage to the manufactured home or mortgaged
property securing a defaulted asset and this damage is not covered by the
standard hazard insurance policy maintained by the related obligor or the
Servicer, the special hazard insurer will pay the lesser of the cost of repair
of the property or upon transfer of the property to the special hazard insurer,
the unpaid principal amount of the asset at the time of the acquisition of the
property, plus accrued interest to the date of claim settlement, excluding late
charges and penalty interest, and other limited expenses incurred in respect of
the property. No claim may be validly presented under a special hazard insurance
policy unless the standard hazard insurance policy covering the manufactured
home or mortgaged property securing the asset has been kept in force and other
reimbursable protection, preservation and foreclosure expenses have been paid
and the insured has acquired title to the manufactured home or mortgaged
property as a result of default by the related obligor. If the sum of the unpaid
principal amount plus accrued interest on an asset, plus some related expenses,
is paid by the special hazard insurer, the amount of further coverage under the
special hazard insurance policy will be reduced by the amount of the payment
less any net proceeds from the sale of the manufactured home or mortgaged
property. Any amount paid as the cost of repair of the manufactured home or
mortgaged property will reduce coverage by the same amount.
The pooling and servicing agreement with respect to a series will, with
limited exception, require the Servicer to maintain any special hazard insurance
policy for the series in full force and effect. The Servicer also must present
claims, on behalf of the certificateholders and the trustee, for all losses not
otherwise covered by the applicable standard hazard insurance policies and take
all reasonable steps necessary to permit recoveries on the claims. See "Sale and
Servicing of the Mortgage Loans -- Maintenance of Insurance Policies and Other
Servicing Procedures -- Presentation of Claims" in this prospectus.
To the extent provided in the related prospectus supplement, in lieu of
maintaining a special hazard insurance policy with respect to a series, a
deposit of cash, a certificate of deposit,
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a letter of credit or any other instrument acceptable to each Rating Agency
rating the series as described in the related prospectus supplement may be
provided in an amount and for a term acceptable to each Rating Agency. This
deposit will be credited to a special hazard or similar fund and the trustee or
Servicer will be permitted to draw on the fund to recover losses that would
otherwise be covered by a special hazard insurance policy. Special hazard losses
may also be allocated to the certificates of a series on the terms and in light
of the conditions and limitations set forth in the related prospectus
supplement.
A special hazard insurance policy, if any, securing a series may insure
against losses on assets assigned to Trusts for other series of certificates or
that secure other pass-through securities or collateralized mortgage or
manufactured housing contract obligations issued by Oakwood Mortgage or one of
its affiliates; provided, however, that the extension of coverage and
corresponding assignment of the special hazard insurance policy to secure any
other series or other securities or obligations will not be permitted if it
would result in the downgrading of the credit rating of any outstanding
certificates of any series offered hereby assigned by any Rating Agency
identified in the related prospectus supplement.
CREDIT INSURANCE
Contracts and mortgage loans underlying a series may, to the extent
described in the related prospectus supplement, be supported by primary
insurance, FHA insurance, VA guarantees or one or more pool insurance policies
or any combination, whereby the insurer would be obligated to pay all or a
portion of the principal balance of the asset if the obligor failed to do so.
Mortgage loans underlying a series of certificates may, to the extent
described in the related prospectus supplement, be covered by primary mortgage
insurance policies. To the extent so specified in the related prospectus
supplement, the Servicer will maintain a primary mortgage insurance policy on
any conventional mortgage loan with an initial mortgage loan-to-value ratio of
greater than 80%. Any primary mortgage insurance policy that is so maintained
will provide coverage on at least the principal amount of the covered mortgage
loan in excess of 75% of the original appraised value of the related mortgaged
property, which coverage will remain in force until the principal balance of the
mortgage loan is reduced to 80% of the original appraised value. A primary
mortgage insurance policy also may be canceled, with the consent of the Servicer
and any applicable pool insurer, after the policy has been in effect for more
than two years if the mortgage loan-to-value ratio of the mortgage loan has
declined to 80% or less based upon the current fair market value of the related
mortgaged property.
Other mortgage loans may also be covered by primary mortgage insurance
policies. Primary mortgage insurance policies may, to the extent required by the
related prospectus supplement, provide full coverage against any loss sustained
by reason of nonpayments by the related mortgagor.
The pool insurance policy or policies for a series, if any, will be
designed to provide coverage for all conventional mortgage loans which are not
covered by full coverage insurance policies. However, neither the primary
mortgage insurance policies nor the pool insurance
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policies will insure against losses sustained in the event of a personal
bankruptcy of the mortgagor under a mortgage loan These losses may be covered to
the extent provided by the obligor bankruptcy insurance, if any, for the series.
See "Legal Aspects of Contracts and Mortgage Loans -- The Mortgage Loans --
Anti-Deficiency Legislation and Other Limitations on Lenders" in this
prospectus.
The credit insurance policies will not provide coverage against hazard
losses. Some hazard risks will be covered by standard hazard insurance policies
or special hazard insurance policies, but other hazard risks will not be insured
and thus may affect payments to holders of related certificates. See " -- Hazard
Insurance" in this prospectus.
To the extent that primary mortgage insurance policies, FHA insurance
or VA guarantees do not cover all losses on a defaulted or foreclosed contract
or mortgage loan, and to the extent these losses are not covered by the pool
insurance policy for the related series of certificates, if any, these losses
would affect payments to holders of related certificates.
A more complete description of any pool insurance policy or the primary
mortgage insurance for the assets of a particular series will be provided in the
prospectus supplement, where applicable.
FHA INSURANCE AND VA GUARANTEES ON CONTRACTS
The regulations governing FHA manufactured home contract insurance
provide that insurance benefits are payable upon the repossession and resale of
the collateral and assignment of the contract to HUD. With respect to a
defaulted FHA contract, the servicer must follow applicable regulations before
initiating repossession procedures as a prerequisite to payment. These
regulations include requirements that the lender arrange a face-to-face meeting
with the borrower, initiate a modification or repayment plan, if feasible, and
give the borrower 30 days' notice of default prior to any repossession. The
insurance claim is paid in cash by HUD. For manufactured housing contracts, the
amount of insurance benefits generally paid by the FHA currently is equal to 90%
of the sum of
o the unpaid principal amount of the contract at the date of default
and uncollected interest earned to the date of default computed at
the applicable contract interest rate, after deducting the best
price obtainable for the collateral, based in part on a
HUD-approved appraisal, and all amounts retained or collected by
the lender from other sources with respect to the contract;
o accrued and unpaid interest on the unpaid amount of the contract
from the date of default to the date of submission of the claim
plus 15 calendar days, but in no event more than nine months,
computed at a rate of 7.00% per annum;
o costs paid to a dealer or other third party to repossess or
preserve the related manufactured home;
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o the amount of any sales commission paid to a dealer or other third
party for the resale of the property;
o with respect to any Land Secured Contract --- which is a contract
secured at origination by a parcel of real estate in addition to a
manufactured home --- property taxes, special assessments and
other similar charges and hazard insurance premiums, prorated to
the date of disposition of the property;
o uncollected court costs;
o legal fees, not to exceed $1,000; and
o expenses for recording the assignment of the lien on the
collateral to the United States, in each case in light of
applicable caps as set by regulations governing the FHA from time
to time.
The insurance available to a lender under FHA Title I insurance is
limited by a reserve amount equal to 10% of the original principal balance of
all Title I insured loans originated by the lender, which amount is reduced by
all claims paid to the lender and by an annual reduction in the reserve amount
of 10% of the reserve amount, and which is increased by an amount equal to 10%
of the original principal balance of insured loans subsequently originated by
the lender. The obligation to pay insurance premiums to the FHA is the
obligation of Oakwood Acceptance, as the servicer of the FHA-insured contracts.
The maximum guarantee that may be issued by the VA for a VA-guaranteed
contract is the lesser of
o the lesser of $20,000 and 40% of the principal amount of the
contract and
o the maximum amount of guaranty entitlement available to the
obligor veteran, which may range from $20,000 to zero.
The amount payable under any VA guarantee will be a percentage of the
VA contract originally guaranteed applied to indebtedness outstanding as of the
applicable date of computation specified in the VA regulations, interest accrued
on the unpaid balance of the loan to the appropriate date of computation and
limited expenses of the contract holder, but in each case only to the extent
that these amounts have not been recovered through resale of the manufactured
home. The amount payable under the guarantee may in no event exceed the original
guaranteed amount.
DELIVERY OF ADDITIONAL ASSETS
To the extent provided in the related prospectus supplement, in lieu of
or in addition to providing pool insurance, special hazard insurance, obligor
bankruptcy insurance or other insurance, Oakwood Mortgage may assign to the
trust for a series of certificates non-recourse guaranties of the timely payment
of principal and interest on contracts and mortgage loans
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included in the trust secured by other assets satisfactory to each Rating Agency
rating the series. Oakwood Mortgage may also assign or undertake to deliver
other assets to any trust by other means as may be specified in the related
prospectus supplement. These other assets may consist of additional contracts or
mortgage loans, letters of credit or other Eligible Investments.
INVESTMENT OF FUNDS
Funds deposited in or remitted to the Certificate Account, the
Distribution Account, any reserve fund and any other funds and accounts for a
series are to be invested by the trustee, as directed by the Servicer, in
Eligible Investments, which include
o obligations of the United States or any agency thereof provided
these obligations are backed by the full faith and credit of the
United States;
o within limitations, securities bearing interest or sold at a
discount issued by any corporation, which securities are rated in
the rating category required to support the then applicable
ratings assigned to that series;
o commercial paper which is then rated in the commercial paper
rating category required to support the then applicable ratings
assigned to that series;
o demand and time deposits, certificates of deposit, bankers'
acceptances and federal funds sold by any depository institution
or trust company incorporated under the laws of the United States
or of any state thereof, provided that either the senior debt
obligations or commercial paper of a depository institution or
trust company --- or provided that either the senior debt
obligations or commercial paper of the parent company of such
depository institution or trust company --- are then rated in the
security rating category required to support the then applicable
ratings assigned to that series;
o demand and time deposits and certificates of deposit issued by any
bank or trust company or savings and loan association and fully
insured by the FDIC;
o guaranteed reinvestment agreements issued by any insurance
company, corporation or other entity acceptable to each Rating
Agency rating that series at the time of issuance of the series;
o repurchase agreements relating to United States government
securities; and
o money market mutual funds investing primarily in the obligations
of the United States; provided that these mutual funds are rated
in a rating category sufficient to support the initial ratings
assigned to that series.
Eligible Investments with respect to a series will include only
obligations or securities that mature on or before the date on which the
invested funds are required or may be anticipated to be required to be applied
for the benefit of the holders of the series. Any income, gain or loss
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from these investments for a series will be credited or charged to the
appropriate fund or account for the series. Reinvestment Income from Eligible
Investments may be payable to the Servicer as additional servicing compensation
and, in that event, will not accrue for the benefit of the certificateholders of
that series.
If a reinvestment agreement is obtained with respect to a series, the
related pooling and servicing agreement will require the trustee to invest funds
deposited in the Certificate Account, the Distribution Account and the reserve
fund, if any, for that series pursuant to the terms of the reinvestment
agreement.
CERTIFICATE GUARANTEE INSURANCE
If so specified in the related prospectus supplement, Certificate
Guarantee Insurance, if any, with respect to a series of certificates may be
provided by one or more insurers. Certificate Guarantee Insurance may guarantee,
with respect to one or more classes of certificates of the related series,
timely distributions of interest and full distributions of principal on the
basis of a schedule of principal distributions set forth in or determined in the
manner specified in the related prospectus supplement. A copy of the Certificate
Guarantee Insurance documentation for a series, if any, will be filed with the
SEC as an exhibit to a Current Report on Form 8-K within 15 days of issuance of
the certificates of the related series.
OAKWOOD HOMES GUARANTEE
If so specified in the related prospectus supplement, some or all of
the distributions of principal of and interest on one or more classes of
certificates of a series may be guaranteed by Oakwood Homes or one of its
affiliates. The terms of and limitations on any guarantee will be described in
the related prospectus supplement. The prospectus supplement for any series
containing a guarantee of Oakwood Homes will contain summary financial
information for Oakwood Homes. In addition, Oakwood Homes' reports under the
Exchange Act will be incorporated by reference. A copy of the guaranty agreement
under which Oakwood Homes provides a guarantee for the asset pool of a series
will be filed with the SEC as an exhibit to a Current Report on Form 8-K within
15 days of issuance of the certificates.
ALTERNATE CREDIT ENHANCEMENT
From time to time with respect to a series of certificates, Oakwood
Mortgage or the Servicer may obtain or cause to be obtained further or other
liquidity enhancement, insurance policies, guarantees, letters of credit, or
surety bonds to provide for the enhancement of the credit rating of the
certificates. To the extent any such other enhancements are obtained or provided
for with respect to a series of certificates, or deposits are made in lieu of
these items or in addition to these items, a description will be included in the
prospectus supplement.
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Underwriting Policies
OAKWOOD'S CONTRACT UNDERWRITING GUIDELINES
Contracts included in an asset pool will have been underwritten by
Oakwood Acceptance. These contracts may have been originated in the name of
Oakwood Mobile Homes, Inc., a wholly-owned retailing subsidiary of Oakwood
Homes, or by a third party manufactured housing broker or dealer, in either case
with funds provided by Oakwood Acceptance, or may have been originated directly
in Oakwood Acceptance's name. The following is a description of the underwriting
practices generally followed by Oakwood Acceptance in connection with the
origination of contracts funded by Oakwood Acceptance.
A customer desiring to obtain financing for the purchase of a
manufactured home through Oakwood Acceptance must complete a loan application
form at a participating sales center. Loan applications are forwarded
electronically or by facsimile by sales centers to Oakwood Acceptance's credit
department for consideration.
Upon receipt of a loan application, Oakwood Acceptance evaluates the
ability of the loan applicant to make the prospective required monthly payments
and to pay related charges. Oakwood Acceptance utilizes a credit scoring system
to evaluate credit applicants. Oakwood Acceptance's underwriting guidelines
require that each applicant's credit history, residence history, employment
history and debt-to-income ratios be examined. Oakwood Acceptance's credit
officers review the information relating to these factors provided by the
applicant on his loan application and obtain credit reports and contact
employers and other references to verify credit, residence and
employment-related information. Oakwood Acceptance's automated loan origination
system computes debt-to-income ratios and assigns each applicant an overall
credit score based upon information contained in the application and in the
credit bureau report obtained with respect to this applicant. An applicant's
overall credit score is the sum of his credit scores in various areas of the
credit review. Each credit officer is authorized to approve applicants within
his lending authority who are assigned overall credit scores and credit report
scores above a specified minimum score, who have acceptable debt-to-income
ratios and who have applied for credit not in excess of the credit officer's
authority. In order for a prospective borrower to be approved for a loan, his
total monthly fixed debt obligations, including the monthly payment on the
contract applied for, monthly payments to acquire the land on which the home is
located or rental fees and hazard insurance premiums relating to the home
(collectively, the "Home Payments"), should not exceed 50% of his gross monthly
income and the proposed Home Payments should not exceed 35% of his gross monthly
income, however, more stringent standards generally apply to prospective
borrowers with relatively lower monthly incomes or relatively higher
loan-to-value ratios. Oakwood Mortgage believes that these debt-to-income ratios
are generally consistent with those employed by other lenders under manufactured
housing installment sales contracts. These ratios are generally higher than the
comparable debt-to-income ratios employed by lenders under many types of
residential first-lien mortgage loans. To the extent the credit underwriting
criteria applied to borrowers under contracts are less stringent than those
applied to borrowers under conventional mortgage loans, the level of
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delinquencies experienced with respect to a pool of contracts may be expected to
be higher than the level of delinquencies that would be experienced with respect
to a pool of conventional mortgage loans. A higher level of delinquencies could
result in a higher level of losses incurred on a pool of contracts as compared
to a pool of conventional mortgage loans.
Loan applicants who do not meet the objective criteria may be approved,
on a case-by-case basis, by higher-level management in Oakwood Acceptance's
credit department. Generally, applicants whose credit scores are less than the
minimums established for credit officer approval are approved only if other
favorable objective underwriting factors are present which are outside the scope
of the scoring systems. In addition, even if an applicant obtains an acceptable
credit score and has acceptable debt-to-income ratios, a credit officer or
manager retains the discretion to reject a credit application if the credit
officer or manager discerns objective factors outside the scope of the scoring
systems that indicate a lack of creditworthiness.
With respect to those customers deemed to be creditworthy, Oakwood
Acceptance requires a down payment in the form of cash, the trade-in equity in a
previously owned manufactured home, or the borrower's equity in any real
property pledged as additional collateral for the loan. The value of any real
property pledged as additional collateral is estimated by a duly licensed
independent appraiser, and the borrower's equity in real property for down
payment purposes is limited to the lesser of 80% of such estimated value and its
appraised tax value. Generally, Oakwood Acceptance requires a minimum down
payment of 5% of the purchase price of the home for purchases of new homes, 10%
of the purchase price of the home for purchases of used homes, other than
repossessed homes, $499 for purchases of repossessed single-section homes, $999
for purchases of repossessed multi-sectional homes, and the lesser of $1,000 or
5% of the transfer price for homes transferred by a borrower to a new borrower.
Notwithstanding the foregoing, Oakwood Acceptance may from time to time accept a
lower down payment than the down payments indicated, and in some circumstances
may require no down payment. In addition, if a borrower uses equity in real
property as all or part of his down payment, the total down payment generally
will be at least equal to 5% of the purchase price of the purchased home. The
level of down payment offered by a prospective purchaser of a new home will
affect his overall credit score, so that higher down payments are required from
applicants with relatively lower credit scores in areas other than down payment
levels. The purchase price of a manufactured home for purposes of determining a
down payment amount generally includes the stated cash sale price of the
manufactured home, including the stated cash sale price of any accessories sold
with the home, which may include appliances, furniture, skirting, steps, porches
and related items, sales and any other state and local taxes.
The balance of the purchase price is financed by an installment sale
contract providing for a purchase money security interest in the manufactured
home and a mortgage on any real property pledged as additional collateral. All
of these contracts funded at origination by Oakwood Acceptance are written on
forms provided by Oakwood Acceptance. Normally, each contract provides for level
monthly payments over the stated term of the contract, which is generally 15 to
20 years, or 20 to 30 years in the case of sales of multi-sectional homes and
larger single-section homes.
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GENERAL UNDERWRITING STANDARDS FOR MORTGAGE LOANS
Mortgage loans underwritten by Oakwood Acceptance will be underwritten
substantially according to the underwriting guidelines Oakwood Acceptance uses
to underwrite contracts. Any different underwriting standards that applied to
the mortgage loans included in any particular asset pool will be described in
the related prospectus supplement.
With respect to any mortgage loans underwritten by an entity other than
Oakwood Acceptance, Oakwood Mortgage expects that the originator will have
underwritten and originated the mortgage loans in compliance with underwriting
standards which are intended to evaluate the obligor's credit standing and
repayment ability and the value and adequacy of the related mortgaged properties
as collateral in accordance with standard procedures complying with the
applicable federal and state laws and regulations. FHA Mortgage Loans and VA
Mortgage Loans will comply with the underwriting policies of FHA and VA,
respectively. Conventional mortgage loans will comply with the underwriting
policies of the originator, which will be described in the related prospectus
supplement. Each mortgage loan included in the trust for a series will have been
originated by a savings and loan association, savings bank, commercial bank,
credit union, insurance company, or similar institution which is supervised and
examined by a federal or state authority, or by a mortgagee approved by HUD.
The adequacy of a mortgaged property as security for a mortgage loan
will be determined by a land-only appraisal performed by an appraiser who, at
the time the appraisal was made, was duly licensed. The appraiser must
personally inspect the property and will prepare a report which customarily
includes a market data analysis based on recent sales of comparable properties.
SALE AND SERVICING OF CONTRACTS AND MORTGAGE LOANS
ASSIGNMENT OF CONTRACTS AND MORTGAGE LOANS
Pursuant to the applicable pooling and servicing agreement, Oakwood
Mortgage will cause the assets comprising the trust estate to be sold, assigned
and transferred to the trustee, together with all principal and interest
payments due on the assets after the date specified in the related prospectus
supplement (the "Cut-off Date" and all prepayments of principal collected on or
after the Cut-off Date. In exchange for the assets assigned to the trustee, the
trustee will deliver certificates of the related series in authorized
denominations, registered in the names as Oakwood Mortgage may request,
representing the beneficial ownership interest in the related trust estate, to
Oakwood Mortgage or its designee. Each asset included in a trust estate will be
identified in an asset schedule appearing as an exhibit to the related pooling
and servicing agreement. The asset schedule will contain information as to the
principal balance of each asset as of the Cut-off Date and its asset rate,
original principal balance and other information concerning each asset.
CONVEYANCE OF CONTRACTS.
Prior to the conveyance of the contracts to the trustee, the Servicer's
operations department will complete a review of all of the contract files,
including the certificates of title to,
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or other evidence of a perfected security interest in, the related manufactured
homes, confirming the accuracy of the related contract schedule delivered to the
trustee. With respect to any Land Secured Contract, the Servicer will also
review the mortgage and any necessary assignments thereof evidencing Oakwood
Acceptance's interest in the related Real Property. Any contract discovered not
to agree with the contract schedule, or any contract for which any required
contract document is discovered to be missing or defective, in either case in a
manner that is materially adverse to the interests of the certificateholders,
will be required to be repurchased by Oakwood Acceptance at the related
Repurchase Price or replaced with another contract if the discrepancy,
incompleteness or defect is not cured within 90 days after notice of the
discrepancy, incompleteness or defect is delivered to Oakwood Acceptance, except
that in the case of a discrepancy between the terms of a contract and the
contract schedule relating to the unpaid principal balance of a contract,
Oakwood Acceptance may deposit cash in the Certificate Account in an amount
sufficient to offset the discrepancy. Contract documents has the meaning
identified in the pooling and servicing agreement.
The Servicer will hold the original contracts and copies of all
material documents and instruments relating to each contract and evidencing the
security interest created by each contract in the related manufactured home or
real estate as custodian on behalf of the certificateholders in accordance with
the related pooling and servicing agreement. In order to give notice of the
trustee's right, title and interest in and to the contracts, UCC-1 financing
statements identifying the trustee or a co-trustee as the secured party or
purchaser and identifying all the contracts as collateral will be filed in the
appropriate offices in the appropriate state. If a subsequent purchaser were
able to take physical possession of the contracts without notice of the
assignment of the contracts to the trustee, the trustee's interest in the
contracts could be defeated. To provide some protection against this
possibility, in addition to filing UCC-1 financing statements, within one week
after the initial delivery of the certificates, the contracts will be stamped or
otherwise marked by the Servicer to reflect their assignment to the trustee. See
"Legal Aspects of Contracts and Mortgage Loans -- The Contracts" in this
prospectus.
CONVEYANCE OF MORTGAGE LOANS.
On or prior to the date of conveyance of the mortgage loans to the
trustee, Oakwood Mortgage will, as to each mortgage loan, deliver or cause to be
delivered to the trustee or a custodian acting on behalf of the trustee (a
"Custodian") the related mortgage note endorsed in blank or to the order of the
trustee, an original or a certified copy of the related mortgage, evidence of
title insurance, and evidence of primary mortgage insurance, if any. Following
the closing date Oakwood Mortgage will, as to each mortgage loan, deliver to the
trustee or a Custodian acting on its behalf an assignment of the mortgage in
recordable form naming the trustee as assignee, together with originals or
certified copies of all recorded assignments necessary to show an unbroken chain
of assignment of the related mortgage from the original mortgagee thereunder to
the trustee. Within one year after the closing date for a series, Oakwood
Mortgage will cause assignments of each related mortgage to be recorded in the
appropriate public recording offices for real property records wherever
necessary to protect the trustee's interest in the related mortgage loans. In
lieu of recording assignments of mortgages in a particular jurisdiction, Oakwood
Mortgage may deliver or cause to be delivered to the trustee an opinion of local
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counsel to the effect that recording is not necessary to protect the right,
title and interest of the trustee in the related mortgage loans. In addition,
Oakwood Acceptance is required to submit to the trustee with each trustee
mortgage loan file a title opinion, mortgagee title insurance policy, title
insurance binder, preliminary title report, or satisfactory evidence of title
insurance for the jurisdiction in which the related mortgaged property is
located. If a preliminary title report is delivered initially, Oakwood
Acceptance is required to deliver a final title insurance policy or other
satisfactory evidence of the existence of adequate title insurance. The trustee
or a Custodian will hold the trustee mortgage loan files for the related
mortgage loans, except to the extent that any of the documents contained in the
files are released to the Servicer or a subservicer for servicing purposes in
accordance with the terms of the related pooling and servicing agreement.
The trustee or the Custodian will review the trustee mortgage loan
files relating to a series. If any document required to be included in a trustee
mortgage loan file is missing or is found to be defective in any material
respect, and Oakwood Acceptance does not cure the defect within 90 days after
its receipt of notice of the missing document or document defect, Oakwood
Acceptance will be required to repurchase the mortgage loan at the related
Repurchase Price or replace the mortgage loan with a substitute mortgage loan as
described under "The Trusts -- Substitution of Contracts or Mortgage Loans" in
this prospectus. This repurchase or substitution obligation constitutes the sole
remedy available to the certificateholder or the trustee for a missing or
defective mortgage loan document.
REPRESENTATIONS AND WARRANTIES
Oakwood Mortgage will make representations and warranties with respect
to the assets for each series. Oakwood Mortgage make representations and
warranties regarding the assets as described in the prospectus supplement. In
addition, Oakwood Acceptance will make representations and warranties with
respect to the contracts and mortgage loans in the sales agreement pursuant to
which the contracts and mortgage loans were transferred to Oakwood Mortgage,
including representations and warranties as to the accuracy in all material
respects of information furnished to Oakwood Mortgage and the trustee in respect
of each contract and mortgage loan.
In addition, Oakwood Acceptance will have represented, among other
things, that
o immediately prior to the transfer and assignment of the contracts
and mortgage loans to Oakwood Mortgage, Oakwood Acceptance had
good title to, and was the sole owner of, each contract and
mortgage loan and there had been no other sale or assignment
thereof from Oakwood Acceptance;
o as of the date of transfer, the contracts and mortgage loans
contain no offsets, defenses or counterclaims;
o each contract and mortgage loan at the time it was made complied
in all material respects with applicable state and federal laws,
including usury, equal credit opportunity and disclosure laws;
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o as of the date of transfer, each contract creates a valid first
lien on the related manufactured home and the manufactured home is
free of material damage and is in good repair;
o as of the date of transfer, no contract or mortgage loan is more
than the number of days delinquent in payment set forth in the
prospectus supplement and there are no delinquent tax or
assessment liens against the related manufactured home or
mortgaged property;
o the manufactured home or mortgaged property securing each contract
or mortgage loan is covered by a standard hazard insurance policy
providing coverage in the amount required by the related pooling
and servicing agreement and that all premiums now due on the
insurance have been paid in full;
o either a title opinion or a lender's policy of title insurance was
issued on the date of the origination of each mortgage loan and
each policy is valid and remains in full force and effect;
o as of the date of transfer, each mortgage evidences a valid first
lien on the related mortgaged property, subject only to
o the lien of current real property taxes and assessments,
o covenants, conditions and restrictions, rights of way, easements
and other matters of public record as of the date of the recording
of the mortgage, exceptions appearing of record and either being
acceptable to mortgage lending institutions generally or
specifically reflected in the appraisal made in connection with
the origination of the related mortgage loan, and
o other matters to which like properties are commonly subject which
do not materially interfere with the benefits of the security
intended to be provided by the mortgage) and the property is free
of material damage and is in good repair;
o if the manufactured home or mortgaged property is located in an
area identified by the Federal Emergency Management Agency as
having special flood hazards and subject to the availability of
flood insurance under the National Flood Insurance Act of 1968, as
amended, the manufactured home or mortgaged property is covered by
flood insurance, if applicable regulations at the time the
contract or mortgage loan was originated required that flood
insurance coverage be obtained;
o for any trust for which a REMIC election is to be made, each
related asset is a Qualified Mortgage; and
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o any FHA Contract, FHA Mortgage Loan, VA Contract or VA Mortgage
Loan has been serviced in compliance with applicable FHA or VA
regulations, and the FHA insurance or VA guarantee with respect to
any asset is in full force and effect.
Oakwood Acceptance will make representations and warranties concerning
the assets in order to ensure the accuracy in all material respects of
information furnished to the trustee in respect of each asset. Upon a breach of
any representation that materially and adversely affects the interests of the
certificateholders in an asset, Oakwood Acceptance will be obligated to cure the
breach in all material respects within 90 days after Oakwood Acceptance's
discovery of or receipt of written notice of the breach or, in the alternative,
either to repurchase the asset from the trust, or to substitute another asset.
In addition, Oakwood Acceptance will be required to indemnify Oakwood Mortgage
and its assignees, including the trust, against losses and damages they incur as
a result of breaches of Oakwood Acceptance's representations and warranties.
Oakwood Acceptance's obligations to repurchase or substitute for an asset
affected by a breach of a representation or warranty and to indemnify Oakwood
Mortgage and its assignees for losses and damages caused by the breach
constitute the sole remedies available to the certificateholders or the trustee
for a breach of representation by Oakwood Acceptance. "The Trusts --
Substitution of Contracts or Mortgage Loans."
Neither Oakwood Mortgage nor the Servicer will be obligated to
repurchase or substitute for a contract or mortgage loan if Oakwood Acceptance
defaults on its obligation to repurchase or substitute for the asset, except to
the extent that Oakwood Acceptance is both Servicer and asset seller, and no
assurance can be given that Oakwood Acceptance will carry out its repurchase or
substitution obligations with respect to contracts and mortgage loans.
SERVICING
GENERAL.
The Servicer will service and administer each asset pool assigned to
the trustee either exclusively or through other servicing institutions.
The Servicer will be required to perform diligently all services and
duties specified in the related pooling and servicing agreement, consistently
with the servicing standards and practices of prudent lending institutions with
respect to manufactured housing installment sales contracts of the same type as
the contracts and mortgage loans of the same type as the mortgage loans in those
jurisdictions where the related manufactured homes and mortgaged properties are
located or as otherwise specified in the pooling and servicing agreement. The
Servicer may delegate some or all of its duties to a subservicer, and in this
event the subservicer will service the assets and the Servicer will monitor the
subservicer's performance and will have the right to remove a subservicer at any
time if it considers removal to be in the best interest of the related
certificateholders. The duties to be performed by the Servicer, directly or
through a subservicer, with respect to a series will include
o collection and remittance of principal and interest payments on
the assets;
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o administration of any mortgage escrow accounts;
o collection of insurance claims;
o if necessary, repossession of manufactured homes or foreclosure on
mortgaged properties; and
o if necessary, the obligation to advance funds to the extent
payments are not made by the obligors and are considered
recoverable from late obligor payments, from proceeds of any
applicable insurance policies or from liquidation proceeds of the
asset.
The Servicer shall also provide information on a periodic basis to
Oakwood Mortgage and the trustee concerning the contracts and mortgage loans,
and shall file required reports with the SEC concerning the trusts as required
by the pooling and servicing agreements.
The Servicer shall keep in force throughout the term of each pooling
and servicing agreement a policy or policies of insurance covering errors and
omissions with respect to its duties under each pooling and servicing agreement,
and a fidelity bond. This policy or policies and fidelity bond shall be in a
form and amount as is generally customary among entities which service a
portfolio of manufactured housing installment sales contracts having an
aggregate principal amount of $100 million or more and which are generally
regarded as servicers acceptable to institutional investors.
The Servicer, to the extent practicable, shall cause the obligors to
pay all taxes and similar governmental charges when and as due. To the extent
that nonpayment of any taxes or charges would result in the creation of a lien
upon any manufactured home or mortgaged property having a priority equal or
senior to the lien of the related contract or mortgage loan, the Servicer shall
advance any delinquent tax or charge to the extent it determines that it will be
able to recover the advance from the related obligor or from liquidation
proceeds of the related contract or mortgage loan.
COLLECTION PROCEDURES.
The Servicer, directly or through subservicers, will make reasonable
efforts to collect all payments called for under the contracts or mortgage loans
and, consistently with the pooling and servicing agreement and any insurance
policy or will follow the collection procedures as it follows with respect to
assets serviced by it that are comparable to the contracts or mortgage loans.
The Servicer will repossess, foreclose upon or otherwise convert the
ownership of properties that secure a defaulted asset if no satisfactory
arrangements can be made for collection of delinquent payments. In connection
with repossession, foreclosure or other conversion, the Servicer will follow the
practices and procedures as it shall deem necessary or advisable and as shall be
normal and usual in its general contract and mortgage loan servicing activities.
The Servicer, however, will not be required to expend its own funds in
connection with any
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repossession or the restoration of any property unless it determines that
restoration or repossession will increase the proceeds of liquidation of the
related contract or mortgage loan to the certificateholders after reimbursement
to itself for these expenses and that these expenses will be recoverable to it
either through liquidation proceeds or through insurance.
To the extent permitted by law, the Servicer may establish and maintain
an escrow account (the "Escrow Account") in which mortgagors under mortgage
loans may be required to deposit amounts sufficient to pay taxes, assessments,
mortgage insurance premiums and standard hazard insurance premiums and other
comparable items and in which obligors under contracts will be required to
deposit amounts sufficient to pay standard hazard insurance premiums and other
comparable items. Withdrawals from the Escrow Account maintained for mortgagors
may be made to effect timely payment of taxes, assessments, mortgage insurance
and hazard insurance, to refund to mortgagors amounts determined to be overages,
to pay interest to mortgagors on balances in the Escrow Account to the extent
required by law, to repair or otherwise protect the related mortgaged properties
and to clear and terminate the Escrow Account. The Servicer will be responsible
for the administration of the Escrow Account and will be obligated to make
advances to this account when a deficiency exists, so long as it determines that
this advances will be recoverable from the related obligors or from liquidation
proceeds collected with respect to the related assets. The Servicer may decline
to establish Escrow Accounts with respect to any contracts or mortgage loans in
its discretion.
COLLECTION OF PAYMENTS ON CONTRACTS AND MORTGAGE LOANS.
The Servicer will establish and maintain a Certificate Account for the
benefit of the trustee, which will be maintained at a depository institution
organized under the laws of the United States or any state, the deposits of
which are insured to the full extent permitted by law by the FDIC, whose
commercial paper or long-term unsecured debt has a rating, as specified in the
related pooling and servicing agreement, sufficient to support the ratings
requested on the certificates of the related series, and which institution is
examined by federal or state authorities; in the corporate trust department of
the trustee; or at an institution otherwise acceptable to each applicable Rating
Agency (an "Eligible Account"). Funds in the Certificate Account will be
invested in Eligible Investments that will mature or be redeemed not later than
two business days preceding the monthly distribution date. Earnings on amounts
deposited into a Certificate Account shall be credited to the account of the
Servicer as servicing compensation in addition to the monthly fee paid to the
Servicer, as specified in the prospectus supplement, which typically will be a
fixed percentage of the pool scheduled principal balance (the "Servicing Fee").
All payments in respect of principal and interest on the contracts and
mortgage loans in the asset pool for a series that are received by the Servicer
on or after the applicable Cut-off Date, exclusive of collections relating to
scheduled payments due on or prior to the Cut-off Date, will be deposited into
the Certificate Account no later than the second business day following the
Servicer's receipt thereof. These payments shall include the following:
o all obligor payments in respect of principal, including principal
prepayments, on the contracts and mortgage loans;
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o all obligor payments in respect of interest on the contracts and
mortgage loans, together with moneys transferred from any buy-down
fund or GPM fund;
o all net liquidation proceeds received with respect to any
liquidated loan, net of the amount of any liquidation expenses
incurred with respect to the liquidated loan and not previously
reimbursed to the Servicer at the time of liquidation;
o all proceeds received under any title, hazard or other insurance
policy covering any contract or mortgage loan, other than proceeds
received as part of liquidation proceeds or proceeds that are to
be applied to the restoration or repair of the related
manufactured home or mortgaged property or released to the
obligor;
o any condemnation awards or settlements which are not released to
obligors in accordance with normal servicing procedures;
o all amounts received from credit enhancement provided with respect
to a series of certificates;
o all proceeds of any contract or mortgage loan, or property
acquired in respect of any asset, that is repurchased by the
related seller or by a terminating party; and
o all amounts, if any, required to be transferred to the Certificate
Account from a reserve fund pursuant to the pooling and servicing
agreement.
In those cases where a subservicer is servicing assets, the subservicer
will establish and maintain an Eligible Account that will comply with the
standards for the Certificate Account and which is otherwise acceptable to the
Servicer. The subservicer will be required to deposit into the sub-servicing
account on a daily basis all amounts enumerated in the preceding paragraph in
respect of the contracts or mortgage loans as received by the subservicer, less
its servicing compensation. On the date specified in the related prospectus
supplement, the subservicer shall remit to the Servicer all funds held in the
sub-servicing account with respect to each related contract or mortgage loan.
The subservicer, to the extent described in the related prospectus supplement,
may be required to advance any monthly installment of principal and interest
that was not received, less its servicing fee, by the date specified in the
related prospectus supplement.
With respect to each Buy-Down Loan and GPM Loan, the Servicer will
deposit into a custodial Eligible Account, which may be interest-bearing,
complying with the requirements for the Certificate Account an amount which,
together with investment earnings thereon, will provide funds sufficient to
support the payments on the Buy-Down Loan or GPM Loan on a level debt service
basis. The Servicer will not be obligated to supplement any buy-down fund should
investment earnings prove insufficient to maintain the scheduled level of
payments on the Buy-Down Loans or GPM Loans in which event distributions to the
certificateholders may be affected.
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DISTRIBUTIONS ON CERTIFICATES.
On the business day preceding a distribution date, the Servicer will
withdraw from the applicable Certificate Account and remit to the trustee for
deposit into the Distribution Account all scheduled payments of principal and
interest due on the assets during the Collection Period and collected by the
Servicer and all unscheduled collections in respect of principal and interest on
the assets received during the Prepayment Period, in each case to the extent
these collections comprise part of the Available Distribution Amount for the
upcoming distribution date. In addition, on the business day preceding each
distribution date, the Servicer shall remit to the trustee, for deposit into the
Distribution Account, the amount of its required P&I Advance and of any
Compensating Interest required to be paid by the Servicer for the upcoming
distribution date.
ADVANCES
The Servicer will be required to advance funds to cover delinquent
payments of principal and interest on related contracts and mortgage loans ("P&I
Advances") and delinquent payments of taxes, insurance premiums and escrowed
items in respect of related contracts and mortgage loans and liquidation-related
expenses ("Servicing Advances," and, together with P&I Advances, "Advances").
The Servicer shall not be required to make an Advance to the extent it
determines, in its reasonable judgment, that the Advance, if made, would not be
recoverable from late collections from the related obligor or from liquidation
proceeds or other collections in respect of the related contract or mortgage
loan (a "Non-Recoverable Advance") The Servicer may offset the otherwise
applicable P&I Advance for any business day preceding a distribution date by the
amount of Early Payments made with respect to the related Due Date. A Due Date
is the date on which a Monthly Payment is due on an asset from the obligor
thereunder, without regard to any grace period. Early Payment means, for any
asset and any Due Date on which the principal and interest payments made, not
including any late fees, exceed the sum of the scheduled Monthly Payment plus
any unpaid Monthly Payments for previous Due Dates, if the obligor has not sent
written notice to the Servicer with this payment asking that the amount by which
this payment exceeds the Monthly Payment then due be treated as a principal
prepayment and the Servicer is unable to determine the obligor's intended
treatment of the excess payment, Early Payment is the amount by which these
payments of principal and interest exceed the scheduled Monthly Payment for the
asset plus any unpaid Monthly Payments for previous Due Dates, but only to the
extent that the amount of the excess is an integral multiple of the amount of
the scheduled Monthly Payment due. To the extent that the amount of this excess
exceeds an integral multiple of the scheduled Monthly Payment, the excess will
be a principal prepayment.
The failure of the Servicer to make any required Advances under a
pooling and servicing agreement constitutes a default under the pooling and
servicing agreement for which the Servicer may be terminated. Upon a default by
the Servicer, the trustee, as substitute Servicer, may, if so provided in the
related pooling and servicing agreement, be required to make Advances, provided
that, in its reasonable discretion, it deems the Advances not to be
Non-Recoverable Advances. Oakwood Mortgage may obtain an endorsement to an
applicable pool insurance policy which obligates the pool insurer to advance
delinquent payments of principal and interest. The pool insurer would only be
obligated under an endorsement to the extent the obligor fails to make the
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payment and the Servicer fails to make a required Advance. The Servicer may
agree to reimburse the pool insurer for any sums the pool insurer pays under an
endorsement.
The advance obligation of a trustee or pool insurer may be limited to
an amount specified by the Rating Agency or Agencies rating the certificates.
Any P&I Advances by the Servicer, the trustee or a pool insurer, as the case may
be, must be deposited into the applicable Certificate Account or into the
Distribution Account and will be due not later than the distribution date to
which the delinquent payment relates. Any Advance made by the Servicer or the
trustee or a pool insurer, as the case may be, will be reimbursable out of
future collections in respect of the particular contract or mortgage loan in
respect of which the Advance was made, including collections of or from
insurance proceeds, additional assets or liquidation proceeds relating to the
contract or mortgage loan. If an Advance made by the Servicer or a trustee or a
pool insurer later proves to be unrecoverable from these sources, the Servicer
or the trustee or pool insurer, as the case may be, will be entitled to
reimbursement from funds in the Certificate Account or Distribution Account
prior to the disbursement of distributions to the certificateholders.
Any P&I Advances with respect to contracts or mortgage loans included
in the trust for any series are intended to enable the trustee to make timely
payment of the scheduled distributions of principal and interest on the
certificates of the series. However, neither the Servicer nor the trustee nor
any pool insurer will insure or guarantee the certificates of any series or the
contracts or mortgage loans included in the trust for any series.
COMPENSATING INTEREST
If a contract or mortgage loan is prepaid in full or liquidated other
than on a Due Date, the obligor generally is only required to pay interest to
the date of prepayment or liquidation. In this event, if provided in the
prospectus supplement, for so long as Oakwood Acceptance is the Servicer of the
related asset, the Servicer may be obligated to pay interest from the last day
for which interest is due from the obligor to the next Due Date, so long as this
amount does not exceed the Servicer's servicing compensation for the related
month ("Compensating Interest")
MAINTENANCE OF INSURANCE POLICIES AND OTHER SERVICING PROCEDURES
PRESENTATION OF CLAIMS.
The Servicer, on behalf of itself, the trustee and the
certificateholders, will present claims to the issuer of each insurance policy,
including the FHA and the VA, and will take reasonable steps as are necessary to
permit recovery under the insurance policies respecting defaulted contracts or
mortgage loans that are the subject of bankruptcy proceedings. All collections
by the Servicer under any insurance policy are to be deposited into the
Certificate Account for the related series and may be withdrawn. With respect to
a mortgage loan or contract that is serviced by a subservicer, the subservicer,
on behalf of itself, the trustee and the certificateholders will present claims
to the applicable insurer, and all collections shall be deposited into the
applicable sub-servicing account for deposit into the Certificate Account.
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If any property securing a defaulted contract or mortgage loan is
damaged and proceeds, if any, from the related standard hazard insurance policy
or the applicable special hazard insurance policy are insufficient to restore
the damaged property to a condition sufficient to permit recovery under any pool
insurance policy or any primary mortgage insurance policy, any FHA insurance or
any VA guarantee, as the case may be, the Servicer is not required to expend its
own funds to restore the damaged property unless it determines that the
restoration will increase the proceeds to the certificateholders upon
liquidation of the contract or mortgage loan after reimbursement of the expenses
incurred by the Servicer and that these expenses will be recoverable by it
through proceeds of the sale of the property or proceeds of the related pool
insurance policy or any related primary mortgage insurance policy, any FHA
insurance, or any VA guarantee, as the case may be.
If, in respect of any defaulted contract or mortgage loan, recovery
under any related pool insurance policy or any related primary mortgage
insurance policy, any FHA insurance, or any VA guarantee, as the case may be, is
not available, the Servicer nevertheless is obligated to follow normal practices
and procedures as it deems necessary or advisable to liquidate the collateral
for the defaulted contract or mortgage loan. If the proceeds of any liquidation
of the related manufactured home or mortgaged property are less than the
principal balance of the defaulted contract or mortgage loan plus interest
accrued thereon at the applicable asset rate, the related trust will realize a
loss in the amount of this difference plus the aggregate of expenses incurred by
the Servicer in connection with the proceedings.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES.
As compensation for its servicing duties in respect of any series, the
Servicer will be entitled to the Servicing Fee specified in a particular
prospectus supplement. In addition, the Servicer may be entitled to servicing
compensation in the form of assumption fees, late payment charges or otherwise,
which fees or charges shall be retained by the Servicer to the extent not
required to be deposited into the related Certificate Account.
The Servicer will pay from its servicing compensation expenses incurred
in connection with the servicing of the contracts and mortgage loans included in
a trust estate. It also is obligated to pay the fees and expenses of the trustee
and any expenses incurred in enforcing the obligations of any subservicers.
These expenses may be reimbursable from liquidation proceeds and proceeds of
pool insurance and from specific recoveries of costs.
The Servicer will be entitled to reimbursement for a portion of its
expenses incurred in connection with the liquidation of defaulted contracts or
mortgage loans. The related trust will suffer no loss by reason of these
expenses to the extent claims are paid under the related pool insurance
policies, if any. If no pool insurance policy is in effect for the series, or if
claims are either not made or paid under the related pool insurance policies or
coverage thereunder has been terminated or canceled, the related trust will
suffer a loss to the extent that the liquidation proceeds of a defaulted asset,
after reimbursement of the Servicer's related expenses, are less than the
principal balance of the asset plus accrued interest thereon at the related
asset rate. In addition, the Servicer will be entitled to reimbursement of
expenditures incurred by it in
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connection with the restoration of any manufactured home or mortgaged property,
this right of reimbursement being prior to the rights of the related
certificateholders to receive any related pool insurance proceeds or liquidation
proceeds.
EVIDENCE AS TO COMPLIANCE.
With respect to each series of certificates, the Servicer will deliver
each year to the trustee an officer's certificate stating that a review of the
activities of the Servicer and any subservicers during the preceding calendar
year and of the Servicer's performance under the related pooling and servicing
agreement has been made, and to the best of this officer's knowledge, the
Servicer has fulfilled all its obligations under the pooling and servicing
agreement throughout such year, and, to the best of this officer's knowledge,
based on this review, each subservicer has fulfilled its obligations throughout
the related year, or, if there has been a default in the fulfillment of any
obligation, specifying each default known to the officer and the nature and
status thereof. This officer's certificate shall be accompanied by a statement
by a firm of independent public accountants to the effect that the firm has
audited the financial statements of the Servicer for the Servicer's most
recently ended fiscal year and issued its report thereon; such audit included
tests of the records and documents relating to manufactured housing installment
sale contracts and mortgage loans serviced by the Servicer for others in
accordance with the requirements of the Uniform Single Attestation Program for
Mortgage Bankers, or any successor program promulgated by the accounting
profession ("USAP"); and any other statements as are contemplated under USAP,
including, if called for under USAP, a statement as to whether the Servicer's
management's written assertion to this firm, which shall be attached to the
statement of the firm, that its servicing during the applicable fiscal year
complied with USAP's minimum servicing standards in all material respects is
fairly stated in all material respects. The audit tests referred to in the
second clause of the preceding sentence in respect of any series shall be
applied to manufactured housing installment sale contracts and mortgage loans
serviced under the related pooling and servicing agreement or, in the sole
discretion of this firm, manufactured housing installment sale contracts and
mortgage loans serviced under pooling and servicing agreements, trust agreements
or indentures substantially similar to the pooling and servicing agreement. For
purposes of this statement, the firm may assume conclusively that all pooling
and servicing agreements under which the Servicer is the servicer of
manufactured housing installment sale contracts and mortgage loans for a trustee
relating to certificates evidencing an interest in manufactured housing
installment sale contracts and mortgage loans are substantially similar to one
another except for any pooling and servicing agreement which by its terms
specifically states otherwise.
THE POOLING AND SERVICING AGREEMENTS
The following discussion describes the material provisions of each
pooling and servicing agreement, including the standard terms to pooling and
servicing agreement that is incorporated by reference into each pooling and
servicing agreement. When particular provisions or terms used in a pooling and
servicing agreement are referred to, the actual provisions, including
definitions of terms, are incorporated by reference in this discussion.
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THE SERVICER
The Servicer shall not resign from the obligations and duties imposed
on it under a pooling and servicing agreement, except upon appointment of a
successor servicer and receipt by the trustee of a letter from each applicable
Rating Agency that the Servicer's resignation and the appointment of the
successor will not, in and of itself, result in a downgrading of any rated
certificates of the affected series or upon determination by the Servicer's
Board of Directors that the performance of its duties under the pooling and
servicing agreement are no longer permissible under applicable law. No
resignation shall become effective until the trustee or a successor servicer
shall have assumed the responsibilities and obligations of the Servicer in
accordance with the applicable pooling and servicing agreement.
Neither the Servicer nor any of its directors, officers, employees or
agents shall be under any liability to the trust or the certificateholders, and
all of these persons shall be held harmless, for any action taken or not taken
in good faith pursuant to each pooling and servicing agreement, or for errors in
judgment; provided, however, that no person shall be protected from liability
for actions or omissions resulting from willful misfeasance, bad faith or gross
negligence in the performance of his duties or by reason of reckless disregard
of his obligations and duties under the pooling and servicing agreement or for
breaches of representations or warranties made by him in the pooling and
servicing agreement. The Servicer and any of the directors, officers, employees
or agents of the Servicer may rely in good faith on any document of any kind
which, prima facie, is properly executed and submitted by any person respecting
any matters arising under a pooling and servicing agreement. The Servicer shall
be under no obligation to appear in, prosecute or defend any legal action unless
the action is related to its duties under a pooling and servicing agreement and
the action in its opinion does not involve it in any expense or liability,
except as otherwise explicitly provided in the pooling and servicing agreement;
provided, however, that the Servicer may in its discretion undertake any action
that it deems necessary or desirable with respect to a pooling and servicing
agreement if the certificateholders offer to the Servicer reasonable security or
indemnity against the costs, expenses and liabilities.
THE TRUSTEE
The prospectus supplement for a series of certificates will specify the
trustee for that series. The trustee for a series may resign at any time, in
which event Oakwood Mortgage will be obligated to attempt to appoint a successor
trustee. Oakwood Mortgage may remove a trustee if the trustee ceases to be
eligible to continue as trustee under the applicable pooling and servicing
agreement or upon the occurrence of bankruptcy or insolvency related events with
respect to the trustee. The trustee for a series will also may be removed at any
time by the holders of certificates of the series evidencing at least 51% of the
voting rights of the series, as specified in the related pooling and servicing
agreement. If the certificateholders remove the trustee other than for
reasonable cause based upon the trustee's failure to continue to meet the
eligibility requirements set forth in the related pooling and servicing
agreement or the trustee's failure to perform its duties, then the
certificateholders so removing the trustee shall bear any and all costs and
expenses arising from removal and substitution. Any resignation or removal of
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the trustee and appointment of a successor trustee will not become effective
until acceptance by Oakwood Mortgage of the appointment of the successor
trustee.
A trustee must be a corporation or a national banking association
organized under the laws of the United States or any state and authorized under
the laws of the jurisdiction in which it is organized to have corporate trust
powers. It also must have combined capital and surplus of at least $50,000,000,
or be a Qualified Bank, and be regulated and examined by state or federal
regulatory authorities. A Qualified Bank is any domestic bank not affiliated
with Oakwood Acceptance or Oakwood Mortgage having long-term unsecured debt
obligations rated in one of the two highest rating categories, without
modifiers, of at least one Rating Agency and of any other Rating Agency, if the
bank's long-term unsecured debt obligations are rated by an additional Rating
Agency, or short-term unsecured debt obligations rated in at least one Rating
Agency's highest applicable rating category, and of any other Rating Agency's
highest applicable rating category if such bank's short-term unsecured debt
obligations are rated by such additional Rating Agency, having commercial paper
or short-term unsecured debt obligations rated in at least one Rating Agency's
highest applicable rating category, and in any other Rating Agency's highest
applicable rating category if the bank's commercial paper or short-term
unsecured debt obligations are rated by an additional Rating Agency, or that is
otherwise acceptable to each Rating Agency. Although a trustee may not be an
affiliate of Oakwood Mortgage or the Servicer, either Oakwood Mortgage or the
Servicer may maintain normal banking relations with the trustee if the trustee
is a depository institution.
REPORTS TO CERTIFICATEHOLDERS
The trustee for a series will furnish the related certificateholders
with monthly statements prepared by the Servicer (each a "Remittance Report")
containing information with respect to principal and interest distributions and
Realized Losses for the series and the assets of the related trust. Any
financial information contained in these reports will not have been examined or
reported upon by an independent public accountant. Copies of monthly statements
and any annual reports prepared by the Servicer evidencing the status of its
compliance with the provisions of a pooling and servicing agreement will be
furnished to related certificateholders upon request addressed to the trustee.
The contents of the Remittance Report for any series will be described in the
prospectus supplement for that series.
EVENTS OF DEFAULT
Events of Default by the Servicer under any pooling and servicing
agreement will include
o any failure by the Servicer to remit funds to the Distribution
Account as required by the applicable pooling and servicing
agreement, which failure continues unremedied for five days, or
another period specified in the related pooling and servicing
agreement, after the date upon which the remittance was due,
o any failure or breach by the Servicer duly to observe or perform
in any material respect any other of its covenants or agreements
that materially and adversely affects
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the interests of certificateholders, which, in either case,
continues unremedied for 60 days after the giving of written
notice of the failure or breach to the Servicer by the related
trustee or by the Holders of certificates evidencing at least 25%
of the voting rights for the applicable series; and
o events involving insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings regarding the
Servicer.
So long as an Event of Default remains unremedied, the trustee may,
and, at the written direction of the certificateholders of the applicable series
evidencing greater than 50% of the voting rights for the series, shall,
terminate all of the rights and obligations of the Servicer under the related
pooling and servicing agreement and in and to the related contracts and mortgage
loans and the proceeds thereof, whereupon, the related trustee or a successor
Servicer will succeed to all the responsibilities, duties and liabilities of the
terminated Servicer under the pooling and servicing agreement and the successor
Servicer will be entitled to similar compensation arrangements to those provided
for the terminated Servicer. In the event that the trustee would be obligated to
succeed the Servicer but is unwilling or unable to do so, it may appoint, or
petition a court of competent jurisdiction for the appointment of, a successor
Servicer meeting the criteria set forth in the related pooling and servicing
agreement. Pending this appointment, the trustee is obligated to act as
successor Servicer unless prohibited by law from doing so. The trustee and the
successor Servicer may agree upon the servicing compensation to be paid, which
in no event may be greater than the compensation paid to the terminated Servicer
under the pooling and servicing agreement. Event of Default means the occurrence
of a default noted in the pooling and servicing agreement, along with the
passage of a period of any cure period without the default having been cured.
CERTIFICATEHOLDER RIGHTS
No certificateholder will have any right under the related pooling and
servicing agreement to institute any proceeding with respect to any pooling and
servicing agreement unless the holder previously has provided the trustee with
written notice of a default and unless the holders of certificates evidencing at
least 25% of the voting rights for the applicable series requested the trustee
in writing to institute the proceeding in its own name as trustee and have
offered to the trustee reasonable indemnity, and the trustee for 15 days has
neglected or refused to institute any proceeding. The trustee will be under no
obligation to take any action or to institute, conduct or defend any litigation
under the related pooling and servicing agreement at the request, order or
direction of any of the holders of certificates, unless the certificateholders
have offered to the trustee reasonable security or indemnity against the costs,
expenses and liabilities which the trustee may incur.
AMENDMENT
A pooling and servicing agreement may be amended by Oakwood Mortgage,
the Servicer, and the related trustee without the consent of the related
certificateholders,
o to cure any ambiguity;
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o to correct or supplement any provision that may be inconsistent
with any other provision;
o to maintain the REMIC status of the trust and to avoid the
imposition of taxes on any related REMIC, if applicable; or
o to make any other provisions with respect to matters or questions
arising under the pooling and servicing agreement that are not
covered by the pooling and servicing agreement, provided that the
action will not adversely affect in any material respect the
interests any holder of certificates of the related series, as
evidenced by an opinion of counsel independent of Oakwood
Mortgage, the Servicer and the trustee or a letter from each
Rating Agency from whom Oakwood Mortgage requested a rating of any
of the certificates of the series stating that the proposed
amendment will not result in a downgrading of the rating of any of
the certificates of the series rated by any Rating Agency.
A pooling and servicing agreement may also be amended by Oakwood Mortgage, the
Servicer and the related trustee with the consent of the related
certificateholders evidencing a majority of the voting rights of each affected
class for the purpose of adding any provisions to, or for the purpose of
eliminating any provisions from, or for the purpose of changing in any manner
any of the provisions of, the pooling and servicing agreement, or for the
purpose of modifying in any manner the rights of the certificateholders;
provided, however, that no amendment that
o reduces in any manner the amount of, or delays the timing of, any
payment received on or with respect to contracts or mortgage loans
which are required to be distributed on any certificate
o otherwise materially adversely affects the rights of any
certificateholder; or
o reduces the percentage of certificateholders required to consent
to any amendment of the related pooling and servicing agreement
may be effective without the consent of the holder of each related certificate.
TERMINATION
The obligations created by each pooling and servicing agreement will
terminate upon the date calculated as specified in the pooling and servicing
agreement, generally upon the later of the final payment or other liquidation of
the last contract or mortgage loan subject thereto and the disposition of all
property acquired upon repossession of any manufactured home or foreclosure of
or other realization on any mortgage loan and the payment to the related
certificateholders of all amounts held by the Servicer or the trustee and
required to be paid to them pursuant to the pooling and servicing agreement. In
addition, a trust may be terminated early at the option of Oakwood Mortgage, the
Servicer or the holders of a majority in interest of any related Residual
Certificates and if so specified in the
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related prospectus supplement, the certificates of a series shall be redeemed by
Oakwood Mortgage, the Servicer or any other party specified in the related
prospectus supplement. See "Description of the Certificates -- Optional
Redemption or Termination."
LEGAL ASPECTS OF CONTRACTS AND MORTGAGE LOANS
The following discussion contains the material legal aspects of
manufactured housing installment sales contracts and mortgage loans. Because
legal aspects are governed by state law, which laws may differ substantially
from state to state, this discussion does not purport to reflect the laws of any
particular state, or to encompass the laws of all states in which the security
for the contracts or mortgage loans is located.
Contracts differ from mortgage loans in material respects. In general,
contracts may experience a higher level of delinquencies than mortgage loans,
because the credit underwriting standards applied to borrowers under
manufactured housing installment sales contracts generally are not as stringent
as those applied to borrowers under many conventional residential first-lien
mortgage loans. In addition, manufactured homes generally decline in value over
time, which may not necessarily be the case with respect to the mortgaged
properties underlying mortgage loans. Consequently, the losses incurred upon
repossession of or foreclosure on manufactured homes securing the contracts may
be expected to be more severe in many cases than the losses that would be
incurred upon foreclosure on mortgaged properties securing mortgage loans, in
each case measured as a percentage of the outstanding principal balances of the
related assets. The servicing of manufactured housing installment sales
contracts is generally similar to the servicing of conventional residential
mortgage loans, except that, in general, servicers of manufactured housing
installment sales contracts place greater emphasis on making prompt telephone
contact with delinquent borrowers than is generally customary in the case of the
servicing of conventional residential mortgage loans. Realization on defaulted
contracts is generally accomplished through repossession and subsequent resale
of the underlying manufactured homes by or on behalf of the Servicer, as
described under " -- The Contracts," whereas realization on defaulted mortgage
loans is generally accomplished through foreclosure on the underlying mortgaged
properties or similar proceedings, as described under " -- The Mortgage Loans."
Realization on defaulted Land Secured Contracts may involve a combination of
repossession and foreclosure-related procedures. Certificates evidencing
interests in contracts may also face other risks that are not present in the
case of certificates evidencing interests in mortgage loans.
THE CONTRACTS
GENERAL.
As a result of the assignment of the contracts underlying a series to
the related trustee, the related trust will succeed to all of the rights,
including the right to receive payments on the contracts, and will assume the
obligations, of the obligee under the contracts. Each contract evidences both
the obligation of the obligor to repay the loan evidenced thereby, and the grant
of a security interest in the related manufactured home to secure repayment of
the loan.
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The contracts generally are chattel paper as defined in the Uniform
Commercial Code (the "UCC") in effect in the states in which the manufactured
homes initially were located. Pursuant to the UCC, the sale of chattel paper is
treated in a manner similar to perfection of a security interest in chattel
paper. Under the pooling and servicing agreement, the Servicer will retain
possession of the contracts as custodian for the trustee. Because the Servicer
is not relinquishing possession of the contracts, the Servicer will file a UCC-1
financing statement in the appropriate recording offices in Nevada as necessary
to perfect the trustee's ownership interest in the contracts. If, through
negligence, fraud or otherwise, a subsequent purchaser from Oakwood Mortgage or
from a predecessor owner of the contracts were able to take physical possession
of the contracts without notice of the assignment of the contracts to the
trustee, the trustee's interest in contracts could be subordinated to the
interest of the purchaser. To provide a measure of protection against this
possibility, within ten days after the closing date, the contracts will be
stamped or marked otherwise to reflect their assignment from Oakwood Mortgage to
the trustee.
SECURITY INTERESTS IN THE MANUFACTURED HOMES.
The manufactured homes securing the contracts may be located in any or
all of the 50 states, Puerto Rico and the District of Columbia. The manner in
which liens on manufactured homes are perfected is governed by applicable state
law. In many states ("Title States"), a lien on a manufactured home may be
perfected under applicable motor vehicle titling statutes by notation of the
secured party's lien on the related certificate of title or by delivery of
required documents and payment of a fee to the state motor vehicle authority to
re-register the home, depending upon applicable state law. In some states ("UCC
States"), perfection of a lien on a manufactured home is accomplished pursuant
to the provisions of the applicable UCC by filing UCC-3 financing statements or
other appropriate transfer instruments with all appropriate UCC filing offices.
Some states are both Title States and UCC States. Oakwood Mortgage will cause
the security interests created by the contracts in the related manufactured
homes to be assigned to the trustee on behalf of the certificateholders.
However, because of the expense and administrative inconvenience involved,
neither Oakwood Acceptance nor any other seller are expected to amend any
certificate of title to change the lienholder from Oakwood Acceptance or Oakwood
Acceptance to the trustee, deliver any documents or pay fees to re-register any
manufactured home, or file any UCC transfer instruments, and neither Oakwood
Acceptance nor Oakwood Mortgage will deliver any certificate of title to the
trustee or note thereon the trustee's interest. In some states, simple
assignment of the security interest created by a contract in the related
manufactured home constitutes an effective conveyance of the security interest
without amendment of any lien noted on the related certificate of title,
re-registration of the underlying home, or filing of any statement under the
applicable UCC, and the assignee succeeds to Oakwood Acceptance's rights as the
secured party as to the manufactured home. In other states, however, the law is
unclear whether a security interest in a manufactured home is effectively
assigned in the absence of an amendment to a certificate of title,
re-registration of the underlying home, or the filing of an appropriate UCC
transfer instrument, as appropriate under applicable state law. In this event,
the assignment of the security interest created by a contract in the related
manufactured home may not be effective against creditors of Oakwood Mortgage or
Oakwood Acceptance or a trustee in bankruptcy of Oakwood Mortgage or Oakwood
Acceptance.
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In recent years, manufactured homes have become increasingly large and
often are attached to their sites, without appearing to be readily mobile.
Perhaps in response to these trends, courts in many states have held that
manufactured homes, under certain circumstances, are subject to real estate
title and recording laws. As a result, a security interest created by an
installment sales contract in a manufactured home located in such a state could
be rendered subordinate to the interests of other parties claiming an interest
in the home under applicable state real estate law. In order to perfect a
security interest in a manufactured home under real estate laws, the holder of
the security interest must file either a fixture filing under the provisions of
the applicable UCC or a real estate mortgage, deed of trust, deed to secure debt
or security deed, as appropriate under the real estate laws of the state in
which the related home is located. These filings must be made in the real estate
records office of the jurisdiction in which the home is located. Neither Oakwood
Acceptance nor any other seller will be required to make fixture filings or to
file mortgages with respect to any of the manufactured homes, except in the case
of Land Secured Contracts. Consequently, if a manufactured home is deemed
subject to real estate title or recording laws because the owner attaches it to
its site or otherwise, the trustee's interest may be subordinated to the
interests of others that may claim an interest in the manufactured home under
applicable real estate laws.
The trustee's security interest in a manufactured home would be
subordinate to, among others, subsequent purchasers for value of the
manufactured home and holders of perfected security interests in the home, in
either case without notice to the trustee's adverse interest in the home.
In the absence of fraud,
forgery or affixation of the manufactured home to its site by the manufactured
home owner, or administrative error by state recording officials, the notation
of the lien of Oakwood Acceptance on the related certificate of title or
delivery of the required documents and fees necessary to register the home in
the name of Oakwood Acceptance or the public filing of appropriate transfer
instruments reflecting the lien of Oakwood Acceptance, in each case as required
under applicable state law, will be sufficient to protect the certificateholders
against the rights of subsequent purchasers of a manufactured home or subsequent
lenders who take a security interest in the manufactured home from anyone other
than the entity whose lien is perfected under state law, because they will be on
notice of the existing interest in the home.
Some of the contracts ("Land Secured Contracts") will be secured by
real estate as well as a manufactured home. Oakwood Acceptance will cause the
liens created by the Land Secured Contracts on the related real estate to be
assigned to the trustee. The contract file for each Land Secured Contract will
be required to include an original or a certified copy of the recorded mortgage
relating to the contract, together with originals or certified copies of a chain
of recorded assignments of the mortgage sufficient to reflect Oakwood Acceptance
as the record holder of the mortgage and the lien it evidences on the related
real estate. Assignments in recordable form for the mortgages naming the trustee
as assignee will not be prepared by the Servicer or any seller. However, Oakwood
Acceptance will deliver to the trustee a power of attorney entitling the trustee
to prepare, execute and record the assignments of mortgages, in the event that
recordation thereof becomes necessary to enable the Servicer to foreclose on the
related real property.
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Under the laws of most states, in the event that a manufactured home is
moved to a state other than the state in which it initially is registered, any
perfected security interest in the home would continue automatically for four
months after relocation, during which time the security interest must be
re-perfected in the new state in order to remain perfected after this four-month
period. Generally, a security interest in a manufactured home may be
re-perfected after the expiration of this four-month period, but, for the period
between the end of such four-month period and the date of such re-perfection,
the security interest would be unperfected.
If a manufactured home is moved to a UCC State, an appropriate UCC
financing statement generally would have to be filed in the state within the
four-month period after the move in order for Oakwood Acceptance's security
interest in the manufactured home to remain perfected continuously. If a
manufactured home is moved to a Title State, re-perfection of a security
interest in the home generally would be accomplished by registering the
manufactured home with the Title State's motor vehicle authority. In the
ordinary course of servicing its portfolio of manufactured housing installment
sales contracts, the Servicer takes steps to re-perfect its security interests
in the related manufactured homes upon its receipt of notice of registration of
the home in a new state --- which it should receive by virtue of the notation of
its lien on the original certificate of title, if the home is moved from a Title
State to a Title State --- or of information from a related borrower as to
relocation of the home. In some Title States, the certificate of title to a
manufactured home, which is required to be in the Servicer's possession, must be
surrendered before the home could be re-registered; in the states an obligor
could not re-register a manufactured home to a transferee without the Servicer's
assistance. In other Title States, when an obligor under a contract sells the
related manufactured home, if it is located in a Title State both before and
after the sale, Oakwood Acceptance should at least receive notice of any
attempted re-registration thereof because its lien is noted on the related
certificate of title and accordingly should have the opportunity to require
satisfaction of the related contract before releasing its lien on the home. If
the motor vehicle authority of a Title State to which a manufactured home is
relocated or in which a manufactured home is located when it is transferred
registers the manufactured home in the name of the owner thereof or the owner's
transferee without noting Oakwood Acceptance's lien on the related certificate
of title, whether because the state did not require the owner to surrender the
certificate of title issued prior to the transfer or issued by the Title State
from which the home was moved or failed to notify Oakwood Acceptance of
re-registration and failed to note Oakwood Acceptance's lien on the new
certificate of title issued upon re-registration or the manufactured home was
moved from a state that is not a Title State, re-registration could defeat the
perfection of Oakwood Acceptance's lien in the manufactured home. In addition,
re-registration of a manufactured home, whether due to a transfer or relocation,
in a state, such as a UCC State, which does not require a certificate of title
for registration of a manufactured home, could defeat perfection of Oakwood
Acceptance's lien.
If Oakwood Acceptance and the Servicer are not the same entity, Oakwood
Acceptance will be required to report to the Servicer any notice it receives of
any re-registration of a manufactured home. The Servicer will take all necessary
steps, at its own expense, to maintain perfection of the trustee's security
interests in each manufactured homes if it receives notice of relocation, sale
or re-registration of the manufactured home. As long as Oakwood Acceptance
remains the Servicer, the Servicer will not be required to cause notations to be
made on any certificate of title or to execute
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any instrument relating to any manufactured home, other than a notation or a
transfer instrument necessary to show Oakwood Acceptance as the lienholder or
legal titleholder. However, the Servicer has no independent obligation to
monitor the status of Oakwood Acceptance's lien on any manufactured home.
Under the laws of most states, liens for repairs performed on a
manufactured home and for property taxes on a manufactured home take priority
even over a prior perfected security interest. These liens could arise at any
time during the term of a contract. No notice will be given to the trustee or
certificateholders in the event this lien arises.
ENFORCEMENT OF SECURITY INTERESTS IN MANUFACTURED HOMES.
The Servicer, on behalf of the trustee, to the extent required by the
related pooling and servicing agreement, may take action to enforce the
trustee's security interest with respect to contracts in default by repossession
and resale of the manufactured homes securing defaulted contracts. So long as
the manufactured home has not become subject to the real estate laws of a state,
a creditor is entitled, in most states, to repossess a manufactured home through
the voluntary surrender thereof, by self-help repossession that is peaceful or,
if the creditor is unable to repossess through either of the foregoing means, by
judicial process. The holder of a contract must give the debtor a number of
days' notice, which varies depending on the state, prior to commencement of any
repossession action. The UCC and consumer protection laws in most states place
restrictions on repossession sales; among other things, laws require prior
notice to the debtor and commercial reasonableness in effecting a sale. The law
in most states also requires that the debtor be given notice prior to any resale
of a repossessed home so that the debtor may redeem the home at or before
resale. In the event of repossession and resale of a manufactured home, the
trustee would be entitled to receive the net proceeds of resale up to the amount
of the unpaid principal balance of the related contract plus all accrued and
unpaid interest thereon at the related asset rate.
Under applicable laws of most states, a creditor is entitled to obtain
a judgment against a debtor for any deficiency remaining after repossession and
resale of the manufactured home securing the debtor's loan. However, obtaining
and collecting deficiency judgments is seldom economically feasible and, for
that reason, Oakwood Acceptance generally has not attempted to obtain deficiency
judgments. In addition, some states impose prohibitions or limitations on
deficiency judgments, and other statutory provisions, including federal and
state bankruptcy and insolvency laws and general equitable principles, the
Soldiers' and Sailors' Civil Relief Act, and state laws affording relief to
debtors, may interfere with or affect the ability of a secured lender to
repossess and resell collateral or to enforce a deficiency judgment. For
example, in proceedings under the United States Bankruptcy Code, as amended, as
set forth in Title 11 of the United States Code (the "Bankruptcy Code" ), when a
court determines that the value of a home is less than the principal balance of
the loan it secures, the court may prevent a lender from repossessing or
foreclosing on the home, and, as part of the debtor's rehabilitation plan,
reduce the amount of the secured indebtedness to the value of the home as it
exists at the time of the proceeding, leaving the lender as a general unsecured
creditor for the difference between that value and the amount of outstanding
indebtedness. A bankruptcy court may grant the debtor a reasonable
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time to cure a payment default, and in the case of a manufactured housing
installment sales contract not secured by the debtor's principal residence, also
may reduce the monthly payments due under the contract, change the rate of
interest and alter the repayment schedule. Court decisions have applied relief
to claims secured by the debtor's principal residence. If a court relieves an
obligor's obligation to repay all or any portion of the amounts otherwise due on
a contract, the Servicer will not be required to advance these amounts, and any
loss of this nature may reduce amounts available for distribution on the related
certificates.
Under the terms of the federal Soldiers' and Sailors' Civil Relief Act,
an obligor who enters military service after the origination of the obligor's
contract, including an obligor who is a member of the National Guard or who is
in reserve status at the time of the origination of the contract and is later
called to active duty, may not be charged interest above an annual rate of 6.00%
during the period of the obligor's active duty status, unless a court orders
otherwise upon application of the lender. It is possible that this action could
have an effect, for an indeterminate period of time, on the ability of the
Servicer to collect full amounts of interest on the contracts. Any shortfall in
interest collections resulting from the application of the Soldiers' and
Sailors' Civil Relief Act, to the extent not covered by the subordination of a
class of subordinated certificates, could result in losses to
certificateholders. In addition, the Soldiers' and Sailors' Civil Relief Act
imposes limitations which would impair the ability of the Servicer to repossess
or foreclose on the manufactured home securing an affected contract during the
obligor's period of active duty status. Thus, in the event that a contract goes
into default, there may be delays and losses occasioned by the inability to
liquidate the related manufactured home in a timely fashion.
Because of the REMIC provisions of the Code, a trust as to which a
REMIC election has been made generally must dispose of any related manufactured
homes acquired pursuant to repossession, foreclosure, or similar proceedings
within two years after acquisition. Consequently, if the Servicer, acting on
behalf of the trust, is unable to sell a manufactured home in the course of its
ordinary commercial practices within 22 months after it acquires the
manufactured home, or a longer period as permitted by the pooling and servicing
agreement, the Servicer will auction the home to the highest bidder, which may
be the Servicer, in an auction reasonably designed to produce a fair price.
There can be no assurance that the price for any manufactured home would not be
substantially lower than the unpaid principal balance of the contract relating
thereto. In fact, manufactured homes, unlike site-built homes, generally
depreciate in value, and it has been Oakwood Acceptance's experience that, upon
repossession and resale, the amount recoverable on a manufactured home securing
an installment sales contract is generally lower than the principal balance of
the contract.
FORECLOSURE UNDER REAL PROPERTY LAWS.
If a manufactured home has become attached to real estate to a degree
such that the home would be treated as real property under the laws of the state
in which it is located, it may not be legally permissible for the Servicer to
repossess the home under the provisions of the UCC or other applicable personal
property laws. If so, the Servicer could obtain possession of the home only
pursuant to real estate mortgage foreclosure laws. In addition, in order to
realize upon the Real Property securing any Land Secured Contract, the Servicer
must proceed under applicable
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state real estate mortgage foreclosure laws. The requirements that the Servicer
must meet in order to foreclose on the Real Property securing a Land Secured
Contract, and the restrictions on foreclosure, are identical to the requirements
and restrictions that would apply to foreclosure of any mortgage loan. Mortgage
foreclosure generally is accomplished through judicial action, rather than by
private action as permitted under personal property laws, and real estate laws
generally impose stricter notice requirements and require public sale of the
collateral. In addition, real estate mortgage foreclosure is usually far more
time-consuming and expensive than repossession under personal property laws, and
applicable real estate law generally affords debtors many more protections than
are provided under personal property laws. Rights of redemption under real
estate laws generally are more favorable to debtors than they are under personal
property laws, and in many states antideficiency judgment legislation will be
applicable in the real estate foreclosure context even if it would not apply to
repossessions under personal property laws. If real estate laws apply to a
manufactured home, to the extent Oakwood Acceptance has not perfected its
security interest in a manufactured home under applicable real estate laws,
Oakwood Acceptance's security interest in the manufactured home would be
subordinate to a lien on such home recorded pursuant to applicable real estate
laws.
CONSUMER PROTECTION LAWS.
The so-called Holder-in-Due-Course rule of the Federal Trade Commission
is intended to prevent a seller of goods pursuant to a consumer credit contract
and related lenders and assignees from transferring the contract free of claims
by the debtor thereunder against Oakwood Acceptance. The effect of this rule is
to subject the assignee of a consumer credit contract to all claims and defenses
that the debtor could have asserted against Oakwood Acceptance under the
contract. Assignee liability under this rule is limited to amounts paid by the
debtor under the assigned contract; however, a borrower also may assert the rule
to set off remaining amounts due under a contract as a defense against a claim
brought by the assignee of the contract against the borrower. Numerous other
federal and state consumer protection laws impose requirements applicable to the
origination and lending pursuant to the contracts, including the Truth in
Lending Act, the Real Estate Settlement Procedures Act, the Equal Credit
Opportunity Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, the
Federal Trade Commission Act, the Magnuson-Moss Warranty -- Federal Trade
Commission Improvement Act, the Fair Credit Reporting Act, the Equal Credit
Opportunity Act, the Fair Debt Collection Practices Act and the Uniform Consumer
Credit Code. The failure of the originator of a contract to have complied with
the provisions of some of these laws may result in liability of the related
trust to the obligor thereunder or in a reduction of the amount payable under
the contract. However, Oakwood Acceptance will be required to represent and
warrant that each contract it sells to Oakwood Mortgage complied, at the time of
its origination, with all requirements of law and will be required to make
representations and warranties as to each contract to be included in an asset
pool concerning the validity, existence, perfection and priority of its security
interest in each underlying manufactured home as of the related Cut-off Date. A
breach of any representation or warranty that materially and adversely affects a
Trust's interest in any contract would create an obligation on the part of
Oakwood Acceptance to use its best efforts to cure the breach to the
satisfaction of the trustee or to repurchase the contract. Nevertheless, this
requirement may not eliminate the Trust's liability to an obligor.
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TRANSFERS OF MANUFACTURED HOMES; ENFORCEABILITY OF DUE-ON-SALE CLAUSES.
The contracts, in general, prohibit the sale or transfer of the related
manufactured homes without the consent of the Servicer and permit the
acceleration of the maturity of the contracts by the Servicer upon any sale or
transfer to which consent has not been obtained. The Servicer will act in
accordance with its customary underwriting procedures and with the terms of the
related pooling and servicing agreement in determining whether to permit
transfers in respect of contracts included in an asset pool. The Servicer will
require, among other things, a satisfactory credit review of any person
proposing to assume any contract. If the Servicer permits an assumption of a
contract, no material term of the contract, including the interest rate or the
remaining term to maturity of the contract, may be modified unless the Servicer
has received an opinion of independent counsel to the effect that this
modification will not be treated, for federal income tax purposes, as an
acquisition of the modified contract by the trust in exchange for the unmodified
contract on the date the modification occurs. A delinquent borrower may transfer
his manufactured home in order to avoid a repossession proceeding with respect
to the manufactured home.
APPLICABILITY OF USURY LAWS.
Title V of the Depository Institutions Deregulation and Monetary
Control Act of 1980, as amended ("Title V"), generally provides that state usury
limitations shall not apply to any loan that is secured by a first lien on
certain kinds of manufactured housing. The contracts would be covered under
Title V if they satisfy conditions governing, among other things, the terms of
any prepayments, late charges and deferral fees and requiring 30 days' prior
notice before the institution of any action leading to repossession of or
foreclosure with respect to the related manufactured home.
Title V authorized any state to reimpose limitations on interest rates
and finance charges by adopting a law or constitutional provision which
expressly rejects application of the federal law before April 1, 1983. Fifteen
states adopted this type of law prior to the April 1, 1983 deadline. In
addition, even where Title V was not so rejected, any state is authorized by the
law to adopt a provision limiting discount points or other charges on loans
covered by Title V. The Servicer will represent that all of the contracts comply
with applicable usury laws.
THE MORTGAGE LOANS
GENERAL.
Mortgage loans are distinct from Land Secured Contracts, which are
discussed under " -- The Contracts -- Foreclosure under Real Property Laws" in
this prospectus. A mortgage loan is secured by a mortgaged property on which a
one- to four-family residential structure is located, whereas a Land Secured
Contract is secured primarily by a manufactured home and is secured only
secondarily by a parcel of Real Property.
The mortgage loans will be secured by either first mortgages, deeds of
trust, deeds to secure debt or security deeds, depending upon the prevailing
practice in the state in which the
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underlying mortgaged property is located. A mortgage creates a lien upon the
real property described in the mortgage. There are two parties to a mortgage:
the mortgagor, who is the obligor, and the mortgagee, who is the lender. Under a
first mortgage, the mortgagor delivers to the mortgagee a note or bond
evidencing the loan and the mortgage. Although a deed of trust is similar to a
mortgage, a deed of trust has three parties; the borrower, a lender as
beneficiary, and a third-party grantee called the trustee. Under a deed of
trust, the borrower grants the property, irrevocably until the debt is paid, in
trust, generally with a power of sale, to the trustee to secure payment of the
loan. The trustee's authority under a deed of trust and the mortgagee's
authority under a mortgage are governed by the express provisions of the deed of
trust or mortgage, applicable law, and, in some cases, with respect to the deed
of trust, the directions of the beneficiary.
FORECLOSURE.
Foreclosure of a mortgage is generally accomplished by judicial action.
Generally, the action is initiated by the service of legal pleadings upon all
parties having an interest of record in the mortgaged property. Delays in
completion of the foreclosure occasionally may result from difficulties in
locating necessary parties. When the mortgagee's right to foreclosure is
contested, the legal proceedings necessary to resolve the issue can be
time-consuming. After the completion of a judicial foreclosure proceeding, the
court may issue a judgment of foreclosure and appoint a receiver or other
officer to conduct the sale of the property. In some states, mortgages may also
be foreclosed by advertisement, pursuant to a power of sale provided in the
mortgage. Foreclosure of a mortgage by advertisement is essentially similar to
foreclosure of a deed of trust by non-judicial power of sale.
Foreclosure of a deed of trust is generally accomplished by a
non-judicial trustee's sale under a specific provision in the deed of trust that
authorizes the trustee to sell the property to a third party upon any default by
the borrower under the terms of the related note or the deed of trust.
Foreclosure also may be accomplished by judicial action in the manner provided
for foreclosure of mortgages. In some states the trustee must record a notice of
default and send a copy to the borrower-trustor and to any person who has
recorded a request for a copy of a notice of default and notice of sale. In
addition, the trustee must provide notice in some states to any other individual
having an interest of record in the underlying real property, including any
junior lienholders. If the deed of trust is not reinstated within any applicable
cure period, a notice of sale must be posted in a public place and, in most
states, must be published for a specified period of time in one or more
newspapers. In addition, some state laws require that a copy of the notice of
sale be posted on the property and sent to all parties having an interest of
record in the property. In some states, the borrower has the right to reinstate
the loan at any time following default until shortly before the trustee's sale.
See " -- Rights of Reinstatement and Redemption" in this prospectus.
In the case of foreclosure under either a mortgage or a deed of trust,
the sale by the receiver or other designated officer, or by the trustee, is a
public sale. However, because of the difficulty a potential buyer at the sale
would have in determining the exact status of title and because the physical
condition of the property may have deteriorated during the foreclosure
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proceedings, it is not common for a third party to purchase the property at the
foreclosure sale. Rather, the lender generally purchases the property from the
trustee or receiver for an amount which may be as great as but is more often
somewhat less than the unpaid principal amount of the note, accrued and unpaid
interest and the expenses of foreclosure. Thereafter, subject to the right of
the obligor in some states to remain in possession during the redemption period,
the lender will assume the burdens of ownership, including obtaining hazard
insurance and making repairs at its own expense as are necessary to render the
property suitable for sale. The lender commonly will obtain the services of a
real estate broker and pay the broker a commission in connection with the sale
of the property. Depending upon market conditions, the ultimate proceeds of the
sale of the property may not equal the lender's investment in the property. Any
loss with respect to a mortgage loan may be reduced by the receipt of mortgage
insurance proceeds. See "The Trusts" in this prospectus.
Courts have imposed general equitable principles upon foreclosure.
These equitable principles are generally designed to relieve obligors from the
legal effect of defaults under the loan documents. Examples of judicial remedies
that may be fashioned include judicial requirements that the lender undertake
affirmative actions to determine the causes for the obligor's default and the
likelihood that the obligors will be able to reinstate the loan. In some cases,
courts have required lenders to reinstate loans or recast payment schedules to
accommodate obligors who are suffering temporary financial disabilities. In some
cases, courts have limited the right of a lender to foreclose if the default
under the related mortgage instrument is not monetary, such as a default arising
from the obligor's failure to maintain the property adequately or the obligor's
executing a second mortgage or deed of trust affecting the property. In other
cases, some courts have been faced with the issue whether federal or state
constitutional provisions reflecting due process concerns for adequate notice
require that obligors under deeds of trust receive notices in addition to
statutorily-prescribed minimum requirements. For the most part, these cases have
upheld state statutory notice provisions as being reasonable or have found that
the sale by a trustee under a deed of trust or under a mortgage having a power
of sale does not involve sufficient state action to afford constitutional
protections to the obligor.
RIGHTS OF REINSTATEMENT AND REDEMPTION.
In some states, an obligor, or any other person having a junior
encumbrance on the related real estate, may, during a reinstatement or
redemption period, cure an obligor default by paying the entire amount in
arrears plus certain costs and expenses incurred by or on behalf of the lender
in attempting to enforce the obligor's obligation. Certain state laws control
the amount of foreclosure expenses and costs, including attorneys' fees, which
may be recovered by a lender. In some states, an obligor under a mortgage loan
has the right to reinstate the loan at any time following default until shortly
before the foreclosure sale.
In some states, after sale pursuant to a deed of trust or foreclosure
of a mortgage, the related obligor and the foreclosed junior lienors are given a
statutory period in which to redeem the related property from the foreclosure
sale. In other states, this right of redemption applies only to sale following
judicial foreclosure, and not to sale pursuant to a non-judicial power of sale.
In most states where the right of redemption is available, statutory redemption
may occur
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upon payment of the foreclosure purchase price, accrued interest and taxes. The
effect of a right of redemption is to diminish the ability of the lender to sell
the foreclosed property that it purchased. The exercise of a right of redemption
would defeat the title of any purchaser at a foreclosure sale, or of any
purchaser from the lender subsequent to its purchase of the related property at
a judicial foreclosure sale or sale under a deed of trust. Consequently, the
practical effect of the redemption right is to force the lender or other
purchaser of property at a foreclosure sale to maintain the property and pay the
expenses of ownership until the redemption period has run.
ANTI-DEFICIENCY LEGISLATION AND OTHER LIMITATIONS ON LENDERS.
Some states have imposed statutory restrictions that limit the remedies
of a beneficiary under a deed of trust or a mortgagee under a mortgage. In some
states, statutes limit the right of the beneficiary or mortgagee to obtain a
deficiency judgment against a borrower following foreclosure on the related
property or sale of the related property under a deed of trust. A deficiency
judgment is a personal judgment against the obligor equal in most cases to the
difference between the amount due to the lender and the greater of the net
amount realized upon the foreclosure sale or the market value of the related
mortgaged property.
Some state statutes may require the beneficiary or mortgagee to exhaust
the security afforded under a deed of trust or mortgage by foreclosure in an
attempt to satisfy the full debt before bringing a personal action against the
obligor. In other states, the lender has the option of bringing a personal
action against the obligor on the debt without first exhausting the security;
however, in some of these states, the lender, following judgment on a personal
action, may be deemed to have elected a remedy and may be precluded from
exercising other remedies. Consequently, the practical effect of the election
requirement, when applicable, is that lenders will usually proceed first against
the security for a mortgage or deed of trust rather than bringing a personal
action against the obligor.
Other statutory provisions may limit any deficiency judgment against
the former obligor under a mortgage loan following a foreclosure sale to the
excess of the outstanding debt over the fair market value of the property at the
time of the sale. The purpose of these statutes is to prevent a beneficiary or a
mortgagee from obtaining a large deficiency judgment against the former obligor
as a result of low or no bids at the foreclosure sale or sale pursuant to a deed
of trust.
In some states, exceptions to the anti-deficiency statutes are provided
in instances where the value of the lender's security has been impaired by acts
or omissions of the obligor, for example, in the event of waste of the property
by the obligor. In addition to anti-deficiency and related legislation, numerous
other federal and state statutory provisions, including the federal and state
bankruptcy and insolvency laws and general equitable principles, the federal
Soldiers' and Sailors' Civil Relief Act and state laws affording relief to
debtors, may interfere with or affect the ability of a secured mortgage lender
to realize upon its security. For example, in some proceedings under the federal
Bankruptcy Code, when a court determines that the value of a home is less than
the principal balance of the loan it secures,
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the court may prevent a lender from foreclosing on the home, and, as
part of the debtor's rehabilitation plan, reduce the amount of the secured
indebtedness to the value of the home as it exists at the time of the
proceeding, leaving the lender as a general unsecured creditor for the
difference between that value and the amount of outstanding indebtedness. A
bankruptcy court may grant the debtor a reasonable time to cure a payment
default, and in the case of a mortgage loan not secured by the debtor's
principal residence, also may reduce the monthly payments due under the mortgage
loan, change the rate of interest and alter the mortgage loan repayment
schedule. Court decisions have applied this relief to claims secured by the
debtor's principal residence. If a court relieves an obligor's obligation to
repay all or any portion of the amounts otherwise due on a mortgage loan, the
Servicer will not be required to advance these amounts, and any loss in respect
thereof may reduce amounts available for distribution on the related
certificates.
Under the terms of the federal Soldiers' and Sailors' Civil Relief Act,
an obligor who enters military service after the origination of the obligor's
mortgage loan, including an obligor who is a member of the National Guard or who
is in reserve status at the time of the origination of the mortgage loan and is
later called to active duty, may not be charged interest above an annual rate of
6.00% during the period of his active duty status, unless a court orders
otherwise. It is possible that this action could have an effect, for an
indeterminate period of time, on the ability of the Servicer to collect full
amounts of interest on the mortgage loans. Any shortfall in interest collections
resulting from the application of the Soldiers' and Sailors' Civil Relief Act,
to the extent not covered by the subordination of a class of subordinated
certificates, could result in losses to certificateholders. In addition, the
Soldiers' and Sailors' Civil Relief Act imposes limitations which would impair
the ability of the Servicer to foreclose on an affected mortgage loan during the
obligor's period of active duty status. Thus, in the event that this type of
mortgage loan goes into default, there may be delays and losses occasioned by
the inability to liquidate the related mortgaged property in a timely fashion.
The Internal Revenue Code of 1986, as amended (the "Code") and the laws
of some states provide priority to certain tax liens over the lien of a mortgage
or deed of trust. Numerous federal and some state consumer protection laws
impose substantive requirements upon mortgage lenders in connection with the
origination, servicing and the enforcement of mortgage loans. These laws include
the federal Truth in Lending Act, Real Estate Settlement Procedures Act, Real
Property Settlement Procedures Act, Equal Credit Opportunity Act, Fair Credit
Billing Act, Fair Credit Reporting Act, and related statutes and regulations.
These federal laws and state laws impose specific statutory liabilities upon
lenders who originate or service mortgage loans and who fail to comply with the
provisions of the law. In some cases, this liability may affect the lender's
assignees as to the mortgage loans.
Due on Sale Clauses. The forms of note, mortgage and deed of trust
relating to conventional mortgage loans may contain a due-on-sale clause
permitting acceleration of the maturity of a loan if the mortgagor transfers its
interest in the underlying property. In recent years, court decisions and
legislative actions placed substantial restrictions on the right of lenders to
enforce these clauses in many states. However, effective October 15, 1982,
Congress enacted the Garn-St Germain Act, which purports to pre-empt state laws
that prohibit the enforcement of
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due-on-sale clauses and provides, among other things, that due-on-sale clauses
in loans, which loans include the conventional mortgage loans, made after the
effective date of the Garn-St Germain Act are enforceable, within limitations as
set forth in the Garn-St Germain Act and the regulations promulgated thereunder.
By virtue of the Garn-St Germain Act, the Servicer may generally be permitted to
accelerate any conventional mortgage loan which contains a due-on-sale clause
upon transfer by the obligor of an interest in the property subject to the
related mortgage or deed of trust. With respect to any mortgage loan secured by
a residence occupied or to be occupied by the mortgagor, this ability to
accelerate will not apply to some transfers, including
o the granting of a leasehold interest which has a term of three
years or less and which does not contain an option to purchase;
o a transfer to a family relative resulting from the death of a
mortgagor, or a transfer where the spouse or child(ren) becomes an
owner of the property in each case where the transferee(s) will
occupy the property;
o a transfer resulting from a decree of dissolution of marriage,
legal separation agreement or from an incidental property
settlement agreement by which the spouse of the mortgagor becomes
an owner of the property;
o the creation of a lien or other encumbrance subordinate to the
lender's security instrument which does not relate to a transfer
of rights of occupancy in the property, provided that the lien or
encumbrance is not created pursuant to a contract for deed;
o a transfer by devise, descent or operation of law on the death of
a joint tenant or tenant by the entirety; and
o other transfers as set forth in the Garn-St Germain Act and the
regulations thereunder. FHA and VA loans do not contain
due-on-sale clauses.
See "Maturity and Prepayment Considerations" in this prospectus.
ADJUSTABLE RATE ASSETS.
The laws of certain states may provide that mortgage notes relating to
adjustable rate loans are not negotiable instruments under the UCC. In this
event, the trustee under a deed of trust arrangement will not be deemed to be a
holder in due course within the meaning of the UCC and may take this type of
mortgage note, but there will be restrictions on its ability to foreclose on the
related mortgaged property and contractual defenses available to the related
obligor.
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ENVIRONMENTAL CONSIDERATIONS
Real property pledged as security to a lender may face environmental
risks. Under the laws of certain states, contamination of a property may give
rise to a lien on the property to secure recovery of the costs of clean-up. In
several states, this lien has priority over the lien of an existing mortgage
against the property. In addition, under the laws of some states and under the
federal Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended ("CERCLA"), a lender may be liable, as an "owner" or
"operator," for costs of addressing releases or threatened releases of hazardous
substances that require remedy at a property securing a mortgage loan owned by
the lender, if agents or employees of the lender have become sufficiently
involved in the operations of the related obligor, regardless of whether or not
the environmental damage or threat was caused by the lender's obligor or by a
prior owner. A lender also risks liability arising out of foreclosure of a
mortgaged property securing a mortgage loan owned by the lender. Until recent
legislation was adopted, it was uncertain what actions could be taken by a
secured lender in the event of a loan default without it incurring exposure
under CERCLA in the event the property was environmentally contaminated. The
Asset Conservation, Lender Liability and Deposit Insurance Act of 1996 (the
"1996 Lender Liability Act") provides for a safe harbor for secured lenders from
CERCLA liability even though the lender forecloses and sells the real estate
securing the loan, provided the secured lender sells "at the earliest
practicable, commercially reasonable time, at commercially reasonable terms,
taking into account market conditions and legal and regulatory requirements."
Although the 1996 Lender Liability Act provides significant protection to
secured lenders, it has not been construed by the courts, and there are
circumstances in which actions taken could expose a secured lender to CERCLA
liability. And, the transferee from the secured lender is not entitled to the
protections enjoyed by a secured lender. Thus, contamination may decrease the
amount that prospective buyers are willing to pay for a mortgaged property and,
thus, decrease the likelihood that the trust will recover fully on the mortgage
loan through foreclosure.
Application of environmental laws other than CERCLA could also result
in the imposition of liability on lenders for costs associated with
environmental hazards. The most significant of these other laws is the Resource
Conservation and Recovery Act of 1976, as amended ("RCRA"), and state regulatory
programs implemented thereunder. Subtitle I of RCRA imposes cleanup liabilities
on owners or operators of underground storage tanks. Some states also impose
similar liabilities on owners and operators of aboveground storage tanks. The
definition of "owner" under RCRA Subtitle I contains a security interest
exemption nearly identical to the CERCLA security interest exemption. However,
as with CERCLA costs, it is possible that these costs, if imposed in connection
with a mortgage loan or a Land Secured Contract included in a trust estate,
could become a liability of the related trust.
At the time the mortgage loans or Land Secured Contracts underlying a
series were originated, it is possible that no environmental assessment or a
very limited environmental assessment of the related mortgaged properties or
Real Properties was conducted. No representations or warranties are made by
Oakwood Acceptance of mortgage loans or contracts including Land Secured
Contracts as to the absence or effect of hazardous wastes or hazardous
substances on any of the related mortgaged properties or Real Properties. In
addition, the Servicer
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has not made any representations or warranties or assumed any liability with
respect to the absence or effect of hazardous wastes or hazardous substances on
any mortgaged property or Real Property or any casualty resulting from the
presence or effect of hazardous wastes or hazardous substances on any mortgaged
property or Real Property, and any loss or liability resulting from the presence
or effect of hazardous wastes or hazardous substances will reduce the amounts
otherwise available to pay to the holders of the related certificates.
Pursuant to the standard terms, the Servicer is not required to
foreclose on any mortgaged property or Real Property if one of its principal
officers has actual knowledge that the property is contaminated with or affected
by hazardous wastes or hazardous substances. If the Servicer does not foreclose
on the mortgaged property underlying a defaulted mortgage loan or the Real
Property securing a Land Secured Contract, the amounts otherwise available to
pay to the holders of the certificates may be reduced. The Servicer will not be
liable to the holders of the certificates if it fails to foreclose on a
mortgaged property or Real Property that it believes may be so contaminated or
affected, even if the mortgaged property or Real Property is, in fact, not so
contaminated or affected. Similarly, the Servicer will not be liable to the
holders of any certificates if the Servicer forecloses on a mortgaged property
or Real Property and takes title to a mortgaged property or Real Property that
is so contaminated or affected.
ENFORCEABILITY OF MATERIAL PROVISIONS OF THE OBLIGORS' AGREEMENTS
The standard forms of contract, Note, mortgage and deed of trust used
by the originators of contracts and mortgage loans may contain provisions
obligating the obligor to pay a late charge if payments are not timely made and
in some circumstances may provide for prepayment fees or penalties if the
obligation is paid prior to maturity. In certain states, there are or may be
specific limitations upon late charges which a lender may collect from a
borrower for delinquent payments. States also limit the amounts that a lender
may collect from a borrower as an additional charge if the loan is prepaid.
Under each pooling and servicing agreement, late charges and prepayment fees on
assets in the related trust estate to the extent permitted by law and not waived
by the Servicer will be retained by the Servicer as additional servicing
compensation.
USE OF PROCEEDS
Substantially all of the net proceeds to be received from the sale of
each series of certificates will be used to purchase the contracts and mortgage
loans related to that series or to reimburse the amounts previously used to
effect the purchase, the costs of carrying such contracts and mortgage loans
until the sale of the related certificates and other expenses connected with
pooling the contracts and mortgage loans and issuing the certificates.
THE COMPANY
Oakwood Mortgage Investors, Inc. was incorporated in the State of
Nevada on June 11, 1998 as a wholly-owned, limited purpose finance subsidiary of
Oakwood Acceptance Corporation. Oakwood Mortgage Investors, Inc., a North
Carolina corporation, was merged with and into Oakwood Mortgage on May 28, 1999.
Oakwood Acceptance is a wholly-
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owned subsidiary of Oakwood Homes Corporation. Oakwood Mortgage maintains its
principal office at 101 Convention Center Drive, Suite 850, Las Vegas, Nevada
89109. Its telephone number is (702) 949-0056.
The only obligations, if any, of Oakwood Mortgage with respect to a
series of certificates may be pursuant to limited representations and warranties
and limited undertakings to repurchase or substitute contracts or mortgage loans
under certain circumstances. Oakwood Mortgage will have no ongoing servicing
obligations or responsibilities with respect to any asset pool. Oakwood Mortgage
does not have, nor is it expected in the future to have, any significant assets.
Neither Oakwood Mortgage nor any underwriter nor any of their
affiliates will insure or guarantee the certificates of any series.
Oakwood Mortgage expects to be merged with and into Oakwood Mortgage
Investors, Inc., a Nevada corporation, during 1999. It is expected that the
surviving corporation will succeed to all of Oakwood Mortgage's rights and
obligations under the registration statement of which this prospectus is a part.
THE SERVICER
Oakwood Acceptance Corporation (in its capacity as servicer, the
"Servicer") was incorporated in 1984 in the State of North Carolina as a
wholly-owned subsidiary of Oakwood Homes. Oakwood Acceptance is primarily
engaged in the business of underwriting, originating, pooling, selling and
servicing installment sales contracts for the sale of manufactured housing.
Oakwood Acceptance's principal offices are located at 7800 McCloud Road,
Greensboro, North Carolina 27409-9634 (telephone 336/664-2500).
Oakwood Acceptance underwrites and funds the origination of
manufactured housing contracts on an individual basis from its principal office
and from one or more additional loan origination offices. Contracts for the
financing of sales of manufactured homes through Oakwood Acceptance are
typically originated in the name of Oakwood Mobile, a wholly-owned retailing
subsidiary of Oakwood Homes, or by a third party manufactured housing dealer,
and are assigned to Oakwood Acceptance following origination, although some
contracts are originated directly in Oakwood Acceptance's name. Oakwood
Acceptance underwrites all of these contracts. From time to time, Oakwood
Acceptance purchases seasoned portfolios of manufactured housing contracts from
third parties.
FEDERAL INCOME TAX CONSEQUENCES
The following is the opinion of Hunton & Williams regarding the
material federal income tax consequences of the purchase, ownership and
disposition of the offered certificates. This opinion is based upon laws,
regulations, rulings, and decisions now in effect, all of which may change.
Because REMIC status may be elected with respect to any series of certificates,
this opinion includes a summary of the federal income tax consequences to
holders of REMIC certificates.
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This opinion does not purport to deal with the federal income tax
consequences that may affect particular investors in light of their individual
circumstances, nor with certain categories of investors that are given special
treatment under the federal income tax laws, such as banks, insurance companies,
thrift institutions, tax-exempt organizations, foreign investors, certain
regulated entities, real estate investment trusts, investment companies and
certain other organizations that face special rules. This opinion focuses
primarily on investors who will hold the certificates as capital assets ---
generally, property held for investment --- within the meaning of section 1221
of the Code, although much of the discussion is applicable to other investors as
well. Investors should note that, although final regulations under the REMIC
provisions of the Code have been issued by the Treasury, no currently effective
regulations or other administrative guidance has been issued with respect to
certain provisions of the Code that are or may be applicable to
certificateholders, particularly the provisions dealing with market discount and
stripped debt instruments. Although the Treasury recently issued final
regulations dealing with original issue discount and premium, those regulations
do not address directly the treatment of Regular Certificates, which are
certificates evidencing regular interests in a REMIC, and certain other types of
certificates. Furthermore, the REMIC provisions of the Code do not address all
of the issues that arise in connection with the formation and operation of a
REMIC. Hence, definitive guidance cannot be provided with respect to many
aspects of the tax treatment of certificateholders.
Moreover, this opinion is based on current law, and there can be no
assurance that the law will not change or that the Internal Revenue Service (the
"Service") will not take positions that would be materially adverse to
investors. Finally, this opinion does not purport to address the anticipated
state income tax consequences to investors of owning and disposing of the
certificates. Consequently, we suggest that investors consult their own tax
advisors in determining the federal, state, local, and any other tax
consequences to them of the purchase, ownership, and disposition of the
certificates.
GENERAL
Many aspects of the federal income tax treatment of the certificates of
a particular series will depend upon whether an election is made to treat the
trust, or one or more segregated asset pools thereof, as a series REMIC. The
prospectus supplement for each series will indicate whether a REMIC election or
elections will be made with respect to the related trust estate and, if such an
election or elections are to be made, will identify all regular interests and
the residual interest in each series REMIC. For each series with respect to
which one or more REMIC elections are to be made, Hunton & Williams, counsel to
Oakwood Mortgage, will deliver a separate opinion generally to the effect that,
assuming timely filing of the REMIC election or elections and compliance with
the related pooling and servicing agreement and certain other documents
specified in the opinion, the trust, or one or more segregated asset pools in
the trust, will qualify as one or more series REMICs. For each series with
respect to which a REMIC election is not to be made, Hunton & Williams will
deliver a separate opinion generally to the effect that, assuming compliance
with the pooling and servicing agreement and certain other documents, the trust
will be treated as a grantor trust under subpart E, Part I of subchapter J of
the Code and not as an association taxable as a corporation. Those opinions will
be based on
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existing law and there can be no assurance that the law will not change or that
contrary positions will not be taken by the Service.
REMIC CERTIFICATES
REMIC certificates will be classified as either Regular Certificates,
which generally are treated as debt for federal income tax purposes, or Residual
Certificates, which generally are not treated as debt for such purposes, but
rather as representing rights and responsibilities with respect to the taxable
income or loss of the related series REMIC. The prospectus supplement for each
series of certificates will indicate whether one or more REMIC elections will be
made for that series and which of the certificates of such series will be
designated as Regular Certificates, and which will be designated as Residual
Certificates.
REMIC certificates held by a REIT generally will qualify as real estate
assets within the meaning of section 856(c)(4)(A) of the Code, and interest on
such certificates generally will be considered Qualifying REIT Interest, in the
same proportion that the assets of the related series REMIC would qualify as
real estate assets for REIT purposes. Similarly, REMIC certificates held by a
thrift institution taxed as a domestic building and loan association generally
will qualify as a loan secured by an interest in real property, for purposes of
the qualification requirements of domestic building and loan associations set
forth in section 7701(a)(19) of the Code, in the same proportion that the assets
of the related series REMIC would so qualify. However, if 95% or more of the
assets of a given series REMIC constitute real estate assets for REIT purposes,
the REMIC certificates issued by such REMIC will be treated entirely as such
assets and 100% of the interest income derived from such REMIC will be treated
as Qualifying REIT Interest. Similarly, if 95% or more of the assets of a given
series REMIC constitute loans secured by interests in real property, the REMIC
certificates will be treated entirely as such assets for purposes of the
qualification requirement of domestic building and loan associations. REMIC
Regular and Residual Certificates held by a financial institution to which
Section 585 of the Code applies will be treated as evidences of indebtedness for
purposes of Section 582(c)(1) of the Code. The Regular Certificates generally
will be qualified mortgages within the meaning of Section 860G(a)(3) of the Code
with respect to other REMICs. In the case of a series for which two or more
REMICs will be created, all such series REMICs will be treated as a single REMIC
for purposes of determining the extent to which the related certificates and the
income thereon will be treated as qualifying assets and income for such
purposes. However, REMIC certificates will not qualify as government securities
for either REIT or RIC qualification purposes. A RIC is a regulated investment
company as defined in the Code.
TAX TREATMENT OF REGULAR CERTIFICATES
Payments received by holders of Regular Certificates generally should
be accorded the same tax treatment under the Code as payments received on other
taxable corporate debt instruments. Except as described below for Regular
Certificates issued with original issue discount or acquired with market
discount or premium, interest paid or accrued on a Regular Certificate will be
treated as ordinary income to the certificateholder and a principal payment on
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such certificate will be treated as a return of capital to the extent that the
certificateholder's basis in the certificate is allocable to that payment.
Holders of REMIC Regular or Residual Certificates must report income from such
certificates under an accrual method of accounting, even if they otherwise would
have used the cash receipts and disbursements method. The Tax Administrator, the
Servicer or the trustee will report annually to the Service and to
certificateholders of record with respect to interest paid or accrued and
original issue discount, if any, accrued on the certificates. The Tax
Administrator is the party responsible for computing the amount of original
issue discount to be reported to the holders of Regular Certificates each
taxable year, which will be Oakwood Acceptance or an Affiliate.
Under temporary Treasury regulations, holders of Regular Certificates
issued by single-class REMICs who are individuals, trusts, estates, or
pass-through entities in which such investors hold interests may be required to
recognize certain amounts of income in addition to interest and discount income.
A single-class REMIC, in general, is a REMIC that (i) would be classified as an
investment trust in the absence of a REMIC election or (ii) is substantially
similar to an investment trust. Under the temporary Treasury regulations, each
holder of a regular or residual interest in a single-class REMIC is allocated
(i) a share of the REMIC's allocable investment expenses (i.e., expenses
normally allowable under section 212 of the Code, which may include servicing
and administrative fees and insurance premiums) and (ii) a corresponding amount
of additional income. Section 67 of the Code permits an individual, trust or
estate to deduct miscellaneous itemized expenses (including expenses allowable
under section 212 of the Code) only to the extent that such expenses, in the
aggregate, exceed 2% of its adjusted gross income. Consequently, an individual,
trust or estate that holds a regular interest in a single-class REMIC (either
directly or through a pass-through entity) will recognize additional income with
respect to such regular interest to the extent that its share of allocable
investment expenses, when combined with its other miscellaneous itemized
deductions for the taxable year, fails to exceed 2% of its adjusted gross
income. Any such additional income will be treated as interest income. In
addition, Code section 68 provides that the amount of itemized deductions
otherwise allowable for the taxable year for an individual whose adjusted gross
income exceeds the applicable amount ($100,000, or $50,000 in the case of a
separate return by a married individual within the meaning of Code section 7703
for taxable year 1991 and adjusted for inflation each year thereafter) will be
reduced by the lesser of (i) 3% of the excess of adjusted gross income over the
applicable amount, or (ii) 80% of the amount of itemized deductions otherwise
allowable for such taxable year. The amount of such additional taxable income
recognized by holders who are subject to the limitations of either section 67 or
section 68 of the Code may be substantial and may reduce or eliminate the
after-tax yield to such holders of an investment in the certificates of an
affected series. Where appropriate, the prospectus supplement for a particular
series will indicate that the holders of certificates of such series may be
required to recognize additional income as a result of the application of the
limitations of either section 67 or section 68 of the Code. Non-corporate
holders of Regular Certificates evidencing an interest in a single-class REMIC
also should be aware that miscellaneous itemized deductions, including allocable
investment expenses attributable to such REMIC, are not deductible for purposes
of the alternative minimum tax.
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ORIGINAL ISSUE DISCOUNT
Certain classes of Regular Certificates may be issued with original
issue discount within the meaning of section 1273(a) of the Code. In general,
such original issue discount will equal the difference between the stated
redemption price at maturity of the Regular Certificate (generally, its
principal amount) and its issue price. Holders of Regular Certificates as to
which there is original issue discount should be aware that they generally must
include original issue discount in income for federal income tax purposes on an
annual basis under a constant yield accrual method that reflects compounding. In
general, original issue discount is treated as ordinary interest income and must
be included in income in advance of the receipt of the cash to which it relates.
The amount of original issue discount required to be included in the
income of the holder of a Regular Certificate in any taxable year will be
computed in accordance with section 1272(a)(6) of the Code, which provides rules
for the accrual of original issue discount under a constant yield method for
certain debt instruments, such as the Regular Certificates, that are subject to
prepayment by reason of the prepayment of the underlying obligations. Under
section 1272(a)(6), the amount and rate of accrual of original issue discount on
a Regular Certificate generally is calculated based on (i) a single constant
yield to maturity and (ii) the Pricing Prepayment Assumptions. The Pricing
Prepayment Assumptions are the assumptions concerning the rate and timing of
principal prepayments on the assets and concerning the reinvestment rate on
amounts held pending distribution that were assumed in pricing. No regulatory
guidance currently exists under Code section 1272(a)(6). Accordingly, until the
Treasury issues guidance to the contrary, the Tax Administrator will, except as
otherwise provided herein, base its computations on Code section 1272(a)(6), the
OID Regulations, and certain other guidance, all as described below. OID
Regulations are the final regulations governing original issue discount that
were issued by the Treasury. There can be no assurance, however, that the
methodology described below represents the correct manner of calculating
original issue discount on the Regular Certificates. The Tax Administrator will
account for income on certain Regular Certificates that provide for one or more
contingent payments as described herein under "Federal Income Tax Consequences
- -- REMIC certificates -- Interest Weighted Certificates and Non-VRDI
certificates." Prospective purchasers should be aware that neither Oakwood
Mortgage, any Servicer, nor the trustee will make any representation that the
assets underlying a series will in fact prepay at a rate conforming to the
Pricing Prepayment Assumptions or at any other rate.
The amount of original issue discount on a Regular Certificate equals
the excess, if any, of the certificate's stated redemption price at maturity
over its issue price. Under the OID Regulations, a debt instrument's stated
redemption price at maturity is the sum of all payments of principal and
interest provided for on the instrument other than Qualified Stated Interest
(i.e., the sum of its Deemed Principal Payments). Qualified Stated Interest
means stated interest that is unconditionally payable in cash or property, other
than debt instruments of the issuer, at least annually at a single fixed rate or
a variable rate that meets certain requirements set out in the OID Regulations.
Thus, in the case of any Regular Certificate, the stated redemption price at
maturity will equal the total amount of all Deemed Principal Payments due on
that certificate.
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Since a certificate that is part of an Accretion Class generally will
not require unconditional payments of interest at least annually, the stated
redemption price at maturity of such a certificate will equal the aggregate of
all payments due, whether designated as principal, accrued interest, or current
interest. The issue price of a Regular Certificate generally will equal the
initial price at which a substantial amount of such certificates is sold to the
public. Deemed Principal Payments means all payments of principal and interest
provided for on a debt instrument other than Qualified Stated Interest.
Although the OID Regulations contain an aggregation rule (the
"Aggregation Rule" Aggregation Rule ), under which two or more debt instruments
issued in connection with the same transaction, or related transactions in
certain circumstances, generally are treated as a single debt instrument for
federal income tax accounting purposes if issued by a single issuer to a single
holder, that Rule does not apply if the debt instruments are part of an issue
(i) a substantial portion of which is traded on an established market or (ii) a
substantial portion of which is issued for cash (or property traded on an
established market) to parties who are not related to the issuer or holder and
who do not purchase other debt instruments of the same issuer in connection with
the same transaction or related transactions. In most cases, the Aggregation
Rule will not apply to Regular Certificates of different classes because one or
both of the exceptions to the Aggregation Rule will have been met. Although the
Tax Administrator will apply the Aggregation Rule to all regular interests in a
series REMIC that are held by another REMIC created with respect to the same
series, it generally will not apply the Aggregation Rule to Regular Certificates
for purposes of reporting to certificateholders.
Under a deminimis rule, a Regular Certificate will be considered to
have no original issue discount if the amount of original issue discount on the
certificate is less than 0.25% of the certificate's stated redemption price at
maturity multiplied by the certificate's WAM. WAM means the sum of the amounts
obtained by multiplying the amount of each Deemed Principal Payment on a Regular
Certificate by a fraction, the numerator of which is the number of complete
years from the certificate's issue date until the payment is made, and the
denominator of which is the certificate's stated redemption price at maturity.
Although no Treasury regulations have been issued under the relevant provisions
of the Tax Reform Act of 1986 (the "1986 Act"), it is expected that the WAM of a
Regular Certificate will be computed using the Pricing Prepayment Assumptions.
The holder of a Regular Certificate will include de minimis original issue
discount in income on a pro rata basis as stated principal payments on the
certificate are received or, if earlier, upon disposition of the certificate,
unless the holder of such certificate makes the All OID Election. An All OID
Election means, with respect to a Regular Certificate, an election to include in
gross income all stated interest, original issue discount, de minimis original
issue discount, market discount, and de minimis market discount that accrues on
such Certificate, reduced by any amortizable premium or acquisition premium on
such certificate, under the constant yield method used to account for original
issue discount.
Regular Certificates of certain series may bears interest under terms
that provide for a teaser rate period, interest holiday, or other period during
which the rate of interest payable on the crtificate is lower than the rate
payable during the remainder of its life ("Teaser Certificates"). Under certain
circumstances, a Teaser Certificate may be considered to have a de minimis
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amount of original issue discount even though the amount of original issue
discount on such certificate would be more than de minimis if determined as
described above. If the stated interest on a Teaser Certificate would be
Qualified Stated Interest but for the fact that during one or more accrual
periods its interest rate is below the rate applicable for the remainder of its
term, the amount of original issue discount on such certificate that is measured
against the de minimis amount of original issue discount allowable on the
certificate is the greater of the excess of the stated principal amount of the
certificate over its issue price and the amount of interest that would be
necessary to be payable on the certificate in order for all stated interest to
be Qualified Stated Interest.
The holder of a Regular Certificate generally must include in gross
income the sum, for all days during his taxable year on which he holds the
Regular Certificate, of the daily portions of the original issue discount on
such certificate. In the case of an original holder of a Regular Certificate,
the daily portions of original issue discount with respect to such certificate
generally will be determined by allocating to each day in any accrual period the
certificate's ratable portion of the excess, if any, of (i) the sum of (a) the
present value of all payments under the certificate yet to be received as of the
close of such period and (b) the amount of any Deemed Principal Payments
received on the certificate during such period over (ii) the certificate's
adjusted issue price at the beginning of such period. The present value of
payments yet to be received on a Regular Certificate is computed by using the
Pricing Prepayment Assumptions and the certificate's original yield to maturity
(adjusted to take into account the length of the particular accrual period), and
taking into account Deemed Principal Payments actually received on the
certificate prior to the close of the accrual period. The adjusted issue price
of a Regular Certificate at the beginning of the first accrual period is its
issue price. The adjusted issue price at the beginning of each subsequent period
is the adjusted issue price of the certificate at the beginning of the preceding
period increased by the amount of original issue discount allocable to that
period and decreased by the amount of any Deemed Principal Payments received
during that period. Thus, an increased (or decreased) rate of prepayments
received with respect to a Regular Certificate will be accompanied by a
correspondingly increased (or decreased) rate of recognition of original issue
discount by the holder of such certificate.
The yield to maturity of a Regular Certificate is calculated based on
the Pricing Prepayment Assumptions and any contingencies not already taken into
account under the Pricing Prepayment Assumptions that, considering all of the
facts and circumstances as of the issue date, are more likely than not to occur.
Contingencies, such as the exercise of mandatory redemptions, that are taken
into account by the parties in pricing the Regular Certificate typically will be
subsumed in the Pricing Prepayment Assumptions and thus will be reflected in the
certificate's yield to maturity. The Tax Administrator's determination of
whether a contingency relating to a class of Regular Certificates is more likely
than not to occur is binding on each holder of a certificate of such class
unless the holder explicitly discloses on its federal income tax return that its
determination of the yield and maturity of such certificate is different from
that of the Tax Administrator.
In many cases, Regular Certificates will be subject to optional
redemption before their stated maturity dates. Under the OID Regulations, any
party entitled to redeem certificates will
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be presumed to exercise its option to redeem for purposes of computing the
accrual of original issue discount if, and only if, by using the optional
redemption date as the maturity date and the optional redemption price as the
stated redemption price at maturity, the yield to maturity of the certificates
is lower than it would be if the certificates were not redeemed early. If a
party entitled to do so is presumed to exercise its option to redeem the
certificates, original issue discount on such certificates will be calculated as
if the redemption date were the maturity date and the optional redemption price
were the stated redemption price at maturity. In cases in which all of the
certificates of a particular series are issued at par or at a discount, the
certificates will not be presumed to have been redeemed because a redemption
would not lower the yield to maturity of the certificates. If, however, some
certificates of a particular series are issued at a premium, a party entitled to
redeem certificates may be able to lower the yield to maturity of the
certificates by exercising its redemption option. In determining whether such a
party will be presumed to exercise its option to redeem certificates when one or
more classes of the certificates is issued at a premium, the Tax Administrator
will take into account all classes of certificates that are subject to the
possibility of optional redemption to the extent that they are expected to
remain outstanding as of the optional redemption date, based on the Pricing
Prepayment Assumptions. If, determined on a combined weighted average basis, the
certificates of such classes were issued at a premium, the Tax Administrator
will presume that a party entitled to redeem such certificates will exercise its
option to do so. However, the OID Regulations are unclear as to how the
redemption presumption rules should apply to instruments such as the
certificates, and there can be no assurance that the Service will agree with the
Tax Administrator's position.
Under the OID Regulations, the holder of a Regular Certificate
generally may make an All OID Election to include in gross income all stated
interest, original issue discount, de minimis original issue discount, market
discount, and de minimis market discount that accrues on such certificate
(reduced by any amortizable premium or acquisition premium on such certificate)
under the constant yield method used to account for original issue discount. To
make an All OID Election, the holder of the certificate must attach a statement
to its timely filed federal income tax return for the taxable year in which the
holder acquired the certificate. The statement must identify the instruments to
which the election applies. An All OID Election is irrevocable unless the holder
obtains the consent of the Service. If an All OID Election is made for a debt
instrument with market discount, the holder is deemed to have made an election
to include in income currently the market discount on all of the holder's other
debt instruments with market discount, as described below under "Federal Income
Tax Consequences -- REMIC certificates -- Tax Treatment of Regular Certificates
- -- Market Discount." In addition, if an All OID Election is made for a debt
instrument with amortizable premium, the holder is deemed to have made an
election to amortize the premium on all of the holder's other debt instruments
with amortizable premium under the constant yield method. See "Federal Income
Tax Consequences -- REMIC certificates -- Tax Treatment of Regular Certificates
- -- Amortizable Premium" in this prospectus. Certificateholders should be aware
that the law is unclear as to whether an All OID Election is effective for
Interest Weighted Certificates or Non-VRDI certificates. Interest Weighted
Certificates means a Regular Certificate, the payments on which consist entirely
or primarily of a specified nonvarying portion of the interest payable on one or
more of the assets held by the related series REMIC. Non-VDRI Certificates means
a NOWA Certificate, a Variable Rate
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Certificate that is issued at an Excess Premium, or any other Variable Rate
Certificate that does not qualify as a VRDI certificate. NOWA Certificate means
a Weighted Average Certificate relating to a trust, or a designated asset pool,
whose assets do not bear interest at qualified floating rates. Variable Rate
Certificate means a Regular Certificate that bears interest at a variable rate.
Weighted Average Certificate means a Regular Certificate that provides for
interest based on a weighted average of the interest rates on some or all of the
assets held by the REMIC. See "Federal Income Tax Consequences -- REMIC
certificates -- Tax Treatment of Regular Certificates -- Interest Weighted
Certificates and Non-VRDI certificates" in this prospectus.
A Regular Certificate having original issue discount may be acquired in
a transaction subsequent to its issuance for more than its adjusted issue price.
If the subsequent holder's adjusted basis in such a Regular Certificate,
immediately after its acquisition, exceeds the sum of all Deemed Principal
Payments to be received on the certificate after the acquisition date, the
certificate will no longer have original issue discount, and the holder may be
entitled to reduce the amount of interest income recognized on the certificate
by the amount of amortizable premium. See "Federal Income Tax Consequences --
REMIC certificates -- Tax Treatment of Regular Certificates -- Amortizable
Premium" in this prospectus. If the subsequent holder's adjusted basis in the
certificate immediately after the acquisition exceeds the adjusted issue price
of the certificate, but is less than or equal to the sum of the Deemed Principal
Payments to be received under the certificate after the acquisition date, the
amount of original issue discount on the certificate will be reduced by a
fraction, the numerator of which is the excess of the certificate's adjusted
basis immediately after its acquisition over the adjusted issue price of the
certificate and the denominator of which is the excess of the sum of all Deemed
Principal Payments to be received on the certificate after the acquisition date
over the adjusted issue price of the certificate. For that purpose, the adjusted
basis of a Regular Certificate generally is reduced by the amount of any
Qualified Stated Interest that is accrued but unpaid as of the acquisition date.
Alternatively, the subsequent purchaser of a Regular Certificate having original
issue discount may make an All OID Election with respect to the certificate.
If the First Distribution Period with respect to a
Regular Certificate contains more days than the number of days of stated
interest that are payable on the first distribution date, the effective interest
rate received by the holder of such certificate during the First Distribution
Period will be less than the certificate's stated interest rate, making such
certificate a Teaser Certificate. If the amount of original issue discount on
the Teaser Certificate measured under the expanded de minimis test described
above exceeds the de minimis amount of original issue discount allowable on the
certificate, the amount by which the stated interest on the certificate exceeds
the interest that would be payable on the certificate at the effective rate of
interest for the First Distribution Period would be treated as part of the
certificate's stated redemption price at maturity. Accordingly, the holder of a
Teaser Certificate may be required to recognize ordinary income arising from
original issue discount in addition to any Qualified Stated Interest that
accrues in a period. A Distribution Period is the interval between one
distribution date and the next distribution date. The First Distribution Period
is the interval between the closing date and its first distribution date.
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Similarly, if the First Distribution Period with respect to a Regular
Certificate is shorter than the interval between subsequent distribution dates,
and the holder of such certificate receives interest on the first distribution
date based on a full accrual period, the effective rate of interest payable on
such certificate during the First Distribution Period will be higher than the
stated rate of interest on such certificate, making such certificate a Rate
Bubble Certificate. A Rate Bubble Certificate that otherwise bears Qualified
Stated Interest would be issued with original issue discount unless the
Pre-Issuance Accrued Interest Rule applies or the amount of original issue
discount on the certificate is de minimis. Pre-Issuance Accrued Interest Rule
means the rule in the OID Regulations under which a certificate's issue price
may be computed by subtracting from the issue price the amount of Pre-Issuance
Accrued Interest on the certificate, and a portion of the interest received on
the first distribution date with respect to the certificate would be treated as
a return of Pre-Issuance Accrued Interest rather than as a payment on the
certificate, provided that a portion of the initial purchase price of the
certificate is allocable to Pre-Issuance Accrued Interest and the certificate
provides for a payment of stated interest on the first payment date within one
year of the issue date that equals or exceeds the amount of such Pre-Issuance
Accrued Interest. Pre-Issuance Accrued Interest means interest that has accrued
under the terms of a certificate prior to its issue date. The amount of original
issue discount on a Rate Bubble Certificate attributable to the First
Distribution Period would be the amount by which the interest payment due on the
first distribution date exceeds the amount that would have been payable had the
effective rate for that Period been equal to the stated interest rate. However,
if a portion of the initial purchase price of a Rate Bubble Certificate is
allocable to Pre-Issuance Accrued Interest and such certificate provides for a
payment of stated interest on the first payment date within one year of its
issue date that equals or exceeds the amount of such Pre-Issuance Accrued
Interest, the Tax Administrator will apply the Pre-Issuance Accrued Interest
Rule to such certificate. Under the Pre-Issuance Accrued Interest Rule, the Tax
Administrator will (i) subtract from the issue price of a Rate Bubble
Certificate an amount of Pre-Issuance Accrued Interest equal to the excess of
(a) the amount of stated interest paid on the certificate on the first
distribution date over (b) the portion of such interest that is economically
allocable to the period after the issue date, which generally should be an
amount equal to the stated interest rate on the certificate expressed as a daily
percentage times the number of days in the first payment period (i.e., from the
issue date to the first payment date) times the certificate's initial principal
amount and (ii) treat a portion of the interest received on the first
distribution date with respect to such certificate as a return of the
Pre-Issuance Accrued Interest excluded from the issue price of such certificate
rather than as a payment on the certificate. Thus, where the Pre-Issuance
Accrued Interest Rule applies, a Rate Bubble Certificate will not have original
issue discount attributable to the First Distribution Period, provided that the
increased effective interest rate for that Period is attributable solely to
Pre-Issuance Accrued Interest, as typically will be the case. The Tax
Administrator will apply the Pre-Issuance Accrued Interest Rule as described
above to each Rate Bubble Certificate for which it is available if the
certificate's stated interest otherwise would be Qualified Stated Interest. If,
however, the First Distribution Period for a Rate Bubble Certificate is longer
than subsequent Distribution Periods, the application of the Pre-Issuance
Accrued Interest Rule typically will not prevent disqualification of the
certificate's stated interest because its effective interest rate during the
First Distribution Period will be less than its stated interest rate. A Rate
Bubble Certificate is a Regular Certificate with an effective interest rate
higher during the certificate's
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First Distribution Period than during the remainder of its term. Thus, a Regular
Certificate with a long First Distribution Period typically will be a Teaser
Certificate, as discussed above. The Pre-Issuance Accrued Interest Rule will not
apply to any amount paid at issuance for such a Teaser Certificate that is
nominally allocable to interest accrued under the terms of such certificate
before its issue date. All amounts paid for such a Teaser Certificate at
issuance, regardless of how designated, will be included in the issue price of
such certificate for federal income tax accounting purposes.
It is not entirely clear how income should be accrued with respect to
Interest Weighted Certificates. Unless and until the Service provides contrary
administrative guidance on the income tax treatment of an Interest Weighted
Certificate, the Tax Administrator will take the position that an Interest
Weighted Certificate does not bear Qualified Stated Interest, and will account
for the income thereon as described in "Federal Income Tax Consequences -- REMIC
certificates -- Interest Weighted Certificates and Non-VRDI certificates" in
this prospectus. Some Interest Weighted Certificates may be certificates that
provide for a relatively small amount of principal and for interest that can be
expressed as Qualified Stated Interest at a very high fixed rate with respect to
principal ("Superpremium Certificates"). Superpremium Certificates technically
are issued with amortizable premium. However, because of their close similarity
to other Interest Weighted Certificates it appears more appropriate to account
for Superpremium Certificates in the same manner as for other Interest Weighted
Certificates. Consequently, in the absence of further administrative guidance,
the Tax Administrator will account for Superpremium Certificates in the same
manner as other Interest Weighted Certificates. However, there can be no
assurance that the Service will not assert a position contrary to that taken by
the Tax Administrator, and, therefore, holders of Superpremium Certificates
should consider making a protective election to amortize premium on such
certificates.
In view of the complexities and current uncertainties as to the manner
of inclusion in income of original issue discount on the Regular Certificates,
each investor should consult its own tax advisor to determine the appropriate
amount and method of inclusion in income of original issue discount on such
certificates for federal income tax purposes.
VARIABLE RATE CERTIFICATES
Under the OID Regulations, a Variable Rate Certificate will qualify as
a VRDI certificate only if (i) the certificate is not issued at an Excess
Premium; (ii) stated interest on the certificate compounds or is payable
unconditionally at least annually at (a) one or more qualified floating rates,
(b) a single fixed rate and one or more qualified floating rates, (c) a single
objective rate, or (d) a single fixed rate and a single objective rate that is a
qualified inverse floating rate; and (iii) the qualified floating rate or the
objective rate in effect during an accrual period is set at a current value of
that rate (i.e., the value of the rate on any day occurring during the interval
that begins three months prior to the first day on which that value is in effect
under the certificate and ends one year following that day). VRDI certificates
are subject to the rules applicable to variable rate debt instruments as defined
in section 1.1275-5 of the OID Regulations ("VRDIs"). VRDIs in the OID
Regulations that are described below. Excess
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Premium means, with respect to a Regular Certificate, a premium over the
certificate's noncontingent principal amount in excess of the lesser of (1) .015
multiplied by the product of such noncontingent principal amount and the WAM of
the certificate or (2) 15% of such noncontingent principal amount.
Under the OID Regulations, a rate is a qualified floating rate if
variations in the rate reasonably can be expected to measure contemporaneous
variations in the cost of newly borrowed funds in the currency in which the debt
instrument is denominated. A qualified floating rate may measure contemporaneous
variations in borrowing costs for the issuer of the debt instrument or for
issuers in general. A multiple of a qualified floating rate is considered a
qualified floating rate only if the rate is equal to either (a) the product of a
qualified floating rate and a fixed multiple that is greater than 0.65 but not
more than 1.35 or (b) the product of a qualified floating rate and a fixed
multiple that is greater than 0.65 but not more than 1.35, increased or
decreased by a fixed rate. If a Regular Certificate provides for two or more
qualified floating rates that reasonably can be expected to have approximately
the same values throughout the term of such certificate, the qualified floating
rates together will constitute a single qualified floating rate. Two or more
qualified floating rates conclusively will be presumed to have approximately the
same values throughout the term of a certificate if the values of all rates on
the issue date of such certificate are within 25 basis points of each other.
A variable rate will be considered a qualified floating rate if it is
subject to a Cap, Floor, Governor, or other similar restriction only if: (a) the
Cap, Floor, or Governor is fixed throughout the term of the related certificate
or (b) the Cap, Floor, Governor, or similar restriction is not reasonably
expected, as of the issue date, to cause the yield on the certificate to be
significantly less or significantly more than the expected yield on such
certificate determined without such Cap, Floor, Governor, or similar
restriction, as the case may be. Although the OID Regulations are unclear, it
appears that a VRDI certificate, the principal rate on which is subject to a
Cap, Floor, or Governor that itself is a qualified floating rate, bears interest
at an objective rate.
A Cap is a restriction or restrictions on the maximum stated interest
rate on a certificate. A Floor is a restriction or restrictions on the minimum
stated interest rate on a certificate. A Governor is a restriction or
restrictions on the amount of increase or decrease in the stated interest rate
on a certificate on any interest adjustment date.
An objective rate is a rate, other than a qualified floating rate, that
(i) is determined using a single fixed formula, (ii) is based on objective
financial or economic information, and (iii) is not based on information that
either is within the control of the issuer (or a related party) or is unique to
the circumstances of the issuer (or related party), such as dividends, profits,
or the value of the issuer's (or related party's) stock. That definition would
include, in addition to a rate that is based on one or more qualified floating
rates or on the yield of actively traded personal property, a rate that is based
on changes in a general inflation index. In addition, a rate would not fail to
be an objective rate merely because it is based on the credit quality of the
issuer.
Under the OID Regulations, if interest on a certificate is stated at a
fixed rate for an initial period of less than one year followed by a variable
rate that is either a qualified floating rate or an
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objective rate for a subsequent period, and the value of the variable rate on
the issue date is intended to approximate the fixed rate, the fixed rate and the
variable rate together constitute a single qualified floating rate or objective
rate. A variable rate conclusively will be presumed to approximate an initial
fixed rate if the value of the variable rate on the issue date does not differ
from the value of the fixed rate by more than 25 basis points.
Under the OID Regulations, all interest payable on a Single Rate VRDI
Certificate is treated as Qualified Stated Interest. Single Rate VRDI
Certificate means a VRDI certificate that provides for stated interest
unconditionally payable in cash or property at least annually at a single
qualified floating rate or a single objective rate. The amount and accrual of
OID on a Single Rate VRDI Certificate is determined, in general, by converting
such certificate into a hypothetical fixed rate certificate and applying the
rules applicable to fixed rate certificates described under "Federal Income Tax
Consequences -- REMIC certificates -- Original Issue Discount" in this
prospectus to such hypothetical fixed rate certificate. Qualified Stated
Interest or original issue discount allocable to an accrual period with respect
to a Single Rate VRDI Certificate also must be increased (or decreased) if the
interest actually accrued or paid during such accrual period exceeds (or is less
than) the interest assumed to be accrued or paid during such accrual period
under the related hypothetical equivalent fixed rate certificate.
Except as provided below, the amount and accrual of OID on a Multiple
Rate VRDI Certificate is determined by converting such certificate into a
hypothetical equivalent fixed rate certificate that has terms that are identical
to those provided under the Multiple Rate VRDI Certificate, except that such
hypothetical equivalent fixed rate certificate will provide for fixed rate
substitutes in lieu of the qualified floating rates or objective rate provided
for under the Multiple Rate VRDI Certificate. A Multiple Rate VRDI Certificate
is a VRDI certificate that does not qualify as a Single Rate VRDI Certificate. A
Multiple Rate VRDI Certificate providing for a qualified floating rate or rates
or a qualified inverse floating rate is converted to a hypothetical equivalent
fixed rate certificate by assuming that each qualified floating rate or the
qualified inverse floating rate will remain at its value as of the issue date. A
Multiple Rate VRDI Certificate providing for an objective rate or rates is
converted to a hypothetical equivalent fixed rate certificate by assuming that
each objective rate will equal a fixed rate that reflects the yield that
reasonably is expected for such Multiple Rate VRDI Certificate. Qualified Stated
Interest or original issue discount allocable to an accrual period with respect
to a Multiple Rate VRDI Certificate must be increased (or decreased) if the
interest actually accrued or paid during such accrual period exceeds (or is less
than) the interest assumed to be accrued or paid during such accrual period
under the related hypothetical equivalent fixed rate certificate.
Under the OID Regulations, the amount and accrual of OID on a Multiple
Rate VRDI Certificate that provides for stated interest at either one or more
qualified floating rates or at a qualified inverse floating rate and in addition
provides for stated interest at a single fixed rate (other than an initial fixed
rate that is intended to approximate the subsequent variable rate), is
determined using the method described in the preceding paragraph except that
prior to its conversion to a hypothetical equivalent fixed rate certificate,
such Multiple Rate VRDI Certificate is treated as if it provided for a qualified
floating rate or a qualified inverse floating rate rather than the fixed rate
during the period in which the fixed rate applies. The qualified
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floating rate or qualified inverse floating rate replacing the fixed rate must
be such that the fair market value of the Multiple Rate VRDI Certificate as of
its issue date would be approximately the same as the fair market value of an
otherwise identical debt instrument that provides for the qualified floating
rate or qualified inverse floating rate, rather than the fixed rate.
It is not entirely clear how income should be accrued with respect to
Weighted Average Certificates. Under the OID Regulations, Weighted Average
Certificates relating to a trust, or a designated asset pool in the trust, whose
assets are exclusively Adjustable Rate Assets appear to bear interest at an
objective rate provided the Adjustable Rate Assets themselves bear interest at
qualified floating rates. However, Weighted Average Certificates relating to a
trust or a designated asset pool thereof whose assets do not bear interest at
qualified floating rates (i.e., NOWA Certificates), do not bear interest at an
objective or a qualified floating rate and, consequently, do not qualify as VRDI
certificates described above. Accordingly, unless and until the Service provides
contrary administrative guidance on the income tax treatment of NOWA
Certificates, the Tax Administrator will treat such certificates as debt
obligations that provide for one or more contingent payments, and will account
for the income thereon as described in "Federal Income Tax Consequences -- REMIC
certificates -- Interest Weighted Certificates and Non-VRDI certificates" in
this prospectus.
Under the OID Regulations, Inverse Floater Certificates generally bear
interest at objective rates because their rates either constitute qualified
inverse floating rates under those Regulations or, although not qualified
floating rates themselves, are based on one or more qualified floating rates. An
Inverse Floater Certificate is a Regular Certificate that provides for the
payment of interest at a rate determined as the difference between two interest
rate parameters, one of which is a variable rate and the other of which is a
fixed rate or a different variable rate. Consequently, if such certificates are
not issued at an Excess Premium and their interest rates otherwise meet the test
for Qualified Stated Interest, the income on such certificates will be accounted
for under the rules applicable to VRDI certificates described above. However, an
Inverse Floater Certificate may have an interest rate parameter equal to the
weighted average of the interest rates on some or all of the assets of the
related trust, or designated asset pool in the trust, in a case where one or
more of the interest rates on such assets is a fixed rate or otherwise may not
qualify as a VRDI certificate. Unless and until the Service provides contrary
administrative guidance on the income tax treatment of such Inverse Floater
Certificates, the Tax Administrator will treat such certificates as debt
obligations that provide for one or more contingent payments, and will account
for the income thereon as described in "Federal Income Tax Consequences -- REMIC
certificates -- Interest Weighted Certificates and Non-VRDI certificates" in
this prospectus.
INTEREST WEIGHTED CERTIFICATES AND NON-VRDI CERTIFICATES
The treatment of a NOWA Certificate, a Variable Rate Certificate that
is issued at an Excess Premium, any other Variable Rate Certificate that does
not qualify as a VRDI certificate (each a Non-VRDI certificate) or an Interest
Weighted Certificate is unclear under current law. The OID Regulations contain
provisions (the "Contingent Payment Regulations") that address
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the federal income tax treatment of debt obligations that provide
for one or more contingent payments ("Contingent Payment Obligations").
Under the Contingent Payment Regulations, any variable rate debt
instrument that is not a VRDI is classified as a Contingent Payment Obligation.
However, the Contingent Payment Regulations, by their terms, do not apply to
REMIC regular interests and other instruments that are subject to section
1272(a)(6) of the Code. In the absence of further guidance, the Tax
Administrator will account for Non-VRDI certificates, Interest Weighted
Certificates, and other Regular Certificates that are Contingent Payment
Obligations in accordance with Code section 1272(a)(6) and the accounting
methodology described in this paragraph. Income will be accrued on such
certificates based on a constant yield that is derived from a projected payment
schedule as of the closing date. The projected payment schedule will take into
account the Pricing Prepayment Assumptions and the interest payments that are
expected to be made based on the value of any relevant indices on the issue
date. To the extent that actual payments differ from projected payments for a
particular taxable year, appropriate adjustments to interest income and expense
accruals will be made for that year. In the case of a Weighted Average
Certificate, the projected payment schedule will be derived based on the
assumption that the principal balances of the assets that collateralize the
certificate pay down pro rata.
The method described in the foregoing paragraph for accounting for
Interest Weighted Certificates, Non-VRDI certificates, and any other Regular
Certificates that are Contingent Payment Obligations is consistent with Code
section 1272(a)(6) and the legislative history thereto. Because of the
uncertainty with respect to the treatment of such certificates under the OID
Regulations, however, there can be no assurance that the Service will not assert
successfully that a method less favorable to certificateholders should apply. In
view of the complexities and the current uncertainties as to income inclusions
with respect to Non-VRDI certificates, Interest Weighted Certificates and any
other Regular Certificates that are Contingent Payment obligations, each
investor should consult his own tax advisor to determine the appropriate amount
and method of income inclusion on such certificates for federal income tax
purposes.
ANTI-ABUSE RULE
Concerned that taxpayers might be able to structure debt instruments or
transactions, or apply the bright-line or mechanical rules of the OID
Regulations, in a way that produces unreasonable tax results, the Treasury
issued regulations containing an anti-abuse rule. These regulations provide that
if a principal purpose in structuring a debt instrument, engaging in a
transaction, or applying the OID Regulations is to achieve a result that is
unreasonable in light of the purposes of the applicable statutes, the Service
can apply or depart from the OID Regulations as necessary or appropriate to
achieve a reasonable result. A result is not considered unreasonable under the
regulations, however, in the absence of a substantial effect on the present
value of a taxpayer's tax liability.
MARKET DISCOUNT
A subsequent purchaser of a Regular Certificate at a discount from its
outstanding principal amount (or, in the case of a Regular Certificate having
original issue discount, its
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"adjusted issue price") will acquire such certificate with market discount. The
purchaser generally will be required to recognize the market discount (in
addition to any original issue discount remaining with respect to the
certificate) as ordinary income. A person who purchases a Regular Certificate at
a price lower than the remaining outstanding Deemed Principal Payments but
higher than its adjusted issue price does not acquire the certificate with
market discount, but will be required to report original issue discount,
appropriately adjusted to reflect the excess of the price paid over the adjusted
issue price. See "Federal Income Tax Consequences -- REMIC certificates --
Original Issue Discount" in this prospectus. A Regular Certificate will not be
considered to have market discount if the amount of such market discount is de
minimis, i.e., less than the product of (i) 0.25% of the remaining principal
amount (or, in the case of a Regular Certificate having original issue discount,
the adjusted issue price of such certificate), multiplied by (ii) the WAM of the
certificate remaining after the date of purchase. Regardless of whether the
subsequent purchaser of a Regular Certificate with more than a de minimis amount
of market discount is a cash-basis or accrual-basis taxpayer, market discount
generally will be taken into income as principal payments (including, in the
case of a Regular Certificate having original issue discount, any Deemed
Principal Payments) are received, in an amount equal to the lesser of (i) the
amount of the principal payment received or (ii) the amount of market discount
that has accrued, but that has not yet been included in income. The purchaser
may make a Current Recognition Election, which generally will apply to all
market discount instruments held or acquired by the purchaser in the taxable
year of election or thereafter, to recognize market discount currently on an
uncapped accrual basis. A Current Recognition Election is the election under
section 1278(b) of the Code to recognize market discount on a debt instrument
currently on an uncapped accrual basis. The Service has indicated in Revenue
Procedure 92-67 the manner in which a Current Recognition Election may be made.
The purchaser also may make an All OID Election with respect to a Regular
Certificate purchased with market discount. See "Federal Income Tax Consequences
- -- REMIC certificates -- Original Issue Discount" in this prospectus.
Until the Treasury promulgates applicable regulations, the purchaser of
a Regular Certificate with market discount generally may elect to accrue the
market discount either: (i) on the basis of a constant interest rate; (ii) in
the case of a Regular Certificate not issued with original issue discount, in
the ratio of stated interest payable in the relevant period to the total stated
interest remaining to be paid from the beginning of such period; or (iii) in the
case of a Regular Certificate issued with original issue discount, in the ratio
of original issue discount accrued for the relevant period to the total
remaining original issue discount at the beginning of such period. The Service
indicated in Revenue Procedure 92-67 the manner in which an election may be made
to accrue market discount on a Regular Certificate on the basis of a constant
interest rate. Regardless of which computation method is elected, the Pricing
Prepayment Assumptions must be used to calculate the accrual of market discount.
A certificateholder who has acquired any Regular Certificate with
market discount generally will be required to treat a portion of any gain on a
sale or exchange of the certificate as ordinary income to the extent of the
market discount accrued to the date of disposition under one of the foregoing
methods, less any accrued market discount previously reported as ordinary income
as partial principal payments were received. Moreover, such certificateholder
generally
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must defer interest deductions attributable to any indebtedness incurred or
continued to purchase or carry the certificate to the extent they exceed income
on the certificate. Any such deferred interest expense, in general, is allowed
as a deduction not later than the year in which the related market discount
income is recognized. If a holder of a Regular Certificate makes a Current
Recognition Election or an All OID Election, the interest deferral rule will not
apply. Under the Contingent Payment Regulations, a secondary market purchaser of
a Non-VRDI certificate or an Interest Weighted Certificate at a discount
generally would continue to accrue interest and determine adjustments on such
certificate based on the original projected payment schedule devised by the
issuer of such certificate. See "Federal Income Tax Consequences -- REMIC
certificates -- Original Issue Discount -- Interest Weighted Certificates and
Non-VRDI certificates" in this prospectus. The holder of such a certificate
would be required, however, to allocate the difference between the adjusted
issue price of the certificate and its basis in the certificate as positive
adjustments to the accruals or projected payments on the certificate over the
remaining term of the certificate in a manner that is reasonable (e.g., based on
a constant yield to maturity).
Treasury regulations implementing the market discount rules have not
yet been issued, and uncertainty exists with respect to many aspects of those
rules. For example, the treatment of a Regular Certificate subject to optional
redemption that is acquired at a market discount is unclear. It appears likely,
however, that the market discount rules applicable in such a case would be
similar to the rules pertaining to original issue discount. Due to the
substantial lack of regulatory guidance with respect to the market discount
rules, it is unclear how those rules will affect any secondary market that
develops for a given class of Regular Certificates. Prospective investors in
Regular Certificates should consult their own tax advisors regarding the
application of the market discount rules to those certificates.
AMORTIZABLE PREMIUM
A purchaser of a Regular Certificate who purchases the certificate at a
premium over the total of its Deemed Principal Payments may elect to amortize
such premium under a constant yield method that reflects compounding based on
the interval between payments on the certificates. The legislative history of
the 1986 Act indicates that premium is to be accrued in the same manner as
market discount. Accordingly, it appears that the accrual of premium on a
Regular Certificate will be calculated using the Pricing Prepayment Assumptions.
Under Treasury regulations, amortized premium generally would be treated as an
offset to interest income on a Regular Certificate and not as a separate
deduction item. If a holder makes an election to amortize premium on a Regular
Certificate, such election will apply to all taxable debt instruments (including
all REMIC regular interests) held by the holder at the beginning of the taxable
year in which the election is made, and to all taxable debt instruments acquired
thereafter by such holder, and will be irrevocable without the consent of the
Service. Purchasers who pay a premium for the Regular Certificates should
consult their tax advisors regarding the election to amortize premium and the
method to be employed.
Amortizable premium on a Regular Certificate that is subject to
redemption at the option of Oakwood Mortgage generally must be amortized as if
the optional redemption price and date
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were the certificate's principal amount and maturity date if doing so would
result in a smaller amount of premium amortization during the period ending with
the optional redemption date. Thus, a certificateholder would not be able to
amortize any premium on a Regular Certificate that is subject to optional
redemption at a price equal to or greater than the certificateholder's
acquisition price unless and until the redemption option expires. In cases where
premium must be amortized on the basis of the price and date of an optional
redemption, the certificate will be treated as having matured on the redemption
date for the redemption price and then having been reissued on that date for
that price. Any premium remaining on the certificate at the time of the deemed
reissuance will be amortized on the basis of (i) the original principal amount
and maturity date or (ii) the price and date of any succeeding optional
redemption, under the principles described above. Under the Contingent Payment
Regulations, a secondary market purchaser of a Non-VRDI certificate or an
Interest Weighted Certificate at a premium generally would continue to accrue
interest and determine adjustments on such certificate based on the original
projected payment schedule devised by the issuer of such certificate. See
"Federal Income Tax Consequences -- REMIC certificates -- Interest Weighted
Certificates and Non-VRDI certificates" in this prospectus. The holder of such a
certificate would be required, however, to allocate the difference between its
basis in the certificate and the adjusted issue price of the certificate as
negative adjustments to the accruals or projected payments on the certificate
over the remaining term of the certificate in a manner that is reasonable (e.g.,
based on a constant yield to maturity).
CONSEQUENCES OF REALIZED LOSSES
Under section 166 of the Code, both corporate holders of Regular
Certificates and noncorporate holders that acquire Regular Certificates in
connection with a trade or business should be allowed to deduct, as ordinary
losses, any losses sustained during a taxable year in which their Regular
Certificates become wholly or partially worthless as the result of one or more
Realized Losses on the underlying assets. However, a noncorporate holder that
does not acquire a Regular Certificate in connection with its trade or business
will not be entitled to deduct a loss under Code section 166 until its Regular
Certificate becomes wholly worthless (i.e., until its outstanding principal
balance has been reduced to zero), and the loss will be characterized as
short-term capital loss.
Each holder of a Regular Certificate will be required to accrue
original issue discount income with respect to such certificate without giving
effect to any reduction in distributions attributable to a default or
delinquency on the underlying assets until a Realized Loss is allocated to such
certificate or until such earlier time as it can be established that any such
reduction ultimately will not be recoverable. As a result, the amount of
original issue discount reported in any period by the holder of a Regular
Certificate could exceed significantly the amount of economic income actually
realized by the holder in such period. Although the holder of a Regular
Certificate eventually will recognize a loss or a reduction in income
attributable to previously included original issue discount that, as a result of
a Realized Loss, ultimately will not be realized, the law is unclear with
respect to the timing and character of such loss or reduction in income.
Accordingly, holders of Regular Certificates should consult with their own tax
advisors
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with respect to the federal income tax consequences of Realized Losses on
original issue discount.
The Tax Administrator will adjust the accrual of original issue discount on
Regular Certificates in a manner that it believes to be appropriate to reflect
Realized Losses. However, there can be no assurance that the Service will not
contend successfully that a different method of accounting for the effect of
Realized Losses is correct and that such method will not have an adverse effect
upon the holders of Regular Certificates.
Gain or Loss on Disposition
If a Regular Certificate is sold, the certificateholder will recognize gain
or loss equal to the difference between the amount realized on the sale and his
adjusted basis in the certificate. The adjusted basis of a Regular Certificate
generally will equal the cost of the certificate to the certificateholder,
increased by any original issue discount or market discount previously
includible in the certificateholder's gross income with respect to the
certificate, and reduced by the portion of the basis of the certificate
allocable to payments on the certificate (other than Qualified Stated Interest)
previously received by the certificateholder and by any amortized premium.
Similarly, a certificateholder who receives a scheduled or prepaid principal
payment with respect to a Regular Certificate will recognize gain or loss equal
to the difference between the amount of the payment and the allocable portion of
his adjusted basis in the certificate. Except to the extent that the market
discount rules apply and except as provided below, any gain or loss on the sale
or other disposition of a Regular Certificate generally will be capital gain or
loss. Such gain or loss will be long-term gain or loss if the certificate is
held as a capital asset for the applicable long-term capital gain holding
period.
If the holder of a Regular Certificate is a bank, thrift, or similar
institution described in section 582 of the Code, any gain or loss on the sale
or exchange of such certificate will be treated as ordinary income or loss. In
the case of other types of holders, gain from the disposition of a Regular
Certificate that otherwise would be capital gain will be treated as ordinary
income to the extent that the amount actually includible in income with respect
to the certificate by the certificateholder during his holding period is less
than the amount that would have been includible in income if the yield on that
certificate during the holding period had been 110% of a specified U.S. Treasury
borrowing rate as of the date that the certificateholder acquired the
certificate. Although the legislative history to the 1986 Act indicates that the
portion of the gain from disposition of a Regular Certificate that will be
recharacterized as ordinary income is limited to the amount of original issue
discount (if any) on the certificate that was not previously includible in
income, the applicable Code provision contains no such limitation.
A portion of any gain from the sale of a Regular Certificate that might
otherwise be capital gain may be treated as ordinary income to the extent that
such certificate is held as part of a conversion transaction within the meaning
of section 1258 of the Code. A conversion transaction generally is one in which
the taxpayer has taken two or more positions in certificates or similar property
that reduce or eliminate market risk, if substantially all of the taxpayer's
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return is attributable to the time value of the taxpayer's net investment in
such transaction. The amount of gain realized in a conversion transaction that
is recharacterized as ordinary income generally will not exceed the amount of
interest that would have accrued on the taxpayer's net investment at 120% of
the appropriate applicable federal rate (which rate is computed and published
monthly by the Service) at the time the taxpayer entered into the conversion
transaction, subject to appropriate reduction for prior inclusion of interest
and other ordinary income from the transaction.
Currently, the highest marginal individual income tax bracket is 39.6%. The
alternative minimum tax rate for individuals is 26% with respect to alternative
minimum tax income up to $175,000 and 28% with respect to alternative minimum
tax income over $175,000. The highest marginal federal tax rate applicable to
individuals with respect to net capital gain on assets held for one year or less
generally is 28%. Accordingly, there can be a significant marginal tax rate
differential between net capital gains and ordinary income for individuals. The
highest marginal corporate tax rate is 35% for corporate taxable income over $10
million, and the marginal tax rate on corporate net capital gains is 35%.
Tax Treatment of Residual Certificates
Overview
A Residual Certificate will represent beneficial ownership of a percentage
of the residual interest in the series REMIC to which it relates, and a Regular
Certificate generally will represent beneficial ownership of a percentage of a
regular interest in the series REMIC to which it relates. A REMIC is an entity
for federal income tax purposes consisting of a fixed pool of mortgages
(including manufactured housing installment sales contracts) or other
mortgage-backed assets in which investors hold multiple classes of interests. To
be treated as a REMIC, the trust, or a segregated asset pool in the trust,
underlying a series must meet certain continuing qualification requirements, and
a REMIC election must be in effect. See "Federal Income Tax Consequences --
REMIC certificates -- REMIC Qualification" in this prospectus . A REMIC
generally is treated as a pass-through entity for federal income tax purposes,
i.e., as not subject to entity-level tax. All interests in a REMIC other than
the residual interest must be regular interests. As described in "Federal Income
Tax Consequences -- REMIC certificates -- Tax Treatment of Regular Certificates"
in this prospectus, a regular interest has terms analogous to those of a debt
instrument and generally is treated as a debt instrument for all federal income
tax purposes. The Regular Certificates will generate interest and, depending
upon the issue price of the Regular Certificates, original issue discount
deductions or income attributable to premium for the related series REMIC. As a
residual interest, a Residual Certificate represents the right to (i) the stated
principal and interest on such certificate, if any, and (ii) such certificate's
pro rata share of the income generated by the related series REMIC's assets in
excess of the amount necessary to service that REMIC's regular interests and pay
that REMIC's expenses.
In a manner similar to that employed in the taxation of partnerships, REMIC
taxable income or loss will be determined at the REMIC level, but passed through
to the Residual Certificateholders. Thus, REMIC taxable income or loss will be
allocated pro rata to the related
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Residual Certificateholders, and each such certificateholder will report his
share of REMIC taxable income or loss on his own federal income tax return.
Prospective investors in Residual Certificates should be aware that the
obligation to account for the related series REMIC's income or loss will
continue until all of that REMIC's Regular Certificates have been retired, which
may not occur until well beyond the date on which the last payments on Residual
Certificates are made. In addition, because of the way in which REMIC taxable
income is calculated, a Residual Certificateholder may recognize phantom income
(i.e., income recognized for tax purposes in excess of income as determined
under financial accounting or economic principles) which will be matched in
later years by a corresponding tax loss or reduction in taxable income, but
which could lower the yield to Residual Certificateholders due to the lower
present value of such loss or reduction.
A portion of the income of a Residual Certificateholder may be treated
unfavorably in three contexts: (i) it may not be offset by current or net
operating loss deductions; (ii) it will be considered unrelated business taxable
income as defined in the Code ("UBTI"). UBTI to tax-exempt entities; and (iii)
it is ineligible for any statutory or treaty reduction in the 30% withholding
tax otherwise available to a foreign Residual Certificateholder.
The concepts presented in this overview are discussed more fully below.
Taxation of Residual Certificateholders
A Residual Certificateholder will recognize his share of the related series
REMIC's taxable income or loss for each day during his taxable year on which he
holds the Residual Certificate. The amount so recognized will be characterized
as ordinary income or loss and will not be taxed separately to the series REMIC.
If a Residual Certificate is transferred during a calendar quarter, REMIC
taxable income or loss for that quarter will be prorated between the transferor
and the transferee on a daily basis.
A REMIC generally determines its taxable income or loss in a manner similar
to that of an individual using a calendar year and the accrual method of
accounting. A REMIC's taxable income or loss generally will be characterized as
ordinary income or loss, and will consist of the REMIC's gross income, including
interest, original issue discount, and market discount income, if any, on the
REMIC's assets (including temporary cash flow investments), premium amortization
on the REMIC's Regular Certificates, income from foreclosure property, and any
cancellation of indebtedness income due to the allocation of realized losses to
the REMIC's Regular Certificates, reduced by the REMIC's deductions, including
deductions for interest and original issue discount expense on the REMIC's
Regular Certificates, premium amortization and servicing fees with respect to
the REMIC's assets, the administrative expenses of the REMIC and the Regular
Certificates, any tax imposed on the REMIC's income from foreclosure property,
and any bad debt deductions with respect to the related assets. The REMIC may
not take into account any items allocable to a prohibited transaction. See
"Federal Income Tax Consequences -- REMIC certificates -- REMIC-Level Taxes" in
this prospectus. The deduction of REMIC expenses by Residual Certificateholders
who are individuals is subject to certain limitations as described below in
"Federal Income Tax Consequences -- REMIC certificates --
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Special Considerations for Certain Types of Investors -- Individuals and
Pass-Through Entities" in this prospectus.
The amount of the REMIC's net loss with respect to a calendar quarter that
may be deducted by a Residual Certificateholder is limited to such
certificateholder's adjusted basis in the Residual Certificate as of the end of
that quarter (or time of disposition of the Residual Certificate, if earlier),
determined without taking into account the net loss for that quarter. A Residual
Certificateholder's basis in its Residual Certificate initially is equal to the
price paid for such certificate. Such basis is increased by the amount of
taxable income of the REMIC reportable by the Residual Certificateholder with
respect to the Residual Certificate and decreased (but not below zero) by the
amount of distributions made and the amount of net losses recognized with
respect to that certificate. The amount of the REMIC's net loss allocable to a
Residual Certificateholder that is disallowed under the basis limitation may be
carried forward indefinitely, but may be used only to offset income with respect
to the related Residual Certificate. The ability of Residual Certificateholders
to deduct net losses with respect to a Residual Certificate may be subject to
additional limitations under the Code, as to which certificateholders should
consult their tax advisors. A distribution with respect to a Residual
Certificate is treated as a non-taxable return of capital up to the amount of
the Residual Certificateholder's adjusted basis in his Residual Certificate. If
a distribution exceeds the adjusted basis of the Residual Certificate, the
excess is treated as gain from the sale of such Residual Certificate.
Although the law is unclear in certain respects, a Residual
Certificateholder effectively should be able to recover some or all of the basis
in his Residual Certificate as the related REMIC recovers the basis of its
assets through either the amortization of premium on such assets or the
allocation of basis to principal payments received on such assets. A REMIC's
initial aggregate basis in its assets generally will equal the sum of the issue
prices of its Regular Certificates and Residual Certificates. In general, the
issue price of a Regular Certificate of a particular class is the initial price
at which a substantial amount of the certificates of such class is sold to the
public. In the case of a Regular Certificate of a class not offered to the
public in substantial amounts, the issue price is either the price paid by the
first purchaser of such certificate or the fair market value of the property
received in exchange for such certificate, as appropriate. The REMIC's aggregate
basis will be allocated among its assets in proportion to their respective fair
market values.
The assets of certain series REMICs may have bases that exceed their
principal amounts. Except as indicated in "Federal Income Tax Consequences --
REMIC certificates -- Treatment by the REMIC of Original Issue Discount, Market
Discount, and Amortizable Premium" in this prospectus, the premium on such
assets will be amortizable under the constant yield method and the same
prepayment assumptions used in pricing the certificates. The amortized premium
will reduce the REMIC's taxable income or increase its tax loss for each year,
which will offset a corresponding amount of the stated interest or other
residual cash flow, if any, allocable to the Residual Certificateholders. It
should be noted, however, that the law concerning the amortization of premium on
assets is unclear in certain respects. If the Service were to contend
successfully that part or all of the premium on the assets underlying a REMIC is
not amortizable,
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the holders of the Residual Certificates in such REMIC would recover the
basis attributable to the unamortizable premium only as principal payments are
received on such assets or upon the disposition or worthlessness of their
Residual Certificates. The inability to amortize part or all of the premium
could give rise to timing differences between the REMIC's income and deductions,
creating phantom income.
In the first years after the issuance of the Regular Certificates, REMIC
taxable income may include significant amounts of phantom income. Phantom income
arises from timing differences between income on the underlying assets and
deductions on the Regular Certificates that result from the multiple-class
structure of the certificates. Since phantom income will arise from timing
differences between income and deductions, it will be matched by a corresponding
loss or reduction in taxable income in later years, during which economic or
financial income will exceed REMIC taxable income. Any acceleration of taxable
income, however, could lower the yield to a Residual Certificateholder, since
the present value of the tax paid on that income will exceed the present value
of the corresponding tax reduction in the later years. The amount and timing of
any phantom income are dependent upon (i) the structure of the particular REMIC
and (ii) the rate of prepayment on the assets held by the REMIC and, therefore,
cannot be predicted without reference to a particular REMIC.
The assets of certain series REMICs may have bases that are less than their
principal amounts. In such a case, a Residual Certificateholder will recover the
basis in his Residual Certificate as the REMIC recovers the portion of its basis
in the assets that is attributable to the residual interest. The REMIC's basis
in the assets is recovered as it is allocated to principal payments received by
the REMIC.
A portion of a series REMIC's taxable income may be subject to special
treatment. That portion (known as "excess inclusion income") generally is any
taxable income beyond that which the Residual Certificateholder would have
recognized had the Residual Certificate been a conventional debt instrument
bearing interest at 120% of the applicable long-term federal rate (based on
quarterly compounding) as of the date on which the Residual Certificate was
issued. Excess inclusion income generally is intended to approximate phantom
income and may result in unfavorable tax consequences for certain investors. See
"Federal Income Tax Consequences -- REMIC certificates -- Tax Treatment of
Residual Certificates -- Limitations on Offset or Exemption of REMIC Income" and
" -- Special Considerations for Certain Types of Investors" in this prospectus.
Limitations on Offset or Exemption of REMIC Income
Generally, a Residual Certificateholder's taxable income for any taxable
year may not be less than such certificateholder's excess inclusion income for
that taxable year. Excess inclusion income is equal to the excess of REMIC
taxable income for the quarterly period for the Residual Certificates over the
product of (i) 120% of the long-term applicable federal rate that would have
applied to the Residual Certificates if they were debt instruments for federal
income tax purposes on the closing date and (ii) the adjusted issue price of
such Residual Certificates at the beginning of such quarterly period. For this
purpose, the adjusted issue price of a Residual Certificate at
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the beginning of a quarter is the issue price of the Residual Certificate,
increased by the amount of the daily accruals of REMIC income for all prior
quarters, and decreased by any distributions made with respect to such Residual
Certificate prior to the beginning of such quarterly period. If the Residual
Certificateholder is an organization subject to the tax on UBTI imposed by Code
section 511, the Residual Certificateholder's excess inclusion income will be
treated as UBTI. In addition, under Treasury regulations yet to be issued, if a
REIT or a RIC owns a Residual Certificate that generates excess inclusion
income, a pro rata portion of the dividends paid by the REIT or the RIC
generally will constitute excess inclusion income for their shareholders.
Finally, Residual Certificateholders who are foreign persons will not be
entitled to any exemption from the 30% withholding tax or a reduced treaty rate
with respect to their excess inclusion income from the REMIC. See "Federal
Income Tax Consequences -- REMIC certificates -- Taxation of Certain Foreign
Holders of REMIC certificates -- Residual Certificates" in this prospectus.
Non-Recognition of Certain Transfers for Federal Income Tax Purposes
In addition to the limitations specified above, the REMIC provisions of the
Code provide that the transfer of a noneconomic residual interest to a United
States person will be disregarded for tax purposes if a significant purpose of
the transfer was to impede the assessment or collection of tax. A Residual
Certificate will constitute a noneconomic residual interest unless, at the time
the interest is transferred, (i) the present value of the expected future
distributions with respect to the Residual Certificate equals or exceeds the
product of the present value of the anticipated excess inclusion income and the
highest corporate tax rate for the year in which the transfer occurs, and (ii)
the transferor reasonably expects that the transferee will receive distributions
from the REMIC in amounts sufficient to satisfy the taxes on excess inclusion
income as they accrue. If a transfer of a residual interest is disregarded, the
transferor would continue to be treated as the owner of the Residual Certificate
and thus would continue to be subject to tax on its allocable portion of the net
income of the related REMIC. A significant purpose to impede the assessment or
collection of tax exists if the transferor, at the time of the transfer, either
knew or should have known that the transferee would be unwilling or unable to
pay taxes due on its share of the taxable income of the REMIC (i.e., the
transferor had improper knowledge). Under the REMIC provisions of the Code, a
transferor is presumed not to have such improper knowledge if (i) the transferor
conducted, at the time of the transfer, a reasonable investigation of the
financial condition of the transferee and, as a result of the investigation, the
transferor found that the transferee had historically paid its debts as they
came due and found no significant evidence to indicate that the transferee would
not continue to pay its debts as they come due and (ii) the transferee
represents to the transferor that it understands that, as the holder of a
noneconomic residual interest, it may incur tax liabilities in excess of any
cash flows generated by the interest and that it intends to pay the taxes
associated with holding the residual interest as they become due. A similar
limitation exists with respect to transfers of certain residual interests to
foreign investors. See "Federal Income Tax Consequences -- REMIC certificates --
Taxation of Certain Foreign Holders of REMIC certificates -- Residual
Certificates" in this prospectus.
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Ownership of Residual Interests by Disqualified Organizations
The Code contains three sanctions that are designed to prevent or
discourage the direct or indirect ownership of a REMIC residual interest (such
as a Residual Certificate) by the United States, any state or political
subdivision thereof, any foreign government, any international organization, any
agency or instrumentality of any of the foregoing, any tax-exempt organization
(other than a farmers' cooperative described in section 521 of the Code) unless
such organization is subject to the tax on UBTI, or any rural electrical or
telephone cooperative (each a "Disqualified Organization"). A corporation is not
treated as an instrumentality of the United States or any state or political
subdivision thereof if all of its activities are subject to tax and, with the
exception of Freddie Mac, a majority of its board of directors is not selected
by such governmental unit.
First, REMIC status is dependent upon the presence of reasonable
arrangements designed to prevent a Disqualified Organization from acquiring
record ownership of any portion of the REMIC's residual interest. No residual
interest issued pursuant to a pooling and servicing agreement (whether or not
such interest is represented by a Residual Certificate) will be offered for sale
to Disqualified Organizations. Furthermore, (i) the residual interest in each
series REMIC will be registered as to both principal and any stated interest
with the trustee (or its agent) and transfer of such residual interest (or a
percentage interest) may be effected only (A) by surrender of the old residual
interest instrument and reissuance by the trustee of a new residual interest
instrument to the new holder or (B) through a book-entry system maintained by
the trustee; (ii) the applicable pooling and servicing agreement will prohibit
the ownership of residual interests by Disqualified Organizations; and (iii)
each residual interest instrument will contain a legend providing notice of that
prohibition. Consequently, each series REMIC should be considered to have made
reasonable arrangements designed to prevent the ownership of its residual
interest by Disqualified Organizations.
Second, the Code imposes a one-time tax on the transferor of a residual
interest (including a Residual Certificate or an interest therein) to a
Disqualified Organization. The one-time tax equals the product of (i) the
present value of the total anticipated excess inclusions with respect to the
transferred residual interest for periods after the transfer and (ii) the
highest marginal federal income tax rate applicable to corporations. Under the
REMIC provisions of the Code, the anticipated excess inclusions with respect to
a transferred residual interest must be based on (i) both actual prior
prepayment experience and the prepayment assumptions used in pricing the related
REMIC's interests and (ii) any required or permitted clean up calls, or required
qualified liquidation provided for in the REMIC's organizational documents. The
present value of anticipated excess inclusions is determined using a discount
rate equal to the applicable federal rate that would apply to a debt instrument
that was issued on the date the Disqualified Organization acquired the residual
interest and whose term ends on the close of the last quarter in which excess
inclusions are expected to accrue with respect to the residual interest. Where a
transferee is acting as an agent for a Disqualified Organization, the transferee
is subject to the one-time tax. For that purpose, the term agent includes a
broker, nominee, or other middleman. Upon the request of such transferee or the
transferor, the REMIC must furnish to the requesting party and to the Service
information sufficient to permit the computation of the present value of the
anticipated excess inclusions. The transferor
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of a residual interest (including a Residual Certificate or interest therein)
will not be liable for the one-time tax if the transferee furnishes to
the transferor an affidavit that states, under penalties of perjury, that the
transferee is not a Disqualified Organization, and, as of the time of the
transfer, the transferor does not have actual knowledge that such affidavit is
false. The one-time tax must be paid by April 15th of the year following the
calendar year in which the residual interest is transferred to a Disqualified
Organization. The one-time tax may be waived by the Secretary of the Treasury
if, upon discovery that a transfer is subject to the one-time tax, the
Disqualified Organization promptly disposes of the residual interest and the
transferor pays any amounts that the Secretary of the Treasury may require.
Third, the Code imposes an annual tax on any pass-through entity (i.e., a
RIC, REIT, common trust fund, partnership, trust, estate or cooperative
described in Code section 1381) that owns a direct or indirect interest in a
residual interest (including a Residual Certificate), if record ownership of an
interest in the pass-through entity is held by one or more Disqualified
Organizations. The tax imposed equals the highest corporate income tax rate
multiplied by the share of any excess inclusion income of the pass-through
entity for the taxable year allocable to interests in the pass-through entity
held by Disqualified Organizations. The same tax applies to a nominee who
acquires an interest in a residual interest (including a Residual Certificate)
on behalf of a Disqualified Organization. For example, a broker that holds an
interest in a Residual Certificate in street name for a Disqualified
Organization is subject to the tax. The tax due must be paid by the fifteenth
day of the fourth month following the close of the taxable year of the
pass-through entity in which the Disqualified Organization is a record holder.
Any such tax imposed on a pass-through entity would be deductible against that
entity's ordinary income in determining the amount of its required
distributions. In addition, dividends paid by a RIC or a REIT are not considered
preferential dividends within the meaning of section 562(c) of the Code solely
because the RIC or REIT allocates such tax expense only to the shares held by
Disqualified Organizations. A pass-through entity will not be liable for the
annual tax if the record holder of the interest in the pass-through entity
furnishes to the pass-through entity an affidavit that states, under penalties
of perjury, that the record holder is not a Disqualified Organization, and the
pass-through entity does not have actual knowledge that such affidavit is false.
The REMIC provisions of the Code also require that reasonable arrangements
be made with respect to each REMIC to enable the REMIC to provide the Treasury
and the transferor with information necessary for the application of the
one-time tax described above. Consequently, the applicable pooling and servicing
agreement will provide for the Servicer or an Affiliate thereof to perform such
information services as may be required for the application of the one-time tax.
Affiliate means, as to any specified person, any other person controlling or
controlled by or under common control with such specified person. For the
purposes of this definition, control, when used with respect to any specified
person, means the power to direct the management and policies of such person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise, and the terms controlling and controlled have the
meanings correlative to the foregoing. If a Residual Certificateholder transfers
an interest in a Residual Certificate in violation of the relevant transfer
restrictions and
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triggers the information requirement, the Servicer or Affiliate thereof may
charge such Residual Certificateholder a reasonable fee for providing the
information.
Special Considerations for Certain Types of Investors
Dealers in Securities. Residual Certificateholders that are dealers in
securities should be aware that, under Treasury regulations (the "Mark-to-Market
Regulations") relating to the mark-to-market accounting provisions under section
475 of the Code dealers in securities are not permitted to mark to market any
REMIC residual interests acquired on or after January 4, 1995. Prospective
purchasers of Residual Certificates should consult with their tax advisors
regarding the possible application of the Mark-to-Market Regulations to such
certificates.
Tax-Exempt Entities. Any excess inclusion income with respect to a Residual
Certificate held by a tax-exempt entity, including a qualified profit-sharing,
pension, or other employee benefit plan, will be treated as UBTI. Although the
legislative history and statutory provisions imply otherwise, the Treasury
conceivably could take the position that, under pre- existing Code provisions,
substantially all income on a Residual Certificate (including non-excess
inclusion income) is to be treated as UBTI. See "Federal Income Tax Consequences
- -- REMIC certificates -- Taxation of Residual Certificateholders" in this
prospectus.
Individuals and Pass-Through Entities. A Residual Certificateholder who is
an individual, trust, or estate will be permitted to deduct its allocable share
of the fees or expenses relating to servicing the assets of and administering
the related REMIC under section 212 of the Code only to the extent that the
amount of such fees and expenses, when combined with the Residual
Certificateholder's other miscellaneous itemized deductions for the taxable
year, exceeds 2% of that holder's adjusted gross income. That same limitation
will apply to individuals, trusts, or estates that hold Residual Certificates
indirectly through a grantor trust, a partnership, an S corporation, a common
trust fund, a REMIC, or a nonpublicly offered RIC. A nonpublicly offered RIC is
a RIC other than one whose shares are (i) continuously offered pursuant to a
public offering; (ii) regularly traded on an established securities market; or
(iii) held by no fewer than 500 persons at all times during the taxable year. In
addition, that limitation will apply to individuals, trusts, or estates that
hold Residual Certificates through any other person (i) that is not generally
subject to federal income tax and (ii) the character of whose income may affect
the character of the income generated by that person for its owners or
beneficiaries. Further, Code section 68 provides that the amount of itemized
deductions otherwise allowable for the taxable year for an individual whose
adjusted gross income exceeds the applicable amount ($100,000, or $50,000 in the
case of a separate return by a married individual within the meaning of Code
section 7703 for taxable year 1991 and adjusted for inflation each year
thereafter) will be reduced by the lesser of (i) 3% of the excess of adjusted
gross income over the applicable amount, or (ii) 80% of the amount of itemized
deductions otherwise allowable for such taxable year. In some cases, the amount
of additional income that would be recognized as a result of the foregoing
limitations by a Residual Certificateholder who is an individual, trust, or
estate could be substantial. Non-corporate holders of Residual Certificates also
should be aware that miscellaneous itemized deductions, including allocable
investment expenses attributable to the related series REMIC, are not deductible
for purposes of the alternative minimum tax.
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Finally, persons holding an interest in a Residual Certificate indirectly
through an interest in a RIC, common trust fund or one of certain corporations
doing business as a cooperative generally will recognize a share of any excess
inclusion allocable to that Residual Certificate.
Employee Benefit Plans. See "Federal Income Tax Consequences -- REMIC
certificates -- Special Considerations for Certain Types of Investors --
Tax-exempt entities" and "ERISA Considerations" in this prospectus.
REITs and RICs. If a Residual Certificateholder is a REIT and the related
series REMIC generates excess inclusion income, a portion of REIT dividends will
be treated as excess inclusion income for the REIT's shareholders, in a manner
to be provided by regulations. Thus, shareholders in a REIT that invests in
Residual Certificates could face unfavorable treatment of a portion of their
REIT dividend income for purposes of (i) using current deductions or net
operating loss carryovers or carrybacks; (ii) UBTI in the case of tax-exempt
shareholders; and (iii) withholding tax in the case of foreign shareholders. See
"Federal Income Tax Consequences -- REMIC certificates -- Special Considerations
for Certain Types of Investors -- Foreign Residual Certificateholders" in this
prospectus. Moreover, because Residual Certificateholders may recognize phantom
income --- See "Federal Income Tax Consequences -- REMIC certificates --
Taxation of Residual Certificateholders" in this prospectus --- a REIT
contemplating an investment in Residual Certificates should consider carefully
the effect of any phantom income upon its ability to meet its income
distribution requirements under the Code. The same rules regarding excess
inclusion will apply to a Residual Certificateholder that is a RIC, common trust
fund, or one of certain corporations doing business as a cooperative.
A Residual Certificate held by a REIT will be treated as a real estate
asset for purposes of the REIT qualification requirements in the same proportion
that the related series REMIC's assets would be treated as real estate assets if
held directly by the REIT, and interest income derived from such Residual
Certificate will be treated as Qualifying REIT Interest to the same extent. If
95% or more of a series REMIC's assets qualify as real estate assets for REIT
purposes, 100% of that REMIC's regular and residual interests (including
Residual Certificates) will be treated as real estate assets for REIT purposes,
and all of the income derived from such interests will be treated as Qualifying
REIT Interest. Qualifying REIT Interest means interest that is treated as
interest on obligations secured by mortgages on real property for REIT
qualification purposes. The REMIC provisions of the Code provide that payments
of principal and interest on assets that are reinvested pending distribution to
the holders of the REMIC certificates constitute real estate assets for REIT
purposes. Two REMICs that are part of a tiered structure will be treated as one
REMIC for purposes of determining the percentage of assets of each REMIC that
constitutes real estate assets. It is expected that at least 95% of the assets
of each series REMIC will be real estate assets throughout such REMIC's life.
The amount treated as a real estate asset in the case of a Residual Certificate
apparently is limited to the REIT's adjusted basis in the certificate.
Significant uncertainty exists with respect to the treatment of a Residual
Certificate for purposes of the various asset composition requirements
applicable to RICs. A Residual Certificate should be treated as a security, but
probably will not be considered a government
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security for purposes of section 851(b)(4) of the Code. Moreover, it is
unclear whether a Residual Certificate will be treated as a voting security
under that Code section. Finally, because a series REMIC will be treated as the
issuer of the Residual Certificate for purposes of that section, a RIC would be
unable to invest more than 25% of the value of its total assets in Residual
Certificates issued by the same series REMIC.
Foreign Residual Certificateholders. Certain adverse tax consequences may
be associated with the holding of certain Residual Certificates by a foreign
person or with the transfer of such certificates to or from a foreign person.
See "Federal Income Tax Consequences -- REMIC certificates -- Taxation of
Certain Foreign Holders of REMIC certificates -- Residual Certificates" in this
prospectus.
Thrift Institutions, Banks, and Certain Other Financial Institutions.
Residual Certificates will be treated as qualifying assets for thrift
institutions in the same proportion that the assets of the series REMIC to which
they relate would be so treated. However, if 95% or more of the assets of a
given series REMIC are qualifying assets for thrift institutions, 100% of that
REMIC's regular and residual interests (including Residual Certificates) would
be treated as qualifying assets. In addition, the REMIC provisions of the Code
provide that payments of principal and interest on assets included in a REMIC
that are reinvested pending their distribution to the holders of the related
REMIC certificates will be treated as qualifying assets for thrift institutions.
Moreover, two REMICs that are part of a tiered structure will be treated as one
REMIC for purposes of determining the percentage of assets of each REMIC that
constitutes qualifying assets for thrift institution purposes. It is expected
that at least 95% of the assets of each series REMIC will be qualifying assets
for thrift institutions throughout such REMIC's life. The amount of a Residual
Certificate treated as a qualifying asset for thrift institutions, however,
cannot exceed the holder's adjusted basis in that Residual Certificate.
Generally, gain or loss arising from the sale or exchange of Residual
Certificates held by certain financial institutions will give rise to ordinary
income or loss, regardless of the length of the holding period for the Residual
Certificates. Those financial institutions include banks, mutual savings banks,
cooperative banks, domestic building and loan institutions, savings and loan
institutions, and similar institutions. See "Federal Income Tax Consequences --
REMIC certificates -- Tax Treatment of Residual Certificates -- Disposition of
Residual Certificates" in this prospectus.
Disposition of Residual Certificates
Upon the sale or exchange of a Residual Certificate, a Residual
Certificateholder will recognize gain or loss equal to the difference between
the amount realized and its adjusted basis in the Residual Certificate. It is
possible that a disqualification of a series REMIC (other than an inadvertent
disqualification for which relief may be provided in Treasury regulations) may
be treated as a sale or exchange of a related Residual Certificate. If the
holder has held the Residual Certificate for the applicable long-term capital
gain holding period, gain or loss on its disposition generally will be
characterized as long-term capital gain or loss. In the case of banks, thrifts,
and certain other financial institutions described in section 582 of the Code,
however, gain or loss on
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the disposition of a Residual Certificate will be treated as ordinary gain or
loss, regardless of the length of the holding period. See "Federal Income Tax
Consequences -- REMIC certificates -- Special Considerations for Certain Types
of Investors" in this prospectus.
A special version of the wash sale rules of the Code applies to
dispositions of Residual Certificates. Under that rule, losses on dispositions
of Residual Certificates generally will be disallowed where, within six months
before or after the disposition, the seller of such certificates acquires any
residual interest in a REMIC or any interest in a Taxable Mortgage Pool that is
economically comparable to a Residual Certificate. Treasury Regulations
providing for appropriate exceptions to the application of the wash sale rules
have been authorized, but have not yet been promulgated.
Liquidation of the REMIC
A REMIC may liquidate without the imposition of entity-level tax only in a
qualified liquidation. A liquidation is considered a qualified liquidation if
the REMIC (i) adopts a plan of complete liquidation; (ii) sells all of its
non-cash assets within 90 days of the date on which it adopts the plan; and
(iii) credits or distributes in liquidation all of the sale proceeds plus its
cash (other than amounts retained to meet claims against it) to its
certificateholders within that 90-day period. An early termination of a REMIC
caused by the redemption of all outstanding classes of certificates issued by
such REMIC, and the distribution to the Residual Certificateholders of the
excess, if any, of the fair market value of the REMIC's assets at the time of
such redemption over the unpaid principal balance and accrued and unpaid
interest of such REMIC certificates (and any administrative costs associated
with such REMIC), will constitute a complete liquidation as described in the
preceding sentence. Under the REMIC provisions of the Code, a plan of
liquidation need not be in any special form. Furthermore, if a REMIC specifies
the first day in the 90-day liquidation period in a statement attached to its
final tax return, the REMIC will be considered to have adopted a plan of
liquidation on that date.
Treatment by the REMIC of Original Issue Discount, Market Discount, and
Amortizable Premium
Original Issue Discount. Generally, a REMIC's deductions for original issue
discount expense on its REMIC certificates will be determined in the same manner
as for determining the original issue discount income on such certificates as
described in "Federal Income Tax Consequences -- REMIC certificates -- Tax
Treatment of Regular Certificates -- Original Issue Discount" in this
prospectus, without regard to the de minimis rule described therein.
Market Discount. In general, a REMIC will have market discount income with
respect to its Qualified Mortgages if the basis of the REMIC in such assets is
exceeded by their adjusted issue prices. A REMIC's aggregate initial basis in
its Qualified Mortgages (and any other assets transferred to the REMIC on the
startup day) equals the aggregate of the issue prices of the regular and
residual interests in the REMIC. That basis is allocated among the REMIC's
Qualified Mortgages based on their relative fair market values. Any market
discount that accrues on a REMIC's Qualified Mortgages will be recognized
currently as an item of REMIC ordinary income. The amount of market discount
income to be recognized in any period is determined in
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a manner generally similar to that used in the determination of original issue
discount, as if the Qualified Mortgages had been issued (i) on the date they
were acquired by the REMIC and (ii) for a price equal to the REMIC's initial
basis in the Qualified Mortgages. The same prepayment assumptions used in
pricing the certificates are used to compute the yield to maturity of a REMIC's
Qualified Mortgages.
Premium. Generally, if the basis of a REMIC in its Qualified Mortgages
exceeds the unpaid principal balances of those assets the REMIC will be
considered to have acquired such assets at a premium equal to the amount of such
excess. A REMIC that holds a Qualified Mortgage as a capital asset may elect
under Code section 171 to amortize premium on such asset under a constant
interest method, to the extent such asset was originated, or treated as
originated, after September 27, 1985. The legislative history to the 1986 Act
indicates that, while the deduction for amortization of premium will not be
subject to the limitations on miscellaneous itemized deductions of individuals,
it will be treated as interest expense for purposes of other provisions in the
1986 Act limiting the deductibility of interest for non-corporate taxpayers.
Because substantially all of the obligors on the assets are expected to be
individuals, section 171 of the Code will not be available for the amortization
of premium on such assets to the extent they were originated on or prior to
September 27, 1985. Such premium may be amortizable under more general
provisions and principles of federal income tax law in accordance with a
reasonable method regularly employed by the holder of such assets. The
allocation of such premium pro rata among principal payments should be
considered a reasonable method; however, the Service may argue that such premium
should be allocated in a different manner, such as allocating such premium
entirely to the final payment of principal.
REMIC-Level Taxes
Income from certain transactions by a REMIC, called prohibited
transactions, will not be part of the calculation of the REMIC's income or loss
that is includible in the federal income tax returns of Residual
Certificateholders, but rather will be taxed directly to the REMIC at a 100%
rate. In addition, net income from one prohibited transaction may not be offset
by losses from other prohibited transactions. Prohibited transactions generally
include: (i) the disposition of Qualified Mortgages other than pursuant to (a)
the repurchase of a defective asset, (b) the substitution for a defective asset
within two years of the closing date, (c) a substitution for any Qualified
Mortgage within three months of the closing date, (d) the foreclosure, default,
or imminent default of a Qualified Mortgage, (e) the bankruptcy or insolvency of
the REMIC, (f) the sale of an adjustable-rate asset the interest rate on which
is convertible to a fixed rate of interest upon its conversion for an amount
equal to the asset's current principal balance plus accrued but unpaid interest
(and provided that certain other requirements are met) or (g) a qualified
liquidation of the REMIC; (ii) the receipt of income from assets that are not
the type of assets or investments that a REMIC is permitted to hold; (iii) the
receipt of compensation for services by a REMIC; and (iv) the receipt of gain
from disposition of cash-flow investments other than pursuant to a qualified
liquidation of the REMIC. A disposition of a Qualified Mortgage or cash flow
investment will not give rise to a prohibited transaction, however, if the
disposition was (i) required to prevent default on a regular interest resulting
from a default on one or more of the REMIC's Qualified Mortgages or (ii) made to
facilitate a clean-up call. The
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REMIC provisions of the Code define a clean-up call as the redemption of a class
of regular interests when, by reason of prior payments with respect to those
interests, the administrative costs associated with servicing the class outweigh
the benefits of maintaining the class. Under those regulations, the redemption
of a class of regular interests with an outstanding principal balance of no more
than 10% of the original principal balance qualifies as a clean-up call. The
REMIC provisions of the Code also provide that the modification of an asset
generally will not be treated as a disposition of that asset if it is occasioned
by a default or a reasonably foreseeable default, an assumption of the asset,
the waiver of a due-on-sale or encumbrance clause, or the conversion of an
interest rate by an obligor pursuant to the terms of a convertible adjustable
rate asset.
In addition, a REMIC generally will be taxed at a 100% rate on any
contribution to the REMIC after the closing date unless such contribution is a
cash contribution that (i) takes place within the three-month period beginning
on the closing date; (ii) is made to facilitate a clean-up call (as defined in
the preceding paragraph) or a qualified liquidation (as defined in "Federal
Income Tax consequences -- REMIC certificates -- Liquidation of the REMIC" in
this prospectus); (iii) is a payment in the nature of a guarantee; (iv)
constitutes a contribution by the holder of the Residual Certificates in the
REMIC to a qualified reserve fund; or (v) is otherwise permitted by Treasury
regulations yet to be issued. The structure and operation of each series REMIC
will be designed to avoid the imposition of the 100% tax on contributions.
To the extent that a REMIC derives certain types of income from foreclosure
property (generally, income relating to dealer activities of the REMIC), it will
be taxed on such income at the highest corporate income tax rate. Although the
relevant law is unclear, it is not anticipated that any series REMIC will
receive significant amounts of such income.
The organizational documents governing the Regular and Residual
Certificates of a series REMIC will be designed to prevent the imposition of the
foregoing taxes on such REMIC in any material amounts. If any of the foregoing
taxes is imposed on a series REMIC, the trustee will seek to place the burden
thereof on the person whose action or inaction gave rise to such taxes. To the
extent that the trustee is unsuccessful in doing so, the burden of such taxes
will be borne by any outstanding subordinated class of certificates before it is
borne by a more senior class of certificates.
REMIC Qualification
The trust underlying a series, or one or more designated asset pools in the
trust, will qualify under the Code as a REMIC if a REMIC election is in effect
and certain tests concerning (i) the composition of the assets of the REMIC and
(ii) the nature of the certificateholders' interests in the REMIC are met on a
continuing basis.
Asset Composition
In order for a trust, or one or more designated asset pools in the trust,
to be eligible for REMIC status, substantially all of its assets must consist of
qualified mortgages and permitted investments as of the close of the third month
beginning after the closing date and at
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all times thereafter. Substantially all of a REMIC's assets will be deemed to
consist of Qualified Mortgages and permitted investments if no more than a de
minimis amount of its assets (i.e., assets with an aggregate adjusted basis that
is less than 1% of the aggregate adjusted basis of all the REMIC's assets) are
assets other than qualified mortgages and permitted investments.
A Qualified Mortgage is any obligation that is principally secured by an
interest in real property, including a regular interest in another REMIC, and
that is either transferred to the REMIC on the closing date or purchased by the
REMIC pursuant to a fixed price contract within a three-month period thereafter.
Under the REMIC provisions of the Code, a Qualified Mortgage includes any
obligation secured by manufactured housing that qualifies as a single family
residence within the meaning of Code section 25(e)(10). Manufactured housing
qualifies as a single family residence under Code Section 25(e)(10) if it: (i)
is used as a single family residence; (ii) has a minimum of 400 square feet of
living space and a minimum width in excess of 102 inches; and (iii) is of a kind
customarily used at a fixed location. A Qualified Mortgage also includes a
qualified replacement mortgage, which is any property that would have been
treated as a Qualified Mortgage if it were transferred to the REMIC on the
closing date and that is received either in exchange for a defective asset
within a two-year period beginning on the closing date or in exchange for any
Qualified Mortgage within a three-month period beginning on that date.
The mortgage loans of each series REMIC will be treated as Qualified
Mortgages. In addition, Oakwood Acceptance will represent and warrant in the
related pooling and servicing agreement or sales agreement, as the case may be,
that each contract will be secured by a manufactured home that meets the
definition of single family residence in section 25(e)(10) of the Code.
Accordingly the contracts of each series REMIC will be treated as Qualified
Mortgages.
Permitted Investments include cash flow investments, qualified reserve
assets, and foreclosure property. Cash flow investments are investments of
amounts received with respect to Qualified Mortgages for a temporary period (not
to exceed thirteen months) before distribution to holders of regular or residual
interests in the REMIC. Qualified reserve assets are intangible investment
assets (other than REMIC residual interests) that are part of a qualified
reserve fund maintained by the REMIC. A qualified reserve fund is any reasonably
required reserve maintained by a REMIC to provide for full payment of expenses
of the REMIC or amounts due on the regular interests or residual interest in
such REMIC in the event of (i) defaults or delinquencies on the Qualified
Mortgages held by such REMIC; (ii) interest shortfalls on such Qualified
Mortgages caused by prepayments of those assets; (iii) lower than expected
returns on cash-flow investments; or (iv) unanticipated losses or expenses
incurred by the REMIC. A qualified reserve fund will be disqualified if more
than 30% of the gross income from the assets in such fund for the year is
derived from the sale of property held for less than three months, unless such
sale was required to prevent a default on the regular interests caused by a
default on one or more Qualified Mortgages. To the extent that the amount in a
qualified reserve fund exceeds a reasonably required amount, it must be reduced
promptly and appropriately. Foreclosure property generally is property acquired
by the REMIC in connection with the default
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or imminent default of a Qualified Mortgage. Foreclosure property may not be
held for more than three taxable years after the close of the taxable year of
acquisition unless it is established to the satisfaction of the Secretary of the
Treasury that an extension of such period is necessary for the orderly
liquidation of the foreclosure property. The Secretary of the Treasury may grant
one or more extensions, but any such extension shall not extend the grace period
beyond the date which is six years after the date such foreclosure property is
acquired.
Investors' Interests
In addition to the foregoing asset qualification requirements, the various
interests in a REMIC also must meet certain requirements. All of the interests
in a REMIC must be issued on the closing date (or within a specified 10-day
period) and belong to either of the following: (i) one or more classes of
regular interests; or (ii) a single class of residual interests on which
distributions are made pro rata. For each series REMIC with respect to which
REMIC certificates are issued, the Regular Certificates will constitute one or
more classes of regular interests in that REMIC and the Residual Certificates
will constitute the single class of residual interests in that REMIC.
A REMIC interest qualifies as a regular interest if (i) it is issued on the
startup day with fixed terms; (ii) it is designated as a regular interest; (iii)
it entitles its holder to a specified principal amount; and (iv) if it pays
interest, such interest either (a) constitutes a specified portion of the
interest payable on one or more of the REMIC's Qualified Mortgages, and that
portion does not vary during the period that the regular interest is outstanding
(a "specified nonvarying portion"), (b) is payable at a fixed rate with respect
to the principal amount of the regular interest, or (c) to the extent permitted
under the REMIC provisions of the Code, is payable at a variable rate with
respect to such principal amount. Pursuant to the REMIC provisions of the Code,
the following rates are permissible variable rates for REMIC regular interests:
(i) a qualified floating rate set at a current value as described in "Federal
Income Tax Consequences -- REMIC certificates -- Variable Rate Certificates" in
this prospectus, without regard to the rules in the OID Regulations limiting the
use of Caps, Floors, and Governors with respect to such a rate; (ii) a rate
equal to the highest, lowest, or average of two or more qualified floating rates
(e.g., a rate based on the average cost of funds of one or more financial
institutions); or (iii) a rate equal to the weighted average of the interest
rates on one or more of the Qualified Mortgages held by the REMIC provided,
however, that the Qualified Mortgages taken into account in determining the
weighted average rate bear interest at a fixed rate or a rate that would be a
permissible variable rate for a REMIC regular interest as described in this
sentence. Under the REMIC provisions of the Code, the presence of a ceiling or
floor on the interest payable on a variable rate regular interest will not
prevent such an interest from qualifying as a regular interest. In addition, a
qualifying variable rate may be expressed as a multiple of, or a constant number
of basis points more or less than, one of the permissible types of variable
rates described above. Finally, a limitation on the amount of interest to be
paid on a variable rate regular interest based on the total amount available for
distribution is permissible, provided that it is not designed to avoid the
restrictions on qualifying variable rates. The REMIC provisions of the Code also
provide that the specified principal amount of a REMIC regular interest may be
zero if the interest associated with such regular interest constitutes a
specified nonvarying portion of the interest on one or more of the REMIC's
Qualified Mortgages.
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If the interest payable on a REMIC regular interest is disproportionately
high relative to the specified principal amount of that interest, that interest
may be treated, in whole or in part, as a second residual interest, which could
result in the disqualification of the REMIC. Under the REMIC provisions of the
Code, interest payments (or similar amounts) are considered disproportionately
high if the issue price of a regular interest exceeds 125% of its specified
principal amount. Under the REMIC provisions of the Code, however, interest
payable at a disproportionately high rate will not cause a regular interest to
be recharacterized as a residual interest if the interest payable on that
regular interest consists of a specified nonvarying portion of the interest
payable on one or more of the REMIC's Qualified Mortgages. None of the Regular
Certificates will have an issue price that exceeds 125% of their respective
specified principal amounts unless the interest payable on those certificates
consists of a specified nonvarying portion of the interest payable on one or
more of the REMIC's Qualified Mortgages.
The Code requires certain arrangements to be made with respect to all
REMICs. Those arrangements, which are intended to prevent acquisitions of REMIC
residual interests (including the Residual Certificates) by certain
organizations that are not subject to federal income tax, are described in
"Federal Income Tax Consequences -- REMIC certificates -- Tax Treatment of
Residual Certificates -- Ownership of Residual Interests by Disqualified
Organizations" in this prospectus. Each series REMIC will be structured to
provide for such arrangements.
Consequences of Disqualification
If a series REMIC fails to comply with one or more of the Code's ongoing
requirements for REMIC status during any taxable year, the Code provides that
its REMIC status may be lost for that year and thereafter. If REMIC status is
lost, the treatment of the former REMIC and the interests therein for federal
income tax purposes is uncertain. The former REMIC might be entitled to
treatment as a grantor trust under Subpart E, Part 1 of Subchapter J of the
Code, in which case no entity- level tax would be imposed on the former REMIC.
Alternatively, the Regular Certificates may continue to be treated as debt
instruments for federal income tax purposes, but the arrangement could be
treated as a Taxable Mortgage Pool. See "Federal Income Tax Consequences --
REMIC certificates -- Taxable Mortgage Pools" in this prospectus. If a series
REMIC is treated as a Taxable Mortgage Pool, any residual income of the former
REMIC (i.e., interest and discount income from the underlying assets less
interest and original issue discount expense allocable to the Regular
Certificates and any administrative expenses of the REMIC) would be subject to
corporate income tax at the Taxable Mortgage Pool level. On the other hand, the
arrangement could be treated under Treasury regulations as a separate
association taxable as a corporation and the Regular Certificates could be
treated as stock interests therein, rather than debt instruments. In the latter
two cases, Residual Certificates would be treated as stock interests in such
Taxable Mortgage Pool or association, respectively. The Code authorizes the
Treasury to issue regulations that address situations where a failure to meet
the requirements for REMIC status occurs inadvertently and in good faith. Such
regulations have not yet been issued. The conference report accompanying the
1986 Act indicates that disqualification relief may be accompanied by sanctions,
such as the imposition of a corporate tax on all or a portion of the REMIC's
income for the period of time in which the requirements for REMIC status are not
satisfied.
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Taxable Mortgage Pools
Corporate income tax can be imposed on the net income of certain entities
issuing non-REMIC debt obligations secured by real estate mortgages ("Taxable
Mortgage Pools"). Any entity other than a REMIC or a REIT will be considered a
Taxable Mortgage Pool if (i) substantially all of the assets of the entity
consist of debt obligations and more than 50% of such obligations consist of
real estate mortgages (which term, for purposes of this paragraph, includes
mortgage loans and contracts), (ii) such entity is the obligor under debt
obligations with two or more maturities, and (iii) under the terms of the debt
obligations on which the entity is the obligor, payments on such obligations
bear a relationship to payment on the obligations held by the entity.
Furthermore, a group of assets held by an entity can be treated as a separate
Taxable Mortgage Pool if the assets are expected to produce significant cash
flow that will support one or more of the entity's issues of debt obligations.
Oakwood Mortgage generally will structure offerings of non-REMIC certificates to
avoid the application of the Taxable Mortgage Pool rules.
Taxation of Certain Foreign Holders of REMIC certificates
Regular Certificates
Interest, including original issue discount, paid on a Regular Certificate
to a Foreign Person generally will be treated as portfolio interest and,
therefore, will not be subject to any United States withholding tax, provided
that such interest is not effectively connected with a trade or business in the
United States of the certificateholder, and the trustee, or other person who
would otherwise be required to withhold tax, is provided with a Foreign Person
Certification. Foreign Person means an alien individual that is not a United
States resident for federal income tax purposes, a foreign corporation, foreign
partnership, certain foreign estates or trusts or holders holding on behalf of
any of the foregoing. Foreign Person Certification means a written certification
signed under penalty of perjury provided by the beneficial owner of a
certificate that the person is, inter alia, a Foreign Person. If the holder of a
Regular Certificate does not provide the trustee (or other person who would
otherwise be required to withhold tax) with a Foreign Person Certification,
interest (including original issue discount) paid on such a certificate may be
subject to either a 30% withholding tax or 31% backup withholding. See "Federal
Income Tax Consequences -- Taxation of Certain Foreign Holders of REMIC
certificates -- Backup Withholding" in this prospectus.
Residual Certificates
Amounts paid to Residual Certificateholders who are Foreign Persons are
treated as interest for purposes of the 30% (or lower treaty rate) United States
withholding tax. Under temporary Treasury Regulations, non-excess inclusion
income received by Residual Certificateholders who are Foreign Persons generally
would qualify as portfolio interest exempt from the 30% withholding tax (as
described in the preceding paragraph) only to the extent that (i) the assets
held by the related series REMIC were issued in registered form and (ii) such
assets were originated after July 18, 1984. Because the assets held by a series
REMIC will not be issued in registered form, amounts received by Residual
Certificateholders who are Foreign Persons will not be exempt from the 30%
withholding tax. Such amounts generally will
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be subject to United States withholding tax when paid or otherwise distributed
(or when the Residual Certificate is disposed of) under rules similar to those
for withholding on debt instruments that have original issue discount. However,
the Code grants the Treasury authority to issue regulations requiring that those
amounts be taken into account earlier than otherwise provided where necessary to
prevent avoidance of tax (i.e., where the Residual Certificates, as a class, do
not have significant value). Further, a Residual Certificateholder will not be
entitled to any exemption from the 30% withholding tax or a reduced treaty rate
on excess inclusion income.
Under the REMIC provisions of the Code, the transfer of a Residual
Certificate that has tax avoidance potential to a Foreign Person will be
disregarded for all federal income tax purposes. A Residual Certificate is
deemed to have tax avoidance potential under those regulations unless, at the
time of the transfer, the transferor reasonably expects that, for each accrual
of excess inclusion, the REMIC will distribute to the transferee an amount that
will equal at least 30% of the excess inclusion, and that each such amount will
be distributed no later than the close of the calendar year following the
calendar year of accrual. A transferor of a Residual Certificate to a Foreign
Person will be presumed to have had a reasonable expectation at the time of the
transfer that, for each accrual of excess inclusion, the REMIC will distribute
to the transferee an amount that will equal at least 30% of the excess
inclusion, and that each such amount will be distributed no later than the close
of the calendar year following the calendar year of accrual, if such
distributions would be made under all asset prepayment rates between 50% and
200% of the Pricing Prepayment Assumption. See "Federal Income Tax Consequences
- -- REMIC certificates -- Tax Treatment of Regular Certificates -- Original Issue
Discount" in this prospectus. If a Foreign Person transfers a Residual
Certificate to a United States person and the transfer, if respected, would
permit avoidance of withholding tax on accrued excess inclusion income, that
transfer also will be disregarded for federal income tax purposes and
distributions with respect to the Residual Certificate will continue to be
subject to 30% withholding as though the Foreign Person still owned the Residual
Certificate. Investors who are Foreign Persons should consult their own tax
advisors regarding the specific tax consequences to them of owning and disposing
of a Residual Certificate. Effective for payments made after December 31, 2000,
any foreign investor that seeks the protection of an income tax treaty with
respect to the imposition of United States withholding tax generally will be
required to obtain a taxpayer identification number from the Service in advance
and provide verification that such investor is entitled to the protection of the
relevant income tax treaty. Foreign tax-exempt investors generally will be
required to provide verification of their tax-exempt status. Foreign investors
are urged to consult with their tax advisors with respect to those new
withholding rules.
Backup Withholding
Under federal income tax law, a certificateholder may be subject to backup
withholding under certain circumstances. Backup withholding applies to a
certificateholder who is a United States person if the certificateholder, among
other things, (i) fails to furnish his social security number or other taxpayer
identification number to the trustee; (ii) furnishes the trustee an incorrect
taxpayer identification number; (iii) fails to report properly interest and
dividends; or (iv) under certain circumstances, fails to provide the trustee or
the
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certificateholder's securities broker with a certified statement, signed under
penalties of perjury, that the taxpayer identification number provided to the
trustee is correct and that the certificateholder is not subject to backup
withholding. Backup withholding applies, under certain circumstances, to a
certificateholder who is a foreign person if the certificateholder fails to
provide the trustee or the certificateholder's securities broker with a Foreign
Person Certification, as described in "Federal Income Tax Consequences -- REMIC
certificates -- Taxation of Certain Foreign Holders of REMIC certificates --
Regular Certificates" in this prospectus. Backup withholding applies to
reportable payments, which include interest payments and principal payments to
the extent of accrued original issue discount, as well as distributions of
proceeds from the sale of Regular Certificates or REMIC Residual Certificates.
The backup withholding rate for reportable payments made on or after January 1,
1993 is 31%. Backup withholding, however, does not apply to payments on
certificates made to certain exempt recipients, such as tax-exempt
organizations, and to certain Foreign Persons. Certificateholders should consult
their tax advisors for additional information concerning the potential
application of backup withholding to payments received by them with respect to a
certificate.
Reporting and Tax Administration
Regular Certificates
Reports will be made at least annually to holders of record of Regular
Certificates (other than those with respect to whom reporting is not required)
and to the Service as may be required by statute, regulation, or administrative
ruling with respect to (i) interest paid or accrued on the certificates; (ii)
original issue discount, if any, accrued on the certificates; and (iii)
information necessary to compute the accrual of any market discount or the
amortization of any premium on the certificates.
Residual Certificates
For purposes of federal income tax reporting and administration, a series
REMIC generally will be treated as a partnership, and the related Residual
Certificateholders as its partners. A series REMIC will file an annual return on
Form 1066 and will be responsible for providing information to Residual
Certificateholders sufficient to enable them to report properly their shares of
the REMIC's taxable income or loss, although it is anticipated that such
information actually will be supplied by the trustee based upon information it
receives from the Servicer in its monthly reports delivered pursuant to the
pooling and servicing agreement. The REMIC provisions of the Code require
reports to be made by a REMIC to its Residual Certificateholders each calendar
quarter in order to permit such certificateholders to compute their taxable
income accurately. A person that holds a Residual Certificate as a nominee for
another person is required to furnish those quarterly reports to the person for
whom it is a nominee within 30 days of receiving such reports. A REMIC is
required to file all such quarterly reports for a taxable year with the Service
as an attachment to the REMIC's income tax return for that year. As required by
the Code, a series REMIC's taxable year will be the calendar year.
Residual Certificateholders should be aware that their responsibilities as
holders of the residual interest in a REMIC, including the duty to account for
their shares of the REMIC's
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income or loss on their returns, continue for the life of the REMIC,
even after the principal and interest on their Residual Certificates have been
paid in full.
The Treasury has issued temporary and final regulations concerning certain
aspects of REMIC tax administration. Under those regulations, a Residual
Certificateholder must be designated as the REMIC's tax matters person (the
"TMP"). The TMP generally has responsibility for overseeing and providing notice
to the other Residual Certificateholders of certain administrative and judicial
proceedings regarding the REMIC's tax affairs, although other holders of the
Residual Certificates of the same series would be able to participate in such
proceedings in appropriate circumstances. It is expected that the Servicer or an
Affiliate thereof will acquire a portion of the residual interest in each series
REMIC in order to permit it to be designated as TMP for the REMIC and will
prepare and file the REMIC's federal and state income tax and information
returns.
Treasury regulations provide that a Residual Certificateholder is not
required to treat items on its return consistently with their treatment on the
REMIC's return if the certificateholder owns 100% of the Residual Certificates
for the entire calendar year. Otherwise, each Residual Certificateholder is
required to treat items on its returns consistently with their treatment on the
REMIC's return, unless the certificateholder either files a statement
identifying the inconsistency or establishes that the inconsistency resulted
from incorrect information received from the REMIC. The Service may assess a
deficiency resulting from a failure to comply with the consistency requirement
without instituting an administrative proceeding at the REMIC level. A series
REMIC typically will not register as a tax shelter pursuant to Code section 6111
because it generally will not have a net loss for any of the first five taxable
years of its existence. Any person that holds a Residual Certificate as a
nominee for another person may be required to furnish the related series REMIC,
in a manner to be provided in Treasury regulations, with the name and address of
such person and other specified information.
New Withholding Regulations
The Treasury Department has issued new regulations which make certain
modifications to the withholding, backup withholding and information reporting
rules described above. The new withholding regulations attempt to unify
certification requirements and modify reliance standards. The new withholding
regulations generally will be effective for payments made after December 31,
2000, subject to certain transition rules. Prospective investors are urged to
consult their tax advisors regarding the new withholding regulations.
Non-REMIC certificates
Treatment of the trust for Federal Income Tax Purposes
In the case of series with respect to which a REMIC election is not made,
the trust will be classified as a grantor trust under Subpart E, Part I of
subchapter J of the Code and not as an association taxable as a corporation.
Thus, the owner of a non-REMIC certificate issued by such a trust generally will
be treated as the beneficial owner of an appropriate portion of the principal
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and interest payments (according to the characteristics of the certificate in
question) to be received on the assets assigned to a trust for federal income
tax purposes.
Treatment of the Non-REMIC certificates for Federal Income Tax Purposes
Generally
The types of non-REMIC certificates offered in a series may include: (i)
Strip Certificates (i.e., IO Certificates, PO Certificates, and Ratio
Certificates) and (ii) Participation Certificates. Participation Certificates
means a non-REMIC certificate evidencing ownership of equal percentages of the
principal and interest payments on the assets assigned to the trust. PO
Certificates means a non-REMIC certificate evidencing ownership of a percentage
of the principal payments on some or all of the assets assigned to the trust.
The federal income tax treatment of Strip Certificates will be determined in
part by section 1286 of the Code. Little administrative guidance has been issued
under that section and, thus, many aspects of its operation are unclear,
particularly the interaction between that section and the rules pertaining to
discount and premium. Hence, significant uncertainty exists with respect to the
federal income tax treatment of Strip Certificates, and potential investors
should consult their own tax advisors concerning such treatment.
Several Code sections provide beneficial treatment to certain taxpayers
that invest in certain types of mortgage assets. For purposes of those Code
sections, Participation Certificates will be characterized with reference to the
assets in the related trust, but it is not clear whether Strip Certificates will
be so characterized. The Service could take the position that the character of
the assets is not attributable to Strip Certificates for purposes of those Code
sections. However, because Strip Certificates represent sole ownership rights in
the principal and interest payments on the assets, Strip Certificates, like
Participation Certificates, should be characterized with reference to the assets
in the trust. Accordingly, all non-REMIC certificates should be treated as
qualifying assets for thrift institutions, and as real estate assets for REITs
in the same proportion that the assets in the trust would be so treated.
Similarly, the interest income attributable to non-REMIC certificates should be
considered Qualifying REIT Interest for REIT purposes to the extent that the
assets in the trust qualify as real estate assets for REIT purposes.
One or more classes of non-REMIC certificates may be subordinated to one or
more other classes of non-REMIC certificates of the same series. In general,
such subordination should not affect the federal income tax treatment of either
the subordinated non-REMIC certificates or the senior non-REMIC certificates.
However, to the extent indicated in "Description of the Certificates --
Allocation of Distributions from the Assets" in this prospectus and to the
extent provided in the relevant prospectus supplement, holders of such
subordinated certificates will be allocated losses prior to their allocation to
the holders of more senior classes of certificates. Holders of such subordinated
certificates should be able to recognize any such losses no later than the
taxable year in which they become Realized Losses. Employee benefit plans
subject to ERISA should consult their own tax advisors before purchasing any
subordinated certificates. See "ERISA Considerations" in this prospectus and in
the prospectus supplement.
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Treatment of Participation Certificates
The holder of a Participation Certificate issued by a trust generally will
be treated as owning a pro rata undivided interest in each of the assets held by
such trust. Accordingly, each holder of a Participation Certificate will be
required to include in income its pro rata share of the entire income from the
Trust's assets, including interest and discount income, if any. Such
certificateholder generally will be able to deduct from its income its pro rata
share of the administrative fees and expenses incurred with respect to the
Trust's assets (provided that such fees and expenses represent reasonable
compensation for the services rendered). An individual, trust, or estate that
holds a Participation Certificate directly or through a pass-through entity will
be entitled to deduct such fees and expenses under section 212 of the Code only
to the extent that the amount of the fees and expenses, when combined with its
other miscellaneous itemized deductions for the taxable year in question,
exceeds 2% of its adjusted gross income. In addition, Code section 68 provides
that the amount of itemized deductions otherwise allowable for the taxable year
for an individual whose adjusted gross income exceeds the applicable amount
($100,000, or $50,000 in the case of a separate return by a married individual
within the meaning of Code section 7703 for taxable year 1991, adjusted each
year thereafter for inflation) will be reduced by the lesser of (i) 3% of the
excess of adjusted gross income over the applicable amount, or (ii) 80% of the
amount of itemized deductions otherwise allowable for such taxable year. Each
Participation Certificateholder generally will determine its net income or loss
with respect to the trust in accordance with its own method of accounting,
although income arising from original issue discount must be taken into account
under the accrual method even though the certificateholder otherwise would use
the cash receipts and disbursements method.
The Code provisions concerning original issue discount, market discount,
and amortizable premium will apply to the trust assets. The rules regarding
discount and premium that are applicable to non-REMIC certificates generally are
the same as those that apply to REMIC Regular Certificates. See the discussions
under "Federal Income Tax Consequences -- REMIC certificates -- Original Issue
Discount," " -- Variable Rate Certificates," " -- Market Discount," and " --
Amortizable Premium" in this prospectus.
For instruments to which it applies, Code section 1272(a)(6) requires the
use of an income tax accounting methodology that utilizes (i) a single constant
yield to maturity and (ii) the Pricing Prepayment Assumptions. Unlike in the
case of Regular Certificates, Code section 1272(a)(6) technically does not apply
to non-REMIC certificates. Although the Treasury has authority to apply that
section to certificates such as the non-REMIC certificates, it has not yet done
so. Nonetheless, unless and until the release of administrative guidance to the
contrary, the Tax Administrator will account for the non-REMIC certificates as
though section 1272(a)(6) applied to them. Thus, the Tax Administrator will
account for a class of non-REMIC certificates in the same manner as it would
account for a class of Regular Certificates with the same terms. There can be no
assurance, however, that the Service ultimately will sanction the Tax
Administrator's position.
The original issue discount rules generally apply to residential mortgage
loans originated after March 2, 1984, and the market discount rules apply to any
such loans originated after July
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18, 1984. The rules allowing for the amortization of premium are available
with respect to mortgage loans originated after September 27, 1985. It is
anticipated that most or all of the assets securing any series will be subject
to the original issue discount, market discount, and amortizable premium rules.
Although most mortgage loans and contracts nominally are issued at their
original principal amounts, original issue discount could arise from the payment
of points or certain other origination charges by the obligors if the discount
attributable to such payments exceeds the de minimis amount. If the trust
contains assets purchased for prices below their outstanding principal amounts,
holders of Participation Certificates will be required to take into account
original issue discount not previously accrued to the prior holder of such
assets. Moreover, if such assets were purchased for less than their adjusted
issue prices, Participation Certificateholders generally will be required to
take into account market discount, unless the amount of such market discount is
de minimis under the market discount rules. Finally, Participation
Certificateholders generally may elect to amortize any premium paid for assets
over the aggregate adjusted issue price of such assets. For a more complete
elaboration of the rules pertaining to original issue discount, market discount,
and acquisition premium, see the discussion under "Federal Income Tax
Consequences -- REMIC certificates -- Tax Treatment of Regular Certificates" in
this prospectus.
Treatment of Strip Certificates
Many aspects of the federal income tax treatment of Strip Certificates are
uncertain. The discussion describes the treatment that Oakwood Mortgage believes
is fair and accurate, but there can be no assurance that the Service will not
take a contrary position. Potential investors, therefore, should consult their
own tax advisors with respect to the federal income tax treatment of Strip
Certificates.
Under section 1286 of the Code, the separation of ownership of the right to
receive some or all of the interest payments on an obligation from ownership of
the right to receive some or all of the principal payments on such obligation
results in the creation of stripped coupons with respect to the separated rights
to interest payments and stripped bonds with respect to the principal and any
undetached interest payments associated with that principal. The issuance of IO
or PO Certificates effects a separation of the ownership of the interest and
principal payments on some or all of the assets in the trust. In addition, the
issuance of Ratio Certificates effectively separates and reallocates the
proportionate ownership of the interest and principal payments on the assets.
Therefore, Strip Certificates will be subject to section 1286.
For federal income tax accounting purposes, section 1286 treats a stripped
bond or a stripped coupon as a new debt instrument issued (i) on the date that
the stripped interest is purchased and (ii) at a price equal to its purchase
price or, if more than one stripped interest is purchased, the share of the
purchase price allocable to such stripped interest. Each stripped bond or coupon
generally will have original issue discount equal to the excess of its stated
redemption price at maturity (or, in the case of a stripped coupon, the amount
payable on the due date of such coupon) over its issue price. The regulations
issued by the Treasury under section 1286 of the Code (the "Stripping
Regulations"), however, provide that the original issue discount on a stripped
bond or stripped coupon is zero if the amount of the original issue discount
would be de
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minimis under rules generally applicable to debt instruments. For purposes
of that determination, (i) the number of complete years to maturity is measured
from the date the stripped bond or stripped coupon is purchased; (ii) an
aggregation approach similar to the Aggregation Rule (as described in "Federal
Income Tax Consequences -- REMIC certificates -- Original Issue Discount" in
this prospectus) may be applied; and (iii) unstripped coupons may be treated as
stated interest with respect to the related bonds and, therefore, may be
excluded from stated redemption price at maturity in appropriate circumstances.
In addition, the Stripping Regulations provide that, in certain circumstances,
the excess of a stripped bond's stated redemption price at maturity over its
issue price is treated as market discount, rather than as original issue
discount. See "Federal Income Tax Consequences -- Non-REMIC certificates --
Treatment of Strip Certificates -- Determination of Income With Respect to Strip
Certificates" in this prospectus.
The application of section 1286 to the Strip Certificates is not entirely
clear under current law. It could be interpreted as causing: (i) in the case of
an IO Certificate, each interest payment due on the underlying assets to be
treated as a separate debt instrument; (ii) in the case of a Ratio Certificate
entitled to a disproportionately high share of principal, each excess principal
amount (i.e., the portion of each principal payment on such assets that exceeds
the amount to which the Ratio Certificateholder would have been entitled if he
had held an undivided interest in the underlying assets) to be treated as a
separate debt instrument; and (iii) in the case of a Ratio Certificate entitled
to a disproportionately high share of interest, each excess interest amount to
be treated as a separate debt instrument. In addition, section 1286 would
require the purchase price of a Strip Certificate to be allocated among each of
the rights to payment on the underlying assets to which the certificateholder is
entitled that are treated as separate debt instruments. Despite the foregoing,
it may be appropriate to treat stripped coupons and stripped bonds issued to the
same holder as a single debt instrument under an aggregation approach, depending
on the facts and circumstances surrounding the issuance. Facts and circumstances
considered relevant for this purpose should include the likelihood of the debt
instruments trading as a unit and the difficulty of allocating the purchase
price of the unit among the individual payments. Strip Certificates are designed
to trade as whole investment units and, to the extent that the underwriter
develops a secondary market for the Strip Certificates, it anticipates that the
Strip Certificates would trade in such market as whole units. In addition,
because no market exists for individual payments on assets, the proper
allocation of the certificate's purchase price to each separate payment on the
assets in the trust would be difficult and burdensome to determine. Based on
those facts and circumstances, it appears that all payments of principal and
interest to which the holder of a Strip Certificate is entitled should be
treated as a single installment obligation. Although the OID Regulations do not
refer directly to debt instruments that are governed by section 1286 of the
Code, the application of the OID Regulations to such instruments is consistent
with the overall statutory and regulatory scheme. Therefore, the Tax
Administrator will treat each Strip Certificate as a single debt instrument for
income tax accounting purposes.
Determination of Income With Respect to Strip Certificates
For purposes of determining the amount of income on a Strip Certificate
that accrues in any period, the rules described under "Federal Income Tax
Consequences -- REMIC certificates -- Original Issue Discount," " -- Variable
Rate Certificates," " -- Anti-Abuse Rule," " --
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Interest Weighted Certificates and Non-VRDI certificates," " -- Market
Discount," and " -- Amortizable Premium" will apply. PO Certificates and certain
classes of Ratio Certificates will be issued at a price that is less than their
stated principal amount and thus generally will be issued with original issue
discount. A Strip Certificate that would meet the definition of an Interest
Weighted Certificate or a Weighted Average Certificate if it were a Regular
Certificate is subject to the same tax accounting considerations applicable to
the Regular Certificate to which it corresponds. Thus, as described in "Federal
Income Tax Consequences -- REMIC certificates -- Interest Weighted Certificates
and Non-VRDI certificates," certain aspects of the tax accounting treatment of
such a Strip Certificate are unclear. Unless and until the Service provides
administrative guidance to the contrary, the Tax Administrator will account for
such a Strip Certificate in the manner described for the corresponding Regular
Certificate. See "Federal Income Tax Consequences -- REMIC certificates --
Interest Weighted Certificates and Non-VRDI certificates."
If a PO Certificate or a Ratio Certificate that is not considered a
Contingent Payment Obligation (an "Ordinary Ratio Certificate") subsequently is
sold, the purchaser apparently would be required to treat the difference between
the purchase price and the stated redemption price at maturity as original issue
discount. The holder of such a certificate generally will be required to include
such original issue discount in income as described in "Federal Income Tax
Consequences -- REMIC certificates -- Original Issue Discount" in this
prospectus. PO Certificates and Ordinary Ratio Certificates
issued at a price less than their stated principal amount will be treated as
issued with market discount rather than with original issue discount if, after
the most recent disposition of the related certificate, either (i) the amount of
original issue discount on the certificate is considered to be de minimis under
the Stripping Regulations or (ii) the annual stated rate of interest payable on
the certificate is no more than 1% lower than the annual stated rate of interest
payable on the asset from which the certificate was stripped. The holders of
such certificates generally would be required to include market discount in
income in the manner described in "Federal Income Tax Consequences -- REMIC
certificates -- Market Discount" in this prospectus. Some classes of Ordinary
Ratio Certificates may be issued at a price that exceeds their stated principal
amount. Subject to the discussion of Superpremium Certificates in "Federal
Income Tax Consequences -- REMIC certificates -- Original Issue Discount" in
this prospectus, holders of such Ordinary Ratio Certificates generally should be
able to amortize that premium as described in "Federal Income Tax Consequences
- -- REMIC certificates -- Amortizable Premium" in this prospectus.
IO Certificates means a non-REMIC certificate evidencing ownership of a
percentage of the interest payments, net of certain fees, on the assets assigned
to a related trust. IO Certificates do not represent a right to stated principal
amounts. Rather, IO Certificates represent rights only to payments of interest
which, as a result of prepayments on the assets in the related trust, may never
be made. The Tax Administrator will account for IO Certificates in the same
manner as for Interest Weighted Certificates. See "Federal Income Tax
Consequences -- REMIC certificates -- Original Issue Discount," " -- Variable
Rate Certificates," and " -- Interest Weighted Certificates and Non-VRDI
certificates" in this prospectus.
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Purchases of Complementary Classes of Strip Certificates
Complementary Strip Certificates, when held in combination, provide
an aggregate economic effect equivalent to that of a Participation Certificate.
Complementary Strip Certificates means different classes of Strip Certificates
of the same series that, when held in combination, provide an aggregate economic
effect equivalent to that of a Participation Certificate. When an investor
purchases Complementary Strip Certificates, it appears that, for federal income
tax purposes, each such certificate should be treated separately and should be
subject to the rules described above. The Service could assert, however, that
Complementary Strip Certificates held in combination should be treated as a
single pass-through type instrument, with the result that the rules governing
stripped bonds and stripped coupons under section 1286 of the Code would not be
applied. Consequently, investors who acquire Complementary Strip Certificates
should consult their own tax advisors as to the proper treatment of such
certificates.
Possible Alternative Characterizations
The Service could assert that the Strip Certificates should be
characterized for tax purposes in a manner different from that described above.
For example, the Service could contend that each Ratio Certificate whose
interest rate is higher than the related series Rate is to be treated as being
composed of two certificates: (i) a Participation Certificate of the same
principal amount as the Ratio Certificate but generating interest at the series
Rate; and (ii) an IO Certificate representing the excess of the rate on the
Ratio Certificate over the series Rate. Similarly, a Ratio Certificate whose
interest rate is lower than the series Rate could be treated as composed of a
Participation Certificate with an interest rate equal to the series Rate and a
PO Certificate. Alternatively, the Service could interpret section 1286 to
require that each individual interest payment with respect to an IO Certificate
or a Ratio Certificate be treated as a separate debt instrument for original
issue discount purposes. The Service also might challenge the manner in which
original issue discount is calculated, contending that (i) the stated maturity
should be used to calculate yield on a non-REMIC certificate; (ii) the
Contingent Payment Regulations should not apply to IO Certificates; or (iii) the
Contingent Payment Regulations should apply to the Ordinary Ratio Certificates.
Given the variety of alternative treatments of Strip Certificates and the
different federal income tax consequences that could result from each
alternative, a potential investor is urged to consult its own tax advisor
regarding the proper treatment of such certificates for federal income tax
purposes.
Limitations on Deductions With Respect to Strip Certificates
The holder of a Strip Certificate will be treated as owning an interest in
each of the assets of the related trust and will recognize an appropriate share
of the income and expenses associated with those assets. Accordingly, an
individual, trust, or estate that holds a Strip Certificate directly or through
a pass-through entity will be subject to the same limitations on deductions with
respect to such certificate as are applicable to holders of Participation
Certificates. See "Federal Income Tax Consequences -- Non-REMIC certificates --
Treatment of Participation Certificates" in this prospectus.
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Sale of a Non-REMIC certificate
A sale of a non-REMIC certificate prior to its maturity will result in gain
or loss equal to the difference between the amount received and the holder's
adjusted basis in such certificate. The rules for computing the adjusted basis
of a Non- REMIC certificate are the same as in the case of a Regular
Certificate. See "Federal Income Tax Consequences -- REMIC certificates -- Tax
Treatment of Regular Certificates -- Gain or Loss on Disposition" in this
prospectus. Gain or loss from the sale or other disposition of a non-REMIC
certificate generally will be capital gain or loss to the certificateholder if
the certificate is held as a capital asset within the meaning of section 1221 of
the Code, and will be long-term or short-term depending on whether the
certificate has been held for the applicable long-term capital gain holding
period. Ordinary income treatment, however, will apply to the extent mandated by
the original issue discount and market discount rules or if the
certificateholder is a financial institution described in section 582 of the
Code. See "Federal Income Tax Consequences -- REMIC certificates -- Gain or Loss
on Disposition" in this prospectus.
Taxation of Certain Foreign Holders of Non-REMIC certificates
Interest, including original issue discount, paid on a non-REMIC
certificate to a Foreign Person generally is treated as portfolio interest and,
therefore, is not subject to any United States tax, provided that (i) such
interest is not effectively connected with a trade or business in the United
States of the certificateholder, and (ii) the trustee (or other person who would
otherwise be required to withhold tax) is provided with Foreign Person
Certification. If the holder of a non-REMIC certificate does not provide the
trustee (or other person who would otherwise be required to withhold tax) with a
Foreign Person Certification, interest (including original issue discount) paid
on such a certificate may be subject to either a 30% withholding tax or 31%
backup withholding.
In the case of certain series, portfolio interest treatment will not be
available for interest paid with respect to certain classes of non-REMIC
certificates. Interest on debt instruments issued on or before July 18, 1984
does not qualify as portfolio interest and, therefore, is subject to United
States withholding tax at a 30% rate (or lower treaty rate, if applicable). IO
Certificates and PO Certificates generally are treated, and Ratio Certificates
generally should be treated, as having been issued when they are sold to an
investor. In the case of Participation Certificates, however, the issuance date
of the certificate is determined by the issuance date of the underlying assets.
Thus, to the extent that the interest received by a holder of a Participation
Certificate is attributable to assets issued on or before July 18, 1984, such
interest will be subject to the 30% withholding tax. Moreover, to the extent
that a Ratio Certificate is characterized as a pass-through type certificate and
the underlying assets were issued on or before July 18, 1984, interest generated
by the certificate may be subject to the withholding tax. Ratio Certificate
means a non-REMIC certificate evidencing ownership of a percentage of the
interest payments and a different percentage of the principal payments on the
assets. See "Federal Income Tax Consequences -- Non-REMIC certificates --
Treatment of Strip Certificates -- Possible Alternative Characterizations" in
this prospectus. Although recently enacted tax legislation denies portfolio
interest treatment to certain types of contingent interest, that legislation
generally
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applies only to interest based on the income, profits, or property values of
the debtor. Accordingly, it is not anticipated that such legislation will apply
to deny portfolio interest treatment to certificateholders who are Foreign
Persons. However, because the scope of the new legislation is not entirely
clear, investors who are Foreign Persons should consult their tax advisors
regarding the potential application of the legislation before purchasing a
certificate.
Backup Withholding
The application of backup withholding to non-REMIC certificates generally
is the same as in the case of REMIC certificates. See "Federal Income Tax
Consequences -- REMIC certificates -- Backup Withholding" in this prospectus.
Reporting and Tax Administration
For purposes of reporting and tax administration, the holders of non-REMIC
certificates will be treated in the same fashion as the holders of Regular
Certificates. See "Federal Income Tax Consequences -- REMIC certificates --
Reporting and Tax Administration" in this prospectus.
Due to the complexity of the federal income tax rules applicable to you and
the considerable uncertainty that exists with respect to many aspects of those
rules, we suggest that you consult your own tax advisor regarding the tax
treatment of the acquisition, ownership and disposition of the certificates.
State Tax Considerations
In addition to the federal income tax consequences described under "Federal
Income Tax Consequences", potential investors should consider the state income
tax consequences of the acquisition, ownership, and disposition of the
certificates. State income tax law may differ substantially from the
corresponding federal law, and this discussion does not purport to describe any
aspect of the income tax laws of any state. Therefore, potential investors
should consult their own tax advisors with respect to the various state tax
consequences of an investment in the certificates.
ERISA Considerations
In considering an investment in a certificate of the assets of any employee
benefit plan or retirement arrangement, including individual retirement accounts
and annuities, Keogh plans, and collective investment funds in which these
plans, accounts, annuities or arrangements are invested, that are described in
or must follow the requirements of the DOL regulations set forth in 29 C.F.R.
2510.3-101, as amended from time to time (the "Plan Asset Regulations"), ERISA,
or corresponding provisions of the Code (a "Plan"), a fiduciary should consider,
among other things,
o the purposes, requirements, and liquidity needs of the Plan;
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o the impact of the plan asset provisions of ERISA and DOL regulations
concerning the definition of plan assets;
o whether the investment satisfies the diversification requirements of
section 404(a)(1)(C) of ERISA; and
o whether the investment is prudent, considering the nature of an investment
in a certificate and the fact that no market in which the fiduciary can
sell or otherwise dispose of certificates may be created or, if created,
will continue to exist for the life of the certificates.
The prudence of a particular investment must be determined by the responsible
fiduciary --- usually the trustee or investment manager --- with respect to each
Plan taking into account all of the facts and circumstances of the investment.
Sections 406 and 407 of ERISA and section 4975 of the Code prohibit certain
transactions that involve:
o a Plan and any party in interest or disqualified person with respect to
the Plan, and
o plan assets.
The Plan Asset Regulations issued by the DOL define plan assets to include
not only securities, like the certificates, held by a Plan but also the
underlying assets of the issuer of any equity securities, unless one or more
exceptions specified in those Regulations are satisfied. Thus, under the Plan
Asset Regulations, a Plan that acquires a certificate could be treated for ERISA
purposes as having acquired a direct interest in some or all of the assets in
the related trust. Such treatment could cause certain transactions with respect
to the assets to be deemed prohibited transactions under ERISA and, in addition,
could result in a finding of an improper delegation by the plan fiduciary of its
duty to manage plan assets.
The DOL has issued several exemptions from certain of the prohibited
transaction rules of ERISA and the related excise tax provisions of section 4975
of the Code. Those exemptions include, but are not limited to:
o Prohibited Transaction Class Exemption 96-23 ("PTCE 96-23"), regarding
investment decisions by in-house asset managers;
o Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60"), regarding
investments by insurance company general accounts;
o Prohibited Transaction Class Exemption 91-38 ("PTCE 91-38"), regarding
investments by bank collective investment funds;
o Prohibited Transaction Class Exemption 90-1 ("PTCE 90-1"), regarding
investments by insurance company pooled separate accounts;
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o Prohibited Transaction Class Exemption 84-14 ("PTCE 84-14"), regarding
investment decisions made by a qualified plan asset manager;
o Prohibited Transaction Class Exemption 83-1 ("PTCE 83-1"), regarding
acquisitions by Plans of interests in mortgage pools; and
o various individual underwriter exemptions.
Before purchasing any certificates, a Plan that must follow the fiduciary
responsibility provisions of ERISA or described in section 4975(e)(1) of the
Code should consult with its counsel to determine whether the conditions of any
exemption would be met. A purchaser of certificates should be aware, however,
that certain of the exemptions do not apply to the purchase, sale, and holding
of subordinated certificates. In addition, PTCE 83-1 will not apply to
certificates evidencing interests in a trust estate that contains contracts.
Moreover, even if the conditions specified in one or more exemptions are met,
the scope of the relief provided by an exemption might not cover all acts that
might be construed as prohibited transactions.
The Plan Asset Regulations will not apply to a certificate if
o the certificate is registered under the Securities Exchange Act of 1934, is
freely transferable and is part of a class of certificates that is held by
more than 100 unrelated investors (the "Publicly Offered Exception") or
o immediately after the most recent acquisition of a certificate of the same
series, benefit plan investors do not own 25% or more of the value of any
class of certificates in that series (the "Insignificant Participation
Exception").
A purchaser of certificates should be aware, however, that determining whether
the Insignificant Participation Exception applies is administratively
impracticable in many situations. Prior to purchasing a certificate, a Plan
should consult with its counsel to determine whether the Publicly Offered
Exception, the Insignificant Participation Exception, or any other exception to
the Plan Asset Regulations would apply to the purchase of the certificate.
Section 403 of ERISA requires that all plan assets be held in trust.
However, under regulations that became effective on June 17, 1982, even if the
underlying assets of an issuer of securities, like the certificates, are deemed
to be plan assets of a Plan investing in the securities, the holding in trust
requirement of section 403 of ERISA will be satisfied if the securities are held
in trust on behalf of the Plan.
Because the purchase or holding of certificates may result in unfavorable
consequences for a Plan or its fiduciaries under the Plan Asset Regulations or
the prohibited transaction provisions of ERISA or the Code,
o certain classes of certificates will not be offered for sale to, and
are not transferable to, any Plan Investor and
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o certain classes of certificates will not be offered for sale to, and are
not transferable to, any Plan Investor unless the Plan Investor provides
Oakwood Mortgage with a Benefit Plan Opinion.
A Plan Investor is any Plan, any person acting on behalf of a Plan, or any
person using the assets of a Plan. A Benefit Plan Opinion is an opinion of
counsel satisfactory to Oakwood Mortgage and the Servicer, and upon which
Oakwood Mortgage, the Servicer, the trustee, the TMP, and their respective
counsel are authorized to rely, generally to the effect that the proposed
transfer of a Certificate will not cause any of the assets in the related trust
to be regarded as plan assets for purposes of the Plan Asset Regulations; give
rise to any fiduciary duty under ERISA on the part of Oakwood Mortgage, the
trustee, the Servicer, or the TMP; or be treated as, or result in, a prohibited
transaction under section 406 or section 407 of ERISA or section 4975 of the
Code. The prospectus supplement for an affected series will indicate which
classes of certificates are restricted in their availability to benefit plan
investors.
In considering the possible application of the Plan Asset Regulations,
potential Plan Investors should be aware that, with respect to certain series
and under certain circumstances, the Servicer and the holders of a majority in
interest of the related Residual Certificates may have a right to redeem the
certificates of the series, at its option. In these cases, the Servicer's
purpose for the retention of this redemption right is to enable the Servicer to
terminate its administration obligations with respect to the certificates in the
event these obligations become unprofitable. The Servicer undertakes no
obligation to consider the interests of certificateholders in deciding whether
to exercise any redemption right.
As described in "Federal Income Tax Consequences", an investment in a
certificate may produce UBTI for tax-exempt employee benefit plans. Potential
investors also should be aware that ERISA requires that the assets of a Plan be
valued at their fair market value as of the close of the plan year. Neither
Oakwood Mortgage, Oakwood Acceptance, the Servicer nor the underwriters
currently intend to provide valuations to certificateholders.
Prospective purchasers of certificates that are insurance companies should
be aware that the United States Supreme Court interpreted the fiduciary
responsibility rules of ERISA in John Hancock Mutual Life Insurance Co. v.
Harris Bank and trust. In John Hancock, the Supreme Court ruled that assets held
in an insurance company's general account may be deemed to be plan assets for
ERISA purposes under certain circumstances. Prospective purchasers of
certificates that are insurance companies should consult with their counsel with
respect to the application of the John Hancock case and PTCE 95-60 to their
purchase of certificates, and should be aware that certain restrictions may
apply to their purchase of certificates.
Due to the complexity of the rules applicable to Plans and Plan
fiduciaries, and the considerable uncertainty that exists with respect to many
aspects of those rules, Plan Investors contemplating the acquisition of
certificates should consult their legal advisors with respect to the ERISA,
Code, and other consequences of an investment in the certificates.
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Available Information
Oakwood Mortgage observes the informational requirements of the Exchange
Act, and files reports and other information with the SEC. Reports and other
information filed by Oakwood Mortgage with the SEC can be inspected and copied
at the public reference facilities maintained by the SEC at 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the Regional Offices of the SEC at 7 World
Trade Center, New York, New York 10048; and Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of this
material can be obtained from the Public Reference Section of the SEC at its
principal office in Washington, D.C., at prescribed rates. The SEC maintains a
web site that contains reports, proxy and information statements and other
information regarding registrants, including Oakwood Mortgage, that file
electronically with the SEC at http://www.sec.gov.
This prospectus does not contain all the information set forth in the
Registration Statement and exhibits relating thereto which Oakwood Mortgage has
filed with the SEC in Washington, D.C. Copies of the information and the
exhibits are on file at the offices of the SEC and may be obtained, upon payment
of the fee prescribed by the SEC, or may be examined without charge at the
offices of the SEC. Copies of the pooling and servicing agreement for a series
will be filed by Oakwood Mortgage with the SEC, without exhibits, on a Current
Report on Form 8-K within 15 days after the applicable closing date.
Each trust will fill periodic reports with the SEC in compliance with the
requirements of the Exchange Act.
Oakwood Mortgage and the Servicer are not obligated with respect to the
certificates. Accordingly, Oakwood Mortgage has determined that financial
statements of Oakwood Mortgage and the Servicer are not material to the offering
made hereby.
Incorporation of Certain Documents by Reference
Oakwood Homes has filed the following documents with the SEC for each class
of certificates that is supported by a guarantee of Oakwood Homes pursuant to
the Exchange Act. These documents are incorporated in this prospectus by
reference and are made a part of this prospectus and any prospectus supplement:
o the Oakwood Homes Quarterly Reports on Form 10-Q for the quarters ended
December 31, 1998 and March 31, 1999, and
o the Oakwood Homes Annual Report on Form 10-K for the fiscal year ended
September 30, 1998.
All documents filed by Oakwood Mortgage or Oakwood Homes pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
prospectus and prior to the termination of the offering of the certificates
shall be deemed, in the case of Oakwood Mortgage, to be incorporated by
reference into this prospectus and, in the case of Oakwood Homes, to be
incorporated by reference into this prospectus and the prospectus supplement
relating to a class
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of certificates that is supported by a guarantee of Oakwood Homes, from the
dates of filing of these documents. Any statement contained in this prospectus
or in a document all or any portion of which is incorporated or deemed to be
incorporated by reference in this prospectus shall be deemed to be modified or
superseded for purposes of this prospectus and the related prospectus supplement
to the extent that a statement contained in this prospectus or in the prospectus
supplement or in any other subsequently filed document which also is or deemed
to be incorporated by reference in this prospectus or in the prospectus
supplement modifies or supersedes that statement. Any modified or superseded
statement shall not be deemed, except as modified or superseded, to constitute a
part of this prospectus and the related prospectus supplement.
We will provide you without charge, on your request, a copy of any of the
documents incorporated in this prospectus by reference, other than the exhibits
to those documents, unless the exhibits are specifically incorporated by
reference. Requests should be directed to Oakwood Mortgage Investors, Inc., in
writing at 101 Convention Center Drive, Suite 850, Las Vegas, Nevada 89109
(Telephone (702) 949-0056), Attn: Secretary.
Plan of Distribution
Oakwood Mortgage may sell the certificates offered hereby either directly
or through one or more underwriters or underwriting syndicates. The prospectus
supplement with respect to each series of certificates will set forth the terms
of the offering of the series of certificates and each class within the series,
including the name or names of the underwriter(s), the proceeds to and their
intended use by Oakwood Mortgage, and either the initial public offering price,
the discounts and commissions to the underwriter(s) and any discounts or
concessions allowed or reallowed to certain dealers, or the method by which the
price at which the related underwriter(s) will sell the certificates will be
determined.
The certificates of a series may be acquired by underwriters for their own
account and may be resold 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. If certificates of a series are
offered otherwise than through underwriters, the related prospectus supplement
will contain information regarding the nature of the offering and any agreements
to be entered into between Oakwood Mortgage and purchasers of certificates of
the series.
The place and time of delivery for the certificates of a series in respect
of which this prospectus is delivered will be described in the prospectus
supplement.
Legal Investment Considerations
The prospectus supplement for each series of certificates will specify
which, if any, of the classes of certificates of the series will constitute
mortgage related securities for purposes of the Secondary Mortgage Market
Enhancement Act of 1984 ("SMMEA"). If so, certificates designated as qualifying
as mortgage related securities will continue to qualify for as long as they are
rated in one of the two highest categories by at least one nationally recognized
statistical rating agency. Classes of certificates that qualify as mortgage
related securities under
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SMMEA will be legal investments for persons, trusts, corporations,
partnerships, associations, business trusts and business entities, including
depository institutions, life insurance companies and pension funds, created
pursuant to or existing under the laws of the United States or of any state
whose authorized investments must observe state regulation to the same extent
as, under applicable law, obligations issued by or guaranteed as to principal
and interest by the United States or any of its agencies or instrumentalities
constitute legal investments for these entities. Some states have enacted
legislation specifically limiting, to varying degrees, the legal investment
authority of these entities with respect to mortgage related securities, in most
cases requiring investors to rely solely upon existing state law and not SMMEA.
In any case in which this legislation is applicable, the certificates will
constitute legal investments only to the extent provided in the legislation.
SMMEA also amended the legal investment authority of federally-chartered
depository institutions as follows: federal savings and loan associations and
federal savings banks may invest in, sell or otherwise deal in mortgage-related
securities without limitation as to the percentage of their assets represented
thereby; federal credit unions may invest in mortgage-related securities; and
national banks may purchase mortgage-related securities for their own account
without regard to the limitations generally applicable to investment securities
set forth in 12 U.S.C. ss. 24 (Seventh), subject, in each case, to such
regulations as the applicable federal regulatory authority may prescribe.
The Federal Financial Institutions Examination Council, the Federal Deposit
Insurance Corporation, the Office of Thrift Supervision, the Office of the
Comptroller of the Currency and the National Credit Union Administration have
proposed or adopted guidelines regarding investment in various types of
mortgage-backed securities. In addition, state regulators have taken positions
that may prohibit regulated institutions from holding securities representing
residual interests, including securities previously purchased. There may be
other restrictions on the ability of some investors, including depository
institutions, either to purchase certificates or to purchase certificates
representing more than a specified percentage of the investor's assets. We
suggest that investors consult their own legal advisors in determining whether
and to what extent any particular certificates constitute legal investments for
them.
Certificates that do not constitute mortgage related securities under
SMMEA will require registration, qualification or an exemption under applicable
state securities laws in those states that have enacted legislation overriding
SMMEA's provisions pre-empting state blue sky laws. In addition, these
certificates may not be legal investments to the same extent as mortgage related
securities under SMMEA. The appropriate characterization under various legal
investment restrictions of the classes of certificates that do not qualify as
mortgage related securities under SMMEA and thus the ability of regulated
investors to purchase these classes of certificates, contains significant
interpretive uncertainties. All investors whose investment authority has legal
restrictions should consult their own legal advisors to determine whether, and
to what extent, the classes of certificates that do not qualify as mortgage
related securities will constitute legal investments for them.
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Experts
The consolidated financial statements of Oakwood Homes Corporation and its
subsidiaries (collectively, "Oakwood Homes Corporation") as of September 30,
1998 and 1997 and for each of the three years in the period ended September 30,
1998, incorporated in this prospectus by reference to Oakwood Homes
Corporation's Annual Report on Form 10-K for the year ended September 30, 1998,
have been so incorporated in reliance on the report of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
Legal Matters
Legal matters relating to the certificates and material federal income tax
consequences concerning the certificates will be passed upon for Oakwood
Mortgage by Hunton & Williams, Richmond, Virginia.
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Index of Terms
"1986 Act" ...................................................... 53
"Accretion Class" ............................................... 6
"Adjustable Rate Asset" ......................................... 14
"Advance" ........................................................ 11
"Affiliate" ...................................................... 68
"Aggregation Rule" ............................................... 53
"All OID Election" .............................................. 54
"Balloon Payment Loan" .......................................... 15
"Bankruptcy Code" ................................................ 42
"Beneficial Owner" ............................................... 7
"Benefit Plan Opinion" ........................................... 85
"Bi-Weekly Loan" ................................................. 15
"Buy-Down Loan" .................................................. 14
"Cap" ............................................................ 58
"Capital Appreciation Class" ..................................... 6
"CERCLA" ......................................................... 48
"Certificate Account" ............................................ 5
"Certificate Register" ........................................... 7
"Code" .......................................................... 47
"Collection Period" .............................................. 10
"Companion Class" ................................................ 6
"Compensating Interest" ......................................... 34
"Complementary Strip Certificates" ............................... 81
"Compound Interest Class" ........................................ 6
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"Contingent Payment Obligation" ............................... 59
"Contingent Payment Regulations" .............................. 59
"Convertible Loan" ............................................ 15
"Current Recognition Election" ............................... 60
"Custodian" ................................................... 28
"Cut-off Date" ................................................ 5
"Deemed Principal Payments" .................................. 53
"Depository Participants" .................................... 7
"Disqualified Organization" ................................... 67
"Distribution Account" ........................................ 5
"distribution date" ........................................... 18
"Distribution Period" ......................................... 56
"Early Payment" ............................................... 33
"Eligible Account" ............................................ 32
"Escrow Account" .............................................. 31
"Event of Default" ............................................ 37
"Excess Premium" .............................................. 57
"Final Scheduled Distribution Date" ........................... 10
"Financial Intermediary" ...................................... 7
"First Distribution Period" ................................... 56
"Floor" ....................................................... 58
"Foreign Person" .............................................. 75
"Foreign Person Certification" ................................ 75
"Governor" .................................................... 58
"Gross Margin" ................................................ 18
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"Increasing Payment Loan" ..................................... 14
"Interest Reduction Loan" ..................................... 14
"Interest Weighted Certificate" ............................... 55
"Inverse Floater Certificate" ................................. 59
"IO Certificate" .............................................. 81
"Land Secured Contract" ....................................... 23
"Level Payment Loan" .......................................... 14
"Monthly Payment" ............................................. 10
"Multiple Rate VRDI Certificate" .............................. 58
"Non-Recoverable Advance" ..................................... 33
"Non-VRDI certificate" ........................................ 55
"Notional Principal Amount" ................................... 6
"NOWA Certificate" ............................................ 55
"OID Regulations" ............................................. 53
"Ordinary Ratio Certificate" .................................. 80
"PAC Class" ................................................... 6
"Parity Price" ................................................ 12
"Participants" ................................................ 7
"Participation Certificate" ................................... 77
"Pass-Through Rate" ........................................... 9
"Periodic Rate Cap" ........................................... 18
"Plan" ........................................................ 83
"Plan Asset Regulations" ...................................... 83
"Plan Investor" ............................................... 85
"PO Certificate" .............................................. 77
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"Pre-Funded Amount" ............................................. 18
"Pre-Funding Account" ........................................... 18
"Pre-Funding Period" ............................................ 18
"Pre-Issuance Accrued Interest" ................................. 56
"Pre-Issuance Accrued Interest Rule" ............................ 56
"Prepayment Model" .............................................. 16
"Prepayment Period" ............................................. 9
"Pricing Prepayment Assumptions" ................................ 53
"Principal-Only Class" .......................................... 6
"Qualified Bank" ................................................ 36
"Qualified Mortgage" ............................................ 72
"Qualified Stated Interest" ..................................... 53
"Qualifying REIT Interest" ...................................... 69
"Rate Bubble Certificate" ....................................... 57
"Rating Agency" ................................................. 5
"Ratio Certificate" ............................................. 82
"RCRA" .......................................................... 49
"Realized Loss" ................................................. 9
"Real Property" ................................................. 13
"Regular Certificate" ........................................... 50
"REMIC" ......................................................... 6
"Remittance Report" ............................................. 37
"REO Property" .................................................. 11
"Repo Property" ................................................. 11
"Repurchase Price" .............................................. 17
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"Residual Certificate" .......................................... 6
"RIC" ........................................................... 51
"Scheduled Principal Balance" ................................... 10
"Service" ....................................................... 51
"Servicing Advance" ............................................. 31
"Servicing Fee" ................................................. 32
"Single Rate VRDI Certificate" .................................. 58
"SMMEA" ......................................................... 87
"Soldiers' and Sailors' Civil Relief Act" ....................... 9
"Soldiers' and Sailors' Shortfall" .............................. 9
"Strip Class" ................................................... 6
"Stripping Regulations" ......................................... 79
"Superpremium Certificate" ...................................... 57
"Taxable Mortgage Pool" ......................................... 74
"Tax Administrator" ............................................. 52
"Teaser Certificate" ............................................ 54
"Title State" ................................................... 40
"Title V" ....................................................... 44
"TMP" ........................................................... 77
"UBTI" .......................................................... 64
"UCC State" ..................................................... 40
"Variable Rate Certificate" ..................................... 55
"VRDI" .......................................................... 57
"WAM" ........................................................... 53
"Weighted Average Certificate" .................................. 55
126
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses in connection with
the offering of $2,500,000,000 of the Mortgage Pass-Through Certificates being
registered under this Registration Statement, other than underwriting discounts
and commission:
SEC Registration............................................$ 695,000
Printing and Engraving...................................... 500,000
Legal Fees and Expenses..................................... 1,200,000
Accounting Fees and Expenses................................ 625,000
Trustee Fees and Expenses................................... 150,000
Rating Agency Fees.......................................... 1,200,000
Miscellaneous .............................................. 130,000
TOTAL..............................................$4,000,000
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 78.751 of the Nevada Revised Statues provides in substance that
Nevada corporations shall have the power, under specified circumstances, to
indemnify their directors, officers, employees and agents in connection with
pending, threatened or completed actions, suits or proceedings whether civil,
criminal, administrative, or investigative (except an action by or in right of
the Registrant) against liability and expenses incurred in any proceeding
arising out of such directors', officers', employees' or agents' status as such
or their activities in any one of the foregoing capacities. Section 78.752 of
the Nevada Revised Statues provides that Nevada corporations may purchase
insurance on behalf of any such director, officer, employee or agent. Section
4.17 of the Registrant's bylaws incorporates the indemnification provisions of
Section 78.751 of the Nevada Revised Statues to the fullest extent provided for
therein.
Oakwood Homes Corporation carries an insurance policy providing directors'
and officers' liability insurance for any liability its directors or officers or
the directors or officers of any of its subsidiaries, including the Registrant,
may incur in their capacities as such.
Under certain sales agreements entered into by the Registrant (as purchaser)
with Oakwood Acceptance Corporation ("OAC") as seller of collateral, OAC is
obligated to indemnify the Registrant against certain expenses and liabilities.
Reference is made to the form of Underwriting Agreement filed as an exhibit
hereto for provisions relating to the indemnification of directors, officers and
controlling persons of the Registrant against certain liabilities, including
liabilities under the Securities Act of 1933, as amended.
II-1
<PAGE>
<TABLE>
<CAPTION>
ITEM 16. EXHIBITS.
<S> <C>
1.1 Underwriting Agreement Standard Provisions, dated May 1999, together
with Form of Underwriting Agreement
3.1 Articles of Incorporation of Registrant
3.2 By-Laws of Registrant
4.1 Form of Pooling and Servicing Agreement
4.2 Standard Terms to Pooling and Servicing Agreement (May 1999 Edition)
4.3 Form of Guaranty Agreement
5.1 Legality Opinion of Hunton & Williams
5.2 Opinion of Kolesar & Leatham, Chtd.
8.1 Tax Opinion re: Adequacy of Prospectus Disclosure
8.2 Tax Opinion re: REMIC Certificates
8.3 Tax Opinion re: Non-REMIC Certificates
23.1 Consent of Hunton & Williams is contained in their opinions filed as
Exhibits 5.1, 8.1, 8.2 and 8.3
23.2 Consent of PricewaterhouseCoopers LLP
23.3 Consent of Kolesar & Leatham, Chtd. is contained in their opinion filed
as Exhibit 5.2
24.1 Power of Attorney (contained on signature page hereof)
99.1 Form of Sales Agreement between the Registrant, as Purchaser, and
Oakwood Acceptance Corporation, as Seller
</TABLE>
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 this Registration Statement:
(i) To include any prospectus required by Section 10(a)
(3) of the Securities Act of 1933;
(ii) To reflect in the Prospectus any facts or events
arising after the effective date of the Registration Statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change in
the information set forth in the Registration Statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
Registration Statement or any material change of such information
in the Registration Statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in the
post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are
included by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof;
(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 of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report
II-2
<PAGE>
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 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 Securities and
Exchange Commission, such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by 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 Act and will
be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 (including the security rating requirement)
and has duly caused this Pre-Effective Amendment No. 2 to the Registrant's
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Greensboro, County of Guilford, State of North
Carolina, on May 28, 1999.
OAKWOOD MORTGAGE INVESTORS,
INC. (REGISTRANT)
/S/ DENNIS W. HAZELRIGG
-----------------------
Dennis W. Hazelrigg
President
Each person whose signature appears below constitutes and appoints Dennis
W. Hazelrigg and Zaklina McGrew his true and lawful attorneys-in-fact and
agents, each acting alone, with full powers of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, each acting alone, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
<S> <C>
/s/ DENNIS W. HAZELRIGG Director and President May 28, 1999
- ----------------------------------- (PRINCIPAL EXECUTIVE OFFICER)
Dennis W. Hazelrigg
/s/ ZAKLINA MCGREW Director, Vice President and May 28, 1999
- ------------------------------------- Treasurer (PRINCIPAL FINANCIAL
Zaklina McGrew OFFICER AND PRINCIPAL ACCOUNTING
OFFICER)
/s/ MONTE L. MILLER Director May 28, 1999
- -------------------------------------
Monte L. Miller
- ------------------------------------- Director May __, 1999
Joshua C. Miller
</TABLE>
II-4
OAKWOOD MORTGAGE INVESTORS, INC.
--------------------
PASS-THROUGH CERTIFICATES
(ISSUABLE IN SERIES)
UNDERWRITING AGREEMENT
STANDARD PROVISIONS
--------------------
MAY 1999
<PAGE>
Oakwood Mortgage Investors, Inc., a Nevada corporation (the "Company"),
proposes to sell Pass-Through Certificates ("Certificates") in various series
(each a "Series"), in one or more offerings on terms to be determined at the
time of sale, each to be issued by a separate trust (a "Trust") under a pooling
and servicing agreement for such Series that incorporates by reference standard
terms (such agreement collectively with such standard terms, the "Pooling and
Servicing Agreement"), among the Company, Oakwood Acceptance Corporation
("OAC"), as servicer (in such capacity, the "Servicer"), and the trustee named
therein (the "Trustee"). The certificates of each Series (the "Certificates")
will represent in the aggregate the entire beneficial ownership interest in a
segregated pool of manufactured housing installment sales contracts
("Contracts") secured by units of manufactured housing ("Manufactured Homes")
and/or mortgage loans ("Mortgage Loans" and, collectively with Contracts,
"Assets") secured by first liens on real estate to which the related
Manufactured Homes are deemed permanently affixed ("Mortgaged Properties").
The Trustee may make one or more elections to have Trust Assets or
portions thereof treated as real estate mortgage investment conduits (each, a
"REMIC") under the Internal Revenue Code of 1986, as amended (the "Code"). In
the event that more than one REMIC is created for a Series, all references
herein to a REMIC shall be deemed to refer to all related REMICs, unless the
context otherwise requires.
The Company will sell, assign and transfer the Assets acquired by it to
the related Trust, all in exchange for the Certificates of the related Series
issued by that Trust. The Assets will have been acquired by the Company from OAC
or from one or more unaffiliated sellers (each, in such capacity, a "Seller"),
in each case pursuant to a sales agreement (each, a "Sales Agreement") between
the Company and the Seller of such Assets. The net proceeds to the Company from
the sale of each Series of the Certificates principally will be used to pay the
purchase price of the Assets acquired for the related Trust.
The Certificates are more fully described in the Registration Statement
(as hereinafter defined). Each Series of Certificates, and any classes of
Certificates within each Series, may vary, among other things, as to number and
types of classes, aggregate principal amount, final stated distribution dates,
the rate or rates of interest accruing thereon, and the allocation, priority and
timing of distributions thereon.
From time to time, the Company may enter into one or more terms
agreements (each, a "Terms Agreement") substantially in the form of the Form of
Terms Agreement attached hereto as Exhibit A, which Terms Agreements provide for
the sale of all or a portion of certain classes of a Series of Certificates
(such certificates to be so purchased being herein collectively referred to as
the "Underwritten Certificates") to the underwriters named in the related
underwriting agreement (the "Underwriters"). The standard provisions set forth
herein are to be incorporated by reference in any such Terms Agreement. A Terms
Agreement, including the provisions hereof incorporated therein by reference, is
herein referred to as an "Underwriting Agreement" or an "Agreement." Unless
otherwise defined herein, all capitalized terms used herein shall have the
meanings assigned to them in the Terms Agreement into which the standard
provisions are incorporated and if not defined therein shall have the meanings
assigned to them in the related Pooling and Servicing Agreement.
The Terms Agreement relating to each offering of Underwritten
Certificates shall specify, among other things, the principal amount of the
Underwritten Certificates to be issued and their terms not otherwise specified
in the related Pooling and Servicing Agreement, the price or prices at which the
Underwritten Certificates are to be purchased by the Underwriters from the
Company, the initial public offering price or the method by which the price at
which such Underwritten Certificates are to be sold will be determined, the
names of the firms, if any, designated as representatives of the Underwriters
(the "Representatives"), and the principal amount of the Underwritten
Certificates to be purchased by each Underwriter, and shall set forth the date,
time and manner of delivery of the Underwritten Certificates and payment
therefor.
The Company is a limited-purpose finance corporation and wholly-owned
subsidiary of OAC, which in turn, is a wholly-owned subsidiary of Oakwood Homes
Corporation, a North Carolina corporation.
1. Representations and Warranties. (a) The Company and OAC represent
and warrant to, and agree
<PAGE>
with, each Underwriter that:
(i) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 for
the registration of the Underwritten Certificates under the Securities
Act of 1933, as amended (the "Act"), which registration statement has
become effective, and has filed such amendments thereto and such
additional registration statements as may have been required to the
date hereof. Such registration statement, as amended at the date
hereof, meets the requirements set forth in Rule 415 under the Act and
complies in all other material respects with the Act and the rules and
regulations thereunder. The Company proposes to file with the
Commission pursuant to Rule 424 under the Act a supplement to the form
of prospectus included in such registration statement relating to the
Underwritten Certificates and the plan of distribution thereof. Such
registration statement, including the exhibits thereto, as amended at
the date hereof, is hereinafter called the "Registration Statement;"
the latter of such prospectus in the form in which it appears in the
Registration Statement or in the form most recently revised and filed
with the Commission pursuant to Rule 424 is hereinafter called the
"Basic Prospectus;" and the form of prospectus supplement specifically
relating to the Underwritten Certificates, in the form in which it
shall be first filed with the Commission pursuant to Rule 424
(including the Basic Prospectus as so supplemented and the information,
if any, filed with the Commission pursuant to the Exchange Act and
incorporated by reference therein) is hereinafter called the "Final
Prospectus." Any preliminary form of the Final Prospectus which has
heretofore been filed pursuant to Rule 424 or, prior to the effective
date of the Registration Statement, pursuant to Rule 402(a), 424(a) or
430A, is hereinafter called a "Preliminary Final Prospectus." Any
supplement to the Basic Prospectus specifically relating to the
Underwritten Certificates shall be referred to by itself as the
"Prospectus Supplement."
(ii) As of the date of this Agreement, when the Final
Prospectus is first filed pursuant to Rule 424 under the Act, when,
prior to the Closing Date (as hereinafter defined), any amendment to
the Registration Statement becomes effective, when any supplement to
the Final Prospectus is filed with the Commission, and at the Closing
Date, (A) the Registration Statement, as amended as of any such time,
and the Final Prospectus, as amended or supplemented as of any such
time, complies and will comply in all material respects with the
applicable requirements of the Act and the rules and regulations
thereunder and (B) the Registration Statement, as amended as of any
such time, does not contain and will not contain any untrue statement
of a material fact and does not omit and will not omit to state any
material fact required to be stated therein or necessary in order to
make the statements made therein not misleading and the Final
Prospectus, as amended or supplemented as of any such time, does not
and will not include an untrue statement of a material fact and does
not omit and will not omit to state a material fact necessary in order
to make the statements made therein, in light of the circumstances
under which they were made, not misleading; PROVIDED, HOWEVER, that the
Company makes no representations or warranties as to the information
contained in or omitted from the Registration Statement or the Final
Prospectus or any amendment thereof or supplement thereto in reliance
upon and in conformity with information furnished in writing to the
Company by or on behalf of any Underwriter specifically for use in
connection with the preparation of the Registration Statement and the
Final Prospectus.
(iii) As of the date of this Agreement, when the Final
Prospectus is first filed pursuant to Rule 424 under the Act, when,
prior to the Closing Date, any amendment to the Registration Statement
becomes effective, when any supplement to the Final Prospectus is filed
with the Commission, and at the Closing Date, there has not and will
not have been (A) any request by the Commission for any further
amendment of the Registration Statement or the Final Prospectus or for
any additional information, (B) any issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement
or the initiation or threat of any proceeding for that purpose, or (C)
any notification with respect to the suspension of the qualification of
the Underwritten Certificates for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose.
2
<PAGE>
(iv) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Nevada with full power and authority (corporate and other) to own
its properties and to conduct its business as it is now conducted and
as described in the Final Prospectus, and to enter into and perform its
obligations under the Agreement, each related Sales Agreement and the
related Pooling and Servicing Agreement, and has qualified to do
business as a foreign corporation and is in good standing under the
laws of each jurisdiction that requires such qualification wherein it
owns or leases material properties, except where the failure so to
qualify would not have a material adverse effect on the Company. The
Company holds all material licenses, certificates, franchises, and
permits from all governmental authorities necessary for the conduct of
its business as it is now conducted and as described in the Final
Prospectus, and has received no notice of proceedings relating to the
revocation of any such license, certificate or permit, that, singly or
in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would affect materially and adversely the conduct of the
business, results of operations, net worth or condition (financial or
otherwise) of the Company.
(v) The execution of the Terms Agreement, each related Sales
Agreement and the related Pooling and Servicing Agreement are within
the corporate power of the Company. The Agreement has been and as of
the Closing Date the related Pooling and Servicing Agreement and each
related Sales Agreement will have been, duly and validly authorized,
executed and delivered by the Company, and assuming the valid
authorization, execution and delivery by the other parties thereto,
each constitutes, or will constitute, a legal, valid and binding
agreement of the Company, enforceable against the Company in accordance
with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally
and to general principles of equity, regardless of whether such
enforcement is sought in a proceeding in equity or at law, and except
that with respect to the Agreement the provisions relating to
indemnification of the Underwriters may be unenforceable as against
public policy.
(vi) Neither the issuance and sale of the Underwritten
Certificates, nor the execution and delivery by the Company of this
Agreement, any related Sales Agreement or the related Pooling and
Servicing Agreement, nor the consummation by the Company of any of the
transactions herein or therein contemplated, nor compliance by the
Company with the provisions hereof or thereof, will (A) conflict with
or result in a breach of, or constitute a default under, any of the
provisions of the articles of incorporation or by-laws of the Company
or any law, governmental rule or regulation or any judgment, decree or
order binding on the Company or any of its properties, or any of the
provisions of any indenture, mortgage, deed of trust, contract or other
instrument to which the Company is a party or by which it is bound, or
(B) result in the creation or imposition of any lien, charge, or
encumbrance upon any of its properties pursuant to the terms of any
such indenture, mortgage, deed of trust, contract or other instrument.
(vii) No filing or registration with, notice to, qualification
of or with, or consent, approval, authorization or order or other
action of any person, corporation or other organization or of any
court, supervisory or governmental authority or agency is required for
the consummation by the Company of the transactions contemplated by
this Agreement or the related Pooling and Servicing Agreement except
such as have been, or will have been prior to the Closing Date,
obtained under the Act, or state securities laws or "Blue Sky" laws, or
from the National Association of Securities Dealers, Inc. in connection
with the purchase and distribution of the Underwritten Certificates by
the Underwriters, or any recordations of the assignment of the related
Mortgage Loans to the Trustee pursuant to the related Pooling and
Servicing Agreement that have not yet been completed.
(viii) There are no actions, suits or proceedings against, or
investigations of, the Company pending, or, to the knowledge of the
Company, threatened, before any court, administrative agency or other
tribunal (A) asserting the invalidity of the Agreement, the related
Pooling and Servicing Agreement, any related Sales Agreement or the
Certificates of the related Series, (B) seeking to prevent the issuance
of the Certificates of the related Series or the consummation of any of
the transactions contemplated by the
-3-
<PAGE>
Agreement, any related Sales Agreement or the related Pooling and
Servicing Agreement, (C) which might materially and adversely affect
the business, operations, financial condition (including, if
applicable, on a consolidated basis), properties or assets of the
Company, performance by the Company of its obligations under, or the
validity or enforceability of, the Agreement, the related Pooling and
Servicing Agreement, any related Sales Agreement, or the validity or
enforceability of the Certificates of the related Series or (D) seeking
to affect adversely the federal or state income tax attributes of the
Underwritten Certificates as described in the Final Prospectus.
(ix) Since the respective dates as of which information is
given in the Registration Statement and the Final Prospectus, there has
not been any material adverse change or development involving a
prospective material adverse change in the business, operations,
financial condition, properties or assets of the Company.
(x) The Underwritten Certificates and Pooling and Servicing
Agreement will conform in all material respects to the descriptions
thereof contained in the Final Prospectus, and the Underwritten
Certificates, when duly and validly executed and authenticated by the
Trustee and delivered to and paid for by the Underwriters as provided
herein, will be validly issued and entitled to the benefits of the
related Pooling and Servicing Agreement, and will be binding
obligations of the Trust to the extent provided in the related Pooling
and Servicing Agreement.
(xi) At the time of execution of the related Pooling and
Servicing Agreement, the Company will own the Assets being transferred
to the Trustee pursuant to the related Pooling and Servicing Agreement,
free and clear of any lien, adverse claim, mortgage, charge, pledge or
other encumbrance or security interest, and will not have assigned to
any other person any of its right, title or interest in such Assets,
and, upon the execution of the related Pooling and Servicing Agreement,
the Company will have transferred all its right, title and interest in
such Assets to the Trustee, PROVIDED that the Company will not be
deemed to be in breach of this representation and warranty to the
extent that a court of competent jurisdiction holds that at the time of
the execution of the related Pooling and Servicing Agreement the
Company had a first priority perfected security interest in such Assets
or that the Company granted to the Trust a first priority perfected
security interest in such Assets.
(xii) Under generally accepted accounting principles, the
Company will report its transfer of the Assets to the Trustee pursuant
to the related Pooling and Servicing Agreement and the sale of the
Certificates of the related Series as a sale of its interest in such
Assets. The Company has been advised by its independent certified
public accountants that it concurs with such treatment under generally
accepted accounting principles. For federal income tax purposes, the
Company will treat the transfer of the Assets to the Trustee and the
sale of the Underwritten Certificates either as a transaction in which
it acts as the agent of one or more Sellers or as a sale of its
interest in the Assets.
(xiii) As of the Closing Date, the Assets will be duly and
validly assigned to the Trustee or its nominee, UCC-1 financing
statements describing any Contracts as collateral and (i) naming the
Seller as "debtor," the Company as "secured party" and the Trustee as
"assignee" and (ii) naming the Company as "debtor" and the Trustee as
"secured party," will be filed in all filing offices where such filing
is necessary to perfect the Trustee's ownership or security interest in
any related Contracts, and any related Mortgage Notes will be endorsed
without recourse to the Trustee or to its nominee and delivered to the
Trustee or to an agent on its behalf and, where required in order to
transfer all right, title and interest to a Mortgage Loan. Upon
completion of the aforementioned actions, upon the stamping of the face
of each related Contract with a legend giving notice of the assignment
of such Contract to the Trustee, and, where required in order to
transfer a lien on a Mortgaged Property, upon the recordation of
assignments to the Trustee of any related Mortgages in the public
records in which such Mortgages shall have been recorded (which
recordation shall be effected unless the Underwriters receive an
opinion of counsel satisfactory to them (at
-4-
<PAGE>
the Company's expense) that such recording is not required under
applicable law to perfect the Trustee's security interest in the
related Mortgaged Property), the Trustee will own each related Asset,
subject to no prior lien, mortgage, security interest, pledge, charge
or other encumbrance, except as permitted under the related Pooling and
Servicing Agreement; PROVIDED THAT the Company will not be deemed to be
in breach of this representation and warranty as to any Asset to the
extent that a court of competent jurisdiction holds that the Trustee
has a first priority perfected security interest in such Asset or that
the Company assigned to the Trust a first priority perfected security
interest in such Asset.
(xiv) As of the Closing Date, any letter of credit or surety
bond included in any accounts or funds constituting part of the Trust
with respect to the Underwritten Certificates will name the Trustee as
the beneficiary thereof and will be delivered to the Trustee, any cash
will be delivered to the Trustee and any Eligible Investments (as
defined in the related Pooling and Servicing Agreement) will be made in
the Trustee's name, and delivered to and/or assigned to the Trustee,
and the Trustee either will own such assets, or have a first priority
perfected security interest therein, in either case subject to no prior
lien, security interest, pledge, charge or other encumbrance.
(xv) Each Seller has been duly incorporated or otherwise
formed and is validly existing and duly qualified under the laws of the
jurisdiction of its incorporation or formation and each jurisdiction
that requires such qualification wherein it owns or leases any material
properties (except where the failure so to qualify would not have a
material adverse effect on such Seller).
(xvi) At the time of the execution and delivery of a Sales
Agreement by each Seller, such execution and delivery by such Seller
will be within the legal power of such Seller and will have been duly
authorized by all necessary action on the part of such Seller; and
neither the execution and delivery of such Sales Agreement by such
Seller, nor the consummation by such Seller of the transactions therein
contemplated, nor compliance with the provisions thereof by such
Seller, will (A) conflict with or result in a breach of, or constitute
a default under, any of the provisions of the articles of
incorporation, by-laws, partnership agreement or other organizational
documents of such Seller, or any law, governmental rule or regulation,
or any judgment, decree or order binding on such Seller or any of its
properties, or any of the provisions of any indenture, mortgage, deed
of trust, contract or other instrument to which such Seller is a party
or by which it is bound, or (B) result in the creation or imposition of
any lien, charge or encumbrance upon any of its properties pursuant to
the terms of any such indenture, mortgage, deed of trust, contract or
other instrument.
(xvii) Each related Sales Agreement, when executed and
delivered as contemplated thereby, will have been duly executed and
delivered by the Seller that is a party thereto, and each will
constitute, when so executed and delivered, a legal, valid and binding
agreement, enforceable against such Seller in accordance with its
terms, subject to bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally and to general
principles of equity, regardless of whether such enforcement is sought
in a proceeding in equity or at law, and except that the provisions of
indemnity contained therein may be unenforceable as against public
policy.
(xviii) Under generally accepted accounting principles, each
Seller will report its transfer of the Assets pursuant to its Sales
Agreement as a sale of its interest in such Assets. Each Seller has
been advised by its independent certified public accountants that they
concur with such treatment under generally accepted accounting
principles and, if applicable, regulatory accounting principles. Each
Seller also will so report the transfer in all financial statements and
reports to the regulatory and supervisory agencies and authorities to
which it reports, if any. For federal income tax purposes, each Seller
will treat the transfer of the Assets pursuant to the related Sales
Agreement as a sale of the interest in the Assets represented by the
Certificates of the related Series not held by such Seller and as an
exchange of the remaining interest in the Assets for any Certificates
of such Series retained by such Seller.
-5-
<PAGE>
(xix) At the Closing Date, each Contract, Mortgage Note and
Mortgage will constitute a legal, valid and binding instrument,
enforceable against the related Obligor in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally, and to general
principles of equity (whether considered in a proceeding at law or in
equity), and will meet the criteria for selection described in the
Final Prospectus.
(xx) At the Closing Date, any Primary Mortgage Insurance
Policies and Standard Hazard Insurance Policies (as such terms are
defined in the related Pooling and Servicing Agreement) that are
required to be maintained with respect to any of the related Assets
pursuant to the related Pooling and Servicing Agreement will have been
duly and validly authorized, executed and delivered by, and will
constitute legal, valid and binding obligations of the issuers of such
Primary Mortgage Insurance Policies and Standard Hazard Insurance
Policies (collectively, the "Insurers"), as the case may be, subject to
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and to general principles of
equity, regardless of whether enforcement is sought in a proceeding in
equity or at law.
(xxi) Each Contract and Mortgage Loan was originated by an
entity that met the mortgagee criteria specified in Section 3(a)(41) of
the Securities Exchange Act of 1934 (the "Exchange Act") for the
related Certificates to constitute "mortgage related securities"
(assuming all other requirements of such Section 3(a)(41) are also met
in respect of such Certificate for such Certificates to be "mortgage
related securities" as so defined) at the time of origination of such
Contract or Mortgage Loan.
(xxii) Each of the Underwritten Certificates, when issued,
will constitute a "mortgage related security" as such term is defined
in Section 3(a)(41) of the Exchange Act for so long as such Certificate
is rated in one of the two highest rating categories by a nationally
recognized statistical rating organization.
(xxiii) Any taxes, fees and other governmental charges in
connection with the execution, delivery and issuance of this Agreement
and the related Pooling and Servicing Agreement and the execution,
delivery and sale of the Underwritten Certificates have been or will be
paid at or prior to the Closing Date.
(xxiv) Neither the Company nor the Trust is, and the issuance
and sale of the Underwritten Certificates in the manner contemplated by
the Final Prospectus will not cause the Company or the Trust to become,
subject to registration or regulation as an "investment company" or an
affiliate of an "investment company" under (and as defined in) the
Investment Company Act of 1940, as amended (the "Investment Company
Act").
(xxv) Immediately prior to the delivery of the Underwritten
Certificates to the Underwriters, the Company will own the Underwritten
Certificates free and clear of any lien, adverse claim, pledge,
encumbrance or other security interest, and will not have assigned to
any person any of its right, title or interest in the Underwritten
Certificates, and, upon consummation of the transactions contemplated
in this Agreement, the Company will have transferred all its right,
title and interest in the Underwritten Certificates to the
Underwriters.
(xxvi) At the Closing Date, the representations and warranties
made by the Company in the related Pooling and Servicing Agreement will
be true and correct in all material respects.
(b) OAC further represents and warrants to, and agrees with, each
Underwriter that:
(i) OAC has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of North
Carolina with full power and authority (corporate and other) to own its
properties and conduct its business as it is now conducted by OAC, and
has qualified to do business as a
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<PAGE>
foreign corporation and is in good standing under the laws of each
jurisdiction which requires such qualification wherein it owns or
leases material properties except when the failure to so qualify would
not have a material adverse effect on OAC.
(ii) The execution of the Agreement and the related Sales
Agreement (if applicable) and the related Pooling and Servicing
Agreement are within the corporate power of OAC. This Agreement has
been, and as of the Closing Date the related Sales Agreement (if
applicable) and the related Pooling and Servicing Agreement will have
been, duly and validly authorized, executed and delivered by OAC, and
assuming the valid authorization, execution and delivery of each such
agreement by the other parties thereto, each of such agreements
constitutes a legal, valid and binding obligation of OAC, enforceable
against OAC in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and to general principles of equity,
regardless of whether such enforcement is sought in a proceeding in
equity or at law, and except that the provisions relating to
indemnification of the Underwriters may be unenforceable as against
public policy.
(iii) Neither the issuance and sale of the Underwritten
Certificates, nor the execution and delivery by OAC of this Agreement,
any related Sales Agreement or the related Pooling and Servicing
Agreement, nor the consummation by OAC of any of the transactions
herein or therein contemplated, nor compliance by OAC with the
provisions hereof or thereof, will (A) conflict with or result in a
breach of, or constitute a default under, any of the provisions of the
articles of incorporation or by-laws of OAC or any law, governmental
rule or regulation or any judgment, decree or order binding on OAC or
any of its properties, or any of the provisions of any indenture,
mortgage, deed of trust, contract or other instrument to which OAC is a
party or by which it is bound, or (B) result in the creation of any
lien, charge, or encumbrance upon any of its properties pursuant to the
terms of any such indenture, mortgage, deed of trust, contract or other
instrument.
(iv) There are no actions, suits or proceedings against, or
investigations of, OAC pending, or, to the knowledge of OAC,
threatened, before any court, administrative agency or other tribunal
(i) asserting the invalidity of the Agreement, the related Pooling and
Servicing Agreement or any related Sales Agreement, (ii) seeking to
prevent the consummation of any of the transactions contemplated by the
Agreement or any related Sales Agreement or the related Pooling and
Servicing Agreement, (iii) which might materially and adversely affect
the business, operations, financial condition (including, if
applicable, on a consolidated basis), properties or assets of OAC,
performance by OAC of its obligations under, or the validity or
enforceability of, the Agreement, the related Pooling and Servicing
Agreement or any related Sales Agreement or (iv) seeking to affect
adversely the federal or state income tax attributes of the
Underwritten Certificates as described in the Final Prospectus.
(v) No filing or registration with, notice to, qualification
of or with, or consent, approval, authorization or order or other
action of any person, corporation or other organization or of any
court, supervisory or governmental authority or agency is required for
the consummation by OAC of the transactions contemplated by this
Agreement or the related Pooling and Servicing Agreement except such as
have been, or will have been prior to the Closing Date, obtained under
the Act, or state securities laws or "Blue Sky" laws, or from the
National Association of Securities Dealers, Inc. in connection with the
purchase and distribution of the Underwritten Certificates by the
Underwriters, or any recordations of the assignment of the related
Mortgage Loans to the Trustee pursuant to the related Pooling and
Servicing Agreement that have not yet been completed.
-7-
<PAGE>
2. Purchase and Sale. Subject to the terms and conditions and in reliance upon
the representations and warranties set forth herein, the Company agrees to sell
to each Underwriter, and each Underwriter agrees, severally and not jointly, to
purchase from the Company, at the applicable purchase prices set forth in the
related Terms Agreement (plus accrued interest as therein set forth),
Underwritten Certificates representing the respective aggregate approximate
principal amounts, notional amounts or percentage interests, as the case may be,
of the various classes of Underwritten Certificates set forth in the Terms
Agreement or opposite such Underwriter's name in an attachment to the Terms
Agreement.
3. Delivery and Payment. Delivery of and payment for the Underwritten
Certificates shall be made at the office, on the date and at the time specified
in the related Terms Agreement, which date and time may be postponed by
agreement between the Underwriters and the Company or as provided in Section 10
hereof (such date and time of delivery and payment for the Underwritten
Certificates being herein called the "Closing Date"). Delivery of the
Underwritten Certificates shall be made to the Underwriters against payment by
the Underwriters of the purchase price thereof to or upon the order of the
Company in the type of funds specified in the Terms Agreement. The Underwritten
Certificates shall be registered in such names and in such authorized
denominations as the Underwriters may request in writing not less than two full
business days in advance of the Closing Date.
The Company agrees to have the Underwritten Certificates available for
inspection, checking and packaging by the Underwriters in New York, New York (or
such other location within the continental United States requested by the
Underwriters), not later than 1:00 p.m. on the business day prior to the Closing
Date.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Underwritten Certificates of such Series for
sale to the public as set forth in the related Final Prospectus.
5. Agreements. (a) The Company covenants and agrees with the several
Underwriters that:
(i) Substantially contemporaneously with the execution of this
Agreement, the Company will prepare the supplement to the Basic
Prospectus setting forth the principal amount of Underwritten
Certificates covered thereby and the material terms thereof, the
initial public offering price of the Underwritten Certificates or the
manner of offering such Underwritten Certificates, the price at which
the Underwritten Certificates are to be purchased by the Underwriters
from the Company, the selling concessions and reallowance, if any, and
such other information as the Underwriters and the Company deem
appropriate in connection with the offering of such Underwritten
Certificates. The Company will not file any amendment or supplement to
the Final Prospectus relating to the Underwritten Certificates unless
the Company has furnished the Underwriters a copy for their review
prior to filing and will not file any such proposed amendment or
supplement to which the Underwriters reasonably object. Subject to the
foregoing sentence, the Company will cause the Final Prospectus to be
filed with the Commission pursuant to Rule 424 under the Act and a
report on Form 8-K will be filed with the Commission within 15 days
following the Closing setting forth specific information concerning the
Underwritten Certificates and the related Assets and including, as an
exhibit, a copy of the related Pooling and Servicing Agreement. In
addition, to the extent that any Underwriter (i) has provided
Collateral Term Sheets to the Company that such Underwriter has
provided to a prospective investor, the Company has filed such
Collateral Term Sheets as an Exhibit to Form 8-K within two business
days of its receipt thereof, or (ii) has provided Structural Term
Sheets or Computational Materials to the Company that such Underwriter
has provided to a prospective investor, the Company will file or cause
to be filed with the Commission a report on Form 8-K containing such
Structural Term Sheets and Computational Materials, as soon as
reasonably practicable after the date of the Underwriting Agreement,
but in any event, not later than the date on which the Final Prospectus
is filed with the Commission pursuant to Rule 424 under the Act. The
Company will promptly advise the Underwriters (A) when the Final
Prospectus shall have been filed with the Commission pursuant to Rule
424 and the Form 8-K shall have been filed with the Commission, (B)
when any amendment to the Registration
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<PAGE>
Statement shall have become effective, (C) of any request by the
Commission for any amendment of the Registration Statement or the Final
Prospectus or for any additional information, (D) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation or threatening of any
proceeding for that purpose, and (E) of the receipt by the Company of
any notification with respect to the suspension of the qualification of
the Underwritten Certificates for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose. The
Company will use its best efforts to prevent the issuance of any such
stop order or suspension and, if issued, to obtain the withdrawal
thereof as soon as possible.
(ii) If, at any time when a prospectus relating to the
Underwritten Certificates is required to be delivered under the Act,
any event occurs as a result of which, in the opinion of counsel to the
Company or the Underwriters, the Final Prospectus, as then amended or
supplemented, would include any untrue statement of a material fact or
omit to state any material fact necessary to make the statements made
therein, in the light of the circumstances under which they were made,
not misleading, or if it shall be necessary to amend or supplement the
Final Prospectus to comply with the Act or the rules and regulations
thereunder, the Company will promptly prepare and file with the
Commission, subject to paragraph (i) of this Section 5, an amendment or
supplement that will correct such statement or omission or an amendment
that will effect such compliance and, if such amendment or supplement
is required to be contained in a post-effective amendment of the
Registration Statement, will use its best efforts to cause such
amendment of the Registration Statement to be made effective as soon as
possible and will promptly file all reports and any definitive proxy or
information statements required to be filed by the Company pursuant to
Sections 13, 14 and 15 of the Exchange Act subsequent to the date of
the Prospectus for so long as the delivery of a Prospectus is required
in connection with the offering or sale of the Underwritten
Certificates; PROVIDED, HOWEVER, that any such amendment or update
prepared more than nine months after the Closing Date shall be at the
expense of the Underwriters.
(iii) The Company will furnish to counsel for the
Underwriters, without charge, signed copies of the Registration
Statement (including exhibits thereto) and each amendment thereto which
shall become effective on or prior to the Closing Date, and to each
Underwriter a conformed copy of the Registration Statement (without
exhibits thereto) and each such amendment and, so long as delivery of a
prospectus by an Underwriter or dealer may be required by the Act, as
many copies of any Preliminary Final Prospectus and the Final
Prospectus and any amendments thereof and supplements thereto as the
Underwriters may reasonably request.
(iv) The Company will apply the net proceeds from the sale of
the Underwritten Certificates in the manner set forth in the related
Final Prospectus.
(v) The Company or OAC will pay or cause to be paid all the
fees and disbursements of the Company's counsel and of independent
accountants for the Company relating to legal review, opinions of
counsel for the Company, audits, review of unaudited financial
statements, cold comfort review or otherwise; the costs and expenses of
printing (or otherwise reproducing) and delivering the Agreement, the
related Pooling and Servicing Agreement and the Underwritten
Certificates; the initial fees, costs and expenses of or relating to
the Trustee under the related Pooling and Servicing Agreement and its
counsel; the initial fees, costs and expenses of or relating to any
custodian of the Contracts or Mortgage Loans under a custodial
agreement and such custodian's counsel; the costs and expenses incident
to the preparation, printing, distribution and filing of the
Registration Statement (including exhibits thereto), the Basic
Prospectus, the Preliminary Final Prospectus and the Final Prospectus,
and all amendments of and supplements to the foregoing, and of the
Underwritten Certificates; and the fees of rating agencies. Except as
provided in Section 7 hereof, the Underwriters shall be responsible for
paying all costs and expenses incurred by them in connection with their
purchase and sale of the Underwritten Certificates.
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<PAGE>
(vi) The Company will use its best efforts to arrange for the
qualification of the Underwritten Certificates for sale under the laws
of such jurisdictions as the Underwriter may designate in the Terms
Agreement, to maintain such qualifications in effect so long as
required for the distribution of the Underwritten Certificates and to
arrange for the determination of the legality of the Underwritten
Certificates for purchase by investors; PROVIDED, HOWEVER, that the
Company shall not be required to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action
which would subject it to general or unlimited service of process in
any jurisdiction where it is not now so subject, and PROVIDED FURTHER,
that the Underwriter shall pay all costs and expenses associated
therewith.
(vii) So long as any Underwritten Certificates are
outstanding, the Company will cause the related Servicer or Trustee to
furnish to the Underwriter, as soon as available, a copy of (A) the
annual statement of compliance delivered by the Servicer to the Trustee
under the related Pooling and Servicing Agreement, (B) the annual
independent public accountants' servicing report furnished to the
Trustee pursuant to the related Pooling and Servicing Agreement, (C)
each report, statement or other document regarding the Underwritten
Certificates filed with the Commission under the Exchange Act or mailed
to the holders of the Underwritten Certificates, pursuant to the
related Pooling and Servicing Agreement or otherwise, (D) any reports
provided by certified public accountants pursuant to the related
Pooling and Servicing Agreement regarding the reports, statements or
other documents included in clause (C) above, and (E) from time to
time, such other information concerning the Underwritten Certificates
as the Underwriter may reasonably request and which may be furnished by
the Company or the Servicer without undue expense. In addition, the
Company shall make or cause the Trustee to make generally available to
the holders of the Underwritten Certificates as soon as practicable,
but in any event not later than sixteen months from the date of this
Agreement, an earnings statement of the issuer of the Underwritten
Certificates (which need not be audited) complying with Section 11(a)
of the Act and the rules and regulations of the Commission (including
at the option of the Company, Rule 158).
(viii) Without the consent of the Underwriters, the Company
will not waive any of the conditions to its obligations to purchase the
Assets pursuant to the related Sales Agreement.
(ix) If a REMIC election is to be made with respect to some or
all of the related Assets ("REMIC Assets"), the Company will make or
cause to be made all filings necessary to establish and maintain the
status of such REMIC Assets as a REMIC.
(b) Each Underwriter represents, warrants, covenants and agrees with
the Company and OAC that:
(i) It either (A) has not provided any potential investor with
a Collateral Term Sheet (that is required to be filed with the
Commission within two business days of first use under the terms of the
Public Securities Association Letter as described below), or (B) has,
substantially contemporaneously with its first delivery of such
Collateral Term Sheet to a potential investor, delivered such
Collateral Term Sheet to the Company, which Collateral Term Sheet, if
any, is attached to the Underwriting Agreement as Exhibit A.
(ii) It either (A) has not provided any potential investor
with a Structural Term Sheet or Computational Materials, or (B) has
provided any such Structural Term Sheet or Computational Materials to
the Company, which Structural Term Sheets and Computational Materials,
if any, are attached to the Underwriting Agreement as Exhibit B.
(iii) Each Collateral Term Sheet bears a legend indicating
that the information contained therein will be superseded by the
description of the collateral contained in the Prospectus Supplement
and, except in the case of the initial Collateral Term Sheet, that such
information supersedes the information in all prior Collateral Term
Sheets.
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<PAGE>
(iv) Each Structural Term Sheet and all Computational
Materials bear a legend substantially as follows (or in such other form
as may be agreed prior to the date of the Underwriting Agreement):
This information does not constitute either an offer to sell
or a solicitation of an offer to buy any of the securities
referred to herein. Information contained herein is
confidential and provided for information only, does not
purport to be complete and should not be relied upon in
connection with any decision to purchase the securities. This
information supersedes any prior versions hereof and will be
deemed to be superseded by any subsequent versions including,
with respect to any description of the securities or the
underlying assets, the information contained in the final
Prospectus and accompanying Prospectus Supplement. Offers to
sell and solicitations of offers to buy the securities are
made only by the final Prospectus and the related Prospectus
Supplement.
(v) It (at its own expense) agrees to provide to the Company
any accountants' letters obtained relating to the Collateral Term
Sheets, Structural Term Sheets and Computational Materials, which
accountants' letters shall be addressed to the Company.
(vi) It has not, and will not, without the prior written
consent of the Company, provide any Collateral Term Sheets, Structural
Term Sheets or Computational Materials to any investor after the date
of the Agreement.
(vii) Any Collateral Term Sheet, Structural Term Sheet or
Computational Materials do not contain any untrue statement of a
material fact and do not omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading,
except to the extent that any such misstatement or omission results
from an Asset Pool Error (as defined in Section 8(a)(i) below).
For purposes of this Agreement, Collateral Term Sheets and Structural
Term Sheets shall have the respective meanings assigned to them in the February
13, 1995 letter of Cleary, Gottlieb, Steen & Hamilton on behalf of the Public
Securities Association (which letter, and the SEC staff's response thereto, are
publicly available February 17, 1995). The term "Collateral Term Sheet" as used
herein includes any subsequent Collateral Term Sheet that reflects a substantive
change in the information presented. Computational Materials has the meaning
assigned to it in the May 17, 1994 letter of Brown & Wood on behalf of Kidder,
Peabody & Co., Inc. (which letter, and the SEC staff's response thereto, are
publicly available May 20, 1994).
6. Conditions to the Obligations of the Underwriters. The obligations
of the Underwriters hereunder to purchase the Underwritten Certificates of any
Series to which this Agreement applies shall be subject to the following
conditions:
(a) To the accuracy on the date hereof and on the Closing Date
(as if made on such Closing Date), and as of the date of the
effectiveness of any amendment to the Registration Statement filed
prior to the Closing Date, of the representations and warranties on the
part of the Company and OAC contained herein and to the extent that the
Agreement provides that the Company and OAC are not making certain
representations and warranties, to the accuracy of the representations
and warranties provided by the parties making such representations and
warranties as of the date thereof and on the Closing Date (as if made
on such Closing Date) and as of the date of the effectiveness of any
amendment to the Registration Statement filed prior to the Closing
Date.
(b) The Registration Statement shall have become effective and
no stop order suspending the effectiveness of the Registration
Statement, as amended from time to time, shall have been issued and not
withdrawn and no proceedings for that purpose shall have been
instituted or threatened; and the Final
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<PAGE>
Prospectus shall have been filed or mailed for filing with the
Commission in accordance with Rule 424 under the Act, and all actions
required to be taken and all filings required to be made by the Company
under the Act prior to the sale of the Underwritten Certificates shall
have been duly taken or made.
(c) Certificates.
------------
(i) The Company shall have delivered to the
Underwriters a certificate of the Company, signed by the
President or any Vice President or Assistant Vice President of
the Company and dated the Closing Date, to the effect that the
signer of such certificate has carefully examined the
Registration Statement, the Final Prospectus, and the
Agreement and that: (A) the representations and warranties of
the Company in the Agreement are true and correct in all
material respects at and as of the Closing Date with the same
effect as if made on the Closing Date; (B) the Company has
complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or
prior to the Closing Date; (C) no stop order suspending the
effectiveness of the Registration Statement has been issued
and no proceedings for that purpose have been instituted or,
to the Company's knowledge, threatened; and (D) nothing has
come to such Officer's attention that would lead him or her to
believe that the Final Prospectus contains any untrue
statement of a material fact or omits to state any material
fact necessary in order to make the statements, in the light
of the circumstances under which they were made, not
misleading; and (E) there has been no material adverse change
or development involving a prospective material adverse change
in the business, operations, financial condition, properties
or assets of the Company.
(ii) OAC shall have delivered to the Underwriters a
certificate of OAC, signed by the President or any Vice
President or Assistant Vice President of OAC and dated the
Closing Date, to the effect that the signer of such
certificate has carefully examined the Agreement, the related
Sales Agreement (if applicable) and the related Pooling and
Servicing Agreement and that: (A) the representations and
warranties of OAC in the Agreement, the related Sales
Agreement (if applicable) and the related Pooling and
Servicing Agreement are true and correct in all material
respects at and as of the Closing Date with the same effect as
if made on the Closing Date and (B) there has been no material
adverse change or development involving a prospective material
adverse change in the business, operations, financial
condition, properties or assets of OAC.
(iii) Each Seller shall have delivered to the
Underwriters a certificate of such Seller, signed by the
President or any Vice President or Assistant Vice President
and dated the Closing Date, to the effect that the signer of
such certificate has examined the related Sales Agreement and
that: (A) the representations and warranties of the related
Seller in such Sales Agreement are true and correct in all
material respects at and as of the Closing Date with the same
effect as if made on the Closing Date; and (B) the Seller has
complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or
prior to the Closing Date.
(d) Opinions.
--------
(i) The Underwriters shall have received from Hunton
& Williams opinions of counsel, each dated the Closing Date
and satisfactory in form and substance to counsel for the
Underwriters, as to (A) various matters relating, among other
things, to the corporate status and authorization of the
Company and OAC, substantially in the form of Exhibit B-1
hereto; (B) various matters relating to the lien of the
trustee in the assets, substantially in the form of Exhibit
B-2 hereto; and (C) the applicable federal income tax
treatment of the Certificates.
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<PAGE>
(ii) The Underwriters shall have received copies of
any opinions of counsel furnished to the Rating Agencies (upon
which the Underwriters shall be entitled to rely) with respect
to the non-consolidation of the Company with its affiliates
and the "true sale" of the Assets, or, in the absence of such
true sale, that the Trustee has a perfected security interest
in the Assets, subject to no prior liens or encumbrances.
(iii) The Underwriters shall have received from
reputable counsel an opinion or opinions of counsel dated the
Closing Date and satisfactory in form and substance to counsel
for the Underwriters, as to the income tax treatment of the
Securities in those states specified in the Terms Agreement.
(iv) The Underwriters shall have received from
counsel for the Underwriters such opinion or opinions, dated
the Closing Date, with respect to the issuance and sale of the
Certificates, the Pooling and Servicing Agreement, the
Agreement, the Registration Statement, the Final Prospectus
and other related matters as the Underwriters may reasonably
require, and the Company shall have furnished to such counsel
such documents as they reasonably request for the purpose of
enabling them to pass upon such matters.
(v) The Company shall have furnished to the
Underwriters the opinions of counsel to each Seller, dated the
Closing Date and satisfactory in form and substance to counsel
for the Underwriter, as to the due authorization, execution
and delivery of each of the related Sales Agreements by the
related Seller and its enforceability against the related
Seller.
(vi) The Company shall have furnished to the
Underwriters the opinions of counsel to the Trustee, dated the
Closing Date and satisfactory in form and substance to counsel
for the Underwriters, as to the due authorization, execution
and delivery of the Pooling and Servicing Agreement by the
Trustee.
(vii) The Company shall have furnished to the
Underwriters the opinions of counsel to any Insurer, dated the
Closing Date and satisfactory in form and substance to counsel
for the Underwriters, as to the due issuance and
enforceability of the policies issued by such Insurer.
(e) The Underwritten Securities shall have been assigned the
ratings set forth in the Terms Agreement, which shall be in one of the
four highest rating categories, by one or more "nationally recognized
statistical rating organizations," as that term is defined by the
Commission from time to time, designated in the Terms Agreement. On the
Closing Date, (i) such rating or ratings shall not have been rescinded
and there shall not have been any downgrading, or public notification
of a possible downgrading or public notice of a possible change,
without indication of direction, and (ii) no downgrading, or public
notification of a possible downgrading or public notification of a
possible change, without indication of direction, shall have occurred
in the rating accorded any of the debt securities of any person
providing any form of credit enhancement for the Certificates by any
"nationally recognized statistical rating organization."
(f) The Underwriters shall have received from Price
Waterhouse, certified public accountants, two letters, (i) one dated
the date hereof and satisfactory in form and substance to the
Underwriters and counsel for the Underwriters to the effect that they
have performed certain specified procedures as a result of which they
have determined that the Assets listed in Schedule I to each related
Sales Agreement conform with the description thereof in the Prospectus
Supplement under "The Asset Pool" and that a sampling of the Contract
Files relating to the Contracts and of the Trustee Mortgage Loan Files
relating to the Mortgage Loans conforms with the information contained
on the contract and mortgage loan data file tape upon which the
information in the Prospectus Supplement under the caption "The Asset
Pool"
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<PAGE>
was based; and (ii) the other letter dated the Closing Date and
satisfactory in form and substance to the Underwriters and counsel for
the Underwriters, reconfirming or updating the letter dated the date
hereof; to the further effect that they have performed certain
procedures as a result of which they have determined that the Assets
listed in Schedule I to the related Pooling and Servicing Agreement (A)
conform with the description thereof in the Prospectus Supplement under
the caption "The Asset Pool" and (B) conform with the information, if
any, set forth in the Company's report on Form 8-K with respect to such
Assets; and covering such other matters relating to the Trust as the
Underwriters may reasonably request.
(g) The Underwriters shall have received from the certified
public accountants of the Seller or Servicer, as applicable, a letter
or letters dated the date hereof and satisfactory in form and substance
to the Underwriters and counsel to the Underwriters to the effect that
they have performed certain specified procedures as a result of which
they determined that certain information of an accounting, financial
and statistical nature set forth in the Final Prospectus under the
caption "The Servicer" (or other caption relating to the Servicer's
servicing activities) agrees with the records of the Servicer.
(h) If applicable, and subject to the conditions set forth in
the related Pooling and Servicing Agreement, any reserve fund to be
established for the benefit of the holders of any related Certificates
shall have been established by the Company with the Trustee and any
initial deposit required to be made therein shall have been delivered
to the Trustee for deposit therein as contemplated by the related
Pooling and Servicing Agreement.
(i) On the Closing Date, there shall not have occurred any
change, or any development involving a prospective change, in or
affecting the business or properties of the Company since the date of
the Terms Agreement which the Underwriter concludes in the reasonable
judgment of the Underwriter materially impairs the investment quality
of the Underwritten Certificates so as to make it impractical or
inadvisable to proceed with the public offering or the delivery of the
Underwritten Certificates as contemplated by the Final Prospectus.
(j) All proceedings in connection with the transactions
contemplated by this Agreement and all documents incident hereto shall
be satisfactory in form and substance to the Underwriters and counsel
for the Underwriters, and the Underwriters and counsel for the
Underwriters shall have received such information, certificates and
documents as they may reasonably request.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
if the Company is in breach of any covenants or agreements contained herein or
if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be reasonably satisfactory in all material respects and in
form and substance reasonably satisfactory to the Underwriters and counsel for
the Underwriters, the Agreement and all obligations of the Underwriters
hereunder may be canceled at, or at any time prior to, the Closing Date by the
Underwriters. Notice of any such cancellation shall be given to the Company in
writing, or by telephone or telegraph and confirmed in writing.
7. Reimbursement of Underwriters' Expenses. If for any reason, other
than a default by the Underwriters pursuant to Section 9 hereof, the sale of the
Underwritten Certificates provided for herein is not consummated, the Company or
OAC will reimburse the Underwriters severally upon demand for all out-of-pocket
expenses (including reasonable fees and disbursements of counsel) that shall
have been reasonably incurred by them in connection with their investigation,
the preparation to market and the marketing of the Underwritten Certificates, or
in contemplation of the performance by them of their obligations hereunder.
8. Indemnification and Contribution. (a) The Company and OAC, jointly
and severally, indemnify and hold harmless each Underwriter and each person, if
any, who controls any Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, as follows:
-14-
<PAGE>
(i) against any and all losses, claims, expenses, damages or
liabilities, joint or several, to which such Underwriter or such
controlling person may become subject under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
Registration Statement, the Final Prospectus, or any amendment or
supplement thereto, or any related Preliminary Final Prospectus, or
arise out of, or are based upon, the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements made therein not misleading; will
reimburse each Underwriter and each such controlling person for any
legal or other expenses reasonably incurred by such Underwriter or such
controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action as such expenses are
incurred; PROVIDED, HOWEVER, that (A) the Company and OAC will not be
liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or
omission, or alleged untrue statement or omission, made in any of such
documents in reliance upon and in conformity with written information
furnished to the Company by an Underwriter, specifically for use
therein, except to the extent that any untrue statement or alleged
untrue statement therein results (or is alleged to have resulted) from
an error or material omission in the information concerning the
characteristics of the Assets furnished by the Company to the
Underwriters for use in the preparation of any Collateral Term Sheet,
Structural Term Sheet or Computational Materials, which error was not
superseded or corrected by the delivery to the Underwriters of
corrected written or electronic information, or for which the Company
provided written notice of such error to the Underwriters prior to the
confirmation of the sale of the applicable Certificates (any such
uncorrected Asset information an "Asset Pool Error"), and (B) such
indemnity with respect to any Preliminary Final Prospectus shall not
inure to the benefit of any Underwriter (or any person controlling such
Underwriter) from whom the person asserting any such loss, claim,
damage or liability purchased the Underwritten Certificates which are
the subject thereof if such person did not receive a copy of the Final
Prospectus (or the Final Prospectus as amended or supplemented,
excluding any documents incorporated therein by reference) at or prior
to the confirmation of the sale of such Underwritten Certificates to
such person in any case where such delivery is required by the Act and
the untrue statement or omission of a material fact contained in such
Preliminary Final Prospectus was corrected in the Final Prospectus (or
the Final Prospectus as amended or supplemented, excluding any
documents incorporated therein by reference);
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, (A) if such settlement is
effected with the written consent of the Company or (B) if such
settlement is effected without the written consent of the Company, but
only if the Company has received a notice from the Underwriters of such
proposed settlement, substantially reflecting the terms of such
proposed settlement, and the Company has not responded to such notice
for 30 days after its receipt thereof and has not responded as of the
effective date of such settlement; and
(iii) against any and all expense whatsoever (including the
fees and disbursements of counsel chosen by you), reasonably incurred
in investigating, preparing or defending against any litigation, or
investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under clause
(i) or clause (ii) above.
This indemnity agreement will be in addition to any liability which the Company
may otherwise have.
-15-
<PAGE>
(b) Each Underwriter, severally and not jointly, agrees to indemnify
and hold harmless the Company, each of its directors, each of its officers who
have signed the Registration Statement and each person, if any, who controls the
Company within the meaning of the Act or the Exchange Act, against any and all
losses, claims, expenses, damages or liabilities to which the Company or any
such director, officer or controlling person may become subject, under the Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, the Final Prospectus or any amendment or supplement thereto, or any
related Preliminary Final Prospectus, or arise out of, or are based upon, the
omission or the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements made therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company by such
Underwriter specifically for use therein; and will reimburse any legal or other
expenses reasonably incurred by the Company or any such director, officer or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability or action. This indemnity agreement will be in addition
to any liability which such Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section 8
of notice of the commencement of any action described therein, such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 8, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
the indemnifying party from any liability that it may have to any indemnified
party otherwise than under this Agreement. In case any such action is brought
against any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein, and, to the extent that it may wish to do so, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party under this
Section 8, such indemnifying party shall not be liable for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and in respect of which
indemnity could have been sought hereunder by such indemnified party unless such
settlement includes an unconditional release of such indemnified party from all
liability on any claims that are the subject matter of such action.
(d) If recovery is not available under the foregoing indemnification
provisions of this Section 8, for any reason other than as specified therein,
the parties entitled to indemnification by the terms thereof shall be entitled
to contribution to the amount paid or payable by such indemnified party as a
result of the losses, claims, expenses, damages or liabilities referred to in
subsection (a) or (b) above, except to the extent that contribution is not
permitted under Section 11(f) of the Act. In determining the amount of
contribution to which the respective parties are entitled, there shall be
considered whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to information
supplied by the Company or the Underwriters, the parties' relative knowledge and
access to information concerning the matter with respect to which the claim was
asserted, the relative opportunities of the Company and the Underwriters to
correct and prevent any untrue statement or omission, the relative benefits
received by each party from the offering of the Underwritten Certificates
(taking into account the portion of the proceeds of the offering (before
deducting expenses) realized by each), and any other equitable considerations
appropriate under the circumstances. The Company and the Underwriters agree that
it would not be equitable if the amount of such contribution were to be
determined by pro rata or per capita allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method that does not
take account of the equitable considerations referred to in the second sentence
of this subsection (d). Notwithstanding the provisions of this subsection (d),
no Underwriter or person controlling such Underwriter shall be obligated to make
contribution hereunder that in the aggregate exceeds the total public offering
price of the Underwritten Certificates purchased by
-16-
<PAGE>
such Underwriter under this Agreement, less the aggregate amount of any damages
which such Underwriter and its controlling persons have otherwise been required
to pay by reason of such untrue statement or alleged untrue statement or
omission. The Underwriters' obligations to contribute shall be several in
proportion to their respective underwriting obligations and not joint.
9. Default by an Underwriter. If any one or more Underwriters shall
fail to purchase and pay for any of the Underwritten Certificates of any Class
agreed to be purchased by such Underwriter or Underwriters hereunder and such
failure to purchase shall constitute a default in the performance of its or
their obligations under this Agreement, the remaining Underwriters shall be
obligated severally to take up and pay for (in the respective proportions which
the portion of the Underwritten Certificates of such Class set forth opposite
their names in the Terms Agreement or in an attachment to the Terms Agreement
bears to the aggregate amount of Underwritten Certificates of such Class set
forth opposite the names of the remaining Underwriters) the Underwritten
Certificates of such Class which the defaulting Underwriter or Underwriters
agreed but failed to purchase; PROVIDED, HOWEVER, that in the event that the
amount of Underwritten Certificates of such Class which the defaulting
Underwriter or Underwriters agreed but failed to purchase shall exceed 10% of
the aggregate amount of Underwritten Certificates of such Class as set forth in
the Final Prospectus, the remaining Underwriters shall have the right to
purchase all, but shall not be under any obligation to purchase any, of the
Underwritten Certificates of such Class, and if such non-defaulting Underwriters
do not purchase all the Underwritten Certificates of such Class, this Agreement
will terminate without liability to any non-defaulting Underwriter or the
Company. Nothing contained in this Agreement shall relieve any defaulting
Underwriter of its liability, if any, to the Company for damages occasioned by
its default hereunder.
10. Termination. This Agreement shall be subject to termination in the
absolute discretion of the Underwriters, by notice given to the Company prior to
delivery of and payment for all Underwritten Certificates if prior to such time
(i) trading in securities generally on the New York Stock Exchange or American
Stock Exchange shall have been suspended or limited, or minimum approximate
prices shall have been established on such Exchange; (ii) a banking moratorium
shall have been declared by either federal or New York State authorities; (iii)
there shall have occurred any outbreak or escalation of hostilities or other
calamity or crisis, the effect of which on the financial markets of the United
States is such as to make it, in the judgment of the Underwriters, impracticable
or inadvisable to market the Underwritten Certificates; or (iv) there has been,
since the date of the Terms Agreement or since the respective dates as of which
information is given in the Registration Statement or the Final Prospectus any
change in, or any development involving a prospective change in, or affecting,
the condition, financial or otherwise, earnings, affairs or business of the
Company, whether arising in the ordinary course of business or otherwise, which
in the reasonable judgment of the Underwriters would materially impair the
market for, or the investment quality of, the Underwritten Certificates..
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company and OAC or their respective officers and the Underwriters set forth in
or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of any Underwriter or the
Company or OAC or any of the officers, directors or controlling persons referred
to in Section 8 hereof, and will survive delivery of and payment for the
Underwritten Certificates. The provisions of this Section 11 and Sections
5(a)(v), 7 and 8 hereof shall survive the termination or cancellation of this
Agreement.
12. Notices. All communications hereunder will be in writing and
effective only on receipt and, if sent to the Underwriters, will be mailed,
delivered or telegraphed and confirmed to it at the office or offices set forth
in the Terms Agreement; or, if sent to the Company, will be mailed, delivered or
telegraphed and confirmed to it at 7800 McCloud Road, Greensboro, North Carolina
27409-2400, Attention: Treasurer; or, if sent to OAC, will be mailed, delivered
or telegraphed and confirmed to it at 7800 McCloud Road, Greensboro, North
Carolina 27409-2400, Attention: Treasurer.
-17-
<PAGE>
13. Successors. The Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 8 hereof, and their
successors and assigns, and no other person will have any right or obligation
hereunder.
14. Applicable Law. The Agreement will be governed by and construed in
accordance with the laws of the jurisdiction as may be specified in the Terms
Agreement. The Terms Agreement may be executed in any number of counterparts,
each of which shall for all purposes be deemed to be an original and all of
which shall together constitute but one and the same instrument.
15. Miscellaneous. Time shall be of the essence of this Agreement. This
Agreement supersedes all prior or contemporaneous agreements and understandings
relating to the subject matter hereof. Neither this Agreement nor any term
hereof may be changed, waived, discharged or terminated except by a writing
signed by the party against whom enforcement of such change, waiver, discharge
or termination is sought. This Agreement may be signed in any number of
counterparts, each of which shall be deemed an original, which taken together
shall constitute one and the same instrument.
-18-
<PAGE>
Exhibit A
Oakwood Mortgage Investors, Inc.
Pass-Through Certificates
FORM OF TERMS AGREEMENT
Dated: ____________, 19__
To: Oakwood Mortgage Investors, Inc. (the "Company")
Oakwood Acceptance Corporation ("OAC")
Re: Underwriting Agreement Standard Provisions dated
May 1999 (the "Standard Provisions")
Series
Designation: Pass-Through Certificates, Series 19__-__, Classes ________
_________________________ (collectively, the "Certificates").
The Classes _______________ Certificates are collectively
referred to herein as the "Underwritten Certificates."
UNDERWRITING AGREEMENT: Subject to the terms and conditions set forth
herein and to the terms of the Standard Provisions, which are incorporated by
reference herein, the Company hereby agrees to issue and sell to
______________________ (the "Underwriter"), and the Underwriter hereby agrees to
purchase from the Company, on ______________, 19__, the Underwritten Securities
at the purchase price and on the terms set forth below; provided, however, that
the obligations of the Underwriter are subject to: (i) receipt by the Company of
the ratings on the Certificates as set forth herein, (ii) receipt by the
Underwriter of the Sales Agreement (the "Sales Agreement"), dated as of
_______________, 19__, by and between the Company and OAC, and the Pooling and
Servicing Agreement (as defined below), each being in form and substance
satisfactory to the Underwriter.
The Certificates will be issued by OMI Trust 19__-__ pursuant to a
Pooling and Servicing Agreement, to be dated as of ______________, 19__ among
the Company, OAC, as servicer (the "Servicer") and _______________________, as
Trustee (the "Trustee"), which incorporates by reference the Company's Standard
Terms to Pooling and Servicing Agreement (September 1994 Edition) (collectively,
the "Pooling and Servicing Agreement"). The Certificates will represent in the
aggregate the entire beneficial ownership interest in the assets of the Trust
which will consist primarily of retail installment sales contracts secured by
units of manufactured housing (the "Contracts") with original terms to maturity
not exceeding 20 years [and] conventional, one- to four-family, fully
amortizing, [fixed][adjustable] rate, first-lien residential mortgage loans (the
"Mortgage Loans" and, together with the Contracts, the "Assets") with original
terms to maturity not exceeding 30 years, in each case having the
characteristics described in the Prospectus Supplement.
A-1
<PAGE>
The Company and the Servicer specifically covenant to make available on
the Closing Date for sale, transfer and assignment to the Trust, Contracts [and]
Mortgage Loans having the characteristics described in the Prospectus
Supplement; provided, however, that there may be nonmaterial variances from the
description of the Contracts [and] Mortgage Loans in the Prospectus Supplement
and the Contracts [and] Mortgage Loans actually delivered on the Closing Date.
REGISTRATION STATEMENT: References in the Standard Provisions to the
Registration Statement shall be deemed to include registration statement No.
33-____________.
INITIAL AGGREGATE SCHEDULED PRINCIPAL BALANCE OF ASSETS: Approximately
$_____________
CUT-OFF DATE: ___________________, 19__
TERMS OF THE CERTIFICATES:
<TABLE>
<CAPTION>
================================================================================================================================
<S> <C> <C> <C> <C>
Original
Principal Purchase
Class Balance Pass-Through Price of the
Designation (approximate)(1) Rate Rating Certificates
- --------------------------------------------------------------------------------------------------------------------------------
[Specify Rating
Agency and
Rating]
================================================================================================================================
</TABLE>
(1) Subject to a permitted variance of plus or minus 5% depending on the
Contracts and Mortgage Loans actually acquired by the Trust.
SUBORDINATION FEATURES: Losses and Shortfalls on the Contracts and
Mortgage Loans will be allocated among the Certificates as described in the
Prospectus Supplement. [Except as otherwise specified in the Prospectus
Supplement, the Class __ Certificates are subordinated to the rights of the
Class __ Certificates for purposes of the allocation of Realized Losses on the
Contracts and Mortgage Loans, as described in the Prospectus Supplement.]
RESERVE FUNDS:
DISTRIBUTION DATES: Each Distribution Date shall be the [___] day of
each month, or if such day is not a business day, on the next succeeding
business day, commencing in _______________ 19__.
[REMIC ELECTION: An election will be made to treat some or all of the
assets of the Trust as a real estate mortgage investment conduit for federal
income tax purposes (the "REMIC"). The Classes _______ Certificates will be
designated as "regular interests" in the REMIC and the Class R Certificates will
be designated as the "residual interest" in the REMIC.]
PURCHASE PRICE: The Underwriter has agreed to purchase the Underwritten
Certificates from the Company for a purchase price of ___________% of the
initial aggregate principal amount thereof, plus accrued interest thereon from
___________, 19__. Payment of the purchase price for the Underwritten
Certificates shall be made to the Company in federal or similar immediately
available funds payable to the order of the Company.
DENOMINATIONS: The Underwritten Certificates will be issued in
[book-entry] [certificated, fully-registered] form in minimum denominations of
$_________ and integral multiples of $_________ in excess thereof, except that
one Certificate of each Class of the Underwritten Certificates may be issued in
a different denomination.
A-2
<PAGE>
FEES: It is understood that servicing fees will be withheld from the
payments on the Assets in each month prior to distributions on the Certificates
on the Distribution Date occurring in such month.
CLOSING DATE AND LOCATION: 10:00 a.m. Eastern Time on ___________,
19__, at the offices of Hunton & Williams, Riverfront Plaza, East Tower, 951
East Byrd Street, Richmond, Virginia 23219-4074. [The Company will deliver the
Underwritten Certificates in certificated, fully-registered form at the offices
of the Underwriter in __________, ______________ on ______________, 19__.] [The
Company will deliver the Underwritten Securities in book-entry form only,
through the same-day funds settlement system of The Depository Trust Company on
the Closing Date.]
CONDITIONS:
ADDITIONAL CONDITIONS:
DUE DILIGENCE: At any time prior to the Closing Date, the Underwriter
has the right to inspect the Contract Files [and] Trustee Mortgage Loan Files,
the related manufactured homes [and] mortgaged properties and the related loan
origination procedures to ensure conformity with the Final Prospectus and the
Prospectus Supplement.
CONTROLLING AGREEMENT: This Terms Agreement sets forth the complete
agreement among the Company, OAC and the Underwriter and fully supersedes all
prior agreements, both written and oral, relating to the issuance of the
Underwritten Certificates and all matters set forth herein. Capitalized terms
used herein and not otherwise defined herein shall have the meanings assigned to
such terms in the Standard Provisions.
COLLATERAL TERM SHEETS, STRUCTURAL TERM SHEETS AND COMPUTATIONAL
MATERIALS: The Underwriter hereby represents and warrants that (i) information
provided by it and attached hereto as Exhibit A constitutes all "Collateral Term
Sheets" (that are required to be filed with the Commission within two business
days of first use under the terms of the Public Securities Association letter)
disseminated by it in connection with the Underwritten Certificates and (ii)
information provided by it and attached hereto as Exhibit B constitutes all
"Structural Term Sheets" and "Computational Materials" disseminated by it in
connection with the Underwritten Certificates.
INFORMATION PROVIDED BY THE UNDERWRITER: It is understood and agreed
that the information (i) set forth under the heading "Underwriting" in the
Prospectus Supplement and the sentence regarding the Underwriter's intention to
establish a market in the Underwritten Certificates on the Cover Page of the
Prospectus Supplement, and (ii) classified as Collateral Terms Sheets,
Structural Terms Sheets or Computational Materials, is the only information
furnished by the Underwriter for inclusion in the Registration Statement and the
Final Prospectus.
TRUSTEE: _________________________ will act as Trustee of the Trust.
[CUSTODIAN:]
BLUE SKY QUALIFICATIONS: The Underwriter specifies no jurisdictions and
the parties do not intend to qualify the Underwritten Securities in any
jurisdiction.
STATE TAX OPINIONS:
BLACKOUT PERIOD: [None.]
APPLICABLE LAW: THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF [NEW YORK] WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.
NOTICES: All communications hereunder will be in writing and effective
only upon receipt and, if sent to the
A-3
<PAGE>
Underwriter, will be mailed, delivered or telegraphed and confirmed to the
Underwriter at________________________________ ___, Attention: ______________.
REQUEST FOR OPINIONS: (a) The Company and OAC hereby request and
authorize Hunton & Williams, as their counsel in this transaction, to issue on
behalf of the Company and OAC, such legal opinions to the Underwriter, its
counsel, the Trustee and the Rating Agencies as may be required by any and all
documents, certificates or agreements executed in connection with this
Agreement.
(b) The Underwriter hereby requests and authorizes
________________________________, as its special counsel in this transaction, to
issue on behalf of the Underwriter such legal opinions to the Company, OAC and
Hunton & Williams, as counsel to the Company and OAC, as may be required by any
and all documents, certificates or agreements executed in connection with this
Agreement.
A-4
<PAGE>
The Underwriter agrees, subject to the terms and provisions of the
Standard Provisions, a copy of which is attached hereto, and which is
incorporated by reference herein in its entirety and made a part hereof to the
same extent as if such provisions had been set forth in full herein, to purchase
the Underwritten Certificates.
[NAME OF UNDERWRITER]
By:________________________
Name:
Title:
Accepted and Acknowledged
As of the Date First
Above Written:
OAKWOOD MORTGAGE INVESTORS, INC.
By:_______________________
Name:
Title:
OAKWOOD ACCEPTANCE CORPORATION
By:_______________________
Name:
Title:
A-5
<PAGE>
Exhibit B-1
-----------
_____________, 19__
[Name and Address
of Underwriter(s)]
OAKWOOD MORTGAGE INVESTORS, INC.
PASS-THROUGH CERTIFICATES, SERIES
------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to Oakwood Mortgage Investors, Inc., a
Nevada corporation ("OMI"), in connection with the formation by it of OMI Trust
19__-_ (the "Trust"), the assets of which consist primarily of a pool of retail
installment sales contracts (the "Contracts") secured by units of manufactured
housing ("Manufactured Homes") [and] mortgage loans (the "Mortgage Loans," and,
together with the Contracts, the "Assets") secured by first liens on one- to
four-family residential real properties (the "Mortgaged Properties").
The Trust was organized pursuant to a Pooling and Servicing Agreement
(the "Series Agreement"), dated as of ___________, 19__, by and among OMI,
Oakwood Acceptance Corporation ("OAC") in its capacity as servicer of the
Contracts (the "Servicer"), and ___________________, as trustee (the "Trustee").
The Series Agreement incorporates by reference OMI's Standard Terms to Pooling
and Servicing Agreement (September 1994 Edition) (the "Standard Terms," and,
together with the Series Agreement, the "Pooling and Servicing Agreement"). We
also have acted as special counsel to OAC in connection with its role as
Servicer for the Trust. Capitalized terms used herein but not defined herein
shall have the meanings assigned to them in the Pooling and Servicing Agreement.
The Trust is issuing today _____ Classes of certificates (collectively,
the "Certificates"), which Classes are described in the Pooling and Servicing
Agreement. The Classes _____ Certificates (the "Underwritten Certificates") are
being sold to you today pursuant to a terms agreement (the "Terms Agreement"),
dated as of _________, 19__, among OMI, OAC and you (the "Underwriter(s)") .
This opinion is furnished to you in accordance with Section 6(d) of OMI's
Underwriting Agreement Standard Provisions (May 1999) (the "Standard
Provisions"), the terms of which are incorporated by reference into the Terms
Agreement (the Terms Agreement together with the Standard Provisions being
referred to collectively as the "Underwriting Agreement").
In rendering the opinions expressed below, we have made such legal and
factual examinations and inquiries as we have deemed necessary or advisable for
the purpose of rendering this opinion, including but not limited to the
examination of the following:
a. OMI's registration statement on Form S-3 (No. 33-______)
(the "Registration Statement"), filed under the Securities
Act of 1933, as amended (the "Act"), and the Prospectus
and Prospectus Supplement, each dated __________, 19__
(collectively, the "Prospectus"), all relating to the
Underwritten Certificates;
B1-1
<PAGE>
[Name of Underwriter(s)]
_____________, 19__
Page 2
b. The Pooling and Servicing Agreement;
c. The form of the Certificate evidencing each Class of
Certificates;
d. The Underwriting Agreement;
e. The Sales Agreement, dated as of ___________, 19__
(the "Sales Agreement"), between OAC, as seller, and
OMI, as purchaser, pursuant to which OMI acquired the
Assets;
f. The purchase agreement, dated as of ___________, 19__
(the "Purchase Agreement"), between OMI and [Oakwood
Financial Corporation, a Delaware corporation
("OFC")], pursuant to which OFC is purchasing the
Class _____ Certificates;
g. The forms of Contract used by OAC in Virginia (each,
a "Form Contract"), which forms have been supplied by
OAC to us and to you in an attachment to a
certificate of officers of OAC and of certain of its
affiliates dated the date hereof;
h. The Articles of Incorporation, as amended, and Bylaws
of each of OMI and OAC, together with a certificate
of existence from the States of Nevada and North
Carolina with respect to each of OMI and OAC,
respectively; and
i. Resolutions of each of OMI and OAC pertaining to the
subject transactions, each certified by an officer of
OAC or OMI, as appropriate.
In rendering the opinions expressed below, we have assumed (i) the
authenticity of all documents submitted to us as originals, (ii) the conformity
to the originals of all documents submitted to us as certified or photostatic
copies and the authenticity of the originals of such copies, (iii) the
genuineness of signatures not witnessed by us, (iv) the legal capacity of
natural persons and (v) the due authorization, execution and delivery of all
documents by all parties thereto and the validity and binding effect thereof
(other than the authorization, execution and delivery of documents by OMI and
OAC and the validity and binding effect thereof upon OMI and OAC, to the extent
we express our opinion on such subjects below). Whenever the phrases "to our
knowledge" or "known to us" are used in this opinion letter, they refer to the
actual knowledge of the attorneys of this firm involved in the representation of
OMI and OAC in connection with the transactions described herein without
independent investigation.
B1-2
<PAGE>
[Name of Underwriter(s)]
_____________, 19__
Page 3
In addition, we have relied, as to factual matters, upon
representations included in the Sales Agreement, the Pooling and Servicing
Agreement and the Underwriting Agreement (collectively, the "Agreements") and
other agreements and documents delivered at the closing, and upon certificates
of officers of OMI, OAC and the Trustee, and upon certificates of public
officials.
In addition, for purposes of the opinions expressed in numbered
paragraph 9 below, we have assumed (i) that all Contracts originated by OAC or
its affiliates in the Commonwealth of Virginia are in the form of one of the
Form Contracts and (ii) that no obligor under any Contract may avail himself or
herself of any claim or defense based on grounds other than the form of such
Contract, and that the blanks in the Contracts were completed in compliance with
applicable federal and state laws.
The obligations of the parties with respect to the Agreements are
subject, with respect to their enforceability, to the provisions of federal and
other applicable bankruptcy, insolvency, reorganization, moratorium and similar
laws relating to or affecting the enforcement of creditors' rights generally,
now or hereafter in effect. Such obligations also are subject to usual equity
principles, which may limit enforcement under state law of certain remedies, but
which do not affect the validity of such documents.
I.
Based upon the foregoing and such other documents and information a
review of which we have considered necessary for the purposes hereof, and
subject to all the assumptions and qualifications set forth herein, we are of
the opinion that:
1. Each of OMI and OAC (a) is a corporation created, organized
and existing under the laws of the States of Nevada and North Carolina,
respectively, (b) has paid all fees, taxes and penalties owed to the
States of Nevada and North Carolina respectively, to the extent (i)
payment of such fees, taxes and penalties is reflected in the records
of the Secretary of State of such states and (ii) nonpayment of such
fees, taxes and penalties would affect the existence of OMI or OAC, as
the case may be, (c) has delivered to the Secretary of State of such
states its most recent annual report as required by the statutes of
such states and (d) has not filed articles of dissolution.
2. Each of OMI and OAC has the corporate power and authority
to own its properties, to conduct its business as described in the
Prospectus and to execute and deliver and perform under each of the
Agreements and to enter into all the transactions contemplated under
the Agreements, and has taken all necessary corporate action to
authorize the execution and delivery of and performance under the
Agreements. The Agreements have been duly authorized, executed and
delivered by each of OMI and OAC and constitute the legal, valid and
binding obligations of each of OMI and OAC, enforceable against OMI and
OAC in accordance with their respective terms under North Carolina law,
in the case of the Sales Agreement and the Pooling and Servicing
Agreement, and under New York law, in the case of the Underwriting
Agreement.
3. To our knowledge, there is no investigation, action,
litigation or administrative proceeding of or before any court,
tribunal or governmental body currently pending or threatened against
OMI or OAC (a) asserting the invalidity of the Agreements or the
Certificates, (b) seeking to prevent the consummation of any of the
transactions contemplated by the Agreements, (c) that would be likely
to impair materially the ability of OMI or OAC to perform its
obligations under any of the Agreements or to affect materially and
adversely the validity or enforceability of any of the Agreements or
the Certificates or (d) that could reasonably be expected to result in
any material adverse change in the business, operations, financial
conditions, properties or assets of OMI or OAC to carry on its business
substantially as now conducted.
B1-3
<PAGE>
[Name of Underwriter(s)]
_____________, 19__
Page 4
4. The execution, delivery and performance of the Agreements
and the transactions contemplated thereby by OMI and OAC (a) will not
violate any provision of the articles of incorporation or bylaws of OMI
or OAC, any existing law or regulation or (b) to our knowledge, result
in a breach of, or constitute a default under, any order, judgment,
writ, injunction or decree of any court or governmental authority
applicable to OMI or OAC and, to our knowledge, will not conflict
materially with or constitute a material breach of, or a default under,
any mortgage, deed of trust, indenture, contract or other agreement to
which OMI or OAC is a party or by which OMI or OAC may be bound.
5. Upon due execution and authentication by the Trustee of
each Class of the Underwritten Certificates in accordance with the
terms of the Pooling and Servicing Agreement, and upon payment for the
Underwritten Certificates as provided for in the Underwriting
Agreement, the Underwritten Certificates will be validly issued and
outstanding and the holders thereof will be entitled to the benefits
provided by the Pooling and Servicing Agreement.
6. No consent, approval, authorization or order of,
registration or filing with, or notice to, any court or governmental
agency or body or official is required under the laws of the United
States of America, the State of North Carolina or the State of Nevada
that, in our experience, are normally applicable to transactions of the
type contemplated by the Agreements, for the consummation by OAC of the
transactions contemplated by the Agreements, except such as have been
obtained under the Act and such as may be required under state
securities or "blue sky" laws of any jurisdiction in connection with
the purchase and distribution by the Underwriter(s) of the Underwritten
Certificates.
7. The Trust established pursuant to the Pooling and Servicing
Agreement is not required, as a result of the offer and sale of the
Certificates as contemplated by the Underwriting Agreement or Purchase
Agreement, to be registered under the Investment Company Act of 1940,
as amended.
8. Assuming due execution thereof, the Contracts originated by
OAC or one of its affiliates in the Commonwealth of Virginia and States
of North Carolina and South Carolina constitute the legal, valid and
binding obligations of the respective obligors and the forms of
Contract used by OAC and its affiliates in Virginia, North Carolina and
South Carolina comply in all material respects as to form and content
with the applicable laws of each such state, respectively, and with
applicable federal laws.
B1-4
<PAGE>
[Name of Underwriter(s)]
_____________, 19__
Page 5
9. The Registration Statement has become effective under the
Act, and, to our knowledge, no stop order suspending the effectiveness
of the Registration Statement has been issued and not withdrawn and no
proceedings for that purpose have been instituted or are pending or
contemplated under the Act.
10. The statements in the Prospectus under the captions
"Description of the Certificates," "The Pooling and Servicing
Agreements" and "ERISA Considerations," and the statements in the
Prospectus Supplement under the captions "The Trust," "Description of
the Underwritten Certificates" and "ERISA Considerations," insofar as
such statements constitute a summary of the documents referred to
therein, fairly summarize such documents and present the information
called for by the Act and the rules and regulations promulgated under
the Act.
II.
We have participated in various conferences with the officers and
directors of OMI and its independent certified public accountants. In some
conferences you and your counsel also participated. At those conferences, the
contents of the Registration Statement and Prospectus were discussed and
revised. Since the dates of those conferences, we have inquired of certain
officers whether there has been any material change in the affairs of OMI.
Because of the inherent limitations in the independent verification of
factual matters, and the character of determinations involved in the preparation
of registration statements under the Act, we are not passing upon, and do not
assume any responsibility for, and make no representation that we have
independently verified the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus, except as
specifically set forth in paragraph 10 of Part I of our opinion above. Also, we
do not express any opinion or belief as to the financial statements or other
financial or statistical information contained or incorporated by reference into
the Registration Statement. However, subject to the foregoing, on the basis of
our participation in the conferences referred to above and our examination of
the documents referred to herein, we advise you that: (a) in our opinion, the
Registration Statement, when it became effective, and the Prospectus, as of its
date and as of the date hereof (other than the financial statements, schedules
and other financial data included therein or excluded therefrom or included in
or excluded from the exhibits to the Registration Statement or incorporated
therein by reference, as to which we express no opinion) comply as to form in
all material respects with the requirements of the Act and the rules and
regulations promulgated thereunder; and (b) we do not know of any contracts or
documents of a character required to be described in the Registration Statement
or Prospectus or to be filed as exhibits to the Registration Statement that are
not described or filed as required. We note that the Pooling and Servicing
Agreement will be filed as an exhibit to a Current Report of OMI on Form 8-K
within 15 days of the date hereof. Further, nothing has come to our attention
that leads us to believe that the Registration Statement, when it became
effective, contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading; or that the Prospectus, as of its date and as
of the date hereof, contained or contains any untrue statement of a material
fact or omitted or omits to state any material fact required to be stated
therein or necessary to make the statements, in light of the circumstances under
which they were made, not misleading; except that we make no statement with
respect to the financial statements or other financial or statistical data
included therein or incorporated therein by reference, including, but not
limited to, the asset information under the heading "The Asset Pool" and the
asset information and financial data under the headings "Maturity and Prepayment
Considerations" and "Yield Considerations" in the Prospectus Supplement and the
information set forth in the Prospectus under the heading "Maturity and
Prepayment Considerations."
B1-5
<PAGE>
[Name of Underwriter(s)]
_____________, 19__
Page 6
We do not purport to express an opinion on any laws other than those of
the State of North Carolina, the State of Nevada and the United States of
America. With respect to the opinions expressed in numbered paragraphs [__] and
[__] above, we have, with your permission, relied upon the opinion of Messrs.
[_____________] dated the date hereof to you as to matters covered thereby.
We consent to reliance on this opinion letter by the Trustee and by
[names of rating agencies] for their purposes in issuing letters rating the
Underwritten Certificates. Except as provided in the preceding sentence, this
opinion letter is for your benefit only and may not be relied upon by, nor may
copies be delivered to, any other person without our prior written consent.
Very truly yours,
B1-6
<PAGE>
<PAGE>
Exhibit B-2
-----------
__________ __, 19__
[Name and Address
of Underwriter(s)]
OAKWOOD MORTGAGE INVESTORS, INC.
PASS-THROUGH CERTIFICATES, SERIES
--------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to Oakwood Mortgage Investors, Inc., a
Nevada corporation ("OMI"), in connection with the formation by it of OMI Trust
19__-__ (the "Trust"), the assets of which consist primarily of a pool of retail
installment sales contracts (the "Contracts") secured by units of manufactured
housing ("Manufactured Homes") [and] mortgage loans (the "Mortgage Loans," and,
together with the Contracts, the "Assets") secured by first liens on
one-to-four-family residential real properties (the "Mortgaged Properties").
The Trust was organized pursuant to a Pooling and Servicing Agreement
(the "Series Agreement"), dated as of _________ __, 19__, by and among OMI,
Oakwood Acceptance Corporation ("OAC") in its capacity as servicer of the
Contracts (the "Servicer"), and _____________________________, as trustee (the
"Trustee"). The Series Agreement incorporates by reference OMI's Standard Terms
to Pooling and Servicing Agreement (September 1994 Edition) (the "Standard
Terms," and, together with the Series Agreement, the "Pooling and Servicing
Agreement"). We also have acted as special counsel to OAC in connection with its
role as Servicer for the Trust. Capitalized terms used herein but not defined
herein shall have the meanings assigned to them in the Pooling and Servicing
Agreement.
The Trust is issuing today [number] classes of certificates
(collectively, the "Certificates"), which Classes are described in the Pooling
and Servicing Agreement. The Classes ________________ Certificates (the
"Underwritten Certificates") are being sold to you today pursuant to a terms
agreement (the "Terms Agreement") dated ___________ __, 19__, among you (the
"Underwriter"), OMI and OAC. This opinion is furnished to you in accordance with
Section 6(e) of OMI's Underwriting Agreement Standard Provisions (May 1999) (the
"Standard Provisions"), the terms of which are incorporated by reference into
the Terms Agreement (the Terms Agreement together with the Standard Provisions
being referred to collectively as the "Underwriting Agreement").
In rendering the opinions expressed below, we have examined the
following documents:
(a) The Pooling and Servicing Agreement;
(b) The Sales Agreement, dated as of _____________ __,
19__ (the "Sales Agreement"), by and between OAC, as
seller, and OMI, as purchaser, pursuant to which OMI
acquired the Assets;
B2-1
<PAGE>
[Name of Underwriter(s)]
__________ __, 19 __
Page 2
(c) Financing statements (the "Financing Statements") (1)
relating to the Contracts and the payments thereon
and proceeds thereof, naming Oakwood Mobile Homes,
Inc. ("Oakwood Mobile") as debtor, OAC as secured
party and OMI as assignee, (2) relating to the Assets
and the payments thereon and proceeds thereof, naming
OAC as debtor, OMI as secured party and the Trustee
as assignee, and (3) relating to the Assets and the
payments thereon and proceeds thereof, OMI's rights
under the Sales Agreement and to the [specify any
reserve or other funds pledged or conveyed to the
Trustee by OMI], naming OMI as debtor and the Trustee
as secured party;
(d) The Underwriting Agreement (together with the Pooling
and Servicing Agreement and the Sales Agreement, the
"Agreements"); and
(e) The Purchase Agreement (the "Purchase Agreement"),
dated as of ____________ __, 19__, between OMI and
[Oakwood Financial Corporation, a Delaware
corporation ("OFC")], pursuant to which [OFC] is
purchasing the Class ________________ Certificates.
For the purposes of this opinion:
(i) the "Virginia UCC" means the Uniform Commercial
Code as in effect in the Commonwealth of Virginia;
(ii) the "North Carolina UCC" means the Uniform
Commercial Code as in effect in the State of North Carolina;
(iii) "Money" means "money" as defined in Section
1-201 of the [applicable] UCC;
(iv) "Instruments" means "instruments" as defined in
Section 9-105(1)(i) of the [applicable] UCC;
(v) "General Intangibles" means "general intangibles"
as defined in Section 9-106 of the [applicable] UCC; and
(vi) "Chattel Paper" means "chattel paper" as defined
in Section 9-105(1)(b) of the [applicable] UCC.
In rendering the opinions expressed below, we have assumed (i) the
authenticity of all documents submitted to us as originals, (ii) the conformity
to the originals of all documents submitted to us as certified or photostatic
copies and the authenticity of the originals of such copies, (iii) the
genuineness of signatures not witnessed by us, (iv) the legal capacity of
natural persons and (v) the due authorization, execution and delivery of all
documents by all parties thereto and the validity, binding effect and
enforceability thereof. We note that you have received today our opinion with
respect to certain of the matters set forth in clause (v) of the preceding
sentence. Whenever the phrase "to our knowledge" or "known to us" is used
herein, it refers to the actual knowledge of the attorneys of this firm involved
in the representation of OMI and OAC in connection with the transactions
described herein without independent investigation.
B2-2
<PAGE>
[Name of Underwriter(s)]
__________ __, 19 __
Page 3
We have not examined the actual Contracts [or] Mortgage Notes, the
assignments of the Contracts [or] the endorsements of the Mortgage Notes, any
Mortgages or assignments thereof or any other Contract Documents or Mortgage
Loan Documents (collectively, the "Asset Documents"), and we express no opinion
concerning the conformity of any of the foregoing to the requirements of any of
the Agreements. We have not examined the certificate of title, if any,
pertaining to the ownership or status of title to the property securing any
Contract and we express no opinion thereon. We also have not examined any title
records as they pertain to ownership or status of title to the Mortgaged
Property securing any Mortgage Note or the Real Property securing any Land
Secured Contract. [We call to your attention that the Initial Certification of
the Trustee delivered pursuant to Section 2.03(c)(1) of the Standard Terms
identifies certain document deficiencies with respect to the Mortgage Loan
Documents for certain Mortgage Loans. Consequently, certain assumptions made
herein regarding the conformity of the Asset Documents to the requirements of
any of the Agreements may not be true. We note that the Sales Agreement provides
that, in some but not all circumstances, OAC is required to repurchase or
replace Assets to the extent of document deficiencies that are not cured.]
We have requested Prentice-Hall Legal & Financial Services, Inc. to
review the UCC records maintained by the [_____________] Secretary of State and
the Register of Deeds of [_____________] with respect to financing statements
naming Oakwood Homes Corporation, Oakwood Mobile, or OMI, as debtor. Our opinion
expressed in numbered paragraph 3 below is rendered in reliance upon the results
of that search and upon a certificate of officers of the respective companies
relating thereto, and is based upon the assumptions (i) that no financing
statements were filed against any of the aforementioned companies as of the
dates through which the respective related search reports are current, which is
no earlier than ____________ __, 19__, other than those reflected in such search
reports, and (ii) that no financing statements have been filed against such
companies since ______________ __, 19__. We assume no liability for the search
reports. Each of OAC and OMI has represented that the Assets formerly owned by
it are subject to no liens, claims or encumbrances having priority over the
Trustee's lien thereon.
Our opinions expressed in numbered paragraph 4 below are based among
other things upon Sections 46.2- 638 and 46.2-640 of the Virginia Code, each as
currently in effect. Section 46.2-638 of the Virginia Code provides:
A certificate of title, when issued by the Department [of Motor
Vehicles] showing a security interest, shall be adequate notice to the
Commonwealth, creditors, and purchasers that a security interest in the
motor vehicle exists and the recording or filing of such creation or
reservation of a security interest in the county or city wherein the
purchaser or debtor resides or elsewhere is not necessary and shall not
be required.
Section 46.2-640 of the Virginia Code provides:
The security interests . . . shown upon such certificate of title
issued by the Department [of Motor Vehicles] pursuant to applications
for same shall have priority over any other liens or security interests
against such motor vehicle, trailer or semitrailer, however created and
recorded.
However, we call to your attention that Section 46.2-641 of the Virginia Code,
as currently in effect, contains the following requirement:
The certificate of title of a motor vehicle, trailer or semitrailer
shall be delivered to the person holding the security interest having
first priority on the motor vehicle, trailer or semitrailer and
RETAINED BY HIM until the entire amount of his security interest is
fully paid by the owner. When the security interest is fully paid, the
B2-3
<PAGE>
[Name of Underwriter(s)]
__________ __, 19 __
Page 4
certificate of title shall be delivered to the secured party next in
order of priority or, if none, to the owner. EMPHASIS ADDED.
Although the matter is not free from doubt, we believe that Sections
46.2-638 and 46.2-640 set forth in clear and unambiguous language the required
method for perfection, and the prerequisites for priority, of a security
interest in a motor vehicle, and that Section 46.2-641 should not be applied to
modify those provisions. Further, we believe that Section 46.2-641 is intended
merely to ensure delivery of certificates of title to motor vehicles to the
purchasers thereof after they have paid off their purchase financing. If so,
OAC's retention of possession of the certificates of title relating to all of
the Manufactured Homes located in Virginia and securing Oakwood Contracts should
not affect the Trustee's interest in those of such Manufactured Homes, on the
certificates of title for which the Trustee is named as first lienor (the
"Trustee Titled Homes"). However, there can be no complete assurance in this
regard, and, for that reason, the Pooling and Servicing Agreement contains an
acknowledgment from the Trustee that, as to the Trustee Titled Homes, OAC, as
the Servicer, is holding the related certificates of title on the Trustee's
behalf as its bailee and agent for the purposes specified in the Pooling and
Servicing Agreement. Although an appointment by a secured party holding a
security interest in Chattel Paper of its debtor as its agent for possession of
such Chattel Paper is not effective under the Virginia UCC for perfection of
such security interest, there is no parallel provision in the Virginia Motor
Vehicle Code invalidating the appointment by a secured party holding a security
interest in a motor vehicle of a predecessor secured party as its agent for
possession of the related certificate of title pursuant to Section 46.2-641.
Accordingly, we believe, and we assume, for purposes of rendering our opinion
expressed in numbered paragraph 4 below, that either (i) Section 46.2-641 would
not be read by a court applying Virginia law as modifying Section 46.2-638 or
Section 46.2-640 or (ii) the appointment of OAC referred to above will be
sufficient to establish OAC as the agent of the Trustee for the possession of
the certificates of title relating to the Trustee Titled Homes for purposes of
Section 46.2-641.
Based upon the foregoing and such other documents and information a
review of which we have considered necessary for the purposes hereof, and
subject to all other assumptions and qualifications set forth herein, we are of
the opinion that:
1. In the event that either the transfer of the Assets by OAC
to OMI or the transfer of the Assets by OMI to the Trustee is found not
to be a "true sale," (a) OAC (i) has granted to OMI a valid security
interest under Article 9 of the Virginia UCC in the Contracts and the
Mortgage Notes, and in the proceeds thereof to the extent provided in
Section 9-306 of the Virginia UCC, and (ii) has assigned to OMI a
security interest in the Manufactured Homes, and (b) OMI (i) has either
granted or assigned to the Trustee a valid security interest under
Article 9 of the Virginia UCC in the Contracts and the Mortgage Notes,
and in the proceeds thereof to the extent provided in Section 9-306 of
the Virginia UCC, and (ii) has assigned to the Trustee a security
interest in the Manufactured Homes.
[2. OMI has granted to the Trustee a valid security interest
in the Money and Instruments comprising the [specify any fund pledged
by OMI to the Trustee], and in the proceeds thereof to the extent
provided in Section 9-306 of the Virginia UCC.]
3. The Financing Statements are in appropriate form for filing
in the office of the [_______________] Secretary of State and in the
office of the Register of Deeds of [______________________], and the
due indexing of the Financing Statements among the UCC financing
statement records in the office of the [_______________] Secretary of
State and in the office of the Register of Deeds of [_________________]
will be sufficient to perfect the security interests created by the
Sales
B2-4
<PAGE>
[Name of Underwriter(s)]
__________ __, 19 __
Page 5
Agreement and by the Pooling and Servicing Agreement (a) in the
Contracts and in the proceeds thereof (to the extent a security
interest in proceeds of the Contracts was created as provided in
Section 9-306 of the Virginia UCC) and (b) in that portion of the
[specify any fund pledged by OMI to the Trustee] consisting of those
items and types of collateral a security interest in which may be
perfected by filing a financing statement under the North Carolina UCC.
Upon perfection of OMI's security interest in the Contracts and of the
Trustee's security interest in the Contracts, no other security
interest will be equal or prior to the Trustee's security interest in
the Contracts.
4. Manufactured Homes located in Virginia, North Carolina and
South Carolina that do not become affixed to real estate are subject to
the Virginia Motor Vehicle Code, the North Carolina Motor Vehicle Code
and Chapter 19 of Title 56 of the Code of Laws of South Carolina,
respectively. As such, a security interest in a Manufactured Home
subject to the Virginia Motor Vehicle Code, the North Carolina Motor
Vehicle Code or Chapter 19 of Title 56 of the Code of Laws of South
Carolina generally is required to be noted on the certificate of title
for such Manufactured Home issued by the Virginia Department of Motor
Vehicles, the North Carolina Department of Motor Vehicles or the South
Carolina Department of Highways and Public Transportation,
respectively. [Based upon a representation from OAC that each
certificate of title or application therefor relating to Manufactured
Homes located in Virginia, North Carolina or South Carolina lists OAC
or the Trustee as the first secured party or first lienor, OAC or the
Trustee has (or with respect to applications, will have upon issuance
of a certificate of title identifying OAC or the Trustee as first
secured party or first lienor) a validly perfected first priority
security interest in each Manufactured Home located in Virginia, North
Carolina or South Carolina, and no other filing is required in order to
continue such perfection.]
5. The security interest of the Trustee in the Mortgage Notes
and in those portions of the [specify any fund to be pledged by OMI to
the Trustee] that constitute Money or Instruments and in the proceeds
thereof (but only to the extent provided in Section 9-306 of the
[applicable] UCC) will be perfected upon the delivery of the Mortgage
Notes and such Money or Instruments to the Trustee. Upon such delivery,
no other security interest will be equal or prior to the security
interest of the Trustee in the Mortgage Notes and such Money or
Instruments. No opinion is expressed with respect to the continued
perfection of such security interest in the Mortgage Notes or such
Money or Instruments in the event that the Trustee relinquishes
possession thereof.
Our opinions with respect to the security interests of the Trustee in
items of collateral other than the Manufactured Homes are subject to the
following qualifications:
(a) we call to your attention that a security interest in
proceeds is limited to the extent set forth in Section 9-306 of the
Virginia UCC;
(b) we have assumed that OAC has sufficient rights in all such
collateral for the security interests therein granted pursuant to the
Sales Agreement to attach and that OMI has sufficient rights in all
such collateral for the security interests therein granted or assigned
pursuant to the Pooling and Servicing Agreement to attach;
(c) we have assumed that payment for the Certificates has been
made in accordance with the Underwriting Agreement and the Purchase
Agreement and that payment for the Assets has been made in accordance
with the Sales Agreement;
B2-5
<PAGE>
[Name of Underwriter(s)]
__________ __, 19 __
Page 6
(d) we have assumed that the Contracts are Chattel Paper under
the [applicable] UCC and the Mortgage Notes are Instruments as defined
in the [applicable] UCC (but excluding any Instrument constituting a
"certificated security" as defined in Section 8-102 of the [applicable]
UCC);
(e) we have assumed the due execution of each endorsement of
each Mortgage Note, of an assignment or assignments of the Contracts
and of an assignment in recordable form of each Mortgage (an
"Assignment"), in each case from the originators thereof through any
intervening endorsees or assignees to OMI and the validity of each such
endorsement and assignment under relevant state law;
(f) we have assumed that, to the extent required by applicable
state law, each Assignment of a Mortgage securing a Mortgage Loan
necessary to reflect the transfer of such Mortgage from the related
originator to the Trustee has been duly recorded in the proper
recording office subject to no intervening recordations prior to the
date of recordation of such Assignment. We note that Section _______ of
the Standard Terms requires that OMI arrange for the recordation of
such Assignments promptly following closing and, in any event, within
one year after the Closing Date;
(g) we call to your attention that Section 552 of Title 11 of
the United States Code (the "Bankruptcy Code") limits the extent to
which property acquired by a debtor after the commencement of a
proceeding under the Bankruptcy Code may be subject to a security
interest arising from a security agreement entered into by the debtor
before the commencement of such a proceeding;
(h) we have assumed that any collateral subject to a security
interest that is perfected by delivery to or possession by the Trustee
is, and will be continuously, located in the [state where Trustee is
holding such collateral] and in the possession of the Trustee; we call
to your attention that the perfection and the effect of perfection and
non-perfection of the security interest of the Trustee may be governed
by laws other than the laws of such state to the extent that collateral
becomes located in a jurisdiction other than such state;
(i) we have assumed that the Trustee has not received any
notice as to any security interest in the Contracts or Mortgage Notes
other than a notice with respect to the security interest of the
Trustee;
(j) we have assumed that each Mortgage Note is evidenced by
only one original document; and
(i) we have assumed that there are no agreements or
understandings among OMI, the Trustee, the Servicer or any other party
which would modify, release, terminate or delay the attachment of the
security interest granted to the Trustee under the Pooling and
Servicing Agreement.
As to factual matters, we have relied upon representations included in
the Agreements, in documents delivered at the closing, upon certificates of
officers of OAC, OMI and the Trustee, and upon certificates of public officials.
Without limiting the foregoing, we have relied upon representations and
warranties in the Agreements or upon certificates of OAC, OMI or the Trustee:
B2-6
<PAGE>
[Name of Underwriter(s)]
__________ __, 19 __
Page 7
(a) that OAC has the full right to sell each Asset to OMI and
that OMI has the full right to sell each Asset to the Trust, and that,
upon authorization, execution and delivery of the Pooling and Servicing
Agreement by all parties thereto, the Trust will be the sole beneficial
owner of each Asset free and clear of liens, encumbrances and rights of
others;
(b) the Trustee has within its possession the original
Mortgage Note evidencing each Mortgage Loan, an endorsement or an
unbroken chain of endorsements of that Mortgage Note from the original
payee to the Trustee and an Assignment or an unbroken chain of
Assignments in recordable form evidencing the transfer of the Mortgage
related to each Mortgage Loan from the original mortgagee or successor
assignee(s) of record to the Trustee;
(c) that each Asset was acquired by each of OAC, OMI and the
Trustee in the ordinary course of their respective businesses, in good
faith, for value and without notice that it is overdue or has been
dishonored or of any defense against or claim to it on the part of any
person;
(d) as to the absence of any actual or constructive knowledge
or notice by OAC, OMI or the Trustee of any interest contrary to the
Trustee's interests under the Pooling and Servicing Agreement;
(e) that the Trustee (or someone acting on its behalf) has
within its possession any Money or Instrument constituting a portion of
the [specify any fund pledged to the Trustee];
(f) that the Trustee is not an affiliate of OMI; and
(g) that the Obligor's debt evidenced by any Contract is not
separately evidenced by any promissory note or other Instrument.
With respect to the opinion expressed in numbered paragraph 4 above, we
do not express any opinion as to the priority of any security interest in any
Manufactured Home as against any security interest therein or lien thereon that
need not be noted on a certificate of title, including, but not limited to,
liens for storage or for parts and labor incurred with respect to such
Manufactured Home, liens that may arise by the operation of applicable real
estate laws, federal, state and local tax liens, liens noted on a certificate of
title or financing statement filed in another state if a Manufactured Home is
moved to another jurisdiction, and liens created by a manufacturer or dealer who
holds a Manufactured Home in its inventory.
We do not express any opinion as to:
(a) the priority of any security interest as against any claim
or lien in favor of the United States or any State or any agency or
instrumentality of the United States or any State (including, without
limitation, federal tax liens, liens under the Employee Retirement
Income Security Act of 1974, as amended, or claims given priority
pursuant to 31 U.S.C. ss. 3713);
(b) the priority of any security interest as against any
liens, claims, or other interests that arise by operation of law and do
not require any filing or possession or similar action in order to take
priority over a prior perfected security interest under the UCC of any
relevant jurisdiction;
(c) the priority of any security interest as against the
rights of any purchaser of any of the
B2-7
<PAGE>
[Name of Underwriter(s)]
__________ __, 19 __
Page 8
Assets who gives new value for and takes possession of such Assets in
the ordinary course of his business without knowledge that any such
Asset is subject to a security interest as described in Section 9-308
of the [applicable] UCC or as against a purchaser of any of the Assets
(including a secured party) who could be afforded priority under
Section 9-309 of the [applicable] UCC;
(d) the priority of any security interest as against a lien
creditor (as defined in Section 9- 301(3) of the [applicable] UCC) who
attached or levied prior to the perfection of the security interest of
the Trustee;
(e) the priority of any security interest as against a lien
creditor to the extent the security interest purports to secure future
advances or other extensions of credit subsequent to the date hereof
other than advances made pursuant to commitments existing on the date
of attachment by such lien creditor;
(f) the priority of any security interest in collateral
constituting proceeds of collateral subject to a third party's security
interest;
(g) the priority of any security interest perfected by filing
a financing statement as against another creditor not required to file
a financing statement under the [applicable] UCC or as against another
secured party in possession of the related collateral prior to the
perfection of the Trustee's security interest through filing of the
Financing Statements;
(h) the priority of any security interest as against a
security interest perfected (i) without possession pursuant to Sections
8-313(1)(i) and 8-321 and Sections 9-304(4) or (5) of the [applicable]
UCC or (ii) without filing pursuant to Sections 9-304(4) or (5) of the
[applicable] UCC;
(i) the priority of any security interest as against a
purchase money security interest that could be perfected without
possession pursuant to Section 8-313(1)(h) of the [applicable] UCC or
and that could be afforded priority under Section 9-312(4) of the
[applicable] UCC;
(j) the priority of any security interest as against another
secured creditor to the extent set forth in Section 9-312(7) of the
[applicable] UCC;
(k) the priority of any security interest as against the
rights of any person against whom the transfer to the Seller or the
Trustee was "wrongful" within the meaning of Section 8-315 of the
[applicable] UCC;
(l) the priority of any security interest as against a
security interest perfected under the laws of another jurisdiction to
the extent the collateral subject to such security interest was located
in such jurisdiction within four months prior to the perfection of the
security interest of the Trustee;
(m) the priority of any security interest as against any
person who has entered into a subordination agreement or intercreditor
agreement with the Trustee with respect to any of the collateral
covered by the opinions set forth above;
(n) whether or to what extent particular items included in the
[specify any fund pledged to Trustee] may constitute Money, General
Intangibles or Instruments;
B2-8
<PAGE>
[Name of Underwriter(s)]
__________ __, 19 __
Page 9
(o) any portion of the [specify any fund pledged to Trustee]
except to the extent it consists of Money, General Intangibles or
Instruments;
(p) whether any item of collateral was or will be transferred
to the Trustee in the manner described herein or in the Pooling and
Servicing Agreement (and we have made no investigation with respect
thereto); and
(q) the nature or extent of OAC's or OMI's rights in, or title
to, any of the collateral covered by the opinions set forth above.
With respect to the Financing Statements, we call your attention to the
fact that the effectiveness of the Financing Statements will terminate (i)
unless appropriate continuation statements are filed within the time period
prescribed by relevant state law; (ii) with respect to collateral acquired more
than four months after any name change by the debtor, unless new appropriate
financing statements indicating the new name of the debtor are properly filed
before the expiration of four months after the debtor changes its name; and
(iii) four months after any relocation by the debtor of its chief executive
office or principal place of business to a new jurisdiction, unless such
security interest is perfected in such new jurisdiction within such time.
[We do not purport to express an opinion on any laws other than those
of the Commonwealth of Virginia, the State of North Carolina and the United
States of America, except to the extent that the opinion expressed in numbered
paragraph 4 above relates to matters of South Carolina law. With respect to
matters of South Carolina law and to matters of North Carolina law covered by
numbered paragraph 4 above, we have, with your permission, relied upon the
opinion of Messrs. [____________________] dated the date hereof to you as to
matters covered thereby.]
We consent to reliance on this opinion letter by the Trustee and by
[name of rating agencies] for their purposes in issuing letters rating the
Underwritten Certificates. Except as provided in the preceding sentence, this
opinion letter is for your benefit only and may not be relied upon by, nor may
copies be delivered to, any other person without our prior written consent.
Very truly yours,
B2-9
ARTICLES OF INCORPORATION
OF
OAKWOOD MORTGAGE INVESTORS, INC.
ARTICLE I
NAME
----
The name of the Corporation (the "Corporation") is: Oakwood Mortgage Investors,
Inc.
ARTICLE II
RESIDENT AGENT AND ADDRESS
--------------------------
The name of the registered agent of the Corporation and the agent's
street address where process may be served upon the Corporation are:
NAME ADDRESS
---- -------
CORPORATION TRUST COMPANY One East First Street
OF NEVADA Reno, Nevada 89501
ARTICLE III
PURPOSES
--------
SECTION 3.01. PURPOSES. The purposes for which the Corporation is formed are:
(a) To merge with Oakwood Mortgage Investors, Inc., a North Carolina
corporation (the "Predecessor"), to assume all of the Predecessor's outstanding
obligations, and thereafter to issue bonds ("Bonds") secured primarily by one or
more of the following: (1) manufactured housing retail installment sales
contracts, (2) mortgage loans, and (3) mortgage pass-through certificates or
mortgage-collateralized obligations (items (1), (2) and (3) collectively,
"Collateral") and in connection therewith to acquire, own, hold, sell, transfer,
assign, pledge, finance, refinance and otherwise deal with Collateral.
(b) To engage in the establishment of one or more trusts to hold pools
of Collateral deposited by the Corporation in such trusts and in consideration
of such deposits, to deliver to the
<PAGE>
Corporation securities evidencing ownership interests in such pools of
Collateral ("Pass-Through Certificates" and, collectively with Bonds, the
"Securities").
(c) (1) To acquire, own, hold, sell, transfer, assign, pledge, finance,
refinance and otherwise deal in or with the Securities, (2) to acquire, own,
hold, sell, transfer, assign, pledge and otherwise deal in or with Collateral
and (3) to acquire, own, hold, sell, transfer, assign, pledge and otherwise deal
in or with any or all of the ownership interests in trusts established by other
entities, institutions or individuals.
(d) Subsequent to the issuance of any series of Bonds, to sell the
Collateral securing such Bonds to a limited-purpose trust, partnership or
corporation, subject to the lien in favor of such Bonds.
(e) Subject to the limitations contained in Section 3.02 of this
Article III, to engage in any activity that is incidental to or that renders
convenient the accomplishment of any or all of the foregoing and that is not
prohibited by law or required to be set forth specifically in these Articles.
SECTION 3.02. LIMITATIONS. The Corporation shall not perform any act in
contravention of any of the following clauses of this Section 3.02 of Article
III without prior unanimous consent in writing of the Board of Directors,
including the Independent Director (as defined below).
(a) The Corporation shall not engage in any business or
activity other than as authorized in Section 3.01 hereof.
(b) The Corporation shall not incur, assume or guaranty any
indebtedness except for (1) such indebtedness as (A) may be incurred by
the Corporation in connection
2
<PAGE>
with the issuance of the Securities and (B) provides for recourse
solely to the assets pledged to secure such indebtedness or to entities
other than the Corporation, and (2) indebtedness that by its terms (A)
is subordinated to indebtedness of the Corporation evidenced by
Securities and (B) provides that the holder thereof may not cause the
filing of a petition in bankruptcy or take any similar action against
the Corporation until at least 91 days after every indebtedness of the
Corporation evidenced by the Securities is paid in full.
(c) The Corporation shall not consolidate or merge with or
into any other entity or convey or transfer its properties and assets
substantially as an entirety to any entity, unless:
(1) the entity (if other than the Corporation) formed
in or surviving such consolidation or merger or that acquires
by conveyance or transfer the properties and assets of the
Corporation substantially as an entirety (A) shall be
organized and existing under the laws of the United States of
America or any State or the District of Columbia, and (B)
shall expressly assume, by amendment or supplement to any
indentures, trust agreements or pooling and servicing
agreements (collectively, the "Indentures") pursuant to which
the Securities that are then outstanding may have been issued
by the Corporation or by trusts established by the
Corporation, which amendments and/or supplements must be
executed and delivered to the appropriate trustees under such
Indentures (the "Trustees"), in form satisfactory to such
Trustees, the due and punctual payment of the principal of and
interest on all Bonds then outstanding under the Indentures
3
<PAGE>
(to the extent that any series of Bonds provides recourse
solely to Collateral pledged to secure such Bonds, such
assumption of payments shall extend only to the extent of such
pledged Collateral) and the performance of every covenant of
the Indentures on the part of the Corporation to be performed
or observed;
(2) immediately after giving effect to such
transaction, no default or event of default under the
Indentures shall have occurred and be continuing; and
(3) the Corporation shall have delivered to the
Trustees an officers' certificate and an opinion of counsel
each stating that such consolidation, merger, conveyance or
transfer and such supplemental indentures are not prohibited
under the terms of the Indentures and that all conditions
precedent provided for relating to such transaction have been
complied with;
PROVIDED, HOWEVER, that the provisions of this Section 3.02(c) shall not limit
the ability of the Corporation to sell the Collateral securing an outstanding
series of Bonds, subject to the lien in favor of such Bonds, to a
limited-purpose trust, partnership or corporation.
Upon any consolidation or merger with respect to the Corporation, or
any conveyance or transfer of the properties and assets of the Corporation
substantially as an entirety as provided above, the entity formed by or
surviving such consolidation or merger (if other than the Corporation) or the
entity to which such conveyance or transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Corporation
under the Indentures with the same effect as if such entity had been an original
party to each such Indenture. In the event of any such conveyance or transfer,
the Corporation may be dissolved, wound-up and
4
<PAGE>
liquidated at any time thereafter, and the Corporation thereafter shall be
released from its liabilities and its obligations under the Indentures.
(d) The Corporation shall not file a petition in bankruptcy.
(e) The Corporation shall not amend, alter, change or repeal
any provision contained in this Article III.
(f) The Corporation shall have at all times at least one
member (an "Independent Director") of the Board of Directors of the
Corporation who is not an employee or an officer of the Corporation or
any of its affiliates, a director of any affiliate of the Corporation
or an owner of 5% or more of the outstanding stock of the Corporation
or any of its affiliates. In the event of the death, incapacity,
resignation or removal of an Independent Director, the Board of
Directors shall promptly appoint a replacement Independent Director.
(g) So long as any Securities remain outstanding, the
Corporation will not cause the issuance of any additional Securities if
such issuance would result in the downgrading or withdrawal of any
ratings assigned to the outstanding Securities by any
nationally-recognized statistical rating organization that rated such
outstanding securities at the request of the Corporation.
(h) The Corporation will observe the following at all
times during its existence:
(1) the Corporation will maintain books and records
separate and apart from those of any other person or entity;
5
<PAGE>
(2) the Corporation will cause its assets to be
properly allocated to it and to be properly accounted for as
its own assets;
(3) the Corporation will conduct its own business in
its own name;
(4) the Corporation will maintain its own financial
statements separate from those of any other entity;
(5) the Corporation will pay its own liabilities out
of its own funds;
6) the Corporation will observe all requisite
corporate formalities in connection with its existence and
transaction of business as a Nevada corporation;
(7) the Corporation will maintain an arm's-length
relationship with its affiliates;
(8) the Corporation will not guarantee or become
obligated for the debts of any other entity or hold out its
credit as being available to satisfy the obligations of
others;
(9) the Corporation will allocate fairly and
reasonably any overhead for shared office space or employee
salaries;
(10) the Corporation will use its own stationery and
invoices when corresponding with or billing third parties;
(11) the Corporation will not pledge its assets for
the benefit of any other entity; and
(12) the Corporation will hold itself out as a
separate entity from any other entity.
6
<PAGE>
ARTICLE IV
AUTHORIZED CAPITAL STOCK
------------------------
The total number of shares which the Corporation shall have authority
to issue shall be 1,000 shares, $1.00 par value per share. All such shares shall
be of a single class denominated Common Stock, which shares have unlimited
voting rights and represent entitlement to receive the net assets of the
Corporation upon its dissolution.
ARTICLE V
INITIAL DIRECTORS
-----------------
The members of the Corporation's governing board shall be Directors.
The number of Directors shall be as specified in the bylaws of the Corporation.
The number of Directors constituting the initial Board of Directors shall be
three, and the names and addresses of the persons who are to serve as the
initial Directors are as follows:
Lisa K. Carter 7800 McCloud Road
- -------------------------------------------- Greensboro, NC 27425-7081
Michael A. Taylor 7800 McCloud Road
- -------------------------------------------- Greensboro, NC 27425-7081
Phil Stout 601 Barron Court
- -------------------------------------------- Henderson, Nevada 89105
ARTICLE VI
INDEMNIFICATION
---------------
The Corporation may provide indemnification to, and advance the
expenses of, its directors, officers, employees and agents to the fullest extent
provided under the provisions of Nevada Revised Statutes ss. 78.751.1 through
ss. 78.751.6, inclusive, as amended from time to time, and may purchase and
maintain insurance or make other financial arrangements for such
7
<PAGE>
indemnification to the fullest extent permitted by Nevada Revised Statutes ss.
78.752, as amended from time to time.
ARTICLE VII
INCORPORATION
-------------
The name and address of the incorporator is as follows:
Thomas Y. Hiner
Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219-4074
Dated: June 11, 1998
/s/ Thomas Y. Hiner
-----------------------------
Thomas Y. Hiner, Incorporator
8
CODE OF BYLAWS OF OAKWOOD MORTGAGE INVESTORS, INC.
ARTICLE 1
IDENTIFICATION
Section 1.01. Name. The name of the corporation (the "Corporation") is
Oakwood Mortgage Investors, Inc.
Section 1.02. Resident Agent and Address. The name of the resident
agent (the "Resident Agent") and the agent's street address ("Registered
Office") where process may be served upon the Corporation are: Corporation Trust
Company of Nevada, One East First Street, Reno, Nevada 89501. The Resident Agent
shall maintain at the Registered Office:
(a) A copy certified by the Nevada Secretary of State of the
Corporation's Articles of Incorporation, and all amendments
thereto;
(b) A copy certified by an Officer of the Corporation of its Bylaws
and all amendments thereto; and
(c) A stock ledger or duplicate stock ledger, revised annually,
containing the names, alphabetically arranged, of all persons
who are stockholders of the Corporation, showing their places
of residence, if known, and the number of shares of stock held
by them respectively. In lieu of the stock ledger or duplicate
stock ledger, the agent may keep a statement setting out the
name of the custodian of the stock ledger or duplicate stock
ledger, and the present and complete post office address,
including street and number, if any, where the stock ledger or
duplicate stock ledger is kept.
Section 1.03. Other Offices. Other offices may at any time be
established by the Corporation's Board of Directors at any place or places
within or without the State of Nevada where the Corporation is authorized to do
business.
Section 1.04. Seal. The seal of the Corporation shall consist of two
concentric circles between which shall appear the name of the Corporation. In
the center of the seal shall appear the word "SEAL." The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or reproduced by
any means.
Section 1.05. Fiscal Year. The fiscal year of the Corporation shall be
determined by resolution of the Board of Directors.
<PAGE>
ARTICLE 2
CAPITAL STOCK
Section 2.01. Consideration for Shares of Stock. The Corporation may
issue and dispose of its authorized shares of stock for such consideration as
the Board of Directors determines is adequate.
Section 2.02. Certificates Representing Shares of Stock. Each holder of
the capital stock of the Corporation shall be entitled to a certificate signed
by the President or a Vice President, and the Secretary or an Assistant
Secretary of the Corporation, and sealed with the seal of the Corporation,
certifying the number of shares of stock owned by the holder in the Corporation.
Any certificate representing the shares of capital stock will bear the following
legend and the holder of such stock will hold the stock subject to the
restrictions referenced thereby:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act"), or
the securities or "blue sky" laws of any state. Such shares may not be
offered, sold, pledged or otherwise transferred in the absence of
registration under the Act and all applicable state laws or
qualifications for an exemption from the registration requirements
imposed by the Act and all applicable state laws."
Section 2.03. Transfer of Stock. The Corporation shall register a
transfer of a stock certificate presented to it for transfer if the following
conditions have been fulfilled:
(a) Endorsement. The certificate is properly endorsed by the
registered holder or by the holder's duly authorized attorney.
(b) Witnessing. The endorsement or endorsements are witnessed by
one witness unless this requirement is waived by the Secretary
of the Corporation.
(c) Adverse Claims. The Corporation has no notice of any adverse
claims or has discharged any duty to inquire into any such
claims.
(d) Collection of Taxes. There has been compliance with any
applicable law relating to the collection of taxes.
ARTICLE 3
THE STOCKHOLDERS
Section 3.01. Place of Meetings. Meetings of the stockholders of the
Corporation shall be held at Bank of America Center, 101 Convention Center
Drive, Las Vegas, Nevada (the
2
<PAGE>
"Place of Meeting"), or at such other place as may be designated by the
President or the Board of Directors, or by the written consent of all
stockholders entitled to vote thereat given either before or after the meeting
and filed with the Secretary of the Corporation.
Section 3.02. Annual Meeting. The annual meeting of the stockholders
shall be held on the date and time and at the place set by the board of
directors. Failure to hold the annual meeting shall not cause a forfeiture or
dissolution of the Corporation.
Section 3.03. Special Meetings. Special meetings of the stockholders
may be called by the President, the Board of Directors, or the holder or holders
of not less than one-tenth of all the shares of stock entitled to vote at the
meeting.
Section 3.04. Notice of Meetings - Waiver. Written notice stating the
place, day and hour of the meeting and, in the case of a special meeting, the
purpose or purposes for which the meeting is called, shall be delivered not less
than ten (10), nor more than fifty (50), days before the date of the meeting,
either personally, or by mail, or by other means of written communication,
charges prepaid, by or at the direction of the President, the Secretary, or the
Officer or persons calling the meeting, to each registered holder entitled to
vote at such meeting. If mailed, such notice shall be considered to have been
delivered when deposited in the United States mail addressed to the registered
holder at the holder's address as it appears on the stock transfer books of the
Corporation, with postage prepaid. If a stockholder gives no address, notice
shall be deemed to have been given if sent by mail or other written
communication addressed to the Resident Agent of the Corporation, or if
published at least once in some newspaper of general circulation in the county
in which said office is located. Waiver by a stockholder in writing of notice of
a stockholders' meeting shall be equivalent to such stockholder's receipt of
such notice. Attendance by a stockholder, without objection to the notice,
whether in person or by proxy, at a stockholders' meeting shall constitute a
waiver of notice of the meeting.
Section 3.05. Quorum. A majority of the shares of stock entitled to
vote, represented in person or by proxy, shall constitute a quorum at a meeting
of stockholders. The stockholders present at a duly organized meeting may
continue to do business until adjournment, notwithstanding the withdrawal of
enough stockholders to leave less than a quorum.
Section 3.06. Adjourned Meeting and Notice Thereof. Any stockholders'
meeting, annual or special, whether or not a quorum is present, may be adjourned
from time to time by the vote of a majority of the shares of stock, the holders
of which are either present in person or represented by proxy thereat, but in
the absence of a quorum no other business may be transacted at any such meeting.
When any stockholders' meeting, either annual or special, is adjourned
for thirty (30) days or more, notice of the adjourned meeting shall be given as
in the case of an original meeting. Except as aforesaid, it shall not be
necessary to give any notice of the time and place of the adjourned meeting or
of the business to be transacted thereat, other than by announcement at the
meeting at which such adjournment is taken.
3
<PAGE>
Section 3.07. Entry of Notice. An entry in the minutes of any meeting
of stockholders, whether annual or special, to the effect that notice has been
duly given, shall be conclusive and incontrovertible evidence that due notice of
such meeting was given to all stockholders as required by applicable law and
these Bylaws.
Section 3.08. Voting. Except as otherwise provided by law, only persons
in whose names shares of stock entitled to vote stand on the stock records of
the Corporation on the day three (3) days prior to any meeting of stockholders,
or, if a record date for voting purposes is fixed as provided in Article 6,
Section 6.01, of these Bylaws, then on such record date, shall be entitled to
vote at such meeting.
The vote of the stockholders shall mean the unanimous written action or
ratification of action of the stockholders or the vote of a majority of the
voting power of the stockholders present in person or by proxy at a telephone or
other meeting of the stockholders, having a quorum and called upon proper notice
or waiver of notice.
Section 3.09. Consent of Absentees. The transaction of any meeting of
stockholders, either annual or special and however called and noticed, shall be
as valid as though had at a meeting duly held after regular call and notice if a
quorum be present either in person or by proxy and if, either before or after
the meeting, each of the stockholders entitled to vote, not present in person or
by proxy, signs a written waiver of notice, or a consent to the holding of such
meeting, or an approval of the minutes thereof. All such waivers, consents or
approvals shall be filed with the corporate records or made a part of the
minutes of the meeting.
Section 3.10. Action or Ratification of Action Without Meeting. Any
action which may be taken or ratified at a meeting of the stockholders may be
taken or ratified without a meeting if authorized in writing by stockholders
holding the percentage of the voting power required by law for taking such
action by written consent and such writing is filed with the Secretary of the
Corporation.
Section 3.11. Proxies. Every person entitled to vote or execute
consents shall have the right to do so either in person or by an agent or agents
authorized by a written proxy executed by such person or the person's duly
authorized agent and reasonable evidence of which is filed with the Secretary of
the Corporation; provided that no such proxy shall be valid after the expiration
of eleven (11) months from the date of its execution unless the person executing
it specified therein the length of time for which such proxy is to continue in
force, which in no event shall exceed seven (7) years from the date of its
execution.
Section 3.12. Telephone Meetings. Stockholders may participate in a
meeting of Stockholders by means of a telephone conference or similar method of
communication by which all persons participating in the meeting can hear each
other. Participation in a meeting pursuant to this section constitutes presence
in person at the meeting.
4
<PAGE>
Section 3.13. Definition of "Stockholder". As used in these Bylaws, the
term "stockholder," and any term of like import, shall include all persons
entitled to vote the shares of stock held by a stockholder, unless the context
in which such term is used indicates that a different meaning is intended.
ARTICLE 4
THE BOARD OF DIRECTORS
Section 4.01. Number of Directors. The Board of Directors of the
Corporation shall consist of three (3) members. The members of the Board of
Directors need not be stockholders or residents of the State of Nevada. The
number of members of the Board of Directors may be increased or decreased from
time to time as provided in Section 4.02 below.
Section 4.02. Increase or Decrease of Directors. The number of
Directors of the Corporation may be increased or decreased from time to time, at
a meeting of the stockholders, by the affirmative vote of a majority of the
issued and outstanding shares of stock of the Corporation; provided, however,
that the Board shall consist of not more than seven (7) members, and of not less
than three (3) members. This Section of the Code of Bylaws may be amended only
by the affirmative vote at a meeting of the stockholders, of a majority of the
issued and outstanding shares of stock of the Corporation.
Section 4.03. Election. Members of the initial Board of Directors shall
hold office until the first annual meeting of stockholders or until their
successors shall have been elected and qualified. At the first annual meeting of
stockholders and at each annual meeting thereafter, the stockholders shall elect
Directors to hold office until the next succeeding annual meeting. If any such
annual meeting is not held, or the Directors are not elected thereat, the
Directors may be elected at any special meeting of the stockholders held for
that purpose. Each Director shall hold office for the term for which the
Director is elected or until the Director's successor shall be elected and
qualified.
Section 4.04. Vacancies. Any vacancy occurring in the Board of
Directors may be filled by the affirmative vote of a majority of the remaining
Directors though less than a quorum of the Board of Directors, or by a sole
remaining Director. A Director elected to fill a vacancy shall be elected for
the unexpired term of the Director's predecessor in office.
A vacancy or vacancies in the Board of Directors shall be deemed to
exist in case of the death, resignation or removal of any Directors, or if the
authorized number of Directors be increased, or if the stockholders fail at any
annual or special meeting of stockholders at which any Director or Directors are
elected to elect the full authorized number of Directors to be voted for at that
meeting, or if a vacancy is declared by the Board of Directors for any reason
permitted by law.
5
<PAGE>
The stockholders may elect a Director or Directors at any time to fill
any vacancy or vacancies not filled by the Directors. If the Board of Directors
accepts the resignation of a Director tendered to take effect at a future time,
the Board or the stockholders shall have power to elect a successor to take
office when the resignation is to become effective.
No reduction of the authorized number of Directors shall have the
effect of removing any Director prior to the expiration of the Director's term
of office.
Section 4.05. Place of Meetings. Immediately after the annual meeting
of the stockholders, at the same place as the meeting of the stockholders, the
Board of Directors shall meet each year for the purpose of organization,
election of Officers, and consideration of any other business that may properly
be brought before the meeting. No notice of any kind to either old or new
members of the Board of Directors for this annual meeting shall be necessary
unless the meeting is to be held at a place other than the Place of Meeting
provided in Section 3.01, in which case notice of the place of the meeting shall
be given as provided in Section 4.07.
Section 4.06. Regular Meetings. Regular meetings of the Board of
Directors shall be held at such time and places within or without the State of
Nevada as may be designated from time to time by resolution of the Board or by
written consent of all members of the Board. No notice of any kind to members of
the Board for these regular meetings shall be necessary unless the meeting is to
be held at a place other than the Place of Meeting provided in Section 3.01, in
which case notice of the place of the meeting shall be given as provided in
Section 4.07.
Section 4.07. Other Meetings. Other meetings of the Board of Directors
for any purpose or purposes may be held at any time upon call by the President
or, if the President is absent or is unable to or refuses to act, by any Vice
President or by any two (2) Directors. Such meetings may be held at any place
within or without the State of Nevada as may be designated from time to time by
resolution of the Board or by written consent of all members of the Board.
Written notice of the time and place of other meetings shall be
delivered personally to each Director or sent to each Director by mail or other
form of written communication, charges prepaid, addressed to the Director at the
Director's address as it is shown upon the records of the Corporation or, if it
is not so shown on such records or is not readily ascertainable, at the place in
which the meetings of the Directors are regularly held. In case such notice is
mailed, it shall be deposited in the United States mail at least one hundred
twenty (120) hours prior to the time of the holding of the meeting. In case such
notice is personally delivered, it shall be so delivered at least twenty-four
(24) hours prior to the time of the holding of the meeting. Such mailing or
delivery as above provided shall constitute due, legal and personal notice to
such Director.
Section 4.08. Notice of Adjourned Meetings. Notice of the time and
place of holding an adjourned meeting need not be given to absent Directors if
the time and place be fixed at the meeting adjourned.
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Section 4.09. Entry of Notice. An entry in the minutes of any special
meeting of the Board of Directors to the effect that notice has been duly given
shall be conclusive and incontrovertible evidence that due notice of such
special meeting was given to all Directors as required by law and by these
Bylaws.
Section 4.10. Waiver of Notice. The transactions of any meeting of the
Board of Directors, however called and noticed or wherever held, shall be as
valid as though had at a meeting duly held after regular call and notice, if a
quorum be present, and if, either before or after the meeting, each of the
Directors not present signs a written waiver of notice or a consent to holding
such meeting or an approval of the minutes thereof. All such waivers, consents
or approvals shall be filed with the corporate records or made a part of the
minutes of the meeting.
Section 4.11. Quorum. A majority of the authorized number of Directors
shall be necessary to constitute a quorum for the transaction of business,
except to adjourn a meeting as hereinafter provided. Every act or decision done
or made by a majority of the Directors present at a meeting, duly held at which
a quorum is present, shall be regarded as the act of the Board of Directors
unless a greater number be required by law or by the Corporation's Articles of
Incorporation.
Section 4.12. Adjournment. A quorum of the Directors may adjourn any
Directors' meeting to meet again at a stated day and hour; provided, however,
that in the absence of a quorum, a majority of the Directors present at any
Directors' meeting, either regular or special, may adjourn from time to time
until the time fixed for the next regular meeting of the Board.
Section 4.13. Action Without Meeting. Any action which may be taken or
ratified at a meeting of the Board of Directors may be taken or ratified without
a meeting if all members of the Board of Directors shall individually or
collectively consent, in writing, to such action. Such action by written consent
shall have the same force and effect as a unanimous vote of such Directors. Such
written consent or consents shall be filed with the minutes of the proceedings
of the Board.
Section 4.14. Telephone Meetings. Members of the board of directors or
of any committee designated by the board may participate in a meeting of the
board or committee by means of a telephone conference or similar method of
communication by which all persons participating in the meeting can hear each
other. Participation in a meeting pursuant to this section constitutes presence
in person at the meeting.
Section 4.15. Voting. The vote of the directors shall mean the
unanimous written action or ratification of action of the directors or the vote
of a majority of the voting power of the directors present in person or by proxy
at a telephone or other meeting of the directors, having a quorum and called
upon proper notice or waiver of notice.
Section 4.16. Fees and Compensation. Directors shall not receive any
stated salary for their services as Directors or as members of committees, but,
by resolution of the Board, a fixed
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fee, with or without expenses of attendance, may be allowed to Directors for
such services. Nothing herein contained shall be construed to preclude any
Director from serving the Corporation in any other capacity as an Officer,
agent, employee or otherwise, and receiving compensation therefore.
Section 4.17. Indemnification of Directors and Officers. The following
provisions are in addition to any other rights and remedies of a person for
advancement of expenses or indemnification by law or contract, or as determined
by a court of competent jurisdiction. A director or officer of the corporation,
or a director, officer, partner, manager, or trustee of another corporation,
partnership, limited liability company, trust or other business venture serving
at the request of the corporation (in this section, "Person") may be eligible
for indemnification or advancement of expenses. Expenses subject to
indemnification or advancement include expenses incurred because the Person was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, whether or not by or in the right of the corporation, by reason
of the fact of the Person's duties to or on behalf of the corporation (in this
section, "Litigation"). The character of expenses subject to indemnification or
advancement include attorneys' fees, costs, judgments, fines, and amounts paid
in settlement actually and reasonably incurred by the Person in connection with
the Litigation (in this section, "Costs"), but exclude judgments in favor of the
corporation and amounts paid in settlement with the corporation and attorneys'
fees and costs incurred in connection with such judgments or settlements. To the
fullest extent permitted under Nevada Revised Statutes ss. 78.751, the
corporation shall pay the Costs of Persons incurred in Litigation as they are
incurred and in advance of the final disposition of the Litigation, upon receipt
of an undertaking by or on behalf of the person to repay the amount if it is
ultimately determined by a court of competent jurisdiction that the Person is
not entitled to indemnification by the corporation. To the fullest extent
permitted under Nevada Revised Statutes ss. 78.751, the Corporation shall
indemnify each Person against his Costs incurred in Litigation, regardless of
the conduct of the Person, unless a final adjudication, after exhaustion of all
appeals therefrom, establishes that the Person's acts or omissions involved
intentional misconduct, fraud or a knowing violation of applicable law and were
material to the cause of action.
Section 4.18. Powers of Directors. Subject to limitations set forth in
the Articles of Incorporation, in these Bylaws, and in applicable law as to
action to be authorized or approved by the stockholders and subject to the
duties of Directors as prescribed by these Bylaws, all corporate powers shall be
exercised by or under the authority of, and the business and affairs of the
Corporation shall be controlled by, the Board of Directors. Without prejudice to
such general powers, but subject to the same limitations, it is hereby expressly
declared that the Directors shall have the following powers, to-wit:
First: To select and remove all Officers, agents and employees
of the Corporation, prescribe such powers and duties for them as may
not be inconsistent with
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applicable law, with the Articles of Incorporation or the Bylaws, fix
their compensation, and require from them security for faithful
service.
Second: To conduct, manage and control the affairs and
business of the Corporation and to make such rules and regulations
therefor not inconsistent with applicable law, with the Articles of
Incorporation or these Bylaws, as they may deem best.
Third: To change the Resident Agent or the Registered Office;
to change the Place of Meeting provided in Section 3.01; to fix and
locate from time to time one or more other offices of the Corporation,
within or without the State of Nevada as provided in Article 1, Section
1.03, hereof; to designate any place within or without the State of
Nevada for the holding of any stockholders' meeting or meetings; and to
adopt, make and use a corporate seal, and to prescribe the forms of
certificates of stock, and to alter the form of such seal and of such
certificates from time to time, as in their judgment they may deem
best, provided such seal and such certificates shall at all times
comply with the provisions of applicable law.
Fourth: To borrow money and incur indebtedness for the
purposes of the Corporation, and to cause to be executed and delivered
therefor, in the corporate name, promissory notes, bonds, debentures,
deeds of trust, mortgages, pledges, hypothecations or other evidences
of debt and securities therefor, except as limited by the Articles of
Incorporation; provided, that no evidence of indebtedness shall be
issued in the Corporation's name unless authorized by a resolution of
its Board of Directors.
Fifth: To authorize the issue of shares of stock of the
Corporation for such consideration as the Board of Directors determines
is adequate.
Sixth: To adopt and administer, or provide for the
administration of, employee stock purchase plans, employee stock option
plans and any other plans or arrangements whereby Directors, Officers,
employees or agents of the Corporation or any other entity may be
entitled to acquire authorized but unissued or treasury stock or other
securities of the Corporation, upon such terms and conditions as may
from time to time be permitted by law.
Seventh: To appoint an Executive Committee and other
committees, and to delegate to such Executive Committee any of the
powers and authority of the Board in the management of the business and
affairs of the Corporation, except the power to declare distributions
and to adopt, amend or repeal Bylaws. The Board of Directors shall have
the power to prescribe the manner in which proceedings of the Executive
Committee and other committees shall be conducted. The committees shall
keep regular minutes of their meetings and report the same to the Board
when required. Any such Executive Committee shall be composed of two
(2) or more Directors.
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Eighth: To lend money in furtherance of any of the purposes of
the Corporation; to invest the funds of the Corporation from time to
time; and to take and hold any property as security for the payment of
funds so loaned or invested; provided, that no loans shall be
contracted on behalf of the Corporation unless authorized by a
resolution of its Board of Directors.
Ninth: To lend money to employees, Officers and Directors, and
otherwise to assist employees, Officers and Directors; provided, that
no loans shall be contracted on behalf of the Corporation unless
authorized by a resolution of its Board of Directors. A loan to a
member of the Board of Directors shall be made only upon the approval
of a majority of the Board of Directors excluding the Director to whom
the loan is to be made.
Tenth: To declare distributions upon the capital stock of the
Corporation in cash, in property, or in shares of the capital stock,
subject to the limitations set forth in the Articles of Incorporation
and in applicable law. Before payment of any distribution, there may be
set aside out of the funds of the Corporation available for
distributions, such sum or sums as the Directors, from time to time, in
their absolute discretion, think proper as a reserve or reserves to
meet contingencies, or for equalizing distributions, or for repairing
or maintaining any property of the Corporation, or for such other
purpose as the Directors shall think conducive to the interests of the
Corporation, and the Directors may modify or abolish any such reserve
in the manner in which it was created.
ARTICLE 5
THE OFFICERS
Section 5.01. Officers. The Officers of the Corporation shall be a
President, a Secretary and a Treasurer, and each of them shall be appointed by
the Board of Directors. The Corporation may also have such other executive
officers, including one (1) or more Vice Presidents, one (1) or more Assistant
Secretaries and one (1) or more Assistant Treasurers, as may be appointed by the
Board of Directors, and such subordinate Officers as may be appointed in
accordance with the provisions of Section 5.03 of this Article 5. Officers,
other than the President, need not be Directors. One person may hold two (2) or
more offices, except those of President and Secretary. However, if the
Corporation only has one stockholder, then one person may hold the offices of
both President and Secretary.
Section 5.02. Election. The Officers of the Corporation, except such
Officers as may be appointed in accordance with the provisions of Section 5.03
or Section 5.05 of this Article 5, shall be chosen annually by the Board of
Directors, and each shall hold office until the Officer shall resign or shall be
removed or otherwise disqualified to serve, or the Officer's successor shall be
elected and qualified to serve; provided that Officers may be appointed at any
time by the Board of Directors, or, as permitted by Section 5.03 of this
Article, by the President, for the purpose of initially filling an office or
filling a newly created or vacant office.
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Section 5.03. Subordinate Officers. The Board of Directors may appoint,
and may empower the President to appoint, such other Officers as the business of
the Corporation may require, each of whom shall hold office for such period,
have such authority and perform such duties as are provided in these Bylaws or
as the Board of Directors (or the President, if so authorized by the Board of
Directors) may from time to time determine.
Section 5.04. Removal and Resignation. Any Officer may, subject to any
contractual arrangements between the Officer and the Corporation, be removed,
either with or without cause, by a majority of the Directors in office at the
time, at any regular or special meeting of the Board, or, except in case of an
Officer chosen by the Board of Directors, by an Officer upon whom such power of
removal may be conferred by the Board of Directors.
Any Officer may resign at any time by giving written notice to the
Board of Directors or to the President, or to the Secretary of the Corporation.
Any such resignation shall take effect at the date of the receipt of such notice
or at any later time specified therein, and, unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to make it effective.
Section 5.05. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled in the
manner prescribed in these Bylaws for regular appointments to such office.
Section 5.06. President. Subject to such supervisory powers, if any, as
may be given by the Board of Directors to an Officer senior to the President, if
there be such an Officer, the President shall be the chief executive officer of
the Corporation and shall, subject to the control of the Board of Directors,
have general supervision, direction and control of the business and Officers of
the Corporation. The President shall preside at all meetings of the
stockholders, and, in the absence of the Chairman of the Board, or Officer
senior to the President, or if there be none, at all meetings of the Board of
Directors. The President shall be ex officio a member of all the standing
committees, including the Executive Committee, if any, and shall have the
general powers and duties of management usually vested in the office of
president of a Corporation, and such other powers and duties as may be
prescribed by the Board of Directors or these Bylaws.
Section 5.07. Vice Presidents. In the absence or disability of the
President, the Vice Presidents, in order of their rank, as fixed by the Board of
Directors, or if not ranked, the Vice President designated by the Board of
Directors, shall perform all the duties of the President, and when so acting,
shall have all the powers of and be subject to all the restrictions upon the
President. The Vice Presidents shall have such other powers and perform such
other duties as may be prescribed for them respectively by the Board of
Directors, the President or these Bylaws.
Section 5.08. Secretary. The Secretary shall keep or cause to be kept,
at the Registered Office or such other place as the Board of Directors may
order, a book of minutes of all meetings of Directors and stockholders, with the
time and place of holding, whether regular or special, and, if special, how
authorized, the notice thereof given, the names of those present at Directors'
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meetings, the number of shares of stock present or represented at stockholders'
meetings, and the proceedings thereof.
The Secretary shall keep or cause to be kept, in any form permitted by
law, at the Registered Office or at the office of the Corporation's transfer
agent, a stock ledger, or a duplicate stock ledger, showing the names of the
stockholders and their addresses, the number and classes of shares of stock held
by each, the number and date of certificates issued for shares of stock, and the
number and date of cancellation of every certificate surrendered for
cancellation.
The Secretary shall give, or cause to be given, notice of all the
meetings of the stockholders and of the Board of Directors required by these
Bylaws or by applicable law to be given, and shall keep the seal of the
Corporation in safe custody, and shall have such other powers and perform such
other duties as may be prescribed by the Board of Directors, the President or
these Bylaws.
Section 5.09. Treasurer. The Treasurer shall keep and maintain, or
cause to be kept and maintained, adequate and correct accounts of the properties
and business transactions of the Corporation, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses, capital, surplus and shares
of stock. Any surplus, including earned surplus, paid-in surplus and surplus
arising from a reduction of stated capital, shall be classified according to
source and shown in a separate account. The books of account shall at all times
be open to inspection by any Director.
The Treasurer shall deposit all moneys and other valuables in the name
and to the credit of the Corporation with such depositories as may be designated
by the Board of Directors; shall disburse the funds of the Corporation as may be
ordered by the Board of Directors; shall render to the President and Directors,
whenever they request it, an account of all transactions entered into by the
Corporation and of the financial condition of the Corporation; and shall have
such other powers and perform such other duties as may be prescribed by the
Board of Directors, the President or these Bylaws. If required by the Board of
Directors, the Treasurer shall give the Corporation a bond in such sum and with
such surety or sureties as shall be satisfactory to the Board of Directors for
the faithful performance of the duties of the office and for the restoration to
the Corporation, in case of the Treasurer's death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other property of
whatever kind in the possession or control of the Treasurer and belonging to the
Corporation.
Section 5.10. Assistant Secretaries and Assistant Treasurers. The
Assistant Secretaries and Assistant Treasurers, if any, shall in the absence or
disability of the Secretary and the Treasurer, respectively, have all the powers
and perform all of the duties of those offices, and shall in general perform
such other duties as shall be assigned to them by the Secretary or Treasurer,
respectively, or by the President or the Board of Directors.
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Section 5.11. Corporate Bank Accounts. Bank accounts in the name of the
Corporation may be opened without the approval of the Board of Directors if
opened with the consent of both the President and Treasurer of the Corporation.
The Treasurer shall inform the Board of Directors of any bank account opened by
the President and Treasurer of the Corporation pursuant to the authority granted
in this section at the next meeting of the Board of Directors after the opening
of the account.
Section 5.12. Transfers of Authority. In case of the absence of any
Officer of the Corporation, or for any reason that the Board of Directors may
consider sufficient, the Board of Directors may transfer the powers or duties of
that Officer to any other Officer or to any Director or employee of the
Corporation, provided a majority of the full Board of Directors concurs.
Section 5.13. Resident Agent and Registered Office. The Resident Agent
and/or Registered Office of the Corporation may be changed by two Officers, one
of whom must be either the President or the Secretary of the Corporation,
without the approval of the Board of Directors. One of the Officers shall inform
the Board of Directors of any change pursuant to the authority granted in this
section at the next meeting of the Board of Directors after such change is
implemented.
ARTICLE 6
MISCELLANEOUS
Section 6.01. Record Date and Closing Stock Books. The Board of
Directors may fix a time in the future, as a record date for the determination
of the stockholders entitled to notice of and to vote at any meeting of
stockholders, or entitled to receive any dividend or distribution, or any
allotment of rights, or to exercise rights in respect to any change, conversion
or exchange of shares of stock. The record date so fixed shall not be more than
fifty (50) days prior to the date of the meeting or event for the purposes of
which it is fixed. When a record date is so fixed, only stockholders of record
on that date shall be entitled to notice of and to vote at the meeting, or to
receive the dividend, distribution or allotment of rights, or to exercise the
rights, as the case may be, notwithstanding any transfer of any shares of stock
on the books of the Corporation after the record date. The Board of Directors
may close the books of the Corporation against transfers of shares of stock
during the whole or any part of any such fifty (50) day period.
Section 6.02. Inspection of Corporate Records. The stock ledger or
duplicate stock ledger, the books of account and minutes of proceedings of the
stockholders and the Board of Directors and the Executive Committee, if any,
shall be open to inspection upon the written demand of any stockholder or holder
of a voting trust certificate, at any reasonable time, and for a purpose
reasonably related to the interests of the holder as a stockholder or as the
holder of a voting trust certificate, and shall be exhibited at any time when
required by the demand at any stockholders' meeting of the holders of ten
percent (10%) of the shares of stock represented at the meeting. Such inspection
may be made in person or by an agent or attorney, and shall include
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the right to make extracts. Demand of inspection other than at a stockholders'
meeting shall be made in writing upon the President, Secretary or Assistant
Secretary or general manager, if any, or the Corporation.
Section 6.03. Checks, Drafts, Etc. All checks, drafts, bonds, bills of
exchange, or other orders for payment of money, notes, or other evidences of
indebtedness issued in the name or payable to the Corporation shall be signed or
endorsed by such person or persons and in such manner as, from time to time,
shall be determined by resolution of the Board of Directors.
Section 6.04. Contracts, Etc., How Executed. The Board of Directors,
except as in these Bylaws otherwise provided, may authorize any Officer or
Officers, agent or agents, to enter into any contract or execute any instrument
or document in the name of and on behalf of the Corporation, and such authority
may be general or confined to specific instances. The Board of Directors may
designate Officers or employees of the Corporation who may, in the name of the
Corporation, sign any such instrument or document and may authorize the use of
facsimile signatures of any of such persons. No Officer, agent or employee shall
have any power or authority to bind the Corporation by any contract or
engagement or to pledge its credit to render it liable for any purpose or to any
amount except as specifically authorized in these Bylaws or by the Board of
Directors in accordance with these Bylaws.
Section 6.05. Certificates of Stock. A certificate or certificates for
shares of the capital stock of the Corporation shall be issued to each
stockholder when any such shares of stock are fully paid up. All such
certificates shall be signed by the President or a Vice President and the
Secretary or an Assistant Secretary, or be authenticated by facsimiles of the
signatures of the President and Secretary or by a facsimile of the signature of
the President and the written signature of the Secretary or an Assistant
Secretary. Before it becomes effective every certificate authenticated by a
facsimile of a signature must be counter-signed by a transfer agent or transfer
clerk and registered by an incorporated bank or trust company, either domestic
or foreign, as registrar of transfers, as required or permitted by law.
In case any Officer or Officers who shall have signed, or whose
facsimile signature or signatures shall have been used on, any such certificate
or certificates shall cease to be such Officer or Officers of the Corporation,
whether because of death, resignation or otherwise, before such certificate or
certificates shall have been delivered by the Corporation, such certificate or
certificates may nevertheless be adopted by the Corporation and be issued and
delivered as though the person or person who signed such certificate or
certificates, or whose facsimile signature or signatures shall have been used
thereon, had not ceased to be the Officer or Officers of such Corporation.
Section 6.06. Lost Certificates of Stock. The Board of Directors may
direct a new certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the Corporation alleged to
have been lost, destroyed, or stolen, upon the making of an affidavit of that
fact by the person claiming the certificate of stock to have been lost or
destroyed.
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When authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion, and as a condition precedent to the issuance
thereof, require the owner of such lost or destroyed certificate or
certificates, or the owner's legal representative, to advertise the same in such
manner as it shall require and/or give the Corporation a bond in such sum as it
may direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been lost or
destroyed.
Section 6.07. Representation of Shares of Stock of Other Corporations.
The President or any Vice President and the Secretary or any Assistant Secretary
of this Corporation are authorized to vote, represent and exercise on behalf of
this Corporation all rights incident to any and all shares of stock of any other
corporation or corporations standing in the name of this corporation. The
authority herein granted to said officers to vote or represent on behalf of this
Corporation any and all shares of stock held by this Corporation in any other
corporation or corporations may be exercised either by such officers in person
or by any persons authorized so to do by proxy or power of attorney duly
executed by said Officers.
Section 6.08. Inspection of Bylaws. The Corporation shall keep at the
Registered Office the original or a copy of the Bylaws as amended or otherwise
altered to date, certified by the Secretary, which shall be open to inspection
by the stockholders at all reasonable times during office hours.
Section 6.09. Conflict. In the event of any conflict between any
provision in these Bylaws and in the Corporation's Articles of Incorporation,
the provision of the Articles of Incorporation shall control.
ARTICLE 7
AMENDMENTS
Section 7.01. Power of Stockholders. New Bylaws may be adopted or these
Bylaws may be amended or repealed by the vote or written assent of stockholders
entitled to exercise a majority of the voting power of the Corporation, except
as otherwise provided by applicable law or by the Articles of Incorporation.
Section 7.02. Power of Directors. Subject to the right of stockholders
as provided in Section 7.01 of this Article 7 to adopt, amend or repeal Bylaws,
Bylaws may be adopted, amended, or repealed by the Board of Directors; provided,
however, that a Bylaw or amendment thereof changing the authorized number of
Directors may be adopted, amended or repealed only by the stockholders, except
that if a flexible number of Directors is authorized by the Articles of
Incorporation or these Bylaws, a Bylaw or amendment thereof fixing the exact
number of Directors within the limits specified in the Articles of Incorporation
or these Bylaws may be adopted, amended or repealed by the Board of Directors
alone.
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CERTIFICATE OF SECRETARY
------------------------
I, the undersigned, do hereby certify:
1. That I am the duly elected Secretary of OAKWOOD MORTGAGE INVESTORS,
INC.
2. That the foregoing Bylaws, comprising fifteen (15) pages, excluding
this page, constitute the Bylaws of said Corporation as duly adopted at a
meeting of the Board of Directors thereof duly held on the 12th day of June,
1998.
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the
seal of said corporation this 12th day of June, 1998.
(SEAL) /s/ Monte L. Miller
-----------------------------
MONTE L. MILLER,
Secretary
===========================================
OAKWOOD MORTGAGE INVESTORS, INC.,
OAKWOOD ACCEPTANCE CORPORATION
AND
[--------------------------------------------],
TRUSTEE
----------
SERIES ____-__ POOLING AND SERVICING AGREEMENT
DATED AS OF ______ 1, ____
----------
OAKWOOD MORTGAGE INVESTORS, INC.
SENIOR/SUBORDINATED
PASS-THROUGH CERTIFICATES, SERIES ____-__
===========================================
<PAGE>
THIS SERIES ____-__ POOLING AND SERVICING AGREEMENT, dated as of ____
1, ____, is made with respect to the formation of OMI Trust ____-__ (the
"Trust") among OAKWOOD MORTGAGE INVESTORS, INC., a Nevada corporation ("OMI"),
OAKWOOD ACCEPTANCE CORPORATION, a North Carolina corporation ("OAC" and, in its
capacity as servicer, the "Servicer"), and [__________________], a [national
banking association], as trustee (the "Trustee"), under this Agreement and the
Standard Terms to Pooling and Servicing Agreement, May 1999 Edition (the
"Standard Terms"), all the provisions of which are incorporated herein as
modified hereby and shall be a part of this Agreement as if set forth herein in
full (this Agreement with the Standard Terms so incorporated, the "Pooling and
Servicing Agreement"). Capitalized terms used and not otherwise defined herein
shall have the respective meanings given them in the Standard Terms.
PRELIMINARY STATEMENT
The Board of Directors of OMI has duly authorized the formation of the
Trust to issue a Series of Certificates with an aggregate initial principal
amount of $___,___,___, to be known as the Senior/Subordinated Pass-Through
Certificates, Series ____-__ (the "Certificates"). The Certificates consist of
__ Classes that in the aggregate evidence the entire beneficial ownership
interest in the Trust.
In accordance with Section 10.01 of the Standard Terms, the Trustee
will make an election to treat all of the assets of the Trust as two real estate
mortgage investment conduits (each, a "REMIC" and, individually, the "Pooling
REMIC" and the "Issuing REMIC") for federal income tax purposes. The Pooling
REMIC will consist of the Distribution Account and the Assets listed on the
Asset Schedules attached as Schedule I (as defined below) hereto. The Issuing
REMIC will consist of the _____ Subaccounts designated as provided herein. The
"startup day" of each REMIC for purposes of the REMIC Provisions is the Closing
Date.
GRANTING CLAUSES
To provide for the distribution of the principal of and interest on the
Certificates in accordance with their terms, all of the sums distributable under
the Pooling and Servicing Agreement with respect to the Certificates and the
performance of the covenants contained in this Pooling and Servicing Agreement,
OMI hereby bargains, sells, conveys, assigns and transfers to the Trustee, in
trust and as provided in this Pooling and Servicing Agreement, without recourse
and for the exclusive benefit of the Holders of the Certificates, all of OMI's
right, title and interest in and to, and any and all benefits accruing to OMI
from, (a) the Contracts listed in Schedule IA hereto and the Mortgage Loans
(together with the Contracts, the "Assets") listed in Schedule IB hereto,
together with the related Asset Documents, and all payments thereon and proceeds
of the conversion, voluntary or involuntary, of the foregoing, including,
without limitation, all rights to receive all principal and interest payments
due on the Assets after the applicable Cut-off Date, including such scheduled
payments received by OMI or OAC on or prior to the applicable Cut-off Date, and
Principal Prepayments, Net Insurance Proceeds, Net Liquidation Proceeds,
Repurchase
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Prices and other unscheduled collections received on the Assets on and after the
applicable Cut-off Date; (b) the security interests in the Manufactured Homes,
Mortgaged Properties and Real Properties granted by the Obligors pursuant to the
related Assets; (c) all funds, other than investment earnings, relating to the
Assets on deposit in the Certificate Account or in the Distribution Account for
the Certificates and all proceeds thereof, whether in the form of cash,
instruments, securities or other properties; (d) any and all rights, privileges
and benefits accruing to OMI under the Sales Agreement with respect to the
Assets (provided that OMI shall retain its rights to indemnification from the
Seller under such Sales Agreement, but also hereby conveys its rights to such
indemnification to the Trustee as its assignee), including the rights and
remedies with respect to the enforcement of any and all representations,
warranties and covenants under such Sales Agreement; and (e) proceeds of all the
foregoing (including, but not by way of limitation, all proceeds of any Standard
Hazard Insurance Policy or FHA Insurance, or any other insurance policy relating
to any of the Assets, cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, rights to payment
of any and every kind, and other forms of obligations and receivables that at
any time constitute all or part or are included in the proceeds of any of the
foregoing) to make distributions on the Certificates as specified herein (the
items referred to in clauses (a) through (e) above shall be collectively
referred to herein as the "Trust Estate").
The Trustee acknowledges the foregoing, accepts the trusts hereunder in
accordance with the provisions hereof and the Standard Terms and agrees to
perform the duties herein or therein required to the best of its ability to the
end that the interests of the Holders of the Certificates may be adequately and
effectively protected.
SECTION 1. STANDARD TERMS.
---------------
OMI, the Servicer and the Trustee acknowledge that the Standard Terms
prescribe certain obligations of OMI, the Servicer and the Trustee with respect
to the Certificates. OMI, the Servicer and the Trustee agree to observe and
perform such prescribed duties, responsibilities and obligations, and
acknowledge that, except to the extent inconsistent with the provisions of this
Pooling and Servicing Agreement, the Standard Terms are and shall be a part of
this Pooling and Servicing Agreement to the same extent as if set forth herein
in full.
SECTION 2. DEFINED TERMS.
--------------
With respect to the Certificates and in addition to or in replacement
for the definitions set forth in Section 1.01 of the Standard Terms, the
following definitions shall be assigned to the defined terms set forth below:
"Accrual Date": The Accrual Date shall be (i) with respect to the Class
A-1 Certificates, the Closing Date and (ii) with respect to all other Classes of
Certificates, ____ 1, ____.
"Adjusted Certificate Principal Balance": With respect to each Class of
Subordinated Certificates on any date of determination, its Certificate
Principal Balance immediately following
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the most recently preceding Distribution Date reduced by all Writedown Amounts
allocated to such Class on such Distribution Date.
"Adjusted Subaccount Principal Balance": With respect to each of the
Corresponding Subaccounts relating to the Subordinated Certificates, on any date
of determination, its Subaccount Principal Balance immediately following the
most recently preceding Distribution Date reduced by all Writedown Amounts
allocated to such Subaccount on such Distribution Date.
"Average Sixty-Day Delinquency Ratio": With respect to any Distribution
Date, the arithmetic average of the Sixty-Day Delinquency Ratios for such
Distribution Date and the two preceding Distribution Dates. The "Sixty-Day
Delinquency Ratio" for a Distribution Date is the percentage derived from the
fraction, the numerator of which is the aggregate Scheduled Principal Balance
(as of the end of the preceding Prepayment Period) of all Assets (including
Assets in respect of which the related Manufactured Home, Real Property or
Mortgage Property has been repossessed or foreclosed upon but not yet disposed
of) as to which a Monthly Payment thereon is delinquent 60 days or more as of
the end of the related Collection Period, and the denominator of which is the
Pool Scheduled Principal Balance for such Distribution Date.
"Average Thirty-Day Delinquency Ratio": With respect to any
Distribution Date, the arithmetic average of the Thirty-Day Delinquency Ratios
for such Distribution Date and the two preceding Distribution Dates. The
"Thirty-Day Delinquency Ratio" for a Distribution Date is the percentage derived
from the fraction, the numerator of which is the aggregate Scheduled Principal
Balance (as of the end of the preceding Prepayment Period) of all Assets
(including Assets in respect of which the related Manufactured Home, Real
Property or Mortgage Property has been repossessed or foreclosed upon but not
yet disposed of) as to which a Monthly Payment thereon is delinquent 30 days or
more as of the end of the related Collection Period, and the denominator of
which is the Pool Scheduled Principal Balance for such Distribution Date.
"Book-Entry Certificates": The Class A, Class M and Class B
Certificates.
"Call Option Date": The Distribution Date on which, after taking into
account distributions of principal to be made on such Distribution Date, the sum
of the Certificate Principal Balances of the Certificates is less than 10% of
the sum of the original Certificate Principal Balances of the Certificates.
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"Carryover Interest Distribution Amount": With respect to each Class of
Certificates, except the Class X Certificates and the Residual Certificates, and
each Distribution Date, all amounts that were distributable on such Class as
Interest Distribution Amounts and as Carryover Interest Distribution Amounts on
the previous Distribution Date but not previously distributed, together with
interest accrued on such amount at the Pass-Through Rate in effect for such
Class during the related Interest Accrual Period. With respect to each
Subaccount on each Distribution Date, all amounts that were allocable to such
Subaccount as Priority Interest Distribution Amounts and as Carryover Interest
Distribution Amounts on the previous Distribution Date but not previously
distributed, together with interest accrued on any such amount at the
Pass-Through Rate in effect for the Corresponding Certificates with respect to
such Subaccount during the related Interest Accrual Period.
"Carryover Non-Priority Interest Distribution Amount": For any
Subaccount, on any Distribution Date, all amounts that were distributable on
such Subaccount as Non-Priority Interest Distribution Amounts on previous
Distribution Dates that remain unpaid.
"Carryover Writedown Interest Distribution Amount": With respect to
each Distribution Date and each related Class or Subaccount, all amounts that
were distributable on such Class or Subaccount as Writedown Interest
Distribution Amounts and Carryover Writedown Interest Distribution Amounts on
the previous Distribution Date but not previously distributed, plus interest
accrued on any such amount during the related Interest Accrual Period at the
then applicable Pass-Through Rate.
"Class A Certificates": The Class A-1, Class A-2, Class A-3 and Class
A-4 Certificates.
"Class A Percentage": With respect to each Distribution Date, the
percentage derived from the fraction (which shall not be greater than 1), the
numerator of which is the Certificate Principal Balance of the Class A
Certificates immediately prior to such Distribution Date and the denominator of
which is the Pool Scheduled Principal Balance of the Assets immediately prior to
such Distribution Date.
"Class A Principal Distribution Amount": For any Distribution Date,
will equal (i) prior to the Cross-over Date, the entire Principal Distribution
Amount (ii) on any Distribution Date as to which the Principal Distribution
Tests are not met, the entire Principal Distribution Amount, or (iii) on any
other Distribution Date, the sum of the Class A Percentage of the Principal
Distribution Amount. For any Distribution Date, if the Class A Principal
Distribution Amount exceeds the Class A Certificate Principal Balance less the
Principal Distribution Shortfall Carryover Amount with respect to such Class and
Distribution Date, then such excess amount shall be allocated to the Class M-1
Principal Distribution Amount.
"Class A Subaccounts": Any or all, as appropriate, of the Class A-1,
Class A-2, Class A-3, or Class A-4 Subaccounts.
"Class B Certificates": The Class B-1 Certificates and Class B-2
Certificates.
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"Class B Subaccounts": Any or all, as appropriate, of the Class B-1 or
Class B-2 Subaccounts.
"Class B-1 Percentage": With respect to each Distribution Date, the
percentage derived from the fraction (which shall not be greater than 1), the
numerator of which is the Adjusted Certificate Principal Balance of the Class
B-1 Certificates immediately prior to such Distribution Date and the denominator
of which is the Pool Scheduled Principal Balance of Assets immediately prior to
such Distribution Date.
"Class B-1 Principal Distribution Amount": For any Distribution Date
will equal (i) as long as the Class A-1 Certificate Principal Balance, the Class
A-2 Certificate Principal Balance, the Class A-3 Certificate Principal Balance,
the Class A-4 Certificate Principal Balance, the Class M-1 Certificate Principal
Balance and the Class M-2 Certificate Principal Balance have not been reduced to
zero and prior to the Cross-over Date, zero, (ii) on any Distribution Date as to
which the Principal Distribution Tests are not met and the Class A-1 Certificate
Principal Balance, the Class A-2 Certificate Principal Balance, the Class A-3
Certificate Principal Balance, the Class A-4 Certificate Principal Balance, the
Class M-1 Certificate Principal Balance and the Class M-2 Certificate Principal
Balance have not been reduced to zero, zero, (iii) on any Distribution Date as
to which the Principal Distribution Tests are not met and the Class A-1
Certificate Principal Balance, the Class A-2 Certificate Principal Balance, the
Class A-3 Certificate Principal Balance, the Class A-4 Certificate Principal
Balance, the Class M-1 Certificate Principal Balance and the Class M-2
Certificate Principal Balance each have been reduced to zero, the Principal
Distribution Amount, (iv) on any other Distribution Date on or after the
Cross-over Date but prior to the May 2009 Distribution Date, the Combined Class
B Percentage of the Principal Distribution Amount, or (v) on any other
Distribution Date, the sum of the Class B-1 Percentage of the Principal
Distribution Amount. For any Distribution Date, if the Class B-1 Principal
Distribution Amount exceeds the Class B-1 Certificate Principal Balance less the
Principal Distribution Shortfall Carryover Amount with respect to such Class and
Distribution Date, then such excess amount shall be allocated to the Class B-2
Principal Distribution Amount.
"Class B-2 Percentage": With respect to any Distribution Date, the
percentage derived from the fraction (which shall not be greater than 1), the
numerator of which is the sum of the Class B-2 Adjusted Certificate Principal
Balance and the Overcollateralization Amount, each immediately prior to such
Distribution Date and the denominator of which is the Pool Scheduled Principal
Balance of Assets immediately prior to such Distribution Date.
"Class B-2 Principal Distribution Amount": For any Distribution Date
will equal (i) as long as the Class A-1 Certificate Principal Balance, the Class
A-2 Certificate Principal Balance, the Class A-3 Certificate Principal Balance,
the Class A-4 Certificate Principal Balance, the Class M-1 Certificate Principal
Balance, the Class M-2 Certificate Principal Balance and the Class B-1
Certificate Principal Balance have not been reduced to zero and prior to the
Distribution Date occurring in May, 2009, zero, (ii) on any Distribution Date as
to which the Principal Distribution Tests are not met and the Class A-1
Certificate Principal Balance, the Class A-2 Certificate
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Principal Balance, the Class A-3 Certificate Principal Balance, the Class A-4
Certificate Principal Balance, the Class M-1 Certificate Principal Balance, the
Class M-2 Certificate Principal Balance and the Class B-1 Certificate Principal
Balance have not been reduced to zero, zero, (iii) on any Distribution Date as
to which the Principal Distribution Tests are not met and the Class A-1
Certificate Principal Balance, the Class A-2 Certificate Principal Balance, the
Class A-3 Certificate Principal Balance, the Class A-4 Certificate Principal
Balance, the Class M-1 Certificate Principal Balance, the Class M-2 Certificate
Principal Balance and the Class B-1 Certificate Principal Balance each have been
reduced to zero, the Principal Distribution Amount, or (iv) on any other
Distribution Date, the Class B-2 Percentage of the Principal Distribution
Amount. On any Distribution Date, the Class B-2 Principal Distribution Amount
shall not exceed the Class B-2 Certificate Principal Balance less the Principal
Distribution Shortfall Carryover Amount with respect to such Class and such
Distribution Date.
"Class M Certificates": The Class M-1 and Class M-2 Certificates.
"Class M Subaccounts": Any or all, as appropriate, of the Class M-1 or
Class M-2 Subaccounts.
"Class M-1 Percentage": With respect to any Distribution Date, the
percentage derived from the fraction (which shall not be greater than 1), the
numerator of which is the Class M-1 Adjusted Certificate Principal Balance
immediately prior to such Distribution Date and the denominator of which is the
Pool Scheduled Principal Balance of the Assets immediately prior to such
Distribution Date.
"Class M-1 Principal Distribution Amount": For any Distribution Date
will equal (i) as long as the Class A-1 Certificate Principal Balance, the Class
A-2 Certificate Principal Balance, the Class A-3 Certificate Principal Balance
and the Class A-4 Certificate Principal Balance have not been reduced to zero
and prior to the Cross-over Date, zero, (ii) on any Distribution Date as to
which the Principal Distribution Tests are not met and the Class A-1 Certificate
Principal Balance, the Class A-2 Certificate Principal Balance, the Class A-3
Certificate Principal Balance and the Class A-4 Certificate Principal Balance
have not been reduced to zero, zero, (iii) on any Distribution Date as to which
the Principal Distribution Tests are not met and the Class A Certificate
Principal Balance has been reduced to zero, the Principal Distribution Amount,
or (iv) on any other Distribution Date, the sum of the Class M-1 Percentage of
the Principal Distribution Amount. For any Distribution Date, if the Class M-1
Principal Distribution Amount exceeds the Class M-1 Certificate Principal
Balance less the Principal Distribution Shortfall Carryover Amount with respect
to such Class and Distribution Date, then such amounts shall be allocated to the
Class M-2 Principal Distribution Amount.
"Class M-2 Percentage": With respect to any Distribution Date, the
percentage derived from the fraction (which shall not be greater than 1), the
numerator of which is the Class M-2 Adjusted Certificate Principal Balance
immediately prior to such Distribution Date and the denominator of which is the
Pool Scheduled Principal Balance of the Assets immediately prior to such
Distribution Date.
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"Class M-2 Principal Distribution Amount": For any Distribution Date
will equal (i) as long as the Class A-1 Certificate Principal Balance, the Class
A-2 Certificate Principal Balance, the Class A-3 Certificate Principal Balance,
the Class A-4 Certificate Principal Balance and the Class M-1 Certificate
Principal Balance have not been reduced to zero and prior to the Cross-over
Date, zero, (ii) on any Distribution Date as to which the Principal Distribution
Tests are not met and the Class A-1 Certificate Principal Balance, the Class A-2
Certificate Principal Balance, the Class A-3 Certificate Principal Balance, the
Class A-4 Certificate Principal Balance and the Class M-1 Certificate Principal
Balance have not been reduced to zero, zero, (iii) on any Distribution Date as
to which the Principal Distribution Tests are not met and the Class A
Certificate Principal Balance and the Class M-1 Certificate Principal Balance
has been reduced to zero, the Principal Distribution Amount, or (iv) on any
other Distribution Date, the sum of the Class M-2 Percentage of the Principal
Distribution Amount. For any Distribution Date, if the Class M-2 Principal
Distribution Amount exceeds the Class M-2 Certificate Principal Balance less the
Principal Distribution Shortfall Carryover Amount with respect to such Class and
Distribution Date, then such amounts shall be allocated to the Class B-1
Principal Distribution Amount.
"Class R Certificates": The Class R Certificates, which represent
beneficial ownership of both the Pooling REMIC Residual Interest and the Issuing
REMIC Residual Interest.
"Class R-1 Certificates": Following the division of the Class R
Certificates into two separately transferable, certificated and fully registered
certificates in accordance with Section 11(b) hereof, the Class R-1
Certificates, which will represent the Issuing REMIC Residual Interest.
"Class R-2 Certificates": Following the division of the Class R
Certificates into two separately transferable, certificated and fully registered
certificates in accordance with Section 11(b) hereof, the Class R-2
Certificates, which will represent the Pooling REMIC Residual Interest.
"Class X Carryover Strip Amount": With respect to the Class X
Certificates on each Distribution Date, all amounts that were distributable on
such Class as Class X Strip Amounts on previous Distribution Dates that remain
unpaid.
"Class X Certificates": The Class X Certificates created pursuant to
Section 3 hereof.
"Class X Strip Amount": With respect to any Distribution Date, 30 days'
interest on the Subaccount Principal Balance of the Class A, Class M and Class B
Subaccounts, at a rate equal to the positive difference, if any, between the
Weighted Average Net Asset Rate and the weighted average of the Pass-Through
Rates on the Class A, Class M and Class B Subaccounts. Solely for the purposes
of those calculations, the Pass-Through Rates of the Class A, Class M and Class
B Subaccounts shall be the Pass-Through Rates on the respective Corresponding
Certificates.
"Closing Date": ____ __, ____.
"Corporate Trust Office": The address set forth hereinbelow under
"Trustee".
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"Corresponding Certificates": For any Subaccount, the Class of
Certificates bearing the same letter and numerical designation as that borne by
such Subaccount.
"Corresponding Subaccount" For any Class of Certificates, the
Subaccount bearing the same letter and numerical designation as that borne by
such Class.
"Cross-over Date": The later to occur of (a) the Distribution Date
occurring in _________ or (b) the first Distribution Date on which the
percentage equivalent of a fraction (which shall not be greater than 1) the
numerator of which is the sum of the aggregate Adjusted Certificate Principal
Balance of the Subordinated Certificates and the Overcollateralization Amount
for such Distribution Date and the denominator of which is the Pool Scheduled
Principal Balance on such Distribution Date, equals or exceeds ____ times the
percentage equivalent of a fraction (which shall not be greater than 1) the
numerator of which is the initial aggregate Adjusted Certificate Principal
Balance of the Subordinated Certificates and the denominator of which is the
Pool Scheduled Principal Balance as of the Cut-off Date.
"Cumulative Realized Losses": With respect to any Distribution Date,
the aggregate Realized Losses incurred on the Assets during the period from the
Cut-off Date through the end of the related Prepayment Period.
"Current Realized Loss Ratio": With respect to any Distribution Date,
the annualized percentage derived from the fraction, the numerator of which is
the sum of the aggregate Realized Losses for the three preceding Prepayment
Periods and the denominator of which is the arithmetic average of the Pool
Scheduled Principal Balances for such Distribution Date and the preceding two
Distribution Dates.
"Cut-off Date": _____ 1, ____.
"ERISA Restricted Certificates": The Class M-1, Class M-2, Class
B-1, Class B-2, Class X and Class R Certificates.
"Excess Subaccount Principal Balance": With respect to each Subaccount,
the excess, if any, of the Subaccount Principal Balance over the Certificate
Principal Balance of the Corresponding Certificates.
"Floating Rate Determination Date": For any Interest Accrual Period for
the Class A-1 Certificates other than the first Interest Accrual Period, the
second London Banking Day prior to the commencement of such Interest Accrual
Period, and for the first Interest Accrual Period, the Closing Date.
"Guarantor": Oakwood Homes Corporation, a North Carolina corporation.
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"Institutional Holder": An insurance company whose long-term debt is
rated at least A- (or equivalent rating) by a Rating Agency, or an equivalent
rating from any other nationally recognized statistical rating organization.
"Interest Distribution Amount": On each Distribution Date, an amount
equal to interest accrued at the applicable Pass-Through Rate for the related
Interest Accrual Period on (i) in the case of each Class of the Class A
Certificates or the Class A Subaccounts, the Certificate Principal Balance of
such Class or the Subaccount Principal Balance of such Subaccount, respectively,
immediately prior to that Distribution Date and (ii) in the case of the
Subordinated Certificates or the Corresponding Subaccounts, on the Adjusted
Certificate Principal Balance of such Class or the Subaccount Principal Balance
of such Subaccount, respectively, immediately prior to that Distribution Date.
"Issuing REMIC": The Trust REMIC consisting of the Subaccounts.
"Issuing REMIC Residual Interest": The residual interest (as defined in
Code section 860G(a)(2)) in the Issuing REMIC.
["Limited Guarantee": The Limited Guarantee by the Guarantor dated as
of ____ 1, _____, for the benefit of the Trustee, of Limited Guarantee Payment
Amounts.]
["Limited Guarantee Payment Amount": With respect to any Distribution
Date, the amount after giving effect to the allocation of the Available
Distribution Amount for such date, equal to the amount of shortfalls in
collections on the Assets otherwise distributable on such Distribution Date not
in excess of the sum of (a) any unpaid Interest Distribution Amount, Carryover
Interest Distribution Amount, Writedown Interest Distribution Amount and
Carryover Writedown Interest Distribution Amount distributable on such
Distribution Date pursuant to clauses (x) and (xi) of Section 5(b) hereof and
(b) any unpaid principal amounts payable on such Distribution Date pursuant to
clause (xi) under Section 5(b) hereof.]
"London Banking Day": Any day on which commercial banks and foreign
exchange markets settle payments in London and New York City.
"Non-Priority Interest Distribution Amount": For any Subaccount, on any
Distribution Date, an amount equal to the positive difference, if any, between
(i) the related Interest Distribution Amount for such Subaccount and (ii) the
related Priority Interest Distribution Amount for such Subaccount.
"Notional Principal Balance": The Notional Principal Balance of the
Class X Certificates on any date shall equal the sum of all of the Subaccount
Principal Balances on such date.
"Offered Certificates": The Class A, Class M and Class B Certificates.
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"One-Month LIBOR": For each applicable Interest Accrual Period, the per
annum rate established in accordance with the provisions of Section 14 hereof.
"Pass-Through Rate": With respect to each Class of Certificates (except
the Class X Certificates and the Residual Certificates) on any Distribution
Date, the per annum rate for such Class set forth in the table in Section 3
hereof. With respect to any Subaccount on any Distribution Date, the then
applicable Weighted Average Net Asset Rate.
"Pooling REMIC": The Trust REMIC consisting of the Assets and the
Distribution Account.
"Pooling REMIC Residual Interest": The residual interest (as defined in
Code section 860G(a)(2)) in the Pooling REMIC.
"Principal Distribution Shortfall Carryover Amount": With respect to
each Distribution Date and each Class of Certificates, an amount equal to all
Principal Distribution Amounts distributable on such Class from previous
Distribution Dates that have not yet been distributed on such Class of
Certificates. With respect to each Distribution Date and each Corresponding
Subaccount, an amount equal to all Principal Distribution Amounts distributable
on the Corresponding Certificates from previous Distribution Dates that have not
yet been distributed on such Corresponding Certificates.
"Principal Distribution Tests": With respect to each Distribution Date:
(a) the Average Sixty-Day Delinquency Ratio as of such Distribution Date does
not exceed __%; (b) the Average Thirty-Day Delinquency Ratio as of such
Distribution Date does not exceed __%; (c) the Cumulative Realized Losses as of
such Distribution Date do not exceed an amount equal to the percentage set forth
below of the initial aggregate Certificate Principal Balance of all the
Certificates:
Distribution Dates Percentage
------------------ ----------
_____ through _____ __%
_____ through _____ __%
_____ through _____ __%
_____ and after __%
; and (d) the Current Realized Loss Ratio as of such Distribution Date does not
exceed ___%.
"Priority Interest Distribution Amount": For any Subaccount, on any
Distribution Date, an amount equal to the Interest Distribution Amount for the
Corresponding Certificates.
"Private Certificates": The Class X Certificates and Residual
Certificates.
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"Qualified Bidders": Firms and institutions that are engaged in the
business of buying and selling manufactured housing paper.
"Rating Agency": Each of __________ and _____.
"Regular Certificates": The Class A Certificates, Class M Certificates,
Class B Certificates and Class X Certificates.
"Residual Certificates": The Class R Certificates or, following the
division of the Class R Certificates into two separately transferable,
certificated and fully registered certificates in accordance with Section 11(b)
hereof, the Class R-1 Certificates and Class R-2 Certificates.
"Rule 144A Certificates": The Class X and Residual Certificates.
"Servicing Fee Rate": ___% per annum.
"Subaccount": Each of the following eight subaccounts established
solely for purposes of the REMIC Provisions by the Trustee, which have the
Pass-Through Rates and initial Subaccount Principal Balances set forth below:
INITIAL
SUBACCOUNT
SUBACCOUNT PASS-THROUGH RATE PRINCIPAL BALANCE
---------- ----------------- -----------------
A-1 (1) $____
A-2 (1) $____
A-3 (1) $____
A-4 (1) $____
M-1 (1) $____
M-2 (1) $____
B-1 (1) $____
B-2 (1) $____
(1) The Pass-Through Rate on each Subaccount for any
Distribution Date shall be equal to the Weighted Average Net Asset
Rate.
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The Final Scheduled Distribution Date for each Subaccount is as follows:
FINAL SCHEDULED
SUBACCOUNT DISTRIBUTION DATES
---------- ------------------
A-1 _____
A-2 _____
A-3 _____
A-4 _____
M-1 _____
M-2 _____
B-1 _____
B-2 _____
For purposes of Treasury Regulation ss.1.860G-1(a)(4), the latest possible
maturity date for each of the Subaccounts shall be its final Scheduled
Distribution Date as set forth above.
"Subaccount Principal Balance": With respect to each Subaccount, on any
date of determination, the amount identified as the "Initial Subaccount
Principal Balance" of such Subaccount in the definition of "Subaccount" above,
minus all amounts allocated to such Subaccount in reduction of its Subaccount
Principal Balance pursuant to Sections 5(a) and 7 hereof.
"Subordinated Certificates": The Class M-1, Class M-2, Class B-1, Class
B-2, Class X and Residual Certificates.
"Trustee": ________________________, not in its individual capacity but
solely as Trustee under this Pooling and Servicing Agreement, or any successor
trustee appointed as herein provided. Notices to the Trustee shall be sent to
________________, Attn: OMI Trust ____-__ (the "Corporate Trust Office"), or its
successor in interest.
"Trust REMIC": Each of the Pooling REMIC and the Issuing REMIC.
"Underwriters": _________________ (whose address is ________________)
and __________________ (whose address is ____________________________).
"Weighted Average Net Asset Rate": With respect to any Distribution
Date, the weighted average of the Asset Rates applicable to the Monthly Payments
that were due during the related Collection Period on Assets that were
Outstanding at the beginning of the related Prepayment Period, less the
Servicing Fee Rate.
"Writedown Amount": With respect to each Distribution Date, the amount,
if any, by which (i) the aggregate Certificate Principal Balance of all the
Certificates, after all distributions have been made on the Certificates on such
Distribution Date pursuant to Section 5(b) hereof, exceeds (ii) the Pool
Scheduled Principal Balance of the Assets for the next Distribution Date.
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"Writedown Interest Distribution Amount": With respect to each
Distribution Date and each Class of Subordinated Certificates, interest accrued
during the related Interest Accrual Period at the applicable Pass-Through Rate
on any related Writedown Amount. With respect to each Distribution Date and each
Corresponding Subaccount, interest accrued during the related Interest Accrual
Period on any related Writedown Amount at the Pass-Through Rate applicable to
the Corresponding Certificates.
SECTION 3. CERTIFICATES.
-------------
The aggregate initial principal amount of Certificates that may be
executed and delivered under this Pooling and Servicing Agreement is limited to
$___,___,___, except for Certificates executed and delivered upon registration
of transfer of, or in exchange for, or in lieu of, other Certificates pursuant
to Sections 5.04 or 5.07 of the Standard Terms. The Certificates shall be issued
in ten Classes having the designations, initial Certificate Principal Balances,
Pass-Through Rates and Final Scheduled Distribution Dates set forth or described
below:
INITIAL FINAL
CERTIFICATE SCHEDULED
PRINCIPAL PASS THROUGH DISTRIBUTION
DESIGNATION BALANCE RATE DATE(8)
- ----------- ------- ---- -------
A-1 $___ (1)
A-2 $___ __%
A-3 $___ __%
A-4 $___ __%
M-1 $___ (2)
M-2 $___ (3)
B-1 $___ (4)
B-2 $___ (5)
X (6) (6)
R (7) (7)
(1) The Pass-Through Rate on the Class A-1 Certificates for any
Distribution Date shall be the per annum rate equal to the lesser of
(i) One-Month LIBOR, as determined (except for the initial Distribution
Date) on the applicable Floating Rate Determination Date, plus ___% and
(ii) the Weighted Average Net Asset Rate of the Assets. For the initial
Distribution Date, the Pass-Through Rate for the Class A-1 Certificates
will be ___% per annum, and the initial Interest Accrual Period for the
Class A-1 Certificates will commence on the Closing Date and end on
_____ __, ____.
(2) The Pass-Through Rate on the Class M-1 Certificates for any
Distribution Date shall be equal to the lesser of (i) ___% per annum
and (ii) the Weighted Average Net Asset Rate of the Assets.
(3) The Pass-Through Rate on the Class M-2 Certificates for any
Distribution Date shall be equal to the lesser of (i) ___% per annum
and (ii) the Weighted Average Net Asset Rate of the Assets.
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(4) The Pass-Through Rate on the Class B-1 Certificates for any
Distribution Date shall be equal to the lesser of (i) ___% per annum
and (ii) the Weighted Average Net Asset Rate of the Assets.
(5) The Pass-Through Rate on the Class B-2 Certificates for any
Distribution Date shall be equal to the lesser of (a) ___% per annum.
(6) The Class X Certificates shall have no Certificate Principal
Balance and no Pass-Through Rate. The Class X Certificates will
represent the right to receive, on each Distribution Date, the
applicable Class X Strip Amount and any Class X Carryover Strip Amount.
(7) The Class R Certificates shall have no Certificate Principal
Balance and no Pass-Through Rate, and shall represent the residual
interest in both the Pooling REMIC and the Issuing REMIC. Following the
division of the Class R Certificates into two separately transferable,
certificated and fully registered certificates in accordance with
Section 11(b) hereof, the Class R-1 and Class R-2 Certificates shall
have no Certificate Principal Balances and no Pass-Through Rates and
shall represent the residual interest in the Issuing REMIC and the
Pooling REMIC, respectively.
(8) For purposes of Treasury Regulation ss.1.860G-1(a)(4), the latest
possible maturity date of each Class of Certificates shall be the Final
Scheduled Distribution Date.
SECTION 4. DENOMINATIONS.
--------------
The Book-Entry Certificates will be registered as one or more
certificates in the name of the Clearing Agency or its nominee. Beneficial
interests in the Book-Entry Certificates will be held by the Beneficial Owners
through the book-entry facilities of the Clearing Agency, in minimum
denominations of $1,000 and integral multiples of $1 in excess thereof.
The Class X Certificates and the Residual Certificates will be issued
in certificated, fully registered form. The Class X Certificates and the
Residual Certificates will be issued in minimum Percentage Interests equal to
10%.
SECTION 5. DISTRIBUTIONS.
--------------
(a) On each Distribution Date, the Trustee (or the Paying Agent on
behalf of the Trustee) shall allocate the Available Distribution Amount to the
various Subaccounts, and, where applicable, OAC, to the extent of the amount
thereof remaining after application pursuant to clauses (1) through (4) of
Section 4.03 of the Standard Terms, in the following manner and in the following
order of priority:
(i) First, concurrently, to each Class A Subaccount, (A) first, its
Priority Interest Distribution Amount for such Distribution Date, with
the Available Distribution Amount being allocated among the Class A
Subaccounts pro rata based on their respective Priority Interest
Distribution Amounts, and (B) second, the related Carryover Interest
Distribution Amount for such Distribution Date, if any, in each case
with the Available Distribution Amount being allocated among the Class
A Subaccounts pro rata based upon their respective Carryover Interest
Distribution Amounts;
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(ii) Second, to the Class M-1 Subaccount, (A) first, the related
Priority Interest Distribution Amount for such Distribution Date, and
(B) second, any related Carryover Interest Distribution Amount for such
Distribution Date;
(iii) Third, to the Class M-2 Subaccount, (A) first, the related
Priority Interest Distribution Amount for such Distribution Date, and
(B) second, any related Carryover Interest Distribution Amount for such
Distribution Date;
(iv) Fourth, to the Class B-1 Subaccount, (A) first, the related
Priority Interest Distribution Amount for such Distribution Date, and
(B) second, any related Carryover Interest Distribution Amount for such
Distribution Date;
(v) Fifth, concurrently, to each Class A Subaccount, the related
Principal Distribution Shortfall Carryover Amount for the Class A
Subaccounts, if any, for such Distribution Date, allocated among the
Class A Subaccounts pro rata based on their respective Principal
Distribution Shortfall Carryover Amounts;
(vi) Sixth, concurrently, (a) to the Class A-1 Subaccount, the Class
A-2 Subaccount, the Class A-3 Subaccount and the Class A-4 Subaccount,
the Class A Principal Distribution Amount, allocated in the following
sequential order:
(1) First, to the Class A-1 Subaccount in reduction of the
Subaccount Principal Balance of such Subaccount, until it has
been reduced to zero;
(2) Second, to the Class A-2 Subaccount in reduction of the
Subaccount Principal Balance of such Subaccount, until it has
been reduced to zero;
(3) Third, to the Class A-3 Subaccount in reduction of the
Subaccount Principal Balance of such Subaccount, until it has
been reduced to zero; and
(4) Fourth, to the Class A-4 Subaccount in reduction of the
Subaccount Principal Balance of such Subaccount, until it has
been reduced to zero;
PROVIDED, HOWEVER, that on any Distribution Date on which the Pool
Scheduled Principal Balance is less than the aggregate Subaccount
Principal Balance of the Class A Subaccounts immediately prior to such
Distribution Date, the Class A Principal Distribution Amount will be
allocated among the Class A Subaccounts PRO RATA based upon their
respective Subaccount Principal Balances.
(vii) Seventh, to the Class M-1 Subaccount, (A) first, any related
Writedown Interest Distribution Amount for such Distribution Date, (B)
second, any related Carryover Writedown Interest Distribution Amount
for such Distribution Date, (C) third, the related Principal
Distribution Shortfall Carryover Amount for the Class M-1 Subaccount,
if any, for such Distribution Date, and (D) fourth, the Class M-1
Principal Distribution Amount, in
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<PAGE>
reduction of the Subaccount Principal Balance of such Class, until the
Class M-1 Certificate Principal Balance is reduced to zero;
(vii) Eighth, to the Class M-2 Subaccount, (A) first, any related
Writedown Interest Distribution Amount for such Distribution Date, (B)
second, any related Carryover Writedown Interest Distribution Amount
for such Distribution Date, (C) third, the related Principal
Distribution Shortfall Carryover Amount for the Class M-2 Subaccount,
if any, for such Distribution Date, and (D) fourth, the Class M-2
Principal Distribution Amount, in reduction of the Subaccount Principal
Balance of such Class, until the Class M-2 Certificate Principal
Balance is reduced to zero;
(ix) Ninth, to the Class B-1 Subaccount, (A) first, any related Writedown
Interest Distribution Amount for such Distribution Date, (B) second,
any related Carryover Writedown Interest Distribution Amount for such
Distribution Date, (C) third, the related Principal Distribution
Shortfall Carryover Amount for the Class B-1 Subaccount, if any, for
such Distribution Date, and (D) fourth, the Class B-1 Principal
Distribution Amount, in reduction of the Subaccount Principal Balance
of such Class, until the Class B-1 Certificate Principal Balance is
reduced to zero;
(x) Tenth, to the Class B-2 Subaccount, (A) first, the related Priority
Interest Distribution Amount for such Distribution Date, and (B)
second, any related Carryover Interest Distribution Amount for such
Distribution Date;
(xi) Eleventh, to the Class B-2 Subaccount, (A) first, any related
Writedown Interest Distribution Amount for such Distribution Date, (B)
second, any related Carryover Writedown Interest Distribution Amount
for such Distribution Date, (C) third, the related Principal
Distribution Shortfall Carryover Amount for the Class B-2 Subaccount,
if any, for such Distribution Date, and (D) fourth, the Class B-2
Principal Distribution Amount, in reduction of the Subaccount Principal
Balance of such Class, until the Class B-2 Certificate Principal
Balance is reduced to zero;
(xii) Twelfth, if Oakwood Acceptance Corporation is the Servicer, to
the Servicer in the following sequential order: (A) the Servicing Fee
with respect to such Distribution Date; and (B) any Servicing Fees from
previous Distribution Dates remaining unpaid;
(xiii) Thirteenth, to each Subaccount, (i) first, its Carryover
Non-Priority Interest Distribution Amount for such Distribution Date,
(ii) second, its Non-Priority Interest Distribution Amount for such
Distribution Date, and (iii) its remaining Subaccount Principal Balance
in each case with the Available Distribution Amount being allocated
among the Subaccounts pro rata based upon the total Excess Subaccount
Principal Balance remaining to be paid with respect to each Subaccount;
and
(xiv) Finally, any remainder to Holders of the Pooling REMIC Residual
Interest.
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(b) On each Distribution Date, after all Subaccount allocations have
been made as described in Section 5(a) above and Section 7 below, the Trustee
(or the Paying Agent on behalf of the Trustee) shall withdraw all amounts
allocated to the various Subaccounts, and shall distribute such amounts in the
following manner and in the following order of priority:
(i) First, concurrently, to each Class of Class A Certificates, (A)
first, its Interest Distribution Amount for such Distribution Date,
with the Available Distribution Amount being allocated among such
Classes pro rata based on their respective Interest Distribution
Amounts, and (B) second, the related Carryover Interest Distribution
Amount, if any, for such Distribution Date, in each case with the
Available Distribution Amount being allocated among the Classes of
Class A Certificates pro rata based on their respective Carryover
Interest Distribution Amounts;
(ii) Second, to the Class M-1 Certificates, (A) first, the related
Interest Distribution Amount for such Distribution Date, and (B)
second, any related Carryover Interest Distribution Amount for such
Distribution Date;
(iii) Third, to the Class M-2 Certificates, (A) first, the related
Interest Distribution Amount for such Distribution Date, and (B)
second, any related Carryover Interest Distribution Amount for such
Distribution Date;
(iv) Fourth, to the Class B-1 Certificates, (A) first, the related
Interest Distribution Amount for such Distribution Date, and (B)
second, any related Carryover Interest Distribution Amount for such
Distribution Date;
(v) Fifth, concurrently, to each Class of the Class A Certificates, the
related Principal Distribution Shortfall Carryover Amount for the Class
A Certificates, if any, for such Distribution Date, allocated among the
Class A Certificates pro rata based on their respective Principal
Distribution Shortfall Carryover Amounts;
(vi) Sixth, concurrently, (a) to the Class A-1 Certificates, the Class
A-2 Certificates, the Class A-3 Certificates and the Class A-4
Certificates, the Class A Percentage of the Class A Principal
Distribution Amount, allocated in the following sequential order:
(1) First, to the Class A-1 Certificates in reduction of the
Certificate Principal Balance of such Class, until it has been
reduced to zero;
(2) Second, to the Class A-2 Certificates in reduction of the
Certificate Principal Balance of such Class, until it has been
reduced to zero;
(3) Third, to the Class A-3 Certificates in reduction of the
Certificate Principal Balance of such Class, until it has been
reduced to zero; and
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<PAGE>
(4) Fourth, to the Class A-4 Certificates in reduction of the
Certificate Principal Balance of such Class, until it has been
reduced to zero;
PROVIDED, HOWEVER, that on any Distribution Date on which the Pool
Scheduled Principal Balance is less than the aggregate Certificate
Principal Balance of the Class A Certificates immediately prior to such
Distribution Date, the Class A Principal Distribution Amount will be
allocated among the Class A Certificates PRO RATA based upon their
respective Certificate Principal Balances.
(vii) Seventh, to the Class M-1 Certificates, (A) first, any related
Writedown Interest Distribution Amount for such Distribution Date, (B)
second, any related Carryover Writedown Interest Distribution Amount
for such Distribution Date, (C) third, the related Principal
Distribution Shortfall Carryover Amount for the Class M-1 Certificates,
if any, for such Distribution Date, and (D) fourth, the Class M-1
Principal Distribution Amount, in reduction of the Certificate
Principal Balance of such Class, until it is reduced to zero;
(viii) Eighth, to the Class M-2 Certificates, (A) first, any related
Writedown Interest Distribution Amount for such Distribution Date, (B)
second, any related Carryover Writedown Interest Distribution Amount
for such Distribution Date, (C) third, the related Principal
Distribution Shortfall Carryover Amount for the Class M-2 Certificates,
if any, for such Distribution Date, and (D) fourth, the Class M-2
Principal Distribution Amount, in reduction of the Certificate
Principal Balance of such Class, until it is reduced to zero;
(ix) Ninth, to the Class B-1 Certificates, (A) first, any related
Writedown Interest Distribution Amount for such Distribution Date, (B)
second, any related Carryover Writedown Interest Distribution Amount
for such Distribution Date, (C) third, the related Principal
Distribution Shortfall Carryover Amount for the Class B-1 Certificates,
if any, for such Distribution Date, and (D) fourth, the Class B-1
Principal Distribution Amount, in reduction of the Certificate
Principal Balance of such Class, until it is reduced to zero;
(x) Tenth, to the Class B-2 Certificates, (A) first, the related
Interest Distribution Amount for such Distribution Date and (B) second,
any related Carryover Interest Distribution Amount for such Distribution
Date;
(xi) Eleventh, to the Class B-2 Certificates, (A) first, any related
Writedown Interest Distribution Amount for such Distribution Date, (B)
second, any related Carryover Writedown Interest Distribution Amount
for such Distribution Date, (C) third, the related Principal
Distribution Shortfall Carryover Amount for the Class B-2 Certificates,
if any, for such Distribution Date, and (D) fourth, the Class B-2
Principal Distribution Amount, in reduction of the Certificate
Principal Balance of such Class, until it is reduced to zero;
(xii) Twelfth, to the Class X Certificates in the following sequential
order:
(A) the current Class X Strip Amount; and
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(B) any Class X Carryover Strip Amount; and
(xiii) Finally, any remainder to the holders of the Issuing REMIC
Residual Interest.
(c) All distributions or allocations made with respect to each Class on
each Distribution Date shall be allocated PRO RATA among the outstanding
Certificates of such Class based on their respective Percentage Interests. So
long as the Book-Entry Certificates are registered in the name of a Clearing
Agency or its nominee, the Trustee shall make all distributions or allocations
on such Certificates by wire transfers of immediately available funds to the
Clearing Agency or its nominee. In the case of Certificates issued in
fully-registered, certificated form, payment shall be made either (i) by check
mailed to the address of each Certificateholder as it appears in the Certificate
Register on the Record Date immediately prior to such Distribution Date or (ii)
by wire transfer of immediately available funds to the account of a Holder at a
bank or other entity having appropriate facilities therefor, if such Holder
shall have so notified the Trustee in writing at least five Business Days prior
to the Record Date immediately prior to such Distribution Date and such Holder
is (A) with respect to any Class A, Class M or Class B Certificates issued after
the Closing Date in certificated, fully-registered form, the registered owner of
Class A, Class M or Class B Certificates with an aggregate initial Certificate
Principal Balance of at least $1,000,000, and (B) with respect to the Residual
Certificates or Class X Certificates, the registered owner of the Residual
Certificates or Class X Certificates evidencing an aggregate Percentage Interest
of at least 50%. The Trustee may charge any Holder its standard wire transfer
fee for any payment made by wire transfer. Final distribution on the
Certificates will be made only upon surrender of the Certificates at the offices
of the Trustee set forth in the notice of such final distribution sent by the
Trustee to all Certificateholders pursuant to Section 9.01 of the Standard
Terms.
(d) (1) Any amounts remaining in the Distribution Account on any
Distribution Date after all allocations and distributions required to be made by
this Pooling and Servicing Agreement have been made, and any amounts remaining
in the Pooling REMIC after payment in full of all of the Regular Interests
therein and any administrative expenses associated with the Trust, will be
distributed to the Holders of the Pooling REMIC Residual Interest.
(2) Any amounts remaining in the Subaccounts on any Distribution Date
after all distributions required to be made by this Pooling and Servicing
Agreement have been made, and any amounts remaining in the Issuing REMIC after
payment in full of the Regular Interests therein and any administrative expenses
associated with the Trust, will be distributed to the Holders of the Issuing
REMIC Residual Interest.
[SECTION 6. LIMITED GUARANTEE.
------------------
The Trustee is the beneficiary of the Limited Guarantee. No later than
1:00 p.m. New York City time on each Remittance Date, after taking into account
the amounts allocated to the various Subaccounts in accordance with Section 5(a)
hereof, the Trustee shall, in accordance with the related Remittance Report and
in accordance with the terms of the Limited Guarantee, notify the
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<PAGE>
Guarantor of any Limited Guarantee Payment Amount payable under the Limited
Guarantee on the related Distribution Date. In addition, the Servicer shall
notify the Guarantor as soon as practical (but no later than the related
Remittance Date) after determining that a Limited Guarantee Payment Amount shall
be payable under the Limited Guarantee on the related Distribution Date. Under
the Limited Guarantee, upon receipt of notice as described above, the Guarantor
shall be required to deliver the Limited Guarantee Payment Amount, if any, on or
prior to the Remittance Date for the related Distribution Date. Such Limited
Guarantee Payment Amount received by the Trustee shall be paid to the Holders of
the Class ____ Certificates on such Distribution Date (or such later date, if
such amounts are received subsequent to such Distribution Date). In no event
shall the Limited Guarantee Payment Amount be distributed on any Class of
Certificates other than the Class ___ Certificates and any such amounts received
by the Trustee which are not distributable to the Class ___ Certificates shall
be returned by the Trustee to the Guarantor. The Trustee shall promptly notify
the Rating Agencies in the event a Limited Guarantee Payment Amount, if any, is
not received in a timely manner with respect to a Distribution Date. Any Limited
Guarantee Payment Amounts made by the Guarantor to the Trustee shall be made in
cash and shall be considered to be payments made to the Issuing REMIC in the
nature of a guarantee within the meaning of I.R.C. ss. 860G(d)(2)(B).]
SECTION 7. ALLOCATION OF WRITEDOWN AMOUNTS.
--------------------------------
On each Distribution Date, after all required distributions have been
made on the Certificates pursuant to Section 5 above, the Writedown Amount, if
any, shall be allocated on such Distribution Date in the following manner and in
the following order of priority:
(a) First, to the Class B-2 Subaccount, to be applied in reduction of
the Adjusted Subaccount Principal Balance of such Subaccount, until the
Adjusted Subaccount Principal Balance has been reduced to zero;
(b) Second, to the Class B-1 Subaccount, to be applied in reduction of
the Adjusted Subaccount Principal Balance of such Subaccount, until the
Adjusted Subaccount Principal Balance has been reduced to zero;
(c) Third, to the Class M-2 Subaccount, to be applied in reduction of
the Adjusted Subaccount Principal Balance of such Subaccount, until the
Adjusted Subaccount Principal Balance has been reduced to zero; and
(d) Finally, to the Class M-1 Subaccount, to be applied in reduction of
the Adjusted Subaccount Principal Balance of such Subaccount, until the
Adjusted Subaccount Principal Balance has been reduced to zero.
(e) Writedown Amounts allocated to the Class B-2, Class B-1, Class M-2
and Class M-1 Subaccounts pursuant to this Section 7 shall be allocated
to the Class B-2, Class B-1, Class M-2 and Class M-1 Certificates,
respectively, until the Adjusted Certificate Principal Balance of each
such Class has been reduced to zero.
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SECTION 8. REMITTANCE REPORTS.
-------------------
(a) The Remittance Report for each Distribution Date shall identify the
following items, in addition to the items specified in Section 4.01 of the
Standard Terms:
(1) the Interest Distribution Amount for each Class of the Certificates
for such Distribution Date (which shall equal the Priority Interest
Distribution Amount for the Corresponding Subaccount) and the Carryover
Interest Distribution Amount, as well as any Writedown Interest
Distribution Amount and any Carryover Writedown Interest Distribution
Amount, for each Class of the Certificates for such Distribution Date,
and the amount of interest of each such category to be distributed on
each such Class based upon the Available Distribution Amount for such
Distribution Date;
(2) the amount to be distributed on such Distribution Date on each
Class of the Certificates to be applied to reduce the Certificate
Principal Balance of such Class (which will be equal to the amount to
be allocated on such Distribution Date on the Corresponding Subaccount
to be applied to reduce the Subaccount Principal Balance of such
Subaccount), separately identifying any portion of such amount
attributable to any prepayments, the amount to be distributed to reduce
the Principal Distribution Shortfall Carryover Amount on each such
Class based upon the Available Distribution Amount for such
Distribution Date.
(3) the aggregate amount, if any, to be distributed on the Residual
Certificates;
(4) the amount of any Writedown Amounts to be allocated to reduce the
Certificate Principal Balance of any Class of Subordinated Certificates
(which will be equal to the amount of any Writedown Amount to be
allocated to the Corresponding Subaccount) on such Distribution Date;
[(5) the amount of the Limited Guarantee Payment Amount, if any, for
such Distribution Date and the aggregate amount of any unpaid Limited
Guarantee Payment Amounts for any previous Distribution Dates;]
(6) the Certificate Principal Balance of each Class of the Certificates
(which will be equal to the Subaccount Principal Balance of the
Corresponding Subaccount) and the Adjusted Certificate Principal
Balance of each Class of the Offered Subordinated Certificates (which
will be equal to the Adjusted Subaccount Principal Balance of the
Corresponding Subaccount) after giving effect to the distributions to
be made (and any Writedown Amounts to be allocated) on such
Distribution Date;
(7) the aggregate Interest Distribution Amount remaining unpaid, if
any, and the aggregate Carryover Interest Distribution Amount remaining
unpaid, if any, for each Class of Certificates (which will be equal to
the Priority Interest Distribution Amount and
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Carryover Interest Distribution Amount remaining unpaid on the
Corresponding Subaccount), after giving effect to all distributions to
be made on such Distribution Date;
(8) the aggregate Writedown Interest Distribution Amount remaining
unpaid, if any, and the aggregate Carryover Writedown Interest
Distribution Amount remaining unpaid, if any, for each Class of
Certificates (which will be equal to such amounts remaining unpaid on
the Corresponding Subaccount), after giving effect to all distributions
to be made on such Distribution Date; and
(9) the aggregate Principal Distribution Shortfall Carryover Amount
remaining unpaid, if any, for each Class of Certificates, after giving
effect to the distributions to be made on such Distribution Date.
In the case of information furnished pursuant to clauses (1), (2) and
(3) above, the amounts shall be expressed, with respect to any Class A, Class M
or Class B Certificate, as a dollar amount per $1,000 denomination.
(b) In addition to mailing a copy of the related Remittance Report to
each Certificateholder on each Distribution Date in accordance with Section 4.01
of the Standard Terms, on each Distribution Date, the Trustee shall mail a copy
of the related Remittance Report to the Underwriters (to the attention of the
person, if any, reported to the Trustee by the Underwriters) and to THE
BLOOMBERG (to the address and to the person, if any specified to the Trustee by
__________________). The Trustee shall not be obligated to mail any Remittance
Report to THE BLOOMBERG unless and until _______________ shall have notified the
Trustee in writing of the name and address to which such reports are to be
mailed, which notice, once delivered, will be effective for all Distribution
Dates after the date such notice is received by the Trustee unless and until
superseded by a subsequent notice.
SECTION 9. LIMITED RIGHT OF SERVICER TO RETAIN SERVICING FEES FROM COLLECTIONS.
--------------------------------------------------------------------
The Servicer may retain its Servicing Fee and any other servicing
compensation provided for herein and in the Standard Terms from gross interest
collections on the Assets prior to depositing such collections into the
Certificate Account; PROVIDED, HOWEVER, that OAC as Servicer may only so retain
its Servicing Fee in respect of a Distribution Date from gross interest
collections on the Assets to the extent that the amounts on deposit in the
Certificate Account and attributable to the Available Distribution Amount for
such Distribution Date exceed the sum of all amounts to be allocated and
distributed on such Distribution Date pursuant to clauses (i) through (xi) under
Section 5(b) hereof.
SECTION 10. MODIFICATIONS OF STANDARD TERMS.
---------------------------------
[INSERT IF NECESSARY]
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SECTION 11. REMIC ADMINISTRATION.
----------------------
(a) For purposes of the REMIC Provisions, all of the Certificates
(except the Residual Certificates) will be designated as the "regular interests"
in the Issuing REMIC, the Subaccounts will be designated as the "regular
interests" in the Pooling REMIC, the Class R Certificates will be designated as
the "residual interest" in each of the Issuing REMIC and the Pooling REMIC and,
following the division of the Class R Certificates into two separately
transferable, certificated and fully registered certificates in accordance with
Section 11(b) below, the Class R-1 Certificates will be designated as the
"residual interest" in the Issuing REMIC and the Class R-2 Certificates will be
designated as the "residual interest" in the Pooling REMIC.
(b) Upon the request of any registered Holder of a Class R Certificate,
the Trustee shall issue to such Holder two separately transferable, certificated
and fully registered Certificates (a Class R-1 Certificate and a Class R-2
Certificate), in substantially the forms of Exhibit R-1 and Exhibit R-2 attached
hereto. In the event that the Class R Certificates are exchanged for separately
transferrable Class R-1 and Class R-2 Certificates: (1) the Class R-1
Certificates will be designated as the residual interest in the Issuing REMIC,
(2) the Class R-2 Certificates will be designated as the residual interest in
the Pooling REMIC, (3) the Holders of a majority of the Percentage Interest in
the Class R-1 Certificates together with the Holders of a majority of the
Percentage Interest in the Class R-2 Certificates will have the option to make a
Terminating Purchase given to the Holders of a majority of the Percentage
Interest in the Residual Certificates pursuant to Section 9.01 of the Standard
Terms, and (4) the restrictions on the transfer of a Residual Certificate
provided in the Standard Terms will apply to both the Class R-1 and the Class
R-2 Certificates.
[SECTION 12. AUCTION CALL.
-------------
(a) If the Servicer does not exercise its optional termination right as
described in Section 9.01 of the Standard Terms within 90 days after it first
becomes entitled to do so, the Trustee shall use commercially reasonable efforts
to solicit bids for the purchase of all Assets, REO Properties and Repo
Properties remaining in the Trust from no fewer than two prospective purchasers
that it believes to be Qualified Bidders. If OAC is then the Servicer of the
Assets, the solicitation of bids shall be conditioned upon the continuation of
OAC as the servicer of the Assets on terms and conditions substantially similar
to those in the Pooling and Servicing Agreement, except that it shall not be
required to make Advances.
(b) If the Trustee receives bids from at least two Qualified Bidders
and the net proceeds of the highest bid are equal to or greater than the
Termination Price, the Trustee shall promptly advise the Servicer of the highest
bid and the terms of purchase, and the Servicer shall have three Business Days,
at its option, to match the terms of such bid. The Trustee shall thereafter sell
the Assets, REO Properties and Repo Properties either (i) to the Servicer, if it
shall so elect, or (ii) to the highest bidder, and in either case the Trustee
shall distribute the net proceeds of such sale in redemption of the Certificates
in compliance with Article IX of the Standard Terms and Section 5
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hereof. Any such sale must also comply with the requirements applicable to a
Terminating Purchase set forth in Section 9.02 of the Standard Terms.
(c) Any costs incurred by the Trustee in connection with such sale
(including without limitation any legal opinions or consents required by Section
9.02 of the Standard Terms) shall be deducted from the bid price of the Assets,
REO Properties and Repo Properties in determining the net proceeds therefrom.
(d) If the Trustee does not obtain bids from at least two Qualified
Bidders, or does not receive a bid such that the net proceeds therefrom would at
least equal the Termination Price, it shall not sell the Assets, REO Properties
and Repo Properties, and shall thereafter have no obligation to attempt to sell
same.
(e) The Servicer shall cooperate with and provide necessary information
to the Trustee in connection with any auction sale as described herein.]
SECTION 13. VOTING RIGHTS.
--------------
The Voting Rights applicable to the Certificates shall be allocated
0.5% to the Class R Certificates, 0.5% to the Class X Certificates and 99% to
the other Certificates in proportion with their respective Certificate Principal
Balance.
[SECTION 14. DETERMINATION OF ONE-MONTH LIBOR.
---------------------------------
(a) The Class A-1 Certificates will be entitled to receive on each
Distribution Date interest distributions at the Pass-Through Rate for such Class
as specified in Section 3 hereof.
(b) With respect to the Class A-1 Certificates, One-Month LIBOR shall
be determined as follows:
On each Floating Rate Determination Date, the Servicer will determine
the arithmetic mean of the London Interbank Offered Rate ("LIBOR")
quotations for one-month Eurodollar deposits ("One-Month LIBOR") for
the succeeding Interest Accrual Period for the Class A-1 Certificates
on the basis of the Reference Banks' offered LIBOR quotations provided
to the Servicer as of 11:00 a.m. (London time) on such Floating Rate
Determination Date. As used herein with respect to a Floating Rate
Determination Date, "Reference Banks" means leading banks engaged in
transactions in Eurodollar deposits in the international Eurocurrency
market (i) with an established place of business in London, (ii) whose
quotations appear on the Bloomberg Screen US0001M Index Page on the
Floating Rate Determination Date in question and (iii) which have been
designated as such by the Servicer and are able and willing to provide
such quotations to the Servicer on each Floating Rate Determination
Date; and "Bloomberg Screen US0001M Index Page" means the display
designated as page "US0001M on the Bloomberg Financial Markets
Commodities News (or such other pages as may replace such page on that
service for the purpose of displaying
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LIBOR quotations of major banks). If any Reference Bank should be
removed from the Bloomberg Screen US0001M Index Page or in any other
way fails to meet the qualifications of a Reference Bank, the Servicer
may, in its sole discretion, designate an alternative Reference Bank.
On each Floating Rate Determination Date, One-Month LIBOR for the next
succeeding Interest Accrual Period for the Class A-1 Certificates will
be established by the Servicer as follows:
(i) If, on any Floating Rate Determination Date, two or more of the
Reference Banks provide offered One-Month LIBOR quotations on the
Bloomberg Screen US0001M Index Page, One-Month LIBOR for the next
Accrual Period for the Class A-1 Certificates will be the arithmetic
mean of such offered quotations (rounding such arithmetic mean if
necessary to the nearest five decimal places).
(ii) If, on any Floating Rate Determination Date, only one or none of
the Reference Banks provides such offered One-Month LIBOR quotations
for the next applicable Interest Accrual Period, One-Month LIBOR for
the next Accrual Period for the Class A-1 Certificates will be the
higher of (x) One-Month LIBOR as determined on the previous Floating
Rate Determination Date and (y) the Reserve Interest Rate. The "Reserve
Interest Rate" will be the rate per annum that the Servicer determines
to be either (A) the arithmetic mean (rounding such arithmetic mean if
necessary to the nearest five decimal places) of the one-month
Eurodollar lending rate that New York City banks selected by the
Servicer are quoting, on the relevant Floating Rate Determination Date,
to the principal London offices of at least two leading banks in the
London interbank market or (B) in the event that the Servicer can
determine no such arithmetic mean, the lowest one-month Eurodollar
lending rate that the New York City banks selected by the Servicer are
quoting on such Floating Rate Determination Date to leading European
banks.
(iii) If, on any Floating Rate Determination Date, the Servicer is
required but is unable to determine the Reserve Interest Rate in the
manner provided in paragraph (ii) above, One-Month LIBOR for the next
applicable Interest Accrual Period will be One-Month LIBOR as
determined on the previous Floating Rate Determination Date.
Notwithstanding the foregoing, One-Month LIBOR for an Interest Accrual
Period shall not be based on One-Month LIBOR for the previous Interest Accrual
Period on the Class A-1 Certificates for two consecutive Floating Rate
Determination Dates. If, under the priorities described above, One-Month LIBOR
for an Interest Accrual Period on the Class A-1 Certificates would be based on
One-Month LIBOR for the previous Floating Rate Determination Date for the second
consecutive Floating Rate Determination Date, the Servicer shall select an
alternative index (over which the Servicer has no control) used for determining
one-month Eurodollar lending rates that is calculated and published (or
otherwise made available) by an independent third party.
S-25
<PAGE>
The establishment of One-Month LIBOR (or an alternative index) by the
Servicer and the Servicer's subsequent calculation of the Pass-Through Rate on
the Class A-1 Certificates for the relevant Interest Accrual Period, in the
absence of manifest error, will be final and binding.]
SECTION 15. GOVERNING LAW.
--------------
The Pooling and Servicing Agreement shall be construed in accordance
with and governed by the laws of the State of North Carolina applicable to
agreements made and to be performed therein. The parties hereto agree to submit
to the personal jurisdiction of all federal and state courts sitting in the
State of North Carolina and hereby irrevocably waive any objection to such
jurisdiction. In addition, the parties hereto hereby irrevocably waive any
objection that they may have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in any federal or state
court sitting in the State of North Carolina, and further irrevocably waive any
claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum.
SECTION 16. FORMS OF CERTIFICATES.
-----------------------
Each of the Schedules and Exhibits attached hereto or referenced herein
are incorporated herein by reference as contemplated by the Standard Terms. Each
Class of Certificates shall be in substantially the related form attached
hereto, as set forth in the Index to Schedules and Exhibits attached hereto.
SECTION 17. COUNTERPARTS.
--------------
This Pooling and Servicing Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all of such counterparts shall together constitute but one and the same
instrument.
SECTION 18. ENTIRE AGREEMENT.
------------------
This Pooling and Servicing Agreement constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof, and fully
supersedes any prior or contemporaneous agreements relating to such subject
matter.
S-26
<PAGE>
IN WITNESS WHEREOF, OMI, the Servicer and the Trustee have caused this
Pooling and Servicing Agreement to be duly executed by their respective officers
thereunto duly authorized and their respective signatures duly attested all as
of the day and year first above written.
OAKWOOD MORTGAGE INVESTORS, INC.
By:
----------------------------
Name:
Title:
OAKWOOD ACCEPTANCE CORPORATION
By:
----------------------------
Name:
Title:
[--------------------------],
AS TRUSTEE
By:
----------------------------
Name:
Title:
S-27
<PAGE>
INDEX TO SCHEDULES AND EXHIBITS
SCHEDULE IA Contract Schedule
SCHEDULE IB Mortgage Loan Schedule
EXHIBIT A-1 Form of Class A-1 Certificate
EXHIBIT A-2 Form of Class A-2 Certificate
EXHIBIT A-3 Form of Class A-3 Certificate
EXHIBIT A-4 Form of Class A-4 Certificate
EXHIBIT M-1 Form of Class M-1 Certificate
EXHIBIT M-2 Form of Class M-2 Certificate
EXHIBIT B-1 Form of Class B-1 Certificate
EXHIBIT B-2 Form of Class B-2 Certificate
EXHIBIT X Form of Class X Certificate
EXHIBIT R Form of Class R Certificate
S-28
- --------------------------------------------------------------------------------
STANDARD TERMS
TO
POOLING AND SERVICING AGREEMENT
---------------------------------
OAKWOOD MORTGAGE INVESTORS, INC.
PASS-THROUGH CERTIFICATES
MAY 1999 EDITION
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
----
ARTICLE I
DEFINITIONS
<S> <C> <C> <C>
Section 1.01. DEFINITIONS..................................................................... 1
ARTICLE II
THE ASSETS
Section 2.01. ASSIGNMENT OF ASSETS............................................................ 24
Section 2.02. THE CONTRACTS................................................................... 24
Section 2.03. THE MORTGAGE LOANS.............................................................. 26
Section 2.04. REPRESENTATIONS AND WARRANTIES OF THE TRUSTEE................................... 29
Section 2.05. REPRESENTATIONS AND WARRANTIES AS TO ASSETS..................................... 29
Section 2.06. PURCHASE OR SUBSTITUTION OF CERTAIN ASSETS...................................... 30
ARTICLE III
ADMINISTRATION OF TRUSTS AND SERVICING OF THE ASSETS
Section 3.01. THE SERVICER.................................................................... 34
Section 3.02. MAINTENANCE OF RECORDS; INSPECTION OF ASSET FILES............................... 34
Section 3.03. COLLECTION OF PAYMENTS ON ASSETS; SERVICING DELINQUENT ACCOUNTS................. 35
Section 3.04. ADVANCES AND COMPENSATING INTEREST.............................................. 35
Section 3.05. SERVICING ACCOUNT............................................................... 36
Section 3.06. CERTIFICATE ACCOUNT............................................................. 37
Section 3.07. WITHDRAWALS FROM CERTIFICATE ACCOUNT; REMITTANCE AMOUNTS........................ 37
Section 3.08. REALIZATION UPON DEFAULTED ASSETS............................................... 38
Section 3.09. TITLE, CONSERVATION, AND DISPOSITION OF REPO PROPERTY AND REO PROPERTY.......... 39
Section 3.10. FULL PREPAYMENTS AND LIQUIDATIONS; TRUSTEE TO COOPERATE; RELEASE OF
MORTGAGE FILES.................................................................. 41
Section 3.11. MAINTENANCE OF SECURITY INTERESTS AND OTHER LIENS IN MANUFACTURED H HOMES....... 43
Section 3.12. DUE-ON-SALE CLAUSES AND ASSUMPTION AGREEMENTS................................... 43
Section 3.13. ANNUAL ACCOUNTANTS' CERTIFICATE; ANNUAL STATEMENT AS TO
COMPLIANCE...................................................................... 43
Section 3.14. SERVICING FEES.................................................................. 44
Section 3.15. LATE CHARGES; PREPAYMENT FEES OR OTHER CHARGES.................................. 44
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Section 3.16. MAINTENANCE OF STANDARD HAZARD INSURANCE, PRIMARY MORTGAGE INSURANCE,
AND ERRORS AND OMISSIONS COVERAGE............................................... 45
ARTICLE IV
REMITTANCE AND REPORTING TO CERTIFICATEHOLDERS
Section 4.01. REMITTANCE REPORTS.............................................................. 47
Section 4.02. DISTRIBUTION ACCOUNT............................................................ 48
Section 4.03. ALLOCATION OF AVAILABLE DISTRIBUTION............................................ 48
Section 4.04. COMPLIANCE WITH WITHHOLDING REQUIREMENTS........................................ 49
Section 4.05. REPORTS OF SECURITY PRINCIPAL BALANCES TO THE CLEARING AGENCY................... 49
Section 4.06. PREPARATION OF REGULATORY REPORTS............................................... 50
ARTICLE V
THE POOLING INTERESTS AND THE CERTIFICATES
Section 5.01. POOLING REMIC INTERESTS......................................................... 51
Section 5.02. THE CERTIFICATES................................................................ 51
Section 5.03. BOOK-ENTRY CERTIFICATES......................................................... 51
Section 5.04. REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES........................... 52
Section 5.05. RESTRICTIONS ON TRANSFER........................................................ 53
Section 5.06. ACCRUAL OF INTEREST ON THE CERTIFICATES......................................... 54
Section 5.07. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES............................... 55
Section 5.08. PERSONS DEEMED OWNERS........................................................... 55
Section 5.09. APPOINTMENT OF PAYING AGENT..................................................... 55
ARTICLE VI
OMI AND THE SERVICER
Section 6.01. LIABILITY OF OMI AND THE SERVICER............................................... 55
Section 6.02. OMI'S REPRESENTATIONS AND WARRANTIES............................................ 55
Section 6.03. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SERVICER....................... 57
Section 6.04. CORPORATE EXISTENCE............................................................. 58
Section 6.05. LIMITATION ON LIABILITY OF OMI, THE SERVICER AND OTHERS......................... 58
Section 6.06. SERVICER RESIGNATION............................................................ 59
Section 6.07. ASSIGNMENT OR DELEGATION OF DUTIES BY THE SERVICER AND OMI...................... 59
Section 6.08. OMI AND SERVICER MAY OWN CERTIFICATES........................................... 59
Section 6.09. PROTECTION OF TRUST ESTATE...................................................... 59
Section 6.10. PERFORMANCE OF OBLIGATIONS...................................................... 60
</TABLE>
(ii)
<PAGE>
<TABLE>
<CAPTION>
ARTICLE VII
EVENT OF DEFAULT; TERMINATION OF SERVICING ARRANGEMENTS
<S> <C> <C> <C>
Section 7.01. EVENTS OF DEFAULT............................................................... 60
Section 7.02. TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR........................................ 61
Section 7.03. NOTIFICATIONS TO SERVICER AND TO CERTIFICATEHOLDERS............................. 63
ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.01. DUTIES OF TRUSTEE............................................................... 63
Section 8.02. CERTAIN MATTERS AFFECTING THE TRUSTEE........................................... 64
Section 8.03. TRUSTEE NOT LIABLE FOR CERTIFICATES OR ASSETS................................... 66
Section 8.04. TRUSTEE MAY OWN CERTIFICATES.................................................... 66
Section 8.05. TRUSTEE'S FEES AND EXPENSES..................................................... 66
Section 8.06. ELIGIBILITY REQUIREMENTS FOR TRUSTEE............................................ 67
Section 8.07. RESIGNATION AND REMOVAL OF THE TRUSTEE.......................................... 67
Section 8.08. SUCCESSOR TRUSTEE............................................................... 67
Section 8.09. MERGER OR CONSOLIDATION OF TRUSTEE.............................................. 68
Section 8.10. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE................................... 68
Section 8.11. APPOINTMENT OF CUSTODIANS....................................................... 69
Section 8.12. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF CERTIFICATES................... 69
ARTICLE IX
TERMINATION
Section 9.01. TERMINATION UPON REPURCHASE OR LIQUIDATION OF ALL CONTRACTS..................... 69
Section 9.02. ADDITIONAL TERMINATION REQUIREMENTS............................................. 71
ARTICLE X
REMIC TAX PROVISIONS
Section 10.01. REMIC ADMINISTRATION............................................................ 72
Section 10.02. PROHIBITED ACTIVITIES........................................................... 73
</TABLE>
(iii)
<PAGE>
<TABLE>
<CAPTION>
ARTICLE XI
MISCELLANEOUS PROVISIONS
<S> <C> <C> <C>
Section 11.01. AMENDMENTS...................................................................... 75
Section 11.02. RECORDATION OF AGREEMENT; COUNTERPARTS.......................................... 75
Section 11.03. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS...................................... 76
Section 11.04. NOTICES......................................................................... 76
Section 11.05. SEVERABILITY OF PROVISIONS...................................................... 77
Section 11.06. SALE OF CONTRACTS............................................................... 77
Section 11.07. NOTICE TO RATING AGENCY......................................................... 77
</TABLE>
TABLE OF EXHIBITS
Exhibit 1 Form of Servicer Custodial Certification
Exhibit 2-A Form of Initial Certification
Exhibit 2-B Form of Final Certification
Exhibit 3 Form of Recordation Report
Exhibit 4 Form of Request for Release
Exhibit 5 Form of Rule 144A Agreement
Exhibit 6 Form of Transferee Agreement
Exhibit 7 Form of Benefit Plan Affidavit
Exhibit 8 Form of Residual Transferee Agreement
Exhibit 9 Form of Power of Attorney
(iv)
<PAGE>
RECITALS
Oakwood Mortgage Investors, Inc. ("OMI"), Oakwood Acceptance
Corporation ("OAC") and a banking association or corporation as trustee (the
"Trustee") have entered into a Pooling and Servicing Agreement that provides for
the issuance of manufactured housing contract and/or mortgage pass-through
securities (the "Certificates") that in the aggregate evidence the entire
interest in a pool consisting of retail installment sales contracts for units of
manufactured housing (the "Contracts") and/or mortgage loans secured by first
liens on one- to four-family residential real properties (the "Mortgage Loans,"
and, together with the Contracts, the "Assets") and other property owned by the
Trust (the "Trust") created by such Pooling and Servicing Agreement. These
Standard Terms are a part of, and are incorporated by reference into, such
Pooling and Servicing Agreement.
STANDARD PROVISIONS
NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations and warranties made in the Pooling and Servicing Agreement and
as hereinafter set forth, OMI, OAC and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS.
Except as otherwise specified herein or in a Pooling and Servicing
Agreement or as the context may otherwise require, whenever used in these
Standard Terms, the following words and phrases shall have the meanings assigned
to them in this Article. Unless otherwise specified, all calculations described
herein shall be made on the basis of a 360-day year consisting of twelve 30-day
months.
"Accrual Date": With respect to any Series or Class of Certificates,
the date upon which interest begins accruing on the Certificates of such Series
or Class, which shall be specified in the related Pooling and Servicing
Agreement.
"Adjustable Rate Asset": An "adjustable rate" Contract or Mortgage
Loan, the Asset Rate of which is subject to periodic adjustment in accordance
with the terms of the Contract or the related Mortgage Note.
"Advance": Any Servicing Advance or P&I Advance.
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<PAGE>
"Affiliate": As to any specified Person, any other Person controlling
or controlled by or under common control with such specified Person. For the
purposes of this definition, "control," when used with respect to any specified
Person, means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Application for Relief": As defined in Section 4.06 hereof.
"Asset": A Contract or Mortgage Loan.
"Asset Documents": Collectively, Contract Documents and Mortgage Loan
Documents.
"Asset File": With respect to any Asset, the related Contract File or
Trustee Mortgage Loan File, as applicable.
"Asset Rate": As to any Asset, the related Contract Rate or Mortgage
Rate, as applicable.
"Asset Schedule": For any Series, the list or lists attached to the
related Pooling and Servicing Agreement consisting of the related Contract
Schedule, if any, and the related Mortgage Loan Schedule, if any.
"Assignment": A document effecting the transfer of all the rights of a
secured party under a Mortgage to a transferee, in recordable form for the
jurisdiction in which the related Mortgaged Property is located.
"Available Distribution Amount": For each Distribution Date for a
Series of Certificates, the amount on deposit in the related Distribution
Account at the commencement of business on such Distribution Date, less the
amounts distributable from the Distribution Account in accordance with clauses
(1) through (4) of Section 4.03(a) hereof.
"Beneficial Owner": With respect to a Book-Entry Certificate, the
Person who is registered as owner of that Certificate in the books of the
Clearing Agency for that Certificate or in the books of a Person maintaining an
account with such Clearing Agency.
"Benefit Plan Affidavit": An affidavit substantially in the form of
Exhibit 7 hereto.
"Benefit Plan Opinion": An Opinion of Counsel to the effect that a
proposed transfer of a Certificate will not (a) cause any of the assets of the
Trust to be regarded as "plan assets" for purposes of the Plan Asset
Regulations, (b) give rise to any fiduciary duty under ERISA on the part of OMI,
the Servicer, the Trustee or the Trust's Tax Matters Person, if any, or (c) be
treated as, or result in, a "prohibited transaction" under section 406 or
section 407 of ERISA or under section
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<PAGE>
4975 of the Code. The cost of obtaining a Benefit Plan Opinion shall not be
borne by OMI, the Servicer or the Trustee.
"Board of Directors": The Board of Directors of OMI, OAC or any other
Servicer or any committee of that Board duly authorized to act on behalf of that
Board with respect to any matters arising hereunder.
"Book-Entry Certificates": The Classes of Certificates of a Series, if
any, classified as such in the related Pooling and Servicing Agreement.
"Business Day": Any day that is not a Saturday, Sunday, holiday or
other day on which commercial banking institutions in the city and state in
which the Trustee's Corporate Trust Office is located are authorized or
obligated by law or executive order to be closed.
"Certificate Account": An account established pursuant to and described
in Section 3.06 hereof. The Certificate Account will be an asset of the Trust
but not an asset of any related REMIC. Solely for federal income tax purposes,
the Servicer will be the owner of the Certificate Account and, thus, any income
earned by the Certificate Account, or any amounts transferred by any related
REMIC to the Certificate Account, shall be treated as income earned by, or
amounts distributed to, the Servicer.
"Certificate Principal Balance": With respect to each Certificate or
Class of Certificates, on any date of determination, the outstanding principal
amount, if any, of such Certificate(s) immediately prior to the most recently
preceding Distribution Date (or in the case of a date of determination on or
before the first Distribution Date, an amount equal to the initial principal
amount of such Certificate(s) as of the Closing Date) net of the amounts, if
any, applied on such preceding Distribution Date to reduce the principal amount
of such Certificate(s) in accordance with Section 4.03 hereof.
"Certificate Register" and "Certificate Registrar": The respective
meanings specified for such terms in Section 5.04 hereof.
"Certificateholder" or "Holder": With respect to any Certificate, the
Person in whose name such Certificate is registered in the Certificate Register.
"Certificates": The certificates authorized by, executed and delivered
under, and issued pursuant to any Pooling and Servicing Agreement.
"Class": With respect to any Series, the classification of different
types of the Certificates within such Series as set forth in the related Pooling
and Servicing Agreement.
"Clearing Agency": The Depository Trust Company, or any successor
organization or any other organization registered as a "clearing agency"
pursuant to Section 17A of the Securities
-3-
<PAGE>
Exchange Act of 1934, as amended, and the regulations of the Securities and
Exchange Commission thereunder.
"Clearing Agency Participant": A broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.
"Closing Date": With respect to any Series, the date specified as the
"Closing Date" in the related Pooling and Servicing Agreement.
"Code": The Internal Revenue Code of 1986, as amended.
"Collection Period": With respect to each Distribution Date for a
Series, the period commencing on the second day of the calendar month preceding
the month in which such Distribution Date occurs and ending at the close of
business on the first day of the calendar month in which such Distribution Date
occurs.
"Commission": The Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, as amended.
"Compensating Interest": For any Remittance Date, the amount of all Due
Date Interest Shortfalls for the preceding Collection Period to the extent such
Shortfalls do not exceed the Servicer's aggregate servicing compensation in
respect of such Collection Period.
"Contract": Each retail installment sales contract and security
agreement or installment loan agreement and security agreement relating to the
Contracts (1) that has been executed by an Obligor and pursuant to which such
Obligor (A) purchased the Manufactured Home described therein, (B) agreed to pay
the deferred purchase price or amount borrowed, together with finance charges,
as therein provided in connection with such purchase or loan, (C) granted a
security interest in such Manufactured Home to the originator of such contract
and (D) undertook to perform certain other obligations as specified in such
contract or loan agreement and (2) that has been assigned to the Trustee
pursuant to the Pooling and Servicing Agreement.
-4-
<PAGE>
"Contract Documents": With respect to each Contract:
(a) the original Contract;
(b) either (1) the original title document for the related
Manufactured Home, a duplicate certified by the appropriate
governmental authority that issued the original thereof or, if such
original is not yet available, a copy of the application filed with the
appropriate governmental authority pursuant to which the original title
document will issue (which copy may be on microfilm or optical disk
maintained by the Servicer in its records separate from the other
related Contract Documents), or (2) if the laws of the jurisdiction in
which the related Manufactured Home is located do not provide for the
issuance of title documents for manufactured housing units, other
evidence of ownership of the related Manufactured Home that is
customarily relied upon in such jurisdiction as evidence of title to a
manufactured housing unit;
(c) unless such Contract is a Land Secured Contract, evidence
of one or more of the following types of perfection of the Seller's or
the Trustee's security interest in the related Manufactured Home
granted by such Contract (or, if such evidence is not yet available, a
copy of the application or other filing used to obtain such security
interest (which copy may be on microfilm or optical disk maintained by
the Servicer in its records separate from the other related Contract
Documents)), as appropriate in the applicable jurisdiction: (1)
notation of such security interest on the title document, (2) a
financing statement meeting the requirements of the UCC, with evidence
of recording indicated thereon, (3) a fixture filing in accordance with
the UCC, with evidence of filing indicated thereon, or (4) such other
evidence of perfection of a security interest in a manufactured housing
unit as is customarily relied upon in the jurisdiction in which the
related Manufactured Home is located;
(d) an original assignment of the Contract from the initial
named payee thereunder to the Seller (unless the Seller is the initial
named payee for such Contract);
(e) originals of any assumption agreements relating to such
Contract, together with originals of any surety or guaranty agreement
relating to such Contract or to any such assumption agreement, payable
to the order of the Trustee, or, if not so payable, endorsed to the
order of, or assigned to, the Trustee by the holder/payee thereunder
without recourse;
(f) originals of any extension, modification or waiver
agreement(s) relating to such Contract; and
(g) proof of maintenance of a Standard Hazard Insurance Policy
for the related Manufactured Home.
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<PAGE>
In the case of any Land Secured Contract, the related Contract
Documents shall consist of the following documents in lieu of those listed in
clause (c) of the foregoing paragraph: (i) the original recorded Mortgage for
the related Real Property, with evidence of recordation noted thereon or
attached thereto, or a certified copy thereof issued by the appropriate
recording office (or, if the Mortgage is in the process of being recorded, a
photocopy of the Mortgage, which may be on microfilm or optical disk maintained
by the Servicer in its records separate from the other related Contract
Documents); (ii) if the Mortgage does not name the related Seller as mortgagee
therein or beneficiary thereof, an original recorded assignment or assignments
of the Mortgage from the Persons named as mortgagee in, or beneficiary of, such
Mortgage, to the related Seller, with evidence of recordation noted thereon or
attached thereto, or a certified copy of each such assignment issued by the
appropriate recording office (or, if such an original assignment is in the
process of being recorded, a photocopy of each such assignment, which may be on
microfilm or optical disk maintained by the Servicer in its records separate
from the other related Contract Documents); (iii) a copy of the power of
attorney delivered by the Seller to the Trustee in the event that recordation of
such assignments becomes necessary for foreclosure on the related Real Property
by or on behalf of the Trustee; and (iv) if such Land Secured Contract's
original principal balance was $40,000 or greater, a copy of the title search
report and bring-down thereof (or evidence of title insurance) with respect to
the related Real Property.
"Contract File": With respect to any Contract, a file containing all of
the related Contract Documents.
"Contract Loan-to-Value Ratio": Means, (i) as to each Contract with
respect to which a lien on land is required for underwriting purposes, the
ratio, expressed as a percentage, of the principal amount of such Contract to
the sum of the purchase price of the home (including taxes, insurance and any
land improvements), the tax value or appraised value of the land and the amount
of any prepaid finance charges or closing costs that are financed; and (ii) as
to each other Contract, the ratio, expressed as a percentage, of the principal
amount of such Contract to the purchase price of the home (including taxes,
insurance and any land improvements) and the amount of any prepaid finance
charges or closing costs that are financed.
"Contract Rate": With respect to a Contract, the annual interest rate
required to be paid by an Obligor under the terms of such Contract.
"Contract Schedule": For any Series, the list attached to the related
Pooling and Servicing Agreement identifying each Contract assigned thereunder
(which may be presented together with any related Mortgage Loan Schedule in a
single Asset Schedule), which list shall (a) identify each Contract and (b) set
forth (or describe the method of determining) as to each such Contract (1) the
Cut-off Date Principal Balance thereof, (2) the amount of each Monthly Payment
due from the Obligor thereunder, (3) the Contract Rate thereof, (4) the original
term to maturity thereof, (5) the date of origination thereof, (6) the original
Contract Loan-to-Value Ratio thereof, (7) the state in which the related
Manufactured Home is located, (8) whether the related Manufactured Home is a
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<PAGE>
used, repossessed, new or transferred home, (9) whether the Contract is a Land
Secured Contract and (10) any other information specified in the related Pooling
and Servicing Agreement.
"Converted Loan": An Adjustable Rate Asset with respect to which the
Obligor has complied with the applicable requirements of the related Contract or
Mortgage Note to convert the related Asset Rate to a fixed rate of interest, and
as to which the Servicer has processed such conversion.
"Corporate Trust Office": The principal corporate trust office of the
Trustee at which at any particular time its corporate trust business under a
Pooling and Servicing Agreement shall be administered.
"Credit Insurer": An insurer under any Primary Mortgage Insurance
Policy or pool insurance policy for a Series.
"Custodian": For any Series, the Trustee or an agent of the trustee
identified in the related Pooling and Servicing Agreement, which agent shall
hold all or part of the Trustee Mortgage Loan Files for some or all of the
related Mortgage Loans.
"Cut-off Date": With respect to any Series, the date or dates (a) after
which all Monthly Payments due in respect of the Assets sold to the Trust (net
of Servicing Fees relating to such Assets) and (b) on and after which all
Principal Prepayments, Net Liquidation Proceeds and Repurchase Prices received
in respect of such Assets, are to be transmitted to the Certificate Account for
the benefit of the Holders of the Certificates. The Cut-off Date for a Series
shall be specified in the related Pooling and Servicing Agreement.
"Cut-off Date Principal Balance": As to any Asset, the original
principal amount of such Asset, minus the principal portion of all Monthly
Payments due on such Asset on or before the Cut-off Date and minus all other
payments applied to reduce such original principal amount before the Cut-off
Date.
"Default": Any occurrence that is, or that with notice or the lapse of
time or both would become, an Event of Default.
"Defaulted Contract": A Contract (a) as to which any related Monthly
Payment has been delinquent and remains delinquent 90 days after the Due Date
therefor or (b) as to which the related Obligor has become bankrupt or
insolvent.
"Defect Discovery Date": With respect to an Asset, the date on which
either the Trustee or the Servicer first discovers a Qualification Defect
affecting the Asset.
"Directly Operate": With respect to any REO Property, the furnishing or
rendering of services to the tenants thereof, the management or operation of
such REO Property, the holding of
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<PAGE>
such REO Property primarily for sale to customers, the performance of any
construction work thereon or any use of such REO Property in a trade or business
conducted by the Trust, in each case other than through an Independent
Contractor; PROVIDED, HOWEVER, that the Servicer on behalf of the Trustee shall
not be considered to Directly Operate an REO Property solely because the
Servicer on behalf of the Trustee establishes rental terms, chooses tenants,
enters into or renews leases, deals with taxes and insurance, or makes decisions
as to repairs or capital expenditures with respect to such REO Property.
"Disqualified Organization": Either (a) the United States, (b) any
state or political subdivision thereof, (c) any foreign government, (d) any
international organization, (e) any agency or instrumentality of any of the
foregoing, (f) any organization (other than a cooperative described in section
521 of the Code) that is exempt from federal income taxation (including taxation
under the unrelated business taxable income provisions of the Code), (g) any
rural telephone or electrical service cooperative described in section
1381(a)(2)(C) of the Code, or (h) any other entity identified as a disqualified
organization by legislation enacted or administrative pronouncement in effect as
of the date of the most recent transfer of the related Residual Certificate. A
corporation will not be treated as an instrumentality of the United States or
any state or political subdivision thereof if all of its activities are subject
to tax and, with the exception of the Federal Home Loan Mortgage Corporation, a
majority of its board of directors is not selected by such governmental unit.
"Distribution Account": As defined in Section 4.02 hereof.
"Distribution Date": Unless otherwise specified in the Pooling and
Servicing Agreement, the 15th day of any month, or the next Business Day after
such 15th day if such 15th day is not a Business Day, commencing in the month
following the Closing Date and ending on the date on which the Trust is
terminated.
"Due Date": With respect to any Asset, the date on which a Monthly
Payment is due on such Asset from the Obligor thereunder (without regard to any
grace period).
"Due Date Interest Shortfall": For any Asset that is prepaid in full or
liquidated on other than a Due Date for such Asset, the difference between (a)
the amount of interest that would have accrued on such Asset through the day
preceding the Due Date next following the date of such prepayment or liquidation
had the Asset not been prepaid in full or liquidated (net of any other
administrative fees payable out of such interest had it accrued and been paid)
and (b) the amount of interest that actually accrued on such Asset prior to the
prepayment in full or liquidation thereof (net of an allocable portion of any
other administrative fees payable from interest payments on such Asset in
respect of the related Collection Period).
"Early Payment": As to any Asset and any Due Date on which the
principal and interest payments on such Asset made with respect to such Due Date
(not including any late fees) exceed the sum of the scheduled Monthly Payment
for such Asset and Due Date plus any unpaid Monthly Payments for previous Due
Dates, if the related Obligor has not sent written notice to the Servicer
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with such payment asking that the amount by which such payment exceeds the
Monthly Payment then due be treated as a Principal Prepayment and the Servicer
is unable to determine the Obligor's intended treatment of such excess payment,
the Early Payment shall be the amount by which (1) payments of principal and
interest on such Asset made with respect to such Due Date exceed (2) the
scheduled Monthly Payment for such Asset on such Due Date plus any unpaid
Monthly Payments for previous Due Dates, but only to the extent that the amount
of such excess is an integral multiple of the amount of the scheduled Monthly
Payment for such Due Date. To the extent that the amount of such excess exceeds
an integral multiple of such scheduled Monthly Payment, the excess shall be
deemed to be a Principal Prepayment of such Asset.
"Eligible Account": (1) An account or accounts maintained with a
Qualified Bank, (2) any trust account maintained in the corporate trust
department of a financial institution subject to governmental regulatory
authorities or (3) a non-trust account maintained with the Trustee, so long as
the Trustee's commercial paper or short-term unsecured debt obligations are
rated by each Rating Agency in its highest applicable rating category (without
regard to "plus" or "minus" modifiers of such rating category); PROVIDED that
the Servicer shall move any funds in such account to another account which is an
Eligible Account pursuant to clause (1) or (2) of this definition within five
days after any downgrading of the Trustee's commercial paper or short-term
unsecured debt obligations below each Rating Agency's highest applicable rating
category (without regard to "plus" or "minus" modifiers of such rating category)
and shall not deposit funds into any account that is an Eligible Account
pursuant to this clause (3) if such deposit would cause the amount on deposit in
such account to exceed 20% of the aggregate unpaid principal balance of the
Certificates. Eligible Accounts may bear interest.
"Eligible Investments": Any one or more of the following obligations or
securities:
(a) direct obligations of, and obligations fully guaranteed
by, the United States of America;
(b) demand and time deposits in, negotiable certificates of
deposit of, bankers' acceptances issued by, or federal funds sold by,
any Qualified Bank;
(c) commercial paper of any Person other than OMI, the Seller
or any Affiliate of OMI or the Seller rated in the Rating Agency's
highest applicable rating category;
(d) repurchase agreements fully collateralized by possession
of obligations of the type specified in clause (a) above; PROVIDED,
HOWEVER, that investments in such repurchase agreements shall mature
within three days of the acquisition thereof and; PROVIDED FURTHER,
that such agreements shall be entered into with a Qualified Bank;
(e) money market accounts or money market funds rated in the
highest rating category of the Rating Agency for such money market
funds; and
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(f) money market accounts or money market mutual funds
investing primarily in obligations of the United States government, and further
investing exclusively in debt obligations, PROVIDED, HOWEVER, that such money
market accounts or money market mutual funds shall be rated in the highest
rating category sufficient to support the initial ratings assigned to a related
Series of Certificates.
The foregoing notwithstanding, Eligible Investments that are acquired with funds
in the Certificate Account, the Distribution Account or any Reserve Fund shall
include only such obligations or securities that mature on or before the
Business Day immediately preceding the next Distribution Date. The Trustee may
not sell or convert an Eligible Investment if such sale or conversion would
result in a loss on the investment. In no event shall an instrument be an
Eligible Investment if such instrument evidences (1) a right to receive only
interest payments with respect to the obligations underlying such instrument or
(2) both principal and interest payments derived from obligations underlying
such instrument, if the interest and principal payments with respect to such
instrument provide a yield to maturity at the date of investment of greater than
120% of the yield to maturity at par of such underlying obligations.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Restricted Certificates": With respect to any Series, any
Certificates of a Class that are subordinated to the Certificates of any other
Class of such Series with respect to the allocation of Writedown Amounts, or, if
the related Pooling and Servicing Agreement does not provide for the allocation
of Writedown Amounts, the Certificates designated as "ERISA Restricted
Certificates" in the related Pooling and Servicing Agreement.
"Event of Default": As defined in Section 7.01 hereof.
"FHA": The Federal Housing Administration.
"FHA Asset": An Asset that is insured by the FHA.
"FHA Insurance": As to any FHA Asset, FHA's agreement to reimburse the
owner of such Asset for the amount of any losses incurred upon the liquidation
of such Asset.
"FHLMC": Federal Home Loan Mortgage Corporation.
"Final Certification": A certification as to the completeness of each
Trustee Mortgage Loan File substantially in the form of Exhibit 2-B hereto
provided by the Trustee (or the Custodian) on or before the first anniversary of
the Closing Date pursuant to Section 2.03(c)(2) hereof.
"Final Scheduled Distribution Date": With respect to any Class of any
Series, the date specified as such in the related Pooling and Servicing
Agreement.
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"FNMA": Federal National Mortgage Association.
"Fraud Loss": A loss incurred on a Contract or Mortgage Loan resulting
from a Credit Insurer's failure to pay a claim with respect to such Contract or
Mortgage Loan on the grounds of fraud in connection with the origination of the
Contract or Mortgage Loan or on the grounds of fraud, dishonesty or
misrepresentation in connection with the application for any insurance obtained
with respect to such Contract or Mortgage Loan.
"Independent": When used with respect to any specified Person, another
Person who (a) is in fact independent of OMI, the Seller, the Servicer, any
obligor upon the Certificates or any Affiliate of OMI, the Seller or the
Servicer or such obligor, (b) does not have any direct financial interest or any
material indirect financial interest in OMI, the Seller or the Servicer or in
any such obligor or in an Affiliate of OMI, the Seller or the Servicer or such
obligor, and (c) is not connected with OMI, the Seller or the Servicer or any
such obligor as an officer, employee, promoter, underwriter, trustee, partner,
director or person performing similar functions. Whenever it is provided herein
that any Independent Person's opinion or certificate shall be furnished to the
Trustee, such Person shall be appointed by OMI, the Seller or the Servicer in
the exercise of reasonable care by OMI, the Seller or the Servicer, as the case
may be, and approved by the Trustee, and such opinion or certificate shall state
that the Person executing the same has read this definition and that such Person
is independent within the meaning thereof.
"Independent Contractor": Either (a) any Person (other than the
Servicer) that would be an "independent contractor" with respect to the Trust
within the meaning of Section 856(d)(3) of the Code if the Trust were a real
estate investment trust (except that, in applying that Section, more than 35% of
the outstanding principal balance of any Class shall be deemed to be more than
35% of the certificates of beneficial interest of the Trust), so long as the
Trust does not receive or derive any income from such Person, the relationship
between such Person and the Trust is at arm's length and such Person is not an
employee of the REMIC, the Trustee or the Servicer, all within the meaning of
Treasury Regulation Section 1.856-4(b)(5), or (b) any other Person (including
the Servicer) upon receipt by the Trustee of an Opinion of Counsel, the expense
of which shall constitute a Servicing Advance if borne by the Servicer, to the
effect that the taking of any action in respect of any REO Property by such
Person, subject to any conditions therein specified, that is otherwise herein
contemplated to be taken by an Independent Contractor will not cause such REO
Property to cease to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code (determined without regard to the exception
applicable for purposes of Section 860D(a) of the Code), or cause any income
realized in respect of such REO Property to fail to qualify as Rents from Real
Property.
"Initial Certification": A certification as to the completeness of each
Trustee Mortgage Loan File substantially in the form of Exhibit 2-A hereto
provided by the Trustee (or the Custodian) on the Closing Date pursuant to
Section 2.03(c)(1) hereof.
"Initial Value": As defined in Section 3.16(b) hereof.
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"Insurance Policy": Any insurance policy covering any Asset (or the
related Manufactured Home or Mortgaged Property), including, without limitation,
any Standard Hazard Insurance Policy or Primary Mortgage Insurance Policy or FHA
Insurance or VA Guaranty.
"Insurance Proceeds": Amounts paid or payable (as the context requires)
under any Insurance Policy, to the extent such amounts are not applied to the
restoration or repair of the Manufactured Home or Mortgaged Property in respect
of which such amounts were paid.
"Insured Expenses": Expenses incurred by the Servicer in connection
with a Contract or Mortgage Loan under which the Obligor is in default, which
expenses are covered by a Standard Hazard Insurance Policy and are paid by an
insurer under any such policy.
"Interest Accrual Period": With respect to any Distribution Date for a
Series, the calendar month immediately preceding the calendar month in which
such Distribution Date occurs, which period will be assumed to consist of 30
days for the purpose of calculating any interest amounts accrued on the
Certificates of such Series.
"Issuing REMIC": If provided for in a Pooling and Servicing Agreement,
the REMIC composed primarily of Regular Interests in the Pooling REMIC, together
with the Distribution Account.
"Land Secured Contract": A Contract secured at origination by a parcel
of real estate in addition to a Manufactured Home.
"Liquidated Loan": A Defaulted Contract or defaulted Mortgage Loan as
to which all amounts that the Servicer expects to recover through the date of
disposition of the related Manufactured Home or Mortgaged Property have been
received.
"Liquidation Expenses": All reasonable, out-of-pocket costs and
expenses (exclusive of the Servicer's overhead costs) incurred by the Servicer
in connection with liquidation of any Asset or disposition of any related Repo
Property or REO Property, including, but not limited to, the cost of all notices
sent in connection with such liquidation, costs and expenses incurred in
connection with preparation and recordation of assignments of Mortgages relating
to Land Secured Contracts, expenses, including reasonable attorney's fees,
incurred in connection with the commencement and pursuit of Proceedings against
Obligors or guarantors or sureties of Obligors or in the pursuit of foreclosure
or other similar remedies, expenses incurred in repossessing and refurbishing
the related Manufactured Home or preparing the related REO Property for sale and
sales commissions paid in connection with the resale of the related Manufactured
Home or REO Property.
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"Liquidation Proceeds": Amounts received and retained in connection
with the liquidation of Liquidated Loans, whether through foreclosure thereon or
repossession and resale of the related Manufactured Home, foreclosure on the
related Mortgaged Property or otherwise (including Insurance Proceeds collected
in connection with such liquidation).
"Loan-to-Value Ratio": The Contract Loan-to-Value Ratio or the Mortgage
Loan-to-Value Ratio of an Asset, as applicable.
"Manufactured Home": A unit of manufactured housing (within the meaning
of Code section 25(e)(10)) together with all accessions thereto securing the
indebtedness of the Obligor under any Contract or constituting a portion of the
Mortgaged Property securing the indebtedness of the Obligor under any Mortgage
Loan.
"Monthly Payment": With respect to any Asset, the scheduled monthly
payment of principal and interest thereon due in any month under the terms
thereof.
"Mortgage": A written instrument creating a valid first lien on Real
Property or a Mortgaged Property, in the form of a mortgage, deed of trust, deed
to secure debt or security deed, including any riders or addenda thereto.
"Mortgage Insurer": The insurance company or companies which issue any
Primary Mortgage Insurance Policies with respect to any Mortgage Loans.
"Mortgage Loan": A mortgage loan (not including any Land Secured
Contract) secured by a first lien on a one- to four-family residential real
property (which may be the real estate to which a Manufactured Home is deemed by
the Seller to have become permanently affixed as of the Cut-off Date for the
related Series).
"Mortgage Loan Documents": With respect to each Mortgage Loan, the
following documents:
(a) the original Mortgage Note bearing a complete chain of
endorsements, if necessary, from the initial payee thereunder to the
Seller, with a further endorsement without recourse from the Seller in
blank or to the Trustee or its Custodian, in a form specified in the
related Sales Agreement, together with all related riders and addenda
and any related surety or guaranty agreement, power of attorney and
buydown agreement;
(b) the original recorded Mortgage (or a copy thereof
certified to be a true and correct reproduction of the original thereof
by the appropriate public recording office) with evidence of
recordation noted thereon or attached thereto, or, if the Mortgage is
in the process of being recorded, a photocopy of the Mortgage,
certified by an officer of the related Seller or the originator, the
related title insurance company, the related
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closing/settlement/escrow agent or the related closing attorney to be
a true and correct copy of the Mortgage submitted for recordation;
(c) the original recorded assignment of the Mortgage from the
related Seller to the Trustee or its Custodian, in a form specified in
the related Sales Agreement (or a copy thereof certified to be a true
and correct reproduction of the original thereof by the appropriate
public recording office) with evidence of recordation noted thereon or
attached thereto, or, if the assignment is in the process of being
recorded, a photocopy of the assignment, certified by an officer of the
Seller to be a true and correct copy of the assignment submitted for
recordation;
(d) each original recorded intervening assignment of the
Mortgage as is necessary to show a complete chain of title from the
initial mortgagee (or beneficiary, in the case of a deed of trust) to
the related Seller (or a copy of each such assignment certified to be a
true and correct reproduction of the original thereof by the
appropriate public recording office) with evidence of recordation noted
thereon or attached thereto, or, if an assignment is in the process of
being recorded, a photocopy of the assignment, certified by an officer
of the Seller to be a true and correct copy of the assignment submitted
for recordation;
(e) an original Title Insurance Policy or, if such policy has
not yet been issued or is otherwise not available, (1) a written
commitment to issue such policy issued by the applicable title
insurance company and an officer's certificate of the related Seller
certifying that all of the requirements specified in such commitment
have been satisfied, (2) a preliminary title report if the related
Mortgaged Property is located in a state in which preliminary title
reports are acceptable evidence of title insurance or (3) a certificate
of an officer of the Seller certifying that a Title Insurance Policy is
in full force and effect as to the related Mortgage and that such Title
Insurance Policy is freely assignable to and will inure to the benefit
of the Trustee (subject to recordation of the related Assignment of
Mortgage);
(f) for each Mortgage Loan identified in the related Agreement
as having in place a Primary Mortgage Insurance Policy, a Primary
Mortgage Insurance Policy or a certificate of primary mortgage
insurance issued by the related Mortgage Insurer or its agent
indicating that such a policy is in effect as to such Mortgage Loan or,
if neither a policy nor a certificate of insurance from the related
Mortgage Insurer is available, a certificate of an officer of the
related Seller certifying that a Primary Mortgage Insurance Policy is
in effect as to such Mortgage Loan;
(g) each related assumption agreement, modification, written
assurance or substitution agreement, if any; and
(h) proof of the maintenance of a Standard Hazard Insurance
Policy (and a flood insurance policy, if applicable) as to the related
Mortgaged Property.
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"Mortgage Loan-to-Value Ratio": Means, as to a Mortgage Loan, the
ratio, expressed as a percentage, of the principal amount of such Mortgage Loan
at the time of determination, to either (i) the sum of the appraised value of
the land and improvements, and the amount of any prepaid finance charges or
closing costs that are financed or (ii) the sum of the purchase price of the
home (including taxes, insurance and any land improvements), the appraised value
of the land and the amount of any prepaid finance charges or closing costs that
are financed.
"Mortgage Loan Schedule": For any Series, the list attached to the
related Pooling and Servicing Agreement identifying each Mortgage Loan assigned
thereunder (which may be presented together with any related Contract Schedule
in a single Asset Schedule), which list shall (a) identify each Mortgage Loan
and (b) set forth (or describe the method of determining) as to each such
Mortgage loan (1) the Cut-off Date Principal Balance thereof, (2) the amount of
each Monthly Payment, (3) the Mortgage Rate thereof, (4) the original term to
maturity thereof, (5) the date of origination thereof, (6) the original Mortgage
Loan-to-Value Ratio thereof, (7) the state in which the related Mortgaged
Property is located, and (8) any other information as may be reasonably
requested by the Trustee prior to the Closing Date.
"Mortgage Note": A manually executed written instrument evidencing a
Mortgagor's promise to repay a stated sum of money, plus interest, to the holder
of such instrument on or before a specific date according to a schedule of
principal and interest payments.
"Mortgage Rate": With respect to each Mortgage Loan, the interest rate
specified in the related Mortgage Note.
"Mortgaged Property": The mortgaged property securing a Mortgage Loan.
"Mortgagor": The obligor on a Mortgage Note.
"Net Insurance Proceeds": With respect to any Asset, Insurance Proceeds
received with respect thereto net of (a) any Insured Expenses incurred in
connection therewith, (b) all reasonable out-of-pocket expenses incurred by the
Servicer in connection with the collection of such Insurance Proceeds and (c)
the amount of any Advances made by the Servicer or any other entity with respect
to such Asset and not previously reimbursed to the Servicer or such other entity
as of the time of the Servicer's receipt of such Insurance Proceeds. Amounts
received by the Servicer as Net Insurance Proceeds will be treated for
accounting purposes as payments received on Assets.
"Net Liquidation Proceeds": With respect to any Asset, the amount of
Liquidation Proceeds received with respect thereto (including any Net Insurance
Proceeds recovered in connection with the liquidation of the related
Manufactured Home or Mortgaged Property) net of the amount of any Liquidation
Expenses incurred and not previously reimbursed to the Servicer or such other
entity as of the time of the liquidation of such Asset. Amounts received by the
Servicer
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as Net Liquidation Proceeds will be treated for accounting purposes as payments
received on Assets.
"Net Rate": As to any Asset, the applicable Asset Rate minus the
Servicing Fee Rate.
"New Lease": Any lease of REO Property entered into on behalf of the
Trust, including any lease renewed, modified or extended on behalf of the Trust
(if the Trustee, or the Servicer or its agent, has the right to renegotiate the
terms of such lease).
"Non-Recoverable Advance": As to any Advance that has not yet been
made, any portion of the amount of such prospective Advance which the Servicer
reasonably determines would not ultimately be recoverable from Related Proceeds.
As to any Advance that has been made by the Servicer, any portion of the amount
of such Advance that has subsequently been determined by the Servicer to be not
ultimately recoverable from Related Proceeds. In determining whether an Advance
is or would be a Non-Recoverable Advance, the Servicer need not take into
account the possibility that it might recover any amounts as the result of a
deficiency judgment against the related Obligor.
"Non-U.S. Person": A foreign person within the meaning of Treasury
regulation Section 1.860G-3(a)(1) (I.E., a person other than (a) a citizen or
resident of the United States, (b) a corporation or partnership that is
organized under the laws of the United States or any jurisdiction thereof or
therein, (c) an estate that is subject to United States federal income tax
regardless of the source of its income, or (d) a trust if a court within the
United States is able to exercise primary supervision over the administration of
the trust and one or more United States fiduciaries have the authority to
control all substantial decisions of the trust) who would be subject to United
States income tax withholding pursuant to section 1441 or 1442 of the Code on
income derived from a Residual Interest.
"OAC": Oakwood Acceptance Corporation, a North Carolina corporation.
"Obligor": A person who is indebted under a Contract or who has
acquired a Manufactured Home subject to a Contract or a person who is the
Mortgagor or borrower under a Mortgage Loan or who has acquired a Mortgaged
Property subject to a Mortgage Loan.
"Obligor Bankruptcy Loss": With respect to any Distribution Date as to
any Asset that was the subject of a Principal Cramdown during the preceding
Prepayment Period, the related Principal Cramdown Amount.
"Officer": With respect to any corporation, the Chairman of the Board
of Directors, the President, any Vice President or Assistant Vice President, the
Secretary, the Treasurer, or any Assistant Secretary or Assistant Treasurer of
such corporation (or, in the case of the Trustee, any trust officer thereof);
with respect to any partnership, the designated managing partner, if any, who
has been granted authority by the partnership agreement of such partnership to
bind the partnership
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by his or her signature, or, in any other case, any general partner of the
partnership; with respect to any bank or trust company acting as trustee of an
express trust or as custodian, any trust officer or authorized officer thereof.
"Officer's Certificate": For any Person, a certificate that has been
signed on behalf of that Person by an Officer of that Person or any other
individual authorized to execute the certificate.
"Opinion of Counsel": A written opinion of counsel, which counsel is
satisfactory to the Servicer and the Trustee. Whenever an Opinion of Counsel is
required hereunder, the renderer of such Opinion may rely on other Opinions of
Counsel. Any Opinion of Counsel relating to tax matters must be an opinion of
Independent counsel.
"OMI": Oakwood Mortgage Investors, Inc., a Nevada corporation.
"Outstanding": (a) With respect to the Certificates, as of any date of
determination, "Outstanding" refers to all Certificates theretofore executed and
delivered under the Pooling and Servicing Agreement except:
(1) Certificates theretofore canceled by the Certificate
Registrar or delivered to the Certificate Registrar for cancellation;
(2) Certificates or portions thereof for which money in the
amount necessary for the making of a final distribution on such
Certificates has been theretofore deposited with the Trustee or any
Paying Agent in trust for the Holders of such Certificates; PROVIDED,
that if such Certificates are to be retired because of termination of
the Trust at the option of the Servicer, notice of such optional
termination has been duly given pursuant to the Pooling and Servicing
Agreement;
(3) Certificates in exchange for which other Certificates have
been executed and delivered pursuant to Section 5.04 hereof; and
(4) Certificates alleged to have been destroyed, lost or
stolen for which replacement Certificates have been issued pursuant to
Section 5.07 hereof unless proof satisfactory to the Trustee has been
presented at or before the time that the determination of those
Certificates that are Outstanding is made that any such Certificates
are held by a holder in due course.
(b) With respect to the Assets as of any date, "Outstanding" refers to
Assets with unpaid principal balances greater than zero and that have not
previously been purchased or repurchased pursuant to Section 2.06 hereof or
become Liquidated Loans.
"Outstanding Certificate Writedown Amount": With respect to any Class
of Certificates, the aggregate amount of all Writedown Amounts that have been
allocated to such Class since the Closing Date for the related Series, minus any
amounts that have been distributed on such Class in
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reduction of such aggregate amount in accordance with the related Pooling and
Servicing Agreement.
"P&I Advance": As defined in Section 3.04(b) hereof.
"Pass-Through Rate": With respect to any Class of Certificates, the
annual rate at which interest accrues on the Certificates of such Class, which
rate is specified or described for each Class in the related Pooling and
Servicing Agreement.
"Paying Agent": Any Person authorized by OMI and the Trustee to
distribute principal or interest on any Certificates on behalf of the Trustee
and appointed pursuant to Section 5.09 hereof.
"Percentage Interest": With respect to a Certificate to which an
initial principal amount is assigned as of the Closing Date, the portion of the
Class of which such Certificate is a part evidenced by such Certificate,
expressed as a percentage, the numerator of which is the denomination
represented by such Certificate and the denominator of which is the initial
Certificate Principal Balance of such Class. With respect to a Certificate to
which an initial principal balance is not assigned as of the Closing Date, the
portion of the Class of which such Certificate is a part evidenced by such
Certificate, expressed as a percentage stated on the face of such Certificate.
"Permitted Encumbrances": In respect of any Mortgaged Property or Real
Property:
(a) the lien of current real property taxes
and assessments not yet due and payable;
(b) covenants, conditions and restrictions,
rights of way, easements and other matters of public record as
of the date of recording acceptable to prudent mortgage
lending institutions generally and specifically referred to in
the lender's title insurance policy delivered to the related
originator and referred to or otherwise considered in the
appraisal made for the originator; and
(c) other matters to which like properties
are commonly subject which do not materially interfere with
the benefits of the security intended to be provided by the
Mortgage or the use, enjoyment, value or marketability of the
related Mortgaged Property or Real Property.
"Person": Any individual, corporation, partnership, joint venture,
association, joint stock company, trust (including any beneficiary thereof),
unincorporated organization or government or any agency or political subdivision
thereof.
"Plan": Any employee benefit plan or retirement arrangement, including
individual retirement accounts and annuities, Keogh plans and collective
investment funds in which such
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plans, accounts, annuities or arrangements are invested, that are described in
or subject to the Plan Asset Regulations, ERISA or corresponding provisions of
the Code.
"Plan Asset Regulations": The Department of Labor regulations set forth
in 29 C.F.R. ss. 2510.3-101.
"Plan Investor": A Plan, a Person acting on behalf of a Plan or a
Person using the assets of a Plan.
"Pool Scheduled Principal Balance": For any Series, on any Distribution
Date, the aggregate of the Scheduled Principal Balances, immediately prior to
the beginning of the related Collection Period, of the related Assets that were
Outstanding at the beginning of such Collection Period, without giving effect to
any Principal Prepayments, Net Liquidation Proceeds or Repurchase Prices
received (or Realized Losses incurred) on the day preceding the beginning of
such Collection Period, plus the aggregate of the principal components of any
Monthly Payments that were due at or prior to the beginning of such Collection
Period on such Assets, but which Monthly Payments were not collected from a
related Obligor or advanced by the Servicer and which were not reflected in a
corresponding reduction in the aggregate Certificate Principal Balance of the
related Certificates on the related Distribution Date. The Pool Scheduled
Principal Balance as of any date of determination that is not a Distribution
Date shall be the Pool Scheduled Principal Balance for the next upcoming
Distribution Date.
"Pooling and Servicing Agreement": A Pooling and Servicing Agreement
among OMI, OAC and a Trustee, relating to the issuance of Certificates of a
Series, which shall incorporate these Standard Terms by reference.
"Pooling REMIC": If provided for in a Pooling and Servicing Agreement,
the REMIC consisting primarily of the related Assets.
"Pooling REMIC Regular Interest": A Regular Interest in a Pooling
REMIC.
"Prepayment Period": With respect to each Distribution Date, the
calendar month immediately preceding the calendar month in which such
Distribution Date occurs.
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"Primary Mortgage Insurance": The insurance provided under any Primary
Mortgage Insurance Policy.
"Primary Mortgage Insurance Policy": A primary mortgage insurance
policy, if applicable, covering certain conventional Mortgage Loans for which
the initial Mortgage Loan-to-Value Ratios exceeded 80%.
"Principal Cramdown" means, as to any Asset, either (a) a decree by a
bankruptcy court to the effect that the portion of such Asset that is secured by
the underlying Manufactured Home or Mortgaged Property is less than its Unpaid
Principal Balance due to the fact that the value of such Manufactured Home or
Mortgaged Property is less than such Unpaid Principal Balance or (b) the
permanent forgiveness by a bankruptcy court of some or all of the Unpaid
Principal Balance owed by the related Obligor.
"Principal Cramdown Amount" means, with respect to any Prepayment
Period as to any Asset that has been the subject of a Principal Cramdown, the
amount by which (a) the Unpaid Principal Balance of such Asset exceeds (b) as
applicable, depending upon the type of Principal Cramdown that was applied to
such Asset, either (1) the portion of such Unpaid Principal Balance that remains
secured by the related Manufactured Home or Mortgaged Property after taking the
related Principal Cramdown into account or (2) the Unpaid Principal Balance
after taking into account the permanent forgiveness of debt ordered by the
bankruptcy court in connection with the related Principal Cramdown.
"Principal Distribution Amount": For any Series, except as otherwise
defined in the related Pooling and Servicing Agreement, on any Distribution Date
other than the Distribution Date that is the Termination Date, the sum of the
following amounts: (a) the sum of the principal components of all Monthly
Payments scheduled to be made on the Due Date occurring during the related
Collection Period on the related Assets that were Outstanding at the opening of
business on such Due Date (regardless of whether such Monthly Payments were
received by the Servicer from the related Obligors), not including any Monthly
Payments due on Liquidated Loans or repurchased Assets; (b) the sum of the
amounts of all Principal Prepayments received by the Servicer on the related
Assets during the related Prepayment Period; (c) with respect to any related
Asset that became a Liquidated Loan during the related Prepayment Period, the
Scheduled Principal Balance thereof on the date of liquidation thereof
(determined without giving effect to such liquidation); and (d) with respect to
any related Asset that was purchased or repurchased by the Servicer, the Seller
or OMI pursuant to Section 2.06 hereof during the related Prepayment Period, the
Scheduled Principal Balance thereof on the date of purchase or repurchase
thereof (determined without giving effect to such purchase or repurchase).
"Principal Prepayment": With respect to any Asset, a payment
attributable to principal of such Asset, other than a scheduled principal
payment on such Asset, which may be received (a) from the related Obligor
together with a regular Monthly Payment, (b) from the related Obligor
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together with an Early Payment, or (c) in the form of Net Insurance Proceeds
received by the Servicer otherwise than as a component of Liquidation Proceeds.
"Private Certificate": Any Class of Certificates of a Series designated
as such in the related Pooling and Servicing Agreement.
"Proceeding": Any suit in equity, action at law or other judicial or
administrative proceeding.
"Qualification Defect": With respect to an Asset, (a) a defective
document in the related Asset File, (b) the absence of a document in such Asset
File, or (c) the breach of any representation, warranty, or covenant with
respect to the Asset made by OMI, the Seller or the Servicer, but only if, as a
result of any of the foregoing, the affected Asset would cease to qualify as a
"qualified mortgage" for purposes of the REMIC Provisions. With respect to a
REMIC Regular Interest or a participation certificate described in Code section
860G(a)(3), the failure to qualify as a "qualified mortgage" for purposes of the
REMIC Provisions.
"Qualified Bank": Any domestic bank not affiliated with the Seller or
OMI (1) having long-term unsecured debt obligations rated in one of the two
highest rating categories (without modifiers) of each Rating Agency or
short-term unsecured debt obligations rated in each Rating Agency's highest
applicable rating category, (2) having commercial paper or short-term unsecured
debt obligations rated in each Rating Agency's highest applicable rating
category, or (3) that is otherwise acceptable to each applicable Rating Agency.
"Qualified Institutional Buyer": Any "qualified institutional buyer" as
defined in clause (a)(1) of Rule 144A.
"Qualified Insurer": Any insurance company or surety or bonding company
licensed to do business and issue insurance in all relevant jurisdictions
(including, in the case of an insurer under a Standard Hazard Insurance Policy,
the jurisdiction in which each Manufactured Home or Real Property or Mortgaged
Property covered by such policy is located).
"Qualified Substitute Asset": An Asset substituted by OMI or the Seller
for a Replaced Asset which must, on the date of such substitution, (a) have an
Unpaid Principal Balance not greater than (and not more than $10,000 less than)
the Unpaid Principal Balance of the Replaced Asset, (b) have an Asset Rate not
less than (and not more than one percentage point in excess of) the Asset Rate
of the Replaced Asset, (c) have a Net Rate equal to the Net Rate of the Replaced
Asset, (d) have a remaining term to maturity not greater than (and not more than
one year less than) that of the Replaced Asset, (e) have a Loan-to-Value Ratio
as of the first day of the month in which the substitution occurs equal to or
less than the Loan-to-Value Ratio of the Replaced Asset as of such date (in each
case, using the appraised value at origination, and after taking into account
the Monthly Payment due on such date), and (f) comply with each representation
and warranty set forth in Section 2.05 hereof and in the related Sales
Agreement. In the event that more than one Asset is
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substituted for a Replaced Asset, the amount described in clause (a) hereof
shall be determined on the basis of aggregate Unpaid Principal Balances, the
rates described in clauses (c) (i), (ii), and (iii) hereof shall be determined
on the basis of weighted average Asset Rates and Net Rates, as the case may be,
and the term described in clause (d) hereof shall be determined on the basis of
weighted average remaining terms to maturity, provided that no Qualified
Substitute Asset may have an original term to maturity beyond the latest
original term to maturity of any Asset assigned to the Trust on the Closing
Date. In the case of a Trust for which a REMIC election has been or will be
made, a Qualified Substitute Asset also shall satisfy the following criteria as
of the date of its substitution for a Replaced Asset: (A) the Obligor shall not
be 30 or more days delinquent in payment on the Qualified Substitute Asset, (B)
the Asset File for such Asset shall not contain any material deficiencies in
documentation, and shall include an executed Contract or Mortgage Note, as
applicable, and, if it is a Land Secured Contract or a Mortgage Loan, a recorded
Mortgage; (C) the Loan-to-Value Ratio of the Asset must be 125% or less either
(1) on the date of origination of the Asset, or, if any of the terms of such
Asset were modified other than in connection with a default or imminent default
on such Asset, on the date of such modification, or (2) on the date of the
substitution, based on an appraisal conducted within the 60 day period prior to
the date of the substitution; (D) no property securing such Asset may be subject
to foreclosure, bankruptcy, or insolvency proceedings; and (E) such Asset, if a
Land Secured Contract or a Mortgage Loan, must be secured by a valid first lien
on the related Real Property or Mortgaged Property. In addition to all other
requirements stated in this paragraph, any Replaced Asset that is a Mortgage
Loan may only be replaced by another Mortgage Loan.
"Rating Agency": As to any Series, any nationally recognized
statistical rating agency, or its successor, that on the Closing Date rated one
or more Classes of the Certificates of such Series at the request of OMI. If
such agency or a successor is no longer in existence, "Rating Agency" shall be
such nationally recognized statistical rating agency, or other comparable
Person, designated by OMI, notice of which designation shall be given to the
Trustee and the Servicer. References herein to any rating category of a Rating
Agency shall mean such rating category without regard to any plus or minus or
numerical designation.
"Real Property": Land and improvements thereon subject to the lien of
the Mortgage securing a Land Secured Contract.
"Realized Interest Loss": A shortfall in interest resulting from the
receipt of Liquidation Proceeds in respect of a Contract or Mortgage Loan in an
amount that is insufficient to pay accrued and unpaid interest thereon.
"Realized Loss": Either (a) with respect to any Liquidated Loan, (1)
the Unpaid Principal Balance of the Liquidated Loan, plus accrued and unpaid
interest on such Liquidated Loan, plus amounts reimbursable to the Servicer for
previously unreimbursed Servicing Advances, minus (2) Net Liquidation Proceeds
collected in respect of the Liquidated Loan or (b) with respect to any Asset
that has been the subject of a Principal Cramdown, an Obligor Bankruptcy Loss
with respect to such Asset.
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"Record Date": With respect to each Distribution Date, the last
Business Day of the month immediately preceding the month in which such
Distribution Date occurs.
"Recordation Report": A report substantially in the form of Exhibit 3
hereto provided by the Trustee (or the Custodian) pursuant to Section 2.03(c)(5)
hereof identifying those Mortgage Loans for which a Mortgage or an Assignment
remains unrecorded.
"Regular Certificate": A Certificate other than a Residual Certificate
and that is a Regular Interest in a REMIC or a combination of Regular Interests
in a REMIC.
"Regular Interests": Interests in a REMIC that are designated as
"regular interests" under the REMIC Provisions.
"Regulations": The regulations promulgated under the Code by the
Treasury.
"Related Proceeds': As defined in Section 3.04(c) hereof.
"REMIC": A "real estate mortgage investment conduit," within the
meaning of the REMIC Provisions. As to a particular Trust, those assets of the
Trust as to which an election is to be made to be treated as a "real estate
mortgage investment conduit," within the meaning of section 860D of the Code. A
REMIC generally is an elective entity for federal income tax purposes that
consists of a fixed pool of qualifying assets in which investors hold multiple
classes of interests. In order to be treated as a REMIC, such pool will be
required to meet ongoing qualification requirements provided by the Code,
Regulations, and binding pronouncements of the Internal Revenue Service, as in
effect from time to time.
"REMIC Loan-to-Value Ratio": The quotient, expressed as a percentage,
obtained by dividing (a) the original unpaid principal balance of an Asset, plus
the full amount of any other indebtedness secured by the related Manufactured
Home or Mortgaged Property which is senior to, or PARI PASSU with, such Asset by
(b) the sale price of the Manufactured Home or Mortgaged Property that secures
such Asset. Alternatively, the REMIC Loan-to-Value Ratio may be determined by
dividing (a) the unpaid principal balance of an Asset as of the Startup Day plus
the full amount of any other indebtedness secured by the related Manufactured
Home or Mortgaged Property which is senior to, or PARI PASSU with, such Asset by
(b) the fair market value of the Manufactured Home or Mortgaged Property that
secures such Asset on the Startup Day.
"REMIC Provisions": Provisions of the Code relating to real estate
mortgage investment conduits, which appear at sections 860A through 860G of the
Code, related Code provisions, and Regulations (whether in proposed, temporary
or final form), announcements and rulings thereunder, as the foregoing may be in
effect from time to time.
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"Remittance Amount": With respect to any Remittance Date and related
Distribution Date, the sum of the following amounts:
(a) the Monthly Payment that was due on each Outstanding Asset
on the Due Date occurring in the related Collection Period and that was
received by the Servicer from the related Obligor;
(b) all amounts received during the related Collection Period
in respect of any Asset that was Outstanding at the beginning of the
related Collection Period representing late payments of principal and
interest due on such Asset prior to the Due Date occurring in the
related Collection Period, to the extent such amounts exceed
outstanding unreimbursed P&I Advances made by the Servicer with respect
to such Asset;
(c) each Principal Prepayment (whether full or partial) of any
Asset that was Outstanding at the beginning of the related Prepayment
Period received by the Servicer during the related Prepayment Period;
(d) any amounts received by the Servicer during the related
Prepayment Period as Net Liquidation Proceeds with respect to any Asset
that was Outstanding at the beginning of the related Prepayment Period
(net of outstanding unreimbursed P&I Advances made by the Servicer with
respect to such Asset); and
(e) all amounts deposited into the Certificate Account during
the related Prepayment Period as a result of any purchase or repurchase
of any Asset pursuant to Section 2.06 hereof (net of outstanding
unreimbursed P&I Advances made by the Servicer with respect to such
Asset).
"Remittance Date": The Business Day preceding each Distribution Date,
which is the date by which funds must be remitted by the Servicer from the
Certificate Account to the Distribution Account or, if the Certificate Account
is maintained by the Trustee, the date on which the Servicer is to notify the
Trustee of the related Remittance Amount, in either case pursuant to Section
3.07(b) hereof.
"Remittance Report": As defined in Section 4.01 hereof.
"Rents From Real Property": With respect to any REO Property, gross
income of the character described in Code section 856(d) and Treasury
regulations thereunder.
"REO Property": A Mortgaged Property acquired by the Servicer on behalf
of the Certificateholders through foreclosure or deed-in-lieu of foreclosure, as
further described in Section 3.09 hereof.
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"REO Property Disposition": The receipt by the Servicer of Insurance
Proceeds and other payments and recoveries (including Liquidation Proceeds)
which the Servicer recovers from the sale or other disposition of an REO
Property.
"Replaced Asset": An Asset replaced or to be replaced by a Qualified
Substitute Asset.
"Repo Property": A Manufactured Home (and any related Real Property)
acquired by the Servicer on behalf of the Trust pursuant to a repossession,
foreclosure, or similar proceeding in connection with a Defaulted Contract.
"Repurchase Price": With respect to any Asset to be purchased or
repurchased pursuant to Section 2.05 hereof, an amount equal to the Unpaid
Principal Balance of such Asset as of the close of business on the date of such
purchase or repurchase, together with all accrued and unpaid interest thereon to
the end of the Collection Period in which such purchase or repurchase occurs.
"Repurchaser": Any Person that repurchases or purchases a Contract from
the Trust pursuant to Section 2.06 hereof.
"Request for Release": A release signed by an Officer of the Servicer
in the form attached hereto as Exhibit 4.
"Reserve Fund": Any fund designated as a "Reserve Fund" in a Pooling
and Servicing Agreement.
"Residual Certificate": Any one of the Classes of Certificates of a
Series designated as such in the related Pooling and Servicing Agreement.
"Residual Interest": An interest in a REMIC that is designated as a
"residual interest" under the REMIC Provisions.
"Residual Majority": At any time, the Holders of a majority (by
Percentage Interests) of the Residual Certificates.
"Residual Transferee Agreement": A certification and agreement required
to be executed and delivered by the prospective transferee of a Residual
Certificate pursuant to Section 5.05(c) hereof, which must be substantially in
the form of Exhibit 8 hereto.
"RESPA": The Real Estate Settlement Procedures Act of 1974, as amended.
"Rule 144A": Rule 144A promulgated by the Securities and Exchange
Commission, as the same may be amended from time to time.
"Rule 144A Agreement": An agreement substantially in the form of
Exhibit 5 hereto.
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"Rule 144A Certificates": Any Class of Certificates of a Series
designated as such in the related Pooling and Servicing Agreement.
"Sales Agreement": A Sales Agreement pursuant to which OAC (or another
Seller) sells Contracts and/or Mortgage Loans to OMI for inclusion in a Trust.
"Scheduled Principal Balance": As of any date of determination with
respect to any Contract, Repo Property, Mortgage Loan or REO Property, (a) the
Cut-off Date Principal Balance of such Contract or Mortgage Loan (or of the
related Contract or Mortgage Loan, in the case of a Repo Property or REO
Property) minus (b) the sum of (1) the principal components of any Monthly
Payments due on such Contract or Mortgage Loan (or on the related Contract or
Mortgage Loan, in the case of a Repo Property or REO Property) after the related
Cut-off Date and on or before such date of determination (regardless of whether
such Monthly Payments were received from the related Obligor) plus (2) all
principal prepayments received by the Servicer on such Contract or Mortgage Loan
(or on the related Contract or Mortgage Loan, in the case of a Repo Property or
REO Property) (including the principal portion of Net Liquidation Proceeds and
the principal portion of all amounts paid by the Seller or another party to
repurchase such Contract or Mortgage Loan) on or after the Cut-off Date and on
or prior to the end of the Prepayment Period preceding the date of
determination, plus (3) all Realized Losses incurred on such Contract or
Mortgage Loan (or the related Contract or Mortgage Loan, in the case of a Repo
Property or REO Property) on or after the Cut-off Date and on or prior to such
date of determination.
"Securities Act": The Securities Act of 1933, as amended.
"Seller": As to any Contract or Mortgage Loan included in the Trust
Estate for a Series, the entity that sold such Contract or Mortgage Loan to OMI
under a Sales Agreement, which will be OAC unless otherwise specified in the
related Pooling and Servicing Agreement. For purposes of the definitions of
"Contract Documents" and "Mortgage Loan Documents" herein, documents (including,
without limitation, certificates of title, UCC filing instruments, assignments
and endorsements) indicating assignment or endorsement to, or the existence of a
security interest in, a name that is a registered trade name of the Seller in
the relevant jurisdiction shall satisfy any requirement of these Standard Terms
that such documents reflect the name of the "Seller."
"Series": A separate Series of Certificates issued pursuant to a
Pooling and Servicing Agreement, which Series may, as provided therein, be
divided into two or more Classes.
"Servicer": OAC, as servicer of any of the Assets under any Pooling and
Servicing Agreement, and its permitted successors and assigns thereunder.
"Servicer Contract File": As to each Contract, a file maintained by the
Servicer that contains the related loan application and credit report, any
correspondence relating to the Contract, and all other instruments, documents,
papers, ledger cards, accounting records, and computer print-
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outs maintained by the Servicer now or hereafter in connection with the
servicing of the Contracts, which may be maintained on microfilm or on
computer-readable optical disk or on any other medium selected by the Servicer.
"Servicer Custodial Certification": A certification executed by an
Officer of the Servicer substantially in the form of Exhibit 1 hereto.
"Servicer File": As to any Asset, the related Servicer Contract File or
Servicer Mortgage Loan File, as applicable.
"Servicer Mortgage Loan File": As to each Mortgage Loan, a file
maintained by the Servicer that contains (1) an original Standard Hazard
Insurance Policy (and flood insurance policy, if required pursuant to Section
3.16 hereof) relating to the underlying Mortgaged Property or a certificate of
insurance issued by the insurer or its agent indicating that a Standard Hazard
Insurance Policy (and a flood insurance policy, if required pursuant to Section
3.16 hereof) is in effect with respect to such Mortgaged Property, (2) originals
or copies of all documents submitted to a Mortgage Insurer for credit and
property underwriting approval, (3) the originals of all RESPA and Regulation Z
disclosure statements executed by the related Mortgagors, (4) the appraisal
report made in connection with the origination of the Mortgage Loan, (5) the
settlement statement for the purchase and/or refinancing of the underlying
Mortgaged Property by the related Mortgagor under the related Mortgage Note and
Mortgage, (6) the originals of any tax service contracts, (7) documentation
relating to any approvals by the Servicer of any modifications of the original
related Mortgage Loan Documents and any releases of collateral supporting the
related Mortgage Loan, together with copies of the documentation effecting any
such modifications or releases, (8) collection notices or form notices sent to
the related Mortgagor, (9) foreclosure correspondence and legal notifications,
if applicable, (10) water and irrigation company stock certificates, if
applicable, and (11) all other documents relating to such Mortgage Loan which
would customarily be maintained in a mortgage loan file by the Servicer in order
to service the mortgage loan properly, as well as any other documents relating
to such Mortgage Loan (other than Mortgage Loan Documents) that come into the
Servicer's possession.
"Servicing Account": As defined in Section 3.05 hereof.
"Servicing Advances": Advances required to be made by the Servicer as
described in Section 3.04(a) hereof, including, but not limited to, advances for
the payment of personal property taxes, real estate taxes and premiums for
Standard Hazard Insurance Policies.
"Servicing Fee": On each Distribution Date, the product obtained by
multiplying (a) one-twelfth of the Servicing Fee Rate by (b) the aggregate
Scheduled Principal Balance of the Assets immediately prior to the preceding
Collection Period (without giving effect to any Principal Prepayments, Net
Liquidation Proceeds and Repurchase Prices received (or Realized Losses
incurred) on the day preceding the beginning of such Collection Period).
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"Servicing Fee Rate": A PER ANNUM rate, to be specified in each Pooling
and Servicing Agreement.
"Shortfall": Due Date Interest Shortfall and Soldiers' and Sailors'
Shortfall.
"Soldiers' and Sailors' Shortfall": Interest losses on a Contract or
Mortgage Loan resulting from application of the Soldiers' and Sailors' Civil
Relief Act of 1940.
"Special Hazard Insurance Policy": An insurance policy covering a
Contract or Mortgage Loan against loss by reason of fire, lightning, explosion,
smoke, windstorm, hail, riot, strike and civil commotion.
"Special Hazard Loss": A loss incurred on a Contract or Mortgage Loan
attributable to physical damage to the related Manufactured Home or Mortgaged
Property of a type which is not covered by standard hazard insurance policies,
excluding losses caused by war, nuclear reaction, nuclear or atomic weapons,
insurrection or normal wear and tear.
"Special Tax Consent": The written consent of the Holder of a Residual
Certificate to any tax (or risk thereof) arising out of a proposed transaction
or activity that may be imposed upon such Holder or that may affect adversely
the value of such Holder's Residual Certificate.
"Special Tax Opinion": An Opinion of Counsel that a proposed
transaction or activity will not (a) affect adversely the status of the REMIC as
a REMIC or the related Regular Certificates as the regular interests therein,
(b) affect the timing or amount of distributions of interest or principal on
such Regular Certificates, or (c) result in the encumbrance of the Contracts by
a tax lien.
"Standard Hazard Insurance Policy": With respect to each Contract, the
policy of fire and extended coverage insurance (and any federal flood insurance,
if applicable) required to be maintained for the related Manufactured Home as
provided herein, which may be a blanket mortgage impairment policy maintained by
the Servicer in accordance with the terms and conditions of the Pooling and
Servicing Agreement.
"Standard Terms": These Standard Terms to Pooling and Servicing
Agreement and all exhibits, schedules and appendices hereto, as amended and
supplemented from time to time.
"Startup Day": The Startup Day (within the meaning of Code section
860G(a)(9)) is the Closing Date.
"Tax Matters Person": The Person or Persons designated from time to
time hereunder to act as tax matters person (within the meaning of the REMIC
Provisions) of the REMIC.
"Terminating Purchase": The purchase of all Contracts and Mortgage
Loans and each Repo Property and REO Property owned by a Trust pursuant to
Section 9.01 hereof.
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"Termination Account": An escrow account maintained by the Trustee into
which any Trust funds not distributed on the Distribution Date on which the
earlier of (a) a Terminating Purchase or (b) the final payment or other
liquidation of the last Asset remaining in the Trust or the disposition of the
last Repo Property or REO Property remaining in the Trust is made are deposited.
The Termination Account shall be an Eligible Account.
"Termination Date": Any Distribution Date fixed for termination of the
Trust pursuant to the provisions of Sections 9.01 and 9.02 hereof.
"Termination Price": With respect to any Terminating Purchase, the
greater of (1) the sum of (a) any Liquidation Expenses incurred by the Servicer
in respect of any Asset that has not yet been liquidated, (b) all amounts
required to be reimbursed or paid to the Servicer in respect of previously
unreimbursed Advances, plus (c) the sum of (i) 100% of the aggregate of the
Unpaid Principal Balance of each Asset remaining in the Trust on the day of such
purchase, plus accrued interest thereon at the related Asset Rate through the
end of the Interest Accrual Period relating to the Termination Date, plus (ii)
the lesser of (A) the aggregate of the Unpaid Principal Balances of each Asset
relating to any Repo Property or REO Property remaining in the Trust, plus
accrued interest thereon at the related Asset Rate through the end of the
Interest Accrual Period related to the Termination Date and (B) the current
appraised value of any such Repo Property or REO Property (net of Liquidation
Expenses to be incurred in connection with the disposition of such Repo Property
or REO Property, estimated in good faith by the Servicer), such appraisal to be
conducted by an appraiser mutually agreed upon by the Servicer and the Trustee,
plus all previously unreimbursed P&I Advances made in respect of such Repo
Property or REO Property and (2) the aggregate fair market value of all of the
assets of the Trust (as reasonably determined in good faith by the Servicer as
of the close of business on the third Business Day preceding the date upon which
notice of any such purchase is furnished to Certificateholders pursuant to
Section 9.01(c) hereof), plus all previously unreimbursed P&I Advances made with
respect to the Assets. The fair market value of the assets of the Trust shall be
deemed to include accrued interest through the end of the Interest Accrual
Period related to the Termination Date at the applicable Asset Rate on the
unpaid principal balance of each Asset (including any Asset that became a Repo
Property or REO Property, which Repo Property or REO Property has not yet been
disposed of by the Servicer). The basis for any such valuation shall be
furnished by the Servicer to the Certificateholders upon request.
"Terminator": The Person making a Terminating Purchase or causing such
Terminating Purchase to be made.
"TIN": Taxpayer identification number.
"Title Insurance Policy": For any Mortgage Loan, an American Land Title
Association mortgagee's mortgage loan title policy form 1970, or other form of
mortgagee's title insurance acceptable to FNMA or FHLMC for the jurisdiction in
which the subject property is located,
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including all riders and endorsements thereto, insuring that the related
Mortgage creates a valid first lien on the underlying Mortgaged Property subject
only to Permitted Encumbrances.
"Transferee Agreement": An agreement substantially in the form of
Exhibit 6 hereto.
"Treasury": The United States Department of the Treasury.
"Trust": The trust created pursuant to the terms of a Pooling and
Servicing Agreement.
"Trust Estate": The segregated pool of assets sold and assigned to a
Trustee by OMI pursuant to the conveyance clause of any Pooling and Servicing
Agreement.
"Trustee": The bank or trust company identified as the trustee under
any Pooling and Servicing Agreement.
"Trustee Mortgage Loan File": As to each Mortgage Loan, a file
containing all of the related Mortgage Loan Documents.
"UCC": The Uniform Commercial Code as in effect in any relevant
jurisdiction.
"Unpaid Principal Balance": With respect to any Asset, the outstanding
principal balance payable by the related Obligor pursuant to the terms of such
Asset.
"U.S. Person": A Person other than a Non-U.S. Person.
"USAP": As defined in Section 3.13 hereof.
"VA": The United States Department of Veterans Affairs.
"VA Asset": An Asset guaranteed in whole or in part by the VA.
"VA Guaranty": As to any VA Asset, VA's full or partial guaranty of
payment of amounts due thereunder.
"Voting Rights": With respect to any Certificate, the portion of the
voting rights of all of the Certificates of the related Series which is
allocated to such Certificate. Unless otherwise provided in the related Pooling
and Servicing Agreement, (a) if any Class of Certificates does not have a
Certificate Principal Balance or has an initial Certificate Principal Balance
that is less than or equal to 1% of the aggregate Certificate Principal Balance
of all the Certificates of its Series, then 1% of the Voting Rights for such
Series shall be allocated to each such Class, and the balance of the Voting
Rights for such Series shall be allocated among the remaining Classes of
Certificates of such Series in proportion to their respective Certificate
Principal Balances following the most recent Distribution Date, and (b) if no
Class of Certificates of such Series has an initial Certificate
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Principal Balance less than 1% of the aggregate Certificate Principal Balance of
all Certificates of such Series, then all of the Voting Rights for such Series
shall be allocated among all the Classes of Certificates of such Series in
proportion to their respective Certificate Principal Balances following the most
recent Distribution Date. Voting Rights allocated to each Class of Certificates
shall be allocated among the Certificates of such Class in proportion to the
respective Percentage Interests of the Holders thereof.
"Withholding Agent": The Trustee or its designated Paying Agent or
other Person who is liable to withhold federal income tax from a distribution on
a Residual Certificate under sections 1441 or 1442 of the Code and the
Regulations promulgated thereunder.
"Writedown Amount": With respect to any Distribution Date for a Series,
the amount, if any, by which (1) the aggregate Certificate Principal Balance of
all Certificates of such Series, after all distributions have been made on such
Certificates on such Distribution Date, exceeds (2) the Pool Scheduled Principal
Balance of the related Assets for the next Distribution Date.
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ARTICLE II
THE ASSETS
SECTION 2.01. ASSIGNMENT OF ASSETS.
Pursuant to a Pooling and Servicing Agreement, OMI has sold to the
Trustee without recourse all the right, title and interest of OMI in and to the
Assets identified in such Pooling and Servicing Agreement, any and all rights,
privileges and benefits accruing to OMI under the Sales Agreement(s) with
respect to such Assets (except any rights of OMI to fees payable by the Seller
under such Sales Agreement and provided that OMI shall retain its rights to
indemnification from the Seller under such Sales Agreement, but shall also
convey rights to such indemnification to the Trustee as its assignee), including
the rights and remedies with respect to the enforcement of any and all
representations, warranties and covenants under such Sales Agreements and assets
included or to be included in the related Trust for the benefit of the related
Certificateholders as set forth in the conveyance clause of the related Pooling
and Servicing Agreement. Such assignment includes all of OMI's rights to
payments due with respect to the Assets after the Cut-off Date.
SECTION 2.02. THE CONTRACTS.
(a) Servicer's Custody of Contract Files and Servicer Contract Files.
The parties to the Pooling and Servicing Agreement, by their execution thereof,
acknowledge the Servicer's appointment to serve as custodian of the Contract
Files and the Servicer Contract Files as described herein for the benefit of the
Certificateholders and the Trustee. The Servicer, by its execution of the
Pooling and Servicing Agreement, agrees to, and shall, retain possession of the
Contract File and the Servicer Contract File pertaining to each of the Contracts
on behalf of the Certificateholders and the Trustee. Without limiting the
foregoing, the Trustee acknowledges that, with respect to each Contract secured
by a Manufactured Home located in Virginia as to which the Trustee is identified
as first lienor on the related certificate of title, for purposes of Section
46.2-641 of the Virginia Code (as currently in effect), the Servicer is holding
such Contract and the related certificate of title as bailee and agent for the
Trustee as such first lienor.
The Servicer shall hold each Contract and any other documents
constituting each Contract File and each Servicer Contract File that are in the
possession of the Servicer or that at any time come into the possession of the
Servicer in trust as custodian for the Holders of the Certificates, and the
Servicer hereby acknowledges and declares that it holds and will hold or has
agreed to hold such documents as custodian and as the bailee for, and for the
exclusive use and benefit of, the Holders of the Certificates in accordance with
the terms of the Pooling and Servicing Agreement, and shall make disposition
thereof only in accordance with the Pooling and Servicing Agreement. The
Servicer shall segregate and maintain continuous custody of all documents
constituting the Contract Files in its possession in secure and fireproof-rated
locked files or vaults in accordance with customary standards for such custody.
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From time to time, OMI or the Seller shall deliver to the Servicer for
inclusion in the appropriate Contract File, the original Contract Documents for
any Contract to the extent that copies of such original documents were initially
included in such Contract File or in the event that only a copy of an
application for an original Contract Document was initially included among the
related Contract Documents. In addition, the Servicer shall add to the
appropriate Contract File any additional original documents received by the
Servicer that evidence a modification of the related Contract approved by OMI.
The Servicer shall maintain custody of the Contract Files and Servicer
Contract Files for each Series in its possession at its offices where the
Contract Files and Servicer Contract Files are presently maintained or at such
other offices of the Servicer in the State of North Carolina as the Servicer may
identify to the Trustee by written notice provided at least ten days prior to
the Servicer's change of the location of its custody of the Contract Files and
Servicer Contract Files. The Servicer may not move the location of its custody
of the Contract Files and Servicer Contract Files for any Series outside of the
State of North Carolina without first giving 30 days' prior written notice of
such relocation to each applicable Rating Agency and the Trustee and obtaining
each such Rating Agency's written confirmation that such relocation will not
result in any downgrading of any Certificates of such Series. Notwithstanding
the foregoing, the Servicer may temporarily move individual Contract Files or
any portions thereof without notice to the Trustee or any Rating Agency as may
be necessary for it to conduct collection and other servicing activities in
accordance with its customary practices and procedures. In acting as custodian
of the Contract Files, the Servicer agrees not to assert any ownership interests
in the Contracts or the Contract Files, and to indicate to any third parties,
promptly upon their inquiry to the Servicer, that the Contracts and the Contract
Files have been sold and assigned to the appropriate Trust.
(b) Review of Contract Files. Prior to the Closing Date, the Servicer's
operations department will complete a review of all of the Contract Files
(including the certificates of title to, or other evidence of a perfected
security interest in, the related Manufactured Homes), confirming the accuracy
of the Contract Schedule delivered to the Trustee. On or before the Closing
Date, the Servicer shall deliver to the Trustee a Servicer Custodial
Certification signed by one of its Officers confirming that it is in possession
of the Contract File for each Contract identified on Schedule I to the Pooling
and Servicing Agreement, subject to any exceptions noted in a schedule to such
certificate. Such certification shall be substantially in the form of Exhibit 1
hereto.
In giving its Servicer's Custodial Certification with respect to a
Series, the Servicer shall be under no duty or obligation (A) to inspect, review
or examine any such documents, instruments, securities or other papers to
determine that they or the signatures thereon are genuine, enforceable, or
appropriate for the represented purpose or that they have actually been recorded
or that they are other than what they purport to be on their face or (B) to
determine whether any Contract File should include any assumption agreement,
modification agreement or waiver agreement.
If the Servicer discovers any discrepancy between any Contract and the
Contract Schedule, or that any required Contract Document is defective or
missing from the related Contract File, in
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either case in a manner that is materially adverse to the interests of the
Certificateholders, it shall immediately provide written notice to the Seller
(unless the Seller is the Servicer) and the Trustee of such discrepancy,
incompleteness or defect. If the Seller does not cure such discrepancy or such
incomplete or defective Contract File within 90 days after its receipt of
written notice of such discrepancy, incompleteness or defect, the Servicer shall
take all steps within its power to enforce the Trustee's right to require the
Seller to repurchase the affected Contract (or in the alternative to substitute
for such Contract, if the substitution will take place within two years after
the Closing Date) pursuant to the applicable Sales Agreement or, in the
alternative (if the discrepancy consists of an overstatement in the Contract
Schedule of the Cut-off Date Principal Balance of a Contract), to deposit cash
into the related Certificate Account in the amount of such overstatement of the
Cut-off Date Principal Balance of a Contract in the Contract Schedule (as
described in the applicable Sales Agreement).
(c) Security Interests in the Contracts, Manufactured Homes and Real
Property.
(1) PERFECTION OF TRUSTEE'S SECURITY INTEREST IN CONTRACTS. On
or prior to the Closing Date, the Servicer shall cause to be filed in
all appropriate UCC filing offices, UCC-1 financing statements
describing the Trust Estate (including the Contracts and payments due
thereon after the Cut-off Date) and proceeds thereof as "collateral"
and (1) naming the Seller as "Debtor," OMI as "Secured Party," and the
Trustee as "Assignee," and (2) naming OMI as "Debtor" and the Trustee
as "Secured Party." Each financing statement shall bear a statement on
the face thereof indicating that the parties intend the financing
statement to evidence a true sale of chattel paper, but that if the
transaction is recharacterized as a loan from the Trustee to the Seller
or as involving a loan from the Trustee to OMI or from OMI to the
Seller, the financing statement is to perfect the Trustee's security
interest in the chattel paper. The Servicer shall cause to be filed all
necessary continuation statements for each of the aforementioned UCC-1
financing statements. Within one week after the Closing Date, the
Servicer will stamp the face of each Contract with the following legend
(with the name of the Trustee filled into each blank): "This Contract
has been assigned to ____________________, as Trustee pursuant to a
Pooling and Servicing Agreement among Oakwood Acceptance Corporation,
Oakwood Mortgage Investors, Inc. and ________________."
(2) PERFECTION OF TRUSTEE'S SECURITY INTEREST IN MANUFACTURED
HOMES. So long as the Contract Documents for each Contract contain
evidence of perfection of either the Seller's, OMI's or the Trustee's
security interest in the related Manufactured Home, neither the Seller
nor OMI shall be required to cause notations to be made on any
certificate or other document of title relating to such Manufactured
Home or to execute any transfer instrument (including, without
limitation, any UCC-3 assignments) relating to such Manufactured Home,
except under the limited circumstances described in Section 2.06(b)
below. Subject to the limitation described in the preceding sentence,
the Servicer shall take all steps necessary, at its own expense, to
maintain perfection of the Trustee's lien on each
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Manufactured Home to the extent the Servicer receives notice of
relocation, re-registration or sale thereof.
(3) REAL ESTATE ASSIGNMENTS. The Contract Documents for each
Land Secured Contract are required to contain evidence that the Seller
has record title to the Real Property underlying such Land Secured
Contract. Neither the Seller nor OMI will be required to prepare,
deliver or record any assignments to OMI or the Trustee in recordable
form for the Mortgages related to such Land Secured Contracts. However,
on or before the Closing Date, the Seller shall deliver to the Trustee
an executed power of attorney substantially in the form of Exhibit 9
hereto, authorizing the Trustee to execute and record assignments of
Mortgages securing Land Secured Contracts from the Seller to the
Trustee in the event that recordation of such assignments becomes
necessary for foreclosure on the related Real Property by or on behalf
of the Trustee. Pursuant to such power of attorney, at the Servicer's
instruction, the Trustee shall execute any such assignments as are
provided to the Trustee by the Servicer. After execution of any such
assignments, the Trustee shall redeliver such assignments to the
Servicer at the Servicer's expense. Any expenses incurred by the
Servicer in connection with the foregoing or in connection with its
recordation of assignments in preparation for a foreclosure on a Land
Secured Contract shall constitute Liquidation Expenses.
SECTION 2.03. THE MORTGAGE LOANS.
(a) Custody of Trustee Mortgage Loan Files. In connection with the
transfer and assignment of the Mortgage Loans from OMI to the Trustee, OMI shall
deliver, or cause to be delivered, to the Trustee or its Custodian on or before
the Closing Date, a Trustee Mortgage Loan File containing each of the documents
listed in the definition thereof. If any Mortgage or an Assignment of a Mortgage
to the Trustee or any prior Assignment is in the process of being recorded on
the Closing Date, OMI shall cause each such original recorded document or
certified copy thereof, to be delivered to the Trustee or its Custodian promptly
following its recordation. OMI shall also cause to be delivered to the Trustee
any other original Mortgage Loan Document to be included in the Trustee Mortgage
Loan File if a copy thereof initially was delivered.
In lieu of recording an Assignment of any Mortgage for any Mortgage
Loan, OMI may deliver or cause to be delivered to the Trustee or its Custodian
the Assignment of the Mortgage from the Seller to the Trustee in a form suitable
for recordation, together with an Opinion of Counsel to the effect that
recording is not required to protect the Trustee's right, title and interest in
and to the related Mortgage Loan or, in case a court should recharacterize the
sale of the Mortgage Loans as a financing, to perfect a first priority security
interest in favor of the Trustee in the related Mortgage Loan. In the event that
the Servicer receives notice that recording is required to protect the right,
title and interest of the Trustee in and to any such Mortgage Loan for which
recordation of an Assignment has not previously been required, the Servicer
shall promptly notify the Trustee and the Trustee shall within five Business
Days of its receipt of such notice deliver, or cause to be delivered, each
previously unrecorded Assignment to the Servicer for recordation.
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By its execution of the Pooling and Servicing Agreement for a Series,
the Trustee acknowledges and declares that it or the Custodian holds and will
hold or has agreed to hold all documents delivered to it from time to time with
respect to a Mortgage Loan underlying such Series and all other assets delivered
to it or its Custodian and that are included in the definition of "Trust Estate"
in the related Pooling and Servicing Agreement in trust for the exclusive use
and benefit of all present and future Certificateholders.
(b) Custody of Servicer Mortgage Loan Files. The Servicer has in its
possession a Servicer Mortgage Loan File for each Mortgage Loan containing each
of the documents listed in the definition thereof. All such documents shall be
held by the Servicer in trust for the benefit of the Trustee on behalf of the
Certificateholders.
(c) Review of Trustee Mortgage Loan Files.
(1) INITIAL CERTIFICATION. The Trustee shall, for the benefit
of the Certificateholders for any Series, review each related Trustee
Mortgage Loan File prior to the related Closing Date to ascertain that
all documents required to be included in the Trustee Mortgage Loan File
are included therein, and shall deliver to OMI and the Servicer on such
Closing Date an Initial Certification with respect to each underlying
Mortgage Loan (except any Mortgage Loan that has been liquidated or
purchased from the related Trust prior to such Closing Date) to the
effect that, except as specifically noted on a schedule of exceptions
thereto, (A) all documents required to be contained in the Trustee
Mortgage Loan File are in its possession, (B) such documents have been
reviewed by it and appear regular on their face and relate to such
Mortgage Loan, and (C) based on its examination and only as to the
foregoing documents, the information set forth on the related Mortgage
Loan Schedule accurately reflects information set forth in the Trustee
Mortgage Loan File.
It is understood that before making the Initial Certification
for any Series, the Trustee shall examine the related Mortgage Loan
Documents to confirm that:
(A) each Mortgage Note and Mortgage bears an
original signature or signatures purporting to be that of the
Person or Persons named as the maker and mortgagor/trustor or,
if photocopies are permitted, that such copies bear a
reproduction of such signature or signatures;
(B) except for the endorsement to the
Trustee, neither the Mortgage nor any Assignment, on the face
or the reverse side(s) thereof, contain evidence of any
unsatisfied claims, liens, security interests, encumbrances or
restrictions on transfer;
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(C) the principal amount of the indebtedness
secured by the related Mortgage is identical to the original
principal amount of the related Mortgage Note;
(D) the Assignment of the related Mortgage
from the Seller to the Trustee is in the form required
pursuant to clause (c) of the definition of Trustee Mortgage
Loan File, and bears an original signature of the Seller and
any other necessary party (or signatures purporting to be that
of the Seller and any such other party) or, if photocopies are
permitted, that such copies bear a reproduction of such
signature or signatures;
(E) if intervening Assignments are included
in the Trustee Mortgage Loan File, each such intervening
Assignment bears an original signature of the related
mortgagee and/or the assignee (and any other necessary party)
(or signatures purporting to be that of the Seller and any
such other party) or, if photocopies are permitted, that such
copies bear a reproduction of such signature or signatures;
(F) if either a Title Insurance Policy, a
preliminary title report or a written commitment to issue a
Title Insurance Policy is delivered, the address of the real
property set forth in such policy, report or written
commitment is identical to the real property address contained
in the related Mortgage; and
(G) if any of a Title Insurance Policy,
certificate of title insurance or a written commitment to
issue a Title Insurance Policy is delivered, such policy,
certificate or written commitment is for an amount not less
than the original principal amount of the related Mortgage
Note and such Title Insurance Policy insures that the related
Mortgage creates a first lien, senior in priority to all other
deeds of trust, mortgages, deeds to secure debt, financing
statements and security agreements and to any mechanics'
liens, judgment liens or writs of attachment (or if the Title
Insurance Policy or certificate of title insurance has not
been issued, the written commitment for such insurance
obligates the insurer to issue such policy for an amount not
less than the original principal amount of the related
Mortgage Note).
(2) FINAL CERTIFICATION. Prior to the first anniversary date
of the Closing Date for a Series, the Trustee shall deliver to OMI and
the Servicer a Final Certification evidencing the completeness of the
Trustee Mortgage Loan File for each Mortgage Loan, with any applicable
exceptions noted on such Final Certification.
(3) CERTIFICATIONS GENERALLY. In giving each of the Initial
Certification and the Final Certification with respect to a Series, the
Trustee shall be under no duty or obligation (A) to inspect, review or
examine any such documents, instruments, securities or other papers to
determine that they or the signatures thereon are genuine, enforceable,
or appropriate for the
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represented purpose or that they have actually been recorded or that
they are other than what they purport to be on their face or (B) to
determine whether any Trustee Mortgage Loan File should include any
assumption agreement, modification agreement, written assurance or
substitution agreement.
(4) RECORDATION REPORT. No later than the fifth Business Day
of each third month, commencing the fourth month following the month in
which the Closing Date for a Series occurs, the Trustee shall deliver
to the Servicer a Recordation Report for such Series, dated as of the
first day of such month, identifying those Mortgage Loans underlying
such Series for which it has not yet received (A) an original recorded
Mortgage or a copy thereof certified to be true and correct by the
public recording office in possession of such Mortgage or (B) an
original recorded Assignment of the Mortgage to the Trustee and any
required intervening Assignments or a copy thereof certified to be a
true and correct copy by the public recording office in possession of
such Assignment; PROVIDED, HOWEVER, that the Trustee shall not be
required to provide a Recordation Report with respect to the
recordation of an Assignment for any Mortgage Loan for which there has
been delivered an Assignment in recordable form pursuant to Section
2.03(a) hereof unless the Trustee has delivered such Assignment to the
Servicer for recordation, in which case, the Trustee shall deliver a
Recordation Report as to the status of such Assignment in accordance
with this paragraph commencing in the fourth month following the
delivery of such Assignment to the Servicer for recordation.
(5) CUSTODIANS. In lieu of taking possession of the Trustee
Mortgage Loan Files and reviewing such files itself, the Trustee may,
in accordance with Section 8.11 hereof, appoint one or more Custodians
to hold the Trustee Mortgage Loan Files for a Series on its behalf and
to review them as provided in this Section 2.03. OMI shall, upon notice
of the appointment of a Custodian, deliver or cause to be delivered all
documents to the Custodian that would otherwise be deliverable to the
Trustee. In such event, the Trustee shall obtain from each such
Custodian, within the specified times, the Initial and Final
Certifications and the Recordation Reports with respect to those
Mortgage Loans held and reviewed by such Custodian and may deliver such
Certifications and Reports to OMI and the Servicer in satisfaction of
the Trustee's obligation to prepare such Certification and Reports. The
Trustee shall notify the Custodian of any notices delivered to the
Trustee with respect to those Trustee Mortgage Loan Files.
(d) Recordation with Respect to Mortgage Loans. Notwithstanding any
provisions in these Standard Terms to the contrary, OMI shall cause, with
respect to each Mortgage Loan, Assignments of Mortgages to the Trustee to be
prepared and recorded with respect to all Mortgages not later than one-hundred
twenty (120) calendar days following the Closing Date, which recordation shall
be an expense of the Company. For each Mortgage for which an Assignment of
Mortgage is not duly and timely recorded as provided above, the Company shall
repurchase such Mortgage pursuant to the provisions of 2.06 hereof. As evidence
of recordation, the Trustee shall be entitled to rely upon, among other things
(i) a certification from a title insurance company, (ii) an
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Opinion of Counsel, (iii) a recorded Assignment or (iv) a clerk's receipt as to
the recordation of any or all of the Assignments.
SECTION 2.04. REPRESENTATIONS AND WARRANTIES OF THE TRUSTEE.
As of the Closing Date, the Trustee represents and warrants that (1) it
acquired the Assets on behalf of the Trust from OMI in good faith, for value,
and without notice or knowledge of any adverse claim, lien, charge, encumbrance
or security interest (including, without limitation, federal tax liens or liens
arising under ERISA), (2) except as permitted in the related Pooling and
Servicing Agreement and these Standard Terms, it has not and will not, in any
capacity, assert any claim or interest in the Assets, and (3) it has not
encumbered or transferred its right, title or interest in the Assets. The
representation and warranty made in clause (1) above with respect to the absence
of any adverse claim, lien, charge, encumbrance or security interest is made by
the Trustee without any independent investigation and without recourse or
warranty, except that the Trustee believes such representation and warranty to
be true.
SECTION 2.05. REPRESENTATIONS AND WARRANTIES AS TO ASSETS.
OMI represents and warrants to the Trustee, effective as of the Closing
Date, that the following information is true and correct in all material
respects:
(a) The information pertaining to each Asset set forth in the Asset
Schedule was true and correct at the date or dates respecting which such
information was furnished.
(b) OMI is the owner of, or holder of a perfected first priority
security interest in, each Asset.
(c) OMI acquired its ownership of, or security interest in, each such
Asset in good faith without notice of any adverse claim.
(d) Except for the sale to the Trustee, OMI has not assigned any
interest or participation in each such Asset (or, if any such interest or
participation has been assigned, it has been released).
(e) OMI has full right to sell the Trust Estate to the Trustee.
It is understood and agreed that the representations and warranties set
forth in this Section 2.05 shall survive delivery of the respective Contract
Files to the Servicer as custodian for the Trustee and of the respective Trustee
Mortgage Loan Files to the Trustee or its Custodian and shall inure to the
benefit of the Trustee notwithstanding any restrictive or qualified endorsement
or assignment. Upon the discovery by OMI, the Servicer or the Trustee of a
breach of any of the foregoing representations and warranties, the party
discovering such breach shall give prompt written notice to the other parties to
the Pooling and Servicing Agreement. It is understood and
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agreed that the obligations of OMI set forth in Section 2.06 to cure, substitute
for or repurchase a Contract constitute the sole remedies available to the
Certificateholders or to the Trustee on their behalf respecting a breach of the
representations and warranties contained in this Section 2.05. It is further
understood and agreed that OMI shall be deemed not to have made the
representations and warranties in this Section 2.05 with respect to, and to the
extent of, representations and warranties made, as to the matters covered in
this Section 2.05, by the Seller in the related Sales Agreement assigned to the
Trustee.
SECTION 2.06. PURCHASE OR SUBSTITUTION OF CERTAIN ASSETS.
(a) Breaches of Representations and Warranties and Incomplete or
Defective Asset Files.
(1) SELLER BREACH. Upon discovery or receipt of notice of any
defective document in an Asset File, or of any breach by the Seller of
any representation, warranty or covenant hereunder or under the Sales
Agreement, which defect or breach materially and adversely affects the
value of any Asset or the interest of the Trust therein (it being
understood that any such defect or breach shall be deemed to have
materially and adversely affected the value of the related Asset or the
interest of the Trust therein if the Trust incurs a loss as a result of
such defect or breach), the Trustee shall promptly notify the Servicer
of such defect or breach and direct the Servicer to request the Seller
of such Asset to cure such defect or breach. The Seller must cure such
defect or breach, or purchase such Asset from the Trustee on behalf of
the Certificateholders, within 90 days after the date on which the
Seller was notified of such defect or breach. In lieu of purchasing any
such Asset as provided above, if so provided in the related Sales
Agreement, the Seller may cause such Asset to be removed from the Trust
(in which case it shall become a Replaced Asset) and substitute one or
more Qualified Substitute Assets in the manner and subject to the
limitations set forth in Section 2.06(g) below. Notwithstanding the
foregoing, however, if such breach is a Qualification Defect and one or
more REMIC elections have been made with respect to the related Trust,
such cure, purchase or substitution must take place within 75 days of
the Defect Discovery Date. It is understood and agreed that enforcement
of the obligation of the Seller to cure or to purchase (or to
substitute for) any Asset as to which a material defect in a
constituent document exists or as to which such a breach has occurred
and is continuing, in addition to the obligation of the Seller to
indemnify OMI and its assignees (including the Trust) for any losses
and damages incurred in respect of any such breach or defect, shall
constitute the sole remedy respecting such defect or breach available
to the Trustee on behalf of the Certificateholders. The Servicer shall
use its best efforts to enforce the Seller's obligations under its
Sales Agreement to repurchase or substitute for Assets affected by
breaches of the Seller's representations and warranties contained in
its Sales Agreement, and to enforce the Seller's obligations to
indemnify the Trust (as the assignee of OMI under the Sales Agreement)
for any losses or damages it incurs as a result of breaches of the
Seller's representations and warranties contained in its Sales
Agreement.
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(2) SERVICER BREACH. In addition to taking any action required
pursuant to Section 7.01 hereof, upon discovery or notice of any breach
by the Servicer of any representation, warranty or covenant hereunder
not covered by Section 2.06(a)(1) above which materially and adversely
affects the value of any Asset or the interest of the Trust therein (it
being understood that any such defect or breach shall be deemed to have
materially and adversely affected the value of the related Asset or the
interest of the Trust therein if the Trust incurs a loss as a result of
such defect or breach), the Trustee promptly shall notify the Servicer
of such breach. Upon receipt of such notification, the Servicer shall
cure such breach or shall purchase such Asset from the Trustee within
90 days after the date on which the Servicer was notified of such
breach. Notwithstanding the foregoing, however, if such breach is a
Qualification Defect and one or more REMIC elections have been made
with respect to the related Trust, such cure or purchase must take
place within 75 days of the Defect Discovery Date.
In the event the Seller has breached a representation or
warranty under its Sales Agreement that is substantially identical to a
representation or warranty breached by the Servicer, the Servicer shall
first proceed against the Seller. If the Seller does not within 60 days
after notification of the breach, take steps to cure such breach or
purchase or substitute for the Mortgage Loan, the Servicer shall cure
such breach or purchase the Mortgage Loan from the Trust as provided in
this Section 2.06(a)(2).
(3) OMI BREACH. Within 90 days after the earlier of discovery
or receipt of notice by OMI of the breach of any of its representations
or warranties set forth in Section 2.05 above with respect to any
Asset, which breach materially and adversely affects the value of the
Asset or the interest of the Trust therein (it being understood that
any such breach shall be deemed to have materially and adversely
affected the value of the related Asset or the interest of the Trust
therein if the Trust incurs a loss as a result of such defect or
breach), OMI shall (i) cure such breach in all material respects, (ii)
purchase the Asset from the Trustee, or (iii) remove such Asset from
the Trust (in which case it shall become a Replaced Asset) and
substitute one or more Qualified Substitute Assets in the manner and
subject to the limitations set forth in Section 2.06(g) below.
Notwithstanding the foregoing, however, if such breach is a
Qualification Defect and one or more REMIC elections have been made
with respect to the related Trust, such cure, purchase or substitution
must take place within 75 days of the Defect Discovery Date.
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(b) Failure to Retitle Manufactured Homes. Upon the occurrence of
either of the following events:
(1) the rendering of judgment by a court of competent
jurisdiction that the Trustee does not have a perfected first-priority
security interest in a particular Manufactured Home because the Seller
has not caused notations to be made on any certificate or other
document of title relating to such Manufactured Home or has not
executed any transfer instrument (including any UCC financing statement
or UCC-3 assignment) relating to such Manufactured Home, or
(2) the Servicer's receipt of written advice of counsel
selected by the Servicer from among the counsel used by the Servicer in
the ordinary course of its business to the effect that a court of
competent jurisdiction sitting in a jurisdiction in which some of the
Manufactured Homes underlying the Contracts are located has held that,
solely because of the failure of a pledgor or assignor of manufactured
housing contracts (whose pledgee or assignee has perfected its security
interest in such contracts) to cause notations to be made on any
certificate or other document of title relating to a manufactured home
underlying the pledged contracts or to execute any transfer instrument
(including any UCC financing statement or UCC-3 assignment) relating to
any such manufactured home, a perfected first-priority security
interest was not created in a manufactured home underlying such
contracts located in such jurisdiction in favor of the pledgee or
assignee,
then the Servicer, at its expense, must complete all appropriate remedial action
with respect to the affected Manufactured Home(s) within 180 days after the
Servicer's receipt of written notice of such judgment or of such written advice.
If the Servicer fails to complete all such remedial action with respect to any
affected Manufactured Home within such 180-day period, the Servicer must
repurchase each related Contract at the Repurchase Price therefor on or before
the last Business Day of the Prepayment Period ending on or immediately after
the expiration of such 180-day period in accordance with Section 2.05(f) below.
In connection with the foregoing obligation, the Servicer shall have no
obligation on an ongoing basis to seek any advice of counsel with respect to the
matters described in clause (2) of the preceding paragraph. However, the
Servicer shall seek advice with respect to such matters whenever information
comes to the attention of any of its executive officers which causes such
executive officer to determine that a holding of the type described in such
clause (2) might exist.
(c) Assignment Failure. If an Assignment to the Trustee of the Seller's
interest in a Mortgage securing a Mortgage Loan has not been recorded within one
year after the Closing Date for the related Series of Certificates (or in the
case of Mortgage Loans for which recordation of an Assignment was initially
waived but subsequently required pursuant to Section 2.03(a) hereof, within one
year after the Trustee's delivery of the Assignment to the Servicer for
recordation), the Servicer shall either (1) purchase the related Mortgage Loan
from the Trustee or (2) if there have
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been no defaults in the Monthly Payments on such Mortgage Loan, deposit an
amount equal to the Repurchase Price therefor into an escrow account maintained
by the Trustee (which account shall not be an asset of the Trust or any REMIC),
or shall enforce the related Seller's obligation under its Sales Agreement to
make such purchase or deposit. Any such amounts deposited to an escrow account,
plus any earnings thereon, shall (A) be released to the Servicer or Seller, as
the case may be, upon receipt by the Trustee of satisfactory evidence that the
Assignment has been recorded in the name of the Trustee or (B) be applied to
purchase the related Mortgage Loan in the event that the Servicer notifies the
Trustee that there has been a default thereon. Any amounts in the escrow account
may be invested in Eligible Investments at the written direction of the
Servicer.
(d) Converted Loans. Upon receipt of written notice from the Servicer
of the conversion of any Adjustable Rate Asset to a Converted Loan, the Trustee
shall direct the Servicer to enforce the related Seller's obligation set forth
in its Sales Agreement to purchase such Converted Loan from the Trustee, or the
Servicer shall repurchase such Converted Loan from the Trustee. In the event the
Servicer or Seller defaults upon its obligation to purchase any Converted Loan,
and, in the case of a Seller default, such default remains unremedied for a
period of five Business Days after written notice of such default shall have
been given by the Servicer to the Seller, then the Servicer shall use its best
efforts to cause such Converted Loan to be sold for settlement on the last day
of any month to any entity which the Servicer may in its sole discretion select.
The Servicer shall not cause a Converted Loan to be sold or otherwise
transferred to a Person other than the Servicer or Seller (or other Person who
has a pre-existing obligation to purchase such loan) unless (i) upon such sale
the Trust would receive a net amount at least equal to the Repurchase Price of
the Converted Loan and (ii) if the Repurchase Price of the Converted Loan
exceeds the related Basis Limit Amount, the Servicer receives an Opinion of
Counsel that such disposition of a Converted Loan will not result in the
imposition of a "prohibited transaction" tax (as such term is defined in the
Code) on any related REMIC or jeopardize its status as a REMIC. Any such
Converted Loan which is not purchased by the Servicer or the Seller and which
the Servicer is unable to sell as described in the second preceding sentence
shall remain in the Trust.
(e) Optional Purchase by Servicer of Defaulted Contracts. At any time
after a Contract has become and remains a Defaulted Contract, the Servicer may,
at its option, purchase such Defaulted Contract from the Trust at the Repurchase
Price therefor in accordance with Section 2.06(f) below.
(f) Manner of Repurchase. Any Asset purchased pursuant to Section
2.05(a), (b), (c), (d) or (e) hereof shall be purchased at the Repurchase Price
for such Asset. The Seller, OMI or the Servicer, as appropriate (any of the
foregoing, a "Repurchaser"), shall deposit into the Certificate Account, on the
date of purchase, the Repurchase Price for each Asset to be purchased. Upon such
deposit and upon being provided by the Repurchaser with appropriate instruments
of transfer or assignment, the Trustee shall execute and deliver such
instruments of transfer or assignment, in each case without recourse, as shall
be necessary to vest in the Repurchaser any Asset purchased hereunder, and the
Trustee shall deliver to the Repurchaser any Asset Documents relating to the
repurchased Asset that are in the Trustee's possession, whereupon the Trustee
shall have no further
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responsibility with regard to such Asset. Except as provided in this Section
2.06(f), if a Repurchaser shall, in accordance with the foregoing, purchase any
Asset required by it to be purchased, neither the Trustee nor any
Certificateholder shall have any other remedy against such Repurchaser based on
any misrepresentation or breach of covenant or warranty of such Repurchaser with
respect to or resulting from any such Asset.
The Servicer will be responsible for determining the Repurchase Price
for any Asset (and the related Basis Limit Amount for any Converted Loan) to be
repurchased pursuant to this Section 2.06 and shall certify such amounts to the
Trustee at the time of any such purchase. If, for whatever reason, the Servicer
shall certify to the Trustee that there is a miscalculation of the amount to be
paid to the Trust, the Trustee shall from monies in the Distribution Account
return any overpayment that the Trust received as a result of such
miscalculation to the applicable Repurchaser upon the discovery of such
overpayment, and the Servicer shall collect from the applicable Repurchaser for
payment to the Trustee any underpayment that resulted from such miscalculation
upon the discovery of such underpayment. Recovery may be made either directly or
by set-off of all or any part of such underpayment against amounts owed by the
Trust to such Repurchaser.
Any Repurchaser shall indemnify and hold harmless the Trustee from and
against any and all losses or liabilities incurred by the Trustee (including any
such losses or liabilities arising from third-party claims) with respect to or
resulting from any repurchase hereunder.
(g) Manner of Substitution. Unless otherwise provided in the Pooling
and Servicing Agreement, the right to substitute a Qualified Substitute Asset
for any Replaced Asset that is an asset of the Trust shall be limited to (1) in
the case of substitutions pursuant to Section 2.06(a) or 2.06(c), the two-year
period beginning on the Closing Date and (2) in the case of any other
substitution, the three-month period beginning on the Closing Date.
As to any Replaced Asset for which OMI or the Seller substitutes a
Qualified Substitute Asset or Assets, OMI or the Seller, as the case may be,
shall effect such substitution by delivering to the Trustee for such Qualified
Substitute Asset or Assets a complete Contract File or Trustee Mortgage Loan
File, as appropriate, together with an Officer's Certificate of OMI or the
Seller, as the case may be, to the effect that each such Qualified Substitute
Asset complies with the terms of the Pooling and Servicing Agreement. Monthly
Payments due with respect to Qualified Substitute Assets in the month of
substitution are not part of the Trust and will be retained by OMI or the
Seller, as the case may be. For the month of substitution, distributions to
Certificateholders will reflect the Monthly Payment due on such Replaced Asset
during the month in which the substitution occurs, and OMI or the Seller, as the
case may be, shall thereafter be entitled to retain all amounts subsequently
received in respect of such Replaced Asset. The Servicer shall amend the Asset
Schedule to reflect the removal of such Replaced Asset from the terms of the
Pooling and Servicing Agreement and the substitution of the Qualified Substitute
Asset or Assets. Upon such substitution, such Qualified Substitute Asset or
Assets shall be subject to the terms of the Pooling and Servicing Agreement in
all respects, including, in the case of a substitution effected by the Seller,
the representations and warranties included in the related Sales Agreement, and
in the case of a substitution effected by OMI, the representations and
warranties set forth in Section 2.05
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above, in each case as of the date of substitution. The Trustee shall, within
five Business Days of its receipt of the documents referred to above, effect the
reconveyance of such Replaced Asset to OMI or the Seller, as the case may be, in
accordance with the procedures specified above.
For any month in which OMI or the Seller substitutes one or more
Qualified Substitute Assets for one or more Replaced Assets, the Servicer will
determine and notify the Trustee with respect to the amount (if any) by which
the aggregate Unpaid Principal Balance of all such Qualified Substitute Assets
as of the date of substitution is less than the aggregate Unpaid Principal
Balance of all such Replaced Assets (after application of Monthly Payments due
in the month of substitution) (the "Substitution Shortfall"). On the date of
such substitution, OMI or the Seller, as the case may be, will deliver or cause
to be delivered to the Trustee for deposit from its own funds into the
Distribution Account an amount equal to the Substitution Shortfall.
(h) Qualification Defect. If any Person required to cure, purchase, or
substitute under Section 2.06(a) above for an Asset affected by a Qualification
Defect fails to perform within the time limit set forth in those subsections,
the Trustee shall dispose of such an Asset in such manner and for such price as
the Servicer advises the Trustee are appropriate, provided that the removal of
such Asset occurs no later than the 90th day from the Defect Discovery Date. It
is the express intent of the parties that an Asset affected by a Qualification
Defect be removed from the Trust before the 90th day from the Defect Discovery
Date so that the related REMIC or Pooling REMIC will continue to qualify as a
REMIC. Accordingly, the Trustee is not required to sell an affected Asset for
its fair market value nor shall the Trustee be required to make up any shortfall
resulting from the sale of such Asset. The person failing to perform under
Section 2.06(a) above shall be liable to the Trust for (1) any difference
between (A) the Unpaid Principal Balance plus accrued and unpaid interest
thereon at the applicable Asset Rate to the date of disposition and (B) the net
amount received by the Trustee from the disposition (after the payment of
related expenses), (2) interest on such difference at the Asset Rate from the
date of disposition to the date of payment and (3) any legal and other expenses
incurred by or on behalf of the Trust in seeking such payments. Except where the
Servicer is the person failing to perform, the Servicer shall pursue the legal
remedies of the Trust on the Trust's behalf and the Trust shall reimburse the
Servicer for any legal or other expenses of the Servicer related to such pursuit
not recovered from such person. If the Servicer is the person failing to
perform, the Trustee shall pursue the Trust's legal remedies against the
Servicer and the Trust shall reimburse the Trustee for its related legal or
other expenses.
(i) Notices. Any person required under this Section 2.06 to give notice
or to make a request of another person to give notice shall give such notice or
make such request promptly.
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ARTICLE III
ADMINISTRATION OF TRUSTS AND SERVICING OF THE ASSETS
SECTION 3.01. THE SERVICER.
The Servicer agrees to service the Assets for and on behalf of the
Trustee and its successors and assigns, and otherwise to perform and carry out
the duties, responsibilities and obligations that are to be performed and
carried out by the Servicer under the Pooling and Servicing Agreement. The
Servicer shall service the Contracts in accordance with the customary and usual
procedures of responsible financial institutions that service manufactured
housing retail installment sales contracts and installment loan agreements for
manufactured housing units located in the jurisdictions in which the
Manufactured Homes are located, except as otherwise expressly provided by the
Pooling and Servicing Agreement; PROVIDED, HOWEVER, that the Servicer shall not
release or waive its right to collect the unpaid principal balance of any
Contract. The Servicer shall service the Mortgage Loans (a) generally in
compliance with FNMA standards and (b) in a manner that is consistent with
prudent residential mortgage loan servicing standards generally accepted within
the residential mortgage loan servicing industry. The manner in which the
Servicer services the Assets shall be consistent with the manner in which the
Servicer services all manufactured housing retail installment sales contracts
and residential mortgage loans in its servicing portfolio, except for any
differences specifically required by the Pooling and Servicing Agreement. The
Servicer shall have full power and authority consistent with the aforementioned
standards, acting alone and/or through agents and designees as permitted by
Section 6.07 hereof, to do any and all things it may deem necessary or desirable
in connection with such servicing and administration; PROVIDED, HOWEVER, that to
the extent the Servicer is prohibited by any applicable rule, regulation,
judicial or administrative determination or other order applicable to it from
carrying out any of its obligations or duties provided for herein or in any
document contemplated herein, such failure shall not constitute a breach of this
Agreement.
SECTION 3.02. MAINTENANCE OF RECORDS; INSPECTION OF ASSET FILES.
(a) The Servicer shall retain all data relating directly to or
maintained in connection with the servicing of the Assets for any Series at the
address of the Servicer set forth in Section 11.04 hereof or at such other place
where the servicing offices of the Servicer are located.
The Servicer shall permit the Trustee or any authorized agent of the
Trustee reasonable access, upon prior written notice to the Servicer, during the
Servicer's normal business hours, to the Asset Files, the Servicer Files, and
the Servicer's other records, if any, relating to the Assets for any related
Series. Any such examination of such files or records will be conducted in a
manner that does not unreasonably interfere with the Servicer's normal
operations or customer or employee relations. Without otherwise limiting the
scope of the examination the Trustee may make, the Trustee or its authorized
agents, using generally accepted audit procedures, may in their discretion
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verify the status of each Asset and review the records relating thereto for
conformity to Remittance Reports prepared pursuant to Article IV hereof and
compliance with the standards represented to exist as to each Asset in the
Pooling and Servicing Agreement.
(b) At all times during the term hereof, the Servicer shall keep
available a copy of the Asset Schedule at its principal executive office for
inspection by Certificateholders.
(c) On or before the date of the Servicer's delivery of the Remittance
Report to the Trustee in any month, the Servicer will, upon the written request
of the Trustee, provide to the Trustee a list of outstanding Assets, setting
forth the Scheduled Principal Balance of each such Asset as of the preceding
Distribution Date.
(d) Notwithstanding the provisions of this Section 3.02, the Trustee
shall at no time have any duty or obligation to examine any records of the
Servicer or to recalculate or otherwise verify the accuracy of any certificate
or report prepared by the Servicer, and no implied duty to do so shall be
asserted against the Trustee.
(e) On or before the Closing Date for a Series, the Servicer shall
deliver to the Trustee a list of Officers of the Servicer (each a "Servicing
Officer") involved in, or responsible for, the administration and servicing of
the Assets underlying such Series, which list shall be amended from time to time
as necessary by the Servicer by delivery of an amended list of Servicing
Officers to the Trustee.
SECTION 3.03. COLLECTION OF PAYMENTS ON ASSETS; SERVICING DELINQUENT ACCOUNTS.
(a) Continuously from the Cut-off Date until the earliest to occur of
the following with respect to each Asset sold to the Trust in connection with
the issuance of the Certificates: (i) the principal and interest on such Asset
is paid in full, (ii) such Asset is foreclosed and the related Manufactured Home
or Mortgaged Property is liquidated pursuant to Section 3.08 hereof, (iii) all
of the proceeds of a liquidating claim under the Standard Hazard Insurance
Policy relating to such Asset have been deposited to the Certificate Account, or
(iv) the Liquidation Proceeds relating to such Asset have been deposited to the
Certificate Account, the Servicer will proceed diligently and in a manner
consistent with its standards for servicing Assets described in Section 3.01
above, to collect all payments due under each Asset when such payments become
due and payable and to apply such payments in accordance with Sections 3.05,
3.06 and 3.07 hereof.
(b) The Servicer shall have reasonable discretion to extend appropriate
relief to Obligors who encounter hardship and who are cooperative and
demonstrate proper regard for their obligations. The Servicer may arrange with
such an Obligor to extend the payment schedule for the related Asset; PROVIDED,
HOWEVER, that any such extension must be made in accordance with the Servicer's
standards for servicing Assets described in Section 3.01 above; and PROVIDED
FURTHER, that no such extensions may be made except to the extent (1) that the
Servicer has determined, in its reasonable judgment, that the Obligor is in
default or that default is reasonably foreseeable with
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respect to such Asset in the absence of such relief, (2) that the Due Date for
the final Monthly Payment on such Asset is not extended beyond the latest Final
Scheduled Distribution Date for the related Series and (3) that the grant of
such extension is otherwise permissible under Section 10.02 hereof and the REMIC
Provisions as in effect at the time of such extension, as evidenced by an
Opinion of Counsel delivered by the Servicer to the Trustee. Where the Obligor
is in default on an Asset notwithstanding such relief and the Servicer has
exhausted all reasonable means of inducing the Obligor to pay on a timely basis,
the Servicer shall begin acceleration of the Assets in accordance with its terms
and applicable laws.
SECTION 3.04. ADVANCES AND COMPENSATING INTEREST.
(a) Servicing Advances. If any Obligor is in default in the payment of
premiums on its Standard Hazard Insurance Policy or Policies, the Servicer may
pay such premiums or taxes out of its own funds. If any Obligor is in default in
the payment of premiums on its Standard Hazard Insurance Policy or Policies and
coverage is not provided in respect of the related Asset under a blanket policy
maintained by the Servicer pursuant to Section 3.16(a) below, or if any Obligor
is in default in the payment of personal property taxes or real estate taxes due
in respect of its Manufactured Home or Mortgaged Property, the Servicer shall
pay such premiums or taxes out of its own funds in a timely manner, as Servicing
Advances, unless the Servicer, in its reasonable judgment, determines that any
such Servicing Advance would be a Non-Recoverable Advance. In addition, the
Servicer shall pay in a timely manner, as Servicing Advances, any and all
personal property taxes and real estate taxes due in respect of any Repo
Property or REO Property it holds on behalf of the Trust and all premiums for
any Standard Hazard Insurance Policy maintained for such Repo Property or REO
Property (except as similar coverage may be provided under a blanket policy
maintained by the Servicer pursuant to Section 3.16 below) unless the Servicer,
in its reasonable judgment, determines that any such Servicing Advance would be
a Non-Recoverable Advance.
(b) P&I Advances. If any Obligor fails to make its Monthly Payment by
the Remittance Date, the Servicer shall deposit such amount in the Distribution
Account on or before such Remittance Date, as a "P&I Advance," unless the
Servicer, in its reasonable judgment, determines that any such P&I Advance would
be a Non-Recoverable Advance, or such Monthly Payment can be offset by Early
Payments, as provided in Section 3.07(c) hereof. In addition, if the Certificate
Account is maintained with the Trustee, the Servicer may instruct the Trustee to
use any investment earnings on such account to defray its P&I Advance
obligation, and the Trustee shall honor any such instructions (including
standing instructions).
(c) Recovery of Advances. The Servicer shall be entitled to
reimbursement for any Advances made by it in respect of any Asset out of
subsequent collections in respect of the Assets, including late collections from
the related Obligor or from Insurance Proceeds, Liquidation Proceeds or a
Repurchase Price recovered by it in respect of such Asset ("Related Proceeds")
and shall be entitled to reimburse itself for unreimbursed Advances made that
have become Non-Recoverable Advances in accordance with Section 3.07(a)(1)
below.
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(d) Non-Recoverable Advances. If the Servicer does not make an Advance
on the grounds that it is a Non-Recoverable Advance, or if an Advance previously
made by the Servicer is determined by the Servicer to have become a
Non-Recoverable Advance, then the Servicer shall provide the Trustee with an
Officer's Certificate stating this fact and stating the basis upon which the
Servicer determined that such Advance would be or was a Non-Recoverable Advance.
The Trustee shall not be responsible for determining whether any such
determination was reasonable.
(e) Compensating Interest. So long as OAC is the Servicer of any
Assets, OAC as Servicer shall deposit into the Distribution Account for the
related Series on or before each Remittance Date an amount equal to Compensating
Interest for such month. Compensating Interest shall not be considered a
Non-Recoverable Advance, and the Servicer shall not be entitled to any recovery
or reimbursement from the Trustee or the Certificateholders for any Compensating
Interest.
SECTION 3.05. SERVICING ACCOUNT.
Within one Business Day after the Servicer's receipt of any amounts
collected on any Asset in its lock box maintained for the collection of amounts
payable under contracts serviced by it (including Net Liquidation Proceeds,
Insurance Proceeds and Repurchase Prices in respect thereof), the Servicer shall
deposit such collections, or cause such collections to be deposited, into a
clearing account established by the Servicer (the "Servicing Account"), which
shall be an Eligible Account. The Servicer may use the Servicing Account for
collection of payments on Assets underlying more than one Series and for assets
that are not the subject of any transaction covered by a Pooling and Servicing
Agreement; PROVIDED, that in any such event, the Servicer shall cause separate
accounting and records to be maintained within the Servicing Account with
respect to the Assets underlying each separate Series. Furthermore, the parties
hereto agree that all amounts deposited into the Servicing Account in respect of
the Assets, other than amounts payable to the Servicer as servicing compensation
under the Pooling and Servicing Agreement, are to be held in trust for the
exclusive use and benefit of the related Trust.
SECTION 3.06. CERTIFICATE ACCOUNT.
(a) On or before the Closing Date, the Trustee shall establish a
collection account or accounts (the "Certificate Account"), which must be an
Eligible Account. The Certificate Account is to be held by or for the benefit of
the Trustee on behalf of the Certificateholders, and shall be either in the
Trustee's name or designated in a manner that reflects the custodial nature of
the account and that all funds in such account are held for the benefit of the
Trustee. The Trustee may elect to use a single Certificate Account for more than
one Series of Certificates PROVIDED, that in any such event, the Servicer shall
cause separate accounting and records to be maintained within the Certificate
Account with respect to each separate Series.
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(b) The Servicer shall deposit into the appropriate Certificate Account
on a daily basis, and in no event later than two Business Days following deposit
thereof to the Servicing Account after the Servicer's collection thereof, all
payments and collections received by it on each Outstanding Asset on or after
the effective date of the related Pooling and Servicing Agreement (including Net
Liquidation Proceeds, Insurance Proceeds and Repurchase Prices in respect
thereof), except amounts collected in respect of Monthly Payments due on or
prior to the Cut-off Date. On or prior to the Closing Date, the Servicer shall
deposit into the Certificate Account all installments of principal and interest
due on the Assets after the Cut-off Date and received by the Servicer prior to
the Closing Date, plus each Principal Prepayment of any Asset (including any
related payment of interest) received by the Servicer on or after the Cut-off
Date but prior to the Closing Date.
(c) Amounts on deposit in the Certificate Account may be invested at
the direction of the Servicer in Eligible Investments, and earnings on amounts
deposited in such account shall be credited to the account of the Servicer as
servicing compensation in addition to the Servicing Fee and shall offset P&I
Advances due from the Servicer in respect of the Distribution Date next
succeeding the date on which such earnings were made or, in the alternative at
the Servicer's option, may be released to the Servicer on such Distribution
Date. The amount of any losses incurred in respect of any such investments shall
be deposited in the Certificate Account by the Servicer out of its own funds
immediately upon realization of any such losses.
SECTION 3.07. WITHDRAWALS FROM CERTIFICATE ACCOUNT; REMITTANCE AMOUNTS.
(a) Withdrawals from Certificate Account. The Servicer may withdraw
funds on deposit in the Certificate Account for the following purposes:
(1) to reimburse itself for any Advances previously made by
the Servicer, which Advances remain unreimbursed to the Servicer, out
of Related Proceeds or, if such Advances have been determined by the
Servicer to have become Non-Recoverable Advances, out of any funds on
deposit in the Certificate Account;
(2) to pay any Servicing Fees and other servicing compensation
provided for herein due to the Servicer; PROVIDED, HOWEVER, that if OAC
is the Servicer, it shall only be entitled to withdraw its Servicing
Fee in respect of any Distribution Date from the Certificate Account in
accordance with this clause to the extent the amounts on deposit in the
Certificate Account and attributable to the Available Distribution
Amount for such Distribution Date exceed the sum of all amounts to be
distributed on the Certificates of the related Series on such
Distribution Date prior to the distribution to OAC of its Servicing
Fees as described in the related Pooling and Servicing Agreement in the
Section thereof entitled "Distributions"; and
(3) to enable the Servicer to remit the Remittance Amount to
the Trustee on each Remittance Date, as described in Section 3.07(b)
below.
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(b) Remittance Dates. On or prior to the Remittance Date for any
Distribution Date, the Servicer shall remit the Remittance Amount for such
Distribution Date to the Trustee, from and to the extent of the funds in the
Certificate Account, plus all required P&I Advances, by wire transfer or
otherwise, in immediately available funds, for deposit into the Distribution
Account. If the Certificate Account is maintained by the Trustee, on each
Remittance Date, the Servicer shall notify the Trustee as to the amount of the
related Remittance Amount and the amount of all required P&I Advances to be
covered by investment earnings on the Certificate Account, and the Trustee shall
transfer such amount from the Certificate Account to the Distribution Account on
the related Distribution Date. In such event, the Servicer shall still remit any
P&I Advances not covered by investment earnings on the Certificate Account to
the Trustee for deposit into the Distribution Account on the Remittance Date.
Notwithstanding the foregoing, if a Terminating Purchase is to be made
on such Distribution Date, and the Servicer shall have received the Termination
Price or shall be the Terminator, the Servicer shall remit the Termination Price
rather than the Remittance Amount to the Trustee for deposit into the
Distribution Account.
(c) Treatment of Early Payments. Early Payments received by the
Servicer shall be retained in the Certificate Account and transferred to the
Distribution Account when and as if such Early Payments had otherwise been
received by the Servicer as scheduled payments under the Assets. However, Early
Payments on any Assets for a Series on deposit in the Certificate Account that
are not yet due to be passed through to Certificateholders on any Distribution
Date may be remitted to the Distribution Account to offset delinquencies on
other Assets for the same Series. If Early Payments on any Asset are used to
offset delinquencies on other Assets, subsequent late recoveries of such
delinquent amounts on such other Assets shall be treated by the Servicer as a
restoration of the Early Payments used to offset such delinquent amounts and
shall be deposited into the Certificate Account in accordance with Section
3.06(a) hereof. The Servicer shall maintain records with respect to its
application of Early Payments.
SECTION 3.08. REALIZATION UPON DEFAULTED ASSETS.
(a) The Servicer shall repossess, foreclose upon or otherwise
comparably convert the ownership of any Manufactured Home and any related Real
Property and any Mortgaged Property securing an Asset that comes into and
continues in default and as to which no satisfactory arrangements can be made
for collection of delinquent payments pursuant to Section 3.03 hereof. In
connection with such repossession, foreclosure or other conversion, the Servicer
shall follow such practices and procedures as it shall deem necessary or
advisable and as shall be normal and usual for responsible holders of retail
installment sales contracts and installment loan agreements for manufactured
housing (in the case of defaulted Contracts) and for responsible holders of
residential, one- to four-family mortgage loans (in the case of defaulted
Mortgage Loans) and as shall be in compliance with all applicable laws;
PROVIDED, that such practices and procedures shall
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be, in all circumstances, undertaken with a view toward maximizing the amount of
principal and interest recovered on the Assets.
(b) The Servicer may commence and prosecute any Proceedings in respect
of any Asset in default in its own name on behalf of the Trustee or, if the
Servicer deems it necessary, in the name of the Trustee. If the Servicer elects
to commence a Proceeding to enforce an Asset, the act of commencement shall be
deemed to entail an automatic assignment of the Asset to the Servicer for
purposes of collection only. If, however, in any enforcement suit or legal
proceeding in which the Servicer seeks to collect payments due on any Asset, it
is held that the Servicer lacks standing to enforce an Asset (or otherwise is
not permitted to enforce an Asset) on the grounds that it is not a real party in
interest or a holder entitled to enforce the Asset, the Trustee, on behalf of
the Certificateholders, shall take such steps as the Servicer deems necessary to
enforce the Asset, including bringing suit in its name or in the names of the
Certificateholders. Any such action by the Trustee shall be taken at the
Servicer's expense, but such expenses (including, without limitation, attorneys'
fees) shall be deemed Liquidation Expenses which the Servicer shall have no
obligation to incur to the extent it makes a good faith determination that such
Liquidation Expenses will not be recoverable out of Liquidation Proceeds of the
related Asset.
(c) In seeking to enforce the Assets, the Servicer may exercise any
rights of recourse against guarantors or sureties of any Obligor's obligations
(or against any other third parties against whom any rights of recourse exist in
connection with any Asset).
(d) The Servicer's obligations under this Section are subject to the
proviso that, in the case of damage to a Manufactured Home or a Real Property or
a Mortgaged Property, the Servicer shall not be required to expend its own funds
in making Liquidation Expenses to restore such property unless it shall
determine, in its reasonable judgment, (1) that such restoration will increase
the proceeds of liquidation of the related Asset, after reimbursement to the
Servicer for such expenses, and (2) that such Liquidation Expenses, if made,
will be recoverable out of Liquidation Proceeds of such Asset. If the Servicer
recovers any Insurance Proceeds or Liquidation Proceeds in respect of any Asset,
the Servicer may deduct the amount of any Insured Expenses and unreimbursed
Liquidation Expenses incurred by it in respect of such Asset from such gross
Insurance Proceeds and Liquidation Proceeds, respectively, prior to deposit of
such proceeds into the Certificate Account.
(e) Notwithstanding any of the foregoing, the Servicer shall not
repossess, foreclose upon or otherwise comparably convert the ownership of any
Manufactured Home, Real Property or Mortgaged Property securing an Asset in
cases where the Servicer has actual knowledge that the Manufactured Home, Real
Property or Mortgaged Property is situated on a toxic waste site as determined
by the United States Environmental Protection Agency or other comparable federal
or state agency and where, in the good faith judgment of the Servicer, the
liabilities that would be imposed upon the Trust with respect to such toxic
waste site would exceed the Net Liquidation Proceeds that could be realized upon
liquidation of the related Asset. The Servicer shall have no
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affirmative duty or obligation to determine whether any Manufactured Home, Real
Property or Mortgaged Property is situated on a toxic waste site.
SECTION 3.09. TITLE, CONSERVATION, AND DISPOSITION OF REPO PROPERTY AND REO
PROPERTY.
(a) The Servicer shall maintain, protect, and insure any Repo Property
or REO Property acquired pursuant to Section 3.08 hereof, on behalf of the
Trust, in accordance with standard industry practice solely for the purpose of
its prompt disposition and sale and with a view toward maximizing the amount of
principal and interest recovered on the Assets. During any period in which the
Trust holds a Repo Property or REO Property, the Servicer shall not (1) lease
the Repo Property or REO Property, (2) authorize or permit any construction on
the Repo Property or REO Property, other than the completion of a building or
improvement thereon, and then only if more than 10% of the construction of such
building or other improvement was completed before default on the related Asset
became imminent, all within the meaning of section 856(e)(4)(B) of the Code, or
(3) allow the Repo Property or REO Property to be used in any trade or business
conducted by the Trust. If one or more REMIC elections are made with respect to
the assets of the Trust, the Servicer shall use its best efforts to dispose of
such Repo Property or REO Property for its fair market value by the end of the
tenth month of the third calendar year following the end of the calendar year in
which the Repo Property or REO Property was acquired by the Trust (the "REO
Holding Period"), pursuant to the Servicer's ordinary commercial practices. If
the Servicer is unable to sell such Repo Property or REO Property in the course
of its ordinary commercial practices within the REO Holding Period, the Servicer
shall (a) purchase such Repo Property or REO Property at a price equal to such
Repo Property's or REO Property's fair market value or (b) auction such Repo
Property or REO Property to the highest bidder in an auction reasonably designed
to produce a fair price (an "Auction") that takes place within one month after
the end of the REO Holding Period. If the Servicer and the Trustee either (1)
receive an Opinion of Counsel indicating that, under then-current law, the REMIC
may hold Repo Property or REO Property associated with a REMIC Asset for a
period longer than the REO Holding Period without threatening the REMIC status
of any related REMIC or causing the imposition of a tax upon any such REMIC or
(2) the Servicer applies for and is granted an extension of the REO Holding
Period pursuant to Code sections 860G(a)(8) and 856(e)(3) (the applicable period
provided pursuant to such Opinion of Counsel or such Code section being referred
to herein as an "Extended Holding Period"), upon the direction of OMI or the
Trustee, the Servicer shall continue to attempt to sell such Repo Property or
REO Property pursuant to its ordinary commercial practices until the date two
months prior to the expiration of the Extended Holding Period. If no REMIC
election has been made or is to be made with respect to the assets of the Trust,
the REO Holding Period for disposing of any Repo Property or REO Property as
described in the preceding two sentences shall be an eleven-month period. The
Servicer shall either sell any Repo Property or REO Property remaining after
such date in an Auction or purchase such Repo Property or REO Property (at the
price set forth in this paragraph) before the end of the Extended Holding
Period. In the event of any such sale of a Repo Property or REO Property, the
Trustee shall, at the written request of the Servicer and upon being supplied
with appropriate forms therefor, within five Business Days after its receipt of
the proceeds of such sale or auction, instruct the Servicer to release to the
purchaser the related
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Contract File and Servicer Contract File (in the case of a Repo Property), and
the Trustee shall release to the purchaser the related Trustee Mortgage Loan
File and shall instruct the Servicer to release to the purchaser the related
Servicer Mortgage Loan File (in the case of a Mortgage Loan), and in any event
the Trustee shall execute and deliver such instruments of transfer or
assignment, in each case without recourse, as shall be necessary to vest in the
auction purchaser title to the Repo Property or REO Property, and shall deliver
to such purchaser any Asset Documents relating to such Contract that are in the
Trustee's possession, whereupon the Trustee shall have no further responsibility
with regard to any related Asset File or Servicer File. Neither the Trustee nor
the Servicer, acting on behalf of the Trust, shall provide financing from such
Trust to any purchaser of a Repo Property or REO Property.
(b) In the event that title to any Real Property or REO Property is
acquired, the deed or certificate of sale shall be issued to the Trustee for the
benefit of the Certificateholders. The Servicer shall, in accordance with
Section 3.09(a), use its reasonable efforts to sell any Repo Property or REO
Property as expeditiously as possible, but in all events within the time period,
and subject to the conditions set forth in Section 3.09(a) hereof. Pursuant to
its efforts to sell such Repo Property or REO Property, the Servicer shall
either itself or through an agent selected by the Servicer protect and conserve
such Repo Property or REO Property in the same manner and to such extent as it
customarily does in connection with its own repossessed manufactured homes or
mortgaged properties (as applicable), incident to its conservation and
protection of the interests of the Certificateholders.
(c) The Servicer shall deposit all net funds collected and received in
connection with the operation of any Repo Property or REO Property in the
applicable Certificate Account no later than the second Business Day following
receipt of such funds.
(d) The Servicer, upon the final disposition of any Repo Property or
REO Property, shall be entitled to reimbursement of any related unreimbursed
Advances related to the Asset for such Repo Property or REO Property as well as
any unpaid Servicing Fees from Liquidation Proceeds received in connection with
the final disposition of such Repo Property or REO Property, the latter in
accordance with the Sections of the related Pooling and Servicing Agreement that
are entitled "Distributions" and "Limited Right of Servicer to Retain Servicing
Fees from Collections."
(e) The final disposition of any Repo Property or REO Property shall be
carried out by the Servicer at the Repo Property's or REO Property's fair market
value under the circumstances existing at the time of disposition and upon such
terms and conditions as the Servicer shall deem necessary or advisable, and as
are in accordance with accepted servicing practices and in accordance with
Section 3.09(a) above.
(f) The Liquidation Proceeds from the final disposition of any Repo
Property or REO Property shall be deposited into the Certificate Account
promptly following receipt of such Liquidation Proceeds and, subject to such
withdrawals as may be permitted by Section 3.07(a) above, shall be transferred
to the Distribution Account pursuant to Section 3.07(b) above.
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(g) The Servicer shall prepare and file reports of foreclosure and
abandonment in accordance with section 6050J of the Code.
(h) Notwithstanding any other provision of this Agreement, the
Servicer, acting on behalf of the Trustee hereunder, shall not rent, lease, or
otherwise earn income or take any action on behalf of the Trust with respect to
any REO Property that might (i) cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of section 860G(a)(8) of the Code or
(ii) result in the receipt by any related REMIC of any "income from
non-permitted assets" within the meaning of section 860F(a)(2) of the Code or
any "net income from foreclosure property" within the meaning of section
860G(c)(2) of the Code, both of which types of income are subject to tax under
the REMIC Provisions, unless the Trustee has received an Opinion of Counsel at
the Trust's expense (the costs of which shall be recoverable out of the
applicable Certificate Account), to the effect that, under the REMIC Provisions
and any relevant proposed legislation, any income generated for any related
REMIC by the REO Property would not result in the imposition of a tax upon such
REMIC.
Without limiting the generality of the foregoing, the Servicer
shall not:
(i) enter into, renew or extend any New Lease with respect to
any REO Property, if the New Lease by its terms will give rise to any
income that does not constitute Rents from Real Property;
(ii) permit any amount to be received or accrued under any New
Lease other than amounts that will constitute Rents from Real Property;
(iii) authorize or permit any construction on any REO
Property, other than the completion of a building or other improvement
thereon, and then only if more than ten percent of the construction of
such building or other improvement was completed before default on the
related Mortgage Loan became imminent, all within the meaning of
section 856(e)(4)(B) of the Code; or
(iv) Directly Operate, or allow any other Person (other than
an Independent Contractor) to Directly Operate, any REO Property on any
date more than 90 days after its acquisition date;
unless, in any such case, the Servicer has requested and received the Opinion of
Counsel described in the preceding sentence, in which case the Servicer may take
such actions as are specified in such Opinion of Counsel.
(i) The Servicer shall not acquire any personal property relating to
any Asset (other than the related Manufactured Home in connection with a
Contract) pursuant to this Section 3.09 unless either:
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(1) such personal property is incident to real property (or to
the related Manufactured Home, in the case of a Contract) (within the
meaning of section 856(e)(1) of the Code) so acquired by the Servicer;
or
(2) the Servicer shall have requested and received an Opinion
of Counsel, at the expense of the Trust (recoverable out of the
Certificate Account), to the effect that the holding of such personal
property by the related REMIC will not cause the imposition of a tax
under the REMIC Provisions on any REMIC related to the Trust or cause
any such REMIC to fail to qualify as a REMIC at any time that any
Certificate is outstanding.
SECTION 3.10. FULL PREPAYMENTS AND LIQUIDATIONS; TRUSTEE TO COOPERATE; RELEASE
OF MORTGAGE FILES.
(a) Contracts. The Servicer shall determine when a Contract has been
paid in full. Upon the liquidation of any Contract, the Servicer shall remit the
proceeds thereof to the related Certificate Account in accordance with Sections
3.05 and 3.06 above.
The Servicer is authorized to execute an instrument in satisfaction of
any Contract that is the subject of a Principal Prepayment in full, final
liquidation or other payment in full (as well as an instrument in satisfaction
of any related Mortgage) and do such other acts and execute such other documents
as the Servicer deems necessary to discharge the Obligor thereunder and
eliminate the security interest in the Manufactured Home and any Real Property
related thereto. Upon the Servicer's request, the Trustee shall, at the expense
of the Servicer, perform such other acts as are reasonably requested by the
Servicer (including, without limitation, the execution of documents) and
otherwise cooperate with the Servicer in enforcement of rights and remedies with
respect to Contracts. No expenses incurred in connection with any instrument of
satisfaction or deed of reconveyance shall be chargeable to a Certificate
Account or Distribution Account.
(b) Mortgage Loans. Upon the liquidation of any Mortgage Loan, the
Servicer shall remit the proceeds thereof to the related Certificate Account in
accordance with Sections 3.05 and 3.06 above and shall deliver to the Trustee a
Request for Release requesting that the Trustee execute such instrument of
release or satisfaction as is necessary to release the related Mortgaged
Property from the lien of the related Mortgage. The Trustee shall, within five
Business Days of its receipt of such a Request for Release, release, or cause
the Custodian to release, the related Trustee Mortgage Loan File to the
Servicer. No expenses incurred in connection with any instrument of satisfaction
or deed of reconveyance shall be chargeable to a Certificate Account or
Distribution Account.
From time to time and as appropriate for the servicing or foreclosure
of any Mortgage Loan, including but not limited to, collection under any Title
Insurance Policy, Primary Mortgage Insurance Policy, flood insurance policy or
Standard Hazard Insurance Policy or to effect a partial release of any Mortgaged
Property from the lien of the related Mortgage, the Servicer shall deliver
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to the Trustee a Request for Release. The Trustee shall, within five Business
Days after its receipt of such Request for Release, release, or cause the
Custodian to release, the related Trustee Mortgage Loan File to the Servicer.
Any such Request for Release shall obligate the Servicer to return each and
every document previously requested from the Trustee Mortgage Loan File to the
Trustee by the twenty-first day following the release thereof, unless (a) the
Mortgage Loan has been liquidated and the Liquidation Proceeds relating to the
Mortgage Loan have been deposited in the related Certificate Account or
Distribution Account or the Trustee Mortgage Loan File or such document has been
delivered to an attorney, or to a public trustee or other public official as
required by law, for purposes of initiating or pursuing legal action or other
proceedings for the foreclosure of the Mortgaged Property either judicially or
non-judicially, and the Servicer has delivered to the Trustee a certificate of
the Servicer certifying as to the name and address of the Person to which such
Trustee Mortgage Loan File or such document was delivered and the purpose or
purposes of such delivery. Upon receipt of an Officer's certificate of the
Servicer stating that such Mortgage Loan was liquidated and that all amounts
received or to be received in connection with such liquidation which are
required to be deposited into the applicable Certificate Account or the
Distribution Account have been so deposited, or that such Mortgage Loan has
become an REO Property, the Request for Release shall be released by the Trustee
to the Servicer.
(c) Trustee's Execution of Documents in connection with Foreclosures.
Upon written certification of the Servicer, the Trustee shall execute and
deliver to the Servicer court pleadings, requests for trustee's sale or other
documents necessary to the foreclosure or trustee's sale in respect of a
Mortgaged Property or Real Property or to any legal action brought to obtain
judgment against any Obligor on a Mortgage Note, Land Secured Contract or
Mortgage or to obtain a deficiency judgment, or to enforce any other remedies or
rights provided by such Mortgage Note, Land Secured Contract or Mortgage or
otherwise available at law or in equity. Each such certification shall include a
request that such pleadings or documents be executed by the Trustee and a
statement as to the reason such documents or pleadings are required and that the
execution and delivery thereof by the Trustee will not invalidate or otherwise
affect the lien of the related Mortgage, except for the termination of such a
lien upon completion of the foreclosure proceeding or trustee's sale. Upon the
request of the Servicer, the Trustee shall execute and deliver to the Servicer
one or more limited powers of attorney that constitutes and appoints the
Servicer as the Trustee's true and lawful attorney-in-fact and agent with
respect to the commencement of certain actions, in the name and on behalf of the
Trustee, for the benefit of the Certificateholders, pursuant to the provisions
hereof and to execute and deliver, in the Trustee's name, place and stead such
papers as reasonably necessary or desirable to carry out the foregoing, at all
times consistent with the Pooling and Servicing Agreement.
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SECTION 3.11. MAINTENANCE OF SECURITY INTERESTS AND OTHER LIENS IN MANUFACTURED
HOMES.
At its own expense, the Servicer shall take such steps as are necessary
to maintain perfection of the security interest in the Seller, OMI or the
Trustee and the validity of any other lien created by each Contract in the
related Manufactured Home to the extent it receives notice of sale or
reregistration of such Manufactured Home. The Trustee hereby authorizes the
Servicer to take such steps as are necessary to reperfect such security interest
in the event of the relocation of a Manufactured Home or for any other reason;
PROVIDED, that nothing in this Section 3.11 shall be construed to limit the
Servicer's obligations under Section 3.12 below.
SECTION 3.12. DUE-ON-SALE CLAUSES AND ASSUMPTION AGREEMENTS.
Upon learning of any conveyance or prospective conveyance of a
Manufactured Home or Real Property securing any Contract or of a Mortgaged
Property securing any Mortgage Loan, the Servicer may exercise its rights,
subject to state law, under any "due-on-sale" clause of the Contract, Mortgage
Note or Mortgage relating to such Manufactured Home or Mortgaged Property to
demand immediate payment in full of all amounts due under such Contract or
Mortgage Loan. With respect to Mortgage Loans, the Servicer will exercise such
rights to the extent, under the circumstances, and in the manner in which the
Servicer enforces such clauses with respect to other Mortgage Loans held in its
portfolio, but will not exercise such rights if prohibited by law from doing so.
If the Servicer determines not to enforce a "due-on-sale" clause with
respect to an Asset, the Servicer will enter into an assumption and/or
modification agreement with the person to whom the Manufactured Home or
Mortgaged Property has been conveyed in a form that is customary or appropriate
in the Servicer's reasonable business judgment pursuant to which such person
becomes liable under the Asset and pursuant to which, to the extent permitted by
applicable law and deemed appropriate by the Servicer in its reasonable
judgment, the original Obligor remains liable on such Asset; PROVIDED, that (a)
the Servicer reasonably determines that permitting such assumption by such
person will not increase materially the risk of nonpayment of amounts due under
the related Asset, (b) such action is not prohibited by law and will not affect
adversely or jeopardize any coverage under any Insurance Policy required to be
maintained with respect to such Asset pursuant to the Pooling and Servicing
Agreement, (c) neither the Unpaid Principal Balance nor the Asset Rate of the
related Asset may be reduced and (d) if one or more REMIC elections have been
made with respect to the assets of the Trust, no other material term of the
related Asset (including, without limitation, the amortization schedule or any
other term affecting the amount or timing of payments on such Asset) may be
modified without an Opinion of Counsel to the effect that such modification will
not be treated, under the REMIC Provisions, as an acquisition of the modified
Asset by the REMIC in exchange for the unmodified Asset on the date the
modification occurs. The Servicer shall follow its customary underwriting
procedures prior to entering into any such assumption agreement, including,
without limitation, a satisfactory credit review of any Person assuming such
Asset.
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SECTION 3.13. ANNUAL ACCOUNTANTS' CERTIFICATE; ANNUAL STATEMENT AS TO
COMPLIANCE.
(a) The Servicer shall deliver to the Trustee, on or before December 30
of each year, with respect to each Pooling and Servicing Agreement that the
Servicer entered into on or before the preceding September 30, an Officer's
Certificate signed by the President or any Vice President of the Servicer, dated
as of September 30 of the preceding year, stating that (1) a review of the
activities of the Servicer during the preceding 12-month period (or since the
Cut-off Date in the case of the first such Officer's Certificate relating to any
Trust) and of its performance under the Pooling and Servicing Agreement has been
made under such Officer's supervision and (2) to the best of such Officer's
knowledge, based on such review, the Servicer has fulfilled all its obligations
under the Pooling and Servicing Agreement throughout such year, or, if there has
been a default in the fulfillment of any such obligation, specifying each such
default known to such Officer and the nature and status thereof. A copy of such
certificate may be obtained by any other Holder who makes a request in writing
to the Trustee addressed to the Corporate Trust Office.
(b) In addition, on or before December 30 of each year, the Servicer,
at its expense, shall cause a firm of Independent public accountants which is a
member of the American Institute of Certified Public Accountants to furnish a
statement to the Trustee and each applicable Rating Agency to the effect that
(1) such firm has audited the financial statements of the Servicer for the
Servicer's most recently ended fiscal year and issued its report thereon; (2)
such audit included tests of the records and documents relating to manufactured
housing installment sale contracts and mortgage loans serviced by the Servicer
for others in accordance with the requirements of the Uniform Single Attestation
Program for Mortgage Bankers, or any successor program promulgated by the
accounting profession ("USAP"); and (3) such other statements as are
contemplated under USAP, including, if called for under USAP, a statement as to
whether the Servicer's management's written assertion to such firm (which shall
be attached to the statement of such firm) that its servicing during the
applicable fiscal year complied with USAP's minimum servicing standards in all
material respects is fairly stated in all material respects. The audit tests
referred to in clause (2) of the preceding sentence shall be applied to
manufactured housing installment sale contracts and mortgage loans serviced
under the Pooling and Servicing Agreement and/or, in the sole discretion of such
firm, manufactured housing installment sale contracts and mortgage loans
serviced under pooling and servicing agreements, trust agreements or indentures
substantially similar to the Pooling and Servicing Agreement (hereinafter
referred to as "Pooling Agreements"). For purposes of such statement, such firm
may assume conclusively that all Pooling Agreements under which the Servicer is
the servicer of manufactured housing installment sale contracts and mortgage
loans for a trustee relating to certificates evidencing an interest in
manufactured housing installment sale contracts and mortgage loans are
substantially similar to one another except for any such Pooling Agreement which
by its terms specifically states otherwise.
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SECTION 3.14. SERVICING FEES.
As compensation for the services provided for a Series (including
servicing of the related Assets and administration of the related Trust) and
ordinary expenses incurred by the Servicer under the Pooling and Servicing
Agreement, on each Distribution Date the Servicer shall be entitled to receive
the Servicing Fee on each Asset from amounts collected on such Asset. Except as
otherwise expressly provided in the Pooling and Servicing Agreement, the
Servicer shall perform all of the obligations to be performed by it under the
Pooling and Servicing Agreement at its expense and without cost or charge to the
Trustee. The Servicing Fee relating to any Asset shall be payable solely from
the interest portion of each Monthly Payment or other payment of or in respect
of interest collected by the Servicer in respect of such Asset, whether from the
proceeds of any judgment, writ of attachment or levy against the related Obligor
or its assets, or from funds received by the Servicer in connection with any
Principal Prepayment in full, from Insurance Proceeds or Liquidation Proceeds or
in connection with any purchase or repurchase of an Asset; PROVIDED, HOWEVER,
that the Servicing Fee with respect to an Asset in any month shall be payable to
the Servicer out of amounts paid by the related Obligor toward the Monthly
Payment due on such Asset during such month only if the related Obligor has
remitted the entire amount of such Monthly Payment. The Servicer also shall be
entitled to additional servicing compensation as specified in Sections 3.06(c)
and 3.15 hereof. Unless otherwise provided in the Pooling and Servicing
Agreement for a Series, the Servicer may retain its Servicing Fee and any other
servicing compensation provided for in such Pooling and Servicing Agreement from
gross interest collections on the related Assets prior to depositing such
collections into the related Certificate Account.
SECTION 3.15. LATE CHARGES; PREPAYMENT FEES OR OTHER CHARGES.
To the extent permitted by law, the Pooling and Servicing Agreement and
the terms of any Asset, the Servicer may collect and retain as additional
compensation any late charges, extension fees or similar fees provided for in
the Asset.
To the extent reasonable and permitted by the terms of any Asset and by
law, the Servicer may collect from the Obligors, and retain as additional
compensation, prepayment fees, assumption fees or any fees imposed in connection
with the replacement by such Obligor of the related Standard Hazard Insurance
Policy.
Notwithstanding any other provisions of the Pooling and Servicing
Agreement, the Servicer shall not charge or impose upon any Obligor, nor seek to
charge or impose upon any Obligor, or assert a right to receive from any
Obligor, any fee, charge, premium or penalty that, if charged or collected,
would violate or contravene any law, including usury laws, or the terms of the
related Asset.
SECTION 3.16. MAINTENANCE OF STANDARD HAZARD INSURANCE, PRIMARY MORTGAGE
INSURANCE, AND ERRORS AND OMISSIONS COVERAGE.
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(a) Standard Hazard Insurance. Except as otherwise provided in this
Section 3.16(a), the Servicer shall cause to be maintained with respect to each
Contract and Mortgage Loan one or more Standard Hazard Insurance Policies that
provide, at a minimum, the same coverage as that provided by a standard form
fire and extended coverage insurance policy that is customary for manufactured
housing or residential real property (as applicable) and which shall include
flood insurance coverage issued by a Qualified Insurer, providing coverage in an
amount at least equal to the lesser of (1) the maximum insurable value of the
related Manufactured Home or Mortgaged Property or (2) the principal balance due
from the Obligor under such Contract or Mortgage Loan; PROVIDED, HOWEVER, that
in any event the amount of coverage provided by each Standard Hazard Insurance
Policy must be sufficient to avoid the application of any co-insurance clause
contained therein. As part of its collection responsibilities, the Servicer
shall proceed to collect the premiums due on the Standard Hazard Insurance
Policies from the Obligors in accordance with the degree of skill and care that
is customarily used for such purpose in the manufactured home loan servicing
industry (in the case of Contracts) and the residential mortgage loan servicing
industry (in the case of Mortgage Loans). Each Standard Hazard Insurance Policy
caused to be maintained by the Servicer shall contain a standard loss payee
clause in favor of the Servicer and its successors and assigns. Any amounts
received under any such policies shall be deposited initially into the related
Certificate Account and then deposited into the related Distribution Account
pursuant to Sections 3.06 and 3.07 hereof, within the respective time frames
specified in such Sections.
In lieu of causing individual Standard Hazard Insurance Policies to be
maintained with respect to each Manufactured Home and Mortgaged Property
pursuant to subsection (a) of this Section 3.16, the Servicer may, and with
respect to each Repo Property and REO Property shall, maintain one or more
blanket insurance policies, each issued by a Qualified Insurer, covering losses
on the Obligors' interests in the Assets relating to such Manufactured Homes and
Mortgaged Properties resulting from the absence or insufficiency of such
individual Standard Hazard Insurance Policies. The Servicer shall pay the
premium for any such policy on the basis described therein and shall pay any
deductible amount with respect to claims under such policy relating to the
Assets covered thereby. All amounts collected by the Servicer under any such
blanket policy and any payments by the Servicer of deductible amounts
thereunder, in each case relating to an Asset covered thereby, shall be
deposited initially into the Certificate Account pursuant to Sections 3.05 and
3.06 hereof (within the respective time frames specified in such Sections),
after payment to (or retention by) the Servicer of all Insured Expenses and
Liquidation Expenses incurred by it with respect to the Manufactured Home or
Mortgaged Property to which such recovery relates, as well as the amount of any
Advances made by the Servicer with respect to the related Asset that have not
been reimbursed to the Servicer.
(b) Primary Mortgage Insurance. The Servicer must maintain a Primary
Mortgage Insurance Policy in full force and effect on each Mortgage Loan, if
any, which is identified in the related Sales Agreement as being covered by a
Primary Mortgage Insurance Policy. Any such Primary Mortgage Insurance Policy
must insure the portion of the Unpaid Principal Balance of the related Mortgage
Loan that exceeds 75% of the value of the related Mortgaged Property (as set
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forth in the appraisal obtained in connection with origination of the Mortgage
Loan) (the Mortgaged Property's "Initial Value") unless such Primary Mortgage
Insurance coverage has been waived in writing by OMI at the time it purchases
the Mortgage Loan or such Primary Mortgage Insurance is canceled under the
circumstances described below. If a covered Mortgage Loan provides for negative
amortization or the potential for negative amortization, the Primary Mortgage
Insurance Policy must also insure any increase in the Unpaid Principal Balance
of the Mortgage Loan from the original principal balance of the related Mortgage
Note. In the event that the rating assigned by any Rating Agency for any of the
related Certificates to the claims-paying ability of any related Mortgage
Insurer is reduced subsequent to the issuance of the related Certificates, the
Servicer will use its best efforts to replace each Primary Mortgage Insurance
Policy issued by the downgraded Mortgage Insurer with a new Primary Mortgage
Insurance Policy issued by an insurer whose claims-paying ability is acceptable
to OMI. The premium for any replacement policy shall not exceed the premium for
any replaced policy.
The Servicer may cancel the Primary Mortgage Insurance Policy
maintained with respect to any Mortgage Loan at the related Mortgagor's request
if the following conditions are met:
(1) The current Mortgage Loan-to-Value Ratio of the mortgage
Loan must be 80% or less. The current Mortgage Loan-to-Value Ratio must
be calculated by dividing the Unpaid Principal Balance of the Mortgage
Loan by the Initial Value of the related Mortgaged Property;
(2) The Mortgage Loan may not have been 30 days or more
delinquent at any time within the preceding twelve months; and
(3) There nay not have been any other default under the terms
of the Mortgage Loan at any time during the preceding twelve months.
The Servicer must take all steps necessary to ensure the payment by
each Mortgage Insurer of the maximum benefits available under the terms of the
related Primary Mortgage Insurance Policy. The Servicer must work diligently
with the Mortgage Insurer to determine whether such insurer will settle a claim
under a Primary Mortgage Insurance Policy by taking title to the related
Mortgaged Property or in some other manner. Upon receipt of any proceeds of a
Primary Mortgage Insurance Policy, the Servicer must deposit such proceeds into
the applicable Certificate Account in accordance with Sections 3.05 and 3.06
above.
(c) Errors and Omissions Coverage; Fidelity Bond. The Servicer shall
keep in force throughout the term of the Pooling and Servicing Agreement a
policy or policies of insurance issued by a Qualified Insurer covering errors
and omissions in the performance of its obligations as Servicer hereunder,
including failure to maintain insurance as required by the Pooling and Servicing
Agreement, and a fidelity bond covering the Servicer's performance under the
Pooling and Servicing Agreement. Such policy or policies and bond shall be in
such form and amount as is generally customary among Persons that service a
portfolio of manufactured housing installment
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sales contracts and installment loans having an aggregate principal amount of
$100 million or more and which Persons are generally regarded as servicers
acceptable to institutional investors.
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ARTICLE IV
REMITTANCE AND REPORTING TO CERTIFICATEHOLDERS
SECTION 4.01. REMITTANCE REPORTS.
On or before the third Business Day prior to each Distribution Date,
the Servicer shall prepare a statement containing the information specified
below as to such Distribution Date (a "Remittance Report") and deliver such
statement to the Trustee. The Trustee shall forward such report to the
Certificateholders on the related Distribution Date, by mail to the addresses of
such Certificateholders as listed in the Certificate Register on the preceding
Record Date. A Remittance Report for a Distribution Date for a Series shall
identify the following items:
(1) the aggregate amount of each of the following, stated
separately, with respect to the related Assets: (A) the amount of all
scheduled principal payments on the Assets relating to such
Distribution Date, (B) the principal components and interest components
of all Monthly Payments made by the Obligors on the Assets during the
related Collection Period, (C) Principal Prepayments (including related
Net Insurance Proceeds) received by the Servicer during the related
Prepayment Period, (D) Liquidation Proceeds (including related
Insurance Proceeds) and Net Liquidation Proceeds (including related Net
Insurance Proceeds) received during the related Prepayment Period, (E)
the amount of any Repurchase Price paid by OMI, the Seller or the
Servicer with respect to any of the Contracts purchased by OMI, the
Seller or the Servicer pursuant to Section 2.06 hereof during the
related Prepayment Period, (F) the aggregate number of Repo Properties
and the aggregate number of REO Properties in the Trust as of the end
of the related Prepayment Period and the aggregate of the unpaid
principal balances of the related Contracts and of the related Mortgage
Loans, respectively, (G) the aggregate number and the aggregate Unpaid
Principal Balance of Outstanding Contracts and Outstanding Mortgage
Loans, stated separately, that are (i) delinquent one month (i.e., 30
to 59 days) as of the end of the related Prepayment Period, (ii)
delinquent two months (i.e., 60 to 89 days) as of the end of the
related Prepayment Period, (iii) delinquent three months (i.e., 90 days
or longer) as of the end of the related Prepayment Period and (iv) as
to which repossession, foreclosure or other comparable proceedings have
been commenced as of the end of the related Prepayment Period, (H) the
amount of Realized Losses incurred on the Assets during the related
Prepayment Period and on a cumulative basis since the Cut-off Date (the
latter expressed as a dollar amount and as a percentage of the
aggregate Cut-off Date Principal Balance) (separately identifying any
Obligor Bankruptcy Losses, Special Hazard Losses and Fraud Losses, if
they are separately allocated to the related Certificates), (I) the
aggregate Scheduled Principal Balance of the Contracts and the Mortgage
Loans, stated separately, and the number of Outstanding Contracts and
Mortgage Loans, stated separately, in each case at the end of the
related Collection Period, (J) the aggregate number and the aggregate
Unpaid Principal Balance of Outstanding Contracts and Outstanding
Mortgage Loans, stated separately, for which the Obligor is also a
debtor, whether voluntary or involuntary,
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in a proceeding under the Bankruptcy Code; and (K) the aggregate number
and the aggregate Unpaid Principal Balance of Outstanding Contracts and
Outstanding Mortgage Loans for which the Obligor is also a debtor,
whether voluntary or involuntary, in a proceeding under the Bankruptcy
Code, stated separately, that are (i) delinquent one month (i.e., 30 to
59 days) as of the end of the related Prepayment Period, (ii)
delinquent two months (i.e., 60 to 89 days) as of the end of the
related Prepayment Period, and (iii) delinquent three months (i.e., 90
days or longer) as of the end of the related Prepayment Period;
(2) the Available Distribution Amount for such Distribution
Date;
(3) the amount of funds in the Distribution Account, if any,
to be allocated to pay Servicing Fees, to reimburse the Servicer for
Advances made, to reimburse OMI or the Servicer for expenses pursuant
to Section 6.05 hereof, and to refund any overpayment of a Repurchase
Price for an Asset pursuant to Section 2.06(f) hereof;
(4) the amount of the Servicing Fee for the related Collection
Period;
(5) the aggregate amount of P&I Advances required to be made
by the Servicer with respect to such Distribution Date, together with a
statement of the amount, if any, of such required P&I Advances that the
Servicer will not make in respect of such Distribution Date and of any
P&I Advances that will not be made because they are Non-Recoverable
Advances;
(6) the aggregate deposits into the Certificate Account
relating to such Distribution Date and the aggregate withdrawals from
the Certificate Account for each category of withdrawal specified in
Section 3.07(a) hereof relating to such Distribution Date;
(7) in the case of a Trust (or designated assets thereof) for
which a REMIC election has been or will be made, any other information
required to be provided to Certificateholders by the REMIC Provisions;
and
(8) any items relating to a specific Series of Certificates
specified in the related Pooling and Servicing Agreement.
The Trustee shall maintain a telephone number which investors may call
to ascertain, on each Distribution Date, the Certificate Principal Balance of
each Class of Certificates and the then-current Pass-Through Rate applicable to
each such Class. Such number for any Series shall initially be as specified in
the Prospectus Supplement for such Series and may only be changed after the
Trustee notes the change in such number in writing on the Remittance Report it
sends to Certificateholders.
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Within a reasonable period of time after the end of each calendar year,
the Trustee shall prepare and furnish a statement, from information provided by
the Servicer, containing the information concerning the amount of distributions
of interest and principal on the Regular Certificates and the amount of
distributions on the Residual Certificates, as well as any other information as
may be required by the Code or Regulations and that customarily would be
provided by a Trustee to Certificateholders in order to enable such
Certificateholders to prepare their federal income tax returns, to each Person
who at any time during the calendar year was a Certificateholder that
constituted a retail investor or other Certificateholder that requests such
statement, aggregated for such calendar year or portion thereof during which
such Person was a Certificateholder. Such obligation of the Trustee shall be
deemed to have been satisfied to the extent that substantially comparable
information shall be provided by the Trustee pursuant to any requirements of the
Code as from time to time are in force.
SECTION 4.02. DISTRIBUTION ACCOUNT.
The Trustee shall establish and maintain a Distribution Account for the
benefit of the Certificateholders and shall deposit therein funds received with
respect to the Remittance Amount for each Distribution Date immediately upon
receipt thereof from the Servicer in accordance with Section 3.07(b) hereof. The
Distribution Account shall be an Eligible Account and shall be either held in
the Trustee's name or designated in a manner that reflects the custodial nature
of the account and that all funds in such account are held in trust for the
benefit of the Trustee.
The Servicer shall keep and maintain separate accounting, on an
Asset-by-Asset basis, for the purpose of justifying any payment to and from the
Distribution Account.
SECTION 4.03. ALLOCATION OF AVAILABLE DISTRIBUTION AMOUNT.
On each Distribution Date for a Series, the Trustee shall withdraw all
monies on deposit in the related Distribution Account in accordance with the
related Remittance Report and shall distribute such amounts in the following
order of priority:
(1) if OAC is not the Servicer, to pay the Servicer its
monthly Servicing Fee, to the extent not previously retained or
withdrawn from the Certificate Account by such Servicer or, if OAC is
the Servicer, to pay OAC its monthly Servicing Fee in respect of a
Distribution Date, but only to the extent that the amounts on deposit
in the Certificate Account and attributable to the Available
Distribution Amount for such Distribution Date exceed the sum of all
amounts to be distributed on the Certificates of the related Series on
such Distribution Date prior to the distribution to OAC of its
Servicing Fee, as described in the related Pooling and Servicing
Agreement in the Section thereof entitled "Distributions";
(2) to reimburse the Servicer from any amounts on deposit in
the Distribution Account for any Advance previously made which has
become a Non-Recoverable Advance, or to reimburse the Servicer for any
other Advance out of Related Proceeds on deposit in
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the Distribution Account, in either case to the extent not previously
retained or withdrawn from the Certificate Account by the Servicer;
(3) to reimburse OMI or the Servicer for expenses incurred by
or reimbursable to them pursuant to Section 6.05 hereof;
(4) to refund any overpayment of a Repurchase Price for an
Asset pursuant to Section 2.06(f) hereof; and
(5) to distribute to the Certificateholders (or, if more than
one REMIC election has been made with respect to the Trust, to
distribute to the holders of the Regular Interests and the Residual
Interest in the Pooling REMIC), the Available Distribution Amount in
accordance with the applicable Pooling and Servicing Agreement.
SECTION 4.04. COMPLIANCE WITH WITHHOLDING REQUIREMENTS.
Notwithstanding any other provisions of the Pooling and Servicing
Agreement, the Trustee shall comply with all federal withholding requirements
respecting payments of interest or principal to the extent of accrued original
issue discount on Certificates to each Holder of such Certificates who (a) is
not a "United States person," within the meaning of Code section 7701(a)(30),
(b) fails to furnish its TIN to the Trustee, (c) furnishes the Trustee an
incorrect TIN, (d) fails to report properly interest and dividends, or (e) under
certain circumstances, fails to provide the Trustee or the Certificateholder's
securities broker with a certified statement, signed under penalties of perjury,
that the TIN provided by such Certificateholder to the Trustee or such broker is
correct and that the Certificateholder is not subject to backup withholding. The
consent of such a Certificateholder shall not be required for such withholding.
In the event the Trustee does withhold the amount of any otherwise required
distribution from interest payments on the Assets (including principal payments
to the extent of accrued original issue discount) or P&I Advances thereof to any
Certificateholder pursuant to federal withholding requirements, the Trustee
shall indicate with any payment to such Certificateholders the amount withheld.
In addition, if any United States federal income tax is due at the time a
Non-U.S. Person transfers a Residual Certificate, the Trustee or other
Withholding Agent may (1) withhold an amount equal to the taxes due upon
disposition of such Residual Certificate from future distributions made with
respect to such Residual Certificate to the transferee thereof (after giving
effect to the withholding of taxes imposed on such transferee), and (2) pay the
withheld amount to the Internal Revenue Service unless satisfactory written
evidence of payment by the transferor of the taxes due has been provided to the
Trustee or such Withholding Agent. Moreover, the Trustee or other Withholding
Agent may (1) hold distributions on a Residual Certificate, without interest,
pending determination of amounts to be withheld, (2) withhold other amounts, if
any, required to be withheld pursuant to United States federal income tax law
from distributions that otherwise would be made to such transferee on each
Residual Certificate that it holds, and (3) pay to the Internal Revenue Service
all such amounts withheld.
SECTION 4.05. REPORTS OF SECURITY PRINCIPAL BALANCES TO THE CLEARING AGENCY.
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If and for so long as any Certificate is held by the Clearing Agency,
on the second Business Day before each Distribution Date, the Trustee shall give
oral notice to the Clearing Agency (and shall promptly thereafter confirm in
writing) the following: (a) the amount of interest and principal to be
distributed on the Certificates of such Class on the upcoming Distribution Date,
as reported in the related Remittance Report, (b) the Record Date for such
distribution, (c) the Distribution Date for such distribution and (d) the
aggregate Certificate Principal Balance of each Class of Certificates reported
pursuant to clause (10) of Section 4.01 hereof in such month.
SECTION 4.06. PREPARATION OF REGULATORY REPORTS.
(a) Subject to the provisions of subsections (b) and (c) of this
Section 4.06, the Servicer shall prepare or cause to be prepared, on behalf of
the Trust, such supplementary and periodic information, documents and reports
(such information, documents or reports are referred to hereinafter as "Periodic
Reports") as may be required pursuant to Section 12(g) or Section 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), by the rules
and regulations of the Commission thereunder or as a condition to approval of
any application for relief ("Application for Relief") hereinafter referred to
and, in connection therewith, shall prepare such applications and requests for
exemption and other relief from such provisions as it may deem appropriate. The
Servicer shall be deemed to certify as to each Periodic Report that it conforms
in all material respects to applicable reporting requirements imposed by the
Exchange Act or is otherwise in form and content appropriate for filing with the
Commission. The Servicer is hereby authorized to and shall execute all such
Periodic Reports or Applications for Relief on the Trustee's behalf and file the
same with the Commission and other required filing offices, if any, on behalf of
the Trust.
(b) Within 30 days after the beginning of the first fiscal year of any
Trust during which its obligation to file Periodic Reports pursuant to the
Exchange Act shall have been suspended, the Servicer shall prepare, or cause to
be prepared, a notice on Commission Form 15 ("Form 15") and is hereby authorized
to and shall execute such Form 15 on the related Trustee's behalf; PROVIDED,
HOWEVER, that the Servicer shall be under no obligation to prepare such notice
if the number of Certificateholders exceeds 300. The Servicer shall file any
notice on Form 15 with the Commission in accordance with the provisions of Rule
15d-6 under the Exchange Act.
(c) Notwithstanding any other provision of the Pooling and Servicing
Agreement, the Trustee has not assumed, and shall not by its performance
hereunder be deemed to have assumed, any of the duties or obligations of OMI or
any other Person with respect to (1) the registration of the Certificates
pursuant to the Securities Act, (2) the issuance or sale of the Certificates, or
(3) compliance with the provisions of the Securities Act, the Exchange Act, or
any applicable federal or state securities or other laws including, without
limitation, any requirement to update the registration statement or prospectus
relating to the Certificates in order to render the same not materially
misleading to investors.
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(d) In connection with the Servicer's preparation of any Form 15 or of
any Periodic Report, the Trustee shall provide it with information which it may
reasonably request concerning the number and identity of the Holders appearing
on the Certificate Register maintained by the Certificate Registrar, but the
Trustee shall have no duty or obligation to provide information which does not
appear on the Certificate Register, including any information concerning the
ownership of Persons for whom a nominee is the Holder of record.
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ARTICLE V
THE POOLING INTERESTS AND THE CERTIFICATES
SECTION 5.01. POOLING REMIC INTERESTS.
If an election has been made to treat certain assets of the Trust as a
Pooling REMIC, the Pooling and Servicing Agreement will set forth the terms of
the Regular Interests and Residual Interest of the Pooling REMIC. Unless
otherwise specified in the Pooling and Servicing Agreement, (a) the Pooling
REMIC Regular Interests will be "regular interests" for purposes of the REMIC
Provisions but will not constitute securities or certificates of interest in the
Trust; and (b) the Trustee will be the owner of any such Regular Interests,
which may not be transferred to any person other than a successor trustee
appointed pursuant to Section 8.08 hereof unless the party desiring the transfer
obtains a Special Tax Opinion.
SECTION 5.02. THE CERTIFICATES.
The Certificates shall be designated in the Pooling and Servicing
Agreement. The Certificates in the aggregate will represent the entire
beneficial ownership interest in the Trust Estate (or in the Issuing REMIC, if
any). On the Closing Date, unless otherwise specified in the related Pooling and
Servicing Agreement, the aggregate Certificate Principal Balance of the
Certificates will not be less than the aggregate Unpaid Principal Balance of the
underlying Assets as of the Cut-off Date, after application of principal
payments due on or before such date, whether or not received. The Certificates
will be substantially in the forms annexed to the Pooling and Servicing
Agreement. Unless otherwise provided in the Pooling and Servicing Agreement, the
Certificates of each Class will be issuable in registered form. Each Certificate
will share ratably in all rights of the related Class.
Upon original issue, the Certificates shall be executed and delivered
by the Trustee and the Trustee shall cause the Certificates to be authenticated
by the Certificate Registrar to or upon the order of OMI upon receipt by the
Trustee of the Servicer Custodial Certification required by Section 2.02 hereof.
The Certificates shall be executed and attested by manual or facsimile signature
on behalf of the Trustee by an authorized Officer under its seal imprinted
thereon. Certificates bearing the manual or facsimile signatures of individuals
who were at any time the proper Officers of the Trustee shall bind the Trustee,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Certificates or did not
hold such offices at the date of such Certificates. No Certificate shall
represent entitlement to any benefit under the Pooling and Servicing Agreement
or be valid for any purpose, unless there appears on such Certificate a
certificate of authentication substantially in the form provided in the Pooling
and Servicing Agreement (in the forms of Certificates attached thereto as
Exhibits) executed by the Certificate Registrar by manual signature, and such
certificate of authentication shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their
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execution, except that those Certificates delivered on the Closing Date may be
dated the Accrual Date.
SECTION 5.03. BOOK-ENTRY CERTIFICATES.
(a) The Book-Entry Certificates will be represented initially by one or
more certificates registered in the name of CEDE & Co., as nominee of the
Clearing Agency. OMI, the Servicer and the Trustee may for all intents and
purposes (including the making of payments on the Book-Entry Certificates) deal
with the Clearing Agency as the authorized representative of the Beneficial
Owners of the Book-Entry Certificates for as long as those Certificates are
registered in the name of the Clearing Agency. The rights of Beneficial Owners
of the Book-Entry Certificates shall be limited to those established by law and
agreements between such Beneficial Owners and the Clearing Agency and Clearing
Agency Participants. The Beneficial Owners of the Book-Entry Certificates shall
not be entitled to certificates for the Book-Entry Certificates as to which they
are the Beneficial Owners, except as provided in subsection (c) below. Requests
and directions from, and votes of, the Clearing Agency, as Holder, shall not be
deemed to be inconsistent if they are made with respect to different Beneficial
Owners. Without the consent of OMI, the Servicer and the Trustee, a Book-Entry
Certificate may not be transferred by the Clearing Agency except to another
Clearing Agency that agrees to hold the Book-Entry Certificate for the account
of the respective Clearing Agency Participants and Beneficial Owners.
(b) Neither OMI, the Servicer nor the Trustee will have any liability
for any aspect of the records relating to or payment made on account of
Beneficial Owners of the Book-Entry Certificates held by the Clearing Agency,
for monitoring or restricting any transfer of beneficial ownership in a
Book-Entry Certificate or for maintaining, supervising or reviewing any records
relating to such Beneficial Owners.
(c) The Book-Entry Certificates will be issued in fully-registered,
certificated form to Beneficial Owners of Book-Entry Certificates or their
nominees, rather than to the Clearing Agency or its nominee, only if (1) OMI
advises the Trustee in writing that the Clearing Agency is no longer willing or
able to discharge properly its responsibilities as depository with respect to
the Book-Entry Certificates and OMI is unable to locate a qualified successor
within 30 days or (2) OMI, at its option, elects to terminate the book-entry
system operating through the Clearing Agency. Upon the occurrence of either such
event, the Trustee shall notify the Clearing Agency, which in turn will notify
all Beneficial Owners of Book-Entry Certificates through Clearing Agency
Participants, of the availability of certificated Certificates. Upon surrender
by the Clearing Agency of the certificates representing the Book-Entry
Certificates and receipt of instructions for re-registration, the Trustee will
reissue the Book-Entry Certificates as certificated Certificates to the
Beneficial Owners identified in writing by the Clearing Agency. Such
certificated Certificates shall not constitute Book-Entry Certificates. All
reasonable costs associated with the preparation and delivery of certificated
Certificates shall be borne by OMI.
SECTION 5.04. REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES.
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The Trustee shall cause to be kept at its Corporate Trust Office a
Certificate Register in which, subject to such reasonable regulations as it may
prescribe, the Trustee shall provide for the registration of Certificates and of
transfers and exchanges of Certificates as herein provided. The Trustee will
initially serve as Certificate Registrar for the purpose of registering
Certificates and transfers and exchanges of Certificates as herein provided.
If a Person other than the Trustee is appointed by the Trustee as
Certificate Registrar, such Person will give the Trustee prompt written notice
of the location, and any change in the location, of the Certificate Register,
and the Trustee shall have the right to inspect the Certificate Register at all
reasonable times and to obtain copies thereof, and the Trustee shall have the
right to rely upon a certificate executed on behalf of the Certificate Registrar
by an Officer thereof as to the names and addresses of the Holders of the
Certificates and the principal amounts and numbers of such Certificates.
Subject to Section 5.05 below, upon surrender for registration of
transfer of any Certificate at the Corporate Trust Office of the Trustee or at
any other office or agency of the Trustee maintained for such purpose, the
Trustee shall execute and the Certificate Registrar shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Certificates of the same Class of a like aggregate Percentage Interest.
At the option of the Certificateholders, each Certificate may be
exchanged for other Certificates of the same Class with the same and authorized
denominations and a like aggregate Percentage Interest, upon surrender of such
Certificate to be exchanged at any such office or agency. Whenever any
Certificates are so surrendered for exchange, the Trustee shall execute and
cause the Certificate Registrar to authenticate and deliver the Certificates
which the Certificateholder making the exchange is entitled to receive. Every
Certificate presented or surrendered for transfer or exchange shall (if so
required by the Trustee) be duly endorsed by, or be accompanied by a written
instrument of transfer in the form satisfactory to the Trustee duly executed by,
the Holder thereof or his attorney duly authorized in writing.
No service charge to the Certificateholders shall be made for any
transfer or exchange of Certificates, but the Trustee may require payment of a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
All Certificates surrendered for transfer and exchange shall be
destroyed by the Certificate Registrar.
The Trustee will (or will cause the Certificate Registrar to) provide
notice to the Trustee of each transfer of a Certificate, and will provide the
Trustee and Servicer with an updated copy of the Certificate Register on January
1 and July 1 of each year (or at such other time as the Servicer may request).
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SECTION 5.05. RESTRICTIONS ON TRANSFER.
(a) Securities Law Compliance. No transfer of any Private Certificate
shall be made unless that transfer is made pursuant to an effective registration
statement under the Securities Act and effective registration or qualification
under applicable state securities laws, or is made in a transaction that does
not require such registration or qualification. Any Holder of a Private
Certificate shall, and, by acceptance of such Certificate, does agree to,
indemnify OMI, the Trustee and the Servicer against any liability that may
result if any transfer of such Certificates by such Holder is not exempt from
registration under the Securities Act and all applicable state securities laws
or is not made in accordance with such federal and state laws. Neither OMI, the
Trustee nor the Servicer is obligated to register or qualify any Private
Certificate under the Securities Act or any other securities law or to take any
action not otherwise required under these Standard Terms or the related Pooling
and Servicing Agreement to permit the transfer of such Certificates without such
registration or qualification. The Trustee shall not register any transfer of a
Private Certificate (other than a Residual Certificate) unless and until the
prospective transferee provides the Trustee with a Transferee Agreement or, if
the Certificate to be transferred is a Rule 144A Certificate, a Rule 144A
Agreement certifying to facts which, if true, would mean that the proposed
transferee is a Qualified Institutional Buyer, and unless and until the transfer
otherwise complies with the provisions of this Section 5.05. If a proposed
transfer does not involve a Rule 144A Certificate or the transferee's Rule 144A
Agreement does not certify to facts which, if true, would mean that the
transferee is a Qualified Institutional Buyer, (i) the Servicer and the Trustee
shall require that the transferor and transferee certify as to the factual basis
for the registration exemption(s) relied upon and (ii) if such transfer is made
within three years after the acquisition thereof by a non-Affiliate of OMI from
OMI or an Affiliate of OMI, the Servicer or the Trustee may also may require an
Opinion of Counsel that such transfer may be made without registration or
qualification under the Securities Act and applicable state securities laws,
which Opinion of Counsel shall not be obtained at the expense of OMI, the
Trustee or the Servicer. Notwithstanding the foregoing, no Rule 144A Agreement,
Transferee Agreement or Opinion of Counsel shall be required in connection with
the initial transfer of the Private Certificates and no Opinion of Counsel shall
be required in connection with the transfer of the Private Certificates by a
broker or dealer, if such broker or dealer was the initial transferee.
OMI shall provide to any transferee Holder of a Rule 144A Certificate
and any prospective transferee designated by such Holder information regarding
the related Certificates and the related Assets and such other information as
shall be necessary to satisfy the condition to eligibility set forth in Rule
144A(d)(4) for transfer of any such Certificate without registration thereof
under the Securities Act pursuant to the registration exemption provided by Rule
144A, upon the request for such information by such Holder.
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(b) ERISA Compliance.
(1) BOOK-ENTRY CERTIFICATES. No transfer of all or any portion
of any Class of Book-Entry Certificates that are ERISA Restricted
Certificates shall be made to a transferee that is a Plan Investor
unless such transfer qualifies for an exemption from application of the
prohibited transaction provisions of Sections 406 and 407 of ERISA and
Section 4975 of the Code, and each Beneficial Owner of such a
Certificate shall be deemed to have represented, by virtue of its
acquisition of such a Certificate, either (i) that it is not a Plan
Investor or (ii) that an exemption from application of the prohibited
transaction provisions of Sections 406 and 407 of ERISA and Section
4975 of the Code will apply to the acquisition, holding and resale of
such Certificates by the Beneficial Owner thereof.
(2) CERTIFICATED CERTIFICATES. No transfer of all or any
portion of any Class of Certificates that (A) are not Book-Entry
Certificates and (B) are ERISA Restricted Certificates shall be made
unless and until the prospective transferee provides the Trustee and
the Servicer with a properly completed and executed Benefit Plan
Affidavit, together with a Benefit Plan Opinion if required in order to
comply with such Affidavit. Notwithstanding anything else to the
contrary herein, any purported transfer of such a Certificate to or on
behalf of a Plan Investor without delivery of a Benefit Plan Opinion
shall be null and void.
(c) Residual Certificates. The Trustee shall not register any transfer
of a Residual Certificate (including any beneficial interest therein) unless it
shall have received the written consent of the Servicer. No Residual Certificate
may be transferred to a Disqualified Organization. The Servicer will not consent
to any proposed transfer or sale of a Residual Certificate (1) to any investor
that it knows is a Disqualified Organization or (2) if the transfer involves
less than an entire interest in a Residual Certificate, unless (A) the interest
transferred is an undivided interest or (B) the transferor or the transferee
provides the Servicer with an Opinion of Counsel obtained at its own expense to
the effect that the transfer will not jeopardize the REMIC status of any REMIC
consisting of assets of the Trust. The Servicer's consent to any transfer is
further conditioned upon the Servicer's receipt from the proposed transferee of
(x) a Residual Transferee Agreement, (y) a Benefit Plan Affidavit, and (z)
either (A) if the transferee is a Non-U.S. Person, an affidavit of the proposed
transferee in substantially the form attached as Exhibit 8-A to Exhibit 8 hereto
and a certificate of the transferor stating whether the Residual Certificate has
"tax avoidance potential" as defined in Treasury Regulations Section
1.860G-3(a)(2), or (B) if the transferee is a U.S. Person, an affidavit in
substantially the form attached as Exhibit 8-B to Exhibit 8 hereto. In addition,
if a proposed transfer involves a Private Certificate, the transfer shall be
subject to the additional restrictions set forth in Section 5.05(a) above.
Notwithstanding the foregoing, no Opinion of Counsel shall be required in
connection with the initial transfer of the Residual Certificates or their
transfer by a broker or dealer, if such broker or dealer was the initial
transferee. Notwithstanding the fulfillment of the prerequisites described
above, the Servicer may withhold its consent to, or the Trustee may refuse to
recognize, a transfer of a Residual Certificate, but only to the extent
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necessary to avoid a risk of disqualification as a REMIC of a REMIC consisting
of Trust assets or the imposition of a tax upon a REMIC. Any attempted transfer
in violation of the foregoing restrictions shall be null and void and shall not
be recognized by the Trustee.
If a tax or a reporting cost is borne by a REMIC consisting of Trust
assets as a result of the transfer of a Residual Certificate or any beneficial
interest therein in violation of the restrictions set forth in this Section, the
transferor shall pay such tax or cost and, if such tax or cost is not so paid,
the Trustee, upon notification from the Servicer, shall pay such tax or cost or
may pay such tax or reporting cost with amounts that otherwise would have been
paid to the transferee of the Residual Certificate (or beneficial interest
therein). In that event, neither the transferee nor the transferor shall have
any right to seek repayment of such amounts from OMI, the Trustee, the REMIC,
the Servicer, or the other Holders of any of the Certificates, and none of such
parties shall have any liability for payment of any such tax or reporting cost.
In the event that a Residual Certificate is transferred to a Disqualified
Organization, the Servicer shall make, or cause to be made, available the
information necessary for the computation of the excise tax imposed under
section 860E(e) of the Code.
SECTION 5.06. ACCRUAL OF INTEREST ON THE CERTIFICATES.
Certificates entitled to receive interest in accordance with the
related Pooling and Servicing Agreement shall accrue interest at the applicable
Pass-Through Rates on the basis of a 360-day year consisting of twelve 30-day
months and on the assumption that each Interest Accrual Period consists of 30
days.
SECTION 5.07. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
If (a) any mutilated Certificate is surrendered to the Trustee or the
Certificate Registrar, or the Trustee and the Certificate Registrar receive
evidence to their satisfaction of the destruction, loss or theft of any
Certificate, and (b) there is delivered to the Trustee and the Certificate
Registrar such security or indemnity as may be required by them to save each of
them harmless (the unsecured agreement of an institutional holder being
sufficient for such purpose), then, in the absence of notice to the Trustee or
the Certificate Registrar that such Certificate has been acquired by a BONA FIDE
purchaser, the Trustee shall execute and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of
the same Class, tenor and denomination or Percentage Interest. Upon the issuance
of any new Certificate under this Section, the Trustee may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other reasonable expenses (including the
fees and expenses of the Trustee and the Certificate Registrar) connected
therewith. Every new Certificate issued pursuant to this Section shall
constitute complete and indefeasible evidence of ownership in the Trust, as if
originally issued on the Closing Date, regardless of whether any destroyed, lost
or stolen Certificate in lieu of which such new Certificate was issued shall be
found at any time.
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SECTION 5.08. PERSONS DEEMED OWNERS.
Prior to due presentment for registration of transfer of any
Certificate, the Servicer, the Trustee and any agent of the Servicer or of the
Trustee may treat the Person in whose name any Certificate is registered on the
Certificate Register as the owner of such Certificate for the purpose of
receiving distributions on such Certificate and for all other purposes
whatsoever (whether or not such Certificate is overdue), and neither the
Servicer, the Trustee nor any agent of the Servicer or the Trustee shall be
affected by notice to the contrary.
SECTION 5.09. APPOINTMENT OF PAYING AGENT.
The Trustee, at its own expense, may appoint a Paying Agent approved by
OMI for the purpose of making distributions to Certificateholders. The Trustee
shall cause such Paying Agent to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with the Trustee that such
Paying Agent will hold all sums held by it for the payment to Certificateholders
in an Eligible Account in trust for the benefit of the Certificateholders
entitled thereto until such sums shall be paid to such Certificateholders. All
funds remitted by the Trustee to any such Paying Agent for the purpose of making
distributions shall be paid to Certificateholders on each Distribution Date and
any amounts not so paid shall be returned on such Distribution Date to the
Trustee.
ARTICLE VI
OMI AND THE SERVICER
SECTION 6.01. LIABILITY OF OMI AND THE SERVICER.
OMI and the Servicer each shall be liable in accordance with the terms
of the Pooling and Servicing Agreement only to the extent of the obligations
specifically imposed by the Pooling and Servicing Agreement and undertaken
hereunder by OMI or the Servicer, respectively.
SECTION 6.02. OMI'S REPRESENTATIONS AND WARRANTIES.
OMI represents and warrants to the Trustee, as of the date of a Pooling
and Servicing Agreement and as of the related Closing Date, as follows:
(a) OMI has been duly incorporated and is validly existing as a
corporation under the laws of the State of Nevada and is in good standing under
such laws, with full power and authority to own its properties and conduct its
business as now conducted by it and to enter into and perform its obligations
under the Pooling and Servicing Agreement, and has duly qualified to do business
as a foreign corporation and is in good standing under the laws of each
jurisdiction wherein it
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conducts any material business or in which the performance of its duties under
the Pooling and Servicing Agreement would require such qualification.
(b) OMI has all requisite corporate power and authority to own its
properties and to conduct any and all business required or contemplated by the
Pooling and Servicing Agreement to be conducted by OMI and to perform the
covenants and obligations to be performed by it hereunder; the execution and
delivery by OMI of the Pooling and Servicing Agreement are within the corporate
power of OMI and have been duly authorized by all necessary corporate action on
the part of OMI; and neither the execution and delivery of the Pooling and
Servicing Agreement by OMI, nor the consummation by OMI of the transactions
herein contemplated, nor compliance with the provisions hereof by OMI, will (1)
conflict with or result in a breach of, or will constitute a default under, any
of the provisions of the articles of incorporation or by-laws of OMI or any law,
governmental rule or regulation, or any judgment, decree or order binding on OMI
or its properties, or any of the provisions of any indenture, mortgage, deed of
trust, contract or other instrument to which OMI is a party or by which it is
bound or (2) result in the creation or imposition of any lien, charge or
encumbrance upon any of its property pursuant to the terms of any such
indenture, mortgage, deed of trust, contract or other instrument.
(c) The Pooling and Servicing Agreement and all other documents and
instruments required or contemplated hereby to be executed or delivered by OMI
under the Pooling and Servicing Agreement have been duly authorized, executed
and delivered by OMI and, assuming due authorization, execution and delivery
thereof by all other parties thereto, constitute legal, valid and binding
agreements enforceable against OMI in accordance with their terms, subject, as
to enforcement of remedies, to applicable bankruptcy, reorganization, insolvency
or other similar laws affecting creditors' rights generally from time to time in
effect and to general principles of equity.
(d) No consent, approval, order or authorization of, or registration,
qualification or declaration with, any state, federal or other governmental
authority by OMI is required in connection with the authorization, execution or
delivery of the Pooling and Servicing Agreement or the performance by OMI of the
covenants and obligations to be performed by it hereunder.
(e) As of the Closing Date, no Proceedings are pending or, to the best
of OMI's knowledge, threatened against OMI that would prohibit its entering into
the Pooling and Servicing Agreement or performing its obligations under the
Pooling and Servicing Agreement, including assisting in the issuance of the
Certificates.
(f) OMI has obtained or made all necessary consents, approvals, waivers
and notifications of stockholders, creditors, lessors and other nongovernmental
persons, in each case, in connection with the execution and delivery of the
Pooling and Servicing Agreement, and the consummation of all the transactions
herein contemplated.
(g) OMI does not believe, nor does it have any reason or cause to
believe, that it cannot perform its obligations under the Pooling and Servicing
Agreement.
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Upon discovery by any of OMI, the Servicer or the Trustee of a breach
of any of the foregoing representations, warranties and covenants that
materially and adversely affects the interest of the Certificateholders in any
underlying Asset, the party discovering such breach shall give prompt written
notice thereof (but in no event later than two Business Days following such
discovery) to the other parties hereto.
SECTION 6.03. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SERVICER.
The Servicer hereby represents, warrants and covenants to the Trustee,
as of the date hereof and as of the Closing Date, as follows:
(a) The Servicer has been duly incorporated and is validly existing as
a corporation under the laws of the State of North Carolina (or the state of its
incorporation, if the Servicer is not OAC) and is in good standing under such
laws, with full power and authority to own its properties and conduct its
business as now conducted by it and to enter into and perform its obligations
under the Pooling and Servicing Agreement, and has duly qualified to do business
as a foreign corporation and is in good standing under the laws of each
jurisdiction wherein it conducts any material business or in which the
performance of its duties under the Pooling and Servicing Agreement would
require such qualification, except where the failure so to qualify would not
have a material adverse effect on the performance of its obligations under the
Pooling and Servicing Agreement. The Servicer holds all material licenses,
certificates, franchises, and permits from all governmental authorities
necessary for the conduct of its business and will have received no notice of
proceedings relating to the revocation of any such license, certificate or
permit, that, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would affect materially and adversely the conduct
of the business, results of operations, net worth or condition (financial or
otherwise) of the Servicer.
(b) The Servicer has all requisite corporate power and authority to own
its properties and to conduct any and all business required or contemplated by
the Pooling and Servicing Agreement to be conducted by the Servicer and to
perform the covenants and obligations to be performed by it hereunder; the
execution and delivery by the Servicer of the Pooling and Servicing Agreement
are within the corporate power of the Servicer and have been duly authorized by
all necessary corporate action on the part of the Servicer; and neither the
execution and delivery of the Pooling and Servicing Agreement by the Servicer,
nor the consummation by the Servicer of the transactions herein contemplated,
nor compliance with the provisions hereof by the Servicer, will (1) conflict
with or result in a breach of, or will constitute a default under, any of the
provisions of the articles of incorporation or by-laws of the Servicer or any
law, governmental rule or regulation, or any judgment, decree or order binding
on the Servicer or its properties, or any of the provisions of any indenture,
mortgage, deed of trust, contract or other instrument to which the Servicer is a
party or by which it is bound or (2) result in the creation or imposition of any
lien, charge or encumbrance upon any of its property pursuant to the terms of
any such indenture, mortgage, deed of trust, contract or other instrument.
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(c) The Pooling and Servicing Agreement and all other documents and
instruments required or contemplated hereby to be executed or delivered by the
Servicer under the Pooling and Servicing Agreement have been duly authorized,
executed and delivered by the Servicer and, assuming due authorization,
execution and delivery thereof by all other parties thereto, constitute legal,
valid and binding agreements enforceable against the Servicer in accordance with
their terms, subject, as to enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency or other similar laws affecting creditors' rights
generally from time to time in effect and to general principles of equity.
(d) No consent, approval, order or authorization of, or registration,
qualification or declaration with, any federal, state or other governmental
authority by the Servicer is required in connection with the authorization,
execution or delivery of the Pooling and Servicing Agreement or the performance
by the Servicer of the covenants and obligations to be performed by it
hereunder.
(e) No Proceedings are pending or, to the best of the Servicer's
knowledge, threatened against the Servicer that would prohibit its entering into
the Pooling and Servicing Agreement or performing its obligations under the
Pooling and Servicing Agreement, including assisting in the issuance of the
Certificates.
(f) The Servicer maintains an errors and omissions policy and fidelity
bond that covers the Servicer's performance under the Pooling and Servicing
Agreement and such policy and bond are in full force and effect.
(g) The Servicer has obtained or made all necessary consents,
approvals, waivers and notifications of stockholders, creditors, lessors and
other nongovernmental persons, in each case, in connection with the execution
and delivery of the Pooling and Servicing Agreement, and the consummation of all
the transactions herein contemplated.
(h) The Servicer does not believe, nor does it have any reason or cause
to believe, that it cannot perform its obligations under the Pooling and
Servicing Agreement.
Upon discovery by any of OMI, the Servicer or the Trustee of a breach
of any of the foregoing representations, warranties and covenants that
materially and adversely affects the interest of the Certificateholders in any
underlying Asset, the party discovering such breach shall give prompt written
notice thereof (but in no event later than two Business Days following such
discovery) to the other parties hereto.
SECTION 6.04. CORPORATE EXISTENCE.
Subject to the provisions of the following paragraph, OMI and the
Servicer each will keep in full effect its existence, rights and franchises as a
corporation under the laws of the jurisdiction in which it is incorporated and
will obtain and preserve its qualification to do business as a foreign
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corporation in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of the Pooling and
Servicing Agreement, any Certificates or any of the Assets included in the Trust
Estate, and to perform its duties under the Pooling and Servicing Agreement.
Any Person (a) into which OMI or the Servicer may be merged or
consolidated, (b) that may result from any merger, conversion or consolidation
to which OMI or the Servicer shall be a party, (c) that may succeed to the
business of OMI or the Servicer, or (d) to which OMI or the Servicer may
transfer all of its assets, shall be the successor to OMI or the Servicer
hereunder, respectively, without the execution or filing of any document or any
further act by any of the parties to the Pooling and Servicing Agreement,
anything herein to the contrary notwithstanding; PROVIDED, that any such
successor to the Servicer must agree in writing to be bound by each of the
Servicer's obligations hereunder and that each applicable Rating Agency must
deliver to the Trustee a letter to the effect that such successorship shall not
result in a downgrading of the rating initially assigned by the Rating Agency to
any Class of Certificates as to which OMI has requested a rating from such
Rating Agency.
SECTION 6.05. LIMITATION ON LIABILITY OF OMI, THE SERVICER AND OTHERS.
Neither OMI, the Servicer nor any of the directors, officers, employees
or agents of any of OMI or the Servicer shall be under any liability to the
Trust or the Certificateholders and all such Persons shall be held harmless for
any action taken or for refraining from the taking of any action in good faith
pursuant to the Pooling and Servicing Agreement, or for errors in judgment;
PROVIDED, HOWEVER, that this provision shall not protect any such Person against
any breach of warranties or representations made herein or against any liability
which would otherwise be imposed by reason of willful misfeasance, bad faith or
gross negligence in the performance of duties or by reason of reckless disregard
of obligations and duties hereunder. OMI, the Servicer and any of the directors,
officers, employees or agents of either OMI or the Servicer may rely in good
faith on any document of any kind which, PRIMA FACIE, is properly executed and
submitted by any Person respecting any matters arising hereunder. Neither OMI
nor the Servicer shall be under any obligation to appear in, prosecute or defend
any legal action unless such action is related to its respective duties under
the Pooling and Servicing Agreement and such action in its opinion does not
involve it in any expense or liability, except as provided in Section 10.01(b)
hereof; PROVIDED, HOWEVER, that OMI or the Servicer may each in its discretion
undertake any such action that it deems necessary or desirable with respect to
the Pooling and Servicing Agreement and the rights and duties of the parties
thereto and the interests of the Certificateholders thereunder if the
Certificateholders offer to OMI or the Servicer, as the case may be, reasonable
security or indemnity against the costs, expenses and liabilities that may be
incurred therein or thereby.
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SECTION 6.06. SERVICER RESIGNATION.
The Servicer shall not resign from the obligations and duties imposed
on it under the Pooling and Servicing Agreement, except (a) upon appointment of
a successor servicer and receipt by the Trustee of a letter from each applicable
Rating Agency that such a resignation and appointment will not, in and of
itself, result in a downgrading of any rated Certificates or (b) upon
determination by its Board of Directors that the performance of its duties under
the Pooling and Servicing Agreement is no longer permissible under applicable
law. Any such determination permitting the resignation of the Servicer shall be
evidenced by a resolution of its Board of Directors and an Opinion of Counsel to
such effect delivered to the Trustee. No such resignation shall become effective
until the Trustee or a successor servicer shall have assumed the
responsibilities and obligations of the Servicer in accordance with Section 7.02
hereof.
SECTION 6.07. ASSIGNMENT OR DELEGATION OF DUTIES BY THE SERVICER AND OMI.
(a) The Servicer may at any time without notice or consent delegate
certain computational, data processing, collection and foreclosure duties
hereunder to any entity. No such delegation shall relieve the Servicer in any
respect of its responsibility with respect to such duties.
(b) Neither the Servicer nor OMI may assign the Pooling and Servicing
Agreement or any of its rights, power, duties or obligations hereunder (except
as provided in Section 6.07(a) above), provided that the Servicer and OMI may
assign the Pooling and Servicing Agreement in connection with a consolidation,
merger, conveyance, transfer or lease made in compliance with Section 6.04
hereof.
(c) Except as provided in Sections 6.04 and 6.06 hereof, the duties and
obligations of the Servicer and OMI under the Pooling and Servicing Agreement
shall continue until the Pooling and Servicing Agreement shall have been
terminated as provided in Section 9.01 hereof, and shall survive the exercise by
the Trustee of any right or remedy under the Pooling and Servicing Agreement, or
the enforcement by the Trustee of any provisions of the Pooling and Servicing
Agreement.
SECTION 6.08. OMI AND SERVICER MAY OWN CERTIFICATES.
OMI, the Servicer and any Affiliate of the foregoing may in its
individual or any other capacity become the owner or pledgee of Certificates
with the same rights as it would have if it were not OMI, the Servicer or an
Affiliate of OMI or the Servicer.
SECTION 6.09. PROTECTION OF TRUST ESTATE.
Except as limited by Section 2.02(c)(2), Section 2.02(c)(3) or Section
2.03(a) above, the Servicer will execute and deliver from time to time all
amendments to the Pooling and Servicing Agreement and all financing statements,
continuation statements, instruments of further assurance
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and other instruments necessary or advisable in order to, and will take such
other action as the Trustee deems necessary or advisable in order to:
(a) grant to the Trustee more effectively all or any portion of the
Trust Estate;
(b) preserve and defend the Trust's title to the Trust Estate and the
rights therein of the Trustee and the Holders of Certificates against the claims
of all persons and parties;
(c) maintain or preserve the lien (and the priority thereof) created by
the Pooling and Servicing Agreement or to carry out more effectively the
purposes hereof (including the filing of continuation statements under the UCC
as necessary);
(d) perfect, publish notice of, or protect the validity of any grant
made or to be made pursuant to the Pooling and Servicing Agreement; or
(e) enforce any of the related Asset Documents.
OMI and the Servicer each hereby designates the Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required pursuant to this Section 6.09; PROVIDED, that the
Trustee shall have no duty to determine whether the filing of any financing
statement shall be necessary or to file such statements except upon written
request of OMI or the Servicer. After execution of any continuation statement or
other instrument pursuant to this Section, the Trustee shall deliver such
instrument to the Servicer for filing. Promptly after filing any such instrument
or causing any such instrument to be filed, the Servicer shall deliver an
Officer's Certificate, signed by an Officer of the Servicer, to the Trustee
stating that such continuation statement or other instrument has been filed.
The Servicer shall pay or cause to be paid, on behalf of the Trust, any
taxes levied on the account of the ownership by the Trust of the related Assets.
SECTION 6.10. PERFORMANCE OF OBLIGATIONS.
The Servicer shall not take any action, and will use its best efforts
not to permit any action to be taken by others, that would release any Person
from any of such Person's covenants or obligations under any of the related
Asset Documents or under any instrument included in the Trust Estate, or that
would result in the amendment, hypothecation, subordination, termination or
discharge of, or impair the validity or effectiveness of, any of the related
Asset Documents or any such instrument, except as expressly provided in the
Pooling and Servicing Agreement or such Asset Documents or other instrument or
unless such action will not adversely affect the interests of the Holders of the
Certificates.
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ARTICLE VII
EVENT OF DEFAULT; TERMINATION OF SERVICING ARRANGEMENTS
SECTION 7.01. EVENTS OF DEFAULT.
Any of the following acts or occurrences shall constitute an Event of
Default by the Servicer:
(a) any failure by the Servicer to remit funds in the Certificate
Account to the Distribution Account or to make a required P&I Advance that is
not deemed by the Servicer to be a Non-Recoverable Advance, in either case as
required by Section 3.07(b) hereof, and the continuance of such failure
unremedied for a period of five days after the date upon which such deposit,
payment or remittance was due;
(b) any failure on the part of the Servicer duly to observe or perform
in any material respect any of the covenants or agreements on the part of the
Servicer (other than covenants referred to in clause (a) above) contained in the
Certificates or in the Pooling and Servicing Agreement, which failure continues
unremedied for a period of 60 days after the date on which written notice of
such failure, requiring the same to be remedied, shall have been given to the
Servicer by the Trustee, or to the Servicer and the Trustee by the Holders of
Certificates of a Series entitled to at least 25% of the related Voting Rights;
(c) the issuance of a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises in an involuntary case
under any present or future federal or state bankruptcy, insolvency or similar
law or appointing a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs, against the
Servicer, and the remaining of such decree or order in force undischarged or
unstayed for a period of 60 consecutive days;
(d) the Servicer's consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshalling of
assets and liabilities, or similar proceedings of, or relating to, the Servicer
or of, or relating to, all or substantially all of the property of the Servicer;
or
(e) the Servicer's (1) admission in writing of its inability to pay its
debts generally as they become due, (2) filing of a petition to take advantage
of, or commence a voluntary case under, any applicable insolvency or
reorganization statute, (3) making of an assignment for the benefit of its
creditors, or (4) voluntarily suspending payment of its obligations.
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If an Event of Default concerning the Servicer shall occur hereunder,
then, and in each and every such case, so long as such Event of Default shall
not have been remedied or waived, the Trustee may, and at the direction of the
Holders of Certificates evidencing greater than 50% of the Voting Rights, shall,
by notice then given in writing to the Servicer, terminate all of the rights and
obligations of the Servicer as servicer. On and after the receipt by the
Servicer of any such written notice, all authority and power of the Servicer
hereunder, whether with respect to the Certificates (except its rights as a
Holder thereof) or the Contracts or otherwise, shall pass to and be vested in
the Trustee pursuant to and under this Section 7.01 (PROVIDED, HOWEVER, that the
Servicer shall continue to be entitled to receive all amounts accrued and owing
to it as Servicer under the Pooling and Servicing Agreement on or prior to the
occurrence of a Event of Default specified in Section 7.01(a) above or, in the
case of any other Event of Default, on or prior to the date of such
termination); and, without limitation, the Trustee hereby is authorized and
empowered on behalf of the Servicer, as attorney-in-fact or otherwise, to
execute and deliver any and all documents and other instruments, and to do or
accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and
endorsement or assignment of the Contracts and related documents or otherwise.
The Servicer shall cooperate with the Trustee in effecting the
termination of the responsibilities and rights of the Servicer hereunder,
including, without limitation, (1) transferring to the Trustee for
administration by it of all cash amounts that shall be held at the time by the
Servicer for deposit, shall have been deposited by the Servicer into the
Servicing Account, the Certificate Account or the Distribution Account, or shall
be received thereafter with respect to a Contract, and (2) the prompt provision
to the Trustee (in no event later than ten Business Days subsequent to its
receipt of such notice of termination) of all documents and records, electronic
and otherwise, reasonably requested by the Trustee or its designee in order for
the Trustee or its designee to assume and carry out the duties and obligations
that otherwise were to have been performed and carried out by the Servicer under
the Pooling and Servicing Agreement but for the termination of the Servicer.
Upon any termination of the Servicer pursuant to this Section, the
Trustee or its designee shall pay over to the Servicer that portion of any
future proceeds of the related Assets that, if it were acting hereunder at such
future time, it would be permitted to retain or withdraw from the Certificate
Account or Distribution Account in consideration of, or in reimbursement for,
previous services performed, or advances made, by it or for other matters for
which it is entitled to reimbursement pursuant hereto or to the terms of the
Pooling and Servicing Agreement. Prior to appointment of any successor Servicer,
the Trustee must notify the Rating Agency in writing of the identity of such
prospective successor.
SECTION 7.02. TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.
On and after the time the Servicer receives a notice of termination
pursuant to Section 7.01 hereof or resigns pursuant to Section 6.06 hereof, the
Trustee shall be the successor in all respects
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to the Servicer in its capacity as servicer under the Pooling and Servicing
Agreement and in connection with the transactions provided for herein and shall
be subject to all the responsibilities, duties and liabilities placed on the
Servicer by the terms and provisions hereof. As compensation therefor, the
Trustee, except as provided in Section 7.01 hereof, shall be entitled to such
compensation (whether payable out of the Distribution Account or otherwise) as
the Servicer would have been entitled to receive hereunder if no such notice of
termination had been given, as well as all protections and indemnification
afforded the Servicer pursuant to Section 6.05 above. Notwithstanding the above,
the Trustee may, if it shall be unwilling so to act, or shall, if it is legally
unable so to act, appoint, or petition a court of competent jurisdiction to
appoint, any established housing finance institution having a net worth of not
less than $40,000,000 and the regular business of which shall have included, for
at least one year prior to such appointment, the servicing of a portfolio of
manufactured housing receivables of not less than $100,000,000, as the successor
to the Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Servicer hereunder. No
appointment of a successor to the Servicer shall be effective until the
assumption by the successor of all future responsibilities, duties and
liabilities of the Servicer under the Pooling and Servicing Agreement. Pending
appointment of a successor to the Servicer hereunder, unless the Trustee is
prohibited by law from so acting, the Trustee or an Affiliate of the Trustee
shall act as Servicer hereunder as provided above. Notwithstanding any of the
foregoing, the successor Servicer shall not be required to purchase any Assets
from the Trust pursuant to these Standard Terms except (i) under Section
2.06(a)(2) hereof to the extent the obligation to repurchase arose out of a
breach of a representation, warranty or covenant by the successor Servicer and
(ii) under Section 2.06(b) hereof to the extent the Servicer's obligation to
effect remedial action as described in such Section arose after the successor
Servicer began serving as Servicer. It is understood that any predecessor
Servicer shall remain liable for any breaches of representations, warranties and
covenants that it committed while it was the Servicer, and shall remain
responsible for effecting remedial actions described in Section 2.06(b) hereof
(and for repurchasing Assets pursuant to such Section 2.06(b)) to the extent the
obligation to undertake such remedial action arose while such predecessor
Servicer was the Servicer hereunder.
In connection with the appointment of a successor Servicer, the Trustee
may make such arrangements for the compensation of such successor servicer out
of payments on the related Assets as it and such successor shall agree;
PROVIDED, HOWEVER, that no such compensation shall be in excess of that
permitted the Servicer under the terms of the Pooling and Servicing Agreement.
The Trustee and such successor servicer shall take such action, consistent with
the Pooling and Servicing Agreement, as shall be necessary to effectuate any
such succession.
Any successor to the Servicer shall maintain in force during the term
of its service as Servicer the policy or policies that the Servicer is required
to maintain pursuant to Section 3.16(c) hereof.
Upon any Event of Default described hereunder, the Trustee, in addition
to the rights specified in this Section, shall have the right, in its own name
and as "Trustee," to take all actions now or hereafter existing at law, in
equity or by statute to enforce its rights and remedies and to
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protect the interests of the Certificateholders, and enforce the rights and
remedies of the Certificateholders (including the institution and prosecution of
all judicial, administrative and other proceedings and the filings of proofs of
claim and debt in connection therewith). No remedy provided for by the Pooling
and Servicing Agreement shall be exclusive of any other remedy, and each and
every remedy shall be cumulative and in addition to any other remedy and no
delay or omission to exercise any right or remedy shall impair any such right or
remedy or shall be deemed to be a waiver of any Event of Default. Amounts
payable to the Trustee to reimburse it for any expenses it incurs in connection
with any actions taken by it pursuant to this paragraph are intended to
constitute administrative expenses. Nothing herein contained shall be deemed to
authorize the Trustee to authorize or consent to or vote for or accept or adopt
on behalf of any Certificateholder any plan of reorganization, arrangement,
adjustment or composition affecting the Certificates or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any
Certificateholder in any such Proceeding.
For the purposes of this Section 7.02 and Section 7.03 hereof, the
Trustee shall not be deemed to have knowledge of a Default or an Event of
Default hereunder unless an Officer of the Trustee having direct responsibility
for the administration of the Pooling and Servicing Agreement has actual
knowledge thereof or unless written notice of any Event of Default is received
by the Trustee and such notice references the Certificates or the Trust.
SECTION 7.03. NOTIFICATIONS TO SERVICER AND TO CERTIFICATEHOLDERS.
(a) Upon obtaining actual knowledge of any Default, the Trustee shall
promptly notify the Servicer and each Certificateholder (at their respective
addresses appearing in the Certificate Register) thereof.
(b) Upon any termination of, or appointment of a successor to, the
Servicer pursuant to Section 7.02 hereof, the Trustee shall give prompt written
notice thereof to the Certificateholders at their respective addresses appearing
in the Certificate Register.
(c) As soon as practicable after the Trustee's obtaining knowledge of
the occurrence of an Event of Default, the Trustee shall transmit by certified
mail to all Holders of the Certificates (at their respective addresses appearing
in the Certificate Register) notice of such Event of Default or occurrence known
to the Trustee, unless such Event of Default shall have been cured or waived.
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ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01. DUTIES OF TRUSTEE.
If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by the Pooling and
Servicing Agreement, and shall use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs. Prior to the occurrence of an Event of Default or
after all Events of Default which may have occurred have been cured or waived,
the Trustee shall exercise such of the rights and powers vested in it by the
Pooling and Servicing Agreement, and shall use the same degree of care and skill
in their exercise, as a corporate trustee would exercise or use under the
circumstances in the administration of a corporate trust agreement.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee that are specifically required to be furnished pursuant to any provision
of the Pooling and Servicing Agreement, shall examine them to determine whether
they conform to the requirements of the Pooling and Servicing Agreement;
PROVIDED, HOWEVER, that the Trustee shall be under no duty to recalculate,
verify or recompute the information provided to it hereunder by OMI or the
Servicer. If any such instrument is found not to conform to the requirements of
the Pooling and Servicing Agreement in a material manner, the Trustee shall take
action as it deems appropriate to have the instrument corrected, and if the
instrument is not corrected to the Trustee's satisfaction, the Trustee will
provide notice thereof to the related Certificateholders.
No provision of the Pooling and Servicing Agreement shall be construed
to relieve the Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct; PROVIDED, HOWEVER, that:
(a) prior to the occurrence of an Event of Default with
respect to the Servicer of which the Trustee has notice or knowledge,
and after the curing or waiver of any such Event of Default, the duties
and obligations of the Trustee shall be determined solely by the
express provisions of the Pooling and Servicing Agreement, the Trustee
shall not be liable except for the performance of such duties and
obligations as are specifically set forth in the Pooling and Servicing
Agreement, no implied covenants or obligations shall be read into the
Pooling and Servicing Agreement against the Trustee and, in the absence
of bad faith on the part of the Trustee, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions furnished
to the Trustee that conform to the requirements of the Pooling and
Servicing Agreement;
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(b) the Trustee shall not be liable in its individual capacity
for any error of judgment made in good faith by an Officer of the
Trustee, unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
(c) the Trustee shall not be liable in its individual capacity
with respect to any action taken, suffered or omitted to be taken by it
in good faith in accordance with the direction of the Holders of
Certificates of a Series entitled to at least 25% of the related Voting
Rights relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee, under the Pooling and
Servicing Agreement;
(d) Any determination of negligence or bad faith of the
Trustee shall be made only upon a finding that there is clear and
convincing evidence (and not upon the mere preponderance of evidence)
thereof in a proceeding before a court of competent jurisdiction in
which the Trustee has had an opportunity to defend; and
(e) in no event shall the Trustee be held liable for the
actions or omissions of the Servicer or OMI (excepting the Trustee's
own actions as Servicer), and in connection with any action or claim or
recovery sought against the Trustee based upon facts involving the acts
or omissions of the Servicer or OMI, or involving any allegation or
claim of liability or recovery against the Trustee by the Servicer or
by OMI, the Trustee shall not be held to a greater standard of care
than the Servicer or OMI would be held in such situation.
Except as specifically required herein, the Trustee shall not be
required to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it, unless such risk or liability
relates to its ordinary services hereunder.
SECTION 8.02. CERTAIN MATTERS AFFECTING THE TRUSTEE.
(a) Except as otherwise provided in Section 8.01 hereof:
(1) In the absence of bad faith, the Trustee may rely, and
shall be protected in acting or refraining from acting in reliance
upon, any resolution, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent,
order, appraisal, bond or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties. Further, the Trustee may accept a copy of the vote of the
Board of Directors of any party certified by its clerk or assistant
clerk or secretary or assistant secretary as conclusive evidence of the
authority of any person to act in accordance with such vote, and such
vote may be considered as in full force and effect until receipt by the
Trustee of written notice to the contrary.
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(2) The Trustee may rely, in the absence of bad faith on its
part, upon a certificate of an Officer of the appropriate Person
whenever in the administration of the Pooling and Servicing Agreement
the Trustee shall deem it desirable that a matter be proved or
established (unless other evidence be prescribed herein specifically)
prior to taking, suffering or omitting any action hereunder.
(3) The Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken or
suffered or omitted by it hereunder in good faith and in accordance
with such written advice or Opinion of Counsel.
(4) The Trustee shall be under no obligation to exercise any
of the trusts or powers vested in it by the Pooling and Servicing
Agreement or to institute, conduct or defend any litigation hereunder
or in relation hereto at the request, order or direction of any of the
Certificateholders, pursuant to the provisions of the Pooling and
Servicing Agreement, unless such Certificateholders shall have offered
to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities that may be incurred therein or thereby.
(5) The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent,
order, approval, bond or other paper or document, unless requested in
writing to do so by the Holders of Certificates of a Series entitled to
at least 25% of the related Voting Rights; PROVIDED, HOWEVER, that if
the payment within a reasonable time to the Trustee of the costs,
expenses or liabilities likely to be incurred by it in the making of
such investigation, in the opinion of the Trustee, is not assured to
the Trustee by the security afforded to it by the terms of the Pooling
and Servicing Agreement, the Trustee may require indemnity against such
expense or liability as a condition to taking any such action. The
expense of every such examination shall be paid by the Servicer or, if
paid by the Trustee, shall be repaid by the Servicer upon demand.
(6) The Trustee may execute any of the trusts or powers under
the Pooling and Servicing Agreement or perform any duties hereunder
either directly or by or through agents, attorneys or co-trustees and
the Trustee shall not be responsible for any misconduct or negligence
on the part of any agent or attorney appointed with due care by it
under the Pooling and Servicing Agreement.
(7) Whenever the Trustee is authorized herein to require acts
or documents in addition to those required to be provided it in respect
of any matter, it shall be under no obligation to make any
determination as to whether such additional acts or documents should be
required unless obligated to do so under Section 8.01 hereof.
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(8) The Trustee shall not be deemed to have notice or
knowledge of any matter, including, without limitation, any Event of
Default, unless one of its Officers having direct responsibility for
the administration of the Pooling and Servicing Agreement has actual
knowledge or record thereof or unless written notice thereof is
received by the Trustee at the Corporate Trust Office and such notice
references the Certificates generally, OMI, the Trust or the Pooling
and Servicing Agreement.
(9) The Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by the Pooling and Servicing Agreement.
(10) The permissive right or authority of the Trustee to take
any action enumerated in the Pooling and Servicing Agreement shall not
be construed as a duty or obligation.
Certificateholders shall have rights to institute suits, actions or
proceedings in equity or at law upon or under or with respect to the Pooling and
Servicing Agreement only under the circumstances described in the third
paragraph of Section 11.03 hereof.
(b) All rights of action under the Pooling and Servicing Agreement or
under any of the Certificates enforceable by the Trustee may be enforced by it
without the possession of any of the Certificates, or the production thereof at
the trial or other Proceeding relating thereto, and any such suit, action or
Proceeding instituted by the Trustee shall be brought in its name for the
benefit of all the Holders of the Certificates, subject to the provisions of the
Pooling and Servicing Agreement.
SECTION 8.03. TRUSTEE NOT LIABLE FOR CERTIFICATES OR ASSETS.
The recitals contained in the Pooling and Servicing Agreement and in
the Certificates (other than the signature and countersignature of the Trustee
on the Certificates) shall be taken as the statements of OMI or the Servicer and
the Trustee assumes no responsibility for their correctness. The Trustee makes
no representations or warranties as to the validity or sufficiency of the
Pooling and Servicing Agreement or of the Certificates (other than the signature
and countersignature of the Trustee on the Certificates) or of any underlying
Asset or related document. The Trustee shall not be accountable for the use or
application by OMI of any of the Certificates or of the proceeds of such
Certificates, or for the use or application of any funds paid to the Servicer in
respect of the underlying Assets or deposited in or withdrawn from the Servicing
Account, the Certificate Account or the Distribution Account other than any
funds held by or on behalf of the Trustee in accordance with the Pooling and
Servicing Agreement.
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SECTION 8.04. TRUSTEE MAY OWN CERTIFICATES.
The Trustee, in its individual capacity or any other capacity, may
become the owner or pledgee of Certificates with the same rights it would have
if it were not Trustee.
SECTION 8.05. TRUSTEE'S FEES AND EXPENSES.
The Servicer shall pay to the Trustee from time to time, pursuant to
the Pooling and Servicing Agreement or a separate fee agreement, reasonable
compensation (which shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust) for all services rendered by
it in the execution of the trusts created under the Pooling and Servicing
Agreement and in the exercise and performance of any of the powers and duties
hereunder of the Trustee, and shall reimburse the Trustee for all reasonable
expenses, disbursements and advances (other than any expenses incurred by the
Trustee in connection with its assumption of the obligations of the Servicer
pursuant to Section 7.02 hereof) incurred or made by the Trustee in accordance
with any of the provisions of the Pooling and Servicing Agreement (including but
not limited to the reasonable compensation and the expenses and disbursements of
its counsel and of all persons not regularly in its employ) except any such
expense, disbursement or advance as may arise from its negligence or bad faith.
The Trustee and any director, officer, employee or agent of the Trustee shall be
indemnified by the Servicer and held harmless against any loss, liability or
expense, including reasonable attorney's fees, incurred as a result of or in
connection with the Pooling and Servicing Agreement or the Certificates,
including, but not limited to, any such loss, liability, or expense incurred in
connection with any legal action against the Trust or the Trustee or any
director, officer, employee or agent thereof, or the performance of any of the
Trustee's duties under the Pooling and Servicing Agreement other than any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
negligence in the performance of duties under the Pooling and Servicing
Agreement or by reason of reckless disregard of obligations and duties under the
Pooling and Servicing Agreement. Any payment hereunder made by the Servicer to
the Trustee shall be from the Servicer's own funds without any right to
reimbursement therefor. The obligations of the Servicer under this Section 8.05
shall survive the termination of the Trust and the resignation or removal of the
Trustee.
SECTION 8.06. ELIGIBILITY REQUIREMENTS FOR TRUSTEE.
The Trustee shall at all times be a corporation or national banking
association that is not an Affiliate of OMI or the Servicer, organized and doing
business under the laws of any state or the United States of America, authorized
under such laws to exercise corporate trust powers, having a combined capital
and surplus of at least $50,000,000 (or qualifying as a Qualified Bank) and
subject to supervision or examination by federal or state regulatory
authorities. If such corporation or association publishes reports of condition
at least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section the
combined capital and surplus of such corporation or association shall be deemed
to be
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its combined capital and surplus as set forth in its most recent report of
conditions so published. In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, the Trustee shall
resign immediately in the manner and with the effect specified in Section 8.07
hereof.
SECTION 8.07. RESIGNATION AND REMOVAL OF THE TRUSTEE.
The Trustee may at any time resign and be discharged from the trusts
created pursuant to the Pooling and Servicing Agreement by giving written notice
of such resignation to OMI, the Servicer and to all related Certificateholders.
Upon receiving such notice of resignation, OMI shall promptly appoint a
successor Trustee by written instrument, in duplicate, which instrument shall be
delivered to the resigning Trustee and to the successor Trustee. A copy of such
instrument shall be delivered to the Certificateholders and to the Servicer by
OMI. If no successor Trustee shall have been so appointed and have accepted
appointment within 30 days after the resigning Trustee's giving of such notice
of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.06 hereof and shall fail to resign after
written request therefor by OMI, or if at any time the Trustee shall become
incapable of acting, or shall be adjudged bankrupt or insolvent, or a receiver
of the Trustee or of its property shall be appointed, or any public officer
shall take charge or control of the Trustee or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation thereof, then OMI may
remove the Trustee and appoint a successor Trustee by written instrument, in
duplicate, which instrument shall be delivered to the Trustee so removed and to
the successor Trustee. A copy of such instrument shall be delivered to the
Certificateholders and to the Servicer by OMI.
The Holders of Certificates entitled to at least 51% of the Voting
Rights may remove the Trustee at any time and appoint a successor Trustee by
written instrument or instruments, in triplicate, signed by such Holders or
their attorneys-in-fact duly authorized, one complete set of which instruments
shall be delivered to OMI, one complete set to the Trustee so removed and one
complete set to the successor so appointed. A copy of such instrument shall be
delivered to the Certificateholders and to the Servicer by OMI. If the Holders
remove the Trustee otherwise than for reasonable cause based upon the Trustee's
failure to continue to meet the eligibility requirements set forth in Section
8.06 above or the Trustee's failure to perform its duties as described herein,
then the Holders so removing the Trustee shall bear any and all costs and
expenses arising from such removal and substitution.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor Trustee as
provided in Section 8.08 hereof.
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SECTION 8.08. SUCCESSOR TRUSTEE.
Any successor Trustee appointed as provided in Section 8.07 hereof
shall execute, acknowledge and deliver to OMI, the Servicer and to its
predecessor Trustee an instrument accepting such appointment under the Pooling
and Servicing Agreement and thereupon the resignation or removal of the
predecessor Trustee shall become effective and such successor Trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with the
like effect as if originally named as Trustee herein. The predecessor Trustee
shall deliver to the successor Trustee all related Asset Documents and related
documents and statements held by it under the Pooling and Servicing Agreement
and OMI, the Servicer and the predecessor Trustee shall execute and deliver such
instruments and do such other things as reasonably may be required for more
fully and certainly vesting and confirming in the successor Trustee all such
rights, powers, duties and obligations.
No successor Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Trustee shall be
eligible under the provisions of Section 8.06 hereof.
Upon acceptance of appointment by a successor Trustee as provided in
this Section, OMI shall mail notice of the succession of such Trustee under the
Pooling and Servicing Agreement to all Holders of the Certificates at their
addresses as shown in the Certificate Register. If OMI fails to mail such notice
within ten days after acceptance of appointment by the successor Trustee, the
successor Trustee shall cause such notice to be mailed at the expense of OMI.
SECTION 8.09. MERGER OR CONSOLIDATION OF TRUSTEE.
Any corporation or association into which the Trustee may be merged or
converted or with which it may be consolidated or any corporation or association
resulting from any merger, conversion or consolidation to which the Trustee
shall be a party, or any corporation or association succeeding to the business
of the Trustee, shall be the successor of the Trustee under the Pooling and
Servicing Agreement provided such corporation or association shall be eligible
under the provisions of Section 8.06 hereof, without the execution or filing of
any paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding. Prior to any such merger, conversion or
consolidation, the Trustee shall notify each applicable Rating Agency in writing
of the pendency of such merger, conversion or consolidation.
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SECTION 8.10. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
For the purpose of meeting any legal requirements of any jurisdiction
in which any part of the Trust Estate or property securing the same may be
located at any time, OMI, the Servicer and the Trustee, acting jointly, shall
have the power and shall execute and deliver all instruments necessary to
appoint one or more Persons approved by the Trustee to act as co-Trustee or
co-Trustees, jointly with the Trustee, or separate Trustee or Trustees, of all
or any part of the Trust Estate, and to vest in such Person or Persons, in such
capacity, such title to the Trust Estate or any part thereof, and, subject to
the other provisions of this Section 8.10, such powers, duties, obligations,
rights and trusts as OMI, the Servicer and the Trustee may consider necessary or
desirable. If OMI or the Servicer shall not have joined in such appointment
within 15 days after the receipt by it of a request so to do, the Trustee alone
shall have the power to make such appointment. No co-Trustee or separate
Trustee(s) hereunder shall be required to meet the terms of eligibility as a
successor Trustee under Section 8.06 hereof and no notice to Holders of
Certificates of the appointment of co-Trustee(s) or separate Trustee(s) shall be
required under Section 8.08 hereof.
In the case of any appointment of a co-Trustee or separate Trustee
pursuant to this Section 8.10, all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate Trustee or co-Trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed (whether as Trustee under the
Pooling and Servicing Agreement or as successor to the Servicer pursuant to
Section 7.02 hereof), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust Estate or any portion thereof in
any such jurisdiction) shall be exercised and performed by such separate Trustee
or co-Trustee at the direction of the Trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate Trustees and co-Trustees,
as effectively as if given to each of them. Every instrument appointing any
separate Trustee or co-Trustee shall refer to the Pooling and Servicing
Agreement and the conditions of this Article VIII. Each separate Trustee and
co-Trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, either
jointly with the Trustee or separately, as may be provided therein, subject to
all the provisions of the Pooling and Servicing Agreement, specifically
including every provision of the Pooling and Servicing Agreement relating to the
conduct of, affecting the liability of, or affording protection to, the Trustee.
Every such instrument shall be filed with the Trustee.
Any separate Trustee or co-Trustee may, at any time, constitute the
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of the
Pooling and Servicing Agreement on its behalf and in its name. If any separate
Trustee or co-Trustee shall die, become incapable of acting, resign or be
removed, all of its
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estates, properties, rights, remedies and trusts shall vest in and be exercised
by the Trustee, to the extent permitted by law, without the appointment of a new
or successor Trustee.
SECTION 8.11. APPOINTMENT OF CUSTODIANS. The Trustee may, with the
consent of the Servicer, appoint one or more Custodians to hold all or a portion
of the Trustee Mortgage Loan Files as agent for the Trustee, by entering into a
custodial agreement. The appointment of any Custodian may at any time be
terminated and a substitute Custodian appointed therefor by the Trustee. The
Trustee shall terminate the appointment of any Custodian and appoint a
substitute custodian upon the request of the Servicer to the Trustee. Subject to
this Article VIII, the Trustee agrees to comply with the terms of each custodial
agreement and to enforce the terms and provisions thereof against the Custodian
for the benefit of the Certificateholders. Each Custodian shall be a depository
institution or trust company subject to supervision by federal or state
authority, shall have combined capital and surplus of at least $10,000,000 and
shall be qualified to do business in the jurisdiction in which it holds any
Trustee Mortgage Loan File. Any such Custodian may not be an affiliate of OMI or
any Seller with respect to the applicable Trust.
SECTION 8.12. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
CERTIFICATES. All rights of action and claims under the Pooling and Servicing
Agreement or the Certificates may be prosecuted and enforced by the Trustee
without the possession of any of the Certificates or the production thereof in
any proceeding relating thereto and any such proceeding instituted by the
Trustee shall be brought in its own name or in its capacity as Trustee. Any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the Certificateholders in respect of
which such judgment has been recovered.
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ARTICLE IX
TERMINATION
SECTION 9.01. TERMINATION UPON REPURCHASE OR LIQUIDATION OF ALL CONTRACTS.
(a) The respective obligations and responsibilities of OMI, the
Servicer and the Trustee under the Pooling and Servicing Agreement (other than
the obligations of the Trustee to make distributions to Certificateholders, to
reimburse the Servicer for outstanding Advances, to pay the Servicer accrued and
previously unpaid Servicing Fees or to provide tax information as provided in
Section 4.01(a) hereof and other than the obligations of the Servicer under
Article X hereof) shall terminate upon distribution to the Certificateholders of
all amounts held by or on behalf of the Trustee and required hereunder to be so
distributed on the Distribution Date coinciding with or following the earlier to
occur of (1) a Terminating Purchase for an amount equal to the Termination Price
and (2) the final payment or other liquidation (or any advance with respect
thereto) of the last Asset remaining in the Trust or the disposition of the last
Repo Property or REO Property remaining in the Trust; PROVIDED, HOWEVER, that in
no event shall the Trust created hereby continue beyond the expiration of 21
years after the death of the last survivor of the descendants of Joseph P.
Kennedy, the late ambassador of the United States to the Court of St. James,
living on the date hereof.
(b) Unless otherwise provided in the Pooling and Servicing Agreement,
the Servicer may, at its option, make, or cause a Person to make, a Terminating
Purchase on any Distribution Date on or after the earlier to occur of (1) the
Servicer's determination, based upon an Opinion of Counsel, that the REMIC
status of any REMIC related to the Trust has been lost or that a substantial
risk exists that such REMIC status will be lost for the then-current taxable
year, or (2) the Distribution Date on which, after taking into account
distributions of principal to be made on such Distribution Date, the sum of the
Certificate Principal Balances of the Certificates is less than 10% of the sum
of the original Certificate Principal Balances of the Certificates.
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(c) The Servicer shall notify the Trustee and the Certificate Registrar
in writing of its election to make or to cause a Terminating Purchase no later
than the Distribution Date preceding the Distribution Date on which the
Certificates will be retired as a result of such Terminating Purchase. The
Servicer shall advise the Trustee and the Certificate Registrar of the final
payment or other liquidation of the last Asset remaining in the Trust or the
disposition of the last Repo Property or REO Property remaining in the Trust at
least two Business Days prior to the Remittance Date in the month in which the
Trust will terminate as a result thereof.
Notice of any termination of the Trust shall be given promptly by the
Trustee by letter sent to the Certificateholders by certified mail (1) in the
event such notice is given in connection with a Terminating Purchase, not
earlier than the fifth day of the month preceding the month of such termination
and not later than the first day of the month of such termination or (2)
otherwise not later than the Remittance Date preceding the final Distribution
Date, in each case specifying (A) the Distribution Date upon which the Trust
will terminate and that final payment of the Certificates will be made on such
Distribution Date and (B) the amount of any such final distribution. The Trustee
shall give such notice to the Certificate Registrar at the time such notice is
given to Certificateholders. In the event such notice is given in connection
with a Terminating Purchase, the Terminator shall deliver to the Trustee for
deposit into the Distribution Account on the Business Day immediately preceding
the Distribution Date on which the Terminating Purchase is to take place an
amount in next day funds equal to the Termination Price. Notwithstanding the
foregoing, if the Terminator is the Servicer, the Terminator, upon notice to the
Trustee, shall be entitled to remit the Termination Price net of amounts owed to
the Terminator in respect of unreimbursed outstanding Advances made by such
Terminator or amounts required to be reimbursed or paid to such Terminator
hereunder.
(d) On the final Distribution Date, the Trustee shall distribute to the
Certificateholders as of the related Record Date the amount otherwise
distributable on the Certificates on such Distribution Date (if such final
Distribution Date is not the result of a Terminating Purchase).
Upon any termination of the Trust as the result of a Terminating
Purchase, the Trustee shall distribute the Termination Price as though it were
the amount on deposit in the Distribution Account in accordance with Section
4.03(a) hereof and in accordance with the related Pooling and Servicing
Agreement.
Following such final distribution, the Servicer and the Trustee shall
promptly release to the Terminator the related Asset Files or portions thereof
in their respective possessions for the remaining Assets, Repo Properties and
REO Properties, and the Trustee shall execute all assignments, endorsements and
other instruments necessary to effectuate transfer of such Asset Files to such
Terminator, whereupon the Trust shall terminate.
(e) In the event that all of the Certificateholders shall not surrender
their Certificates within six months after the date specified in the
above-mentioned written notice, the Trustee shall give a second written notice
to the remaining Certificateholders to surrender their Certificates and receive
the final distribution with respect thereto, net of the cost of such second
notice. If within
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one year after the second notice all the Certificates shall not have been
surrendered for cancellation, the Trustee may take appropriate steps, or may
appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the amounts otherwise payable on such Certificates.
Any funds payable to Certificateholders that are not distributed on the final
Distribution Date shall be deposited in a Termination Account, as the case may
be, each of which shall be an Eligible Account, to be held for the benefit of
Certificateholders not presenting and surrendering their Certificates in the
aforesaid manner, and shall be disposed of in accordance with this Section.
SECTION 9.02. ADDITIONAL TERMINATION REQUIREMENTS.
(a) In the event of a Terminating Purchase as provided in Section 9.01
hereof, the Trust shall be terminated in accordance with the following
additional requirements, unless the Servicer, OMI, and the Trustee receive (1) a
Special Tax Opinion and (2) a Special Tax Consent from each of the Holders of
the Residual Certificates (unless the Special Tax Opinion specifically provides
that no REMIC-level tax will result from such Terminating Purchase).
(1) Within 90 days prior to the time of the making of the
final payment on the Certificates, OMI on behalf of each related REMIC
shall adopt a plan of complete liquidation meeting the requirements set
forth in the REMIC Provisions for a qualified liquidation (which plan
may be adopted by the Trustee's attachment of a statement specifying
the first day of the 90-day liquidation period to the REMIC's final
federal income tax return) and the REMIC will sell all of its assets
(other than cash).
(2) At the time of the making of the final payment on the
Regular Certificates or the deposit to the Termination Account, the
Trustee shall distribute or credit, or cause to be distributed or
credited, PRO RATA, to the Holders of the Residual Certificates, all
remaining cash on hand relating to the REMIC after such final payment
(other than cash retained to meet claims against the Trust) and the
REMIC shall terminate at that time.
(3) In no event may the final payment on the Regular
Certificates or the final distribution or credit to the Holders of the
Residual Certificates be made after the 90th day after the date on
which the plan of complete liquidation relating thereto is adopted. A
payment into the Termination Account with respect to any Certificate
pursuant to Section 9.01 hereof shall be deemed a final payment on, or
final distribution with respect to, such Certificate for the purposes
of this Section 9.02(a)(3).
(b) By their acceptance of Residual Certificates, the Holders thereof
agree (1) to authorize such action as may be necessary to adopt a plan of
complete liquidation of any related REMIC and (2) to take such action as may be
necessary to adopt a plan of complete liquidation of any related REMIC upon the
written request of the Servicer, which authorization shall be binding upon all
successor Holders of such Residual Certificates.
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ARTICLE X
REMIC TAX PROVISIONS
SECTION 10.01. REMIC ADMINISTRATION.
Unless otherwise specified in the related Pooling and Servicing
Agreement, an election will be made to treat the Assets and the Distribution
Account underlying a Series as one or more REMICs under the Code. Each Holder of
a Residual Certificate in each REMIC shall, in its Residual Transferee
Agreement, designate the Servicer or an Affiliate of the Servicer, as its agent,
to act as the Tax Matters Person for such REMIC. The Servicer agrees that it or
one of its Affiliates will serve as such Tax Matters Person for each REMIC, and
also will perform various tax administration functions for each REMIC, as its
agent, as set forth in this Section 10.01.
(a) The Trustee shall elect (on behalf of each REMIC to be created) to
have the Trust (or designated assets thereof) treated as a REMIC on Form 1066 or
other appropriate federal tax or information return for the taxable year ending
on the last day of the calendar year in which the Certificates are issued as
well as on any corresponding state tax or information return necessary to have
such assets treated as a REMIC under relevant state law.
(b) The Servicer shall pay any and all tax related expenses (not
including taxes) of the Trust and each related REMIC, including but not limited
to any professional fees or expenses related to audits or any administrative or
judicial proceedings with respect to each such REMIC that involve the Internal
Revenue Service or state tax authorities or related to the adoption of a plan of
complete liquidation.
(c) The Servicer shall prepare any necessary forms for election as well
as all of the Trust's and each related REMIC's federal and state tax and
information returns. At the request of the Servicer, the Trustee shall sign and
file such returns on behalf of each such REMIC. The expenses of preparing and
filing such returns shall be borne by the Servicer.
(d) The Servicer shall perform all reporting and other tax compliance
duties that are the responsibility of the Trust and the REMIC under the REMIC
Provisions or state or local tax law. Among its other duties, if required by the
REMIC Provisions, the Servicer, acting as agent of the REMIC, shall provide (1)
to the Treasury or to other governmental authorities such information as is
necessary for the application of any tax relating to the transfer of a Residual
Certificate to any Disqualified Organization and (2) to the Trustee such
information as is necessary for the Trustee to discharge its obligations under
the REMIC Provisions to report tax information to the Certificateholders.
(e) OMI, the Servicer, the Trustee (to the extent the Trustee has been
instructed by OMI or the Servicer), and the Holders of Residual Certificates
shall take any action or cause each related
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REMIC to take any action necessary to create or maintain the status of each such
REMIC as a REMIC under the REMIC Provisions and shall assist each other as
necessary to create or maintain such status.
(f) OMI, the Servicer, the Trustee (to the extent the Trustee has been
instructed by OMI or the Servicer), and the Holders of the Residual Certificates
shall not take any action or fail to take any action, or cause each related
REMIC to take any action or fail to take any action that, if taken or not taken,
could endanger the status of each such REMIC as a REMIC unless the Trustee and
the Servicer have received an Opinion of Counsel (at the expense of the party
seeking to take or to omit to take such action) to the effect that the
contemplated action or failure to act will not endanger such status.
(g) Any taxes that are imposed upon the Trust or any related REMIC by
federal or state (including local) governmental authorities (other than taxes
paid by a party pursuant to Section 10.02 hereof or as provided in the following
sentence) shall be allocated to the Certificates (including, for this purpose,
the regular interests in any Pooling REMIC) in the same manner as Writedown
Amounts are so allocated; PROVIDED, HOWEVER, that if the related Pooling and
Servicing Agreement does not provide for the allocation of Writedown Amounts,
such taxes shall be payable out of the Available Distribution Amount before any
distributions are made on the related Certificates on the related Distribution
Date. Any state or local taxes imposed upon the Trust, any related REMIC or any
related Certificateholder that would not have been imposed on the Trust, such
REMIC or such Certificateholder in the absence of any legal or business
connection between the Trustee and the state or locality imposing such taxes
(including any federal, state or local taxes imposed on such Trust, such REMIC
or such Certificateholder as a result of such Trust, such REMIC or such
Certificateholder being deemed to have received income as a result of the
Trustee's payment of state or local taxes) shall be paid by the Trustee, and,
notwithstanding anything to the contrary in these Standard Terms, such taxes
shall be deemed to be part of the Trustee's cost of doing business and shall not
be reimbursable to the Trustee.
(h) If the Servicer (or an Affiliate thereof) is unable for any reason
to fulfill its duties as Tax Matters Person, then the holder of the largest
Percentage Interest of the Residual Certificates, without compensation, shall
become the successor Tax Matters Person for each related REMIC; PROVIDED,
HOWEVER, that in no event shall the Trustee be required to act as Tax Matters
Person (regardless of whether the Trustee is acting as successor Servicer).
SECTION 10.02. PROHIBITED ACTIVITIES.
Except as otherwise provided elsewhere in the Pooling and Servicing
Agreement, neither OMI, the Servicer, the Holders of Residual Certificates, nor
the Trustee shall engage in, nor shall the Trustee permit, any of the following
transactions or activities unless it has received (1) a Special Tax Opinion and
(2) a Special Tax Consent from each of the Holders of the Residual Certificates
(unless the Special Tax Opinion specially provides that no REMIC-level tax will
result from the transaction or activity in question):
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(a) the sale or other disposition of, or substitution for, any
of the underlying Assets except pursuant to (1) a foreclosure or
default with respect to such an Asset, (2) a purchase or repurchase
pursuant to Section 2.06 hereof, (3) the bankruptcy or insolvency of
any related REMIC, or (4) the termination of any related REMIC pursuant
to Article IX hereof;
(b) the acquisition of any Assets for the Trust after the
related Closing Date except (1) during the three-month period beginning
on the Closing Date pursuant to a fixed-price contract in effect on the
Closing Date that has been reviewed and approved by tax counsel
acceptable to the Servicer or (2) a substitution in accordance with
Section 2.06 hereof;
(c) the sale or other disposition of any investment in the
Distribution Account at a gain;
(d) the acceptance of any contribution to the Trust except the
following cash contributions: (1) a cash contribution received during
the three-month period beginning on the Closing Date; (2) a cash
contribution to facilitate a Terminating Purchase that is made within
the 90-day period beginning on the date on which a plan of complete
liquidation is adopted pursuant to Section 9.02(a)(1) hereof; (3) a
contribution to a Reserve Fund owned by a related REMIC that is made
PRO RATA by the Holders of the Residual Certificates; or (4) any other
contribution approved by the Servicer after consultation with tax
counsel;
(e) except in the case of an Asset that is in default, or as
to which, in the reasonable judgment of the Servicer, default is
reasonably foreseeable, neither the Trustee nor the Servicer shall
permit any modification of any material term of an Asset (including,
but not limited to, the interest rate, the principal balance, the
amortization schedule (except as provided in the Pooling and Servicing
Agreement), the remaining term to maturity, or any other term affecting
the amount or timing of payments on the Asset) unless the Trustee and
Servicer have received an Opinion of Counsel (at the expense of the
party seeking to modify the Asset) to the effect that such modification
would not be treated as giving rise to a new debt instrument for REMIC
purposes;
(f) any other transaction or activity that is not contemplated
by the Pooling and Servicing Agreement;
(g) the sale or other disposition of any asset held in a
Reserve Fund for a period of less than three months (a "Short-Term
Reserve Fund Investment") if such sale or disposition would cause 30%
or more of a related REMIC's income from all of its Reserve Funds for
the taxable year to consist of gain from the sale or disposition of
Short-Term Reserve Fund Investments; or
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(h) the withdrawal of any amounts from any Reserve Fund except
(A) for the distribution pro rata to the Holders of the Residual
Certificates or (B) to provide for the payment of Trust expenses or
amounts payable on the Certificates in the event of defaults or late
payments on the related Assets or lower than expected returns on funds
held in the Distribution Account, as provided under section 860G(a)(7)
of the Code.
Any party causing the Trust to engage in any of the activities prohibited in
this Section shall be liable for the payment of any tax imposed on the Trust
pursuant to Code section 860F(a)(1) or 860G(d) as a result of the Trust engaging
in such activities.
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ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.01. AMENDMENTS.
The Pooling and Servicing Agreement may be amended or supplemented from
time to time by OMI, the Servicer and the Trustee without the consent of any of
the Certificateholders (a) to cure any ambiguity herein, (b) to correct or
supplement any provisions herein that may be inconsistent with any other
provisions herein, (c) to modify, eliminate or add to any of its provisions to
such extent as shall be necessary or appropriate to maintain the qualification
of any related REMIC as a REMIC under the Code at all times that any
Certificates are outstanding or (d) to make any other provisions with respect to
matters or questions arising under the Pooling and Servicing Agreement or
matters arising with respect to the Trust that are not covered by the Pooling
and Servicing Agreement; PROVIDED, that such action shall not affect adversely
the interests of any Certificateholder, as evidenced by an opinion of counsel
independent from OMI, the Servicer and the Trustee or a letter from each Rating
Agency from whom OMI requested a rating of any of the related Certificates
stating that such action will not result in a downgrading of the rating of any
of the related Certificates rated by such Rating Agency at the request of OMI.
Promptly after the execution of any such amendment, the Trustee shall furnish a
copy of such amendment to each Holder of Certificates.
The Pooling and Servicing Agreement also may be amended from time to
time by OMI, the Servicer and the Trustee with the consent of the Holders
entitled to at least a majority of the Voting Rights of each Class of
Certificates that would be affected by such amendment for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of the Pooling and Servicing Agreement or of modifying in any manner the rights
of the Holders of the Certificates; PROVIDED, HOWEVER, that no such amendment
shall (a) reduce in any manner the amount of, or delay the timing of, payments
received on Contracts or Mortgage Loans that are required to be distributed on
any Certificate without the consent of the Holder of such Certificate, (b)
affect adversely in any material respect the interests of the Holders of any
Class of Certificates in a manner other than described in clause (a) of this
paragraph, without the consent of the Holders of Certificates of such Class
evidencing at least 66_% of the Voting Rights with respect to such Class, or (c)
reduce the aforesaid percentage of Certificates the Holders of which are
required to consent to any such amendment, without the consent of such Holders
of all Certificates then outstanding.
It shall not be necessary for the consent of Certificateholders under
this Section 11.01 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
regulations as the Trustee may prescribe.
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SECTION 11.02. RECORDATION OF AGREEMENT; COUNTERPARTS.
To the extent permitted by applicable law, the Pooling and Servicing
Agreement is subject to recordation in all appropriate public offices for real
property records in all the counties or other comparable jurisdictions in which
any or all of the Real Property or Mortgaged Properties included in the Trust
Estate and subject to the related Mortgages are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by the Servicer and at its expense, but only upon direction of the
Trustee accompanied by an Opinion of Counsel to the effect that such recordation
is necessary to protect the interests of the Certificateholders. The Trustee
shall not be responsible for determining whether the Pooling and Servicing
Agreement should be recorded in any such office.
For the purpose of facilitating the recordation of the Pooling and
Servicing Agreement as herein provided and for other purposes, the Pooling and
Servicing Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an original, and
such counterparts shall together constitute but one and the same instrument.
SECTION 11.03. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS.
The death or incapacity of any Certificateholder shall not operate to
terminate the Pooling and Servicing Agreement or the Trust, nor will such death
or incapacity entitle such Certificateholder's legal representatives or heirs to
claim an accounting or to take any action or proceeding in any court for a
partition or winding up of the Trust, nor shall it otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.
No Certificateholder shall have any right to vote (except as expressly
provided for herein) or in any manner otherwise control the operation and
management of the Trust, or the obligations of the parties hereto, nor shall
anything herein set forth, or contained in the terms of the Certificates, be
construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be under
any liability to any third person by reason of any action taken by the parties
to the Pooling and Servicing Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue of any provision of
the Pooling and Servicing Agreement to institute any suit, action or proceeding
in equity or at law upon or under or with respect to the Pooling and Servicing
Agreement, unless such Holder previously shall have given to the Trustee a
written notice of default and of the continuance thereof, as hereinbefore
provided, and unless also the Holders of Certificates entitled to at least 25%
of the Voting Rights allocated to the Certificates shall have made written
request upon the Trustee to institute such action, suit or proceeding in its own
name as Trustee under the Pooling and Servicing Agreement and shall have offered
to the Trustee such reasonable indemnity as it may require against the costs,
expenses and liabilities to be incurred therein or thereby, and the Trustee, for
15 days after its receipt of such notice, request and offer of indemnity, shall
have neglected or refused to institute
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any such action, suit or proceeding. It is understood and intended, and
expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue of any provision of the
Pooling and Servicing Agreement to affect, disturb or prejudice the rights of
the Holders of any other of such Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder, or to enforce any right
under the Pooling and Servicing Agreement, except in the manner herein provided
and for the equal, ratable and common benefit of all Holders of Certificates.
For the protection and enforcement of the provisions of this Section, each and
every Certificateholder and the Trustee shall be entitled to such relief as can
be given either at law or in equity.
SECTION 11.04. NOTICES.
All demands and notices under the Pooling and Servicing Agreement shall
be in writing and shall be deemed to have been duly given if personally
delivered at or mailed by first class mail, postage prepaid, or by express
delivery service, to (a) in the case of OMI, 7800 McCloud Road, Greensboro, NC
27425-7081, Attention: Treasurer, telecopy number (336) 664-3224, or such other
address or telecopy number as may hereafter be furnished to each party to the
Pooling and Servicing Agreement in writing by OMI, (b) in the case of OAC or the
Servicer, 7800 McCloud Road, Greensboro, NC 27425-7081, Attention: Treasurer,
telecopy number (336) 664-3224, or such other address or telecopy number as may
subsequently be furnished to each party to the Pooling and Servicing Agreement
in writing by the Servicer and (c) in the case of the Trustee, at its address
set forth in the Pooling and Servicing Agreement or such other address or
telecopy number as may subsequently be furnished to each party to the Pooling
and Servicing Agreement in writing by the Trustee. Any notice required or
permitted to be mailed to a Certificateholder shall be given by registered mail,
postage prepaid, or by express delivery service, at the address of such Holder
as shown in the Certificate Register. Any notice so mailed within the time
prescribed in the Pooling and Servicing Agreement shall be conclusively presumed
to have been duly given, whether or not the Certificateholder receives such
notice. A copy of any notice required to be telecopied hereunder also shall be
mailed to the appropriate party in the manner set forth above. A copy of any
notice given hereunder to any other party shall be delivered to the Trustee.
SECTION 11.05. SEVERABILITY OF PROVISIONS.
If any one or more of the covenants, agreements, provisions or terms of
the Pooling and Servicing Agreement shall be held invalid for any reason
whatsoever, then such covenants, agreements, provisions or terms shall be deemed
severable from the remaining covenants, agreements, provisions or terms of the
Pooling and Servicing Agreement and shall in no way affect the validity or
enforceability of the other provisions of the Pooling and Servicing Agreement or
of the Certificates or the rights of the Holders thereof.
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SECTION 11.06. SALE OF CONTRACTS.
It is the express intent of OMI and the Trustee that the conveyance of
the Assets underlying a Series by OMI to the Trustee pursuant to the related
Pooling and Servicing Agreement be construed as a sale of such Assets by OMI to
the Trustee. It is, further, not the intention of OMI or the Trustee that such
conveyance be deemed a pledge of such Assets by OMI to the Trustee to secure a
debt or other obligation of OMI. However, in the event that, notwithstanding the
intent of the parties, such Assets are held to continue to be property of OMI,
then (a) the Pooling and Servicing Agreement also shall be deemed to be a
security agreement within the meaning of Article 9 of the applicable UCC; (b)
the conveyance by OMI provided for in the Pooling and Servicing Agreement shall
be deemed to be a grant by OMI to the Trustee of a security interest in all of
OMI's right, title and interest in and to the Assets and all amounts payable to
the holders of the Assets in accordance with the terms thereof and all proceeds
of the conversion, voluntary or involuntary, of the foregoing into cash,
instruments, securities or other property, including without limitation all
amounts, other than investment earnings, from time to time held or invested in
the related Certificate Account or Distribution Account, whether in the form of
cash, instruments, securities or other property, and including without
limitation all amounts from time to time held or invested in any related Reserve
Fund; (c) the possession by the Trustee or its agent (including the Servicer
pursuant to Section 2.02(a) hereof) of items of property that constitute
instruments, money, negotiable documents or chattel paper shall be deemed to be
"possession by the secured party" for purposes of perfecting the security
interest pursuant to Section 9-305 of the applicable UCC; and (d) notifications
to persons holding such property, and acknowledgments, receipts or confirmations
from persons holding such property, shall be deemed notifications to, or
acknowledgments, receipts or confirmations from, financial intermediaries,
bailees or agents (as applicable) of the Trustee for the purpose of perfecting
such security interest under applicable law. OMI and the Trustee (to the extent
the Trustee has been instructed by OMI or the Servicer) shall take, to the
extent consistent with the Pooling and Servicing Agreement, such actions as may
be necessary to ensure that, if the Pooling and Servicing Agreement were deemed
to create a security interest in the related Assets, such security interest
would be deemed to be a perfected security interest of first priority under
applicable law and will be maintained as such throughout the term of the Pooling
and Servicing Agreement.
SECTION 11.07. NOTICE TO RATING AGENCY.
(a) The Trustee shall use its best efforts promptly to provide notice
to each applicable Rating Agency and each Certificateholder with respect to each
of the following of which it has actual knowledge, except that no notice
specified below need be sent to any such Certificateholder or each applicable
Rating Agency if already sent pursuant to other provisions of the Pooling and
Servicing Agreement:
(1) any amendment to the Pooling and Servicing Agreement or
any agreement assigned to the Trust;
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(2) the occurrence of any Event of Default involving the
Servicer that has not been cured or waived;
(3) the resignation, termination or merger of OMI, the
Servicer or the Trustee;
(4) the purchase or repurchase or substitution of Contracts
pursuant to Section 2.06 hereof;
(5) the final payment to the Certificateholders;
(6) any change in the location of the related Certificate
Account or the Distribution Account;
(7) any event that would result in the inability of the
Servicer to make Advances regarding the related Assets;
(8) any change in applicable law that would require an
assignment of a Mortgage, not previously recorded, to be recorded in
order to protect the right, title and interest of the Trustee in and to
the related Real Property or Mortgaged Property or, in case a court
should recharacterize the sale of the related Asset as a financing, to
perfect a first priority security interest in favor of the Trustee in
the related Asset or the occurrence of either of the circumstances
described in clause (1) or (2) of Section 2.06(b) hereof relating to
the retitling of Manufactured Homes; or
(9) any change in OMI's or the Servicer's name or place of
business or the relocation of the Contract Files or Servicer Contract
Files or the Servicer Mortgage Loan Files to a location outside the
State of North Carolina or the relocation of the Trustee Mortgage Loan
Files to a location outside of the state where they are originally held
by the Trustee or its Custodian.
(b) The Servicer shall promptly notify the Trustee of any of the events
listed in Section 11.07(a) hereof of which it has actual knowledge. In addition,
the Trustee shall furnish promptly to each Rating Agency, at its address set
forth in the Pooling and Servicing Agreement, copies of the following:
(i) Each Remittance Report; and
(ii) Each Officer's Certificate supplied by the Servicer to
the Trustee and the Certificateholders pursuant to Section 3.13 hereof.
(c) Any notice pursuant to this Section 11.07 shall be in writing and
shall be deemed to have been duly given if personally delivered or mailed by
first class mail, postage prepaid or by
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express delivery service to each Rating Agency at its address specified in the
Pooling and Servicing Agreement.
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<PAGE>
EXHIBIT 1
FORM OF SERVICER'S CUSTODIAL CERTIFICATION
[DATE]
[NAME AND ADDRESS
OF TRUSTEE]
Pooling and Servicing Agreement, dated
as of ____________, among
Oakwood Mortgage Investors, Inc. ("OMI"),
Oakwood Acceptance Corporation and
_____________________________ , as Trustee
Ladies and Gentlemen:
In accordance with Section 2.02(b) of OMI's Standard Terms to Pooling
and Servicing Agreement (May 1999 Edition), which are incorporated by reference
into the above-referenced Pooling and Servicing Agreement (the "Agreement"),
Oakwood Acceptance Corporation, as Servicer under the Agreement, hereby confirms
that it is in possession of a complete Contract File for each of the Contracts
identified on Schedule I to the Agreement, subject to those exceptions
identified on the schedule attached hereto. Capitalized terms used and not
otherwise defined herein shall have the respective meanings assigned to such
terms in the Agreement.
OAKWOOD ACCEPTANCE CORPORATION
By:____________________________
Name:_________________________
Title:__________________________
Exhibit 1 - Page 1
<PAGE>
EXHIBIT 2-A
FORM OF INITIAL CERTIFICATION
[Date]
Oakwood Mortgage Investors, Inc.
7800 McCloud Road
Greensboro, North Carolina 27409
Attention: [_______________]
Oakwood Acceptance Corporation
7800 McCloud Road
Greensboro, North Carolina 27409
Attention: [________________]
Re: Pooling and Servicing Agreement, dated as of ___ 1, ___,
among Oakwood Mortgage Investors, Inc.,
Oakwood Acceptance Corporation, as Servicer,
and _______________, as Trustee,
Pass-Through Certificates, __________________
OMI Trust _______-_____.
Gentlemen:
In accordance with Section 2.03 of OMI's Standard Terms to Pooling and
Servicing Agreement (May 1999 Edition) (the "Standard Terms"), which are
incorporated by reference into the above-referenced Pooling and Servicing
Agreement, the undersigned, as Trustee, hereby certifies that, as to each
Mortgage Loan listed in the Mortgage Loan Schedule to the Pooling and Servicing
Agreement (other than any Mortgage Loan paid in full or listed on the attachment
hereto) it, or a Custodian on its behalf, has reviewed the Trustee Mortgage Loan
File and has determined that, except as noted on the Schedule of Exceptions
attached hereto: (i) all documents required to be included in the Trustee
Mortgage Loan File (as set forth in the definition of "Trustee Mortgage Loan
File" in the Standard Terms) are in its possession or in the possession of a
Custodian on its behalf; (ii) such documents have been reviewed by it, or a
Custodian on its behalf, and appear regular on their face and relate to such
Mortgage Loan; and (iii) based on examination by it, or by a Custodian on its
behalf, and only as to such documents, the information set forth on the Mortgage
Loan Schedule to the Pooling and Servicing Agreement accurately reflects the
information set forth in the Trustee Mortgage Loan File. The undersigned further
certifies that the Trustee's review, or the review of its Custodian, of each
Trustee Mortgage Loan File included each of the procedures listed in Section
2.03(c)(2) of the Standard Terms.
Exhibit 2-A - Page 1
<PAGE>
Except as described herein, neither the Trustee, nor any Custodian on
its behalf, has made an independent examination of any documents contained in
any Trustee Mortgage Loan File. The Trustee makes no representations as to: (i)
the validity, legality, sufficiency, enforceability or genuineness of any
documents contained in any Trustee Mortgage Loan File for any of the Mortgage
Loans listed on the Mortgage Loan Schedule to the Pooling and Servicing
Agreement, (ii) the collectibility, insurability, effectiveness or suitability
of any such Mortgage Loan or (iii) whether any Trustee Mortgage Loan File should
include any assumption agreement, modification agreement, written assurance or
substitution agreement.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing Agreement
(the "Pooling and Servicing Agreement").
[TRUSTEE]
By:___________________________
Its:__________________________
Exhibit 2-A - Page 2
<PAGE>
EXHIBIT 2-B
-----------
FORM OF FINAL CERTIFICATION
[Date]
Oakwood Mortgage Investors, Inc.
7800 McCloud Road
Greensboro, North Carolina 27409
Attention: [_______________]
Oakwood Acceptance Corporation
7800 McCloud Road
Greensboro, North Carolina 27409
Attention: [________________]
Re: Pooling and Servicing Agreement, dated as of ___ 1, ____,
among Oakwood Mortgage Investors, Inc.,
Oakwood Acceptance Corporation, as Servicer,
and _______________, as Trustee,
Pass-Through Certificates, __________________
OMI Trust _______-_____.
Gentlemen:
In accordance with Section 2.03 of OMI's Standard Terms to Pooling and
Servicing Agreement (May 1999 Edition) (the "Standard Terms"), which are
incorporated by reference into the above-referenced Pooling and Servicing
Agreement, the undersigned, as Trustee, hereby certifies that, except as noted
on the Schedule of Exceptions attached hereto, for each Mortgage Loan listed in
the Mortgage Loan Schedule to the Pooling and Servicing Agreement (other than
any Mortgage Loan paid in full or listed on the attachment hereto) it, or a
Custodian on its behalf, has received a complete Trustee Mortgage Loan File
which includes each of the documents required to be included in the Trustee
Mortgage Loan File as set forth in the definition of "Trustee Mortgage Loan
File" in the Standard Terms.
Neither the Trustee nor any Custodian on its behalf has made an
independent examination of any documents contained in any Trustee Mortgage Loan
File beyond the review specifically required in the above captioned Pooling and
Servicing Agreement. The Trustee makes no representations as to: (i) the
validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in any Trustee Mortgage Loan File or any of the Mortgage
Loans listed on
Exhibit 2-B - Page 1
<PAGE>
the Mortgage Loan Schedule, (ii) the collectibility, insurability, effectiveness
or suitability of any such Mortgage Loan or (iii) whether any Trustee Mortgage
Loan File should include any assumption agreement, modification agreement,
written assurance or substitution agreement.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing Agreement
(the "Pooling and Servicing Agreement").
[TRUSTEE]
By:___________________________
Its:__________________________
Exhibit 2-B - Page 2
<PAGE>
EXHIBIT 3
FORM OF RECORDATION REPORT
[Date]
Oakwood Acceptance Corporation
7800 McCloud Road
Greensboro, North Carolina 27409
Attention: [________________]
Re: Pooling and Servicing Agreement, dated as of _____ 1, ___,
among Oakwood Mortgage Investors, Inc.,
Oakwood Acceptance Corporation, as Servicer,
and _______________, as Trustee,
Pass-Through Certificates, __________________
OMI Trust _______-_____.
Gentlemen:
In accordance with Section 2.03 of OMI's Standard Terms to Pooling and
Servicing Agreement (May 1999 Edition) (the "Standard Terms"), which are
incorporated by reference into the above-referenced Pooling and Servicing
Agreement, the undersigned, as Trustee hereby notifies you, that as of the date
hereof with respect to the following Mortgage Loans it has not received the
indicated documents:
MORTGAGE LOANS DOCUMENTS NOT RECEIVED
-------------- ----------------------
ORIGINAL RECORDED
ORIGINAL RECORDED ASSIGNMENT OF
MORTGAGE MORTGAGE
OR CERTIFIED COPY OR CERTIFIED COPY
OAC LOAN NUMBER THEREOF THEREOF(1/)
--------------- -------------------
- -----------------------------------
(1/) Not required for Mortgage Loans for which OMI has waived recordation
of Assignments.
Exhibit 3 - Page 1
<PAGE>
[TRUSTEE]
as Trustee
By:___________________________
Its:__________________________
Exhibit 3 - Page 2
<PAGE>
EXHIBIT 4
REQUEST FOR RELEASE OF DOCUMENTS AND RECEIPT
--------------------------------------------
TO: [Name and Address of Trustee or Custodian]
RE: Pooling and Servicing Agreement, dated as of __________ 1,
--__, among Oakwood Mortgage Investors, Inc. ("OMI"), Oakwood
Acceptance Corporation, as Servicer, and ____________________,
as Trustee, which incorporates by reference OMI's Standard
Terms to Pooling and Servicing Agreement (May 1999 Edition)
(collectively, the "Pooling and Servicing Agreement")
In connection with the administration of the Mortgage Loans held by you
as the Trustee or Custodian, we request the release and acknowledge receipt, of
the Trustee Mortgage Loan File [specify documents if only a partial Trustee
Mortgage Loan File is being released]) for the Mortgage Loan described below,
for the reason indicated.
Mortgagor's Name and Address & Zip Code:
- ----------------------------------------
Mortgage Loan Number:
- ---------------------
Reason for Requesting Documents (check one)
- -------------------------------
___ 1. Mortgage Loan Paid in Full. (The Servicer hereby certifies
that all amounts received in connection therewith have been
deposited into the applicable Certificate Account as provided
in the Pooling and Servicing Agreement.)
___ 2. Mortgage Loan Liquidated by _________________. (The
Servicer hereby certifies that all proceeds of foreclosure,
insurance, condemnation or other liquidation have been finally
received.)
___ 3. Mortgage Loan in Foreclosure.
___ 4. Other (explain). _______________________________
Exhibit 5 - Page 1
<PAGE>
If item 1 or 2 above is checked, and if all or part of the Trustee
Mortgage Loan File was previously released to us, please release to us our
previous request and receipt on file with you, as well as any additional
documents in your possession relating to the specified Mortgage Loan.
If item 3 or 4 above is checked, upon our return of all of the above
documents to you as the Trustee or Custodian, please acknowledge your receipt by
signing in the space indicated below, and returning this form.
Capitalized terms used herein but not defined herein have the meanings
ascribed to them in the Pooling and Servicing Agreement.
OAKWOOD ACCEPTANCE CORPORATION,
as Servicer
By:______________________________
Name:____________________________
Title:___________________________
Acknowledgment of Documents returned to the Trustee or Custodian:
[NAME OF TRUSTEE OR CUSTODIAN]
By:______________________________
Name:____________________________
Title:___________________________
Exhibit 5 - Page 2
<PAGE>
EXHIBIT 5
---------
RULE 144A AGREEMENT--QIB CERTIFICATION
OAKWOOD MORTGAGE INVESTORS, INC., SERIES ____-_
PASS-THROUGH CERTIFICATES, CLASS ___
----------------
(DATE)
[Name and Address of
the Trustee]
Oakwood Mortgage Investors, Inc.
Oakwood Acceptance Corporation
7800 McCloud Road
Greensboro, NC 27409
Ladies and Gentlemen:
In connection with the purchase on the date hereof of the captioned
securities (the "Purchased Certificates"), the undersigned (the "Transferee")
hereby certifies and covenants to the transferor, Oakwood Mortgage Investors,
Inc. ("OMI"), the Servicer, the Trustee and the Trust as follows:
1. The Transferee is a "qualified institutional buyer" as that term is
defined in Rule 144A ("Rule 144A") promulgated under the Securities Act of 1933,
as amended (the "1933 Act") and has completed the form of certification to that
effect attached hereto as Annex A1 (if the Transferee is not a registered
investment company) or Annex A2 (if the Transferee is a registered investment
company). The Transferee is aware that the sale to it is being made in reliance
on Rule 144A.
2. The Transferee understands that the Purchased Certificates have not
been registered under the 1933 Act or registered or qualified under any state
securities laws and that no transfer may be made unless the Purchased
Certificates are registered under the 1933 Act and under applicable state law or
unless an exemption from such registration is available. The Transferee further
understands that neither OMI, the Servicer, the Trustee nor the Trust is under
any obligation to register the Purchased Certificates or make an exemption from
such registration available.
3. The Transferee is acquiring the Purchased Certificates for its own
account or for the account of a "qualified institutional buyer" (as defined in
Rule 144A, a "QIB"), and understands
Exhibit 5 - Page 1
<PAGE>
that such Purchased Certificates may be resold, pledged or transferred only (a)
to a person reasonably believed to be such a QIB that purchases for its own
account or for the account of a QIB to whom notice is given that the resale,
pledge or transfer is being made in reliance on Rule 144A, or (b) pursuant to
another exemption from registration under the 1933 Act and under applicable
state securities laws. IN ADDITION, SUCH TRANSFER MAY BE SUBJECT TO ADDITIONAL
RESTRICTIONS, AS SET FORTH IN SECTION 5.05 OF THE STANDARD TERMS TO THE POOLING
AND SERVICING AGREEMENT (THE "STANDARD TERMS") REFERRED TO BELOW. By its
execution of this agreement, the Transferee agrees that it will not resell,
pledge or transfer any of the Purchased Certificates to anyone otherwise than in
strict compliance with Rule 144A, or pursuant to another exemption from
registration under the 1933 Act and all applicable state securities laws, and in
strict compliance with the transfer restrictions set forth in Section 5.05 of
the Standard Terms. The Transferee will not attempt to transfer any or all of
the Purchased Certificates pursuant to Rule 144A unless the Transferee offers
and sells such Certificates only to QIBs or to offerees or purchasers that the
Transferee and any person acting on behalf of the Transferee reasonably believe
(as described in paragraph (d)(l) of Rule 144A) is a QIB.
4. The Transferee has been furnished with all information that it
requested regarding (a) the Purchased Certificates and distributions thereon and
(b) the Pooling and Servicing Agreement referred to below.
5. If applicable, the Transferee has complied, will comply in all
material respects with applicable regulatory guidelines relating to the
ownership of mortgage derivative products.
All capitalized terms used but not otherwise defined herein have the
respective meanings assigned thereto in the Pooling and Servicing Agreement,
dated as of _____________ 1, ____, which incorporates by reference the Standard
Terms thereto (May 1999 Edition), among Oakwood Mortgage Investors, Inc.,
Oakwood Acceptance Corporation and ____________________, as Trustee, pursuant to
which the Purchased Certificates were issued.
IN WITNESS WHEREOF, the undersigned has caused this Rule 144A Agreement
to be executed by its duly authorized representative as of the day and year
first above written.
[TRANSFEREE]
By:_____________________________
Name:___________________________
Title:___________________________
Exhibit 5 - Page 2
<PAGE>
ANNEX A1 TO EXHIBIT 5
TRANSFEREES OTHER THAN REGISTERED INVESTMENT COMPANIES
------------------------------------------------------
1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Transferee.
2. The Transferee is a "qualified institutional buyer" as that term is
defined in Rule 144A ("Rule 144A") promulgated under the Securities Act of 1933,
as amended (the "1933 Act"), because (a) the Transferee owned and/or invested on
a discretionary basis at least $____________ in securities [Note to reviewer -
the amount in the previous blank must be at least $100,000,000 unless the
Transferee is a dealer, in which case the amount filled in the previous blank
must be at least $10,000,000.] (except for the excluded securities referred to
in paragraph 3 below) as of _______________ [specify a date on or since the end
of the Transferee's most recently ended fiscal year] (such amount being
calculated in accordance with Rule 144A) and (b) the Transferee meets the
criteria listed in the category marked below.
_____ Corporation, etc. The Transferee is an organization
described in Section 501(c)(3) of the Internal Revenue Code of
1986, as amended, a corporation (other than a bank as defined
in Section 3(a)(2) of the 1933 Act or a savings and loan
association or other similar institution referenced in Section
3(a)(5)(A) of the Act), a partnership, or a Massachusetts or
similar business trust.
_____ Bank. The Transferee (a) is a national bank or banking
institution as defined in Section 3(a)(2) of the 1933 Act and
is organized under the laws of a state, territory or the
District of Columbia. The business of the Transferee is
substantially confined to banking and is supervised by the
appropriate state or territorial banking commission or similar
official or is a foreign bank or equivalent institution, and
(b) has an audited net worth of at least $25,000,000 as
demonstrated in its latest annual financial statements as of a
date not more than 16 months preceding the date of this
certification in the case of a U.S. bank, and not more than 18
months preceding the date of this certification in the case of
a foreign bank or equivalent institution, a copy of which
financial statements is attached hereto.
_____ Savings and Loan. The Transferee is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution referenced in
Section 3(a)(5)(A) of the 1933 Act. The Transferee is
Exhibit 5 - Page 3
<PAGE>
supervised and examined by a state or federal authority having
supervisory authority over any such institutions or is a
foreign savings and loan association or equivalent institution
and has an audited net worth of at least $25,000,000 as
demonstrated in its latest annual financial statements as of a
date not more than 16 months preceding the date of this
certification in the case of a U.S. savings and loan
association or similar institution, and not more than 18
months preceding the date of this certification in the case of
a foreign savings and loan association or equivalent
institution, a copy of which financial statements is attached
hereto.
_____ Broker-dealer. The Transferee is a dealer registered
pursuant to Section 15 of the Certificates Exchange Act of
1934, as amended (the "1934 Act").
_____ Insurance Company. The Transferee is an insurance
company as defined in Section 2(13) of the 1933 Act, whose
primary and predominant business activity is the writing of
insurance or the reinsuring of risks underwritten by insurance
companies and which is subject to supervision by the insurance
commissioner or a similar official or agency of a state,
territory or the District of Columbia.
_____ State or Local Plan. The Transferee is a plan
established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or
its political
subdivisions, for the benefit of its employees.
_____ ERISA Plan. The Transferee is an employee benefit plan
within the meaning of Title I of the Employee Retirement
Income Certificate Act of 1974, as amended.
_____ Investment Adviser. The Transferee is an investment
adviser registered under the Investment Advisers Act of 1940,
as amended.
_____ Other. The Transferee qualifies as a "qualified
institutional buyer" as defined in Rule 144A on the basis of
facts other than those listed in any of the entries above. If
this response is marked, the Transferee must certify on
additional pages, to be attached to this certification, to
facts that satisfy the Servicer that the Transferee is a
"qualified institutional buyer" as defined in Rule 144A.
3. The term "securities" as used herein does not include (a) securities
of issuers that are affiliated with the Transferee, (b) securities constituting
the whole or part of an unsold allotment to or subscription by the Transferee,
if the Transferee is a dealer, (c) bank deposit notes and certificates of
deposit, (d) loan participations, (e) repurchase agreements, (f) securities
owned but subject to a repurchase agreement and (g) currency, interest rate and
commodity swaps.
Exhibit 5 - Page 4
<PAGE>
4. For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Transferee, the Transferee used
the cost of such securities to the Transferee and did not include any of the
securities referred to in the preceding paragraph. Further, in determining such
aggregate amount, the Transferee may have included securities owned by
subsidiaries of the Transferee, but only if such subsidiaries are consolidated
with the Transferee in its financial statements prepared in accordance with
generally accepted accounting principles and if the investments of such
subsidiaries are managed under the Transferee's direction. However, such
securities were not included if the Transferee is a majority-owned, consolidated
subsidiary of another enterprise and the Transferee is not itself a reporting
company under the 1934 Act.
5. The Transferee acknowledges that it is familiar with Rule 144A and
understands that the Transferor and other parties related to the Purchased
Certificates are relying and will continue to rely on the statements made herein
because one or more sales to the Transferee may be made in reliance on Rule
144A.
6. Will the Transferee be purchasing ______ _____
the Purchased Certificates only YES NO
for the Transferee's own account?
If the answer to the foregoing question is "NO", the Transferee agrees
that, in connection with any purchase of securities sold to the Transferee for
the account of a third party (including any separate account) in reliance on
Rule 144A, the Transferee will only purchase for the account of a third party
that at the time is a "qualified institutional buyer" within the meaning of Rule
144A. In addition, the Transferee agrees that the Transferee will not purchase
securities for a third party unless the Transferee has obtained a current
representation letter from such third party or taken other appropriate steps
contemplated by Rule 144A to conclude that such third party independently meets
the definition of "qualified institutional buyer" set forth in Rule 144A.
7. The Transferee will notify each of the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice is given, the Transferee's purchase of the Purchased
Certificates will constitute a reaffirmation of this certification as of the
date of such purchase. In addition, if the Transferee is a bank or savings and
loan as provided above, the Transferee agrees that it will furnish to such
parties updated annual financial statements promptly after they become
available.
IN WITNESS WHEREOF, the undersigned has caused this certificate to be
executed by its duly authorized representative this ____ day of ___________,
______.
Exhibit 5 - Page 5
<PAGE>
__________________________________
Print Name of Transferee
By:__________________________________
Name:________________________________
Title:________________________________
Exhibit 5 - Page 6
<PAGE>
ANNEX A2 TO EXHIBIT 5
REGISTERED INVESTMENT COMPANIES
-------------------------------
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the entity purchasing the
Purchased Certificates (the "Transferee") or, if the Transferee is part of a
Family of Investment Companies (as defined in paragraph 3 below), is an officer
of the related investment adviser (the "Adviser").
2. The Transferee is a "qualified institutional buyer" as that term is
defined in Rule 144A ("Rule 144A") promulgated under the Securities Act of 1933,
as amended (the "1933 Act"), because (a) the Transferee is an investment company
(a "Registered Investment Company") registered under the Investment Company Act
of 1940, as amended (the "1940 Act") and (b) as marked below, the Transferee
alone, or the Transferee's Family of Investment Companies, owned at least
$___________ [Note to reviewer - the amount in the previous blank must be at
least $100,000,000] in securities (other than the excluded securities referred
to in paragraph 4 below) as of ________________ [specify a date on or since the
end of the Transferee's most recently ended fiscal year]. For purposes of
determining the amount of securities owned by the Transferee or the Transferee's
Family of Investment Companies, the cost of such securities to the Transferee or
the Transferee's Family of Investment Companies was used.
_____ The Transferee owned $____________ in securities (other than the
excluded securities referred to in paragraph 4 below) as of the end of
the Transferee's most recent fiscal year (such amount being calculated
in accordance with Rule 144A).
_____ The Transferee is part of a Family of Investment Companies which owned
in the aggregate $____________ in securities (other than the excluded
securities referred to in paragraph 4 below) as of the end of the
Transferee's most recent fiscal year (such amount being calculated in
accordance with Rule 144A).
3. The term "Family of Investment Companies" as used herein means two
or more Registered Investment Companies except for a unit investment trust whose
assets consist solely of shares of one or more Registered Investment Companies
(provided that each series of a "series company," as defined in Rule 18f-2 under
the 1940 Act, shall be deemed to be a separate investment company) that have the
same investment adviser (or, in the case of a unit investment trust, the same
depositor) or investment advisers (or depositors) that are affiliated (by virtue
of being majority-owned subsidiaries of the same parent or because one
investment adviser is a majority-owned subsidiary of the other).
Exhibit 5 - Page 7
<PAGE>
4. The term "securities" as used herein does not include (a) securities
of issuers that are affiliated with the Transferee or are part of the
Transferee's Family of Investment Companies, (b) bank deposit notes and
certificates of deposit, (c) loan participations, (d) repurchase agreements, (e)
securities owned but subject to a repurchase agreement and (f) currency,
interest rate and commodity swaps.
5. The Transferee is familiar with Rule 144A and understands that the
parties to which this certification is being made are relying and will continue
to rely on the statements made herein because one or more sales to the
Transferee will be in reliance on Rule 144A. In addition, the Transferee will
only purchase for the Transferee's own account.
6. The undersigned will notify the parties to which this certification
is made of any changes in the information and conclusions herein. Until such
notice, the Transferee's purchase of the Purchased Certificates will constitute
a reaffirmation of this certification by the undersigned as of the date of such
purchase.
IN WITNESS WHEREOF, the undersigned has caused this certificate to be
executed by its duly authorized representative this ____ of ____________,
______.
[Print Name of Transferee or
Adviser]
By:________________________________________
Name:______________________________________
Title:_____________________________________
IF AN ADVISER:
[Print Name of Transferee]
Date:______________________________________
Exhibit 5 - Page 8
<PAGE>
EXHIBIT 6
---------
FORM OF TRANSFEREE AGREEMENT
OAKWOOD MORTGAGE INVESTORS, INC., SERIES _____-___
PASS-THROUGH CERTIFICATES
CLASS __
____________________
[Name of Transferee]
________________
(DATE)
[NAME AND ADDRESS OF TRUSTEE]
Oakwood Mortgage Investors, Inc.
Oakwood Acceptance Corporation
7800 McCloud Road
Greensboro, North Carolina 27409
Re: Oakwood Mortgage Investors, Inc., Series _____-____
Pass-Through Certificates, Class __, representing a
[___% Percentage Interest][$ denomination]
Ladies and Gentlemen:
The undersigned (the "Transferee") proposes to purchase all or some of
the Class __, Class __, Class __ and Class __ Certificates (the "Purchased
Certificates"), issued by the Trust established pursuant to a pooling and
servicing agreement, dated as of ____________ (the "Series Agreement"), among
Oakwood Mortgage Investors, Inc. ("OMI"), Oakwood Acceptance Corporation ("OAC")
and _____________________________, as Trustee, which incorporates by reference
OMI's Standard Terms to Pooling and Servicing Agreement (May 1999 Edition) (the
Exhibit 6 - Page 1
<PAGE>
"Standard Terms," and, collectively with the Series Agreement, the "Agreement").
In doing so the Transferee hereby acknowledges and agrees as follows:
SECTION 1. DEFINITIONS. Each capitalized term used herein and not
otherwise defined herein shall have the meaning ascribed to it in the Agreement.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE TRANSFEREE. In
connection with the proposed transfer of the Purchased Certificates, the
Transferee represents and warrants to OMI, OAC, the Servicer, the Trustee and
the Trust as follows:
(a) The Transferee is purchasing the Purchased Certificates
for its own account as principal for investment purposes and not with a
view to the distribution of the Purchased Certificates, in whole or in
part, in violation of Section 5 of the Securities Act of 1933, as
amended (the "Act").
(b) The Transferee has knowledge in financial and business
matters and is capable of evaluating the merits and risks of an
investment in the Purchased Certificates; the Transferee has sought
such accounting, legal and tax advice as it has considered necessary to
make an informed investment decision; and the Transferee is able to
bear the economic risk of an investment in the Purchased Certificates
and can afford a complete loss of such investment.
(c) The Transferee confirms that OMI and the Servicer have
made available to the Transferee the opportunity to ask questions of,
and receive answers from, OMI and the Servicer concerning OMI, the
Servicer, the Trust, the purchase by the Transferee of the Purchased
Certificates and all matters relating thereto, and to obtain additional
information relating thereto that OMI or the Servicer possesses or can
acquire without unreasonable effort or expense.
(d) The Transferee is an "accredited investor" as defined in
paragraph (1), (2), (3) or (7) of Rule 501(a) under the Act.
SECTION 3. COVENANTS OF THE TRANSFEREE. In consideration of the
proposed transfer, the Transferee covenants with each of OMI, OAC, the Servicer,
the Trustee and the Trust as follows:
(a) The Transferee will not make a public offering of the
Purchased Certificates, and will not reoffer or resell the Purchased
Certificates in a manner that would render the issuance and sale of the
Purchased Certificates, whether considered together with the resale or
otherwise, a violation of the Act or any state securities or "Blue Sky"
laws or require registration pursuant thereto.
Exhibit 6 - Page 2
<PAGE>
(b) The Transferee agrees that, in its capacity as a holder of
the Purchased Certificates, it will assert no claim or interest in the
Contracts by reason of owning the Purchased Certificates other than
with respect to amounts that may be properly and actually payable to
the Transferee pursuant to the terms of the Pooling and Servicing
Agreement and the Purchased Certificates.
(c) The Transferee hereby agrees to abide by the terms of the
Agreement that will be applicable to it as a Certificateholder,
including, without limitation, the indemnification provisions contained
in the second sentence of Section 5.05(a) of the Agreement.
(d) If applicable, the Transferee will comply in all material
respects with applicable regulatory guidelines relating to the
ownership of mortgage derivative products.
SECTION 4. TRANSFER OF PURCHASED CERTIFICATES.
(a) The Transferee understands that the Purchased Certificates have not
been registered under the Act or any state securities laws and that no transfer
may be made unless the Purchased Certificates are registered under the Act and
under applicable state law or unless an exemption from such registration is
available. If requested by the Servicer or the Trustee, the Transferee and the
Holder of Purchased Certificates who desires to effect this transfer have
certified to the Trustee, OMI and the Servicer as to the factual basis for the
registration or qualification exemption relied upon. The Transferee further
understands that neither OMI, OAC, the Servicer, the Trustee nor the Trust is
under any obligation to register the Purchased Certificates or make an exemption
from such registration available.
(b) In the event that the transfer is to be made within three years of
the date the Purchased Certificates were acquired by a non-Affiliate of OMI from
OMI or an Affiliate of OMI, the Servicer or the Trustee may require an Opinion
of Counsel (which shall not be an expense of OMI, OAC, the Servicer or the
Trustee) that such transfer is not required to be registered under the Act or
state securities laws.
(c) Any Certificateholder desiring to effect a transfer shall, and does
hereby agree to, indemnify OMI, the Servicer and the Trustee against any
liability that may result if the transfer is not exempt under federal or
applicable state securities laws.
(d) The transfer of the Purchased Certificates may be subject to
additional restrictions, as set forth in Section 5.05 of the Standard Terms of
the Pooling and Servicing Agreement, a copy of which is attached hereto as Annex
A.
All capitalized terms used but not otherwise defined herein have the
respective meanings assigned thereto in the Pooling and Servicing Agreement.
Exhibit 6 - Page 3
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Transferee
Certification and Agreement to be validly executed by its duly authorized
representative this ____ day of ___________, ____.
___________________,
By:________________________________
Name:______________________________
Its:________________________________
Exhibit 6 - Page 4
<PAGE>
ANNEX A TO EXHIBIT 6
ATTACH COPY OF SECTION 5.05 OF THE
STANDARD TERMS TO POOLING AND SERVICING AGREEMENT
<PAGE>
EXHIBIT 7
---------
BENEFIT PLAN AFFIDAVIT
Re: Oakwood Mortgage Investors, Inc., OMI
Trust ______ (the "Trust") Pass-
Through Certificates, Class ___,
Class __ and Class __
STATE OF ___________ )
) ss:
COUNTY OF __________)
Under penalties of perjury, I, the undersigned, declare that, to the
best of my knowledge and belief, the following representations are true,
correct, and complete.
1. That I am a duly authorized officer of __________________________, a
_________ corporation (the "Purchaser"), whose taxpayer identification number is
__________, and on behalf of which I have the authority to make this affidavit.
2. That the Purchaser is acquiring the Class ______ Certificates ("the
Purchased Certificates"), each representing an interest in the Trust, for
certain assets of which one or more real estate mortgage investment conduit
("REMIC") elections are to be made under Section 860D of the Internal Revenue
Code of 1986, as amended (the "Code").
3. The Purchaser either:
(i) (A) is not a plan ("Plan") described in or subject to the
Department of Labor regulations set forth in 29 C.F.R. ss. 2510.3-101
(the "Plan Asset Regulations"), a person acting on behalf of a Plan, or
a person using the assets of a Plan and (B) either (I) is not an
insurance company or (II) is an insurance company, in which case none
of the funds used by the Purchaser in connection with its purchase of
the Purchased Certificates constitute plan assets as defined in the
Plan Asset Regulations ("Plan Assets") and its purchase of the
Purchased Certificates shall not result in the certificates issued by
or the assets of the Trust being deemed to be Plan Assets;
Exhibit 7 - Page 1
<PAGE>
(ii) is an insurance company and (A) the Purchaser is
acquiring the Purchased Certificates with funds held in an "insurance
company general account" (as defined in Section V(e) of Prohibited
Transaction Class Exemption 95-60 ("PTCE 95-60"), as published in 60
Fed. Reg. 35925 (July 12, 1995)), (B) there is no Plan with respect to
which the amount of such general account's reserves and liabilities for
all contracts held by or on behalf of such Plan and all other Plans
maintained by the same employer, or its affiliates (as defined in
Section V(a)(1) of PTCE 95-60), or by the same employee organization
exceeds or will exceed 10% of the total of all reserves and liabilities
of such general account (as such amounts are determined under Section
I(a) of PTCE 95-60) at the date of acquisition, (C) the purchase of the
Purchased Certificates is not part of an agreement, arrangement, or
understanding designed to benefit a party in interest, and (D) the
conditions of Prohibited Transaction Exemption __________ [INSERT
SPECIFIC UNDERWRITER'S EXEMPTION OR PTE 83-1] (except for the
conditions stated in section II(A)(2) and (3) thereof) are met; or
(iii) has provided a "Benefit Plan Opinion," obtained at the
Purchaser's expense, satisfactory to OMI, the Servicer, and the
Trustee. A Benefit Plan Opinion is an opinion of counsel to the effect
that the proposed transfer will not (a) cause the assets of the Trust
to be regarded as Plan Assets, (b) give rise to a fiduciary duty under
the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), on the part of OMI, the Servicer, or the Trustee, or (c) be
treated as, or result in, a prohibited transaction under Section 406 or
407 of ERISA or Section 4975 of the Code.
Capitalized terms used but not otherwise defined herein shall have the
meanings assigned to such terms in the Pooling and Servicing Agreement, dated as
of ____________ __, _______, which incorporates by reference the Standard Terms
thereto (May 1999 Edition), among OMI, Oakwood Acceptance Corporation, and
_________________________, as Trustee.
Exhibit 7 - Page 2
<PAGE>
IN WITNESS WHEREOF, the Purchaser has caused this instrument to be duly
executed on its behalf, by its duly authorized officer this ____ day of
___________, ____.
_____________________________
[Name of Purchaser]
By:________________________________
Name:______________________________
Its:________________________________
Personally appeared before me ________________, known or proved to me
to be the same person who executed the foregoing instrument and to be a
_________________________ of the Purchaser, and acknowledged to me that he
executed the same as his or her free act and deed and as the free act and deed
of the Purchaser.
Subscribed and sworn before me this ______ day of ___________, ____.
___________________________________
Notary Public
My commission expires:______________________________.
Exhibit 7 - Page 3
<PAGE>
EXHIBIT 8
---------
FORM OF RESIDUAL TRANSFEREE AGREEMENT.......
OAKWOOD MORTGAGE INVESTORS INC., SERIES ____-_______
PASS-THROUGH CERTIFICATES,
CLASS __
RESIDUAL TRANSFEREE
-----------------
[Name of Transferee]
----------------
(DATE)
[NAME AND ADDRESS OF TRUSTEE]
Oakwood Mortgage Investors, Inc.
Oakwood Acceptance Corporation
7800 McCloud Road
Greensboro, North Carolina 27409
Re: Oakwood Mortgage Investors, Inc., Series ____-____,
Pass-Through Certificates, Class __, representing a
[___% Percentage Interest][$ denomination]
Ladies and Gentlemen:
The undersigned (the "Transferee") proposes to purchase all or some of
the captioned Certificates (the "Residual Certificates"), issued by the Trust
established pursuant to a pooling and servicing agreement dated as of
__________________, ____ (the "Series Agreement"), among Oakwood Mortgage
Investors, Inc. ("OMI"), Oakwood Acceptance Corporation ("OAC"), and
_____________________________, as Trustee, which incorporates by reference the
Standard Terms thereto, May 1999 Edition (the "Standard Terms" and, collectively
with the Series
Exhibit 8 - Page 1
<PAGE>
Agreement, the "Agreement"). In doing so the Transferee hereby
acknowledges and agrees as follows:
SECTION 1. DEFINITIONS. Each capitalized term used herein and not
otherwise defined herein shall have the meaning ascribed to it in the Agreement.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE TRANSFEREE. In
connection with the proposed transfer of the Purchased Certificates, the
Transferee represents and warrants to OMI, OAC, the Servicer, the Trustee and
the Trust as follows:
(a) The Transferee has knowledge in financial and business
matters and is capable of evaluating the merits and risks of an
investment in the Residual Certificates; the Transferee has sought such
accounting, legal and tax advice as it has considered necessary to make
an informed decision; and the Transferee is able to bear the economic
risk of an investment in the Residual Certificates and can afford a
complete loss of such investment.
(b) The Transferee represents that (i) it understands that
each of the Residual Certificates represents for federal income tax
purposes a "residual interest" in a real estate mortgage investment
conduit (a "REMIC") and that, as the holder of the Residual
Certificates, it will be required to take into account, in determining
its taxable income, its PRO RATA share of the taxable income of the
REMIC, (ii) it understands that it may incur federal income tax
liabilities with respect to the Residual Certificates in excess of any
cash flows generated by the Residual Certificates and (iii) it has
historically paid its debts as they became due and has the financial
wherewithal and intends to continue to pay its debts as they come due
in the future, including any tax imposed on the income that it derives
from the Residual Certificates as such taxes become due.
*(c) The Transferee is acquiring the Residual Certificates for
its own account as principal and not with a view to the resale or
distribution thereof, in whole or in part, in violation of Section 5 of
the Securities Act of 1933, as amended (the "Act").
*(d) The Transferee confirms that OMI has made available to
the Transferee the opportunity to ask questions of, and receive answers
from, OMI concerning OMI, the Trust, the purchase by the Transferee of
the Residual Certificates and all matters relating thereto, and to
obtain additional information relating thereto that OMI possesses or
can acquire unreasonable effort or expense.
SECTION 3. COVENANTS. The Transferee covenants:
(a) The Transferee will not make a public offering of the
Residual Certificates, and will not reoffer or resell the Residual
Certificates in a manner that would render the issuance and sale of the
Residual Certificates whether considered together with the resale or
Exhibit 8 - Page 2
<PAGE>
otherwise, a violation of the Act, or any state securities or "Blue
Sky" laws or require registration pursuant thereto.
(b) The Transferee agrees that, in its capacity as a holder of
the Residual Certificates, it will assert no claim or interest in the
Contracts by reason of owning the Residual Certificates other than with
respect to amounts that may be properly and actually payable to the
Transferee pursuant to the terms of the Pooling and Servicing Agreement
and the Certificates.
(c) If applicable, the Transferee will comply with respect to
the Residual Certificates in all material respects with applicable
regulatory guidelines relating to the ownership of mortgage derivative
products.
(d) Upon notice thereof, the Transferee agrees to any future
amendment to the provisions of the Pooling and Servicing Agreement
relating to the transfer of the Residual Certificates (or any interest
therein) that counsel to OMI or the Trust may deem necessary to ensure
that any such transfer will not result in the imposition of any tax on
the Trust.
*These representations and covenants are to be deleted if the Residual
Securities are not Private Securities.
(e) The Transferee hereby agrees that the Servicer or an
affiliate thereof will (i) supervise or engage in any action necessary
or advisable to preserve the status of the REMIC as a REMIC, (ii) be,
and perform the functions of, the REMIC's tax matters person ("TMP"),
and (iii) employ on a reasonable basis counsel, accountants, and
professional assistance to aid in the preparation of tax returns or the
performance of the above.
(f) The Transferee hereby agrees to cooperate with the TMP and
to take any action required of it by the REMIC Provisions in order to
create or maintain the REMIC status of the REMIC.
(g) The Transferee hereby agrees that it will not take any
action that could endanger the REMIC status of any related REMIC or
result in the imposition of tax on any such REMIC unless counsel for,
or acceptable to, the TMP has provided an opinion that such action will
not result in the loss of such REMIC status or the imposition of such
tax, as applicable.
SECTION 4. ADDITIONAL TRANSFER RESTRICTIONS.
Exhibit 8 - Page 3
<PAGE>
(a) No transfer of the Residual Certificates shall be made
unless the Servicer has consented in writing to such transfer. No
Residual Certificate may be transferred to a Disqualified Organization.
The Servicer will not consent to any proposed transfer (i) to any
investor that it knows is a Disqualified Organization or (ii) if the
transfer involves less than an entire interest in a Residual
Certificate unless (A) the interest transferred is an undivided
interest or (B) the transferor or the transferee provides the Servicer
with an Opinion of Counsel obtained at its own expense to the effect
that the transfer will not jeopardize the REMIC status of any related
REMIC. The Servicer's consent to any transfer is further conditioned
the Servicer's receipt from the proposed transferee of (x) a Residual
Transferee Agreement, (y) a Benefit Plan Affidavit, and (z) either (A)
if the transferee is a Non-U.S. Person, an affidavit of the proposed
transferee in substantially the form attached as Exhibit 8-A to Exhibit
8 to the Standard Terms and a certificate of the transferor stating
whether the Class R Certificate has "tax avoidance potential" as
defined in Treasury Regulations Section 1.860G-3(a)(2), or (B) if the
transferee is a U.S. Person, an affidavit in substantially the form
attached as Exhibit 8-B to Exhibit 8 to the Standard Terms. In
addition, if a proposed transfer involves a Private Certificate, (1)
the Servicer or the Trustee shall require that the transferor and
transferee certify as to the factual basis for the registration or
qualification exemption(s) relied upon to exempt the transfer from
registration under the Act and all applicable state securities or "blue
sky" laws, and (2) if the transfer is to be made within three years
after the acquisition thereof by a non-Affiliate of OMI from OMI or an
Affiliate of OMI, the Servicer or the Trustee also may require an
Opinion of Counsel that such transfer may be made without registration
or qualification under the Act and applicable state securities laws,
which Opinion of Counsel shall not be obtained at the expense of OMI,
the Trustee or the Servicer. Notwithstanding the foregoing, no Opinion
of Counsel shall be required in connection with the initial transfer of
the Residual Certificates or their transfer by a broker or dealer, if
such broker or dealer was the initial transferee. Notwithstanding the
fulfillment of the prerequisites described above, the Servicer may
withhold its consent to, or the Trustee may refuse to recognize, a
transfer of a Residual Certificate, but only to the extent necessary to
avoid a risk of disqualification of a related REMIC as a REMIC or the
imposition of a tax upon any such REMIC. Any attempted transfer in
violation of the foregoing restrictions shall be null and void and
shall not be recognized by the Trustee.
(b) If a tax or a reporting cost is borne by a related REMIC
as a result of the transfer of the Residual Certificates or any
beneficial interest therein, in violation of the restrictions
referenced herein, the Transferor shall pay such tax or cost and, if
such tax or costs are not so paid, the Trustee, upon notification from
the Servicer, shall pay such tax or reporting cost with amounts that
otherwise would have been paid to the transferee of such Residual
Certificates. In that event, neither the Transferee nor the transferor
shall have any right to seek repayment of such amounts from OMI, the
Servicer, the Trustee, the Trust, the REMIC or the holders of any other
Certificates, and none of such parties shall have any
Exhibit 8 - Page 4
<PAGE>
liability for payment of any such tax or reporting cost. In the event
that a Residual Certificate is transferred to a Disqualified
Organization, the Servicer shall make, or cause to be made, available
the information necessary for the computation of the excise tax imposed
under section 860E(e) of the Code.
SECTION 5. ACKNOWLEDGMENTS.
(a) The Transferee acknowledges that, if the Residual
Certificates are Private Certificates, the Residual Certificates have
not been registered under the Act or registered or qualified under any
state securities laws and that no transfer may be made unless the
Purchased Certificates are registered under the Act and under
applicable state law or unless an exemption from such registration is
available. The Transferee further understands that neither OMI, the
Servicer nor the Trust is under any obligation to register the
Certificate or make an exemption from such registration available.
(b) The Transferee acknowledges that if any United States
federal income tax is due at the time a Non-U.S. Person transfers a
Residual Certificate, the Trustee or its designated Paying Agent or
other person who is liable to withhold federal income tax from a
distribution on a Residual Certificate under sections 1441 and 1442 of
the Code and the regulations thereunder (the "Withholding Agent") may
(i) withhold an amount equal to the taxes due upon disposition of the
Certificate from future distributions made with respect to the
Certificate to the transferee (after giving effect to the withholding
of taxes imposed on such transferee), and (ii) pay the withheld amount
to the Internal Revenue Service unless satisfactory written evidence of
payment of the taxes due by the transferor has been provided to the
Withholding Agent. Moreover, the Withholding Agent may (x) hold
distributions on a Certificate, without interest, pending determination
of amounts to be withheld, (y) withhold other amounts required to be
withheld pursuant to United States federal income tax law, if any, from
distributions that otherwise would be made to such transferee on each
Certificate it holds, and (z) pay to the Internal Revenue Service all
such amounts withheld.
(c) The Transferee acknowledges that the transfer of all or
part of the Residual Certificates that have "tax avoidance potential"
(as defined in Treasury Regulations section 1.860G-3(a)(2) or any
successor provision) to a Non-U.S. Person will be disregarded for all
federal income tax purposes.
(d) The Transferee acknowledges that the transfer of the
Residual Certificates to a U.S. Person will be disregarded for all
federal income tax purposes if a significant purpose of the transfer is
to impede the assessment or collection of the taxes and expenses
associated with the security within the meaning of Treasury regulation
section 1.860E-1(c)(1).
Exhibit 8 - Page 5
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused the Pooling and
Servicing Agreement be validly executed by its duly authorized representative as
of the day and year first above written.
[Name of Transferee]
By: _______________________
Its: ________________________
Exhibit 8 - Page 6
<PAGE>
EXHIBIT 8-A
-----------
OAKWOOD MORTGAGE INVESTORS, INC.
FOREIGN PERSON AFFIDAVIT
AND AFFIDAVIT PURSUANT TO SECTIONS
860D(A)(6)(A) AND 860E(E)(4)
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
Re: Oakwood Mortgage Investors, Inc.
Series __________ Trust (the "Trust")
Pass-Through Certificates, Class __
STATE OF ___________ )
) ss.:
COUNTY OF __________ )
Under penalties of perjury, I, the undersigned, declare that to the
best of my knowledge and belief, the following representations are true,
correct, and complete:
1. I am a duly authorized officer of ___________________ (the
"Transferee"), and on behalf of which I have the authority to make this
affidavit.
2. The Transferee is acquiring all or a portion of the securities (the
"Residual Certificates"), which represent a residual interest in one or more
real estate mortgage investment conduits (each, a "REMIC") for which elections
are to be made under Section 860D of the Internal Revenue Code of 1986, as
amended (the "Code").
3. The Transferee is a foreign person within the meaning of Treasury
Regulation Section 1.860G-3(a)(1) (I.E., a person other than (i) a citizen or
resident of the United States, (ii) a corporation or partnership that is
organized under the laws of the United States or any jurisdiction thereof or
therein, or (iii) an estate or trust that is subject to United States federal
income tax regardless of the source of its income) who would be subject to
United States income tax withholding pursuant to Section 1441 or 1442 of the
Code on income derived from the Residual Certificates (a "Non-U.S. Person").
4. The Transferee agrees that it will not hold the Residual
Certificates in connection with a trade or business in the United States, and
the Transferee understands that it will be subject to United States federal
income tax under sections 871 and 881 of the Code in accordance with section
860G of the Code and any Treasury regulations issued thereunder on "excess
inclusions" that accrue with respect to the Residual Certificates during the
period the Transferee holds the Residual Certificates.
Exhibit 8-A - Page 1
<PAGE>
5. The Transferee understands that the federal income tax on excess
inclusions with respect to the Residual Certificates may be withheld in
accordance with section 860G(b) of the Code from distributions that otherwise
would be made to the Transferee on the Residual Certificates and, to the extent
that such tax has not been imposed previously, that such tax may be imposed at
the time of disposition of any such Residual Certificate pursuant to section
860G(b) of the Code.
6. The Transferee agrees (i) to file a timely United States federal
income tax return for the year in which disposition of a Residual Certificate it
holds occurs (or earlier if required by law) and will pay any United States
federal income tax due at that time and (ii) if any tax is due at that time, to
provide satisfactory written evidence of payment to the Trustee or its
designated paying agent or other person who is liable to withhold federal income
tax from a distribution on the Residual Certificates under sections 1441 and
1442 of the Code and the regulations thereunder (the "Withholding Agent").
7. The Transferee understands that, until such written notice is
provided, the Withholding Agent may (i) withhold an amount equal to the taxes
due upon disposition of a Residual Certificates from future distributions made
with respect to the Residual Certificate to subsequent transferees (after giving
effect to the withholding of taxes imposed on such subsequent transferees), and
(ii) pay the withheld amount to the Internal Revenue Service.
8. The Transferee understands that (i) the Withholding Agent may
withhold other amounts required to be withheld pursuant to United States federal
income tax law, if any, from distributions that otherwise would be made to such
transferee on each Residual Certificates it holds and (ii) the Withholding Agent
may pay to the Internal Revenue Service amounts withheld on behalf of any and
all former holders of each Residual Certificate held by the Transferee.
9. The Transferee understands that if it transfers a Residual
Certificate (or any interest therein) to a United States Person (including a
foreign person who is subject to net United States federal income taxation with
respect to such Residual Certificate), the Withholding Agent may disregard the
transfer for federal income tax purposes if the transfer would have the effect
of allowing the Transferee to avoid tax on accrued excess inclusions and may
continue to withhold tax from future distributions as though the Residual
Certificate were still held by the Transferee.
10. The Transferee understands that a transfer of a Residual
Certificate (or any interest therein) to a Non-U.S. Person (I.E., a foreign
person who is not subject to net United States federal income tax with respect
to such Residual Certificate) will not be recognized unless the Withholding
Agent has received from the transferee an affidavit in substantially the same
form as this affidavit containing these same agreements and representations.
Exhibit 8-A - Page 2
<PAGE>
11. The Transferee understands that distributions on a Residual
Certificate may be delayed, without interest, pending determination of amounts
to be withheld.
12. The Transferee is not a "Disqualified Organization" (as defined
below), and the Transferee is not acquiring a Residual Certificate for the
account of, or as agent or nominee of, or with a view to the transfer of direct
or indirect record or beneficial ownership to, a Disqualified Organization. For
the purposes hereof, a Disqualified Organization is any of the following: (i)
the United States, any State or political subdivision thereof, any foreign
government, any international organization, or any agency or instrumentality of
any of the foregoing; (ii) any organization (other than a farmer's cooperative
as defined in Section 521 of the Code) that is exempt from federal income
taxation (including taxation under the unrelated business taxable income
provisions of the Code); (iii) any rural telephone or electrical service
cooperative described in Section 1381(a)(2)(C) of the Code; or (iv) any other
entity so designated by Treasury rulings or regulations promulgated or otherwise
in effect as of the date hereof. In addition, a corporation will not be treated
as an instrumentality of the United States or of any state or political
subdivision thereof if all of its activities are subject to tax and, with the
exception of the Federal Home Loan Mortgage Corporation, a majority of its board
of directors is not selected by such governmental unit.
13. The Transferee agrees to consent to any amendment of the Pooling
and Servicing Agreement that shall be deemed necessary by OMI (upon the advice
of counsel to OMI) to constitute a reasonable arrangement to ensure that no
interest in a Residual Certificate will be owned directly or indirectly by a
Disqualified Organization.
14. The Transferee acknowledges that Section 860E(e) of the Code would
impose a substantial tax on the transferor or, in certain circumstances, on an
agent for the transferee, with respect to any transfer of any interest in any
Residual Certificate to a Disqualified Organization.
Capitalized terms used and not otherwise defined herein shall have the
meanings assigned to them in the Pooling and Servicing Agreement, dated as of
_______________, ____, which incorporates by reference the Standard Terms
thereto (May 1999 Edition), among Oakwood Mortgage Investors, Inc., Oakwood
Acceptance Corporation, and ____________________, as Trustee.
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
duly executed on its behalf, by its duly authorized officer as of the _______
day of _____________, ____.
[Name of Transferee]
By: _______________________
Its: ______________________
Exhibit 8-A - Page 3
<PAGE>
Personally appeared before me ___________________________, known or
proved to me to be the same person who executed the foregoing instrument and to
be a ______________________ of the Transferee, and acknowledged to me that he or
she executed the same as his or her free act and deed and as the free act and
deed of the Transferee.
Subscribed and sworn before me this ______ day of __________, ____.
___________________________________________________
Notary Public
My commission expires the _____ day of ________________, ____.
Exhibit 8-A - Page 4
<PAGE>
EXHIBIT 8-B
OAKWOOD MORTGAGE INVESTORS, INC.
AFFIDAVIT PURSUANT TO SECTIONS
860D(A)(6)(A) AND 860E(E)(4)
OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED
Re: Oakwood Mortgage Investors, Inc.
Series ________ Trust (the "Trust")
Pass-Through Certificates, Class ___
STATE OF __________________________)
) ss.:
COUNTY OF _________________________)
Under penalties of perjury, I, the undersigned declare that, to the
best of my knowledge and belief, the following representations are true, correct
and complete:
1. I am a duly authorized officer of ______________________ (the
"Transferee"), on behalf of which I have the authority to make this affidavit.
2. The Transferee is acquiring all or a portion of the securities (the
"Residual Certificates"), which represent a residual interest in one or more
real estate mortgage investment conduits (each, a "REMIC") for which elections
are to be made under Section 860D of the Internal Revenue Code of 1986, as
amended (the "Code").
3. The Transferee either is (i) a citizen or resident of the United
States, (ii) a domestic partnership or corporation, (iii) an estate or trust
that is subject to United States federal income tax regardless of the source of
its income, (iv) a trust if a court within the United States is able to exercise
primary supervision over the administration of the trust and one or more United
States fiduciaries have the authority to control all substantial decisions of
the trust, or (v) a foreign person who would be subject to United States income
taxation on a net basis on income derived from the Residual Certificates (a
"U.S. Person").
4. The Transferee is a not a "Disqualified Organization" (as defined
below), and the Transferee is not acquiring a Residual Certificate for the
account of, or as agent or nominee of, or with a view to the transfer of direct
or indirect record or beneficial ownership to, a Disqualified Organization. For
the purposes hereof, a Disqualified Organization is any of the following: (i)
the United States, any State or political subdivision thereof, any foreign
government, any international organization, or any agency or instrumentality of
any of the foregoing; (ii) any organization (other
Exhibit 8-B - Page 1
<PAGE>
than a farmer's cooperative as defined in Section 521 of the Code) that is
exempt from federal income taxation (including taxation under the unrelated
business taxable income provisions of the Code); (iii) any rural telephone or
electrical service cooperative described in ss. 1381(a)(2)(C) of the Code; or
(iv) any other entity so designated by Treasury rulings or regulations
promulgated or otherwise in effect as of the date hereof. In addition, a
corporation will not be treated as an instrumentality of the United States or of
any state or political subdivision thereof if all of its activities are subject
to tax and, with the exception of the Federal Home Loan Mortgage Corporation, a
majority of its board of directors is not selected by such governmental unit.
5. The Transferee agrees to consent to any amendment of the Pooling and
Servicing Agreement that shall be deemed necessary by the Issuer (upon advice of
counsel to the Issuer) to constitute a reasonable arrangement to ensure that no
interest in a Residual Certificate will be owned directly or indirectly by a
Disqualified Organization.
6. The Transferee acknowledges that Section 860E(e) of the Code would
impose a substantial tax on the transferor or, in certain circumstances, on an
agent for the transferee, with respect to any transfer of any interest in any
Residual Certificate to a Disqualified Organization.
Capitalized terms used and not otherwise defined herein shall have the
meanings assigned to them in the Pooling and Servicing Agreement, dated as of
_______________, ____, which incorporates by reference the Standard Terms
thereto (May 1999 Edition), among Oakwood Mortgage Investors, Inc., the
Servicer, and ____________________, as Trustee.
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
duly executed on its behalf by its duly authorized officer this ____ day of
______, ____.
[Name of Transferee]
By: ___________________
Its: _________________
Personally appeared before me ___________________, known or proved to
me to be the same person who executed the foregoing instrument and to be a
_______________ of the Transferee, and acknowledged to me that he or she
executed the same as his or her free act and deed and as the free act and deed
of the Transferee.
Subscribed and sworn before me this ____ day of ________, ____.
_________________________________________
Exhibit 8-B - Page 2
<PAGE>
Notary Public
My commission expires the ____ day of ____________________, ____.
Exhibit 8-B - Page 3
<PAGE>
EXHIBIT 9
---------
FORM OF POWER OF ATTORNEY
Oakwood Acceptance Corporation ("OAC"), pursuant to the Pooling and
Servicing Agreement, dated as of ______________________, _______, among Oakwood
Mortgage Investors, Inc. ("OMI"), OAC, and _____________________________, as
Trustee (the "Trustee"), which incorporates by reference OMI's Standard Terms to
Pooling and Servicing Agreement (May 1999 Edition) (the "Standard Terms"),
hereby irrevocably constitutes and appoints the Trustee its true and lawful
attorney-in-fact and agent, to execute, acknowledge, verify, swear to, deliver,
record and file, in its name, place and stead, assignments of Mortgages relating
to Loan Secured Contracts from OAC to the Trustee as contemplated by Section
2.02 of the Standard Terms. If required, OAC shall execute and deliver to the
Trustee, upon the Trustee's request therefor, such further designations, powers
of attorney or other instruments as the Trustee may reasonably deem necessary
for the purposes hereof.
Capitalized terms used and not otherwise defined herein shall have the
respective meanings assigned to them in the Agreement.
OAKWOOD ACCEPTANCE CORPORATION
By: _______________________________________
Name: _____________________________________
Title: ____________________________________
Acknowledged and Agreed:
[Name of Trustee]
By: ___________________________
Name: _________________________
Title: ________________________
Exhibit 9 - Page 1
<PAGE>
LIMITED GUARANTEE
-----------------
THIS LIMITED GUARANTEE (this "Limited Guarantee"), dated as of _______
1, ____, is made and entered into upon the terms hereinafter set forth, by
OAKWOOD HOMES CORPORATION, a North Carolina corporation (the "Guarantor"), for
the benefit of _________________________, a [national banking association], as
trustee (the "Trustee") of OMI Trust _____-__ (the "Trust").
RECITALS:
a. The Trust was formed pursuant to a Pooling and Servicing Agreement,
dated as of ______ 1, ______, by and among Oakwood Mortgage Investors, Inc. (the
"Company"), Oakwood Acceptance Corporation (the "Servicer") and the Trustee,
which incorporates by reference the Company's Standard Terms to Pooling and
Servicing Agreement (May 1999 Edition) (together, the "Pooling and Servicing
Agreement"). Capitalized terms used and not otherwise defined herein shall have
the respective meanings assigned to such terms in the Pooling and Servicing
Agreement.
b. The Company is a wholly-owned subsidiary of the Servicer, which is a
wholly-owned subsidiary of the Guarantor.
c. Under the Pooling and Servicing Agreement, the Trust issued its
Pass-Through Certificates, Series ____-__ (the "Certificates"). In connection
with the issuance of the Certificates, the Guarantor has been requested to
provide to the Trustee this Limited Guarantee of certain shortfalls in
distributions on the Class ____ Certificates. Because of the substantial
economic benefits accruing to the Guarantor by virtue of the issuance of the
Certificates, the Guarantor desires to make this Limited Guarantee, all on the
following terms and conditions.
AGREEMENTS:
- -----------
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged by the Guarantor, the Guarantor hereby agrees as follows:
I. The Guarantor hereby unconditionally and absolutely guarantees the
full and prompt payment to the Trustee on or prior to the Remittance Date
relating to each Distribution Date of the Limited Guarantee Payment Amount (as
such term is defined in the Pooling and Servicing Agreement), if any, for such
Distribution Date, provided that the Trustee or the Servicer has notified the
Guarantor in writing (which may be by telecopy confirmed by a telephone call as
described below) of such amount before 1:00 p.m. New York City time on the
Remittance Date preceding the applicable Distribution Date. If the Trustee or
Servicer fails to notify the Guarantor as provided in this paragraph of any
Limited Guarantee Payment Amount (and the amount thereof) for any Distribution
Date before 1:00 p.m. New York City time on the
<PAGE>
related Remittance Date, but subsequently so notifies the Guarantor, then the
Guarantor shall deliver such Limited Guarantee Payment Amount to the Trustee in
immediately available funds as soon as practicable after its receipt of such
notice. Notices sent to the Guarantor by telecopy or telephone shall be sent to
the attention of Treasurer (or such other person as may hereafter be prescribed
by the Guarantor to the Trustee in writing) to the telecopy number of (336)
664-3224 (or such other telecopy number as may be hereafter prescribed by the
Guarantor to the Trustee and Servicer in writing).
2. The Guarantor guarantees payment of the Limited Guarantee Payment
Amount, if any, to the Trustee pursuant to the terms hereof only, and does not
guarantee the Trustee's obligation to distribute payments made by the Guarantor
in accordance with the Pooling and Servicing Agreement, and the Guarantor shall
not be liable for any failure by the Trustee properly to distribute the amount
of any payments made by the Guarantor hereunder. Although this Limited Guarantee
is for the benefit of the Trustee on behalf of the Holders of the Class ___
Certificates, this Limited Guarantee may not be enforced directly by the Holders
of the Class ___ Certificates, but only by the Trustee on their behalf.
3. The obligations of the Guarantor hereunder shall not be released by
the Trustee's receipt, application or release of any security given for the
payment of any Limited Guarantee Payment Amounts.
4. The liability of the Guarantor hereunder shall in no way be affected
by (i) the release or discharge of the Trust in any creditors', receivership,
bankruptcy or other proceedings, (ii) the impairment, limitation or modification
of the liability of the Trust or the estate of the Trust in bankruptcy, or of
any remedy for the enforcement of any of the Trustee's obligations under the
Pooling and Servicing Agreement resulting from the operation of any present or
future provision of the federal bankruptcy law or any other statute or the
decision of any court, (iii) the rejection or disaffirmance of any instrument,
document or agreement evidencing any of the Trustee's obligations under the
Pooling and Servicing Agreement in any such proceedings, (iv) the assignment or
transfer of any of the Trustee's obligations under the Pooling and Servicing
Agreement by the Trustee or (v) the cessation from any cause whatsoever of the
liability of the Trustee with respect to the Trustee's obligations under the
Pooling and Servicing Agreement.
5. The Guarantor hereby waives any right to subrogation to the rights
of the Trustee; provided, however, that the Guarantor shall be entitled to be
reimbursed for Limited Guarantee Payment Amounts made under this Limited
Guarantee pursuant to the terms of the Pooling and Servicing Agreement.
6. This is a guaranty of payment and not of collection. The liability
of the Guarantor hereunder shall be direct and immediate and not conditional or
contingent upon the occurrence of any event except the occurrence of shortfalls
giving rise to the existence of a Limited Guarantee Payment Amount as of a
Distribution Date, as set forth more particularly in the Pooling and
-2-
<PAGE>
Servicing Agreement. The Guarantor hereby waives any right to require that an
action be brought against any person prior to discharging its obligations
hereunder. The Guarantor also waives all of its rights, powers and benefits
under N.C.G.S. ss.26-7 through ss.26-9.
7. This Limited Guarantee is assignable by the Trustee to any successor
trustee under the Pooling and Servicing Agreement, and any assignment of the
Trustee's obligations under the Pooling and Servicing Agreement or any portion
thereof by the Trustee shall operate to vest in the assignee the rights and
powers of the Trustee hereunder to the extent of such assignment. This Limited
Guarantee shall be binding upon the Guarantor and the Guarantor's successors and
assigns, and shall inure to the benefit of the Trustee, its representatives,
successors, successors-in-title and assigns.
8. This Limited Guarantee shall be construed in accordance with and
governed by the laws of the State of North Carolina applicable to contracts to
be performed within said state. No amendment or modification hereof shall be
effective unless evidenced by a writing signed by the Guarantor and the Trustee.
When used herein, the singular shall include the plural, and vice versa, and the
use of any gender shall include all other genders, as appropriate.
-3-
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Limited
Guarantee, or has caused this Limited Guarantee to be executed by its duly
authorized representative, as of the date first above written.
OAKWOOD HOMES CORPORATION
By: [SEAL]
---------------------------
Name:
-------------------------
Title:
------------------------
Acknowledged:
[____________________] AS TRUSTEE
By: [SEAL]
---------------------------
Name:
-------------------------
Title:
------------------------
-4-
<PAGE>
[Hunton & Williams Letterhead]
File Number: 40944.000529
Direct Dial: 804/788-8200
Exhibit 5.1
-----------
May 28, 1999
Oakwood Mortgage Investors, Inc.
101 Convention Center Drive
Las Vegas, Nevada 89109
Dear Sirs:
We have acted as counsel to Oakwood Mortgage Investors, Inc., a Nevada
corporation (the "Company"), in connection with the Company's Registration
Statement on Form S-3 (the "Registration Statement") filed with the Securities
and Exchange Commission under the Securities Act of 1933, as amended, with
respect to the proposed sale by the Company of up to $2,500,000,000 in
aggregate principal amount of Pass-Through Certificates, issuable by separate
trusts in one or more series (the "Certificates"). In this capacity, we have
examined the Registration Statement, the Company's Articles of Incorporation and
Bylaws, the form of Pooling and Servicing Agreement, including Standard Terms
thereto, among the Company, the trustee to be named therein and Oakwood
Acceptance Corporation, as servicer (the "Pooling and Servicing Agreement"), and
such other materials as we have deemed necessary to the issuance of this
opinion.
On the basis of the foregoing, we are of the opinion that:
1. The Company has been organized and is existing as a corporation
under the laws of the State of Nevada.
2. When each Pooling and Servicing Agreement has been duly authorized
by all necessary corporate action and has been duly executed and delivered by
the parties thereto, it will constitute a valid, legal and binding agreement of
the Company, enforceable against the Company in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and to general
principles of equity, regardless of whether enforcement is sought in a
proceeding in equity or at law.
3. When the Certificates have been duly authorized for sale by all
necessary corporate
<PAGE>
Oakwood Mortgage Investors, Inc.
May 28, 1999
Page 2
action, and when the Certificates have been duly issued, executed and
authenticated in accordance with the provisions of the related Pooling and
Servicing Agreement and delivered to and paid for by the purchasers thereof, the
Certificates will be legally and validly issued and the holders of the
Certificates will be entitled to the benefits provided by the Pooling and
Servicing Agreement pursuant to which such Certificates were issued.
With respect to matters of Nevada Law, we have relied solely upon the
opinion of Kolesar & Leatham, Chtd., dated the date hereof. We hereby consent to
the filing of this opinion as an exhibit to the Registration Statement. In
giving this consent, we do not admit that we are within the category of persons
whose consent is required by Section 7 of the Securities Act of 1933, as
amended, or the rules and regulations promulgated thereunder by the Securities
and Exchange Commission.
Very truly yours,
/s/ HUNTON & WILLIAMS
------------------------
Hunton & Williams
[Kolesar & Leatham, Chtd. Letterhead]
Exhibit 5.2
-----------
May 28, 1999
Oakwood Mortgage Investors, Inc.
101 Convention Center Drive
Las Vegas, Nevada 89109
Dear Sirs:
We have acted as Nevada counsel to Oakwood Mortgage Investors, Inc., a
Nevada corporation (the "Company"), in connection with the Company's
Registration Statement on Form S-3 (the "Registration Statement") filed with
the Securities and Exchange Commission under the Securities Act of 1933, as
amended, with respect to the proposed sale by the Company of up to
$2,500,000,000 in aggregate principal amount of Pass-Through Certificates,
issuable by separate trusts in one or more series. In this capacity, we have
examined the Registration Statement, the Company's Articles of Incorporation and
Bylaws, and such other materials as we have deemed necessary to the issuance of
this opinion.
On the basis of the foregoing, we are of the opinion that the Company
has been organized and is existing as a corporation under the laws of the
State of Nevada.
This opinion letter may be relied upon by Messrs. Hunton & Williams
for the purpose of rendering an opinion letter of even date herewith. While
we express no opinion as to the applicability or effect on the subject
transaction of the securities laws of the State of Nevada or the United States
of America, we hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving this consent, we do not admit that we are
within the category of persons whose consent is required by Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations promulgated
thereunder by the Securities and Exchange Commission.
Very truly yours,
/s/ Kolesar & Leatham, Chtd.
------------------------------
Kolesar & Leatham, Chtd.
[Hunton & Williams Letterhead]
File Number: 40944.000529
Direct Dial: 804/788-8200
Exhibit 8.1
-----------
May 28, 1999
Oakwood Mortgage Investors, Inc.
101 Convention Center Drive
Las Vegas, Nevada 89109
Ladies and Gentlemen:
We have acted as counsel to Oakwood Mortgage Investors, Inc.,
a Nevada corporation (the "Seller"), in connection with the Seller's
Registration Statement on Form S-3 (the "Registration Statement"), filed with
the Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "Act"), for the registration under the Act of $2,500,000,000
aggregate principal amount of Pass-Through Certificates (the "Certificates")
representing interests in one or more trusts (each a "Trust") to be established
by the Seller. The Certificates of each Trust will be issued pursuant to a form
of Pooling and Servicing Agreement, including Standard Terms thereto, among the
Seller, a trustee to be named therein, and Oakwood Acceptance Corporation, a
North Carolina Corporation, as servicer (a "Pooling and Servicing Agreement").
We have reviewed the originals or copies of (i) the Articles
of Incorporation, By-laws, and other organizational documents of the Seller;
(ii) certain resolutions of the Board of Directors of the Seller; (iii) the
Pooling and Servicing Agreement, including the forms of the Certificates annexed
thereto; (iv) the Registration Statement and the prospectus included therein;
and (v) such other documents as we have deemed necessary or appropriate as a
basis for the opinion set forth below.
<PAGE>
Oakwood Mortgage Investors, Inc.
May 28, 1999
Page 2
Based on the foregoing, we are of the opinion that the legal
conclusions contained in the Registration Statement under the caption "Federal
Income Tax Consequences" are correct in all material respects, and the
discussion thereunder does not omit any material provision with respect to the
matters covered. You should be aware that this opinion represents our
conclusions as to the application of existing law to a transaction as described
above. There can be no assurance that contrary positions will not be taken by
the Internal Revenue Service or that the law will not change.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement. We also consent to the references to Hunton &
Williams under the caption "Federal Income Tax Consequences" in the Prospectus.
In giving this consent, we do not admit that we are in the category of persons
whose consent is required by Section 7 of the Act or the rules and regulations
promulgated thereunder by the Securities and Exchange Commission.
No opinion has been sought and none has been given concerning
the tax treatment of the issuance and sale of the Certificates under the laws of
any state.
Very truly yours,
/s/ Hunton & Williams
--------------------------
HUNTON & WILLIAMS
[Hunton & Williams Letterhead]
File Number: 40944.000529
Direct Dial: 804/788-8200
Exhibit 8.2
-----------
May 28, 1999
Oakwood Mortgage Investors, Inc.
101 Convention Center Drive
Las Vegas, Nevada 89109
Ladies and Gentlemen:
We have acted as counsel to Oakwood Mortgage Investors, Inc.,
a Nevada corporation (the "Seller"), in connection with the preparation of the
Seller's Registration Statement on Form S-3 (the "Registration Statement"),
filed with the Securities and Exchange Commission under the Securities Act of
1933, as amended (the "Act"), for the registration under the Act of
$2,500,000,000 aggregate principal amount of Pass-Through Certificates (the
"Certificates") representing interests in one or more trusts (each a "Trust") to
be established by the Seller. The Certificates of each Trust will be issued
pursuant to a form of Pooling and Servicing Agreement, including Standard Terms
thereto, among the Seller, a trustee to be named therein, and Oakwood Acceptance
Corporation, a North Carolina corporation, as servicer (a "Pooling and Servicing
Agreement").
We have reviewed the originals or copies of (i) the Articles of
Incorporation, By-laws, and other organizational documents of the Seller; (ii)
certain resolutions of the Board of Directors of the Seller; (iii) the Pooling
and Servicing Agreement, including the forms of the Certificates annexed
thereto; (iv) the Registration Statement and the prospectus included therein;
and (v) such other documents as we have deemed necessary or appropriate as a
basis for the opinions set forth below.
Based on the foregoing, we are of the opinion that the legal
conclusions contained in the Registration Statement under the caption "Federal
Income Tax Consequences" are correct in all material respects, the discussion
thereunder does not omit any material provision with respect to the matters
covered and we hereby confirm that this discussion is the opinion of Hunton &
Williams as to the material federal income tax consequences associated with the
purchase, ownership and disposition of the Certificates. We also are of the
opinion that, with respect to the issuance of the Certificates of a Trust for
which an election to be treated as a real estate mortgage investment conduit
("REMIC") is to be made, if (i) the Seller, the Trustee, and the other parties
to the issuance transaction comply (without waiver) with all of the provisions
of the Pooling and Servicing
<PAGE>
Oakwood Mortgage Investors, Inc.
May 28, 1999
Page 2
Agreement and certain other documents to be prepared and executed in connection
with such transaction, (ii) the Certificates are issued and sold as described in
the Registration Statement and the prospectus supplement to be issued in
connection with the Trust, and (iii) an election is properly made and filed for
the Trust (or designated assets thereof) to be treated as one or more REMICs
pursuant to Section 860D of the Internal Revenue Code of 1986, as amended (the
"Code"), the Trust (or designated assets thereof) will qualify as one or more
REMICs, and the Certificates relating to the Trust will be considered to be
"regular interests" or the "residual interest" in a REMIC (as designated in the
relevant prospectus supplement) on the date of issuance thereof and thereafter,
assuming continuing compliance with the REMIC provisions of the Code and any
regulations thereunder.
You should be aware that the above opinions represent our conclusions
as to the application of existing law to a transaction as described above. There
can be no assurance that contrary positions will not be taken by the Internal
Revenue Service or that the law will not change.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. We also consent to the references to Hunton & Williams
under the caption "Federal Income Tax Consequences" in the Prospectus. In giving
this consent, we do not admit that we are in the category of persons whose
consent is required by Section 7 of the Act or the rules and regulations
promulgated thereunder by the Securities and Exchange Commission.
No opinion has been sought and none has been given concerning the tax
treatment of the issuance and sale of the Certificates under the laws of or any
state.
Very truly yours,
/s/ Hunton & Williams
------------------------
HUNTON & WILLIAMS
<PAGE>
[Hunton & Williams Letterhead]
File Number: 40944.000529
Direct Dial: 804/788-8200
Exhibit 8.3
-----------
May 28, 1999
Oakwood Mortgage Investors, Inc.
101 Convention Center Drive
Las Vegas, Nevada 89109
Ladies and Gentlemen:
We have acted as counsel to Oakwood Mortgage Investors, Inc.,
a Nevada corporation (the "Seller"), in connection with the preparation of the
Seller's Registration Statement on Form S-3 (the "Registration Statement"),
filed with the Securities and Exchange Commission under the Securities Act of
1933, as amended (the "Act"), for the registration under the Act of
$2,500,000,000 aggregate principal amount of Pass-Through Certificates (the
"Certificates") representing interests in one or more trusts (each a "Trust") to
be established by the Seller. The Certificates of each Trust will be issued
pursuant to a form of Pooling and Servicing Agreement, including Standard Terms
thereto, among the Seller, a trustee to be named therein, and Oakwood Acceptance
Corporation, a North Carolina corporation, as servicer (a "Pooling and Servicing
Agreement").
We have reviewed the originals or copies of (i) the Articles
of Incorporation, By-laws, and other organizational documents of the Seller;
(ii) certain resolutions of the Board of Directors of the Seller; (iii) the
Pooling and Servicing Agreement, including the forms of the Certificates annexed
thereto; (iv) the Registration Statement and the prospectus included therein;
and (v) such other documents as we have deemed necessary or appropriate as a
basis for the opinions set forth below.
Based on the foregoing, we are of the opinion that the legal
conclusions contained in the Registration Statement under the caption "Federal
Income Tax Consequences" are correct in all material respects, the discussion
thereunder does not omit any material provision with respect to the matters
covered and we hereby confirm that this discussion is the opinion of Hunton &
Williams as to the material federal income tax consequences associated with the
purchase, ownership and disposition of the Certificates. We also are of the
opinion that, with respect to the issuance of the
<PAGE>
Oakwood Mortgage Investors, Inc.
May 28, 1999
Page 2
Certificates of a Trust for which no election to be treated as a real estate
mortgage investment conduit is to be made, if (i) the Seller, the Trustee, and
the other parties to the issuance transaction comply (without waiver) with all
of the provisions of the Pooling and Servicing Agreement and certain other
documents to be prepared and executed in connection with such transaction and
(ii) the Certificates are issued and sold as described in the Registration
Statement and the prospectus supplement to be issued in connection with the
Trust, the Trust will be classified as a grantor trust under Subpart E, Part 1
of subchapter J of the Internal Revenue Code of l986, as amended (the "Code"),
and not as an association taxable as a corporation.
You should be aware that the above opinions represent our
conclusions as to the application of existing law to the transaction described
above. There can be no assurance that contrary positions will not be taken by
the Internal Revenue Service or that the law will not change.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement. We also consent to the references to Hunton &
Williams under the caption "Federal Income Tax Consequences" in the Prospectus.
In giving this consent, we do not admit that we are in the category of persons
whose consent is required by Section 7 of the Act or the rules and regulations
promulgated thereunder by the Securities and Exchange Commission.
No opinion has been sought and none has been given concerning
the tax treatment of the issuance and sale of the Certificates under the laws of
any state.
Very truly yours,
/s/ Hunton & Williams
-----------------------
HUNTON & WILLIAMS
Exhibit 23.2
------------
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of Oakwood Mortgage
Investors, Inc. of our report dated November 2, 1998 (except as to the
information presented in the first paragraph of Note 17 for which the date is
November 25, 1998) relating to the financial statements, which appears on
page 35 of Oakwood Homes Corporation's ("OHC") 1998 Annual Report to
Shareholders, which is incorporated by reference in OHC's Annual Report on Form
10-K for the year ended September 30, 1998. We also consent to the reference to
us under the heading "Experts" in such Registration Statement.
/S/PricewaterhouseCoopers LLC
- -------------------------------------
PricewaterhouseCoopers LLC
Greensboro, North Carolina
May 28, 1999
SALES AGREEMENT
---------------
THIS SALES AGREEMENT (this "Agreement"), made as of _____ 1, _____, by
and between Oakwood Mortgage Investors, Inc., a Nevada corporation ("OMI"), and
Oakwood Acceptance Corporation, a North Carolina corporation ("OAC" or the
"Seller"), recites and provides as follows:
RECITALS
1. Schedule IA attached hereto (the "Contract Schedule") and
made a part hereof lists manufactured housing retail installment sales contracts
(the "Contracts") secured by units of manufactured housing ("Manufactured
Homes"). Schedule IB attached hereto (the "Mortgage Loan Schedule" and together
with the Contract Schedule, the "Asset Schedule") and made a part hereof lists
mortgage loans secured by first liens on the real estate to which the related
Manufactured Homes are deemed permanently affixed (the "Mortgage Loans"). The
Contracts and Mortgage Loans listed on Schedules IA and IB are currently, or
will be, owned by the Seller, and the Seller desires to sell such Assets to OMI.
2. OMI desires to purchase the Assets and intends immediately
thereafter to transfer the Assets to OMI Trust ___-__ (the "Trust") pursuant to
the terms of a pooling and servicing agreement (the "Series Agreement"), dated
as of ____ 1, ____, by and among OMI, OAC, as servicer (the "Servicer"), and
____________________________________, as trustee (the "Trustee"). Such Series
Agreement will incorporate by reference OMI's Standard Terms to Pooling and
Servicing Agreement (May 1999 Edition) (the "Standard Terms" and, together with
the above-referenced Series Agreement, the "Pooling and Servicing Agreement").
3. Pursuant to the terms of the Pooling and Servicing
Agreement, the Trust will issue securities evidencing 100% of the beneficial
ownership interest in the Trust to OMI in consideration of OMI's deposit of the
Assets into the Trust.
4. Securities to be issued by the Trust to OMI will be
designated as the Senior/Subordinated Pass-Through Certificates, Series ____-__,
Classes [A-1, A-2, A-3, A-4, M-1, M-2, B-1, B-2, X and R] Certificates and shall
be collectively referred to herein as the "Certificates."
5. The Class [A-1, A-2, A-3, A-4, M-1, M-2, B-1 and B-2]
Certificates (the "Offered Certificates") shall be sold pursuant to a terms
agreement dated _____ __, ____ (the "Terms Agreement" and, together with OMI's
Underwriting Agreement Standard Provisions (May 1999), the "Underwriting
Agreement"), among OMI, OAC and ___________________ and _____________________
(the "Underwriters"), and will be offered publicly for sale by the Underwriters
pursuant to a prospectus supplement dated _____ __, ____ (the "Prospectus
Supplement"), and the related prospectus, dated _____ __, ____ (together with
the Prospectus Supplement, the "Prospectus").
<PAGE>
6. The Class [X and Class R] Certificates (the "Private
Certificates") will be sold by OMI to Oakwood Financial Corporation, a Nevada
corporation (the "Purchaser").
7. Capitalized terms used and not defined herein shall have
the meanings assigned to them in the Pooling and Servicing Agreement.
AGREEMENT
NOW THEREFORE, in consideration of the above premises, mutual promises
herein made and other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1. SALE AND PURCHASE.
(a) Subject to the terms and conditions of this Agreement, the Seller
agrees to sell, and OMI agrees to purchase, on the date of the issuance of the
Certificates, which is expected to be on or about ____ __, ____ (the "Closing
Date"), Assets having an aggregate Scheduled Principal Balance as of the
applicable Cut-Off Date, of approximately $___,___,___.
(b) The Seller and OMI have agreed upon which of the contracts and
mortgage loans owned by the Seller are to be purchased by OMI pursuant to this
Agreement, and the Seller has prepared, or provided information to OMI enabling
it to prepare, the schedules attached hereto as Schedule IA and Schedule IB
identifying all of the Assets to be purchased by OMI on the Closing Date and
describing such Assets. The Seller shall, with OMI's consent, amend or modify,
or provide information to OMI enabling it to amend or modify, Schedule IA and
Schedule IB on or prior to the Closing Date if necessary to reflect the Assets
actually transferred by the Seller and accepted by OMI on such date. Schedule IA
and Schedule IB as so amended or modified (collectively, the "Closing
Schedule"), shall conform to the requirements of OMI as set forth in this
Agreement and to the definition of "Asset Schedule" under the Standard Terms,
and shall be used as the definitive Asset Schedule attached as an exhibit to the
Pooling and Servicing Agreement.
(c) The sale of the Assets shall be effected pursuant to the Assignment
of Assets substantially in the form attached hereto as Exhibit A (the
"Assignment of Assets").
SECTION 2. PURCHASE PRICE.
(a) On the Closing Date, as full consideration for the Seller's sale of
the Assets to OMI, OMI will pay to the Seller $____________________.
2
<PAGE>
(b) OMI or any assignee or transferee of OMI (which may include the
Trustee acting on behalf of the Certificateholders) shall be entitled to all
Monthly Payments due after the applicable Cut-Off Date, and all Principal
Prepayments and other unscheduled collections of principal collected in respect
of the Assets on or after the applicable Cut-off Date. All Monthly Payments due
on or before the applicable Cut-off Date and collected on or after the
applicable Cut-off Date shall belong to the Seller.
(c) Pursuant to the Pooling and Servicing Agreement, OMI will transfer
and assign all of its right, title and interest in and to the Assets to the
Trustee for the benefit of the Holders of the Certificates in consideration of
the issuance of the Certificates to OMI.
SECTION 3. TRANSFER OF THE ASSETS.
(a) TRANSFER OF OWNERSHIP. Upon the sale of the Assets, the ownership
of each Asset and the related Asset Documents shall be vested in OMI, and the
ownership of all other records and documents with respect to any Asset prepared
by or which come into the possession of the Seller shall immediately vest in OMI
upon such preparation or possession. The Seller shall retain, in its capacity as
the Servicer, any documents that come into its possession with respect to the
Contracts following the sale of the Assets to OMI and shall hold any such
documents for the benefit of OMI, its successors and assigns. The Seller shall
promptly deliver to the Trustee or retain in its capacity as the Servicer, as
appropriate, any documents that come into its possession with respect to the
Mortgage Loans following the sale of the Assets to OMI. Prior to such delivery,
the Seller shall hold any such documents for the benefit of OMI, its successors
and assigns.
All documents with respect to any Asset in the possession of OAC
following the execution by OAC of the Pooling and Servicing Agreement shall be
held by OAC, in its capacity as Servicer, as bailee and agent for OMI, its
successors and assigns and shall only be released in accordance with the terms
of the Pooling and Servicing Agreement.
(b) DELIVERY OF MORTGAGE LOAN FILES. Not later than three Business Days
prior to the Closing Date the Seller shall deliver to
____________________________, as trustee (the "Trustee"), each of the Mortgage
Loan Documents required to be included in the Trustee Mortgage Loan File for
each Mortgage Loan. The Mortgage Note for each Mortgage Loan shall be endorsed
without recourse to the Trustee (as the designee of OMI), and the Mortgage for
each Mortgage Loan shall be assigned to the Trustee. Each endorsement of a
Mortgage Note to the trustee shall be in the following form:
3
<PAGE>
WITHOUT RECOURSE,
PAY TO THE ORDER OF
[---------------------------------------]
AS TRUSTEE u/a DATED AS OF _________ __, ___
Each assignment of a Mortgage relating to a Mortgage Loan shall be made
to "___________________________, AS TRUSTEE u/a w/Oakwood Mortgage Investors,
Inc. and Oakwood Acceptance Corporation dated as of ____ __, ____."
Prior to the transfer and sale of the Mortgage Loans pursuant to this
Agreement, all Mortgage Loan Documents delivered to the Trustee shall be held by
the Trustee for the benefit of the Seller, and the possession by the Trustee of
such Mortgage Loan Documents will be at the will of the Seller and will be in a
custodial capacity only. Following the transfer and sale of the Mortgage Loans
from the Seller to OMI in accordance with the terms and upon satisfaction of the
conditions of this Agreement, the Trustee will hold all Mortgage Loan Documents
delivered to it hereunder for the benefit of OMI, as its agent and bailee. The
Trustee will act on OMI's behalf as a custodian for the receipt and custody of
all Trustee Mortgage Loan Files and, after the transfer of the Mortgage Loans
from OMI to the Trust, the Trustee will hold all Mortgage Loan Documents
delivered to it hereunder as custodian in order to effect the transfer and sale
of the Mortgage Loans from OMI to the Trust.
(c) EXAMINATION OF CONTRACT DOCUMENTS. The Servicer shall review the
Contract Files for each Contract in accordance with Section 2.02(b) of the
Standard Terms to confirm that each Contract File is complete, that none of the
Contract Documents is materially defective, and that the documents included in
each Contract File conform to the description thereof contained in the Contract
Schedule. If the Seller receives written notice or obtains actual knowledge that
a Contract File is incomplete or defective in any material respect, or of any
material discrepancy between any Contract and the Contract Schedule, which
incompleteness, defect or discrepancy materially and adversely affects the
Trustee's interest in any Contract, the Seller must cure, repurchase or
substitute for the affected Contract as provided in Section 7(b) hereof.
Notwithstanding any of the foregoing, if the only problem discovered in respect
of a Contract is an overstatement in the Contract Schedule of the Cut-off Date
Principal Balance of the Contract, the Seller may cure such discrepancy by
depositing cash into the Certificate Account in the amount of such overstatement
prior to the first Distribution Date.
(d) EXAMINATION OF MORTGAGE LOAN DOCUMENTS; ACCEPTANCE OF MORTGAGE
LOANS. Prior to the Closing Date the Seller shall either (i) deliver to OMI or
its designee in escrow, for examination, the Mortgage Loan Documents pertaining
to each Mortgage Loan, or (ii) make such Mortgage Loan Documents available to
OMI or its designee for examination at the Seller's offices or at such other
place as the Seller shall specify. OMI, the Trustee, or a designee of any such
entity may review the Mortgage Loan Documents.
4
<PAGE>
Prior to the Closing Date the Trustee shall review the documents
delivered pursuant to Section 3(b) hereof to ascertain that, as to each Mortgage
Loan listed in the Mortgage Loan Schedule, (i) all documents required to be
delivered by the Seller pursuant to such Section 3(b) have been received, (ii)
such documents appear regular on their face and relate to such Mortgage Loan,
and (iii) the information as to the Mortgage Loan set forth in the Mortgage Loan
Schedule accurately reflects the information set forth in the corresponding
Trustee Mortgage Loan File. An additional review shall be conducted by the
Trustee prior to the first anniversary of the Closing Date to determine that all
Mortgage Loan Documents required to be included in the Trustee Mortgage Loan
File are included therein. If at any time OMI or the Trustee discovers or
receives notice that any Mortgage Loan Document is missing or defective in any
material respect with respect to any Mortgage Loan, or that there exists any
material discrepancy between the Mortgage Loan Documents and the Mortgage Loan
Schedule, it shall promptly notify the Seller in writing thereof. Upon its
receipt of notice of such incompleteness, defect or discrepancy, the Seller must
cure, repurchase or substitute for the affected Mortgage Loan to the extent
provided in Section 7(b) hereof. Notwithstanding any of the foregoing, if the
only problem discovered in respect of a Mortgage Loan is an overstatement in the
Mortgage Loan Schedule of the Cut-off Date Principal Balance of the Mortgage
Loan, the Seller may cure such discrepancy by depositing cash into the
Certificate Account in the amount of such overstatement prior to the first
Distribution Date. At the time of any such repurchase or substitution, the
Trustee shall release documents in its possession relating to such Mortgage Loan
to the Seller. The fact that OMI, the Trustee or a designee of either entity has
conducted or has failed to conduct any partial or complete examination of the
Mortgage Loan Documents prior to the Closing Date shall not affect the rights of
OMI (or any assignee or successor thereof) to demand repurchase or other relief
as provided herein.
(e) RECORDATION OF ASSIGNMENTS OF MORTGAGE. Subject to the sale of the
Mortgage Loans by the Seller to OMI in accordance with the terms of this
Agreement, OMI hereby authorizes and instructs the Seller, and the Seller hereby
agrees, to record (or to cause one of its affiliates to record) all Assignments
with respect to the Mortgage Loans required to be contained in the Trustee
Mortgage Loan File pursuant to the Standard Terms in the public recording office
for the jurisdiction in which the related Mortgaged Property is located. All
recording fees relating to the recordation of the Assignments as described above
shall be paid by the Seller or an affiliate of the Seller. If the Trustee does
not receive, within the time specified in the Pooling and Servicing Agreement,
evidence satisfactory to it of such recording with respect to any Mortgage Loan,
or in the alternative, an Opinion of Counsel acceptable to OMI to the effect
that such recording is not required to protect the right, title and interest of
the Trustee in any such Mortgage Loan, the Seller shall, in cooperation with the
Servicer, correct or cure any such omission.
5
<PAGE>
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
(a) The Seller hereby represents and warrants to OMI as of the date of
this Agreement, or as of such other date as is specifically provided, as
follows:
(1) The Seller has been duly incorporated and is validly
existing and in good standing under the laws of the State of North
Carolina and is duly qualified to do business and in good standing
under the laws of each jurisdiction that requires such qualification
wherein it owns or leases any material properties (except where the
failure so to qualify would not have a material adverse effect on the
Seller). The Seller has the full power and authority (corporate and
other) to own its properties and conduct its business as its business
is presently conducted.
(2) The Seller has the full power, authority and legal right
to transfer and convey the Assets to OMI, and has the full power,
authority (corporate and other) and legal right to execute and deliver,
engage in the transactions contemplated by, and perform and observe the
terms and conditions of, this Agreement.
(3) This Agreement has been duly and validly authorized,
executed and delivered by the Seller and (assuming the due
authorization, execution and delivery hereof by OMI) constitutes the
valid, legal and binding agreement of the Seller, enforceable against
the Seller in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, receivership, moratorium or other similar
laws affecting creditors' rights generally and to general principles of
equity, regardless of whether such enforcement is sought in a
proceeding in equity or at law.
(4) No consent, approval, authorization or order of or
registration or filing with, or notice to, any governmental authority
or court is required, under federal laws or the laws of the State of
North Carolina, for the execution, delivery and performance of or
compliance by the Seller with this Agreement or the consummation by the
Seller of any other transaction contemplated hereby.
(5) Neither the execution and delivery of this Agreement by
the Seller, nor the consummation by the Seller of the transactions
herein contemplated, nor compliance with the provisions hereof by the
Seller, will (A) conflict with or result in a breach of, or constitute
a default under, any of the provisions of the Seller's articles of
incorporation or by-laws, or any law, governmental rule or regulation,
or any judgment, decree or order binding on the Seller or any of its
properties, or any of the provisions of any indenture, mortgage, deed
of trust, contract or other instrument to which the Seller is a party
or by which the Seller is bound or (B) result in the creation or
imposition of any lien, charge or encumbrance which would have a
material adverse effect upon any of the Seller's
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properties pursuant to the terms of any such indenture, mortgage, deed
of trust, contract or other instrument.
(6) The Seller is not, and with passage of time does not
expect to become, insolvent or bankrupt.
(7) No officer's certificate, statement or other information
furnished in writing or report delivered by the Seller to OMI or to any
affiliate or designee of OMI or to the Trustee for use in connection
with OMI's or the Trust's purchase of the Assets and the transactions
contemplated hereunder will, to the knowledge of the Seller, contain
any untrue statement of a material fact, or omit a material fact
necessary to make the information, certificate, statement or report not
misleading.
(8) The Seller has delivered to OMI financial statements as to
its last two complete fiscal years. Each such financial statement
fairly presents the pertinent results of operations and changes in
financial position for each of such periods and the financial position
at the end of each such period of the Seller and its subsidiaries, and
has been prepared in accordance with generally accepted accounting
principles consistently applied throughout the period involved, except
as set forth in the notes thereto.
(9) There has been no change in the business, operations,
financial condition, properties or assets of the Seller since the date
of the Seller's financial statements described in the preceding
paragraph which would have a material adverse effect on the Seller's
ability to perform its obligations under this Agreement.
(10) The Seller has not dealt with any broker, investment
banker, agent or other person that may be entitled to any commission or
compensation in connection with the sale of the Assets to OMI.
(11) There is no litigation pending or, to the Seller's
knowledge, threatened against the Seller that would reasonably be
expected to affect adversely the transfer of the Assets, the issuance
of the Certificates, or the execution, delivery, performance or
enforceability of this Agreement or have a material adverse effect on
the financial condition of the Seller.
(12) The Seller will treat the transfer of the Assets to OMI
as a sale on its books and records in accordance with generally
accepted accounting principles.
(13) The Seller is, or, immediately prior to the sale of the
Assets to OMI, the Seller will be, the sole owner of, and will have
good and marketable title to, the Assets, subject to no prior lien,
mortgage, security interest, pledge, charge or other encumbrance,
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except any lien to be released prior to or concurrently with the
purchase of the Assets by OMI. Following the sale of the Assets, OMI
will own such Assets, free and clear of any prior lien, mortgage,
security interest, pledge, charge or other encumbrance (assuming, with
respect to each Asset secured by a Real Property or a Mortgaged
Property located in a jurisdiction in which recordation of an
assignment is necessary to transfer a lien on the Real Property or
Mortgaged Property, that an Assignment of the related Mortgage from the
Seller to OMI, or its designee, is so recorded), except the lien
created by the Pooling and Servicing Agreement.
(14) As of the Closing Date with respect to each Asset, the
Seller is in possession of each of the Asset Documents required to be
included in the related Asset File (except to the extent such Asset
File has been delivered to the Trustee as described in this Agreement).
(15) The transfer, assignment and conveyance of the Assets by
the Seller pursuant to this Agreement are not subject to the bulk
transfer or any similar statutory provisions in effect in any
applicable jurisdiction.
(16) The Seller used no adverse selection procedures in
selecting the Assets from among the outstanding contracts and mortgage
loans in its portfolio as to which the representations and warranties
required by this Agreement could truthfully be made.
[(17) The Assets set forth on Schedule IV hereto are the
"Step-up Rate Loans," as defined in the Prospectus Supplement.]
(18) As of the Closing Date, the description of the Assets
acquired from the Seller set forth in the Prospectus Supplement under
the heading "The Asset Pool" does not contain any untrue statement of
any material fact or omit any material fact required to be stated
therein or necessary in order to make the statements contained therein,
in light of the circumstances under which they are made, not
misleading.
(19) The information set forth in Schedule IA and Schedule IB
hereto is true and correct in all material respects as of the
applicable Cut-off Date.
(20) The consideration received by the Seller upon the sale of
the Assets under this Agreement constitutes fair consideration and
reasonably equivalent value for the Assets.
(21) The Seller is solvent, and the sale of the Assets will
not cause the Seller to become insolvent. The sale of the Assets is not
undertaken with the intent to hinder, delay or defraud any of the
Seller's creditors.
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(22) The Seller intends to relinquish all rights to possess,
control and monitor the Assets sold pursuant to this Agreement (except
such rights as are entailed in its serving as the Servicer of the
Assets under the Pooling and Servicing Agreement). After the Closing
Date the Seller will have no right to modify or alter the terms of the
sale of the Assets, and the Seller will have no right or obligation to
repurchase any Asset or substitute another contract or mortgage loan,
as applicable, for any Asset sold hereunder, except as provided in
Sections 3 and 7 hereof.
(23) As of the date hereof no property securing an Asset is
subject to repossession, foreclosure, litigation, bankruptcy or
insolvency proceedings or any workout or foreclosure agreement, and, to
the best of the Seller's knowledge, the filing of a bankruptcy or
insolvency proceeding that would result in any Asset becoming subject
to bankruptcy or insolvency proceedings is not imminent.
[(24) The Assets listed on Schedule III hereto are insured
against losses by the Federal Housing Administration (subject to
applicable limitations on such insurance).]
(b) As of the date of this Agreement and as of the Closing Date, the
Seller hereby represents and warrants to OMI that each applicable representation
and warranty set forth in Schedule II hereto is true and correct.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF OMI. OMI hereby represents
and warrants to the Seller as of the date of this Agreement or as of such other
date as is specifically provided, as follows:
(a) OMI is a corporation duly organized and validly existing in good
standing under the laws of the State of Nevada.
(b) OMI has the full power, authority (corporate and other) and legal
right to execute and deliver, engage in the transactions contemplated by, and
perform and observe the terms and conditions of, this Agreement.
(c) This Agreement has been duly and validly authorized, executed and
delivered by OMI, and (assuming the due authorization, execution and delivery
hereof by the Seller) constitutes the valid, legal and binding agreement of OMI,
enforceable against OMI in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, receivership, moratorium or other similar laws
affecting creditors' rights generally and to general principles of equity,
regardless of whether such enforcement is sought in a proceeding in equity or at
law.
(d) No consent, approval, authorization or order of or registration or
filing with, or notice to, any governmental authority or court is required,
under federal laws or the laws of the
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State of Nevada, for the execution, delivery and performance of or compliance by
OMI with this Agreement or the consummation by OMI of any other transaction
contemplated hereby.
(e) Neither the execution and delivery of this Agreement by OMI, nor
the consummation by OMI of the transactions hereby contemplated, nor compliance
with the provisions hereof by OMI, will (i) conflict with or result in a breach
of, or constitute a default under, any of the provisions of OMI's articles of
incorporation or by-laws, or any law, governmental rule or regulation, or any
judgment, decree or order binding on OMI or any of its properties, or any of the
provisions of any contract or other instrument to which OMI is a party or by
which it is bound or (ii) result in the creation or imposition of any lien,
charge or encumbrance which would have a material adverse effect upon the
Certificates.
(f) There is no litigation pending or, to OMI's knowledge, threatened
against OMI that would reasonably be expected to affect adversely the execution,
delivery, performance or enforceability of this Agreement or have a material
adverse effect on the financial condition of OMI.
SECTION 6. COVENANTS OF THE SELLER. The Seller hereby covenants to
OMI as follows:
(a) Simultaneously with the execution hereof, the Seller shall execute
and deliver a Secretary's or Assistant Secretary's Certificate evidencing the
Seller's authority to enter into the transactions contemplated by this
Agreement.
(b) On or before the Closing Date the Seller shall take all steps
required of it to effect the transfer of the Assets to the Trustee, as
transferee of OMI, free and clear of any lien, charge, or encumbrance.
(c) The Seller shall use its best efforts to make available to counsel
for OMI in executed form each of the Closing Documents (as defined in Section
9(b) below) no later than two Business Days before the Closing Date, it being
understood that such documents are to be released and delivered only on the
closing of the transaction contemplated hereby and the sale of the Certificates.
(d) In the event the Seller fails to take all actions necessary to
effect the conveyance of the Assets to OMI on or before the Closing Date as
contemplated hereby, the Seller hereby constitutes and appoints OMI and its
officers and representatives as the Seller's true and lawful attorneys-in-fact
to do all acts and transactions and to execute and deliver all agreements,
documents, instruments and papers by and on behalf of the Seller as may be
necessary to consummate the transfer of the Assets to OMI. The foregoing grant
of authority shall be deemed to be irrevocable and a power coupled with an
interest.
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(e) The Seller shall record its transfer of the Assets to OMI as a sale
of its interest therein under generally accepted accounting principles. The
Seller shall also report the transfer as a sale in all financial statements and
reports to regulatory and supervisory agencies and authorities to which it
reports, if any. For federal income tax purposes, the Seller will treat the
transfer of the Assets as a sale.
(f) If in the future OAC is not the Servicer, the Seller will promptly
notify the Servicer upon the Seller's receiving notice or otherwise gaining
actual knowledge of any re-registration of a Manufactured Home underlying a
Contract in a name other than that of the Seller, OMI or the Trustee.
SECTION 7. REPURCHASE OBLIGATIONS.
(a) Each of the representations and warranties made by the Seller
herein shall survive the purchase by OMI of the Assets and shall continue in
full force and effect, notwithstanding any restrictive or qualified endorsement
on the Mortgage Notes and notwithstanding subsequent termination of this
Agreement or the Pooling and Servicing Agreement. The Seller's representations
and warranties shall not be impaired by any review or examination of Asset
Documents or other documents evidencing or relating to the Assets or any failure
on the part of OMI to review or examine such documents and shall inure to the
benefit of the Trustee (as the assignee of OMI) for the benefit of the
Certificateholders. With respect to the representations and warranties contained
herein that are made to the best of the Seller's knowledge or as to which the
Seller has no knowledge, if it is discovered by either the Seller, OMI or the
Trustee that the substance of any such representation and warranty is inaccurate
and such inaccuracy materially and adversely affects the value of the related
Asset, then notwithstanding the Seller's lack of knowledge with respect to the
substance of such representation and warranty being inaccurate at the time the
representation and warranty was made, the Seller shall take action in accordance
with the following paragraph in respect of such Asset.
(b) Upon discovery or receipt of notice by the Seller, OMI or the
Trustee of any missing or materially defective document in any Asset File, a
breach of any of the representations and warranties set forth in Section 4
hereof or in Schedule II hereto, or a default in the performance of any of the
covenants or other obligations of the Seller under this Agreement, that in any
of the foregoing cases materially and adversely affects the value of any Asset
or the interest therein of OMI or the Trustee, the party discovering or
receiving notice of the missing or materially defective document, breach, or
default shall give prompt written notice to the other parties. Upon its
discovery or its receipt of notice of any such missing or materially defective
documentation or any such breach of a representation and warranty or covenant,
the Seller shall, within 90 days after such discovery or receipt of such notice,
either (i) cure such defect or breach in all material respects, or (ii) either
repurchase the affected Asset at the Repurchase Price therefor or cause the
removal of such Asset from the Trust (in which case it shall become a Replaced
Asset) and substitute therefor
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one or more Assets, each of which must be a Qualified Substitute Asset as
defined in the Pooling and Servicing Agreement; PROVIDED, however, that any such
substitution must occur within two years of the Closing Date. Notwithstanding
the foregoing, if such missing or materially defective document, breach, or
default exposes or results in a Qualification Defect, the cure, repurchase, or
substitution of the affected Asset must take place within 75 days of the Defect
Discovery Date, PROVIDED, HOWEVER, that any substitution must take place within
two years of the Closing Date. The Servicer shall amend the Asset Schedule to
reflect the withdrawal of any Asset from the terms of this Agreement and the
Pooling and Servicing Agreement and the addition, if any, of any Qualified
Substitute Asset(s). In order to effect a substitution pursuant to this Section
7(b), the Seller will deliver to the Trustee (i) each of the Asset Documents
required to be contained in the Asset File with respect to the Qualified
Substitute Asset(s) and (ii) if the aggregate Unpaid Principal Balance on the
date of substitution of the Qualified Substitute Asset(s) is less than the
aggregate Unpaid Principal Balance of the Replaced Asset(s) (after application
of Monthly Payments due in the month of substitution), cash in an amount equal
to such shortfall. The Trustee shall deposit any such cash into the Certificate
Account. Any repurchase of an Asset pursuant to this Section 7(b) shall be
accomplished by the delivery to the Trustee, on (or determined as of) the last
day of the calendar month in which such repurchase is made, of the Repurchase
Price for such Asset.
(c) It is understood and agreed that the obligations of the Seller set
forth in this Section 7 to cure, repurchase or substitute for an Asset and to
indemnify OMI as provided in Section 8 of this Agreement constitute the sole
remedies of OMI and the Trustee against the Seller with respect to a missing or
materially defective document in any Asset File, a breach of representations and
warranties of the Seller set forth in Section 4 hereof or in Schedule II hereto,
or a default in the performance by the Seller of any of its covenants or other
obligations under this Agreement.
SECTION 8. INDEMNIFICATION.
----------------
(a) In the event the Seller breaches its representations, warranties,
covenants or obligations set forth herein, the Seller shall indemnify and hold
harmless OMI (and its assignees in accordance with Section 17 hereof) (the
"Indemnified Parties") from and against any loss, damages, penalties, fines,
forfeiture, legal fees and related costs, judgments, and other costs and
expenses resulting from any claim, demand, defense or assertion based on or
grounded upon, or resulting from, such breach. Promptly after receipt by an
Indemnified Party of notice of the commencement of any such action, such
Indemnified Party will notify the Seller in writing of the commencement thereof
if a claim in respect of such action is to be made against the Seller under this
Section 8, but the omission so to notify the Seller will not relieve the Seller
from any liability hereunder unless such omission materially prejudices the
rights and positions of the Seller. If any such action is brought against an
Indemnified Party, and it notifies the Seller of the commencement thereof, the
Seller will be entitled to participate therein, and to assume the defense
thereof, with counsel selected by the Seller and satisfactory to such
Indemnified Party, and after notice from the Seller to the Indemnified Party of
its election so to assume the defense thereof, the Seller will not be liable to
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the Indemnified Party under this Section 8 for any legal or other expenses
subsequently incurred by such Indemnified Party in connection with the defense
of such action; PROVIDED, HOWEVER, that if the defendants in any such action
include both one or more Indemnified Parties and the Seller and any such
Indemnified Party shall have reasonably concluded that there may be legal
defenses available to it and/or other Indemnified Parties which are different
from or additional to those available to the Seller, the Indemnified Party or
Parties shall have the right to select separate counsel to defend such legal
action on behalf of such Indemnified Party or Parties (it being understood,
however, that the Seller shall not be liable for the expenses of more than one
separate counsel appointed by the Indemnified Parties) and, PROVIDED, FURTHER,
that this sentence shall not be in effect if (i) the Seller shall not have
employed counsel satisfactory to the Indemnified Party to represent the
Indemnified Party within a reasonable time after notice of commencement of the
action or (ii) the Seller shall have authorized the employment of counsel for
the Indemnified Party at the expense of the Seller. If the Seller assumes the
defense of any such proceeding, it shall be entitled to settle such proceeding
with the consent of any Indemnified Party that is also subject to such
proceeding or, if such settlement provides for release of any such Indemnified
Party in connection with all matters relating to the proceeding which have been
asserted against such Indemnified Party in such proceeding by the other parties
to such settlement, without the consent of such Indemnified Party.
(b) The Seller shall reimburse the Underwriter upon demand for all
amounts otherwise payable by OMI pursuant to Section 7 of OMI's Underwriting
Agreement Standard Provisions (May 1999), in the event that any breach referred
to in the preceding paragraph or any of the following results in the inability
of the parties hereto to consummate the transactions contemplated herein: (A)
failure to obtain any consent or authorization, if any, required under federal
or applicable state law for the Seller to perform the transactions contemplated
herein; or (B) the Seller's failure to perform any of the obligations of the
Seller under Section 9(a), (b), (c) or (d) hereof.
(c) In the event of either a breach by the Underwriter of its
obligation to purchase the Offered Certificates pursuant to the Underwriting
Agreement or a breach by the Purchaser of its obligation to purchase the Private
Certificates, subject to payment in full of the Issuance Fee to OMI, OMI hereby
assigns to the Seller any and all rights of action or other claims OMI may have
against the Underwriter or the Purchaser pursuant to the applicable agreement
(other than OMI's right to receive payment due OMI from the Underwriter or the
Purchaser for OMI's expenses related to the proposed issuance of the related
Certificates); PROVIDED, HOWEVER, that OMI expressly reserves, and does not
hereby assign, its rights to indemnification and contribution under the
Underwriting Agreement and any other rights to indemnification or contribution
it may have at law or in equity.
SECTION 9. CONDITIONS TO OBLIGATION OF OMI. The obligation of OMI
hereunder to purchase the Assets is subject to the following conditions:
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(a) The accuracy in all material respects of all of the representations
and warranties of the Seller under this Agreement and the non-occurrence of any
event which, with notice or the passage of time, would constitute a default
under this Agreement;
(b) On the Closing Date, OMI shall have received, or OMI's attorneys
shall have received, in escrow (to be released from escrow at the time of
closing), the following documents (collectively, the "Closing Documents") in
such forms as are agreed upon and acceptable to OMI, duly executed by all
signatories other than OMI as required pursuant to the respective terms thereof:
(i) An Assignment of Assets substantially in the
form of Exhibit A hereto;
(ii) An Opinion of Counsel for the Seller as to
various corporate matters and such other Opinions of Counsel
as are necessary in order to obtain the ratings set forth in
Section 9(f) below, each of which shall be acceptable to OMI,
its counsel, the Seller, its counsel, and _____________ and
___________(the "Rating Agencies") (it being understood that
such opinions shall expressly provide that the Trustee shall
be entitled to rely on such Opinions of Counsel); and
(iii) From ___________________, certified public
accountants, two letters, (i) one dated the date of the
Underwriting Agreement and satisfactory in form and substance
to OMI and counsel for OMI to the effect that such accountants
have performed certain specified procedures as a result of
which they have determined that the Assets listed on Schedule
IA and Schedule IB hereto conform with the description thereof
in the Prospectus Supplement under "The Asset Pool" and that a
sampling of the Asset Files relating to the Assets conforms
with the information contained on the asset data file tape
upon which the information in the Prospectus Supplement under
the caption "The Asset Pool" was based; and (ii) the other
letter dated the Closing Date and satisfactory in form and
substance to OMI and counsel for OMI, reconfirming or updating
the letter described in clause (i) above and to the further
effect that such accountants have performed certain procedures
as a result of which they have determined that the Assets
listed on Schedule IA and Schedule IB to the Pooling and
Servicing Agreement conform with the description thereof in
the Prospectus Supplement under the caption "The Asset Pool,"
and covering such other matters relating to the Trust as OMI
may reasonably request;
(c) The Seller shall have delivered to the Trustee, in escrow, all
documents (including, without limitation, the Mortgage assigned by the Seller to
the Trustee and the Mortgage Note
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endorsed to the Trustee with respect to each Mortgage Loan) required to be
delivered hereunder and shall have released its interest therein to OMI or its
designee;
(d) Compliance by the Seller with all other terms and conditions
of this Agreement;
(e) The purchase by the Underwriter of the Offered Certificates
pursuant to the terms of the Underwriting Agreement; and
(f) The receipt of written confirmation from _____ and _________ that
each has assigned ratings of ["Aaa" and "AAA", respectively, to the Class A-1,
Class A-2, Class A-3 and Class A-4 Certificates], of at least ["Aa3" and "AA+",
respectively, to the Class M-1 Certificates], of at least ["A2" and "A",
respectively, to the Class M-2 Certificates], of at least ["Baa2" and "BBB",
respectively, to the Class B-1 Certificates] and of at least ["Baa3" and "BBB-",
respectively, to the Class B-2 Certificates].
SECTION 10. FEES AND DEPOSITS.
(a) The Seller shall be responsible for payment of (i) all fees and
expenses of attorneys, accountants, printers and the Trustee in connection with
the issuance of the Certificates, (ii) the fees payable to the Securities and
Exchange Commission with respect to the Certificates and (iii) the fees payable
to the Rating Agencies for their initial ratings of the Certificates. In
addition, the Seller shall pay (i) the fees and expenses of its attorneys and
accountants, (ii) any required reserve fund deposits (as such terms are defined
in, and as required by, the Pooling and Servicing Agreement) and (iii) to
________________, the cost of the blue sky survey referred to in the Terms
Agreement.
(b) The Servicer shall be entitled to receive in consideration of its
services under the Pooling and Servicing Agreement a monthly fee on or with
respect to each Distribution Date in an amount not to exceed one-twelfth of
1.00% times the Pool Scheduled Principal Balance of the Assets in respect of
that Distribution Date.
SECTION 11. MANDATORY DELIVERY; GRANT OF SECURITY INTEREST. The sale
and delivery on the Closing Date of the Assets described in the Asset Schedule
are mandatory, it being specifically understood and agreed that each Asset is
unique and identifiable on the date hereof and that an award of money damages
would be insufficient to compensate OMI for the losses and damages incurred by
OMI in the event of the Seller's failure to deliver the Assets on or before the
Closing Date. The Seller hereby grants to OMI a first lien on and a continuing
first priority security interest in each Asset and each document and instrument
evidencing each Asset to secure the performance by the Seller of its obligation
to deliver such Assets hereunder. All rights and remedies of OMI under this
Agreement are distinct from, and cumulative with, any other rights or remedies
under
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this Agreement or afforded by law or equity, and all such rights and remedies
may be exercised concurrently, independently or successively.
SECTION 12. NOTICES. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered or mailed by registered mail, postage prepaid, or transmitted by
telecopier, telex or telegraph and confirmed by a similar mailed writing, to the
following:
a. If to OMI:
Oakwood Mortgage Investors, Inc.
7800 McCloud Road
Greensboro, North Carolina 27425-7081
Attention: Treasurer
with a copy, given in the manner
prescribed above, to:
Jack A. Molenkamp, Esquire
Hunton & Williams
Riverfront Plaza - East Tower
951 East Byrd Street
Richmond, Virginia 23219-4074
b. If to the Seller:
7800 McCloud Road
Greensboro, North Carolina 27425-7081
Oakwood Acceptance Corporation
Attention: Treasurer
with a copy, given in the manner
prescribed above, to:
Jack A. Molenkamp, Esquire
Hunton & Williams
Riverfront Plaza - East Tower
951 East Byrd Street
Richmond, Virginia 23219-4074
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Any party may alter the address to which communications or copies are
to be sent by giving notice of such change of address in conformity with the
provisions of this Section 12 for the giving of notice.
SECTION 13. SEVERABILITY OF PROVISIONS. Any part, provision,
representation, warranty or covenant contained in this Agreement that is
prohibited or unenforceable or that is held to be void or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Asset shall not invalidate or render unenforceable such
provision in any other jurisdiction. To the extent permitted by applicable law,
the parties hereto waive any provision of law that prohibits or renders void or
unenforceable any provision hereof.
SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH CAROLINA,
NOTWITHSTANDING ANY NORTH CAROLINA OR OTHER CONFLICT OF LAWS PROVISION TO THE
CONTRARY.
SECTION 15. AGREEMENT OF THE SELLER. The Seller agrees to execute and
deliver such instruments and take such actions as OMI or the Trustee may, from
time to time, reasonably request in order to effectuate the purpose and to carry
out the terms of this Agreement including, without limitation, the execution and
filing of any UCC financing statements to evidence the interests of OMI and any
of its transferees in the Assets and other assets assigned to the Trust.
SECTION 16. SURVIVAL. The Seller agrees that the representations,
warranties and agreements made by it herein and in any certificate or other
instrument delivered pursuant hereto shall be deemed to have been relied upon by
OMI, notwithstanding any investigation heretofore or hereafter made by OMI or on
OMI's behalf, and that the representations, warranties and agreements made by
the Seller herein or in any such certificate or other instrument shall survive
the delivery of and payment for the Assets.
SECTION 17. ASSIGNMENT. The Seller hereby acknowledges that OMI will
assign all its rights hereunder (except those rights set forth in Section 8(b)
and Section 10 hereof) to the Trustee. The Seller agrees that, upon the
execution of the Pooling and Servicing Agreement, the Trustee will have all such
rights and remedies provided to OMI hereunder (except those rights set forth in
Section 8(b) and Section 10 hereof) and this Agreement will inure to the benefit
of the Trustee. The Trustee shall constitute not only an assignee of OMI's
rights in accordance with this Section 17 but also an intended third-party
beneficiary of this Agreement to the extent necessary to enforce such rights and
to obtain the benefit of such remedies.
SECTION 18. MISCELLANEOUS.
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(a) This Agreement may be executed in two or more counterparts, each of
which when so executed and delivered shall be an original, but all of which
together shall constitute one and the same instrument. This Agreement shall
inure to the benefit of, and be binding upon, the parties hereto and their
respective successors and assigns.
(b) Any person into which the Seller may be merged or consolidated or
any person resulting from a merger or consolidation involving the Seller or any
person succeeding to the business of the Seller shall be considered the
successor of the Seller hereunder, without the further act or consent of either
party hereto. Except as provided above, this Agreement cannot be assigned,
pledged or hypothecated by any party without the written consent of each other
party to this Agreement.
(c) This Agreement supersedes all prior agreements and understandings
between the parties hereto relating to the subject matter hereof. Neither this
Agreement nor any term hereof may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by the party against whom
enforcement of the change, waiver, discharge or termination is sought. The
headings in this Agreement are for purposes of reference only and shall not
limit or otherwise affect the meaning of the provisions of this Agreement.
(d) OMI shall immediately deliver the Assets and all related Asset
Documents to OAC or OAC's designee and any security interest created by Section
11 hereof shall be deemed to have been released if, on the Closing Date each of
the conditions set forth in Section 9 hereof shall not have been satisfied or
waived.
(e) It is the express intent of the parties hereto that the conveyance
of the Assets by the Seller to OMI as contemplated by this Agreement be
construed as a sale of the Assets by the Seller to OMI. It is, further, not the
intention of the parties that such conveyance be deemed a pledge of the Assets
by the Seller to OMI or any assignee of OMI, including, but not limited to, the
Trustee, to secure a debt or other obligation of the Seller. However, in the
event that, notwithstanding the intent of the parties hereto, the Assets are
held to be property of the Seller, then (i) this Agreement shall also be deemed
to be a security agreement within the meaning of Article 9 of the North Carolina
Uniform Commercial Code; (ii) the conveyance provided for herein shall be deemed
to be a grant by the Seller to OMI of a first priority security interest in all
of the Seller's right, title and interest in and to the Assets and all amounts
payable to the holder of the Assets in accordance with the terms thereof and all
proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, instruments, securities, or other property, including without limitation
all amounts, other than investment earnings, from time to time held or invested
in the Certificate Account or the Distribution Account, whether in the form of
cash, instruments, securities or other property; (iii) the possession by OMI or
its agents of items of property that constitute instruments, money, negotiable
documents or chattel paper shall be deemed to be "possession by the secured
party" for purposes of
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perfecting the security interest pursuant to Section 9-305 of the North Carolina
Uniform Commercial Code, and (iv) notifications to persons holding such
property, and acknowledgments, receipts or confirmations from persons holding
such property, shall be deemed notifications to, or acknowledgments, receipts or
confirmations from, financial intermediaries, bailees or agents (as applicable)
of OMI for the purpose of perfecting such security interest under applicable
law. Any assignment of the interest of OMI pursuant to any provision hereof
shall also be deemed to be an assignment of any security interest created
hereby. The Seller and OMI shall, to the extent consistent with this Agreement,
take such actions as may be necessary to ensure that, if this Agreement were
deemed to create a security interest in the Assets, such security interest would
be deemed to be a perfected security interest of first priority under applicable
law and would be maintained as such throughout the terms of this Agreement and
the Pooling and Servicing Agreement.
SECTION 19. REQUEST FOR OPINIONS. The Seller and OMI hereby request and
authorize _________________, as their counsel in this transaction, to issue on
behalf of the Seller and OMI such legal opinions to the Trustee, the Seller, OMI
and the Rating Agencies as may be (i) required by any and all documents,
certificates or agreements executed in connection with this Agreement or (ii)
requested by the Trustee, the Seller, OMI or the Rating Agencies or their
respective counsel.
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IN WITNESS WHEREOF, the Seller and OMI have caused this Sales Agreement
to be executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
OAKWOOD MORTGAGE INVESTORS, INC.
By:________________________________
Name:_______________________________
Title:______________________________
OAKWOOD ACCEPTANCE CORPORATION
By:________________________________
Name:______________________________
Title:______________________________
ACKNOWLEDGED AND AGREED:
[________________________], as Trustee
By:________________________________
Name:______________________________
Title:______________________________
20
<PAGE>
EXHIBIT A
ASSIGNMENT OF ASSETS
SCHEDULE IA
THE CONTRACTS
SCHEDULE IB
THE MORTGAGE LOANS
SCHEDULE II
REPRESENTATIONS AND WARRANTIES MADE BY THE SELLER
AS TO THE CONTRACTS AND MORTGAGE LOANS
SCHEDULE III
ASSETS INSURED BY FHA
SCHEDULE IV
ASSETS THAT ARE STEP-UP RATE LOANS
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SCHEDULE II
REPRESENTATIONS AND WARRANTIES MADE BY THE SELLER
AS TO THE CONTRACTS AND MORTGAGE LOANS
I. THE FOLLOWING REPRESENTATIONS AND WARRANTIES ARE MADE BY
THE SELLER TO OMI WITH RESPECT TO THE CONTRACTS:
(a) The information pertaining to each Contract set forth in
the Contract Schedule was true and correct at the date or dates as of which such
information was furnished.
(b) Each Contract is the legal, valid and binding obligation
of the Obligor thereunder and is enforceable in accordance with its terms,
subject, as to enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency or other similar laws affecting the enforcement of
creditors' rights generally and to general principles of equity (whether
considered in a proceeding at law or in equity). There is no homestead exemption
that would prevent repossession of the related Manufactured Home from the
related Obligor. All parties to such Contract had full legal capacity to execute
such Contract and all other documents related thereto and to grant the security
interest purported to be granted thereby. The terms of such Contract have not
been waived, altered or modified in any respect, except by instruments or
documents identified in the Contract File relating thereto.
(c) There is in effect with respect to each Contract one or
more Standard Hazard Insurance Policies that provide, at a minimum, the same
coverage as that provided by a standard form fire and extended coverage
insurance policy that is customary for manufactured housing in the jurisdiction
in which the related Manufactured Home is located, or, if such a Standard Hazard
Insurance Policy is not in effect with respect to a particular Contract, such
Contract is covered by one or more blanket insurance policies, each issued by a
Qualified Insurer, covering losses on the Obligors' interests in the Contracts
relating to such Manufactured Homes resulting from the absence or insufficiency
of individual Standard Hazard Insurance Policies with respect to such Contract.
Such Standard Hazard Insurance Policies (or blanket policies in lieu thereof)
with respect to each Contract shall provide coverage in an amount at least equal
to the lesser of (i) the maximum insurable value of the related Manufactured
Home or (ii) the principal balance due from the Obligor under such Contract, in
either case subject to standard deductibles; PROVIDED, HOWEVER, that in any
event the amount of coverage provided by Standard Hazard Insurance Policies or
one or more blanket policies with respect to any Contract must be sufficient to
avoid the application of any co-insurance clause contained in such policies.
Each Standard Hazard Insurance Policy contains a standard loss payee clause in
favor of the originator (or other initial payee under the related Contract) and
its successors and assigns, including the Seller and its successors and assigns.
Such insurance shall provide flood insurance coverage for any Contract if the
related Manufactured Home is located in an area identified by the Secretary of
Housing and
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Urban Development or the Director of the Federal Emergency Management Agency as
subject to special flood hazards (if flood insurance is available for
manufactured homes located in the area in which such Manufactured Home is
located).
(d) No Contract is subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury, and neither
the operation of any of the terms of such Contract, nor the exercise of any
right thereunder, will render such Contract either unenforceable, in whole or in
part, or subject to any right of rescission, set-off, counterclaim or defense,
and no such right of rescission, set-off, counterclaim or defense has been
asserted with respect to any Contract.
(e) Each Contract, and the sale of the Manufactured Home sold
thereunder, complied at the time of such sale in all material respects with
applicable state and federal laws (and regulations promulgated thereunder),
including usury, equal credit opportunity, fair credit reporting,
truth-in-lending or other similar laws, the Magnuson-Moss Warranty Act, the
Federal Trade Commission Act, and applicable state laws regulating retail
installment sales contracts and loans in general and manufactured housing retail
installment sales contracts in particular.
(f) There is no lien or claim for work, labor, material or
unpaid site rent affecting any Manufactured Home that is or may become a lien
prior to or equal with the security interest granted by the related Contract.
(g) Each Contract grants to the originator, the Seller or the
Trustee a valid and enforceable security interest in and lien on the related
Manufactured Home, and such security interest and lien has been duly perfected
and is prior to all other security interests in and liens on such Manufactured
Home that now exist or may arise hereafter or be created (except for any lien
for taxes unpaid by the related Obligor that may hereafter arise), or all
necessary and appropriate action shall have been performed by the Seller and the
related Obligor to perfect a first priority security interest in such
Manufactured Home in favor of the Seller or Trustee as secured party. Each
Contract contains customary and enforceable provisions such as to render the
rights and remedies of the holder thereof adequate for the realization against
the Manufactured Home of the benefits of the security provided thereby.
(h) As of the date of origination of each Contract, either the
related Manufactured Home was not considered or classified as part of the real
estate on which it is situated under the laws of the jurisdiction in which it is
located, or the related Contract File contains a valid recorded Mortgage
together with valid recorded assignments thereof, or copies thereof, creating a
first mortgage lien on such real estate in favor of the Seller or the Trustee.
(i) Immediately prior to the sale thereof to OMI, the Seller
is the owner of each Contract, and acquired such ownership in good faith without
notice of any adverse claim.
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(j) There is only one original of each Contract.
(k) As of the applicable Cut-off Date, no Contract was more
than 30 days delinquent in payment as to principal or interest or subject to
repossession or foreclosure proceedings and, to the best of the Seller's
knowledge, the initiation of any such proceedings is not imminent with respect
to any Contract. As of the applicable Cut-off Date, there was no default,
breach, violation or event permitting acceleration existing under any such
Contract and no event that, with notice and the expiration of any grace or cure
period, would constitute such a default, breach, violation or event permitting
acceleration under such Contract (except payment delinquencies permitted by the
first sentence hereof). The Seller has not waived any such default, breach,
violation or event permitting acceleration.
(l) Each Manufactured Home is free of material damage and, to
the best of the Seller's knowledge, is in good repair. The Seller is not aware
of any condemnation proceedings with respect to any Manufactured Home. Other
than those Assets noted in paragraph (x) below, each Manufactured Home is in the
possession of the related Obligor.
(m) No Contract has been satisfied, canceled or subordinated
in whole or in part or rescinded, and no Manufactured Home or Real Property
securing any such Contract has been released from the lien of such Contract or
the related Mortgage in whole or in part, nor has any instrument been executed
that would effect any such satisfaction, release, cancellation, subordination or
rescission.
(n) No Contract was originated under and no Contract is
subject to any laws that would make the transfer of such Contract from the
Seller to OMI or from OMI to the Trust or pursuant to transfers of Certificates
unlawful.
(o) Each Contract (other than the Step-up Rate Loans
identified on Schedule IV to the Sales Agreement) has a fixed rate of interest
and provides for level monthly payments that fully amortize the related loan
over a remaining term of not more than 360 months. The Step-up Rate Loans
identified on Schedule IV to the Sales Agreement conform to the description
thereof set forth in the Prospectus Supplement under the heading "The Asset
Pool."
(p) If one or more REMIC elections are to be made with respect
to all or part of the Trust, the REMIC Loan-to-Value Ratio of each Contract is
less than 125% either (i) at the time of its origination or as of the Startup
Day or (ii) if such Contract has been modified other than as a result of a
default or reasonably foreseeable default, as of the Startup Day.
(q) The Manufactured Home securing each Contract is a "single
family residence" as defined in section 25(e)(10) of the Code, I.E., it is used
as a single family residence, has a minimum living space of 400 square feet and
a minimum width of over 102 inches and is of
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<PAGE>
the kind customarily used at a fixed location. The Manufactured Home securing
each Contract is a "manufactured home" as defined in 42 U.S.C. section 5402(6).
(r) There are no delinquent taxes or other outstanding charges
affecting any related Manufactured Home or Real Property that are or may become
liens prior to, or equal or coordinate with, the lien thereon of the related
Contract.
(s) Each Contract was originated in the ordinary course of the
originator's business. Each Contract that was originated by the Seller (whether
originated in the Seller's name or in the name of another entity using funds
provided by the Seller) was underwritten and originated substantially in
accordance with the Seller's customary underwriting guidelines as in effect from
time to time.
(t) No Obligor under any Contract is the subject of any
proceeding under any chapter of the United States Bankruptcy Code or any
proceeding under any similar state law providing for the protection of debtors.
(u) The transfer, assignment and conveyance of the Contracts,
the Contract Documents and the Contract Files by the Seller pursuant to the
Sales Agreement are not subject to the bulk transfer or any similar statutory
provisions in effect in any applicable jurisdiction.
(v) Within 10 days after the Closing Date each Contract will
have been stamped with the following legend: "This Contract has been assigned to
___________________, as Trustee pursuant to a Pooling and Servicing Agreement
among Oakwood Mortgage Investors, Inc., Oakwood Acceptance Corporation and
______________, as Trustee." On or before the Closing Date the Seller shall
cause to be filed in all appropriate UCC filing offices the UCC-1 financing
statements relating to the Trust Estate that are described in Section 2.02(c)(1)
of the Standard Terms.
(w) Each Contract is a "qualified mortgage" within the meaning
specified for such term in section 860G of the Code and does not contain any
provision requiring action which would render it not such a "qualified
mortgage."
(x) With respect to each Land Secured Contract with an
original principal balance of $40,000 or greater, either (i) a title insurance
policy providing coverage in the amount of the full principal balance of such
Contract was issued at the time such Contract was originated, which policy is
valid and binding and is in full force and effect, and which policy insures that
the related Mortgage creates a valid first priority security interest on the
related Real Property, subject only to (A) the lien created by the related
Mortgage, (B) liens for taxes, assessments, levies, fees and other governmental
or similar charges which are not yet due or which are being contested in a
proceeding that will result in the suspension of such charge and will not affect
payments to the
II-4
<PAGE>
holder of the related Contract and its successors and assigns (including the
Seller and its successors and assigns), and (C) any exceptions to title set
forth in such title insurance policy or the related preliminary title report
that will not adversely affect the ability of the Obligor to pay the principal
and interest due under the Contract or materially and adversely affect the
marketability of the title to the underlying real property in the event of
foreclosure thereon, or (ii) the related Obligor has good and marketable title
to the related Real Property.
(y) Each Contract was originated by a savings and loan
association, savings bank, commercial bank, credit union, insurance company, or
similar institution which is supervised and examined by a federal or state
authority, or by a mortgagee approved by the Secretary of Housing and Urban
Development pursuant to Sections 203 and 211 of the National Housing Act or by
any such institution or by any financial institution approved for insurance by
the Secretary of Housing and Urban Development pursuant to Section 2 of the
National Housing Act.
[(z) Any Contract identified on Schedule III to the Sales
Agreement as being insured by the Federal Housing Administration ("FHA") has
been serviced in compliance with applicable FHA regulations and the FHA
insurance with respect to such Contract as in effect at the origination of such
Contract is in full force and effect. ]
II. THE FOLLOWING REPRESENTATIONS AND WARRANTIES ARE MADE BY
THE SELLER TO OMI WITH RESPECT TO THE MORTGAGE LOANS:
(a) The information pertaining to each Mortgage Loan set forth
in the Mortgage Loan Schedule was true and correct at the date or dates as of
which such information was furnished.
(b) The Seller has not assigned any interest or participation
in any Mortgage Loan other than to OMI (or if any such interest or participation
has been assigned it has been released or will be released prior to or
concurrently with the purchase of such Mortgage Loan by OMI). The Seller has not
acted to (i) modify any Mortgage Note or Mortgage relating to any Mortgage Loan
in any material respect, (ii) satisfy, cancel or subordinate any Mortgage Loan
in whole or in part, (iii) release the related Mortgaged Property in whole or in
part from the lien of any Mortgage Loan or (iv) execute any instrument effecting
the release, cancellation, modification or satisfaction of any Mortgage Loan.
(c) The Mortgage Note for each Mortgage Loan delivered to OMI,
the Trustee or OMI's other designee is the original Mortgage Note and is the
only Mortgage Note evidencing the Mortgage Loan that has been manually signed by
the related Obligor. As of the Cut-off Date, there is no default, breach,
violation or event of acceleration existing under any of the Mortgage Loan
Documents transferred to OMI or any event that with notice and expiration of any
grace or cure period would result in such a default, breach, violation or event
of acceleration.
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<PAGE>
(d)As of the Cut-off Date, no Monthly Payment on any Mortgage
Loan was more than 30 days delinquent.
(e) Each Mortgage Note and Mortgage executed and delivered by
an Obligor in connection with a Mortgage Loan has been duly executed and
delivered by the related Obligor and constitutes a legal, valid and binding
obligation of such Obligor, enforceable against such Obligor in accordance with
its terms, subject, as to enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency or other similar laws affecting the enforcement of
creditors' rights generally and to general principles of equity (whether
considered in a proceeding at law or in equity).
(f) Each Mortgage securing a Mortgage Loan has been duly
recorded in the appropriate governmental recording office in the jurisdiction
where the related Mortgaged Property is located or has been submitted to such
recording office for recordation.
(g) If the Mortgage securing a Mortgage Loan does not name the
Seller as the beneficiary or mortgagee, then a valid assignment, in recordable
form, assigning the Mortgage to the Seller or to OMI, has been duly recorded (or
has been sent for recordation) in the appropriate records depository for the
jurisdiction in which the related Mortgaged Property is located, and the Seller
has delivered to OMI the original of such assignment accompanied by appropriate
evidence that such assignment has been duly recorded (or a copy thereof
certified by the appropriate records depository to be a true and complete copy
of the recorded assignment) or a copy of the original assignment together with a
certificate from an officer of the Seller certifying that such assignment has
been sent for recordation in the appropriate records depository, but that such
recorded assignment has not been returned to the Seller.
(h) No Mortgage Loan has been modified in any material respect
since the date of its origination and no Mortgage Loan is presently subordinated
in whole or in part to any other lien, nor has the Mortgaged Property securing
any Mortgage Loan been released in whole or in part from the lien of the related
Mortgage.
(i) Each Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder thereof adequate
for the realization of the holder's rights against the related Mortgaged
Property in the event of a foreclosure or trustee's sale of such property. Upon
default by an Obligor on a Mortgage Loan and foreclosure on, or trustee's sale
of, the related Mortgaged Property pursuant to proper procedures, the holder of
the Mortgage Loan will be able to deliver good and merchantable title to the
Mortgaged Property underlying that Mortgage Loan, except to the extent that the
enforceability of remedies against such Obligor may be subject to applicable
bankruptcy, insolvency or other similar laws affecting creditors' rights
generally, and to general principles of equity (whether considered in a
proceeding at law or in
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equity). There is no homestead exemption or other exemption or defense available
to the related Obligor that would prevent the sale of the Mortgaged Property at
a trustee's sale or impair the right of the holder to foreclose thereon.
(j) In connection with the origination of each Mortgage Loan,
the originator complied with all applicable federal, state and local laws and
regulations, including but not limited to those related to consumer credit,
equal credit opportunity, real estate settlement procedures, truth-in-lending
and usury.
(k) An appraisal of the Mortgaged Property underlying each
Mortgage Loan was made at the time the Mortgage Loan was originated by an
appraiser who met the minimum qualifications of FNMA or FHLMC for appraisers of
conventional residential mortgage loans and was completed on a form satisfactory
to FNMA or FHLMC.
(l) The assignment of each Mortgage to the Trustee constitutes
a legal, valid and binding assignment of the Mortgage and creates, or upon
recordation will create, a valid first priority security interest in favor of
the Trustee in such Mortgage or vests ownership of such Mortgage in the Trustee.
(m) The Mortgage securing each Mortgage Loan creates a valid
and enforceable first lien on the related Mortgaged Property subject only to
Permitted Encumbrances. "Permitted Encumbrances" consist of the following in
respect of any Mortgage Loan:
1) the lien of current real property taxes and
assessments not yet due and payable;
2) covenants, conditions and restrictions, rights
of way, easements and other matters of public record as of the
date of recording acceptable to prudent mortgage lending
institutions generally and specifically referred to in the
lender's title insurance policy delivered to the related
originator and referred to or otherwise considered in the
appraisal made for the originator; and
3) other matters to which like properties are
commonly subject which do not materially interfere with the
benefits of the security intended to be provided by the
Mortgage or the use, enjoyment, value or marketability of the
related Mortgaged Property.
(n) There are no mechanic's or other liens against the related
Mortgaged Property which are superior to or equal to the first lien of the
related Mortgage Loan, except such liens that are expressly insured against by a
Title Insurance Policy.
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<PAGE>
(o) There are no delinquent taxes, governmental assessments or
municipal charges due and owing as to any Mortgaged Property. All such charges
have been paid or a sufficient escrow has been established to make payment of
such charges.
(p) Each Mortgaged Property is free of material damage and, to
the best of the Seller's knowledge, is in good repair. The Seller is not aware
of any condemnation proceedings with respect to any Mortgaged Property.
(q) All improvements located on each Mortgaged Property that
were considered in determining the appraised value of the Mortgaged Property lie
within the boundary lines of, and comply with building restrictions applicable
to, the Mortgaged Property. There is no violation of applicable zoning laws or
regulations with respect to any Mortgaged Property. No improvements on adjoining
properties encroach upon any Mortgaged Property in any respect so as to affect
adversely the value or marketability of the Mortgaged Property.
(r) The full principal amount of each Mortgage Loan has been
paid to the related Obligor or according to the direction of the Obligor. The
Obligor has no option under the related Mortgage to borrow additional funds
secured by the related Mortgage from the Seller or any other person. The
principal balance of each Mortgage Loan as of the Cut-off Date, as set forth in
the Mortgage Loan Schedule, is correct and is fully secured by the related
Mortgage.
(s) Except with respect to any funds held in a temporary
buy-down fund for a buy-down loan, no Mortgage Loan is subject to any right of
rescission, set-off, counterclaim or defense, including without limitation the
defense of usury, nor will the operation of any of the terms of the related
Mortgage Note or Mortgage, or the exercise of any right thereunder, render
either the Mortgage Note or the Mortgage unenforceable, in whole or in part, or
subject to any right of rescission, set-off, counterclaim or defense, including
without limitation the defense of usury, and no such right of rescission,
set-off, counterclaim or defense has been asserted with respect thereto.
(t) Pursuant to the terms of each Mortgage, all improvements
on the related Mortgaged Property are insured by an insurer acceptable to FNMA
against loss by fire and such other risks as are usually insured against by the
broad form of extended coverage hazard insurance policy as is from time to time
available. All such improvements are also insured against flood hazards if the
Mortgaged Property is in an area identified by the Secretary of Housing and
Urban Development or the Director of the Federal Emergency Management Agency as
subject to special flood hazards (and if flood insurance is available for real
properties located in the area in which such Mortgaged Property is located). All
such insurance policies (collectively, the "hazard insurance policy") meet the
requirements of the current guidelines of the Federal Insurance Administration,
conform to the FNMA Sellers' Guide and the FNMA Servicers' Guide, and
collectively constitute a standard policy of insurance for the locale where the
Mortgaged Property is located. The coverage provided by such a hazard insurance
policy is in the amount of the lesser of
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<PAGE>
(i) the full insurable value of the related Mortgaged Property on a replacement
cost basis or (ii) the unpaid balance of the Mortgage Loan, and in any event
must at least be sufficient to avoid application of any co-insurance clause
contained in such hazard insurance policy. The hazard insurance policy names
(and will name) the present owner of the Mortgaged Property as the insured and
contains a standard mortgagee loss payable clause in favor of the originator (or
another initial payee under the related Mortgage Note) and its successors and
assigns, including the Seller and its successors and assigns. The Mortgage
obligates the mortgagor thereunder to maintain the hazard insurance policy at
the mortgagor's cost and expense, and on the mortgagor's failure to do so,
authorizes the holder of the Mortgage to obtain and maintain such insurance at
such holder's cost and expense, and to seek reimbursement therefor from the
mortgagor. Where required by state law or regulation, the mortgagor has been
given an opportunity to choose the carrier of the required hazard insurance.
(u) Each Standard Hazard Insurance Policy and Primary Mortgage
Insurance Policy (if any) is the valid and binding obligation of the related
insurer, is in full force and effect, and will be in full force and effect and
inure to the benefit of OMI and its successors and assigns (including the
Trustee) upon the consummation of the transactions contemplated by the Sales
Agreement. The Seller has not engaged in, and has no knowledge of the mortgagor
having engaged in, any act or omission which would impair the coverage of any
such policy, the benefits of any endorsement provided for therein, or the
validity and binding effect of either of the foregoing. Statements made by
either the Seller or the related Obligor in the applications for such insurance
were true and complete at the times of such applications and, to the best of the
Seller's knowledge, no events have occurred since the policies for such
insurance were issued that would reduce the stated coverage provided by such
policies.
(v) Each Mortgage Loan is secured by a fee simple estate (or,
if the Mortgaged Property is located in Hawaii or Maryland, a leasehold estate)
and the related Mortgaged Property consists of a parcel of real property with a
single family residence or a two- to four-family dwelling erected thereon.
(w) Each Mortgage Loan is covered by either (i) an attorney's
opinion of title and abstract of title the form and substance of which is
acceptable to FNMA or (ii) an American Land Title Association ("ALTA") lender's
title insurance policy or other generally acceptable form of policy of insurance
for the jurisdiction in which the related Mortgaged Property is located, issued
by a title insurer qualified to do business in the jurisdiction where the
related Mortgaged Property is located, insuring the initial mortgagee (or
beneficiary in the case of a deed of trust) and its successors and assigns
(including the Trustee) as to the first priority status of the lien created by
the related Mortgage, subject only to Permitted Encumbrances (as defined above
in paragraph II(m)), providing coverage in the amount of 100% of the outstanding
principal amount of the Mortgage Loan and providing coverage against any loss by
reason of the invalidity or unenforceability of the lien resulting from any
provisions of the Mortgage providing for adjustment to the Mortgage Rate
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and Monthly Payment. Where required by state law or regulation, the Obligor has
been given the opportunity to choose the carrier of such lender's title
insurance. The related initial mortgagee (or beneficiary in the case of a deed
of trust), together with its successors or assigns (including the Trustee), is
the sole insured under such lender's title insurance policy, and such lender's
title insurance policy is in full force and effect and will be in full force and
effect upon the sale of the Mortgage Loan to OMI. No claims have been made under
such lender's title insurance policy, and no prior holder of the related
Mortgage, including the Seller, has done, by act or omission, anything which
would impair the coverage provided by such lender's title insurance policy.
(x) The Mortgage Loan was originated by a savings and loan
association, savings bank, commercial bank, credit union, insurance company, or
similar institution which is supervised and examined by a federal or state
authority, or by a mortgagee approved by the Secretary of Housing and Urban
Development pursuant to Sections 203 and 211 of the National Housing Act.
(y) Neither the related originator nor the Seller has made any
representations to the related Obligor that are inconsistent with the mortgage
instruments used. If the Mortgage Loan has an adjustable interest rate, (i) the
Mortgage Rate is adjusted on each applicable interest rate adjustment date, in
accordance with the schedule set forth or described in the related Mortgage
Note, to equal the applicable index plus the applicable gross margin, rounded as
specified in the related Mortgage Note, subject to any periodic and/or lifetime
Mortgage Rate caps; (ii) all required notices of interest rate and payment
amount adjustments have been sent to the Obligor on a timely basis and such
adjustments were properly calculated; (iii) installments of interest are subject
to change due to the adjustments to the Mortgage Rate on each interest rate
adjustment date, with interest calculated and payable in arrears, sufficient to
amortize the Mortgage Loan fully by its stated maturity date, over an original
term of not more than thirty years from commencement of amortization; and (iv)
all Mortgage Rate adjustments have been made in strict compliance with state and
federal law and the terms of the related Mortgage Note. Any interest required to
be paid pursuant to state and local law has been properly paid and credited.
(z) For any Mortgage that constitutes a deed of trust, a
trustee, authorized and duly qualified under applicable law to serve as such,
has been properly designated and currently serves as such trustee and is named
in the Mortgage, and no fees or expenses are or will become payable by the
Seller or OMI or its assignees (including the Trustee) to the trustee under the
deed of trust, except in connection with a trustee's sale after default by the
Obligor.
(aa) The Seller has no knowledge of any circumstances or
conditions with respect to any Mortgage, the related Mortgaged Property, the
related Obligor or the Obligor's credit standing that can reasonably be expected
to cause private institutional investors to regard the Mortgage Loan as an
unacceptable investment, cause the Mortgage Loan to become delinquent, or
adversely affect the value or marketability of the Mortgage Loan.
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(bb) Each Mortgage Loan is a "qualified mortgage" within the
meaning specified for such term in section 860G of the Code and does not contain
any provision requiring action that would render it not such a "qualified
mortgage."
[(cc) Any Mortgage Loan identified on Schedule III to the
Sales Agreement as being insured by the Federal Housing Administration ("FHA")
or guaranteed in whole or in part by the U.S. Department of Veterans Affairs
("VA") has been serviced in compliance with applicable FHA or VA regulations and
the FHA insurance or VA guarantee with respect to such Mortgage Loan as in
effect at the origination of such Mortgage Loan is in full force and effect. ]
(dd) As of the date hereof, no property securing a Mortgage
Loan is subject to foreclosure, litigation, bankruptcy or insolvency proceedings
or any workout or foreclosure agreement, and, to the best of the Seller's
knowledge, the filing of a bankruptcy or insolvency proceeding that would result
in any Mortgage Loan becoming subject to bankruptcy or insolvency proceedings is
not imminent.
(ee) If one or more REMIC elections are to be made with
respect to all or part of the Trust, the REMIC Loan-to-Value Ratio of each
Mortgage Loan is less than 125% either (i) at the time of its origination or as
of the Startup Day or (ii) if such Mortgage Loan has been modified other than as
a result of a default or reasonably foreseeable default, as of the Startup Day.
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EXHIBIT A TO THE SALES AGREEMENT
ASSIGNMENT OF ASSETS
ASSIGNMENT OF ASSETS, made as of the ____ day of ___, _____, by Oakwood
Acceptance Corporation, a North Carolina corporation ("OAC" or the "Seller"), to
Oakwood Mortgage Investors, Inc., a Nevada corporation ("OMI").
WHEREAS, the Seller and OMI are parties to that certain Sales
Agreement, dated as of ____ 1, ____, with respect to the sale by the Seller and
purchase by OMI of certain Assets (the "Sales Agreement");
WHEREAS, OMI intends to transfer the Assets and certain related assets
to _________________, as Trustee (the "Trustee") for OMI Trust ____-__ (the
"Trust") established pursuant to the Pooling and Servicing Agreement referred to
in the Sales Agreement (the "Pooling and Servicing Agreement");
NOW THEREFORE, the Seller, for and in consideration of the
consideration set forth in the Sales Agreement, and for other good and valuable
consideration, the sufficiency of which is hereby acknowledged, does hereby
bargain, sell, convey, assign and transfer to OMI, without recourse, free and
clear of any liens, claims or other encumbrances, all of its right, title and
interest in and to each of the Assets identified on Schedule IA and Schedule IB
to the Sales Agreement, together with the Asset Documents and other documents
maintained as part of the related Asset Files and the Seller's interest in any
Manufactured Homes, Mortgaged Properties or Real Properties which secure an
Asset but are acquired by repossession, foreclosure or deed in lieu of
foreclosure after the Closing Date, and all scheduled payments due on the Assets
after April 1, 1999 (the "Cut-off Date"), and all principal prepayments and
other unscheduled collections collected in respect of the Assets on or after the
Cut-off Date, and all proceeds of the conversion, voluntary or involuntary, of
the foregoing.
The Seller hereby acknowledges receipt from OMI of the Purchase Price
referred to in Section 2(a) of the Sales Agreement, which consists of cash in
the amount of $______________.
Nothing in this Assignment of Assets shall be construed to be a
modification of, or limitation on, any provision of the Sales Agreement,
including the representations, warranties and agreements set forth therein.
Unless otherwise defined herein, capitalized terms used in this
Assignment of Assets shall have the meanings assigned to them in the Sales
Agreement, or if not assigned in the Sales Agreement, the Pooling and Servicing
Agreement.
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IN WITNESS WHEREOF, the Seller has caused this Assignment of Assets to
be executed and delivered by its respective officer thereunto duly authorized as
of the date above written.
OAKWOOD ACCEPTANCE CORPORATION
By:________________________________
Name:______________________________
Title:_____________________________
OMI hereby acknowledges receipt from the Seller of the Assets
identified on Schedule IA and Schedule IB to the Sales Agreement, subject to its
right of inspection set forth in Section 3 of the Sales Agreement.
OAKWOOD MORTGAGE INVESTORS, INC.
By:________________________________
Name:______________________________
Title:_____________________________
