<PAGE> 1
Pursuant to Rule 424b5
Registration No. 33-94448
PROSPECTUS SUPPLEMENT (TO PROSPECTUS DATED OCTOBER 22, 1996)
$395,151,146
(APPROXIMATE)
GMAC COMMERCIAL MORTGAGE SECURITIES, INC.
DEPOSITOR
GMAC COMMERCIAL MORTGAGE CORPORATION
SERVICER
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1996-C1
------------------------
The Series 1996-C1 Mortgage Pass-Through Certificates (the "CERTIFICATES")
will consist of the following 15 classes (each, a "CLASS"): (i) the Class X-1
and Class X-2 Certificates (collectively, the "CLASS X CERTIFICATES"); (ii) the
Class A-1, Class A-2A and Class A-2B Certificates (collectively, the "CLASS A
CERTIFICATES"; and collectively with the Class X Certificates, the "SENIOR
CERTIFICATES"); (iii) the Class B, Class C, Class D, Class E, Class F, Class G
and Class H Certificates (collectively, the "SUBORDINATE CERTIFICATES"; and
collectively with the Senior Certificates, the "REMIC REGULAR CERTIFICATES");
------------------------ (cover cont. on next page)
PROCEEDS OF THE ASSETS IN THE TRUST FUND ARE THE SOLE SOURCE OF PAYMENTS ON THE
OFFERED CERTIFICATES. THE OFFERED CERTIFICATES DO NOT REPRESENT AN INTEREST IN
OR OBLIGATION OF THE DEPOSITOR, GMAC COMMERCIAL MORTGAGE CORPORATION OR ANY
OF THEIR AFFILIATES. NEITHER THE OFFERED CERTIFICATES NOR THE MORTGAGE
LOANS ARE INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY OR BY THE DEPOSITOR, GMAC COMMERCIAL MORTGAGE
CORPORATION OR ANY OF THEIR AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE
MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
------------------------
PROSPECTIVE INVESTORS SHOULD REVIEW THE INFORMATION APPEARING UNDER THE
CAPTION "RISK FACTORS" BEGINNING ON PAGE S-18 HEREIN AND PAGE 11 IN THE
PROSPECTUS BEFORE PURCHASING ANY OFFERED CERTIFICATE.
<TABLE>
<CAPTION>
INITIAL CERTIFICATE ASSUMED FINAL
CLASS BALANCE(1) PASS-THROUGH RATE DISTRIBUTION DATE(2)
- ------------------------------------------- ---------------------- ----------------- --------------------
<S> <C> <C> <C>
Class X-1.................................. N/A(3) 0.9455%(4) July 15, 2006
Class X-2.................................. N/A(5) 1.9673%(6) March 15, 2021
Class A-1.................................. $ 33,475,146 5.9125%(7) February 15, 2006
Class A-2A................................. 190,353,000 6.7900% September 15, 2003
Class A-2B................................. 71,963,000 7.2200% February 15, 2006
Class B.................................... 31,978,000 7.3400% April 15, 2006
Class C.................................... 26,268,000 7.4300% May 15, 2006
Class D.................................... 27,409,000 7.7300% August 15, 2006
Class E.................................... 13,705,000 7.8600% September 15, 2006
</TABLE>
(footnotes on next page)
------------------------
The Offered Certificates will be purchased from the Depositor by Goldman,
Sachs & Co. and Morgan Stanley & Co. Incorporated (the "UNDERWRITERS") and will
be offered by the Underwriters from time to time in negotiated transactions or
otherwise at varying prices to be determined at the time of sale. Proceeds to
the Depositor from the sale of the Offered Certificates, before deducting
expenses payable by the Depositor estimated to be approximately $2,000,000, will
be 111.56% of the initial aggregate Certificate Balance of the Offered
Certificates, plus accrued interest. The Offered Certificates are offered by the
Underwriters subject to prior sale, when, as and if delivered to and accepted by
the Underwriters and subject to certain other conditions. It is expected that
the Offered Certificates will be delivered in book-entry form through the
Same-Day Funds Settlement System of DTC on or about November 7, 1996 (the
"DELIVERY DATE"), against payment therefor in immediately available funds.
GOLDMAN, SACHS & CO. MORGAN STANLEY & CO.
INCORPORATED
AND SOLELY AS MEMBERS OF THE SELLING GROUP
CONTIFINANCIAL SERVICES CORPORATION [ING BARINGS LOGO]
The date of this Prospectus Supplement is October 30, 1996.
<PAGE> 2
(footnotes from previous page)
- ------------------
(1) Subject to a variance of plus or minus 5%.
(2) The "ASSUMED FINAL DISTRIBUTION DATE" with respect to any Class of Offered
Certificates is the Distribution Date (as defined herein) on which the final
distribution would occur for such Class of Certificates based upon the
assumption that no Mortgage Loan is prepaid prior to its stated maturity and
otherwise based on the Maturity Assumptions (as described herein). The
actual performance and experience of the Mortgage Loans will likely differ
from such assumptions. The Rated Final Distribution Date (as defined herein)
for each Class of Offered Certificates with a Certificate Balance is the
Distribution Date in October, 2028. See "Yield and Maturity Considerations"
herein.
(3) The Class X-1 Certificates will not have a Certificate Balance and will
accrue interest on a Notional Amount (as defined herein) that is equal to
the aggregate Stated Principal Balance (as defined herein) of the Group 1
Loans outstanding from time to time.
(4) Approximate initial Pass-Through Rate. For each Distribution Date subsequent
to the initial Distribution Date, the related Pass-Through Rate will be
variable and will, in general, equal the excess, if any, of the weighted
average of the Net Mortgage Rates (as defined herein) of the Group 1 Loans
from time to time, over the Pass-Through Rate applicable to the Class A-1
Certificates (or, if such Certificates are no longer outstanding, that would
otherwise have been applicable thereto) from time to time.
(5) The Class X-2 Certificates will not have a Certificate Balance and will
accrue interest on a Notional Amount that is equal to approximately 99.9% of
the aggregate Stated Principal Balance of all the Mortgage Loans outstanding
from time to time.
(6) Approximate initial Pass-Through Rate. Subsequent to the initial
Distribution Date, the related Pass-Through Rate will be variable and will,
in general, equal the excess, if any, of (a) the weighted average of (i) the
Net Mortgage Rates of the Group 1 Loans (in each case, net of the applicable
Pass-Through Rate for the Class X-1 Certificates) and (ii) the Net Mortgage
Rates of the Group 2 Loans from time to time, over (b) the weighted average
of the Pass-Through Rates applicable to the Class A, Class B, Class C, Class
D, Class E, Class F, Class G and Class H Certificates from time to time.
(7) Initial Pass-Through Rate. The related Pass-Through Rate will remain at
5.9125% per annum for each Distribution Date, up to and including the
Distribution Date in April 1997. Thereafter the related Pass-Through Rate
will be variable, will reset every six months and will, in general, equal
the lesser of (x) Certificate Six-Month LIBOR from time to time, plus 0.35%,
and (y) the weighted average of the Net Mortgage Rates of the Group 1 Loans
from time to time or, if the Group 1 Loans are no longer outstanding, 11.61%
per annum.
------------------------
(cover continued from prior page)
and (iv) the Class R-I, Class R-II and Class R-III Certificates (the "REMIC
RESIDUAL CERTIFICATES"). Only the Senior Certificates and the Class B, Class C,
Class D and Class E Certificates (collectively, the "OFFERED CERTIFICATES") are
offered hereby. The respective Classes of Offered Certificates will be issued
with the respective Certificate Balances and Pass-Through Rates set forth or
otherwise described in the table on the cover page hereof.
The Certificates will represent the entire beneficial ownership interest in
a trust fund (the "TRUST FUND") to be established by the Depositor, that will
consist primarily of a segregated pool (the "MORTGAGE ASSET POOL") of
conventional, multifamily and commercial mortgage loans (the "MORTGAGE LOANS").
The Cut-off Date is November 1, 1996 and, as of such date, the Mortgage Loans
had an aggregate principal balance (the "INITIAL POOL BALANCE") of $456,822,350,
after application of all payments of principal due on or before such date,
whether or not received, and subject to a variance of plus or minus 5%. Certain
characteristics of the Mortgage Loans are described herein under "Description of
the Mortgage Asset Pool".
The Mortgage Asset Pool has been divided into two separate sub-pools (each,
a "LOAN GROUP"), designated as "LOAN GROUP 1" (and the Mortgage Loans included
therein, the "GROUP 1 LOANS") and "LOAN GROUP 2" (and the Mortgage Loans
included therein, the "GROUP 2 LOANS"), each of which is described herein. Loan
Group 1 will consist of all the adjustable-rate Mortgage Loans, and Loan Group 2
will consist of all the fixed-rate Mortgage Loans and Mortgage Loans with a
one-time step-down in their Mortgage Rates shortly following the Delivery Date.
As of the Cut-off Date, the Group 1 Loans and the Group 2 Loans will have
aggregate principal balances, after taking into account all payments of
principal due on or before such date, whether or not received, of $33,475,147
and $423,347,204, respectively, in each case subject to a variance of plus or
minus 5%.
As described herein, three separate REMIC elections will be made with
respect to the Trust Fund for federal income tax purposes (the REMICs formed
thereby being herein referred to as "REMIC I", "REMIC II" and "REMIC III",
respectively). The Offered Certificates will constitute "regular interests" in
REMIC III. See "Certain Federal Income Tax Consequences" herein and in the
Prospectus.
Distributions on the Certificates will be made, to the extent of available
funds, on the 15th day of each month or, if any such 15th day is not a business
day, then on the next business day, beginning in December 1996 (each, a
"DISTRIBUTION DATE"). As described herein, interest distributions on each Class
of Offered Certificates will be made on each Distribution Date based on the
Pass-Through Rate then applicable to such Class and the Certificate Balance or
Notional Amount, as the case may be, of such Class outstanding immediately prior
to such Distribution Date. Distributions allocable to principal of the
respective Classes of Certificates with Certificate Balances (the "PRINCIPAL
BALANCE CERTIFICATES") will be made in the amounts and in accordance with the
priorities described herein until the Certificate Balance of each such Class is
reduced to zero. No Class of Class X Certificates will have a Certificate
Balance or entitle the holders thereof to receive distributions of principal. As
described herein, any Prepayment Premiums actually collected on the Mortgage
Loans will be distributed among certain of the
S-2
<PAGE> 3
Classes of Certificates in the amounts and in accordance with the priorities
described herein. See "Description of the Certificates--Distributions" herein.
As and to the extent described herein, the Subordinate Certificates will be
subordinate to the Senior Certificates; and each Class of Subordinate
Certificates will further be subordinate to each other class of Subordinate
Certificates, if any, with an earlier alphabetical Class designation. The REMIC
Residual Certificates will be subordinate to the Regular Interest Certificates.
See "Description of the Certificates--Distributions" and "--Subordination;
Allocation of Losses and Certain Expenses" herein.
The yield to maturity of each Class of Offered Certificates will depend on,
among other things, the rate and timing of principal payments (including by
reason of prepayments, loan extensions, defaults and liquidations) and losses on
or in respect of the Mortgage Loans that result in a reduction of the
Certificate Balance or Notional Amount of such Class. The yield to maturity of
the Class X Certificates will be highly sensitive to the rate and timing of
principal payments (including by reason of prepayments, defaults and
liquidations) and losses on or in respect of, in the case of the Class X-1
Certificates, the Group 1 Loans and, in the case of the Class X-2 Certificates,
the Group 2 Loans (and, to a lesser extent, the Group 1 Loans), which rate and
timing of principal payments and losses may fluctuate significantly from time to
time. A rate of principal prepayments on the Mortgage Loans that is more rapid
than expected by investors will have a material negative effect on the yield to
maturity of one or both Classes of the Class X Certificates. Investors in the
Class X Certificates should consider the associated risks, including the risk
that a rapid rate of principal prepayments on the Mortgage Loans could result in
the failure of investors in either or both Classes of such Certificates to
recover fully their initial investments. See "Yield and Maturity Considerations"
herein and "Yield and Maturity Considerations" and "Risk Factors--Yield and
Prepayment Considerations" in the Prospectus.
See "Index of Principal Definitions" in the Prospectus for the location of
meanings of capitalized terms used but not defined herein. See "Index of
Principal Definitions" herein for location of meanings of other capitalized
terms used herein.
There is currently no secondary market for the Offered Certificates. The
Underwriters intend to make a secondary market in the Offered Certificates, but
are not obligated to do so. There can be no assurance that a secondary market
for the Offered Certificates will develop or, if it does develop, that it will
continue. The Offered Certificates will not be listed on any securities
exchange.
S-3
<PAGE> 4
THE CERTIFICATES OFFERED BY THIS PROSPECTUS SUPPLEMENT CONSTITUTE PART OF A
SEPARATE SERIES OF CERTIFICATES ISSUED BY THE DEPOSITOR AND ARE BEING OFFERED
PURSUANT TO ITS PROSPECTUS DATED OCTOBER 22, 1996, OF WHICH THIS PROSPECTUS
SUPPLEMENT IS A PART AND WHICH ACCOMPANIES THIS PROSPECTUS SUPPLEMENT. THE
PROSPECTUS CONTAINS IMPORTANT INFORMATION REGARDING THIS OFFERING THAT IS NOT
CONTAINED HEREIN, AND PROSPECTIVE INVESTORS ARE URGED TO READ THE PROSPECTUS AND
THIS PROSPECTUS SUPPLEMENT IN FULL. SALES OF THE OFFERED CERTIFICATES MAY NOT BE
CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE OFFERED
CERTIFICATES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
UNTIL FEBRUARY 4, 1997, ALL DEALERS EFFECTING TRANSACTIONS IN THE OFFERED
CERTIFICATES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED
TO DELIVER A PROSPECTUS SUPPLEMENT AND THE PROSPECTUS TO WHICH IT RELATES. THIS
DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A
PROSPECTUS SUPPLEMENT AND PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH
RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
S-4
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
TRANSACTION OVERVIEW................................................................. S-6
SUMMARY OF PROSPECTUS SUPPLEMENT..................................................... S-7
RISK FACTORS......................................................................... S-18
The Certificates................................................................ S-18
The Mortgage Loans.............................................................. S-18
DESCRIPTION OF THE MORTGAGE ASSET POOL............................................... S-22
General......................................................................... S-22
Certain Terms and Conditions of the Mortgage Loans.............................. S-23
Additional Mortgage Loan Information............................................ S-28
The Mortgage Loan Sellers....................................................... S-30
Certain Underwriting Matters.................................................... S-30
Certain Legal Aspects of Mortgage Loans Under California Law.................... S-32
Assignment of the Mortgage Loans; Repurchases................................... S-32
Representations and Warranties; Repurchases..................................... S-33
Changes in Mortgage Asset Pool Characteristics.................................. S-35
SERVICING OF THE MORTGAGE LOANS...................................................... S-36
General......................................................................... S-36
The Servicer.................................................................... S-37
Termination of the Servicer with Respect to Specially Serviced Mortgage Loans
and REO Properties............................................................. S-37
Servicing and Other Compensation and Payment of Expenses........................ S-38
The Extension Adviser........................................................... S-41
Modifications, Waivers, Amendments and Consents................................. S-42
Sale of Defaulted Mortgage Loans................................................ S-43
REO Properties.................................................................. S-43
Inspections; Collection of Operating Information................................ S-44
DESCRIPTION OF THE CERTIFICATES...................................................... S-44
General......................................................................... S-44
Book-Entry Registration of the Offered Certificates............................. S-45
Certificate Balances and Notional Amounts....................................... S-46
Pass-Through Rates.............................................................. S-46
The Certificate Groups.......................................................... S-47
Distributions................................................................... S-48
Subordination; Allocation of Losses and Certain Expenses........................ S-53
P&I Advances.................................................................... S-54
Appraisal Reductions............................................................ S-55
Reports to Certificateholders; Certain Available Information.................... S-55
Voting Rights................................................................... S-57
Termination; Retirement of Certificates......................................... S-58
The Trustee..................................................................... S-58
YIELD AND MATURITY CONSIDERATIONS.................................................... S-58
Yield Considerations............................................................ S-58
Weighted Average Life........................................................... S-61
Certain Price/Yield Tables...................................................... S-67
Yield Sensitivity of the Class X Certificates................................... S-75
CERTAIN FEDERAL INCOME TAX CONSEQUENCES.............................................. S-78
General......................................................................... S-78
Original Issue Discount and Premium............................................. S-78
Characterization of Investments in Offered Certificates......................... S-79
METHOD OF DISTRIBUTION............................................................... S-80
LEGAL MATTERS........................................................................ S-81
RATINGS.............................................................................. S-81
LEGAL INVESTMENT..................................................................... S-82
ERISA CONSIDERATIONS................................................................. S-82
INDEX OF PRINCIPAL TERMS............................................................. S-83
ANNEX A.............................................................................. A-1
ANNEX B.............................................................................. B-1
</TABLE>
S-5
<PAGE> 6
TRANSACTION OVERVIEW
Prospective investors are advised to carefully read, and should rely solely
on, the detailed information appearing elsewhere in this Prospectus Supplement
and the Prospectus relating to the Offered Certificates in making their
investment decision. The following Transaction Overview does not include all
relevant information relating to the securities and collateral described herein,
particularly with respect to the risks and special considerations involved with
an investment in such securities and is qualified in its entirety by reference
to the detailed information appearing elsewhere in this Prospectus Supplement
and the Prospectus. Prior to making an investment decision, a prospective
investor should carefully review this Prospectus Supplement and the Prospectus.
Capitalized terms used and not otherwise defined herein have the respective
meanings assigned to them in this Prospectus Supplement and the Prospectus. See
"Index of Principal Terms" in this Prospectus Supplement and "Index of Principal
Definitions" in the Prospectus.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
INITIAL INITIAL
RATINGS CERTIFICATE PERCENT OF DESCRIPTION CERTIFICATE
(S&P/ BALANCE OR INITIAL POOL OF CERTIFICATE INTEREST RATE
CLASS MOODY'S) NOTIONAL AMOUNT BALANCE SUBORDINATION(C) INTEREST RATE (APPROXIMATE)
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
X-1 NR/Aaa $ 33,475,146(b) Variable Rate I/O 0.9455%
- ------------------------------------------------------------------------------------------------------------
X-2 NR/Aaa 456,365,528(b) Variable Rate I/O 1.9673%
- ------------------------------------------------------------------------------------------------------------
A-1 AAA/Aaa 33,475,146 7.33% 35.25% Floating Rate 5.9125%
- ------------------------------------------------------------------------------------------------------------
A-2A AAA/Aaa 190,353,000 41.67 35.25 Fixed Rate 6.7900%
- ------------------------------------------------------------------------------------------------------------
A-2B AAA/Aaa 71,963,000 15.75 35.25 Fixed Rate 7.2200%
- ------------------------------------------------------------------------------------------------------------
B AA/Aa1 31,978,000 7.00 28.25 Fixed Rate 7.3400%
- ------------------------------------------------------------------------------------------------------------
C A/Aa3 26,268,000 5.75 22.50 Fixed Rate 7.4300%
- ------------------------------------------------------------------------------------------------------------
D BBB/Baa1 27,409,000 6.00 16.50 Fixed Rate 7.7300%
- ------------------------------------------------------------------------------------------------------------
E BB+/Baa3 13,705,000 3.00 13.50 Fixed Rate 7.8600%
- ------------------------------------------------------------------------------------------------------------
F(a) BB/Ba3 22,841,000 5.00 8.50 Fixed Rate 7.8600%
- ------------------------------------------------------------------------------------------------------------
G(a) B/B3 19,415,000 4.25 4.25 Fixed Rate 5.7000%
- ------------------------------------------------------------------------------------------------------------
H(a) Unrated 19,415,204 4.25 0.00 Fixed Rate 5.7000%
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------
WEIGHTED
AVG. PRINCIPAL
CLASS LIFE(D) WINDOW(D)
<S> <C> <C> <C>
- ------
X-1 N/A N/A
- ------
X-2 N/A N/A
- ------
A-1 7.50 12/96- 2/06
- ------
A-2A 5.20 12/96- 9/03
- ------
A-2B 8.77 9/03- 2/06
- ------
B 9.38 2/06- 4/06
- ------
C 9.52 4/06- 5/06
- ------
D 9.71 5/06- 8/06
- ------
E 9.80 8/06- 9/06
- ------
F(a) 9.87 9/06-11/06
- ------
G(a) 10.78 11/06- 7/10
- ------
H(a) 14.87 7/10- 3/21
- ------
</TABLE>
(a)Not offered hereby.
(b)Notional Amount
(c)Reflects aggregate of Certificate Balances of all Classes of
Certificates that are subordinate to the specified class, expressed as
a percentage of the Initial Pool Balance.
(d)The weighted average life and period during which distributions of
principal would be received (the "Principal Window") set forth in the
foregoing table with respect to each Class of REMIC Regular
Certificates is based on the assumptions that there are no prepayments
on the Mortgage Loans and otherwise on the basis of the Maturity
Assumptions (as defined herein). See "Yield and Maturity
Considerations" herein.
- --------------------------------------------------------------------------------
Set forth below is certain information regarding the Mortgage Loans and the
Mortgaged Properties as of the Cut-off Date (all weighted averages set forth
below are based on the Cut-off Date Balances (as defined herein) of the
respective Mortgage Loans). Such information is described, and additional
information regarding the Mortgage Loans and the Mortgaged Properties is set
forth, under "Description of the Mortgage Asset Pool" herein and in Annex A
hereto:
MORTGAGE POOL CHARACTERISTICS
<TABLE>
<CAPTION>
CHARACTERISTICS ENTIRE MORTGAGE POOL
------------------------------------------------------------ --------------------
<S> <C>
Initial Pool Balance........................................ $456,822,350
Number of Mortgage Loans.................................... 137
Average Cut-off Date Balance................................ $ 3,334,470
Weighted Average Mortgage Rate.............................. 9.208%
Weighted Average Original Term to Maturity.................. 106 Months
Weighted Average Remaining Term to Maturity................. 98 Months
Weighted Average Original Amortization Term................. 314 Months
Weighted Average Debt Service Coverage Ratio................ 1.51x
Weighted Average Cut-off Date LTV Ratio..................... 67%
</TABLE>
"Cut-off Date LTV Ratios" and "Debt Service Coverage Ratios" are calculated
as described in Annex A hereto.
S-6
<PAGE> 7
SUMMARY OF PROSPECTUS SUPPLEMENT
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus Supplement and in
the accompanying Prospectus. Certain capitalized terms that are used in this
Summary may be defined elsewhere in this Prospectus Supplement, including on
Annex A hereto, or in the Prospectus. An "Index of Principal Definitions" is
included at the end of both this Prospectus Supplement and the Prospectus. Terms
that are used but not defined in this Prospectus Supplement will have the
meanings specified in the Prospectus.
TITLE OF CERTIFICATES........ Mortgage Pass-Through Certificates, Series
1996-C1.
DEPOSITOR.................... GMAC Commercial Mortgage Securities, Inc. See "The
Depositor" in the Prospectus.
SERVICER..................... GMAC Commercial Mortgage Corporation. See
"Servicing of the Mortgage Loans--The Servicer"
herein.
TRUSTEE...................... State Street Bank and Trust Company. See
"Description of the Certificates--The Trustee"
herein.
MORTGAGE LOAN SELLERS........ On or before the Delivery Date, the Depositor will
acquire the Mortgage Loans that are to
constitute the Trust Fund from three sources:
(i) ContiTrade Services L.L.C. ("CONTITRADE");
(ii) Internationale Nederlanden (U.S.) Capital
Corporation (to be known as ING (U.S.) Capital
Corporation effective as of November 1, 1996)
("ING CAPITAL"); and (iii) GMAC Commercial
Mortgage Corporation ("GMACCM", collectively
with ContiTrade and ING Capital, the "MORTGAGE
LOAN SELLERS"). Each Mortgage Loan Seller will
make certain representations and warranties with
respect to its Mortgage Loans, and all such
representations and warranties will be assigned
by the Depositor to the Trustee. In the event
that any such representation or warranty is
breached in respect of any Mortgage Loan in a
manner that is material and adverse to the
interests of the Certificateholders, the related
Mortgage Loan Seller will be required to cure
the breach in all material respects or
repurchase such Mortgage Loan from the Trust
Fund. See "Description of the Mortgage Asset
Pool--The Mortgage Loan Sellers" and
"--Representations and Warranties; Repurchases"
herein.
CUT-OFF DATE................. November 1, 1996.
DELIVERY DATE................ On or about November 7, 1996.
RECORD DATE.................. With respect to any Distribution Date, (i) in the
case of Class A-1 Certificates, the fifth day of
the month in which such Distribution Date occurs
or, if such fifth day is not a business day, the
preceding business day; and (ii) in the case of
each other Class of Certificates, the last
business day of the calendar month immediately
preceding the month in which such Distribution
Date occurs.
INTEREST ACCRUAL PERIOD...... With respect to any Distribution Date, (i) in the
case of the Class A-1 Certificates, the period
that begins on the 15th day of the calendar
month preceding the month in which such
Distribution Date occurs (or, in the case of the
initial Distribution Date, that begins on the
Delivery Date) and ends on the 14th day of the
calendar month in which such Distribution Date
occurs; and (ii) in the case of each other Class
of REMIC Regular Certificates, the calendar
month
S-7
<PAGE> 8
immediately preceding the month in which such
Distribution Date occurs.
REGISTRATION AND
DENOMINATIONS................ The Offered Certificates will be issued as
Book-Entry Certificates in denominations of: (i)
in the case of the Class X Certificates,
$2,500,000 notional principal amount and in any
whole dollar denomination in excess thereof; and
(ii) in the case of the other Offered
Certificates, $100,000 actual principal amount
and in any whole dollar denomination in excess
thereof. Each Class of Offered Certificates will
be represented by one or more Certificates
registered in the name of Cede & Co., as nominee
of DTC. No Certificate Owner will be entitled to
receive a Definitive Certificate representing
its interest in a Class of Offered Certificates,
except under the limited circumstances described
herein and in the Prospectus. See "Description
of the Certificates--Book-Entry Registration of
the Offered Certificates" herein and
"Description of the Certificates--Book-Entry
Registration and Definitive Certificates" in the
Prospectus.
THE MORTGAGE ASSET POOL...... The Mortgage Asset Pool will consist of 137
Mortgage Loans, with an Initial Pool Balance of
$456,822,350, subject to a variance of plus or
minus 5%. All numerical information provided
herein with respect to the Mortgage Loans is
provided on an approximate basis.
The Cut-off Date Balances (as defined herein) of
the Mortgage Loans will range from $137,790 to
$23,970,819, and the average Cut-off Date
Balance will be $3,334,470.
All of the Mortgage Loans were originated during
the years 1993 to 1996.
Each Mortgage Loan is secured by a first mortgage
lien on a fee simple and/or leasehold interest
in a Mortgaged Property used for commercial or
multifamily residential purposes.
Six separate sets of Mortgage Loans (the
"CROSS-COLLATERALIZED MORTGAGE LOANS"),
representing 4.1%, 1.5%, 1.3%, 1.0%, 0.5% and
0.3%, respectively, of the Initial Pool Balance,
are, solely as among the Mortgage Loans in each
such particular set, cross-collateralized with
each other. See "Description of the Mortgage
Asset Pool--Cross-Collateralized and
Cross-Defaulted Mortgage Loans" herein and Annex
A hereto.
Two additional Mortgage Loans, representing 0.8%
and 0.4%, respectively, of the Initial Pool
Balance, are, in each such case, without regard
to the cross-collateralization described in the
previous paragraph, secured by one or more
Mortgages encumbering multiple Mortgaged
Properties.
In general, the Mortgage Loans constitute
nonrecourse obligations of the related borrower,
and prospective investors should thus consider
all of the Mortgage Loans to be nonrecourse.
None of the Mortgage Loans is insured or
guaranteed by the United States, any
governmental agency or instrumentality or any
private mortgage insurer. See "Description of
the Mortgage Asset Pool--General".
S-8
<PAGE> 9
Set forth below are the number of Mortgage Loans,
and the approximate percentage of the Initial
Pool Balance represented by such Mortgage Loans,
that are secured by Mortgaged Properties located
in the six states with the highest
concentrations:
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF INITIAL POOL
STATE MORTGAGE LOANS BALANCE
-------------------------------- -------------- -------------
<S> <C> <C>
California...................... 22 17.17%
Florida......................... 10 10.98
Illinois........................ 3 8.57
Texas........................... 20 8.16
New York........................ 18 8.05
Connecticut..................... 3 5.51
</TABLE>
The remaining Mortgaged Properties are located
throughout 22 other states and the District of
Columbia, with no more than 4.95% of the Initial
Pool Balance secured by Mortgaged Properties
located in any such other state.
Set forth below are the number of Mortgage Loans,
and the approximate percentage of the Initial
Pool Balance represented by such Mortgage Loans,
that are secured by Mortgaged Properties
operated for each indicated purpose:
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF INITIAL POOL
PROPERTY TYPE MORTGAGE LOANS BALANCE
-------------------------------- -------------- -------------
<S> <C> <C>
Multifamily Rental.............. 41 24.82%
Office.......................... 18 24.38
Self-Storage.................... 47 16.41
Retail.......................... 12 13.85
Mobile Home Park................ 5 12.61
Hotel........................... 3 3.68
Other........................... 11 4.24
</TABLE>
121 of the Mortgage Loans (the "FIXED-RATE
LOANS"), representing 76.12% of the Initial Pool
Balance, bear interest at Mortgage Rates that
are, in each case, fixed for the entire
remaining term of the Mortgage Loan, subject, in
three such cases, however, to adjustment in
connection with an extension of the related
maturity, which extension is generally at
borrower's option. Nine of the Mortgage Loans
(the "STEP-DOWN LOANS"), representing 16.55% of
the Initial Pool Balance, bear interest at
Mortgage Rates that will, in each case,
step-down (by a range of 65.6 to 183.1 basis
points on a loan-by-loan basis) to a new
specified rate per annum within a two- to
ten-month period following the Cut-off Date and
thereafter remain fixed at such new rate for the
remaining term of the Mortgage Loan. The terms
of the Step-Down Loans provide that the amount
of the Monthly Payments due in respect of each
such Mortgage Loan remain constant during the
entire remaining term thereof; however, in
connection with the one-time step-down of the
related Mortgage Rate, each such Mortgage Loan
will begin to amortize. Seven of the Mortgage
Loans (the "ARM LOANS"), representing 7.33% of
the Initial Pool Balance, accrue interest at
Mortgage Rates that are
S-9
<PAGE> 10
subject to adjustment on a semi-annual basis, in
general, by adding a specified percentage (a
"GROSS MARGIN") to the value of a base index (an
"INDEX"), subject to rounding conventions and
specified floors and caps. The Index for each
ARM Loan is Six-Month LIBOR (calculated as
described herein). No Mortgage Loan permits
negative amortization or the deferral of accrued
interest. See "Description of the Mortgage Asset
Pool--Certain Terms and Conditions of the
Mortgage Loans--Mortgage Rates; Calculations of
Interest" and "--Certain Terms and Conditions of
the Mortgage Loans--The ARM Loans" herein.
131 of the Mortgage Loans (the "BALLOON LOANS"),
which represent 97.51% of the Initial Pool
Balance, provide for monthly payments of
principal based on amortization schedules
significantly longer than the remaining terms of
such Mortgage Loans (and, in some cases,
following an interest only period), or provide
for quarterly payments of principal based on net
cash flow from each related Mortgaged Property
which may not amortize the loan fully by stated
maturity. As a result, substantial principal
amounts will be due and payable (each such
payment, together with the corresponding
interest payment, a "BALLOON PAYMENT") in
respect of such Mortgage Loans on their
respective maturity dates, unless prepaid prior
thereto. Six of the Mortgage Loans, which
represent 2.49% of the Initial Pool Balance, are
self-amortizing.
As of the Cut-off Date, all of the Mortgage Loans
impose some restriction on voluntary principal
prepayments, whether in the form of an absolute
prohibition or a requirement that any voluntary
principal prepayment be accompanied by a
Prepayment Premium. The prepayment terms of each
of the Mortgage Loans are described under
"Description of the Mortgage Asset Pool--Certain
Terms and Conditions of the Mortgage
Loans--Prepayment Provisions" herein and on
Annex A hereto.
For purposes of calculating certain distributions
on the Certificates, the Mortgage Asset Pool has
been divided into two Loan Groups, designated as
"Loan Group 1" and "Loan Group 2", respectively,
based upon the Mortgage Rates for the Mortgage
Loans. Loan Group 1 consists of the ARM Loans,
and Loan Group 2 consists of all the remaining
Mortgage Loans. The Class X-1 and Class A-1
Certificates initially will correspond to and
evidence interests generally in Loan Group 1,
and the other REMIC Regular Certificates
initially will correspond to and evidence
interests generally in Loan Group 2.
For more detailed statistical information
regarding Loan Group 1, Loan Group 2 and the
entire Mortgage Asset Pool, see "Certain Terms
and Conditions of the Mortgage Loans" herein and
Annex A hereto.
DESCRIPTION OF THE
CERTIFICATES................. The Certificates will be issued pursuant to a
Pooling and Servicing Agreement, to be dated as
of the Cut-off Date, among the Depositor, the
Servicer and the Trustee (the "POOLING AND
SERVICING AGREEMENT"), and will represent in the
aggregate the entire beneficial ownership
interest in the Trust Fund, which will consist
of the Mortgage Asset Pool and certain related
assets.
S-10
<PAGE> 11
A. CERTIFICATE BALANCES AND
NOTIONAL AMOUNTS........ Upon initial issuance, the Class A-1, Class A-2A,
Class A-2B, Class B, Class C, Class D and Class
E Certificates will have the respective
Certificate Balances set forth on the cover page
hereof (in each case, subject to a variance of
plus or minus 5%).
The Class F, Class G and Class H Certificates will
have an initial aggregate Certificate Balance
equal to the excess of the Initial Pool Balance
over the initial aggregate Certificate Balance
of the Class A, Class B, Class C, Class D and
Class E Certificates.
Neither Class of Class X Certificates will have a
Certificate Balance; each such Class of
Certificates will instead represent the right to
receive distributions of interest accrued as
described herein on a Notional Amount. The
Notional Amount of the Class X-1 Certificates
will equal the aggregate Stated Principal
Balance (as defined herein) of the Group 1 Loans
outstanding from time to time. The Notional
Amount of the Class X-2 Certificates will equal
approximately 99.9% of the aggregate Stated
Principal Balance of all the Mortgage Loans
outstanding from time to time. The Notional
Amount of each Class of Class X Certificates is
used solely for the purpose of determining the
amount of interest to be distributed on such
Class of Certificates and does not represent the
right to receive any distributions of principal.
No Class of REMIC Residual Certificates will have
a Certificate Balance.
See "Description of the Certificates--Certificate
Balances and Notional Amounts" and
"--Distributions" herein.
B. PASS-THROUGH RATES...... The Pass-Through Rate applicable to the Class A-1
Certificates for each Distribution Date, up to
and including the Distribution Date in April
1997, will equal 5.9125% per annum. The
Pass-Through Rate applicable to the Class A-1
Certificates will thereafter be subject to
semi-annual adjustment and, with respect to any
Distribution Date occurring in or after May
1997, will, in general, equal the lesser of (i)
the Certificate Six-Month LIBOR (determined as
described herein) for such Distribution Date,
plus 0.35%, and (ii) the weighted average of the
Net Mortgage Rates (as defined herein) in effect
for the Group 1 Loans as of the first day of the
related Collection Period (as defined herein)
(weighted on the basis of the respective Stated
Principal Balances (as defined herein) of such
Mortgage Loans immediately following the prior
Distribution Date) or, if the Group 1 Loans are
no longer outstanding, 11.61% per annum. As of
the Cut-off Date, the maximum Mortgage Rates of
the Group 1 Loans range from 11.75% to 12.75%
per annum, with a weighted average maximum
Mortgage Rate of 11.84% per annum.
The Pass-Through Rate applicable to the Class X-1
Certificates for the initial Distribution Date
will equal approximately 0.9455% per annum. The
Pass-Through Rate applicable to the Class X-1
Certificates for each Distribution Date
subsequent to the initial Distribution Date
will, in general, equal the excess, if any, of
(i) the weighted average of the Net Mortgage
Rates in effect for the Group 1 Loans as of the
first day of the related Collection Period
(weighted on the
S-11
<PAGE> 12
basis of the respective Stated Principal
Balances of such Mortgage Loans immediately
following the prior Distribution Date), over
(ii) the Pass-Through Rate applicable to the
Class A-1 Certificates (or, if such Certificates
are no longer outstanding, that would otherwise
have been applicable thereto) for such current
Distribution Date.
The Pass-Through Rates applicable to the Class
A-2A, Class A-2B, Class B, Class C, Class D and
Class E Certificates will be fixed and, at all
times, will be equal to the respective
Pass-Through Rates specified for each such Class
on the cover page hereof.
The Pass-Through Rate applicable to the Class X-2
Certificates for the initial Distribution Date
will equal approximately 1.9673% per annum. The
Pass-Through Rate applicable to the Class X-2
Certificates for each subsequent Distribution
Date will, in general, equal the excess, if any,
of (i) the weighted average of the Net Mortgage
Rates in effect for the Group 1 Loans (in each
case, net of the Pass-Through Rate applicable to
the Class X-1 Certificates for such Distribution
Date) and the Net Mortgage Rates in effect for
the Group 2 Loans as of the first day of the
related Collection Period (weighted on the basis
of the respective Stated Principal Balances of
such Mortgage Loans immediately following the
prior Distribution Date), over (ii) the weighted
average of the Pass-Through Rates applicable to
the Class A, Class B, Class C, Class D, Class E,
Class F, Class G and Class H Certificates for
such current Distribution Date (weighted on the
basis of the respective Certificate Balances of
such Classes of Certificates immediately prior
to such current Distribution Date).
The Pass-Through Rates applicable to the Class F,
Class G and Class H Certificates will, at all
times, be equal to 7.86%, 5.70% and 5.70% per
annum, respectively.
DISTRIBUTIONS OF INTEREST
AND PRINCIPAL ON THE
SENIOR CERTIFICATES........ On each Distribution Date, to the extent of the
Available Distribution Amount (as defined
herein) for such date, the holders of the
respective Classes of Senior Certificates will
be entitled to receive distributions of
interest, on a pro rata basis, in an amount
equal to all Distributable Certificate Interest
(as defined herein) in respect of each such
Class of Certificates for such Distribution Date
and, to the extent not previously paid, for all
prior Distribution Dates, if any.
On each Distribution Date, following all required
distributions of interest on the Senior
Certificates, the Trustee will apply the
remaining portion, if any, of the Available
Distribution Amount for such date to make
payments of principal on the respective Classes
of Class A Certificates, in the amounts and
order described herein, up to an aggregate
amount equal to the lesser of (i) the then
aggregate of the outstanding Certificate Balance
of the Class A Certificates and (ii) the
aggregate of the Principal Distribution Amounts
(as defined herein) with respect to the two Loan
Groups for such Distribution Date (or, on the
final Distribution Date in connection with a
termination of the Trust Fund (see "Description
of the
S-12
<PAGE> 13
Certificates--Termination; Retirement of
Certificates" herein), up to an aggregate amount
equal to the aggregate of the then outstanding
Certificate Balances of the Class A
Certificates). See "Description of the
Certificates--Distributions" herein.
DISTRIBUTIONS OF INTEREST AND
PRINCIPAL ON THE CLASS B,
CLASS C, CLASS D AND CLASS
E CERTIFICATES............. On each Distribution Date, following all required
distributions of interest and principal on the
Senior Certificates, the Trustee will apply the
remaining portion, if any, of the Available
Distribution Amount for such date to make
payments of interest and principal on the Class
B, Class C, Class D and Class E Certificates, in
that order. On each Distribution Date, the
holders of each such Class of Offered
Certificates will, to the extent of the
Available Distribution Amount remaining after
all required distributions of interest and
principal on the Senior Certificates and each
other Class of Offered Certificates, if any,
with an earlier alphabetical Class designation,
be entitled: first, to distributions of interest
up to an amount equal to all Distributable
Certificate Interest in respect of such
particular Class of Offered Certificates for
such Distribution Date and, to the extent not
previously paid, for all prior Distribution
Dates, if any, and, then, if the Certificate
Balances of the Class A Certificates and each
other Class of Principal Balance Certificates,
if any, with an earlier alphabetical Class
designation, have been reduced to zero, to
distributions of principal up to an amount equal
to the lesser of (i) the then outstanding
Certificate Balance of such particular Class of
Offered Certificates and (ii) the aggregate of
the Principal Distribution Amounts with respect
to the two Loan Groups for such Distribution
Date (net of any portion of such aggregate
amount paid in retirement of the Class A
Certificates and/or any other Class of Principal
Balance Certificates with an earlier
alphabetical Class designation) (or, on the
final Distribution Date in connection with a
termination of the Trust Fund, up to an amount
equal to the then outstanding Certificate
Balance of such particular Class of Offered
Certificates). See "Description of the
Certificates--Distributions" herein.
DISTRIBUTIONS OF PREPAYMENT
PREMIUMS................... Any Prepayment Premium actually collected with
respect to a Group 1 Loan during any particular
Collection Period will be distributed to the
holders of the Class X-1 Certificates on the
related Distribution Date. Any Prepayment
Premium actually collected with respect to a
Group 2 Loan during any particular Collection
Period will, in general, be distributed to the
holders of the Class X-2, Class A-2A, Class
A-2B, Class B, Class C, Class D and Class E
Certificates in the amounts and priorities
described under "Description of the
Certificates--Distributions--Distributions of
Prepayment Premiums" herein.
CERTAIN YIELD AND PREPAYMENT
CONSIDERATIONS............. The yield on the Offered Certificates of each
Class thereof will depend on, among other
things, the Pass-Through Rate for such
Certificates. The yield on any Offered
Certificate that is purchased at a discount
S-13
<PAGE> 14
or premium will also be affected by the rate and
timing of distributions in respect of principal
on such Certificate, which in turn will be
affected by (i) the rate and timing of principal
payments (including principal prepayments) on
the Mortgage Loans and (ii) the extent to which
such principal payments are applied on any
Distribution Date in reduction of the
Certificate Balance of the Class to which such
Certificate belongs. See "Description of the
Certificates --Distributions--Application of the
Available Distribution Amount" and
"--Distributions--Principal Distribution Amount"
herein.
An investor that purchases an Offered Certificate
at a discount should consider the risk that a
slower than anticipated rate of principal
payments on such Certificate will result in an
actual yield that is lower than such investor's
expected yield. An investor that purchases any
Offered Certificate at a premium should consider
the risk that a faster than anticipated rate of
principal payments on such Certificate will
result in an actual yield that is lower than
such investor's expected yield. Insofar as an
investor's initial investment in any Offered
Certificate is returned in the form of payments
of principal thereon, there can be no assurance
that such amounts can be reinvested in a
comparable alternative investment with a
comparable yield.
The actual rate of prepayment of principal on the
Mortgage Loans cannot be predicted. The
investment performance of the Offered
Certificates may vary materially and adversely
from the investment expectations of investors
due to prepayments on the Mortgage Loans being
higher or lower than anticipated by investors.
The actual yield to the holder of an Offered
Certificate may not be equal to the yield
anticipated at the time of purchase of the
Certificate or, notwithstanding that the actual
yield is equal to the yield anticipated at that
time, the total return on investment expected by
the investor or the expected weighted average
life of the Certificate may not be realized. For
a discussion of certain factors affecting
prepayment of the Mortgage Loans, including the
effect of Prepayment Premiums, see "Yield and
Maturity Considerations" herein. In deciding
whether to purchase any Offered Certificates, an
investor should make an independent decision as
to the appropriate prepayment assumptions to be
used.
The Class X Certificates are interest-only
Certificates and are not entitled to any
distributions in respect of principal. The yield
to maturity of the Class X Certificates will be
especially sensitive to the prepayment,
repurchase, default and recovery experience on,
in the case of the Class X-1 Certificates, the
Group 1 Loans and, in the case of the Class X-2
Certificates, the Group 2 Loans (and, to a
lesser extent, the Group 1 Loans), which
prepayment, repurchase, default and recovery
experience may fluctuate significantly from time
to time. A rate of principal payments and
liquidations on, in the case of the Class X-1
Certificates, the Group 1 Loans and, in the case
of the Class X-2 Certificates, the Group 2 Loans
(and, to a lesser extent, the Group 1 Loans),
that is more rapid than expected by investors
will have a material negative effect on the
yield to maturity
S-14
<PAGE> 15
of the Class X Certificates. See "Yield and
Maturity Considerations--Yield Sensitivity of
the Class X Certificates" herein.
P&I ADVANCES................. The Servicer is required to make advances (each, a
"P&I ADVANCE") of delinquent principal and
interest on the Mortgage Loans, under the
circumstances and subject to the limitations set
forth herein. In no event will the Servicer be
required to advance the full amount of any
delinquent Balloon Payment. If the Servicer
fails to make a required P&I Advance, the
Trustee will be required to make such P&I
Advance. The Servicer and the Trustee will each
be entitled to interest on any P&I Advances made
and certain servicing expenses incurred by it or
on its behalf, such interest accruing at the
rate and payable under the circumstances
described herein. See "Description of the
Certificates--P&I Advances" herein and
"Description of the Certificates--Advances in
Respect of Delinquencies" and "The Pooling and
Servicing Agreements--Certificate Account" in
the Prospectus.
SUBORDINATION; ALLOCATION OF
LOSSES AND CERTAIN EXPENSES...The rights of the holders of the Subordinate
Certificates to receive distributions with
respect to the Mortgage Loans will be
subordinate to the rights of the holders of the
Senior Certificates and, further, in the case of
any particular Class of Subordinate
Certificates, to the rights of the holders of
each other Class of Subordinate Certificates, if
any, with an earlier alphabetical Class
designation, in each case to the extent
described herein and in the Prospectus. In
addition, the rights of the holders of the REMIC
Residual Certificates to receive distributions
with respect to the Mortgage Loans will be
subordinate to the rights of the holders of the
REMIC Regular Certificates, to the extent
described herein and in the Prospectus. Such
subordination will be accomplished by the
application of the Available Distribution Amount
on each Distribution Date to distributions on
the respective Classes of Certificates in the
order described herein under "Description of the
Certificates--Distributions--Application of the
Available Distribution Amount". No other form of
Credit Support will be available for the benefit
of the holders of the Offered Certificates.
If, following the distributions to be made in
respect of the Certificates on any Distribution
Date, the aggregate Stated Principal Balance of
the Mortgage Asset Pool that will be outstanding
immediately following such Distribution Date is
less than the then aggregate Certificate Balance
of the Principal Balance Certificates, the
Certificate Balances of the Subordinate
Certificates will be reduced, in reverse
alphabetical order, until, in the case of each
such Class of Subordinate Certificates, such
deficit (or the related Certificate Balance) is
reduced to zero (whichever occurs first). If any
portion of such deficit remains at such time as
the aggregate Certificate Balance of the
Subordinate Certificates is reduced to zero,
then, the respective Certificate Balances of the
Class A-1, Class A-2A and Class A-2B
Certificates will be reduced, pro rata in
accordance with the relative sizes of the
remaining Certificate Balances of such Classes
of Certificates, until such deficit (or each
such Certificate Balance) is reduced to zero.
Any such deficit may be the result of
S-15
<PAGE> 16
Realized Losses (as defined herein) incurred in
respect of the Mortgage Loans and/or Additional
Trust Fund Expenses (also, as defined herein).
The foregoing reductions in the Certificate
Balances of the Principal Balance Certificates
will be deemed to constitute an allocation of
any such Realized Losses and Additional Trust
Fund Expenses.
OPTIONAL TERMINATION......... At its option, on any Distribution Date on which
the remaining aggregate Stated Principal Balance
of the Mortgage Asset Pool is less than 5% of
the Initial Pool Balance, the Servicer or the
Depositor may purchase all of the Mortgage Loans
and REO Properties, and thereby effect
termination of the Trust Fund and early
retirement of the then outstanding Certificates.
See "Description of the
Certificates--Termination; Retirement of
Certificates" herein and in the Prospectus.
CERTAIN FEDERAL INCOME TAX
CONSEQUENCES............... For federal income tax purposes, three separate
REMIC elections will be made with respect to
certain segregated asset pools which make up the
Trust Fund, the resulting REMICs being herein
referred to as REMIC I, REMIC II and REMIC III,
respectively. The assets of "REMIC I" will
include the Mortgage Loans, any REO Properties
acquired on behalf of the Certificateholders and
the Certificate Account. For federal income tax
purposes, (i) the separate, uncertificated
regular interests in REMIC I will be the
"regular interests" in REMIC I and will
constitute the assets of REMIC II, (ii) the
Class R-I Certificates will be the sole class of
"residual interests" in REMIC I, (iii) the
separate, uncertificated regular interests in
REMIC II will be the "regular interests" in
REMIC II and will constitute the assets of REMIC
III, (iv) the Class R-II Certificates will be
the sole class of "residual interests" in REMIC
II, (v) the REMIC Regular Certificates will be
the "regular interests" in, and generally will
be treated as debt obligations of, REMIC III,
and (vi) the Class R-III Certificates will be
the sole class of "residual interests" in REMIC
III.
For further information regarding the Federal
income tax consequences of investing in the
Offered Certificates, see "Certain Federal
Income Tax Consequences" herein and in the
Prospectus.
RATINGS...................... It is a condition to their issuance that the
Offered Certificates receive from S&P and/or
Moody's the credit ratings indicated herein. The
ratings of the Offered Certificates address the
timely payment thereon of interest and, to the
extent applicable, the ultimate payment thereon
of principal on or before the Rated Final
Distribution Date. The ratings of the Offered
Certificates do not, however, represent any
assessment of (i) the likelihood or frequency of
principal prepayments (whether voluntary or
involuntary) on the Mortgage Loans, (ii) the
corresponding effect on yield to investors or
(iii) the possibility that, as a result of
prepayments, investors in the Class X
Certificates may realize a lower than
anticipated yield or may not fully recover their
initial investment. The ratings of the Offered
Certificates also do not address certain other
matters as described under "Ratings" herein. A
security rating is not a recommendation to buy,
sell or hold securities and may be subject to
S-16
<PAGE> 17
revision or withdrawal at any time by the
assigning rating agency. See "Ratings" herein.
LEGAL INVESTMENT............. The Offered Certificates will not be "mortgage
related securities" within the meaning of SMMEA.
Institutions whose investment activities are
subject to legal investment laws and
regulations, regulatory capital requirements or
review by regulatory authorities may be subject
to restrictions on investment in the Offered
Certificates and should consult their legal
advisors to determine whether and to what extent
the Offered Certificates constitute legal
investments for them. See "Legal Investment"
herein and in the Prospectus.
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<PAGE> 18
RISK FACTORS
Prospective purchasers of Offered Certificates should consider, among other
things, the following risk factors (as well as the risk factors set forth under
"Risk Factors" in the Prospectus) in connection with an investment therein.
THE CERTIFICATES
Potential Conflicts of Interest. As described herein, the Servicer will
have considerable latitude in determining whether to liquidate or modify
defaulted Mortgage Loans. See "Servicing of the Mortgage Loans--Modifications,
Waivers, Amendments and Consents" and "--The Extension Adviser" herein. It is
expected that GMACCM, the Servicer, will acquire in connection with the initial
issuance thereof certain of the Subordinate Certificates, including the Class H
Certificates. In addition, subject to the conditions described herein, the
holder or holders of Certificates representing a majority interest in the
Controlling Class (as described herein and initially consisting of the Class H
Certificates) can terminate the rights and obligations of the Servicer in
respect of Specially Serviced Mortgage Loans and REO Properties (each as defined
herein) and can appoint a replacement to perform such duties, which replacement
may be any such holder or an affiliate thereof. Investors in the Offered
Certificates should consider that, although the Servicer will be obligated to
act in accordance with the terms of the Pooling and Servicing Agreement, it may
have interests when dealing with defaulted Mortgage Loans that are in conflict
with those of the holders of the Offered Certificates. See "Servicing of the
Mortgage Loans--Termination of the Servicer with Respect to Specially Serviced
Mortgage Loans and REO Properties" herein.
THE MORTGAGE LOANS
Environmental Considerations. Each of the Mortgaged Properties was subject
to an environmental site assessment (or an update of a previously conducted
assessment), which was performed on behalf of the related Mortgage Loan Seller,
or as to which the related report was delivered to the related Mortgage Loan
Seller in connection with its acquisition or origination of the related Mortgage
Loan. In most cases, such environmental assessments (or updates) were performed
during the 18-month period prior to the Cut-off Date, although some were
performed prior to such 18-month period. In four cases, such environmental
assessments were conducted prior to the construction of the improvements on the
related Mortgaged Property. No such environmental assessment revealed any
material adverse environmental condition or circumstance at any Mortgaged
Property, except for (i) those cases in which an operations and maintenance plan
or periodic monitoring of such Mortgaged Property or nearby properties was
recommended or an escrow reserve to cover the estimated cost of remediation was
established; (ii) those cases involving a leaking underground storage tank or
groundwater contamination at a nearby property which condition has not yet
affected such Mortgaged Property and as to which a responsible party has been
identified under applicable law; and (iii) those cases where such conditions
were remediated or abated prior to the Delivery Date or the property is eligible
for coverage under a government program for remediation or the cost thereof is
eligible for reimbursement.
The Servicer is required to obtain an environmental site assessment of a
Mortgaged Property securing a defaulted Mortgage Loan prior to acquiring title
thereto or assuming its operation. Such requirement effectively precludes
enforcement of the security for the related Mortgage Note until a satisfactory
environmental site assessment is obtained (or until any required remedial action
is thereafter taken), but will decrease the likelihood that the Trust Fund will
become liable for a material adverse environmental condition at the Mortgaged
Property. However, there can be no assurance that this requirement will
effectively insulate the Trust Fund from potential liability for a materially
adverse environmental condition at any Mortgaged Property. See "The Pooling and
Servicing Agreements--Realization Upon Defaulted Mortgage Loans", "Risk
Factors--Environmental Considerations" and "Certain Legal Aspects of Mortgage
Loans--Environmental Considerations" in the Prospectus.
Geographic Concentration. Twenty-two Mortgage Loans, which represent
17.17% of the Initial Pool Balance, are secured by liens on Mortgaged Properties
located in California; ten Mortgage Loans, which represent 10.98% of the Initial
Pool Balance, are secured by liens on Mortgaged Properties located in Florida;
three Mortgage Loans, which represent 8.57% of the Initial Pool Balance, are
secured by liens on Mortgaged Properties located in Illinois; 20 Mortgage Loans,
which represent 8.16% of the Initial Pool Balance, are
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<PAGE> 19
secured by liens on Mortgaged Properties located in Texas; and 18 Mortgage
Loans, which represent 8.05% of the Initial Pool Balance, are secured by liens
on Mortgaged Properties located in New York. In general, the level of such
concentration increases the exposure of the Mortgage Asset Pool to any adverse
economic or other developments, including earthquakes, hurricanes and other
natural disasters, that may occur in such States.
Concentration of Mortgage Loans. Several of the Mortgage Loans,
individually or together with other Mortgage Loans with which they are
cross-collateralized, have Cut-off Date Balances that are substantially higher
than the average Cut-off Date Balance. In general, concentrations in a mortgage
pool of loans with larger-than-average balances can result in losses that are
more severe, relative to the size of the pool, than would be the case if the
aggregate balance of the pool were more evenly distributed.
Adjustable Rate Mortgage Loans. Seven of the Mortgage Loans, which
represent 7.33% of the Initial Pool Balance and constitute Loan Group 1, are ARM
Loans. Increases in the required Monthly Payments on ARM Loans in excess of
those assumed in the original underwriting of such loans may result in a default
rate higher than that on mortgage loans with fixed mortgage rates.
Balloon Payments. One hundred thirty-one of the Mortgage Loans provide for
Balloon Payments to be due at their respective stated maturity dates unless
prepaid prior thereto. Loans with Balloon Payments involve a greater likelihood
of default than self-amortizing loans because the ability of a borrower to make
a Balloon Payment typically will depend upon its ability either to refinance the
loan or to sell the related mortgaged property. For purposes of this Prospectus
Supplement, the Balloon Loans include the Cash-Flow Amortization Loans (as
defined herein), which represent 1.89% of the Initial Pool Balance and provide
for the amortization of the related outstanding principal balance through the
application of a specified percentage of net cash flow received with respect to
each Mortgaged Property securing such Mortgage Loan on the last day of each
calendar quarter. See "Description of Mortgage Asset Pool--Certain Terms and
Conditions of the Mortgage Loans" herein and "Risk Factors--Balloon Payments;
Borrower Default" in the Prospectus.
In order to maximize recoveries on defaulted Mortgage Loans, the Servicer
is allowed to extend and modify Mortgage Loans that are in material default or
as to which a payment default (including the failure to make a Balloon Payment)
is reasonably foreseeable; subject, however, to the limitations described under
"Servicing of the Mortgage Loans--Modifications, Waivers and Amendments" and
"--The Extension Adviser" herein. There can be no assurance, however, that any
such extension or modification will increase the present value of recoveries in
a given case. Any delay in collection of a Balloon Payment that would otherwise
be distributable in respect of a Class of Offered Certificates, whether such
delay is due to borrower default or to modification of the related Mortgage Loan
by the Servicer, will likely extend the weighted average life of such Class of
Offered Certificates. See "Yield and Maturity Considerations" herein and in the
Prospectus.
Management. The successful operation of a real estate project is dependent
on the performance and viability of the property manager of such project. The
property manager is responsible for responding to changes in the local market,
planning and implementing the rental structure, including establishing levels of
rent payments, and ensuring that maintenance and capital improvements can be
carried out in a timely fashion. Accordingly, by controlling costs, providing
appropriate service to tenants and seeing to the maintenance of improvements,
sound property management can improve cash flow, reduce vacancy, leasing and
repair costs and preserve building value. On the other hand, management errors
can, in some cases, impair the long term viability of a real estate project. The
Mortgage Loan Sellers have identified several groups of Mortgage Loans that have
the same or related management.
Risks Particular to Retail and Office Properties. Thirty Mortgage Loans,
representing 38.24% of the Initial Pool Balance, are secured by retail, office
and combination retail/office properties. In addition to risks generally
associated with real estate, such Mortgage Loans are also affected significantly
by adverse changes in consumer spending patterns, local competitive conditions
(such as the supply of retail or office space or the existence or construction
of new competitive shopping centers, shopping malls or office buildings),
alternative forms of retailing (such as direct mail and video shopping networks
which reduce the need for retail space by retail companies), the quality and
management philosophy of management, the attractiveness of the properties to
tenants and their customers or clients, the public perception of the safety of
customers at
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shopping malls and shopping centers, and the need to make major repairs or
improvements to satisfy the needs of major tenants.
Retail properties may be adversely affected if a significant tenant ceases
operations at such locations (which may occur on account of a voluntary decision
not to renew a lease, bankruptcy or insolvency of such tenant, such tenant's
general cessation of business activities or for other reasons). Significant
tenants at a retail property play an important part in generating customer
traffic and making a retail property a desirable location for other tenants at
such property. In addition, certain tenants at retail properties may be entitled
to terminate their leases if an anchor tenant ceases operations at such
property. In such cases, there can be no assurance that any such anchor tenants
will continue to occupy space in the related shopping centers. See "Description
of the Mortgage Asset Pool--Additional Mortgage Loan Information--Tenant
Matters" herein.
Risks Particular to Multifamily Rental Properties. Forty-one Mortgage
Loans, representing 24.82% of the Initial Pool Balance, are secured by
multifamily rental properties. Adverse economic conditions, either local or
national, may limit the amount of rent that can be charged for rental units, and
may result in a reduction in timely rent payments or a reduction in occupancy
levels. Occupancy and rent levels may also be affected by construction of
additional housing units, local military base closings and national and local
politics, including, in the case of multifamily rental properties, current or
future rent stabilization and rent control laws and agreements. In addition, the
level of mortgage interest rates may encourage tenants in multifamily rental
properties to purchase housing. Furthermore, the rent limitations imposed on
Section 42 Properties (as defined herein) may adversely affect the ability of
the applicable borrowers to increase rents to maintain such Mortgaged Properties
in proper condition during periods of rapid inflation or declining market value
of such Mortgaged Properties. In addition, the income restrictions on tenants
imposed by Section 42 of the Code may reduce the number of eligible tenants in
such Mortgaged Properties and result in a reduction in occupancy rates
applicable thereto. Furthermore, some eligible tenants may not find any
differences in rents between the Section 42 Properties and other multifamily
rental properties in the same area to be a sufficient economic incentive to
reside at a Section 42 Property, which may have fewer amenities or otherwise be
less attractive as a residence. See "Description of the Mortgage Asset
Pool--Additional Mortgage Loan Information--Low Income Housing Tax Credits" and
"--Tenant Matters" herein. All of these conditions and events may increase the
possibility that a borrower may be unable to meet its obligations under its
Mortgage Loan.
Risks Particular to Self-Storage Facilities. Forty-seven Mortgage Loans,
representing 16.41% of the Initial Pool Balance, are secured by self-storage
properties. Self-storage properties are considered vulnerable to competition
because both acquisition costs and break-even occupancy are relatively low. The
conversion of self-storage facilities to alternative uses would generally
require substantial capital expenditures. Thus, if the operation of any of the
self-storage Mortgaged Properties becomes unprofitable due to decreased demand,
competition, age of improvements or other factors such that the borrower becomes
unable to meet its obligations on the related Mortgage Loan, the liquidation
value of that self-storage Mortgaged Property may be substantially less,
relative to the amount owing on the Mortgage Loan, than would be the case if the
self-storage Mortgaged Property were readily adaptable to other uses. Tenant
privacy, anonymity and efficient access may heighten environmental risks. The
environmental assessments discussed herein did not include an inspection of the
contents of the self-storage units included in the self-storage Mortgaged
Properties and there is no assurance that all of the units included in the
self-storage Mortgaged Properties are free from hazardous substances or other
pollutants or contaminants or will remain so in the future; however,
substantially all of the lease agreements used in connection with such Mortgaged
Properties prohibit the storage of hazardous substances, pollutants or
contaminants.
Risks Particular to Mobile Home Parks. Five Mortgage Loans, representing
12.61% of the Initial Pool Balance, secured by mobile home parks pose risks not
associated with loans secured by liens on other types of income-producing real
estate. The successful operation of a Mortgaged Property operated as a mobile
home park will generally depend upon the number of competing mobile home parks
and other residential developments in the local market, as well as upon other
factors such as its age, appearance, reputation, management and the types of
services it provides.
Mobile home parks are "special purpose" properties that could not be
readily converted to general residential, retail or office use. Thus, if the
operation of any of the Mortgaged Properties constituting mobile
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home parks becomes unprofitable due to competition, age of the improvements or
other factors such that the borrower becomes unable to meet its obligations on
the related Mortgage Loan, the liquidation value of that Mortgaged Property may
be substantially less, relative to the amount owing on the Mortgage Loan, than
would be the case if the Mortgaged Property were readily adaptable to other
uses.
Risks of Subordinate Financing. Twelve of the Mortgaged Properties,
constituting security for Mortgage Loans that represent 4.29% of the Initial
Pool Balance, are encumbered by subordinated debt that is not part of the
Mortgage Pool. In each such case, the holder of the subordinate debt has agreed
not to foreclose for so long as the related Mortgage Loan is outstanding and the
Trust Fund is not pursuing a foreclosure action. Certain other Mortgage Loans
also permit the related borrower to encumber the Mortgaged Property with
subordinated debt provided that the borrower satisfies certain conditions (such
as maximum loan-to-value ratios, minimum debt service coverage ratios and
limitations in the loan documentation for the subordinated debt regarding the
subordinate lender's right to foreclose while the related Mortgage Loan is
outstanding). All of the other Mortgage Loans either prohibit the related
borrower from encumbering the Mortgaged Property with additional secured debt or
require the consent of the holder of the first lien prior to so encumbering such
property. Other than as indicated above, the Depositor is unaware of any other
subordinate financing currently encumbering any Mortgaged Property.
The existence of any such additional subordinate indebtedness may increase
the difficulty of refinancing the related Mortgage Loan at maturity and the
possibility that reduced cash flow could result in deferred maintenance. Also,
in the event that the holder of the subordinated debt secured by a Mortgaged
Property has filed for bankruptcy or been placed in involuntary receivership,
foreclosing on such Mortgaged Property could be delayed.
Related Parties. Certain borrowers under the Mortgage Loans are affiliated
or under common control with one another (although no group of affiliated
borrowers are obligors on Mortgage Loans representing more than 9.51% of the
Initial Pool Balance). The two largest groups of related borrowers represent
9.51% and 6.48%, respectively, of the Initial Pool Balance. No other group of
related borrowers represents more than approximately 5% of the Initial Pool
Balance. In such circumstances, any adverse circumstances relating to a borrower
or an affiliate thereof and affecting one of the related Mortgage Loans or
Mortgaged Properties could arise in connection with the other related Mortgage
Loans or Mortgaged Properties, in particular, as a result of the bankruptcy or
insolvency of any such borrower or affiliate. See "Certain Legal Aspects of
Mortgage Loans --Bankruptcy Laws" in the Prospectus. The largest group of
affiliated borrowers under the Mortgage Loans has been structured in a manner
that is intended to avoid a bankruptcy proceeding relating to any such borrower
in the event a substantial equity owner of such borrower were to become
insolvent or subject to bankruptcy proceedings and to avoid the consolidation of
the assets of the borrower with those of such equity owner under such
circumstances; however, there can be no assurance that such arrangements will be
successful or that any such borrower will not become insolvent or subject to
bankruptcy proceedings. Some of the borrowing entities in the second largest
group of affiliated borrowers under the Mortgage Loans may not have been so
structured. In addition, a number of the borrowers are limited or general
partnerships. Under certain circumstances, the bankruptcy of the general partner
in a partnership may result in the dissolution of such partnership. The
dissolution of a borrower partnership, the winding-up of its affairs and the
distribution of its assets could result in an acceleration of its payment
obligations under the related Mortgage Loan.
Leasehold Considerations. Four Mortgage Loans, which represent 4.67% of
the Initial Pool Balance, are secured solely by a Mortgage on the borrower's
leasehold interest under a ground lease. In addition, one Mortgage Loan, which
represents 3.37% of the Initial Pool Balance, is secured by a Mortgage on both
the borrower's leasehold interest in a portion of the related Mortgaged Property
and the borrower's fee simple interest in the remainder of the related Mortgaged
Property. See "Description of the Mortgage Asset Pool--Additional Mortgage Loan
Information--Ground Leases" herein. Leasehold mortgage loans are subject to
certain risks not associated with mortgage loans secured by a lien on the fee
estate of the borrower. The most significant of these risks is that if the
borrower's leasehold were to be terminated upon a lease default, the leasehold
mortgagee would lose its security. However, in each of these five cases, each
related ground lease requires the lessor to give the leasehold mortgagee notice
of lessee defaults and an opportunity to cure them, permits the leasehold estate
to be assigned to and by the leasehold mortgagee or the purchaser at a
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foreclosure sale, and contains certain other protective provisions typically
included in a "mortgageable" ground lease.
Risk of Changes in Concentrations. As payments in respect of principal
(including in the form of voluntary principal prepayments, liquidations proceeds
and the repurchase prices for any Mortgage Loans repurchased due to breaches of
representations or warranties or defaults) are received with respect to the
Mortgage Loans, the remaining Mortgage Loans as a group may exhibit increased
concentration with respect to the type of properties, property characteristics,
number of borrowers and affiliated borrowers and geographic location. Because
principal on the Principal Balance Certificates is payable in sequential order,
the Classes thereof that have a lower priority with respect to the payment of
principal are relatively more likely to be exposed to any risks associated with
changes in concentrations of borrower, loan or property characteristics.
DESCRIPTION OF THE MORTGAGE ASSET POOL
GENERAL
The Mortgage Asset Pool will consist of 137 Mortgage Loans with an Initial
Pool Balance of $456,822,350, subject to a variance of plus or minus 5%. See
"Description of the Trust Funds" and "Certain Legal Aspects of Mortgage Loans"
in the Prospectus. All numerical information provided herein with respect to the
Mortgage Loans is provided on an approximate basis. All weighted average
information provided herein with respect to the Mortgage Loans is determined by
related Cut-off Date Balance. The "CUT-OFF DATE BALANCE" of each Mortgage Loan
is the unpaid principal balance thereof as of the Cut-off Date (which will be
November 1, 1996), after application of all payments of principal due on or
before such date, whether or not received. For purposes of this Prospectus
Supplement, the respective Cut-off Date Balances of the Mortgage Loans have been
calculated on the assumption that no prepayments of principal are received after
October 1, 1996 to and including November 1, 1996. For purposes of this
Prospectus Supplement, all percentages of Mortgage Loans secured by Mortgaged
Properties located in a particular state reflect, in the case of each of the two
Mortgage Loans secured by multiple Mortgaged Properties, only the location of
the first of such multiple Mortgaged Properties listed in Annex A, unless the
context otherwise requires.
Except as otherwise described below under "--Certain Terms and Conditions
of the Mortgage Loans--Cross-Collateralized and Cross-Defaulted Mortgage Loans",
each Mortgage Loan is evidenced by a Mortgage Note and secured by a Mortgage
that creates a first mortgage lien on a fee simple and/or leasehold interest in
a Mortgaged Property, improved by (i) an apartment building or complex
consisting of five or more rental living units or a mobile home park (a
"MULTIFAMILY MORTGAGED PROPERTY"; and any Mortgage Loan secured thereby, a
"MULTIFAMILY MORTGAGE LOAN") (41 Mortgage Loans, representing 24.82% of the
Initial Pool Balance), or (ii) a retail shopping mall or center or individual
store, a self-storage facility (which may be combined with industrial facilities
or offices), a nursing or assisted living facility, an office building or
complex, industrial or warehouse buildings, a hotel, a combination retail/office
complex or owner-occupied restaurants (a "COMMERCIAL MORTGAGED PROPERTY"; and
any Mortgage Loan secured thereby, a "COMMERCIAL MORTGAGE LOAN") (96 Mortgage
Loans which represent 75.18% of the Initial Pool Balance).
Two of the Mortgage Loans, representing 0.8% and 0.4%, respectively, of the
Initial Pool Balance, are, in each such case, without regard to the
cross-collateralization described below, secured by one or more Mortgages
encumbering multiple Mortgaged Properties. Accordingly, the total number of
Mortgage Loans reflected herein is 137, while the total number of Mortgaged
Properties reflected herein is 140.
The Mortgage Asset Pool includes six separate sets of Cross-Collateralized
Mortgage Loans, representing 4.1%, 1.5%, 1.3%, 1.0%, 0.5% and 0.3%,
respectively, of the Initial Pool Balance. See "--Cross-Collateralized and
Cross-Defaulted Mortgage Loans" below and Annex A hereto.
In general, the Mortgage Loans constitute nonrecourse obligations of the
related borrower and, upon any such borrower's default in the payment of any
amount due under the related Mortgage Loan, the holder thereof may look only to
the related Mortgaged Property or Properties for satisfaction of the borrower's
obligation. In addition, in those cases where recourse to a borrower or
guarantor is permitted by the loan documents, the Depositor has not undertaken
an evaluation of the financial condition of any such person, and prospective
investors should thus consider all of the Mortgage Loans to be nonrecourse. None
of the Mortgage
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Loans is insured or guaranteed by the United States, any governmental entity or
instrumentality, by any private mortgage insurer, or by the Depositor, Servicer
or any Mortgage Loan Seller.
Ninety-four of the Mortgage Loans (the "CONTITRADE MORTGAGE LOANS"), which
represent 53.28% of the Initial Pool Balance, are currently held by ContiTrade.
Most of the ContiTrade Mortgage Loans were acquired by ContiTrade pursuant to
its conduit program, and the remainder of such Mortgage Loans were acquired from
third parties in the secondary market. Twenty-five of the Mortgage Loans (the
"ING CAPITAL MORTGAGE LOANS"), which represent 34.57% of the Initial Pool
Balance, are currently held by ING Capital. Most of the ING Capital Mortgage
Loans were originated by ING Capital, and the remainder of such Mortgage Loans
were acquired from third parties in the secondary market. Eighteen of the
Mortgage Loans (the "GMACCM MORTGAGE LOANS"), which represent 12.15% of the
Initial Pool Balance, are currently held by GMACCM. Most of the GMACCM Mortgage
Loans were originated by GMACCM, and the remainder of such Mortgage Loans were
acquired by GMACCM from third parties in the secondary market.
On or prior to the Delivery Date, the Depositor will acquire the Mortgage
Loans from the Mortgage Loan Sellers, in each case pursuant to a purchase
agreement to be entered into between the Depositor and the particular Mortgage
Loan Seller (each, a "MORTGAGE LOAN PURCHASE AGREEMENT"). The Depositor will
thereupon assign its interests in the Mortgage Loans, without recourse, to the
Trustee for the benefit of the Certificateholders. See "--The Mortgage Loan
Sellers" and "--Assignment of Mortgage Loans; Repurchases" below. Each Mortgage
Loan Seller constitutes a "MORTGAGE ASSET SELLER" for purposes of the
Prospectus.
The Mortgage Loans were originated between 1993 and 1996.
CERTAIN TERMS AND CONDITIONS OF THE MORTGAGE LOANS
Due Dates. All of the Mortgage Loans provide for scheduled monthly
payments of principal and/or interest ("MONTHLY PAYMENTS"), and the Due Date is
either the first day (128 Mortgage Loans representing 98.11% of the Initial Pool
Balance) or last day (nine Mortgage Loans representing 1.89% of the Initial Pool
Balance) of each month, except that, in the case of certain Mortgage Loans, the
related Balloon Payment may be due on a day other than the first day of the
month (any resulting Balloon Payment Interest Shortfalls (as defined herein) to
be covered by the Servicer out of its own funds). See "Servicing of the Mortgage
Loans--Servicing and Other Compensation and Payment of Expenses" herein.
Most of the Mortgage Loans provide for a grace period for the payment of
Monthly Payments of not more than ten days. No Mortgage Loan provides for a
grace period for the payment of Monthly Payments of more than 15 days.
Mortgage Rates; Calculations of Interest. One hundred twenty-two of the
Mortgage Loans, which represent 92.15% of the Initial Pool Balance, accrue
interest on the basis of a 360-day year consisting of twelve 30-day months. Nine
of the Mortgage Loans, which represent 1.89% of the Initial Pool Balance, accrue
interest on the basis of the actual number of days elapsed in a year consisting
of 365 or 366 days. Six of the Mortgage Loans, which represent 5.96% of the
Initial Pool Balance, accrue interest on the basis of the actual number of days
elapsed in a year consisting of 360 days.
The Mortgage Asset Pool consists of 121 Fixed-Rate Loans, which represent
76.12% of the Initial Pool Balance, nine Step-Down Loans, which represent 16.55%
of the Initial Pool Balance, and seven ARM Loans, which represent 7.33% of the
Initial Pool Balance.
For purposes of calculating distributions on the Certificates, the Mortgage
Asset Pool has been divided into two Loan Groups, designated as Loan Group 1 and
Loan Group 2, respectively, based generally upon the Mortgage Rate type for the
Mortgage Loans. Loan Group 1, which will have an aggregate Cut-off Date Balance
(the "INITIAL GROUP 1 BALANCE") of $33,475,147 (subject to a variance of plus or
minus 5%), consists of the ARM Loans. Loan Group 2, which will have an aggregate
Cut-off Date Balance (the "INITIAL GROUP 2 BALANCE") of $423,347,204 (subject to
a variance of plus or minus 5%), consists of all the remaining Mortgage Loans.
As of the Cut-off Date, the Mortgage Rates of the Mortgage Loans will range from
7.750% to 11.950% per annum, and the weighted average Mortgage Rate of the
Mortgage Loans will be 9.208% per annum; the Mortgage Rates of the Group 1 Loans
will range from 8.53125% to 9.00000% per annum, and the weighted average
Mortgage Rate of such Mortgage Loans will be 8.575% per annum; and the Mortgage
Rates of the
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Group 2 Loans will range from 7.750% to 11.950% per annum, and the weighted
average Mortgage Rate of such Mortgage Loans will be 9.258% per annum.
Three Fixed-Rate Loans permit the related borrower, subject to certain
conditions, to extend the maturity thereof. In the case of two such Mortgage
Loans, upon extension, the Mortgage Rate is reset to a rate equal to 240 basis
points over the bid side yield of the 5-year U.S. Treasury Securities with
maturities of five years from the close of business on the last business day
immediately preceding the date of the initial stated maturity. With respect to
the third such Mortgage Loan, the Mortgage Rate subsequent to extension of the
maturity date adjusts semi-annually to a rate, no lower than the original
Mortgage Rate, calculated based on a six month London interbank offered rate.
See "--Additional Mortgage Loan Information--Loan Extensions" below.
The ARM Loans. The ARM Loans are subject to minimum and maximum lifetime
Mortgage Rates, in each case as described herein, and provide that Mortgage Rate
adjustments may occur semi-annually on April 1 and October 1 of each year. Any
date on which the Mortgage Rate for any ARM Loan is subject to adjustment is
herein referred to as a "MORTGAGE RATE ADJUSTMENT DATE" for such Mortgage Loan.
Five of the ARM Loans have minimum lifetime Mortgage Rates of 6.00% per
annum, and the remaining two ARM Loans have minimum lifetime Mortgage Rates of
8.50% and 9.00% per annum, respectively. As of the Cut-off Date, the ARM Loans
will have a weighted average minimum Mortgage Rate of 6.30% per annum.
Five of the ARM Loans have maximum lifetime Mortgage Rates of 11.75% per
annum, and the remaining two ARM Loans have maximum lifetime Mortgage Rates of
12.00% and 12.75% per annum, respectively. As of the Cut-off Date, the ARM Loans
will have a weighted average maximum Mortgage Rate of 11.84% per annum.
The Monthly Payments on each ARM Loan are subject to adjustment in response
to changes in the related Mortgage Rate to an amount that would amortize fully
the principal balance of the Mortgage Loan over its then remaining amortization
term and pay one month's interest thereon at the applicable Mortgage Rate.
Five of the ARM Loans have a Gross Margin of 2.75% per annum and the
remaining two ARM Loans have a Gross Margin of 3.15% and 3.00% per annum,
respectively. As of the Cut-off Date, the weighted average Gross Margin of all
of the ARM Loans will be 2.78% per annum.
The ARM Loans are subject to Mortgage Rate adjustments based on Six-Month
LIBOR, as calculated below. For purposes of the following, a "LIBOR REFERENCE
PERIOD" is each successive six-month calendar period, commencing on the first
day of April and October of each year and ending on the day preceding the next
LIBOR Reference Period.
With respect to five of the ARM Loans, "SIX-MONTH LIBOR" is, in general,
determined two (2) Formula 1 LIBOR Business Days prior to each LIBOR Reference
Period (the "FORMULA 1 LIBOR DETERMINATION DATE") by reference to the offered
quotations appearing on the display page designated as "LIBO" on the Reuters
Monitor Money Rates Service or such other page as may replace the LIBO page (the
"REUTERS SCREEN LIBO PAGE") for six-month United States dollar deposits in the
London interbank market, as of 11:00 a.m. (London time) on such Formula 1 LIBOR
Determination Date. If on any Formula 1 LIBOR Determination Date two or more
such offered quotations appear on the Reuters Screen LIBO Page, Six-Month LIBOR
in respect of such five ARM Loans for the immediately succeeding LIBOR Reference
Period will be equal to the arithmetic mean of such offered quotations (rounded
upwards, if necessary, to the nearest whole multiple of 1/16 of 1%). If on any
Formula 1 LIBOR Determination Date fewer than two such offered quotations appear
on the Reuters Screen LIBO Page, Six-Month LIBOR in respect of such five ARM
Loans for the immediately succeeding LIBOR Reference Period will be equal to the
arithmetic mean of the quotations offered by the Reference Banks for six-month
United States dollar deposits in the London interbank market, as of 11:00 a.m.
(London time) on such Formula 1 LIBOR Determination Date (rounded upwards, if
necessary, to the nearest whole multiple of 1/16 of 1%); provided, however, that
(i) if only one Reference Bank offers such a quotation, Six-Month LIBOR in
respect of such five ARM Loans for the immediately succeeding LIBOR Reference
Period will be equal to that quotation (rounded upwards, if necessary, to the
nearest whole multiple of 1/16 of 1%), or (ii) if no Reference Banks offer such
a quotation,
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Six-Month LIBOR in respect of such five ARM Loans for the immediately succeeding
LIBOR Reference Period will be Six-Month LIBOR as determined on the previous
LIBOR Determination Date. "REFERENCE BANKS" are leading banks engaged in
transactions in Eurodollar deposits in the international Eurocurrency market
with an established place of business in London. A "FORMULA 1 LIBOR BUSINESS
DAY" is each day on which commercial banks are open for domestic and
international business (including dealings in U.S. Dollar deposits) in London
and New York City. The foregoing calculation of Six-Month LIBOR is herein
referred to as "SIX-MONTH LIBOR FORMULA 1".
With respect to two of the ARM Loans, "Six-Month LIBOR" is determined five
(5) Formula 2 LIBOR Business Days prior to each LIBOR Reference Period (the
"FORMULA 2 LIBOR DETERMINATION DATE") by reference to the offered quotations
(rounded upwards, if necessary, to the nearest 1/16 of 1%, in one case, and 1/8
of 1%, in the other) appearing on Page 3750 of the Telerate Service ("Telerate
Page 3750") or such other display as may replace such page (as is then
customarily used to quote the London interbank offered rate as determined by the
holder of the Mortgage Loan in its reasonable discretion) for six-month United
States dollar deposits as of approximately 11:00 a.m. (London time) on such
Formula 2 LIBOR Determination Date. If on any Formula 2 LIBOR Determination Date
no offered quotation appears on Telerate Page 3750 or such other display as may
replace such page, Six-Month LIBOR in respect of such two ARM Loans for the
immediately succeeding LIBOR Reference Period will be equal to the arithmetic
mean (rounded upwards, if necessary, to the nearest 1/16 or 1/8 of 1%, as the
case may be) of the quotations offered at approximately 11:00 a.m. (London time)
on such Formula 2 LIBOR Determination Date by four major banks, as reasonably
selected by the holder of the Mortgage Loan, in the London interbank market to
prime banks in the London interbank market for six-month United States dollar
deposits commencing on the first day of such LIBOR Reference Period and in a
principal amount equal to an amount that is representative for a single
transaction in such market at such time, and if at least two such quotations are
provided, the Six-Month LIBOR in respect of such two ARM Loans for such LIBOR
Reference Period will be the arithmetic mean of such quotations, and if fewer
than two quotations are provided as requested, the Six-Month LIBOR in respect of
such two ARM Loans for such LIBOR Reference Period will be the arithmetic mean
of the rates quoted by such major banks in New York City as shall be selected by
the holder of the Mortgage Loan, as of approximately 11:00 a.m., (New York City
time), on the first Formula 2 LIBOR Business Day of the LIBOR Reference Period
for loans in U.S. Dollars to leading European banks with a six-month maturity
commencing on the first day of such LIBOR Reference Period in a principal amount
equal to an amount that is representative for a single transaction in such
market at such time. A "FORMULA 2 LIBOR BUSINESS DAY" is, in general, each day
on which commercial banks are open for business dealings in U.S. dollar deposits
in the London interbank market.
If Six-Month LIBOR cannot be determined in accordance with the foregoing,
the related Mortgage Rate for each ARM Loan will be determined as set forth in
the related Mortgage Note.
Amortization of Principal. The Mortgage Asset Pool consists of 131 Balloon
Loans, which represent 97.51% of the Initial Pool Balance. The remaining 6
Mortgage Loans, which represent 2.49% of the Initial Pool Balance, are
self-amortizing.
The Balloon Loans include nine Mortgage Loans (the "CASH-FLOW AMORTIZATION
LOANS"), which represent 1.89% of the Initial Pool Balance and provide for the
amortization of the related outstanding principal balance through the
application of Net Cash Flow (as defined below) received with respect to each
Mortgaged Property securing such Mortgage Loan on the last day of each calendar
quarter on which interest is due. With respect to each Cash Flow Amortization
Loan, during the first seven years, 50% of Net Cash Flow for each calendar
quarter is applied to amortize principal, and beginning with the first scheduled
principal payment thereafter, 100% of Net Cash Flow for each calendar quarter is
applied to amortize principal. Each such Cash-Flow Amortization Loan provides
for a final scheduled payment of principal on the stated maturity date of the
Mortgage Loan. In general, "NET CASH FLOW" means the amount by which the gross
receipts of the related Mortgaged Property exceeds the sum of (i) the interest
paid during such period with respect to such Mortgage Loan and any related
subordinate loan, (ii) payments for or with respect to real and personal
property taxes, (iii) insurance premiums for the Mortgaged Property, (iv)
capital expenses and (v) normal and customary operating expenses for the
Mortgaged Property. The Monthly Payment due in respect of each Cash-Flow
Amortization Loan on the last day of each calendar quarter shall include the
portion of Net Cash
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Flow required to be applied to amortize such loan on such date and shall
otherwise consist solely of one-month's accrued interest.
At origination, the Step-Down Loans provided for the payment of interest
only for a period ranging from six to 12 months following origination before the
borrower is required, in connection with the one-time step-down of the related
Mortgage Rate, to pay monthly payments of both interest and principal. As of the
Cut-off Date, the number of months remaining in the interest only period for any
Step-Down Loan ranged from two to ten months. The total dollar amount of the
Monthly Payment due on each Step-Down Loan remains constant during the entire
term thereof.
In addition, one Fixed-Rate Loan, which represents 2.18% of the Initial
Pool Balance, provides for payments of interest only for 24 months following
origination before payments of principal are due. However, because this is a
Fixed-Rate Loan, the total dollar amount of the Monthly Payment will not remain
constant during the entire term of such loan, but rather will be subject to a
one-time increase in order to permit the commencement of scheduled amortization
of such loan.
The original term to stated maturity of each Mortgage Loan was between 52
and 300 months. The original amortization schedules of the Mortgage Loans ranged
from 120 to 360 months. As of the Cut-off Date, the remaining terms to stated
maturity of the Mortgage Loans will range from 38 months to 292 months, and the
weighted average remaining term to stated maturity of the Mortgage Loans will be
98 months; the remaining terms to stated maturity of the Group 1 Loans will
range from 80 months to 116 months, and the weighted average remaining term to
stated maturity of such Mortgage Loans will be 94 months; and the remaining
terms to stated maturity of the Group 2 Loans will range from 38 months to 292
months, and the weighted average remaining term to stated maturity of such
Mortgage Loans will be 98 months. As of the Cut-off Date, the remaining
amortization terms of the Mortgage Loans will range from 109 months to 360
months, and the weighted average remaining amortization term of the Mortgage
Loans will be 306 months; the remaining amortization terms of the Group 1 Loans
will range from 236 months to 334 months, and the weighted average remaining
amortization term of such Mortgage Loans will be 328 months; and the remaining
amortization terms of the Group 2 Loans will range from 109 months to 360
months, and the weighted average remaining amortization term of such Mortgage
Loans will be 305 months. See "Risk Factors--Balloon Payments; Borrower Default"
in the Prospectus. No Mortgage Loan permits negative amortization or the
deferral of accrued interest.
Prepayment Provisions. As of the Cut-off Date, all of the Mortgage Loans,
either (a) prohibit voluntary principal prepayments, in whole or in part, prior
to a specified date (each, a "LOCK-OUT EXPIRATION DATE") (32 Mortgage Loans,
which represent 11.54% of the Initial Group 1 Balance, 20.61% of the Initial
Group 2 Balance and 19.94% of the Initial Pool Balance), which in no such case
occurs earlier than January 26, 1999 or later than April 30, 2006, or (b)
(without duplication of clause (a) above) require for a specified period that
any voluntary principal prepayment be accompanied by a Prepayment Premium (105
Mortgage Loans, which represent 88.46% of the Initial Group 1 Balance, 79.39% of
the Initial Group 2 Balance and 80.06% of the Initial Pool Balance). Of the 32
Mortgage Loans that, as of the Cut-off Date, prohibit voluntary principal
prepayments, in whole or in part, prior to a Lock-Out Expiration Date, all of
such Mortgage Loans also require, for a specified period following the related
Lock-Out Expiration Date that any voluntary principal prepayment be accompanied
by a Prepayment Premium. Prepayment Premiums are generally calculated either as
a percentage (which declines over time) of the principal amount prepaid or on
the basis of a yield maintenance formula (subject, in certain instances, to a
minimum equal to a specified percentage of the principal amount prepaid). The
prepayment terms of each of the Mortgage Loans are described in Annex A hereto.
As described herein, Prepayment Premiums actually collected on the Mortgage
Loans will be distributed to the respective Classes of Certificateholders in the
amounts and priorities described under "Description of the
Certificates--Distributions--Distributions of Prepayment Premiums" herein. The
Depositor makes no representation as to the enforceability of the provision of
any Mortgage Loan requiring the payment of a Prepayment Premium or as to the
collectability of any Prepayment Premium. See "Risk Factors--Prepayment
Premiums" herein and "Certain Legal Aspects of Mortgage Loans--Default Interest
and Limitations on Prepayments" in the Prospectus.
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The enforceability, under the laws of a number of states, of provisions
similar to the provisions of the Mortgage Loans providing for the payment of a
Prepayment Premium upon an involuntary prepayment is unclear. No assurance can
be given that, at any time that any Prepayment Premium is required to be made in
connection with an involuntary prepayment, the obligation to pay such Prepayment
Premium will be enforceable under applicable law or, if enforceable, the
foreclosure proceeds will be sufficient to make such payment. Liquidation
Proceeds recovered in respect of any defaulted Mortgage Loan will, in general,
be applied to cover outstanding servicing expenses and unpaid principal and
interest prior to being applied to cover any Prepayment Premium due in
connection with the liquidation of such Mortgage Loan. See "Certain Legal
Aspects of Mortgage Loans--Default Interest and Limitations on Prepayments" in
the Prospectus.
No Prepayment Premium will be payable in connection with any repurchase of
a Mortgage Loan by a Mortgage Loan Seller for a material breach of
representation or warranty on the part of such Mortgage Loan Seller or any
failure to deliver documentation relating thereto, nor will any Prepayment
Premium be payable in connection with the purchase of all of the Mortgage Loans
and any REO Properties by the Servicer or the Depositor in connection with the
termination of the Trust Fund or in connection with the purchase of defaulted
Mortgage Loans by the Servicer or any holder or holders of Certificates
evidencing a majority interest in the Controlling Class. See "Description of the
Mortgage Asset Pool--Assignment of the Mortgage Loans; Repurchases" and
"--Representations and Warranties; Repurchases" and "Description of the
Certificates--Termination; Retirement of Certificates" herein.
Cross-Collateralized and Cross-Defaulted Mortgage Loans. The Mortgage
Asset Pool includes six separate sets of Cross-Collateralized Mortgage Loans,
which represent 4.1%, 1.5%, 1.3%, 1.0%, 0.5% and 0.3%, respectively, of the
Initial Pool Balance, respectively. All of the Cross-Collateralized Mortgage
Loans are Group 2 Loans.
In the case of one set of Cross-Collateralized Mortgage Loans, which
consists of two Mortgage Loans representing 1.0% of the Initial Pool Balance, if
one of the two related Mortgaged Properties is transferred (see "--Due-on-Sale
and Due-on-Encumbrance Provisions" below), the cross-collateralization feature
will be extinguished.
All but one set of the Cross-Collateralized Mortgage Loans consist of
Mortgage Loans that are, in each case, evidenced by a separate Mortgage Note.
One set of the Cross-Collateralized Mortgage Loans consists of two Mortgage
Loans that are collectively evidenced by a single Mortgage Note secured by two
Mortgages on two separate Mortgaged Properties. The loan documentation with
respect to the set of two Cross-Collateralized Mortgage Loans that is evidenced
by one Mortgage Note and secured by two separate Mortgages on two separate
Mortgaged Properties provides that the related borrower may release a Mortgaged
Property from the lien of the respective Mortgage if a specified minimum debt
service coverage ratio and maximum loan-to-value ratio is met following such
release and upon payment of the required Prepayment Premium and the applicable
specified release price.
See Annex A hereto for information regarding the Cross-Collateralized
Mortgage Loans.
Two of the Mortgage Loans, which represent 0.8% and 0.4%, respectively, of
the Initial Pool Balance, are, in each such case, without regard to the
cross-collateralization described above, secured by one or more Mortgages
encumbering multiple Mortgaged Properties. With respect to both such Mortgage
Loans, the related Mortgaged Properties are not located in the same state but
are of the same property type. Each of these two Mortgage Loans is evidenced by
a single Mortgage Note, and despite the related multiple Mortgaged Properties,
none is treated as a set of Cross-Collateralized Mortgage Loans for purposes
herein. Accordingly, the total number of Mortgage Loans reflected herein is 137,
while the total number of Mortgaged Properties reflected herein is 140.
Due-on-Sale and Due-on-Encumbrance Provisions. Substantially all of the
Mortgage Loans contain both "due-on-sale" and "due-on-encumbrance" clauses that
in each case, subject to limited exception, permit the holder of the Mortgage to
accelerate the maturity of the related Mortgage Loan if the borrower sells or
otherwise transfers or encumbers the related Mortgaged Property or prohibit the
borrower from doing so without the consent of the holder of the Mortgage. See
"--Additional Mortgage Loan Information--Subordinate Financing" herein. Certain
of the Mortgage Loans permit either: (i) a one-time transfer of the related
Mortgaged Property if certain specified conditions are satisfied or if the
transfer is to a borrower reasonably
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acceptable to the lender; or (ii) transfers to parties related to the borrower.
The borrower under one of the Mortgage Loans with a provision described in
clause (i) of the preceding sentence, which Mortgage Loan is secured by the
Mortgaged Property identified on Annex A as Berkeley Center, has contacted
GMACCM regarding a possible transfer of such Mortgaged Property. The Servicer
will determine, in accordance with its normal servicing practices, whether to
exercise any right the holder of any Mortgage may have under any such clause to
accelerate payment of the related Mortgage Loan upon, or to withhold its consent
to, any transfer or further encumbrance of the related Mortgaged Property. See
"Description of the Pooling and Servicing Agreements--Due-on-Sale and
Due-on-Encumbrance Provisions" and "Certain Legal Aspects of Mortgage
Loans--Due-on-Sale and Due-on-Encumbrance" in the Prospectus.
ADDITIONAL MORTGAGE LOAN INFORMATION
General. For a detailed presentation of certain characteristics of the
Mortgage Loans and Mortgaged Properties, on an individual basis and in tabular
format, see Annex A hereto.
Delinquencies. As of the Cut-off Date, no Mortgage Loan will be 30 days or
more delinquent in respect of any Monthly Payment. However, certain Mortgage
Loans have been acquired and restructured and, during the 12-month period prior
to such restructuring, such Mortgage Loans experienced delinquencies.
Tenant Matters. Twenty Mortgaged Properties, which represent security for
22.93% of the Initial Pool Balance, are leased in large part to one or more
Major Tenants (as defined below). In addition, certain Mortgaged Properties are
leased in part to Anchor Tenants. In addition, the borrower with respect to one
Mortgage Loan that is secured by two Mortgaged Properties, which represents 0.4%
of the Initial Pool Balance, is the sole occupant and operator of the Mortgaged
Property. "MAJOR TENANT" means any tenant of a Commercial Mortgaged Property,
that rents at least 20% of the net leasable square footage at such property.
"ANCHOR TENANT" means any tenant of a retail or office Mortgaged Property that,
because of characteristics such as size, diversity of merchandise, name
recognition and/or range of advertising, are expected to attract customers to
the property from a broad geographic area in a manner that benefits all of the
tenants of such Mortgaged Property.
Certain Mortgaged Properties are located near military installations
and it is believed that more than 20% of the tenants at such Mortgaged
Properties are military personnel.
Ground Leases. Four of the Mortgage Loans, which represent 4.67% of the
Initial Pool Balance, are in each case secured solely by a Mortgage on the
applicable borrower's leasehold interest in the related Mortgaged Property. One
of the Mortgage Loans, which represents 3.37% of the Initial Pool Balance, is
secured by a Mortgage on both the borrower's leasehold interest in a portion of
the Mortgaged Property and the borrower's fee simple interest in the remainder
of the Mortgaged Property. None of the related ground leases expire less than
ten years after the stated maturity of the related Mortgage Loan, and the
borrower's estate, which is encumbered by the leasehold mortgage, is not likely
to be altered or terminated during the term of the related Mortgage Loan,
provided that the ground lessor recognizes any non-disturbance rights of the
borrower. In each such case, the related ground lessor has agreed to give the
holder of the Mortgage Loan notice of, and has granted such holder the right to
cure, any default or breach by the lessee.
One Mortgage Loan, which represents 1.81% of the Initial Pool Balance made
to two separate but affiliated borrowers, is secured by a Mortgage on the
leasehold interest of one such borrower in the related Mortgaged Property and
the fee simple interest of the other such borrower in such Mortgaged Property.
The related ground lease expires approximately three years and five months
following the end of the term of the related Mortgage Loan. Under the related
ground lease, the ground lessor has recognized the mortgagee's rights under the
related Mortgage Loan (although there are no express rights of such mortgagee to
receive any notice of, or to cure, any default under such ground lease).
See "Risk Factors--The Mortgage Loans--Leasehold Considerations" herein.
Subordinate Financing. Twelve of the Mortgaged Properties, which
constitute security for Mortgage Loans that represent 4.29% of the Initial Pool
Balance, are encumbered by subordinated debt that is not part of the Mortgage
Pool. In each of such cases, the holder of the subordinated debt has agreed not
to foreclose for so long as the related Mortgage Loan is outstanding, and the
Trust Fund is not pursuing a foreclosure action. Certain other Mortgage Loans
also permit the related borrower to encumber the Mortgaged Property with
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subordinate debt provided that the borrower satisfies certain conditions (such
as maximum loan-to-value ratios, minimum debt service coverage ratios, and
limitations in the loan documentation for the subordinated debt regarding the
subordinate lender's ability to foreclose while the related Mortgage Loan is
outstanding). All of the remaining Mortgage Loans either prohibit the related
borrower from encumbering the Mortgaged Property with additional secured debt or
require the consent of the holder of the first lien prior to so encumbering such
property. Other than as indicated above, the Depositor is unaware of any other
subordinate financing that currently encumbers any Mortgaged Property. See "Risk
Factors--The Mortgage Loans--Risks of Subordinate Financing" and "Certain Legal
Aspects of Mortgage Loans--Subordinate Financing" in the Prospectus.
Loan Extensions. Three Mortgage Loans, which represent 5.36% of the
Initial Pool Balance, permit the borrower to extend the term of the related loan
for five years, in two cases, and two years, in one case, provided that certain
conditions are satisfied. With respect to one such Mortgage Loan, the Mortgage
Rate subsequent to extension of the maturity date will adjust semi-annually to a
rate, no lower than the original Mortgage Rate, calculated based on a six month
London interbank offered rate. In the case of two such Mortgage Loans, upon
extension, the Mortgage Rate is reset to a rate equal to 240 basis points over
the bid side yield of the 5-year U.S. Treasury Securities with maturities of
five years from the close of business on the last business day immediately
preceding the date of the initial stated maturity. With respect to two of such
Mortgage Loans, the partnership entity that is the borrower is scheduled to
terminate prior to the maturity date of the Mortgage Loan; if the partnership is
not extended prior to the borrower's election to extend the Mortgage Loan, 100%
of the Mortgaged Property's net cash flow is required to be deposited in a lock
box and used to reduce the outstanding principal balance of the Mortgage Loan on
a monthly basis. It is not expected that termination of the related partnership
will affect the enforceability of the lien of the related Mortgage. Four
Mortgage Loans, which represent 3.64% of the Initial Pool Balances, permit the
lender to extend the maturity date for an additional three years; however, the
Servicer will be prohibited from exercising such extension rights except as
described under "Servicing of the Mortgage Loans--Amendments, Modifications,
Waivers and Consents" herein.
Low Income Housing Tax Credits. The Depositor has been informed by the
Mortgage Loan Sellers that six of the Mortgaged Properties, which represent
4.29% of the Initial Pool Balance, are eligible to receive low-income housing
tax credits ("TAX CREDITS") pursuant to Section 42 of the Code (such Mortgaged
Properties, the "SECTION 42 PROPERTIES"). Section 42 of the Code provides a Tax
Credit for owners of residential rental property meeting the definition of
low-income housing who have received a tax credit allocation from the state or
local allocating agency. The Depositor is unaware of any other Mortgaged
Properties that are eligible to receive such Tax Credits.
At the time the project is "placed in service" (that is, when the first
unit is available for occupancy), the property owner must make an irrevocable
election of one of two set-aside rules, either (i) at least 20% of the units
must be rented to tenants with incomes of 50% or less of the median income (as
defined below), or (ii) at least 40% of the units must be rented to tenants with
incomes of 60% or less of the median income. The aggregate amount of Tax Credits
the owner is entitled to is based upon the percentage of total units made
available to qualified tenants. Median income is determined by the U.S.
Department of Housing and Urban Development ("HUD") for each metropolitan area
or county in the United States and is adjusted annually.
The Tax Credit provisions require that gross rent for each low-income unit
not exceed 30% of the annual HUD median income, adjusted for the household size
expected to occupy the particular unit. The gross rent charged for a unit must
take into account an allowance for utilities. If utilities are paid by the
tenant, then the maximum allowable Tax Credit rent is reduced according to
utility allowances, as provided in regulations of the Internal Revenue Service.
Under the Tax Credit provision, a property owner must comply with the
tenant income restrictions and rental restrictions over a 15-year compliance
period. In addition, agreements governing the property may require an "extended
use period" which has the effect of extending the income and rental restrictions
for an additional period (typically 15 years).
With respect to at least one of the Section 42 Properties, a recorded deed
restriction requires that upon acquisition of the Mortgaged Property through
foreclosure or deed in lieu of foreclosure the holder of the
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Mortgage shall permit all tenants in low-income units to continue to occupy such
unit for three years following acquisition.
In the event a Tax Credit project does not maintain compliance with the Tax
Credit restrictions on tenant income or rental rates, the owners of the Tax
Credit project may lose the Tax Credits related to the period of the
noncompliance and face the partial recapture of previously taken Tax Credits.
THE MORTGAGE LOAN SELLERS
ContiTrade. ContiTrade was organized in the State of Delaware on June 1,
1995 and is a wholly-owned indirect subsidiary of ContiFinancial Corporation, a
Delaware corporation. Continental Grain Company currently owns approximately 81%
of ContiFinancial Corporation's outstanding capital stock. ContiFinancial
Corporation engages in the consumer and commercial finance business by
originating and servicing home equity loans and providing financing and asset
securitization expertise to originators of a broad range of loans, leases and
receivables. ContiTrade was organized, among other things, for the purposes of
establishing trusts, selling beneficial interests therein and acquiring and
selling mortgage assets to such trusts. The principal executive offices of
ContiTrade is located at 277 Park Avenue, New York, New York 10172. Its
telephone number is (212) 207-2800.
ING Capital. ING Capital was incorporated in the State of Delaware on
March 5, 1993 and effective November 1, 1996 will be a wholly-owned direct
subsidiary of ING (U.S.) Financial Holdings Corporation, which in turn is a
wholly-owned direct subsidiary of ING Bank N.V. ING Capital was established
primarily to engage in the making, servicing and acquisition of loans and other
extensions of credit and to engage in securities investment as well as certain
merchant banking functions. The principal executive offices of ING Capital are
located at 135 East 57th Street, New York, New York 10022. Its telephone number
is (212) 446-1500.
GMACCM. GMACCM, a corporation organized under the laws of the State of
California and an affiliate of the Depositor, is a wholly-owned direct
subsidiary of GMAC Mortgage Group, Inc., which in turn is a wholly-owned direct
subsidiary of General Motors Acceptance Corporation. The principal offices of
GMACCM are located at 650 Dresher Road, Horsham, Pennsylvania 19044. Its
telephone number is (215) 682-4622.
The information set forth herein concerning the Mortgage Loan Sellers and
the underwriting conducted by each with respect to the Mortgage Loan has been
provided by the respective Mortgage Loan Sellers, and neither the Depositor nor
the Underwriters make any representation or warranty as to the accuracy or
completeness of such information.
CERTAIN UNDERWRITING MATTERS
Environmental Assessments. Each of the Mortgaged Properties was subject to
a "Phase I" environmental assessment (or an update of a previously conducted
assessment), which was performed on behalf of the related Mortgage Loan Seller,
or as to which the related report was delivered to the related Mortgage Loan
Seller in connection with its origination or acquisition of the related Mortgage
Loan. Most of such environmental assessments or updates were conducted within
the 18-month period prior to the Cut-off Date, although certain such
environmental assessments (or updates) were performed prior to such 18-month
period. See Annex A hereto. In the case of the four Section 42 Properties
securing GMACCM Mortgage Loans, each of which was built since 1994, such
assessment was conducted shortly before such construction. No such assessment
revealed any material adverse environmental condition or circumstance at any
Mortgaged Property, except for: (i) those cases in which an operations and
maintenance plan or periodic monitoring of such Mortgaged Property or nearby
properties was recommended or an escrow reserve to cover the estimated cost of
remediation was established; (ii) those cases involving a leaking underground
storage tank or groundwater contamination at a nearby property, which condition
has not yet affected such Mortgaged Property and as to which a responsible party
has been identified under applicable law; and (iii) those cases where such
conditions were remediated or abated prior to the Delivery Date or the property
is eligible for coverage under a government program for remediation or the cost
thereof is eligible for reimbursement.
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The information contained herein is based on the environmental assessments
and has not been independently verified by the Depositor, the Mortgage Loan
Sellers, the Underwriters, or any of their respective affiliates.
Property Condition Assessments. Inspections of most of the Mortgaged
Properties (or updates of previously conducted inspections) were conducted by
independent licensed engineers by or on behalf of the related Mortgage Loan
Seller. Most such engineering inspections (or updates) were conducted within the
18-month period prior to the Cut-off Date, although certain such inspections
were conducted prior to such 18-month period. Such inspections were generally
commissioned to inspect the exterior walls, roofing, interior construction,
mechanical and electrical systems and general condition of the site, buildings
and other improvements located at a Mortgaged Property. With respect to certain
of the Mortgage Loans, the resulting reports indicated a variety of deferred
maintenance items and recommended capital improvements. The estimated cost of
the necessary repairs or replacements at a Mortgaged Property was included in
the related property condition assessment. In some (but not all) instances, cash
reserves were established to fund such deferred maintenance and/or replacement
items. Any Mortgaged Property that was not subject to an engineering inspection
on behalf of the related Mortgage Loan Seller was inspected by representatives
or other designee of the related Mortgage Loan Seller.
Appraisals and Market Studies. An appraisal of each of the related
Mortgaged Properties was performed (or an existing appraisal updated) on behalf
of the related Mortgage Loan Seller, in most cases within the 18-month period
prior to the Closing Date (see, however, Annex A), by an independent appraiser
that is state certified and/or designated as a Member of the Appraisal Institute
("MAI"), in order to establish that the appraised value of the related Mortgaged
Property or Properties exceeded the original principal balance of the Mortgage
Loan (or, in the case of a set of related Cross-Collateralized Mortgage Loans,
the aggregate original principal balance of such set). In general, such
appraisals represent the analysis and opinions of the respective appraisers at
or before the time made, and are not guarantees of, and may not be indicative
of, present or future value. There can be no assurance that another appraiser
would not have arrived at a different valuation, even if such appraiser used the
same general approach to and same method of appraising the property. In
addition, appraisals seek to establish the amount a typically motivated buyer
would pay a typically motivated seller. Such amount could be significantly
higher than the amount obtained from the sale of a Mortgaged Property under a
distress or liquidation sale. Furthermore, not all of the above-described
appraisals of the Mortgaged Properties conformed to the appraisal guidelines set
forth in Title XI of the Federal Financial Institutions Reform, Recovery and
Enforcement Act of 1989.
None of the Depositor, the Underwriters, GMACCM, ContiTrade, ING Capital,
the Trustee, or any of their respective affiliates has prepared or conducted its
own separate appraisal or reappraisal of any Mortgaged Property.
Zoning and Building Code Compliance. Each Mortgage Loan Seller has taken
certain steps to establish that the use and operation of Mortgaged Properties
securing its Mortgage Loans were in compliance in all material respects with all
applicable zoning, land-use, building, fire and health ordinances, rules,
regulations and orders applicable to such Mortgaged Properties, but no assurance
can be made that such steps revealed all possible violations. Evidence of such
compliance may have been in the form of legal opinions, certifications from
government officials and/or representations by the related borrower contained in
the related Mortgage Loan documents. Certain violations may exist at any
particular Mortgaged Property, but the related Mortgage Loan Seller does not
consider any such violations known to it to be material. In many cases, the use,
operation and/or structure of a Mortgaged Property constitutes a permitted
nonconforming use and/or structure, which may not be rebuilt to its current
state in the event of a material casualty event; however, it is expected that
insurance proceeds would be available for application to the related Mortgage
Loan if such were to occur.
Hazard, Liability and Other Insurance. The Mortgage Loans require that
either: (i) in most cases, the Mortgaged Property be insured by a hazard
insurance policy in an amount (subject to a customary deductible) at least equal
to the lesser of the outstanding principal balance of the related Mortgage Loan
and 100% of the full insurable replacement cost of the improvements located on
the related Mortgaged Property, and if applicable, except in two cases where
there is 100% co-insurance, the related hazard insurance policy contains
appropriate endorsements to avoid the application of co-insurance and does not
permit reduction in
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insurance proceeds for depreciation; or (ii) in certain cases, the Mortgaged
Property be insured by hazard insurance in such other amounts as was required by
the related originators. In addition, if any portion of a Mortgaged Property
securing any Mortgage Loan was, at the time of the origination of such Mortgage
Loan, in an area identified in the Federal Register by the Flood Emergency
Management Agency as having special flood hazards, and flood insurance was
available, a flood insurance policy meeting any requirements of the then current
guidelines of the Federal Insurance Administration is in effect with a generally
acceptable insurance carrier, in an amount representing coverage not less than
the least of (1) the outstanding principal balance of such Mortgage Loan, (2)
the full insurable value of such Mortgaged Property, (3) the maximum amount of
insurance available under the National Flood Insurance Act of 1968, as amended
and (4) 100% of the replacement cost of the improvements located on the related
Mortgaged Property. In general, the standard form of hazard insurance policy
covers physical damage to, or destruction of, the improvements on the Mortgaged
Property by fire, lightning, explosion, smoke, windstorm and hail, riot or
strike and civil commotion, subject to the conditions and exclusions set forth
in each policy.
Each Mortgage generally also requires the related borrower to maintain
comprehensive general liability insurance against claims for personal and bodily
injury, death or property damage occurring on, in or about the related Mortgaged
Property in an amount customarily required by institutional lenders.
Each Mortgage generally further requires the related borrower to maintain
business interruption or rent loss insurance in an amount not less than 100% of
the projected rental income from the related Mortgaged Property for not less
than six months (or, in one case, three months).
In general, the Mortgaged Properties are not insured for earthquake risk.
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS UNDER CALIFORNIA LAW
General. As of the Cut-off Date, 22 of the Mortgage Loans, which represent
17.17% of the Initial Pool Balance, are secured by liens on Mortgaged Properties
located in California. The following discussion contains a general summary of
certain legal aspects of loans secured by income-producing properties in
California. The summary does not purport to be complete nor does the summary
reflect the laws of any other state. The summary relates only to the topics
covered and are qualified in their entirety by reference to the applicable state
laws being discussed. See also "Certain Legal Aspects of Mortgage Loans" in the
Prospectus.
Mortgage loans in California are generally secured by deeds of trust.
Provided the deed of trust contains a private power of sale, a lender may
foreclose either non-judicially or judicially. Most lenders choose non-judicial
foreclosure because the process typically may be completed within a much shorter
time frame; however, a lender is barred from obtaining a deficiency judgment
after a non-judicial foreclosure. If the lender opts for judicial foreclosure,
an application for a deficiency judgment must be filed with the court within
three months of the foreclosure sale. A deficiency judgment may not exceed the
difference between the indebtedness and the fair value of the property, as
determined by the court. Unless the lender waives the right to a deficiency
judgment, the borrower has a right to redeem the property following a judicial
foreclosure sale for a period of three months from the date of sale if the
proceeds from the sale were sufficient to satisfy the debt, or for a period of
one year if the proceeds were insufficient to satisfy the debt. Junior
lienholders do not have a right to redeem the property following a judicial
foreclosure sale unless the junior lien was created before July 1, 1983.
California's form of the "one action rule" requires the lender to look first to
the property for satisfaction of the debt if the lender wants to pursue a
deficiency judgment. In general, a lender who takes any action to enforce the
debt other than judicial or non-judicial foreclosure violates the one-action
rule and may be deemed to have waived its security for the indebtedness and, in
some cases, may be prevented from collecting the indebtedness altogether.
ASSIGNMENT OF THE MORTGAGE LOANS; REPURCHASES
On or prior to the Delivery Date, each Mortgage Loan Seller will assign its
Mortgage Loans, without recourse, to the Depositor, and the Depositor will
assign all the Mortgage Loans, without recourse, to the Trustee for the benefit
of the Certificateholders. In connection with the foregoing, each Mortgage Loan
Seller is required in accordance with the related Mortgage Loan Purchase
Agreement to deliver the following documents, among others, with respect to each
Mortgage Loan so assigned by it, to the Depositor or its custodial agent (who
will deliver such documents to the Trustee) or, at the direction of the
Depositor, directly
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to the Trustee: (a) the original Mortgage Note, endorsed (without recourse) in
blank or to the order of Trustee; (b) the original or a copy of the related
Mortgage(s), together with originals or copies of any intervening assignments of
such document(s), in each case with evidence of recording thereon (unless such
document(s) have not been returned by the applicable recorder's office); (c) the
original or a copy of any related assignment(s) of rents and leases (if any such
item is a document separate from the Mortgage), together with originals or
copies of any intervening assignments of such document(s), in each case with
evidence of recording thereon (unless such document(s) have not been returned by
the applicable recorder's office); (d) an assignment of each related Mortgage in
blank or in favor of the Trustee, in recordable form; (e) an assignment of any
related assignment(s) of rents and leases (if any such item is a document
separate from the Mortgage) in blank or in favor of the Trustee, in recordable
form; (f) an original or copy of the related lender's title insurance policy
(or, if a title insurance policy has not yet been issued, a commitment for title
insurance "marked-up" at the closing of such Mortgage Loan); and (g) when
relevant, the related ground lease or a copy thereof.
The Trustee will be required to review the documents delivered by the
related Mortgage Loan Seller and/or Depositor with respect to each Mortgage Loan
within 60 days following the Delivery Date, and the Trustee will hold the
related documents in trust. If it is found during the course of such review or
at any other time that any of the above-described documents was not delivered
with respect to any Mortgage Loan or that any such document is defective, and in
either case such omission or defect materially and adversely affects the value
of the related Mortgage Loan or the interests of Certificateholders therein, and
if the related Mortgage Loan Seller cannot deliver the document or cure the
defect within a period of 90 days following its receipt of notice of such
omission or defect, then the related Mortgage Loan Seller will be obligated
pursuant to the related Mortgage Loan Purchase Agreement (the relevant rights
under which will be assigned by the Depositor to the Trustee) to repurchase the
affected Mortgage Loan within such 90-day period at a price (the "PURCHASE
PRICE") at least equal to the unpaid principal balance of such Mortgage Loan,
together with any accrued but unpaid interest thereon to but not including the
Due Date in the Collection Period of the repurchase and any related unreimbursed
Servicing Advances (as defined herein).
The foregoing repurchase obligation will constitute the sole remedy
available to the Certificateholders and the Trustee for any failure on the part
of a Mortgage Loan Seller to deliver any of the above-described documents with
respect to any of its Mortgage Loans or for any defect in any such document; and
none of the Depositor, either of the other Mortgage Loan Sellers or any other
person or entity will be obligated to repurchase the affected Mortgage Loan if
the related Mortgage Loan Seller defaults on its obligation to do so.
Within 45 days following the Delivery Date, the Servicer or the Trustee
will cause the assignments with respect to each Mortgage Loan described in
clauses (d) and (e) of the third preceding paragraph to be completed in the name
of the Trustee (if delivered in blank) and submitted for recording in the real
property records of the appropriate jurisdictions.
REPRESENTATIONS AND WARRANTIES; REPURCHASES
In each Mortgage Loan Purchase Agreement, the related Mortgage Loan Seller
has represented and warranted with respect to each of its Mortgage Loans, as of
the Delivery Date, or as of such other date specifically provided in the
representation and warranty, among other things, that:
(i) Immediately prior to the transfer thereof to the Depositor, such
Mortgage Loan Seller had good and marketable title to, and was the sole
owner and holder of, such Mortgage Loan, free and clear of any and all
liens, encumbrances and other interests on, in or to such Mortgage Loan
(other than, in certain cases, the right of a subservicer to primary
service such Mortgage Loan).
(ii) Such Mortgage Loan Seller has full right and authority to sell,
assign and transfer such Mortgage Loan.
(iii) The information pertaining to such Mortgage Loan set forth in
the Mortgage Loan schedule attached to the related Mortgage Loan Purchase
Agreement was true and correct in all material respects as of the Cut-off
Date.
(iv) Such Mortgage Loan was not, as of the Cut-off Date, 30 days or
more delinquent in respect of any Monthly Payment required thereunder,
without giving effect to any applicable grace period.
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(v) The lien of the related Mortgage is insured by an ALTA lender's
title insurance policy, or its equivalent as adopted in the applicable
jurisdiction, issued by a nationally recognized title insurance company,
insuring the originator of the related Mortgage Loan, its successors and
assigns, as to the first priority lien of the Mortgage in the original
principal amount of the related Mortgage Loan after all advances of
principal, subject only to Permitted Encumbrances (or, if a title insurance
policy has not yet been issued in respect of any Mortgage Loan, a policy
meeting the foregoing description is evidenced by a commitment for title
insurance "marked-up" at the closing of such loan). "PERMITTED
ENCUMBRANCES" include (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,
and (C) exceptions and exclusions specifically referred to in the lender's
title insurance policy issued or, as evidenced by a "marked-up" commitment,
to be issued in respect of such Mortgage Loan. The Permitted Encumbrances
referred to above do not materially interfere with the security intended to
be provided by the related Mortgage, the current use or operation of the
related Mortgaged Property, or the current ability of such Mortgaged
Property to generate net operating income sufficient to service the
Mortgage Loan.
(vi) Such Mortgage Loan Seller has not waived any material default,
breach, violation or event of acceleration existing under the related
Mortgage or Mortgage Note.
(vii) There is no valid offset, defense or counterclaim to such
Mortgage Loan.
(viii) Such Mortgage Loan Seller has not received actual notice (A)
that there is any proceeding pending or threatened for the total or partial
condemnation of the related Mortgaged Property or (B) that there is any
material damage at the related Mortgaged Property that materially and
adversely affects the value of such Mortgaged Property.
(ix) At origination, such Mortgage Loan complied in all material
respects with all requirements of federal, state and local laws, including,
without limitation, laws relating to usury, relating to the origination of
such Mortgage Loan.
(x) The proceeds of such Mortgage Loan have been fully disbursed and
there is no requirement for future advances thereunder.
(xi) The Mortgage Note and Mortgage for such Mortgage Loan and all
other documents and instruments evidencing, guaranteeing, insuring or
otherwise securing such Mortgage Loan have been duly and properly executed
by the parties thereto, and each is the legal, valid and binding obligation
of the maker thereof (subject to any non-recourse provisions contained in
any of the foregoing agreements and any applicable state anti-deficiency
legislation), enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium or other laws relating to or affecting the rights
of creditors generally and by general principles of equity (regardless of
whether such enforcement is considered in a proceeding in equity or at
law).
(xii) All insurance required under the Mortgage for such Mortgage Loan
is in full force and effect with respect to the related Mortgaged Property.
(xiii) The related Mortgaged Property was subject to one or more
environmental site assessments (or an update of a previously conducted
assessment), which was performed on behalf of such Mortgage Loan Seller, or
as to which the related report was delivered to such Mortgage Loan Seller
in connection with its origination or acquisition of such Mortgage Loan;
and such Mortgage Loan Seller, having made no independent inquiry other
than reviewing the resulting report(s) and/or employing an environmental
consultant to perform the assessment(s) referenced herein, has no knowledge
of any material and adverse environmental condition or circumstance
affecting such Mortgaged Property that was not disclosed in the related
report(s).
(xiv) Such Mortgage Loan is not cross-collateralized with a mortgage
loan other than another Mortgage Loan.
(xv) All escrow deposits (including capital improvements and
environmental remediation reserves) relating to such Mortgage Loan that
were required to be delivered to the mortgagee under the terms of the
related loan documents, have been received and, to the extent of any
remaining balances thereof are
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in the possession, or under the control, of such Mortgage Loan Seller or
its agents (which shall include the Servicer).
(xvi) As of the date of origination of such Mortgage Loan and as of
the Closing Date, the related Mortgaged Property was and is free and clear
of any mechanics' and materialmen's liens or liens in the nature thereof
which create a lien prior to that created by the related Mortgage.
(xvii) If the Mortgage Loan is an ARM Loan, all of the terms of the
related Mortgage Note pertaining to interest rate adjustments, payment
adjustments and adjustments of the principal balance are enforceable, such
adjustments will not affect the priority of the mortgage lien, and all such
adjustments and all calculations made before the Cut-off Date were made
correctly and in full compliance with the terms of the related Mortgage and
Mortgage Note.
(xviii) No holder of the Mortgage Loan has, to the Seller's knowledge,
advanced funds or induced, solicited or knowingly received any advance of
funds from a party other than the owner of the related Mortgaged Property,
directly or indirectly, for the payment of any amount required by the
Mortgage Loan.
(xix) To such Mortgage Loan Seller's knowledge, based on due diligence
customarily performed in the origination of comparable mortgage loans, as
of the date of origination of the Mortgage Loan, (A) the related mortgagor
was in possession of all material licenses, permits and authorizations
required by applicable laws for the ownership and operation of the related
Mortgaged Property as it was then operated and (B) all such licenses,
permits and authorizations were valid and in full force and effect.
(xx) The related Mortgage or Mortgage Note, together with applicable
state law, contains customary and enforceable provisions (subject to the
exceptions set forth in clause (xi)) such as to render the rights and
remedies of the holders thereof adequate for the practical realization
against the related Mortgaged Property of the principal benefits of the
security intended to be provided thereby.
If it is found that there exists a material breach of any of the foregoing
representations and warranties of any of the Mortgage Loan Sellers with respect
to any of its Mortgage Loans, and if such Mortgage Loan Seller cannot cure such
breach within a period of 90 days following its receipt of notice of such
breach, then such Mortgage Loan Seller will be obligated pursuant to the related
Mortgage Loan Purchase Agreement (the relevant rights under which will be
assigned by the Depositor to the Trustee) to repurchase the affected Mortgage
Loan within such 90-day period at the applicable Purchase Price.
The foregoing repurchase obligation will constitute the sole remedy
available to the Certificateholders and the Trustee for any breach of a Mortgage
Loan Seller's representations and warranties regarding any of its Mortgage
Loans. As to any Mortgage Loan, the related Mortgage Loan Seller will be the
sole Warranting Party; and none of the Depositor, either of the other Mortgage
Loan Sellers or any other person or entity will be obligated to repurchase any
affected Mortgage Loan in connection with a breach of the related Mortgage Loan
Seller's representations and warranties if the related Mortgage Loan Seller
defaults on its obligation to do so. See "The Pooling and Servicing
Agreements--Representations and Warranties; Repurchases" in the Prospectus.
CHANGES IN MORTGAGE ASSET POOL CHARACTERISTICS
The description in this Prospectus Supplement of the Mortgage Asset Pool
and the Mortgaged Properties is based upon the Mortgage Asset Pool as expected
to be constituted at the time the Offered Certificates are issued, as adjusted
for the scheduled principal payments due on or before the Cut-off Date. Prior to
the issuance of the Offered Certificates, a Mortgage Loan may be removed from
the Mortgage Asset Pool if the Depositor deems such removal necessary or
appropriate or if it is prepaid. A limited number of other mortgage loans may be
included in the Mortgage Asset Pool prior to the issuance of the Offered
Certificates, unless including such Mortgage Loans would materially alter the
characteristics of the Mortgage Asset Pool as described herein. The information
set forth herein is representative of the characteristics of the Mortgage Asset
Pool as it will be constituted at the time the Offered Certificates are issued,
although the range of Mortgage Rates and maturities and certain other
characteristics of the Mortgage Loans in the Mortgage Asset Pool may vary.
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A Current Report on Form 8-K (the "FORM 8-K") will be available to
purchasers of the Offered Certificates on or shortly after the Delivery Date and
will be filed, together with the Pooling and Servicing Agreement, with the
Securities and Exchange Commission within fifteen days after the initial
issuance of the Offered Certificates. In the event Mortgage Loans are removed
from or added to the Mortgage Asset Pool as set forth in the preceding
paragraph, such removal or addition will be noted in the Form 8-K.
SERVICING OF THE MORTGAGE LOANS
GENERAL
The Servicer will be responsible for the servicing and administration of
all the Mortgage Loans; however, the holder or holders of Certificates
evidencing a majority interest in the Controlling Class will be entitled to
terminate substantially all the rights and duties of the Servicer in respect of
Specially Serviced Mortgage Loans and REO Properties (each as defined below) and
to appoint a replacement to perform such duties under substantially the same
terms and conditions as applicable to the Servicer. See "--Termination of the
Servicer with respect to Specially Serviced Mortgage Loans and REO Properties"
below. The Servicer, either directly or through Sub-Servicers, will be required
to service and administer the Mortgage Loans in the best interests of and for
the benefit of the Certificateholders (as determined by the Servicer in its good
faith and reasonable judgment), in accordance with applicable law, the terms of
the Pooling and Servicing Agreement and the terms of the respective Mortgage
Loans and, to the extent consistent with the foregoing, in the same manner as is
normal and usual in its general mortgage servicing activities with respect to
mortgage loans comparable to the Mortgage Loans.
A "SPECIALLY SERVICED MORTGAGE LOAN" is any Mortgage Loan as to which any
of the following events (each, a "SPECIAL SERVICING EVENT") has occurred: (i)
the related borrower has failed to make when due any Balloon Payment, which
failure has continued unremedied for 30 days; (ii) the related borrower has
failed to make when due any Monthly Payment (other than a Balloon Payment) or
any other payment required under the related Mortgage Note or the related
Mortgage(s), which failure continues unremedied for 60 days; (iii) the Servicer
has determined in its good faith and reasonable judgment, that a default in the
making of a Monthly Payment or any other payment required under the related
Mortgage Note or the related Mortgage(s) is likely to occur within 30 days and
is likely to remain unremedied for at least 60 days or, in the case of a Balloon
Payment, for at least 30 days; (iv) there shall have occurred a default under
the related loan documents, other than as described in clause (i) or (ii) above,
that materially impairs the value of the related Mortgaged Property as security
for the Mortgage Loan or otherwise materially and adversely affects the
interests of Certificateholders, which default has continued unremedied for the
applicable grace period under the terms of the Mortgage Loan (or, if no grace
period is specified, 60 days); (v) 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 the appointment of 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, shall
have been entered against the related borrower and such decree or order shall
have remained in force undischarged or unstayed for a period of 60 days; (vi)
the related borrower shall have consented 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 such borrower or
of or relating to all or substantially all of its property; (vii) the related
borrower shall have admitted in writing its inability to pay its debts generally
as they become due, filed a petition to take advantage of any applicable
insolvency or reorganization statute, made an assignment for the benefit of its
creditors, or voluntarily suspended payment of its obligations; and (viii) the
Servicer shall have received notice of the commencement of foreclosure or
similar proceedings with respect to the related Mortgaged Property or
Properties.
A Mortgage Loan will cease to be a Specially Serviced Mortgage Loan (and
will become a "CORRECTED MORTGAGE LOAN") at such time as such of the following
as are applicable occur with respect to the
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circumstances identified above that caused the Mortgage Loan to be characterized
as a Specially Serviced Mortgage Loan (and provided that no other Special
Servicing Event then exists):
(a) with respect to the circumstances described in clauses (i) and
(ii) of the preceding paragraph, the related borrower has made three
consecutive full and timely Monthly Payments under the terms of such
Mortgage Loan (as such terms may be changed or modified in connection with
a bankruptcy or similar proceeding involving the related borrower or by
reason of a modification, waiver or amendment granted or agreed to by the
Servicer);
(b) with respect to the circumstances described in clauses (iii), (v),
(vi) and (vii) of the preceding paragraph, such circumstances cease to
exist in the good faith and reasonable judgment of the Servicer;
(c) with respect to the circumstances described in clause (iv) of the
preceding paragraph, such default is cured; and
(d) with respect to the circumstances described in clause (viii) of
the preceding paragraph, such proceedings are terminated.
The Servicer will be required to service and administer the respective
groups of related Cross-Collateralized Mortgage Loans as a single Mortgage Loan
as and when it deems necessary and appropriate, consistent with its normal
servicing practices. If any Cross-Collateralized Mortgage Loan becomes a
Specially Serviced Mortgage Loan, then each other Mortgage Loan that is
cross-collateralized with it shall also become a Specially Serviced Mortgage
Loan. Similarly, no Cross-Collateralized Mortgage Loan shall subsequently become
a Corrected Mortgage Loan, unless and until all Special Servicing Events in
respect of each other Mortgage Loan that is cross-collateralized with it, are
remediated or otherwise addressed as contemplated above.
Set forth below, following the subsection captioned "--The Servicer," is a
description of certain pertinent provisions of the Pooling and Servicing
Agreement relating to the servicing of the Mortgage Loans. Reference is also
made to the Prospectus, in particular to the section captioned "The Pooling and
Servicing Agreements" for important additional information regarding the terms
and conditions of the Pooling and Servicing Agreement as they relate to the
rights and obligations of the Servicer thereunder. The Servicer constitutes a
"Master Servicer" for purposes of the Prospectus. However, information set forth
in the Prospectus should be read taking account of all supplemental information
contained herein.
THE SERVICER
GMACCM will be the Servicer with respect to the Mortgage Asset Pool. As of
September 30, 1996, the Servicer had a total commercial and multifamily mortgage
loan servicing portfolio of approximately $20.8 billion. See "Description of the
Mortgage Asset Pool--The Mortgage Loan Sellers--GMACCM" herein and "GMAC
Commercial Mortgage Corporation" in the Prospectus.
TERMINATION OF THE SERVICER WITH RESPECT TO SPECIALLY SERVICED MORTGAGE LOANS
AND REO PROPERTIES
The holder or holders of Certificates evidencing a majority interest in the
Controlling Class (as defined below) may at any time terminate substantially all
of the rights and duties of the Servicer in respect of Specially Serviced
Mortgage Loans and REO Properties and appoint a replacement (a "REPLACEMENT
SPECIAL SERVICER") to perform such duties under substantially the same terms and
conditions as applicable to the Servicer. Such holder(s) shall designate a
replacement to so serve by the delivery to the Trustee of a written notice
stating such designation. The Trustee shall, promptly after receiving any such
notice, so notify the Rating Agencies. If the designated replacement is
acceptable to the Trustee, which approval may not be unreasonably withheld, the
designated replacement shall become the Replacement Special Servicer as of the
date the Trustee shall have received: (i) written confirmation from both Rating
Agencies stating that if the designated replacement were to serve as Replacement
Special Servicer under the Pooling and Servicing Agreement, none of the
then-current rating or ratings of all outstanding Classes of the Certificates
would be qualified, downgraded or withdrawn as a result thereof; (ii) a written
acceptance of all obligations of a Replacement Special Servicer, executed by the
designated replacement; and (iii) an opinion of counsel to the
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effect that the designation of such replacement to serve as Replacement Special
Servicer is in compliance with the Pooling and Servicing Agreement, that the
designated replacement will be bound by the terms of the Pooling and Servicing
Agreement and that the Pooling and Servicing Agreement will be enforceable
against such designated replacement in accordance with its terms. The Servicer
shall be deemed to have resigned from its duties in respect of Specially
Serviced Mortgage Loans and REO Properties simultaneously with such designated
replacement's becoming the Replacement Special Servicer under the Pooling and
Servicing Agreement. Any Replacement Special Servicer may be similarly so
replaced by the holder or holders of Certificates evidencing a majority interest
in the Controlling Class.
In general, a Replacement Special Servicer will possess rights and
obligations comparable to those of a Master Servicer described in the Prospectus
under "The Pooling and Servicing Agreements--Sub-Servicers," "--Evidence as to
Compliance" and "--Certain Matters Regarding a Master Servicer and the
Depositor." In addition, a Replacement Special Servicer will be responsible for
performing the servicing and other administrative duties attributable to the
Servicer herein or a Master Servicer under "The Pooling and Servicing
Agreements" (and, in particular, under the subsection thereof captioned
"--Realization Upon Defaulted Mortgage Loans") in the Prospectus, insofar as
such duties relate to Specially Serviced Mortgage Loans and REO Properties.
Notwithstanding any appointment of a Replacement Special Servicer, however, the
Servicer shall continue to collect information and prepare all reports to the
Trustee and to pay the reasonable compensation of the Trustee required under the
Pooling and Servicing Agreement with respect to any Specially Serviced Mortgage
Loans and REO Properties, and further to render incidental services with respect
to any Specially Serviced Mortgage Loans and REO Properties as are specifically
provided for in the Pooling and Servicing Agreement. The Servicer and the
Replacement Special Servicer shall not have any responsibility for the
performance of each other's duties under the Pooling and Servicing Agreement.
The "CONTROLLING CLASS" will be the most subordinate Class of Principal
Balance Certificates outstanding (the Class A-1, Class A-2A and Class A-2B
Certificates being treated as a single Class for this purpose) that has a
Certificate Balance at least equal to 25% of its initial Certificate Balance
(or, if no Class of Principal Balance Certificates has a Certificate Balance at
least equal to 25% of its initial Certificate Balance, then the "Controlling
Class" will be the Class of Principal Balance Certificates with the largest
Certificate Balance then outstanding). Initially the Controlling Class will
consist of the Class H Certificates. It is anticipated that the Servicer will
acquire certain Subordinate Certificates, including the Class H Certificates.
SERVICING AND OTHER COMPENSATION AND PAYMENT OF EXPENSES
The principal compensation to be paid to the Servicer in respect of its
servicing activities will be the Servicing Fee, the Special Servicing Fee, the
Workout Fee and the Liquidation Fee. The "SERVICING FEE" will be payable monthly
on a loan-by-loan basis from amounts received or advanced in respect of interest
on each Mortgage Loan (including Specially Serviced Mortgage Loans and Mortgage
Loans as to which the related Mortgaged Property has become an REO Property),
will accrue at 0.14% per annum (the "SERVICING FEE RATE") and will be computed
on the basis of the same principal amount and for the same period respecting
which any related interest payment due or deemed due on the related Mortgage
Loan is computed. The "SPECIAL SERVICING FEE" will accrue solely with respect to
each Specially Serviced Mortgage Loan and each Mortgage Loan as to which the
related Mortgaged Property has become an REO Property, at a rate equal to 0.25%
per annum, on the basis of the same principal amount and for the same period
respecting which any related interest payment due or deemed due on such Mortgage
Loan is computed, and will be payable monthly from the same sources and at the
same time as, but separate from, the Servicing Fee with respect to such Mortgage
Loan. A "WORKOUT FEE" will in general be payable with respect to each Corrected
Mortgage Loan. As to each Corrected Mortgage Loan, the Workout Fee will be
payable out of, and will be calculated by application of a "WORKOUT FEE RATE" of
1.0% to, each collection of interest and principal (including scheduled
payments, prepayments, Balloon Payments and payments at maturity) received on
such Mortgage Loan for so long as it remains a Corrected Mortgage Loan. The
Workout Fee with respect to any Corrected Mortgage Loan will cease to be payable
if such loan again becomes a Specially Serviced Mortgage Loan or if the related
Mortgaged Property becomes an REO Property; provided that a new Workout Fee will
become payable if and when such Mortgage Loan again becomes a Corrected Mortgage
Loan. If the Servicer is terminated (other
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than for cause) or resigns with respect to any or all of its servicing duties,
it shall retain the right to receive any and all Workout Fees payable with
respect to Mortgage Loans that became Corrected Mortgage Loans during the period
that it had responsibility for servicing Specially Serviced Mortgage Loans and
that were still Corrected Mortgage Loans at the time of such termination or
resignation (and the successor Servicer or Replacement Special Servicer shall
not be entitled to any portion of such Workout Fees), in each case until the
Workout Fee for any such loan ceases to be payable in accordance with the
preceding sentence. A "LIQUIDATION FEE" will be payable with respect to each
Specially Serviced Mortgage Loan as to which the Servicer obtains a full or
discounted payoff from the related borrower and, except as otherwise described
below,with respect to any Specially Serviced Mortgage Loan or REO Property as to
which the Servicer receives any Liquidation Proceeds. As to each such Specially
Serviced Mortgage Loan and REO Property, the Liquidation Fee will be payable
from, and will be calculated by application of a "LIQUIDATION FEE RATE" of 1.0%
to, the related payment or proceeds. Notwithstanding anything to the contrary
described above, no Liquidation Fee will be payable based on, or out of,
Liquidation Proceeds received in connection with the purchase of any Specially
Serviced Mortgage Loan or REO Property by the Servicer, a Replacement Special
Servicer or any holder of Certificates evidencing a majority interest in the
Controlling Class or the purchase of all of the Mortgage Loans and REO
Properties by the Servicer or the Depositor in connection with the termination
of the Trust Fund. If, however, Liquidation Proceeds are received with respect
to any Corrected Mortgage Loan and the Servicer is properly entitled to a
Workout Fee, such Workout Fee will be payable based on and out of the portion of
such Liquidation Proceeds that constitute principal and/or interest.
As additional servicing compensation, the Servicer will be entitled to
retain all assumption and modification fees, late payment charges, charges for
beneficiary statements or demands, amounts collected for checks returned for
insufficient funds and any similar fees, in each case to the extent actually
paid by a borrower with respect to a Mortgage Loan. The Servicer will also be
entitled to: (a) Prepayment Interest Excesses and Balloon Payment Interest
Excesses (each described below) collected on the Mortgage Loans; and (b) any
default interest actually collected on the Mortgage Loans, but only to the
extent that such default interest is not allocable to pay any portion of a
Workout Fee or Liquidation Fee payable with respect to the related Mortgage Loan
or to cover interest on any Advances (as defined below) made in respect of the
related Mortgage Loan. In addition, the Servicer will be authorized to invest or
direct the investment of funds held in any and all accounts maintained by it or
the Trustee that constitute part of the Certificate Account, in Permitted
Investments, and the Servicer will be entitled to retain any interest or other
income earned on such funds, but will be required to cover any losses from its
own funds without any right to reimbursement.
If a Replacement Special Servicer is appointed, then as compensation for
performing its duties in respect of the Specially Serviced Mortgage Loans and
REO Properties, such Replacement Special Servicer will be entitled to receive
all Special Servicing Fees, Liquidation Fees and, except as otherwise described
above, Workout Fees otherwise payable to the Servicer for performing such
duties, as well as the Replacement Special Servicer Standby Fee. The
"REPLACEMENT SPECIAL SERVICER STANDBY FEE" will accrue with respect to each
Mortgage Loan (whether or not it is a Specially Serviced Mortgage Loan or a
Mortgage Loan as to which the related Mortgaged Property has become an REO
Property), at a rate of 0.005% per annum, on the basis of the same principal
amount and for the same period respecting which any related interest payment due
or deemed due on such Mortgage Loan is computed, and will be payable by the
Servicer out of its Servicing Fee with respect to such Mortgage Loan. In
addition, a Replacement Special Servicer will become (and the Servicer will
cease to be) entitled to additional servicing compensation in the form of late
payment charges, assumption fees and modification fees received on or with
respect to Specially Serviced Mortgage Loans. A Replacement Special Servicer
will also become (and the Servicer will also cease to be) entitled to any
default interest actually collected on the Mortgage Loans, but only to the
extent that (i) such default interest is not allocable to pay any portion of a
Workout Fee or Liquidation Fee payable to the Servicer or Replacement Special
Servicer with respect to the related Mortgage Loan or to cover interest payable
to the Servicer, the Replacement Special Servicer or the Trustee with respect to
any Advances made in respect of the related Mortgage Loan and (ii) such default
interest is allocable to the period that the related Mortgage Loan constituted a
Specially Serviced Mortgage Loan.
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If a borrower voluntarily prepays a Mortgage Loan, in whole or in part,
after the Due Date but before the Determination Date in any calendar month, the
amount of interest (net of related Servicing Fees) accrued on such prepayment
from such Due Date to, but not including, the date of prepayment (or any later
date through which interest accrues) will, to the extent actually collected,
constitute a "PREPAYMENT INTEREST EXCESS". Conversely, if a borrower prepays a
Mortgage Loan, in whole or in part, after the Determination Date in any calendar
month and does not pay interest on such prepayment through the end of such
calendar month, then the shortfall in a full month's interest (net of related
Servicing Fees) on such prepayment will constitute a "PREPAYMENT INTEREST
SHORTFALL". Similarly, if the Due Date for any Balloon Payment occurs after the
first day of, but before the Determination Date in, any calendar month, the
amount of interest (net of related Servicing Fees) accrued on the related
Balloon Loan from the beginning of such month to the maturity date will, to the
extent actually collected in connection with the payment of such Balloon Payment
on or before such Determination Date, constitute a "BALLOON PAYMENT INTEREST
EXCESS". Conversely, if the Due Date for any Balloon Payment occurs after the
Determination Date in any calendar month, the amount of interest (net of related
Servicing Fees) that would have accrued on the related Balloon Loan from the
stated maturity date through the end of such calendar month will, to the extent
not paid by the borrower, constitute a "BALLOON PAYMENT INTEREST SHORTFALL".
Prepayment Interest Excesses and Balloon Payment Interest Excesses collected on
the Mortgage Loans will be retained by the Servicer as additional servicing
compensation. The Servicer will cover, out of its own funds, any Balloon Payment
Interest Shortfalls and, to the extent of that portion of its aggregate
Servicing Fee for the same Collection Period that is, in the case of each loan,
calculated at 0.055% per annum, Prepayment Interest Shortfalls incurred with
respect to the Mortgage Loans during any Collection Period.
The Servicer and any Replacement Special Servicer will, in general, each be
required to pay its overhead and any general and administrative expenses
incurred by it in connection with its servicing activities under the Pooling and
Servicing Agreement, including the fees of any Sub-Servicers retained by it, and
will not be entitled to reimbursement therefor except as expressly provided in
the Pooling and Servicing Agreement. In general, customary, reasonable and
necessary "out of pocket" costs and expenses incurred by the Servicer or a
Replacement Special Servicer in connection with the servicing of a Mortgage Loan
after a default, delinquency or other unanticipated event, or in connection with
the administration of any REO Property, will constitute "SERVICING ADVANCES"
(Servicing Advances and P&I Advances, collectively, "ADVANCES") and, in all
cases, will be reimbursable from future payments and other collections,
including in the form of Liquidation Proceeds, Insurance Proceeds and
Condemnation Proceeds, in any event on or in respect of the related Mortgage
Loan or REO Property ("RELATED PROCEEDS"). Notwithstanding the foregoing, the
Servicer and any Replacement Special Servicer will each be permitted to pay, or
to direct the payment of, certain servicing expenses directly out of the
Certificate Account and at times without regard to the relationship between the
expense and the funds from which it is being paid (including in connection with
the remediation of any adverse environmental circumstance or condition at a
Mortgaged Property or an REO Property, although in such specific circumstances
the Servicer may advance the costs thereof). Furthermore, if any Replacement
Special Servicer is required under the Pooling and Servicing Agreement to make
any Servicing Advance but does not desire to do so, such Replacement Special
Servicer may, in its sole discretion, request that the Servicer make such
Advance, such request to be made in writing and in a timely manner that does not
adversely affect the interests of any Certificateholder; provided, however, that
such Replacement Special Servicer will have an obligation to make any such
Servicing Advance that, in its good faith and reasonable judgment, is necessary
to avoid (i) a penalty, (ii) material harm to a Mortgaged Property or (iii) any
other material adverse consequence to the Trust Fund (an "EMERGENCY ADVANCE").
The Servicer shall make any such Servicing Advance (other than an Emergency
Advance) that it is requested by a Replacement Special Servicer to so make
within ten (10) days of the Servicer's receipt of such request. A Replacement
Special Servicer shall be relieved of any obligations with respect to an Advance
that it requests the Servicer to make (regardless of whether or not the Servicer
makes that Advance), other than an Emergency Advance.
If the Servicer (or a Replacement Special Servicer) is required under the
Pooling and Servicing Agreement to make a Servicing Advance, but does not do so
within 15 days after such Servicing Advance is required to be made, then the
Trustee will, if it has actual knowledge of such failure, be required to give
the
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defaulting party notice of such failure and, if such failure continues for three
more days, the Trustee will be required to make such Servicing Advance.
The Servicer, any Replacement Special Servicer and the Trustee will be
obligated to make Servicing Advances only to the extent that such Servicing
Advances are, in the reasonable and good faith judgment of such party,
ultimately recoverable from Related Proceeds.
As and to the extent described herein, the Servicer, any Replacement
Special Servicer and the Trustee are each entitled to receive interest at the
Reimbursement Rate (as defined herein) on Servicing Advances made thereby. See
"The Pooling and Servicing Agreements--Certificate Account" and "--Servicing
Compensation and Payment of Expenses" in the Prospectus and "Description of the
Certificates--P&I Advances" herein.
The Servicer will be required to pay, out of its Servicing Fee, the
Replacement Special Servicer Standby Fee to any Replacement Special Servicer,
the reasonable compensation of the Trustee and any surveillance fees to the
Rating Agencies.
THE EXTENSION ADVISER
Election of the Extension Adviser. The holder or holders of Offered
Certificates with an aggregate principal balance equal to more than 50% of the
aggregate Certificate Balance of all the Offered Certificates with Certificate
Balances (exclusive, if applicable, of the Controlling Class (as defined below)
and any Class of Offered Certificates subordinate to the Controlling Class) will
be entitled to (i) elect an adviser (the "EXTENSION ADVISER") from whom the
Servicer will seek approval as described below and/or (ii) replace an existing
Extension Adviser. Upon (i) the receipt by the Trustee of written requests for
an election of an Extension Adviser from the holders of Offered Certificates
with an aggregate principal balance representing more than 50% of the aggregate
Certificate Balance of all the Offered Certificates with Certificate Balances
(exclusive, if applicable, of the Controlling Class and any Class of Offered
Certificates subordinate to the Controlling Class), or (ii) the resignation or
removal of the person acting as Extension Adviser, an election of an Extension
Adviser will be held commencing as soon as practicable thereafter. Any Extension
Adviser may be removed at any time by the written vote of holders of Offered
Certificates with an aggregate principal balance representing more than 50% of
the aggregate Certificate Balance of all the Offered Certificates with
Certificate Balances (exclusive, if applicable, of the Controlling Class and any
Class of Offered Certificates subordinate to the Controlling Class).
Duties of the Extension Adviser. If any person or entity has been elected
and is serving as Extension Adviser, then the Servicer will not be permitted to
grant any extension of the maturity of a Specially Serviced Mortgage Loan beyond
the third anniversary of such loan's original stated maturity date if such
Extension Adviser has objected to such action in writing within ten days of its
receiving from the Servicer written notice thereof and sufficient information to
make an informed decision (provided that if such written objection has not been
received by the Servicer within such ten-day period, then such Extension
Adviser's approval will be deemed to have been given). In addition, the
Extension Adviser will confirm to its reasonable satisfaction that all
conditions precedent to granting any such extension have been satisfied. See
"--Modifications, Waivers, Amendments and Consents" below.
Limitation on Liability of Extension Adviser. The Extension Adviser will
be acting solely as representative of the interests of the Certificateholders
entitled to vote in the election thereof, and will have no liability to the
Trust Fund or the Certificateholders 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. By its acceptance of a
Certificate, each Certificateholder confirms its understanding that the
Extension Adviser may take actions that favor the interests of one or more
Classes of the Certificates over other Classes of the Certificates, and that the
Extension Adviser may have special relationships and interests that conflict
with those of holders of some Classes of the Certificates and agrees to take no
action against the Extension Adviser or any of its officers, directors,
employees, principals or agents as a result of such a special relationship or
conflict.
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Limitation on Liability of the Servicer. The Servicer will be entitled to
the same limitations on liability when acting in accordance with a direction or
approval or refraining from acting in accordance with a direction or objection
of the Extension Adviser as it would if such direction, approval or objection,
as the case may be, were an express term of the Pooling and Servicing Agreement.
Compensation of the Extension Adviser. The Pooling and Servicing Agreement
will not provide for any compensation to be paid to the Extension Adviser out of
the Trust Fund.
MODIFICATIONS, WAIVERS, AMENDMENTS AND CONSENTS
The Servicer may agree to any modification, waiver or amendment of any term
of, forgive interest on and principal of, capitalize interest on, permit the
release, addition or substitution of collateral securing, and/or permit the
release of the borrower on or any guarantor of any Mortgage Loan without the
consent of the Trustee or, except as contemplated by clause (ii) below, any
Certificateholder, subject, however, to each of the following limitations,
conditions and restrictions:
(i) the Servicer may not agree to any modification, waiver or
amendment of any term of, or take any of the other above referenced actions
with respect to, any Mortgage Loan that would affect the amount or timing
of any related payment of principal, interest or other amount payable
thereunder or, in the Servicer's good faith and reasonable judgment, would
materially impair the security for such Mortgage Loan or reduce the
likelihood of timely payment of amounts due thereon, unless, in the
Servicer's judgment, a material default on such Mortgage Loan has occurred
or a default in respect of payment on such Mortgage Loan is reasonably
foreseeable, and such modification, waiver, amendment or other action is
reasonably likely to produce a greater recovery to Certificateholders on a
present value basis than would liquidation;
(ii) if any person or entity has been selected and is serving as
Extension Adviser, the Servicer may not extend the date on which any
Balloon Payment is scheduled to be due on any Mortgage Loan beyond the
third anniversary of such loan's original stated maturity date unless such
Extension Adviser has approved or is deemed to have approved such
extension;
(iii) the Servicer may not extend the maturity of any Mortgage Loan
beyond the date that is two years prior to the Rated Final Distribution
Date;
(iv) the Servicer shall not make or permit any modification, waiver or
amendment of any term of, or take any of the other above referenced actions
with respect to, any Mortgage Loan that would (A) cause either REMIC I,
REMIC II or REMIC III to fail to qualify as a REMIC under the Code or,
except as otherwise described under "--REO Properties" below, result in the
imposition of any tax on "prohibited transactions" or "contributions" after
the startup date of either such REMIC under the REMIC Provisions or (B)
cause any Mortgage Loan to cease to be a "qualified mortgage" within the
meaning of Section 860G(a)(3) of the Code (provided that the Servicer shall
not be liable for judgments as regards decisions made under this subsection
which were made in good faith and, unless it would constitute bad faith or
negligence to do so, the Servicer may rely on opinions of counsel in making
such decisions);
(v) the Servicer shall not permit any borrower to add or substitute
any collateral for an outstanding Mortgage Loan, which collateral
constitutes real property, unless the Servicer shall have first determined
in its good faith and reasonable judgment, based upon a Phase I
environmental assessment (and such additional environmental testing as the
Servicer deems necessary and appropriate), that such additional or
substitute collateral is in compliance with applicable environmental laws
and regulations and that there are no circumstances or conditions present
with respect to such new collateral relating to the use, management or
disposal of any hazardous materials for which investigation, testing,
monitoring, containment, clean-up or remediation would be required under
any then applicable environmental laws and/or regulations; and
(vi) with limited exceptions, the Servicer shall not release any
collateral securing an outstanding Mortgage Loan;
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provided that (x) the limitations, conditions and restrictions set forth in
clauses (i) through (vi) above will not apply to any modification of any term of
any Mortgage Loan that is required under the terms of such Mortgage Loan in
effect on the Delivery Date or that is solely within the control of the related
borrower, and (y) notwithstanding clauses (i) through (vi) above, the Servicer
will not be required to oppose the confirmation of a plan in any bankruptcy or
similar proceeding involving a borrower if in its reasonable and good faith
judgment such opposition would not ultimately prevent the confirmation of such
plan or one substantially similar.
SALE OF DEFAULTED MORTGAGE LOANS
The Pooling and Servicing Agreement grants to the Servicer, any Replacement
Special Servicer and the holder or holders of Certificates evidencing a majority
interest in the Controlling Class a right to purchase from the Trust Fund
certain defaulted Mortgage Loans. If the Servicer has determined, in its good
faith and reasonable judgment, that any defaulted Mortgage Loan will become the
subject of a foreclosure, the Servicer will be required to promptly so notify in
writing the Trustee, and the Trustee will be required, within 10 days after
receipt of such notice, to notify the holders of the Controlling Class. Any
holder or holders of Certificates evidencing a majority interest in the
Controlling Class may, at its or their option, purchase from the Trust Fund, at
a price equal to the applicable Purchase Price, any such defaulted Mortgage
Loan. If such Certificateholders have not purchased such defaulted Mortgage Loan
within 15 days of their having received notice in respect thereof, either the
Servicer or any Replacement Special Servicer may, at its option, purchase such
defaulted Mortgage Loan from the Trust Fund, at a price equal to the applicable
Purchase Price.
The Servicer may offer to sell any such defaulted Mortgage Loan not
otherwise purchased pursuant to the prior paragraph, if and when the Servicer
determines, in its good faith and reasonable judgment, that such a sale would be
in the best economic interests of the Trust Fund. Such offer is to be made in a
commercially reasonable manner for a period of not less than 10 days. Unless the
Servicer determines, in its good faith and reasonable judgment, that acceptance
of any offer would not be in the best economic interests of the Trust Fund, the
Servicer shall accept the highest cash offer received from any person that
constitutes a fair price (which may be less than the Purchase Price) for such
Mortgage Loan; provided that none of the Servicer, any Replacement Special
Servicer, the Depositor, the holder of any Certificate or an affiliate of any
such party may purchase such Mortgage Loan for less than the Purchase Price
unless at least two other offers are received from independent third parties.
See also "The Pooling and Servicing Agreements--Realization Upon Defaulted
Mortgage Loans" in the Prospectus.
REO PROPERTIES
In general, the Servicer will be obligated to (or may contract with a third
party to) operate and manage any Mortgaged Property acquired as REO Property in
a manner that would, in its good faith and reasonable judgment and to the extent
commercially feasible, maximize the Trust Fund's net after-tax proceeds from
such property. After the Servicer reviews the operation of such property and
consults with the Trustee to determine the Trust Fund's federal income tax
reporting position with respect to income it is anticipated that the Trust Fund
would derive from such property, the Servicer could determine that it would not
be commercially feasible to manage and operate such property in a manner that
would avoid the imposition of a tax on "net income from foreclosure property"
within the meaning of the REMIC Provisions or a tax on "prohibited transactions"
under Section 860F of the Code (either such tax referred to herein as an "REO
TAX"). To the extent that income the Trust Fund receives from an REO Property is
subject to a tax on (i) "net income from foreclosure property", such income
would be subject to federal tax at the highest marginal corporate tax rate
(currently 35%) and (ii) "prohibited transactions", such income would be subject
to federal tax at a 100% rate. The determination as to whether income from an
REO Property would be subject to an REO Tax will depend on the specific facts
and circumstances relating to the management and operation of each REO Property.
Generally, income from an REO Property that is directly operated by the Servicer
would be apportioned and classified as "service" or "non-service" income. The
"service" portion of such income could be subject to federal tax either at the
highest marginal corporate tax rate or at the 100% rate on "prohibited
transactions," and the "non-service" portion of such income could be subject to
federal tax
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at the highest marginal corporate tax rate or, although it appears unlikely, at
the 100% rate applicable to "prohibited transactions". Any REO Tax imposed on
the Trust Fund's income from an REO Property would reduce the amount available
for distribution to Certificateholders. Certificateholders are advised to
consult their own tax advisors regarding the possible imposition of REO Taxes in
connection with the operation of commercial REO Properties by REMICs. The
Servicer will be required to sell any REO Property acquired on behalf of the
Trust Fund within the time period and in the manner described under "The Pooling
and Servicing Agreements--Realization Upon Defaulted Mortgage Loans" in the
Prospectus.
INSPECTIONS; COLLECTION OF OPERATING INFORMATION
The Servicer is required to (or may contract with a third party to) perform
physical inspections of each Mortgaged Property at least once every two years
(or, if the related Mortgage Loan has a then-current balance greater than
$5,000,000, at least once every year). In addition, the Servicer, subject to
statutory limitations or limitations set forth in the related loan documents, is
required to perform a physical inspection of each Mortgaged Property as soon as
practicable after the related Mortgage Loan becomes a Specially Serviced
Mortgage Loan. The Servicer will be required to prepare a written report of each
such inspection performed thereby describing the condition of the Mortgaged
Property.
With respect to each Mortgage Loan that requires the borrower to deliver
annual operating statements with respect to the related Mortgaged Property, the
Servicer is also required to make reasonable efforts to collect and review such
statements. However, there can be no assurance that any operating statements
required to be delivered will in fact be delivered, nor is the Servicer likely
to have any practical means of compelling such delivery in the case of an
otherwise performing Mortgage Loan.
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will be issued pursuant to the Pooling and Servicing
Agreement and will represent in the aggregate the entire beneficial ownership
interest in a Trust Fund consisting of: (i) the Mortgage Loans and all payments
under and proceeds of the Mortgage Loans received after the Cut-off Date
(exclusive of payments of principal and interest due on or before the Cut-off
Date); (ii) any REO Property acquired on behalf of the Certificateholders
through foreclosure, deed in lieu of foreclosure or otherwise; (iii) such funds
or assets as from time to time are deposited in the Certificate Account; (iv)
the rights of the mortgagee under all insurance policies with respect to the
Mortgage Loans; and (v) certain rights of the Depositor under each of the
Mortgage Loan Purchase Agreements relating to Mortgage Loan document delivery
requirements and the representations and warranties of the related Mortgage Loan
Seller regarding its Mortgage Loans.
The Certificates will consist of 15 Classes to be designated as: (i) the
Class X-1 Certificates and the Class X-2 Certificates (collectively, the "CLASS
X CERTIFICATES"); (ii) the Class A-1 Certificates, the Class A-2A Certificates
and the Class A-2B Certificates (collectively, the "CLASS A CERTIFICATES"; and
collectively with the Class X Certificates, the "SENIOR CERTIFICATES"); (iii)
the Class B Certificates, the Class C Certificates, the Class D Certificates,
the Class E Certificates, the Class F Certificates, the Class G Certificates and
the Class H Certificates (collectively, the "SUBORDINATE CERTIFICATES"; and
collectively with the Senior Certificates, the "REMIC REGULAR CERTIFICATES");
and (iv) the Class R-I Certificates, the Class R-II Certificates and the Class
R-III Certificates (collectively, the "REMIC RESIDUAL CERTIFICATES").
Only the Senior Certificates and the Class B, Class C, Class D and Class E
Certificates (collectively the "OFFERED CERTIFICATES") are offered hereby. The
Class F, Class G, Class H and REMIC Residual Certificates have not been
registered under the Securities Act of 1933 and are not offered hereby.
The Offered Certificates will be issued in book-entry format in
denominations of: (i) in the case of the Class X Certificates, $2,500,000
notional principal amount and in any whole dollar denomination in excess
thereof; and (ii) in the case of the other Offered Certificates, $100,000 actual
principal amount and in any whole dollar denomination in excess thereof.
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Each Class of Offered Certificates will initially be represented by one or
more global Certificates registered in the name of the nominee of DTC. The
Depositor has been informed by DTC that DTC's nominee initially will be Cede &
Co. No Certificate Owner will be entitled to receive a Definitive Certificate
representing its interest in a Class of Offered Certificates, except as set
forth below under "--Book-Entry Registration of the Offered
Certificates--Definitive Certificates". Unless and until Definitive Certificates
are issued in respect of any Class of Offered Certificates, all references to
actions by holders of the Offered Certificates will refer to actions taken by
DTC upon instructions received from the related Certificate Owners through its
Participants, and all references herein to payments, notices, reports and
statements to holders of the Offered Certificates will refer to payments
notices, reports and statements to DTC or Cede & Co., as the registered holder
of the Offered Certificates, for distribution to the related Certificate Owners
through its Participants in accordance with DTC procedures. Until Definitive
Certificates are issued in respect of any Class of Offered Certificates,
interests in such Certificates will be transferred on the book-entry records of
DTC and its Participants. See "Description of the Certificates--Book-Entry
Registration and Definitive Certificates" in the Prospectus.
BOOK-ENTRY REGISTRATION OF THE OFFERED CERTIFICATES
General. Certificate Owners that are not Direct or Indirect Participants
but desire to purchase, sell or otherwise transfer ownership of, or other
interests in, the Offered Certificates may do so only through Direct and
Indirect Participants. In addition, Certificate Owners will receive all payments
on their Offered Certificates from the Trustee through DTC and its Direct and
Indirect Participants. Accordingly, Certificate Owners may experience delays in
their receipt of payments. Unless and until Definitive Certificates are issued
in respect of any Class thereof, the only registered Certificateholder of the
Offered Certificates will be Cede & Co., as nominee of DTC. Certificate Owners
will not be recognized by the Trustee or the Servicer as Certificateholders;
and, except under the limited circumstances described herein, Certificate Owners
will be permitted to receive information furnished to Certificateholders and to
exercise the rights of Certificateholders only indirectly through DTC and its
Direct and Indirect Participants.
Under the rules, regulations and procedures regarding DTC and its
operations (the "RULES"), DTC is required to make book-entry transfers of the
Offered Certificates among Participants and to receive and transmit payments on
the Offered Certificates. Direct and Indirect Participants with which
Certificate Owners have accounts with respect to the Offered Certificates
similarly are required to make book-entry transfers and receive and transmit
such payments on behalf of their respective Certificate Owners. Accordingly,
although Certificate Owners will not possess physical certificates evidencing
their interests in the Offered Certificates, the Rules provide a mechanism by
which Certificate Owners, through their Direct and Indirect Participants, will
receive payments and will be able to transfer their interests in the Offered
Certificates.
None of the Depositor, the Servicer, the Trustee or the Mortgage Loan
Sellers will have any liability for any actions taken by DTC or its nominee,
including, without limitation, actions for any aspect of the records relating to
or payments made on account of beneficial ownership interests in the Offered
Certificates held by Cede & Co., as nominee for DTC, or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interest.
Definitive Certificates. Definitive Certificates will be issued to
Certificate Owners or their nominees, respectively, rather than to DTC or its
nominee, only under the limited conditions set forth in the Prospectus under
"Description of the Certificates--Book-Entry Registration and Definitive
Certificates."
Upon the occurrence of an event described in the Prospectus in the last
paragraph under "Description of the Certificates--Book-Entry Registration and
Definitive Certificates," the Trustee is required to notify, through DTC, Direct
Participants who have ownership of Offered Certificates as indicated on the
records of DTC, of the availability of Definitive Certificates with respect
thereto. Upon surrender by DTC of the physical certificates registered in the
name of its nominee and representing the Offered Certificates and upon receipt
of instructions from DTC for re-registration, the Trustee will reissue the
respective Classes of Offered Certificates as Definitive Certificates issued in
the respective principal or notional amounts owned by individual Certificate
Owners of each such Class, and thereafter the Trustee and the Servicer will
recognize the holders of such Definitive Certificates as Certificateholders.
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For additional information regarding DTC and Certificates maintained on the
book-entry records thereof, see "Description of the Certificates--Book-Entry
Registration and Definitive Certificates" in the Prospectus.
CERTIFICATE BALANCES AND NOTIONAL AMOUNTS
Upon initial issuance, the Class A-1, Class A-2A, Class A-2B, Class B,
Class C, Class D, Class E, Class F, Class G and Class H Certificates will have
the following Certificate Balances (in each case, subject to a variance of plus
or minus 5%):
<TABLE>
<CAPTION>
INITIAL PERCENT OF PERCENT OF
CLASS CERTIFICATE BALANCE INITIAL POOL BALANCE CREDIT SUPPORT
- ----------- ------------------- -------------------- --------------
<S> <C> <C> <C>
Class A-1 $ 33,475,146 7.33% 35.25%
Class A-2A 190,353,000 41.67 35.25
Class A-2B 71,963,000 15.75 35.25
Class B 31,978,000 7.00 28.25
Class C 26,268,000 5.75 22.50
Class D 27,409,000 6.00 16.50
Class E 13,705,000 3.00 13.50
Class F 22,841,000 5.00 8.50
Class G 19,415,000 4.25 4.25
Class H 19,415,204 4.25 0.00
</TABLE>
On each Distribution Date, the Certificate Balance of each Class of
Principal Balance Certificates will be reduced by any distributions of principal
actually made on such Class of Certificates on such Distribution Date, and will
be further reduced by any Realized Losses and Additional Trust Fund Expenses
deemed allocated to such Class of Certificates on such Distribution Date. See
"--Distributions" and "--Subordination; Allocation of Realized Losses and
Certain Expenses" below.
Neither Class of Class X Certificates will have a Certificate Balance. Each
Class of Class X Certificates will represent the right to receive distributions
of interest accrued as described herein on a Notional Amount equal to: (i) in
the case of the Class X-1 Certificates, the aggregate Stated Principal Balance
of the Group 1 Loans outstanding from time to time; and (ii) in the case of the
Class X-2 Certificates, approximately 99.9% of the aggregate Stated Principal
Balance of all the Mortgage Loans outstanding from time to time. The Class X-1
Certificates will have an initial Notional Amount of $33,475,146 (subject to a
variance of plus or minus 5%), and the Class X-2 Certificates will have an
initial Notional Amount of $456,365,528 (subject to a variance of plus or minus
5%).
No Class of REMIC Residual Certificates will have a Certificate Balance.
The "STATED PRINCIPAL BALANCE" of each Mortgage Loan will generally equal
the Cut-off Date Balance thereof, reduced (to not less than zero) on each
Distribution Date by (i) any payments or other collections (or advances in lieu
thereof) of principal of such Mortgage Loan that have been or, if they had not
been applied to cover Additional Trust Fund Expenses, would have been
distributed on the Certificates on such date, and (ii) the principal portion of
any Realized Loss incurred in respect of or allocable to such Mortgage Loan
during the related Collection Period.
PASS-THROUGH RATES
The rate per annum at which any Class of Certificates accrues interest from
time to time is herein referred to as its "PASS-THROUGH RATE".
The Pass-Through Rate applicable to the Class A-1 Certificates: (a) for
each Distribution Date up to and including the Distribution Date in April 1997,
will equal approximately 5.9125% per annum; and (b) for each subsequent
Distribution Date, will, in general, equal the lesser of (i) Certificate
Six-Month LIBOR for such Distribution Date, plus 0.35%, and (ii) the weighted
average of the Net Mortgage Rates in effect for the Group 1 Loans as of the
first day of the related Collection Period (weighted on the basis of the
respective Stated Principal Balances of such Mortgage Loans immediately
following the prior Distribution Date) or, if the Group 1 Loans are no longer
outstanding, 11.61% per annum. "CERTIFICATE SIX-MONTH LIBOR" will, for each
Distribution Date, equal the value of Six-Month LIBOR calculated in accordance
with Six-Month
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LIBOR Formula 1 on the most recent Formula 1 LIBOR Determination Date that
precedes the commencement of the Interest Accrual Period for the Class A-1
Certificates for such Distribution Date. The Pass-Through Rate for the Class A-1
Certificates will be subject to adjustment as of the commencement of the
applicable Interest Accrual Period for the Distribution Date in May 1997, and
every six months thereafter.
The Pass-Through Rate applicable to the Class X-1 Certificates: (a) for the
initial Distribution Date, will equal approximately 0.9455% per annum; and (b)
for each subsequent Distribution Date, will equal the excess, if any, of (i) the
weighted average of the Net Mortgage Rates in effect for the Group 1 Loans as of
the first day of the related Collection Period (weighted on the basis of the
respective Stated Principal Balances of such Mortgage Loans immediately
following the prior Distribution Date), over (ii) the Pass-Through Rate
applicable to the Class A-1 Certificates (or, if such Certificates are no longer
outstanding, that would otherwise have been applicable thereto)for such current
Distribution Date.
The Pass-Through Rates applicable to the Class A-2A, Class A-2B, Class B,
Class C, Class D and Class E Certificates will, at all times, be equal to 6.79%,
7.22%, 7.34%, 7.43%, 7.73% and 7.86% per annum, respectively.
The Pass-Through Rate applicable to the Class X-2 Certificates: (a) for the
initial Distribution Date, will equal approximately 1.9673% per annum; and (b)
for each subsequent Distribution Date, will, in general, equal the excess, if
any, of (i) the weighted average of the Net Mortgage Rates in effect for the
Group 1 Loans (in each case, net of the Pass-Through Rate applicable to the
Class X-1 Certificates for such Distribution Date) and the Net Mortgage Rates in
effect for the Group 2 Loans as of the first day of the related Collection
Period (weighted on the basis of the respective Stated Principal Balances of
such Mortgage Loans immediately following the prior Distribution Date), over
(ii) the weighted average of the Pass-Through Rates applicable to the Class A,
Class B, Class C, Class D, Class E, Class F, Class G and Class H Certificates
for such current Distribution Date (weighted on the basis of the respective
Certificate Balances of such Classes of Certificates immediately prior to such
current Distribution Date).
The Pass-Through Rates applicable to the Class F, Class G and Class H
Certificates will, at all times, be equal to 7.86%, 5.70% and 5.70% per annum,
respectively. No Class of REMIC Residual Certificates will have a specified
Pass-Through Rate.
The "NET MORTGAGE RATE" with respect to any Mortgage Loan is, in general, a
per annum rate equal to the related Mortgage Rate in effect from time to time,
minus the Servicing Fee Rate. However, for purposes of calculating Pass-Through
Rates, the Net Mortgage Rate for any Mortgage Loan shall be determined without
regard to any modification, waiver or amendment of the terms of such Mortgage
Loan, whether agreed to by the Servicer or resulting from a bankruptcy,
insolvency or similar proceeding involving the related borrower. In addition, if
any Mortgage Loan does not accrue interest on the basis of a 360-day year
consisting of twelve 30-day months (which is the basis on which interest accrues
in respect of the REMIC Regular Certificates), then, for purposes of calculating
Pass-Through Rates, the Net Mortgage Rate of such Mortgage Loan for any
one-month period preceding a related Due Date will be the annualized rate at
which interest would have to accrue in respect of such loan on the basis of a
360-day year consisting of twelve 30-day months in order to produce the
aggregate amount of interest actually accrued in respect of such loan during
such one-month period at the related Mortgage Rate (net of the related Servicing
Fee Rate). See "Servicing of the Mortgage Loans--Servicing and Other
Compensation and Payment of Expenses" and "--Modifications, Waivers, Amendments
and Consents" herein.
The "COLLECTION PERIOD" for each Distribution Date is the period that
begins immediately following the Determination Date in the calendar month
preceding the month in which such Distribution Date occurs (or, in the case of
the initial Distribution Date, immediately following the Cut-off Date) and ends
on the Determination Date in the calendar month in which such Distribution Date
occurs. The "DETERMINATION DATE" will be the 5th day of each month or, if any
such 5th day is not a business day, the immediately preceding business day.
THE CERTIFICATE GROUPS
The Class X-1 and Class A-1 Certificates initially will correspond to and
evidence interests solely in Loan Group 1; and the Class X-2, Class A-2A, Class
A-2B, Class B, Class C, Class D, Class E, Class F, Class G
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and Class H Certificates initially will correspond to and evidence interests
solely in Loan Group 2. Distributions of interest on and principal of the Group
1 Certificates will initially be based on interest and/or principal due or
collected, as the case may be, on or with respect to the Group 1 Loans.
Distributions of interest on and principal of the Group 2 Certificates will
initially be based on interest and/or principal due or collected, as the case
may be, on or with respect to the Group 2 Loans. In general, the exceptions to
the foregoing would arise as a result of the subordination of the Subordinate
Certificates in connection with losses and defaults on the Mortgage Loans (in
particular, the Group 1 Loans) and, further, because no payments of principal
may be made with respect to the Subordinate Certificates for so long as any
Class of Class A Certificates is outstanding. The initial Certificate Balance of
the Class A-1 Certificates and the initial Notional Amount of the Class X-1
Certificates will each equal the aggregate Cutoff Date Balance of the Group 1
Loans, the Pass-Through Rate for the Class X-1 Certificates will be calculated
based upon the Net Mortgage Rates in effect with respect to the Group 1 Loans
and the Pass-Through Rate for the Class A-1 Certificates will be calculated
based upon the values of Six-Month LIBOR applicable to the Group 1 Loans. The
aggregate initial Certificate Balance of the Group 2 Certificates with
Certificate Balances will equal the aggregate Cut-off Date Balance of the Group
2 Loans, and the fixed Pass-Through Rates for such Certificates have been set
taking into account the Net Mortgage Rates for the Group 2 Loans.
DISTRIBUTIONS
General. Distributions on or with respect to the Certificates will be made
by the Trustee, to the extent of available funds, on each Distribution Date,
commencing in December 1996. Except as otherwise described below, all such
distributions will be made to the persons in whose names the Certificates are
registered at the close of business on the related Record Date and, as to each
such person, will be made by wire transfer in immediately available funds to the
account specified by the Certificateholder at a bank or other entity having
appropriate facilities therefor, if such Certificateholder will have provided
the Trustee with wiring instructions no less than five business days prior to
the related Record Date and is the registered owner of Certificates with an
aggregate initial principal amount of at least $5,000,000 (or, alternatively, is
the registered owner of all the Class X Certificates of any Class thereof), or
otherwise by check mailed to such Certificateholder. The final distribution on
any Certificate (determined without regard to any possible future reimbursement
of any Realized Losses or Additional Trust Fund Expense previously allocated to
such Certificate) will be made in like manner, but only upon presentation and
surrender of such Certificate at the location that will be specified in a notice
of the pendency of such final distribution. Any distribution that is to be made
with respect to a Certificate in reimbursement of a Realized Loss or Additional
Trust Fund Expense previously allocated thereto, which reimbursement is to occur
after the date on which such Certificate is surrendered as contemplated by the
preceding sentence (the likelihood of any such distribution being remote), will
be made by check mailed to the Certificateholder that surrendered such
Certificate. All distributions made on or with respect to a Class of
Certificates will be allocated pro rata among such Certificates based on their
respective Percentage Interests in such Class.
The Available Distribution Amount. With respect to any Distribution Date,
distributions of interest on and principal of the Certificates will be made from
the Available Distribution Amount for such Distribution Date. The "AVAILABLE
DISTRIBUTION AMOUNT" for any Distribution Date will, in general, equal (a) all
amounts on deposit in the Certificate Account as of the close of business on the
related Determination Date, exclusive of any portion thereof that represents one
or more of the following:
(i) Monthly Payments collected but due on a Due Date subsequent to the
related Collection Period;
(ii) Prepayment Premiums (which are separately distributable on the
Certificates as hereinafter described);
(iii) amounts that are payable or reimbursable to any person other
than the Certificateholders (including amounts payable to the Servicer, any
Replacement Special Servicer or the Trustee as compensation or in
reimbursement of outstanding Advances and amounts payable in respect of
Additional Trust Fund Expenses); and
(iv) amounts deposited in the Certificate Account in error; plus
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(b) to the extent not already included in clause (a), any P&I Advances made
with respect to such Distribution Date and payments made by the Servicer to
cover Prepayment Interest Shortfalls and Balloon Payment Interest Shortfalls
incurred during the related Collection Period.
See "Description of the Pooling and Servicing Agreements--Certificate
Account" in the Prospectus.
Application of the Available Distribution Amount. On each Distribution
Date, the Trustee will apply the Available Distribution Amount for such date for
the following purposes and in the following order of priority:
(1) to pay interest to the holders of the respective Classes of Senior
Certificates, up to an amount equal to, and pro rata as among such Classes
in accordance with, all Distributable Certificate Interest in respect of
each such Class of Certificates for such Distribution Date and, to the
extent not previously paid, for each prior Distribution Date, if any;
(2) to pay principal: (a) first to the holders of the Class A-1
Certificates, second to the holders of the Class A-2A Certificates and
third to the holders of the Class A-2B Certificates, in each case, up to an
amount equal to the lesser of (i) the then outstanding Certificate Balance
of such Class of Certificates and (ii) the remaining Principal Distribution
Amount with respect to Loan Group 1 for such Distribution Date; and (b)
first to the holders of the Class A-2A Certificates, second to the holders
of the Class A-2B Certificates and third to the holders of the Class A-1
Certificates, in each case, up to an amount equal to the lesser of (i) the
then outstanding Certificate Balance of such Class of Certificates and (ii)
the remaining Principal Distribution Amount with respect to Loan Group 2
for such Distribution Date;
(3) to reimburse the holders of the respective Classes of Class A
Certificates, up to an amount equal to, and pro rata as among such Classes
in accordance with, the respective amounts of Realized Losses and
Additional Trust Fund Expenses, if any, previously deemed allocated to such
Classes of Certificates and for which no reimbursement has previously been
paid; and
(4) to make payments on the Subordinate Certificates as contemplated
below;
provided that, on each Distribution Date after the aggregate Certificate Balance
of the Subordinate Certificates has been reduced to zero, and in any event on
the final Distribution Date in connection with a termination of the Trust Fund
(see "--Termination; Retirement of Certificates" below), the payments of
principal to be made as contemplated by clause (2) above with respect to the
Class A Certificates, will be so made to the holders of the respective Classes
of such Certificates, up to an amount equal to, and pro rata as among such
Classes in accordance with, the respective then outstanding Certificate Balances
of such Classes of Certificates, and without regard to the Principal
Distribution Amounts with respect to the two Loan Groups for such date.
On each Distribution Date, following the above-described distributions on
the Senior Certificates, the Trustee will apply the remaining portion, if any,
of the Available Distribution Amount for such date to make payments on the
respective Classes of Subordinate Certificates in alphabetical order of Class
designation. On each Distribution Date, the holders of each Class of Subordinate
Certificates will, to the extent of the Available Distribution Amount remaining
after all required distributions to be made therefrom (as described under this
"--Distributions--Application of the Available Distribution Amount" section) on
the Senior Certificates and each other Class of Subordinate Certificates, if
any, with an earlier alphabetical Class designation, be entitled: first, to
distributions of interest, up to an amount equal to all Distributable
Certificate Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for each prior
Distribution Date, if any; second, if the Certificate Balances of the Class A
Certificates and each other Class of Subordinate Certificates, if any, with an
earlier alphabetical Class designation have been reduced to zero, to
distributions of principal, up to an amount equal to the lesser of (a) the then
outstanding Certificate Balance of such Class of Certificates and (b) the
aggregate of the remaining Principal Distribution Amounts for both Loan Groups
for such Distribution Date (or, on the final Distribution Date in connection
with the termination of the Trust Fund, up to an amount equal to the then
outstanding Certificate Balance of such Class of Certificates); and, third, to
distributions for purposes of reimbursement, up to an amount equal to all
Realized Losses and Additional Trust Fund Expenses, if any, previously deemed
allocated to such Class of Certificates and for which no reimbursement has
previously been paid.
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On each Distribution, following the above-described distributions on the
REMIC Regular Certificates, the Trustee will pay the remaining portion, if any,
of the Available Distribution Amounts for such date to the holders of the REMIC
Residual Certificates.
Distributable Certificate Interest. The "DISTRIBUTABLE CERTIFICATE
INTEREST" in respect of each Class of REMIC Regular Certificates for each
Distribution Date is equal to the Accrued Certificate Interest in respect of
such Class of Certificates for such Distribution Date, reduced by such Class of
Certificates' allocable share (calculated as described below) of any Net
Aggregate Prepayment Interest Shortfall for such Distribution Date.
The "ACCRUED CERTIFICATE INTEREST" in respect of each Class of REMIC
Regular Certificates for each Distribution Date is equal to one month's interest
at the Pass-Through Rate applicable to such Class of Certificates for such
Distribution Date accrued on the Certificate Balance or Notional Amount, as the
case may be, of such Class of Certificates outstanding immediately prior to such
Distribution Date. Accrued Certificate Interest will be calculated on the basis
of a 360-day year consisting of twelve 30-day months.
To the extent of that portion of its aggregate Servicing Fees for the
related Collection Period that is, in the case of each loan, calculated at
0.055% per annum, the Servicer is required to make a non-reimbursable payment
with respect to each Distribution Date to cover the aggregate of any Prepayment
Interest Shortfalls incurred with respect to the Mortgage Asset Pool during each
Collection Period. The "NET AGGREGATE PREPAYMENT INTEREST SHORTFALL" for any
Distribution Date will be the amount, if any, by which (a) the aggregate of all
Prepayment Interest Shortfalls incurred with respect to the Mortgage Asset Pool
during the related Collection Period, exceeds (b) any such payment made by the
Servicer with respect to such Distribution Date to cover such Prepayment
Interest Shortfalls. See "Servicing of the Mortgage Loans-- Servicing and Other
Compensation and Payment of Expenses" herein. The Net Aggregate Prepayment
Interest Shortfall, if any, for each Distribution Date will be allocated on such
Distribution Date: first, to the respective Classes of Subordinate Certificates
sequentially in reverse alphabetical order of Class designation, in each case up
to the amount of the Accrued Certificate Interest in respect of such Class of
Certificates for such Distribution Date; and thereafter, among the respective
Classes of Senior Certificates, pro rata, in accordance with the respective
amounts of Accrued Certificate Interest for each such Class of Senior
Certificates for such Distribution Date.
Principal Distribution Amount. The "PRINCIPAL DISTRIBUTION AMOUNT" with
respect to each Loan Group for any Distribution Date will, in general, equal the
aggregate of the following:
(a) the principal portions of all Monthly Payments (other than Balloon
Payments) and any Assumed Monthly Payments due or deemed due, as the case
may be, in respect of the Mortgage Loans in such Loan Group for their
respective Due Dates occurring during the related Collection Period;
(b) all voluntary principal prepayments received on the Mortgage Loans
in such Loan Group during the related Collection Period;
(c) with respect to any Balloon Loan in such Loan Group as to which
the related stated maturity date occurred during or prior to the related
Collection Period, any payment of principal (exclusive of any voluntary
principal prepayment and any amount described in clause (d) below) made by
or on behalf of the related borrower during the related Collection Period,
net of any portion of such payment that represents a recovery of the
principal portion of any Monthly Payment (other than a Balloon Payment)
due, or the principal portion of any Assumed Monthly Payment deemed due, in
respect of such Mortgage Loan on a Due Date during or prior to the related
Collection Period and not previously recovered;
(d) the portion of all Liquidation Proceeds, Condemnation Proceeds and
Insurance Proceeds received on the Mortgage Loans in such Loan Group during
the related Collection Period that were identified and applied by the
Servicer as recoveries of principal thereof, in each case net of any
portion of such amounts that represents a recovery of the principal portion
of any Monthly Payment (other than a Balloon Payment) due, or the principal
portion of any Assumed Monthly Payment deemed due, in respect of the
related Mortgage Loan on a Due Date during or prior to the related
Collection Period and not previously recovered; and
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(e) if such Distribution Date is subsequent to the initial
Distribution Date, the excess, if any, of (i) the Principal Distribution
Amount with respect to such Loan Group for the immediately preceding
Distribution Date, over (ii) the aggregate distributions of principal made
on the Principal Balance Certificates in respect of such Principal
Distribution Amount on such immediately preceding Distribution Date.
An "ASSUMED MONTHLY PAYMENT" is an amount deemed due in respect of: (i) any
Balloon Loan that is delinquent in respect of its Balloon Payment beyond the
first Determination Date that follows its stated maturity date and as to which
no arrangements have been agreed to for collection of the delinquent amounts; or
(ii) any Mortgage Loan as to which the related Mortgaged Property or Properties
have become REO Property or Properties. The Assumed Monthly Payment deemed due
on any such Balloon Loan on its stated maturity date and on any successive Due
Date that it remains or is deemed to remain outstanding shall equal the Monthly
Payment that would have been due thereon on such date if the related Balloon
Payment had not come due, but rather such Mortgage Loan had continued to
amortize in accordance with such loan's amortization schedule, if any, in effect
immediately prior to maturity and had continued to accrue interest in accordance
with such loan's terms in effect immediately prior to maturity. The Assumed
Monthly Payment deemed due on any such Mortgage Loan as to which the related
Mortgaged Property or Properties have become REO Property or Properties, on each
Due Date for so long as such REO Property or Properties remain part of the Trust
Fund, shall equal the Monthly Payment (or, in the case of a Balloon Loan
described in the prior sentence, the Assumed Monthly Payment) due on the last
Due Date prior to the acquisition of such REO Property or Properties.
Distributions of Prepayment Premiums. Any Prepayment Premium (whether
described in the related Mortgage Loan documents as a fixed prepayment premium
or a yield maintenance amount) actually collected with respect to a Mortgage
Loan during any particular Collection Period will be distributed on the related
Distribution Date as follows:
1. If such Prepayment Premium is with respect to a Group 1 Loan, to
the holders of the Class X-1 Certificates.
2. If such Prepayment Premium is with respect to a Group 2 Loan:
(a) First, on a pro rata basis in accordance with their respective
entitlements, (i) to the holders of the Class X-2 Certificates, up to an
amount equal to (A) the present value (discounted at the Discount Rate
(as defined below) for the Class X-2 Certificates plus the Spread Rate
(as defined below) for the Class X-2 Certificates) of the aggregate
interest that would have been paid in respect of the Class X-2
Certificates from the Distribution Date occurring in the following month
until the Notional Amount of the Class X-2 Certificates would have been
reduced to zero had the related prepayment not occurred, minus (B) the
present value (discounted at the Discount Rate for the Class X-2
Certificates plus the Spread Rate for the Class X-2 Certificates) of the
aggregate interest that is to be paid in respect of the Class X-2
Certificates from the Distribution Date occurring in the following month
until the Notional Amount of the Class X-2 Certificates is to be reduced
to zero after taking account of the related prepayment; (ii) to the
holders of the Class A-2A Certificates, up to an amount equal to (A) the
present value (discounted at the Discount Rate for the Class A-2A
Certificates plus the Spread Rate for the Class A-2A Certificates) of
the aggregate principal and interest that would have been paid in
respect of the Class A-2A Certificates from the Distribution Date
occurring in the following month until the Certificate Balance of the
Class A-2A Certificates would have been reduced to zero had the related
prepayment not occurred, minus (B) the sum of the amount of the related
prepayment distributed in respect of the Class A-2A Certificates and the
present value (discounted at the Discount Rate for the Class A-2A
Certificates plus the Spread Rate for the Class A-2A Certificates) of
the aggregate principal and interest that is to be paid in respect of
the Class A-2A Certificates from the Distribution Date occurring in the
following month until the Certificate Balance of the Class A-2A
Certificates is to be reduced to zero after taking account of the
related prepayment; and (iii) to the holders of the Class A-2B
Certificates, up to an amount equal to (A) the present value (discounted
at the Discount Rate for the Class A-2B Certificates plus the Spread
Rate for the Class A-2B Certificates) of the aggregate principal and
interest that would
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have been paid in respect of the Class A-2B Certificates from the
Distribution Date occurring in the following month until the Certificate
Balance of the Class A-2B Certificates would have been reduced to zero
had the related prepayment not occurred, minus (B) the sum of the amount
of the related prepayment distributed in respect of the Class A-2B
Certificates and the present value (discounted at the Discount Rate for
the Class A-2B Certificates plus the Spread Rate for the Class A-2B
Certificates) of the aggregate principal and interest that is to be paid
in respect of the Class A-2B Certificates from the Distribution Date
occurring in the following month until the Certificate Balance of the
Class A-2B Certificates is to be reduced to zero after taking account of
the related prepayment;
(b) then, to the extent of any portion of such Prepayment Premium
remaining following the distributions described in the preceding clause
(a), to the holders of Class B, Class C, Class D and Class E
Certificates, in that order, in each case up to an amount calculated in
the same manner as described for the Class A-2A and Class A-2B
Certificates in clauses (a)(ii) and (a)(iii) above (except that the
Discount Rate and Spread Rate for each such Class shall correspond to
the applicable rate set forth in the definitions below);
(c) then, to the extent of any portion of such Prepayment Premium
remaining following the distributions described in the preceding clauses
(a) and (b), to the holders of the Class R-III Certificates.
The foregoing calculations (as well as the calculation of Discount Rates
described in the next paragraph) will be made by assuming no future prepayments
on or in respect of the Mortgage Loans during, and by otherwise applying the
Maturity Assumptions at a 0% CPR to, the period subsequent to the end of the
Collection Period in which the related prepayment was received. If more than one
prepayment occurs with respect to Loan Group 2 during any Collection Period,
then the foregoing calculations shall be applied collectively for all such
prepayments in the aggregate.
For purposes of the foregoing, the "DISCOUNT RATE" with respect to any
Class of Offered Certificates is the rate determined by the Servicer or the
Trustee, in its good faith, to be the yield (interpolated and rounded to the
nearest one-thousandth of a percent, if necessary) in the secondary market for
United States Treasury securities with a maturity equal to the earlier of the
maturity of the particular Mortgage Loan being prepaid and the final
Distribution Date for such Class of Certificates (without taking into account
the related principal prepayment but giving effect to all prior prepayments).
The "SPREAD RATE" for the Class X-2 Certificates is 1.0% per annum, for the
Class A-2A and A-2B Certificates is 0.30% per annum, for the Class B
Certificates is 0.50% per annum, for the Class C Certificates is 0.50% per
annum, for the Class D Certificates is 0.65% per annum, and for the Class E
Certificates is 1.50% per annum. The holders of the Class E, Class F, Class G
and Class H Certificates will not receive any Prepayment Premiums.
The Prepayment Premiums, if any, collected on the Mortgage Loans during any
Collection Period may not be sufficient to fully compensate Certificateholders
of any Class for any loss in yield attributable to the related prepayments of
principal. See "Risk Factors--Prepayment Premiums" herein.
Treatment of REO Properties. Notwithstanding that any Mortgaged Property
may be acquired as part of the Trust Fund through foreclosure, deed in lieu of
foreclosure or otherwise, the related Mortgage Loan will be treated, for
purposes of, among other things, determining distributions on the Certificates,
allocations of Realized Losses and Additional Trust Fund Expenses to the
Certificates, and the amount of Servicing Fees and Special Servicing Fees
payable under the Pooling and Servicing Agreement, as having remained
outstanding until such REO Property is liquidated. Among other things, such
Mortgage Loan will be taken into account when determining Pass-Through Rates and
the Principal Distribution Amount for the related Loan Group. In connection
therewith, operating revenues and other proceeds derived from such REO Property
(after application thereof to pay certain costs and taxes, including certain
reimbursements payable to the Servicer, any Replacement Special Servicer and/or
the Trustee, incurred in connection with the operation and disposition of such
REO Property) will be "applied" by the Servicer as principal, interest and other
amounts "due" on such Mortgage Loan, and, subject to the applicable limitations
described under "--P&I
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Advances" below, the Servicer will be required to make P&I Advances in respect
of such Mortgage Loan, in all cases as if such Mortgage Loan had remained
outstanding.
SUBORDINATION; ALLOCATION OF LOSSES AND CERTAIN EXPENSES
As and to the extent described herein, the rights of holders of Subordinate
Certificates to receive distributions of amounts collected or advanced on the
Mortgage Loans will, in the case of each Class thereof, be subordinated to the
rights of holders of the Senior Certificates and, further, to the rights of
holders of each other Class of Subordinate Certificates, if any, with an earlier
alphabetical Class designation. This subordination is intended to enhance the
likelihood of timely receipt by holders of the respective Classes of Senior
Certificates of the full amount of Distributable Certificate Interest payable in
respect of their Certificates on each Distribution Date, and the ultimate
receipt by holders of the respective Classes of Class A Certificates of
principal equal to, in each such case, the entire Certificate Balance of such
Class of Certificates. Similarly, but to decreasing degrees, this subordination
is also intended to enhance the likelihood of timely receipt by holders of the
other Classes of Offered Certificates of the full amount of Distributable
Certificate Interest payable in respect of their Certificates on each
Distribution Date, and the ultimate receipt by holders of such other Classes of
Offered Certificates of principal equal to, in each such case, the entire
Certificate Balance of such Class of Certificates. The subordination of any
Class of Subordinate Certificates will be accomplished by, among other things,
the application of the Available Distribution Amount on each Distribution Date
in the order of priority described under "--Distributions--Application of the
Available Distribution Amount" above. No other form of Credit Support will be
available for the benefit of holders of the Offered Certificates.
If, following the distributions to be made in respect of the Certificates
on any Distribution Date, the aggregate Stated Principal Balance of the Mortgage
Asset Pool that will be outstanding immediately following such Distribution Date
is less than the then aggregate Certificate Balance of the Principal Balance
Certificates, the respective Certificate Balances of the Class H, Class G, Class
F, Class E, Class D, Class C and Class B Certificates will be reduced,
sequentially in that order, in the case of each such Class until such deficit
(or the related Certificate Balance) is reduced to zero (whichever occurs
first). If any portion of such deficit remains at such time as the Certificate
Balances of such Classes of Certificates are reduced to zero, then the
respective Certificate Balances of the Class A-1, Class A-2A and Class A-2B
Certificates will be reduced, pro rata in accordance with the relative sizes of
the remaining Certificate Balances of such Classes of Certificates, until such
deficit (or each such Certificate Balance) is reduced to zero. Any such deficit
may be the result of Realized Losses incurred in respect of the Mortgage Loans
and/or Additional Trust Fund Expenses. The foregoing reductions in the
Certificate Balances of the Principal Balance Certificates will be deemed to
constitute an allocation of any such Realized Losses and Additional Trust Fund
Expenses.
"REALIZED LOSSES" are losses on or in respect of the Mortgage Loans arising
from the inability of the Servicer to collect all amounts due and owing under
any such Mortgage Loan, including by reason of the fraud or bankruptcy of a
borrower or a casualty of any nature at a Mortgaged Property, to the extent not
covered by insurance. The Realized Loss in respect of a liquidated Mortgage Loan
(or related REO Property or Properties) is an amount generally equal to the
excess, if any, of (a) the outstanding principal balance of such Mortgage Loan
as of the date of liquidation, together with (i) all accrued and unpaid interest
thereon at the related Mortgage Rate to but not including the Due Date in the
Collection Period in which the liquidation occurred and (ii) all related
unreimbursed Servicing Advances and outstanding liquidation expenses, over (b)
the aggregate amount of Liquidation Proceeds, if any, recovered in connection
with such liquidation. If any portion of the debt due under a Mortgage Loan is
forgiven, whether in connection with a modification, waiver or amendment granted
or agreed to by the Servicer or in connection with the bankruptcy or similar
proceeding involving the related borrower, the amount so forgiven also will be
treated as a Realized Loss.
"ADDITIONAL TRUST FUND EXPENSES" include, among other things, (i) Special
Servicing Fees, Workout Fees and Liquidation Fees, (ii) interest in respect of
unreimbursed Advances, (iii) the cost of various opinions of counsel required or
permitted to be obtained in connection with the servicing of the Mortgage Loans
and the administration of the Trust Fund, (iv) certain unanticipated,
non-Mortgage Loan specific expenses of the Trust Fund, including certain
indemnities and reimbursements to the Trustee as described under "The Pooling
and Servicing Agreements--Certain Matters Regarding the Trustee" in the
Prospectus, certain indemnities and reimbursements to the Servicer and the
Depositor (and certain indemnities and reimbursements to a
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Replacement Special Servicer comparable to those for the Servicer) as described
under "The Pooling and Servicing Agreements--Certain Matters Regarding the
Master Servicer and the Depositor" in the Prospectus and certain federal, state
and local taxes, and certain tax-related expenses, payable out of the Trust Fund
as described under "Servicing of the Mortgage Loans--REO Properties" herein and
"Certain Federal Income Tax Consequences--Prohibited Transactions Tax and Other
Taxes" in the Prospectus, (v) any amounts expended on behalf of the Trust Fund
to remediate an adverse environmental condition at any Mortgaged Property
securing a defaulted Mortgage Loan (see "Description of the Pooling and
Servicing Agreements--Realization Upon Defaulted Mortgage Loans" in the
Prospectus), and (vi) any other expense of the Trust Fund not specifically
included in the calculation of "Realized Loss" for which there is no
corresponding collection from a borrower. Additional Trust Fund Expenses will
reduce amounts payable to Certificateholders and, consequently, may result in a
loss on the Offered Certificates.
P&I ADVANCES
With respect to each Distribution Date, unless the Servicer, in its
reasonable judgment, believes that the funds therefor would not be recoverable
from Related Proceeds and subject to the recoverability standard described in
the Prospectus, the Servicer, will be obligated to make P&I Advances out of its
own funds or, subject to the replacement thereof as provided in the Pooling and
Servicing Agreement, funds held in the Certificate Account that are not required
to be part of the Available Distribution Amount for such Distribution Date, in
an amount generally equal to the aggregate of all Monthly Payments (other than
Balloon Payments) and any Assumed Monthly Payments (in each case net of any
related Workout Fee) that were due or deemed due, as the case may be, in respect
of the Mortgage Loans during the related Collection Period and that were not
paid by or on behalf of the related borrowers or otherwise collected as of the
close of business on the last day of the related Collection Period or other
specified date prior to such Distribution Date. The Servicer's obligations to
make P&I Advances in respect of any Mortgage Loan will continue through
liquidation of such Mortgage Loan or disposition of any REO Property acquired in
respect thereof. Notwithstanding the foregoing, if it is determined that an
Appraisal Reduction Amount exists with respect to any Required Appraisal
Mortgage Loan (each as defined below), then, with respect to the Distribution
Date immediately following the date of such determination and with respect to
each subsequent Distribution Date for so long as such Appraisal Reduction Amount
exists, in the event of subsequent delinquencies thereon, the interest portion
of the P&I Advance in respect of such Mortgage Loan will be reduced (no
reduction to be made in the principal portion, however) to equal to the product
of (i) the amount of the interest portion of such P&I Advance that would
otherwise be required to be made for such Distribution Date without regard to
this sentence, multiplied by (ii) a fraction (expressed as a percentage), the
numerator of which is equal to the Stated Principal Balance of such Mortgage
Loan, net of such Appraisal Reduction Amount, and the denominator of which is
equal to the Stated Principal Balance of such Mortgage Loan. See "--Appraisal
Reductions" below. If the Servicer fails to make a required P&I Advance, the
Trustee will be required to make such P&I Advance. See "--The Trustee" below.
The Servicer and the Trustee will each be entitled to recover any P&I
Advance made by it from Related Proceeds collected in respect of the Mortgage
Loan as to which such P&I Advance was made. Notwithstanding the foregoing,
neither the Servicer nor the Trustee will be obligated to make a P&I Advance
that would, if made, constitute a Nonrecoverable Advance. The Servicer and
Trustee will each be entitled to recover any P&I Advance previously made by it
that is, at any time, determined to be a Nonrecoverable Advance, out of funds
received on or in respect of other Mortgage Loans. See "Description of the
Certificates--Advances in Respect of Delinquencies" and "The Pooling and
Servicing Agreements--Certificate Account" in the Prospectus.
The Servicer and the Trustee will each be entitled with respect to any
Advance made thereby, and any Replacement Special Servicer will be entitled with
respect to any Servicing Advance made thereby, to interest accrued on the amount
of such Advance for so long as it is outstanding at a rate per annum (the
"REIMBURSEMENT RATE") equal to the "prime rate" as published in the "Money
Rates" section of The Wall Street Journal, as such "prime rate" may change from
time to time. Such interest on any Advance will be payable to the Servicer, any
Replacement Special Servicer or the Trustee, as the case may be, out of default
interest collected in respect of the related Mortgage Loan or, in connection
with the reimbursement of such
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Advance, out of any amounts then on deposit in the Certificate Account. To the
extent not offset by default interest actually collected in respect of any
defaulted Mortgage Loan, interest accrued on outstanding Advances made in
respect thereof will result in a reduction in amounts payable on the
Certificates.
APPRAISAL REDUCTIONS
Upon the earliest of (i) the date on which any Mortgage Loan becomes a
Modified Mortgage Loan (as defined below), (ii) the 90th day following the
occurrence of any uncured delinquency in Monthly Payments with respect to any
Mortgage Loan, (iii) the date on which a receiver is appointed and continues in
such capacity in respect of a Mortgaged Property securing any Mortgage Loan and
(iv) the date on which a Mortgaged Property securing any Mortgage Loan becomes
an REO Property (each such Mortgage Loan, a "REQUIRED APPRAISAL LOAN"), the
Servicer will be required, within 30 days (or such longer period as the Servicer
is diligently and in good faith proceeding to obtain such appraisal), to obtain
an appraisal of the related Mortgaged Property from an independent
MAI-designated appraiser, unless such an appraisal had previously been obtained
within the prior twelve months. The cost of such appraisal will be advanced by
the Servicer, subject to its right to be reimbursed therefor as a Servicing
Advance. As a result of any such appraisal, it may be determined that an
Appraisal Reduction Amount exists with respect to the related Required Appraisal
Loan. The "APPRAISAL REDUCTION AMOUNT" for any Required Appraisal Loan will be
an amount, calculated as of the Determination Date immediately succeeding the
date on which the appraisal is obtained, equal to the excess, if any, of (a) the
sum of (i) the Stated Principal Balance of such Required Appraisal Loan, (ii) to
the extent not previously advanced by or on behalf of the Servicer or the
Trustee, all unpaid interest on the Required Appraisal Loan through the most
recent Due Date prior to such Determination Date at a per annum rate equal to
the related Mortgage Rate, (iii) all related unreimbursed Advances made with
respect to such Required Appraisal Loan plus interest accrued on such Advances
at the Reimbursement Rate and (iv) all currently due and unpaid real estate
taxes and assessments, insurance premiums, and, if applicable, ground rents in
respect of the related Mortgaged Property, net of any escrow reserves held by
the Servicer to cover any such item, over (b) 90% of an amount equal to (i) the
appraised value of the related Mortgaged Property or REO Property as determined
by such appraisal, net of (ii) the amount of any liens on such property that are
prior to the lien of the Required Appraisal Loan, are not in respect of items
included in clause (a)(iv) above and were not taken into account in the
calculation of such appraised value.
With respect to each Required Appraisal Loan (unless such Mortgage Loan has
become a Corrected Mortgage Loan and has remained current for twelve consecutive
Monthly Payments, and no other Special Servicing Event has occurred with respect
thereto during the preceding twelve months), the Servicer is required, within 30
days of each anniversary of such loan's becoming a Required Appraisal Loan, to
order an update of the prior appraisal (the cost of which will be covered by and
reimbursable as a Servicing Advance). Based upon such appraisal, the Servicer is
to redetermine and report to the Trustee the Appraisal Reduction Amount, if any,
with respect to such Mortgage Loan.
A "MODIFIED MORTGAGE LOAN" is any Mortgage Loan as to which any Special
Servicing Event has occurred and which has been modified by the Servicer in a
manner that: (a) affects the amount or timing of any payment of principal or
interest due thereon (other than, or in addition to, bringing current Monthly
Payments with respect to such Mortgage Loan); (b) except as expressly
contemplated by the related Mortgage, results in a release of the lien of the
Mortgage on any material portion of the related Mortgaged Property without a
corresponding principal prepayment in an amount not less than the fair market
value (as is) of the property to be released; or (c) in the reasonable good
faith judgment of the Servicer, otherwise materially impairs the security for
such Mortgage Loan or reduces the likelihood of timely payment of amounts due
thereon.
REPORTS TO CERTIFICATEHOLDERS; CERTAIN AVAILABLE INFORMATION
Trustee Reports. On each Distribution Date, the Trustee will be required
to forward by mail to each holder of an Offered Certificate a Distribution Date
Statement providing various items of information relating to distributions made
on such date with respect to the relevant Class and the recent status of the
Mortgage Asset Pool. For a discussion of the particular items of information to
be provided in each Distribution Date
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Statement, as well as a discussion of certain annual information reports to be
furnished by the Trustee to persons who at any time during the prior calendar
year were holders of the Offered Certificates, see "Description of the
Certificates--Reports to Certificateholders" in the Prospectus.
In addition, based on information provided in monthly reports prepared by
the Servicer and delivered to the Trustee, the Trustee will prepare and/or
forward on each Distribution Date to each Offered Certificateholder, the
following statements and reports (collectively with the Distribution Date
Statements, the "TRUSTEE REPORTS"), substantially in the forms set forth in
Annex B (although such forms may be subject to change over time) and containing
the information set forth below:
(1) A report containing information regarding the Mortgage Loans as of
the close of business on the immediately preceding Determination Date,
which report shall contain certain of the categories of information
regarding the Mortgage Loans set forth in this Prospectus Supplement in the
tables under the caption "Annex A: Certain Characteristics of the Mortgage
Loans" (calculated, where applicable, on the basis of the most recent
relevant information provided by the borrowers to the Servicer and by the
Servicer to the Trustee) and such information shall be presented in a
loan-by-loan and tabular format substantially similar to the formats
utilized in this Prospectus Supplement on Annex A (provided that no
information will be provided as to any repair and replacement or other cash
reserve and the only financial information to be reported on an ongoing
basis will be Most Recent NOI (as defined in Annex A) and a debt service
coverage ratio calculated on the basis thereof).
(2) A "Delinquent Loan Status Report" setting forth, among other
things, those Mortgage Loans which, as of the close of business on the
immediately preceding Determination Date, were delinquent 30-59 days,
delinquent 60-89 days, delinquent 90 days or more, current but specially
serviced, or in foreclosure but not REO Property or which has become REO
Property.
(3) An "Historical Loan Modification Report" setting forth, among
other things, those Mortgage Loans which, as of the close of business on
the immediately preceding Determination Date, have been modified pursuant
to the Pooling and Servicing Agreement (i) during the Collection Period
ending on such Determination Date and (ii) since the Cut-off Date, showing
the original and the revised terms thereof.
(4) An "Historical Loss Report" setting forth, among other things, as
of the close of business on the immediately preceding Determination Date,
(i) the aggregate amount of liquidation proceeds and liquidation expenses,
both for the Collection Period ending on such Determination Date and for
all prior Collection Periods, and (ii) the amount of Realized Losses
occurring both during such Collection Period and historically, set forth on
a Mortgage Loan-by-Mortgage Loan basis.
(5) An "REO Status Report" setting forth, among other things, with
respect to each REO Property that was included in the Trust Fund as of the
close of business on the immediately preceding Determination Date, (i) the
acquisition date of such REO Property, (ii) the amount of income collected
with respect to any REO Property (net of related expenses) and other
amounts, if any, received on such REO Property during the Collection Period
ending on such Determination Date and (iii) the value of the REO Property
based on the most recent appraisal or other valuation thereof available to
the Servicer as of such date of determination (including any prepared
internally by the Servicer).
(6) A "Specially Serviced Mortgage Loan Status Report" setting forth,
among other things, as of the close of business on the immediately
preceding Determination Date, (i) the aggregate amount of Specially
Serviced Mortgage Loans and (ii) a loan-by-loan listing of all Specially
Serviced Mortgage Loans indicating their status and the date and
circumstances of the applicable Special Servicing Event.
None of the above reports will include any information that the Servicer
deems to be confidential. Neither the Servicer nor the Trustee shall be
responsible for the accuracy or completeness of any information supplied to it
by a borrower or other third party that is included in any reports, statements,
materials or information prepared or provided by the Servicer or the Trustee, as
applicable. Certain information will be made available to Certificateholders by
electronic transmission as may be agreed upon between the Depositor and the
Trustee.
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The Servicer is also required to deliver to the Trustee within 90 days
following the end of each calendar quarter, commencing with the calendar quarter
ended December 31, 1996, with respect to each Mortgaged Property and REO
Property, an "Operating Statement Analysis" containing revenue, expense and net
operating income information normalized using the methodology described in Annex
A as of the end of such calendar quarter, together with copies of the operating
statements and rent rolls (but only to the extent the related borrower is
required by the Mortgage to deliver and does deliver, or otherwise agrees to
provide and does provide, such information) for such Mortgaged Property or REO
Property as of the end of such calendar quarter.
Certificate Owners who have certified to the Trustee as to their beneficial
ownership of any Offered Certificate may also obtain copies of any of the
Trustee Reports and Operating Statement Analyses described above. Otherwise,
until such time as Definitive Certificates are issued in respect of the Offered
Certificates, the foregoing information will be available to the related
Certificate Owners only to the extent that it is forwarded by or otherwise
available through DTC and its Participants. Conveyance of notices and other
communications by DTC to Participants, and by Participants to Certificate
Owners, will be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time. The Servicer, the
Trustee, the Depositor and the Certificate Registrar are required to recognize
as Certificateholders only those persons in whose names the Certificates are
registered on the books and records of the Certificate Registrar.
Other Information. The Trustee will make available at its offices
primarily responsible for administration of the Trust Fund (or the offices of
the Servicer), during normal business hours, for review by any holder or
Certificate Owner of an Offered Certificate, originals or copies of, among other
things, the following items: (a) the Pooling and Servicing Agreement and any
amendments thereto, (b) all Trustee Reports and all Operating Statement Analyses
delivered to holders of the relevant Class of Offered Certificates since the
Delivery Date, (c) all officer's certificates and accountants' reports delivered
to the Trustee since the Delivery Date as described under "The Pooling and
Servicing Agreements--Evidence as to Compliance" in the Prospectus, (d) the most
recent property inspection report prepared by or on behalf of the Servicer and
delivered to the Trustee in respect of each Mortgaged Property, (e) the most
recent annual operating statements, if any, collected by or on behalf of the
Servicer and delivered to the Trustee in respect of each Mortgaged Property, and
(f) the Mortgage Note, Mortgage and other legal documents relating to each
Mortgage Loan, including any and all modifications, waivers and amendments of
the terms of a Mortgage Loan entered into by the Servicer and delivered to the
Trustee. Copies of any and all of the foregoing items will be available from the
Trustee upon request; provided that the Trustee will be permitted to require
payment of a sum sufficient to cover the reasonable costs and expenses of
providing such copies; and provided, further, that the Trustee may require (x)
in the case of a Certificate Owner, a written confirmation executed by the
requesting person or entity, in a form reasonably acceptable to the Trustee,
generally to the effect that such person or entity is a beneficial owner of
Offered Certificates, is requesting the information solely for use in evaluating
such person's or entity's investment in such Certificates and will otherwise
keep such information confidential and (y) in the case of a prospective
purchaser, confirmation executed by the requesting person or entity, in a form
reasonably acceptable to the Trustee, generally to the effect that such person
or entity is a prospective purchaser of Offered Certificates or an interest
therein, is requesting the information solely for use in evaluating a possible
investment in such Certificates and will otherwise keep such information
confidential. Certificateholders, by the acceptance of their Certificates, will
be deemed to have agreed to keep such information confidential.
VOTING RIGHTS
At all times during the term of the Pooling and Servicing Agreement, 98.0%
of the voting rights for the Certificates (the "VOTING RIGHTS") shall be
allocated among the holders of the respective Classes of Principal Balance
Certificates in proportion to the Certificate Balances of their Certificates,
1.4% of the Voting Rights shall be allocated among the holders of the respective
Classes of Class X Certificates in proportion to the Notional Amounts of their
Certificates, and the remaining Voting Rights shall be allocated equally among
the holders of the respective Classes of REMIC Residual Certificates. Voting
Rights allocated to a Class of
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Certificateholders shall be allocated among such Certificateholders in
proportion to the Percentage Interests in such Class evidenced by their
respective Certificates.
TERMINATION; RETIREMENT OF CERTIFICATES
The obligations created by the Pooling and Servicing Agreement will
terminate following the earliest of (i) the final payment (or Advance in respect
thereof) or other liquidation of the last Mortgage Loan or REO Property subject
thereto, and (ii) subject to the requirement that the then aggregate Stated
Principal Balance of the Mortgage Asset Pool be less than 5% of the Initial Pool
Balance, the purchase of all of the assets of the Trust Fund by the Servicer or
the Depositor. Written notice of termination of the Pooling and Servicing
Agreement will be given to each Certificateholder, and the final distribution
will be made only upon surrender and cancellation of the Certificates at the
office of the Certificate Registrar or other location specified in such notice
of termination.
Any such purchase by the Servicer or the Depositor of all the Mortgage
Loans and other assets in the Trust Fund is required to be made at a price equal
to (a) the sum of (i) the aggregate Purchase Price of all the Mortgage Loans
(exclusive of Mortgage Loans as to which the related Mortgaged Properties have
become REO Properties) then included in the Trust Fund and (ii) the aggregate
fair market value of all REO Properties then included in the Trust Fund (which
fair market value for any REO Property may be less than the Purchase Price for
the corresponding Mortgage Loan), as determined by an appraiser mutually agreed
upon by the Servicer and the Trustee, reduced by (b) if such purchase is by the
Servicer, the aggregate of amounts payable or reimbursable to the Servicer under
the Pooling and Servicing Agreement.
On the final Distribution Date, the aggregate amount paid by the Servicer
or the Depositor, as the case may be, for the Mortgage Loans and other assets in
the Trust Fund (if the Trust Fund is to be terminated as a result of the
purchase described in the preceding paragraph), together with all other amounts
on deposit in the Certificate Account and not otherwise payable to a person
other than the Certificateholders (see "The Pooling and Servicing
Agreements--Certificate Account" in the Prospectus), will be applied as
described above under "--Distributions--Application of the Available
Distribution Amount".
THE TRUSTEE
State Street Bank and Trust Company, a trust company chartered under the
laws of the Commonwealth of Massachusetts, will act as Trustee on behalf of the
Certificateholders. The Servicer will be responsible for the reasonable
compensation of the Trustee for performing its duties under the Pooling and
Servicing Agreement. The offices of the Trustee primarily responsible for the
administration of the Trust Fund are located at Two International Place, 5th
Floor, Boston, Massachusetts 02110. See "The Pooling and Servicing
Agreements--the Trustee", "--Duties of the Trustee", "--Certain Matters
Regarding the Trustee" and "--Resignation and Removal of the Trustee" in the
Prospectus.
YIELD AND MATURITY CONSIDERATIONS
YIELD CONSIDERATIONS
General. The yield on any Offered Certificate will depend on: (i) the
Pass-Through Rate in effect from time to time for such Certificate; (ii) the
price paid for such Certificate and, if the price was other than par, the rate
and timing of payments of principal on such Certificate; and (iii) the aggregate
amount of distributions on such Certificate.
Pass-Through Rate. The Pass-Through Rate for the Class X-1 Certificates
will be variable and will equal the excess, if any, of the weighted average of
the Net Mortgage Rates of the Group 1 Loans from time to time, over the
Pass-Through Rate applicable to the Class A-1 Certificates (or, if such
Certificates are no longer outstanding, that would have been applicable to such
Certificates) from time to time. The Pass-Through Rate for the Class X-2
Certificates will also be variable and will equal the excess, if any, of (i) the
weighted average of the Net Mortgage Rates of the Group 1 Loans (in each case,
net of the applicable Pass-Through Rate for the Class X-1 Certificates) and the
Net Mortgage Rates of the Group 2 Loans from time to time, over (ii) the
weighted average of the Pass-Through Rates applicable to the Class A, Class B,
Class C, Class D, Class E, Class F, Class G and Class H Certificates from time
to time. Accordingly, the yield on the Class X Certificates will be sensitive to
changes in the relative composition of the two Loan Groups (or, in the
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case of the Class X-1 Certificates, just Loan Group 1) as a result of scheduled
amortization, voluntary prepayments, liquidations of Mortgage Loans following
default and repurchases of Mortgage Loans.
The yield on the Class X-1 Certificates will also be sensitive to changes
in the Pass-Through Rate for the Class A-1 Certificates. If Certificate
Six-Month LIBOR rises above one or more of the maximum Mortgage Rates (in each
case, net of the related Gross Margin) for the Group 1 Loans, and accordingly,
results in an increase in the Pass-Through Rate for the Class A-1 Certificates,
then the Pass-Through Rate for (and, accordingly, the yield on) the Class X-1
Certificates will be adversely affected until the Pass-Through Rate for the
Class A-1 Certificates reaches the weighted average of the Net Mortgage Rates of
Group 1 Loans (at which time the Pass-Through Rate for the Class X-1
Certificates will be 0% per annum).
The yield on the Class X-2 Certificates will also be sensitive to changes
in the relative sizes of the respective Certificate Balances of the Class A,
Class B, Class C, Class D, Class E, Class F, Class G and Class H Certificates.
In addition, if as a result of losses on or in respect of the Group 1 Loans,
payments of interest on the Class A-1 Certificates become dependent upon
interest accrued on the Group 2 Loans, the Pass-Through Rate for (and,
accordingly, the yield on) the Class X-2 Certificates will be adversely affected
by increases in Six-Month LIBOR (to the extent reflected in the Pass-Through
Rate for the Class A-1 Certificates). Furthermore, if as a result of the
application of payments or other collections of principal on or in respect of
the Group 2 Loans to pay principal of the Class A-1 Certificates following the
retirement of the Class A-2A and Class A-2B Certificates, payments on the
remaining Group 2 Certificates become dependent upon interest accrued on the
Group 1 Loans, the Pass-Through Rate for (and, accordingly, the yield on) the
Class X-2 Certificates will be adversely affected by decreases in Six-Month
LIBOR (to the extent reflected in the Net Mortgage Rates for the Group 1 Loans).
See "Description of the Certificates--Distributions--Pass-Through Rates"
and "Description of the Mortgage Asset Pool" herein and "--Yield
Considerations--Rate and Timing of Principal Payments" and "--Yield Sensitivity
of the Class X Certificates" below.
Rate and Timing of Principal Payments. The yield to holders of the Class X
Certificates and any other Offered Certificates that are purchased at a discount
or premium will be affected by the rate and timing of principal payments on the
Mortgage Loans (including principal prepayments on the Mortgage Loans resulting
from both voluntary prepayments by the mortgagors and involuntary liquidations).
The rate and timing of principal payments on the Mortgage Loans will in turn be
affected by the amortization schedules thereof, the dates on which Balloon
Payments are due and the rate and timing of principal prepayments and other
unscheduled collections thereon (including for this purpose, collections made in
connection with liquidations of Mortgage Loans due to defaults, casualties or
condemnations affecting the Mortgaged Properties, or purchases of Mortgage Loans
out of the Trust Fund). Prepayments and, assuming the respective stated maturity
dates therefor have not occurred, liquidations and purchases of the Mortgage
Loans, will result in distributions on the Principal Balance Certificates of
amounts that otherwise would have been distributed (and reductions in the
Notional Amounts of the Class X Certificates that would otherwise have occurred)
over the remaining terms of the Mortgage Loans. Defaults on the Mortgage Loans,
particularly at or near their stated maturity dates, may result in significant
delays in payments of principal on the Mortgage Loans (and, accordingly, on the
Principal Balance Certificates) while work-outs are negotiated or foreclosures
are completed. See "Servicing of the Mortgage Loans--Modifications, Waivers,
Amendments and Consents" herein and "The Pooling and Servicing
Agreements--Realization Upon Defaulted Mortgage Loans" and "Certain Legal
Aspects of Mortgage Loans--Foreclosure" in the Prospectus. Because the rate of
principal payments on the Mortgage Loans will depend on future events and a
variety of factors (as described below), no assurance can be given as to such
rate or the rate of principal prepayments in particular. The Depositor is not
aware of any relevant publicly available or authoritative statistics with
respect to the historical prepayment experience of a large group of mortgage
loans comparable to the Mortgage Loans.
The extent to which the yield to maturity of an Offered Certificate may
vary from the anticipated yield will depend upon the degree to which such
Certificate is purchased at a discount or premium and when, and to what degree,
payments of principal on the Mortgage Loans are in turn distributed on or
otherwise result in the reduction of the principal balance or notional amount,
as the case may be, of such Certificate. An investor should consider, in the
case of any Offered Certificate purchased at a discount, the risk that a slower
than
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anticipated rate of principal payments on such Certificate could result in an
actual yield to such investor that is lower than the anticipated yield and, in
the case of any Offered Certificate purchased at a premium, the risk that a
faster than anticipated rate of principal payments on such Certificate could
result in an actual yield to such investor that is lower than the anticipated
yield. In general, the earlier a payment of principal is made on an Offered
Certificate purchased at a discount or premium, the greater will be the effect
on an investor's yield to maturity. As a result, the effect on an investor's
yield of principal payments on such investor's Offered Certificates occurring at
a rate higher (or lower) than the rate anticipated by the investor during any
particular period would not be fully offset by a subsequent like reduction (or
increase) in the rate of principal payments. The yield to maturity of each Class
of Class X Certificates will be highly sensitive to the rate and timing of
principal payments (including by reason of prepayments, defaults and
liquidations) on or in respect of, in the case of the Class X-1 Certificates,
the Group 1 Loans and, in the case of the Class X-2 Certificates, the Group 2
Loans (and, to a lesser extent, the Group 1 Loans). Investors in the Class X
Certificates should fully consider the associated risks, including the risk that
an extremely rapid rate of amortization and prepayment of the related Notional
Amount could result in the failure of such investors to recoup their initial
investments.
Losses and Shortfalls. The yield to holders of the Offered Certificates
will also depend on the extent to which such holders are required to bear the
effects of any losses or shortfalls on the Mortgage Loans. Losses and other
shortfalls on the Mortgage Loans will generally be borne: first, by the holders
of the respective Classes of Subordinate Certificates, in reverse alphabetical
order of Class designation, to the extent of amounts (or, in the case of a Net
Aggregate Prepayment Interest Shortfall, just interest) otherwise distributable
in respect of their Certificates; and then, by the holders of the Senior
Certificates.
Certain Relevant Factors. The rate and timing of principal payments and
defaults and the severity of losses on the Mortgage Loans may be affected by a
number of factors, including, without limitation, prevailing interest rates, the
terms of the Mortgage Loans (for example, Prepayment Premiums, prepayment
lock-out periods, adjustable Mortgage Rates and amortization terms that require
Balloon Payments), the demographics and relative economic vitality of the areas
in which the Mortgaged Properties are located and the general supply and demand
for comparable residential and/or commercial space in such areas, the quality of
management of the Mortgaged Properties, the servicing of the Mortgage Loans,
possible changes in tax laws and other opportunities for investment. See "Risk
Factors" and "Description of the Mortgage Asset Pool" herein and "Risk Factors"
and "Yield and Maturity Considerations--Principal Prepayments" in the
Prospectus.
The rate of prepayment on the Mortgage Asset Pool is likely to be affected
by prevailing market interest rates for mortgage loans of a comparable type,
term and risk level. When the prevailing market interest rate is below a
mortgage coupon, a borrower may have an increased incentive to refinance its
mortgage loan. Even in the case of the ARM Loans, adjustments to the Mortgage
Rates thereon will generally be limited by lifetime and/or periodic caps and
floors and, in each case, will be based on the related Index (which may not rise
and fall consistently with mortgage interest rates then available) plus the
related Gross Margin (which may be different from margins then offered on
adjustable rate mortgage loans). See "Description of the Mortgage Asset
Pool--Certain Terms and Conditions of the Mortgage Loans--The ARM Loans" herein.
As a result, the Mortgage Rates on the ARM Loans at any time may not be
comparable to prevailing market interest rates. In addition, as prevailing
market interest rates decline, and without regard to whether the Mortgage Rates
on the ARM Loans decline in a manner consistent therewith, related borrowers may
have an increased incentive to refinance for purposes of either (i) converting
to a fixed rate loan and thereby "locking in" such rate, or (ii) taking
advantage of a different index, margin or rate cap or floor on another
adjustable rate mortgage loan. If a Mortgage Loan is not in a lock-out period,
the Prepayment Premium, if any, in respect of such Mortgage Loan may not be
sufficient economic disincentive to prevent the related borrower from
voluntarily prepaying the loan as part of a refinancing thereof. See
"Description of the Mortgage Asset Pool-- Certain Terms and Conditions of the
Mortgage Loans" herein.
Delay in Payment of Distributions. Because monthly distributions will not
be made to Certificateholders (other than the Class A-1 Certificateholders)
until a date that is scheduled to be at least 15 days following the end of
related Interest Accrual Period, the effective yield to the holders of the
Offered Certificates (other than the Class A-1 Certificates) will be lower than
the yield that would otherwise be
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<PAGE> 61
produced by the applicable Pass-Through Rates and purchase prices (assuming such
prices did not account for such delay).
Unpaid Distributable Certificates Interest. As described under "Description
of the Certificates--Distributions--Application of the Available Distribution
Amount" herein, if the portion of the Available Distribution Amount
distributable in respect of interest on any Class of Offered Certificates on any
Distribution Date is less than the Distributable Certificate Interest then
payable for such Class, the shortfall with be distributable to holders of such
Class of Certificates on subsequent Distribution Dates, to the extent of
available funds. Any such shortfall will not bear interest, however, and will
therefore negatively affect the yield to maturity of such Class of Certificates
for so long as it is outstanding.
WEIGHTED AVERAGE LIFE
The weighted average life of a Principal Balance Certificate refers to the
average amount of time that will elapse from the date of its issuance until each
dollar allocable to principal of such Certificate is distributed to the
investor. For purposes of this Prospectus Supplement, the weighted average life
of a Principal Balance Certificate is determined by (i) multiplying the amount
of each principal distribution thereon by the number of years from the Delivery
Date to the related Distribution Date, (ii) summing the results and (iii)
dividing the sum by the aggregate amount of the reductions in the principal
balance of such Certificate. Accordingly, the weighted average life of any such
Certificate will be influenced by, among other things, the rate at which
principal of the Mortgage Loans is paid or otherwise collected or advanced and
the extent to which such payments, collections and/or advances of principal are
in turn applied in reduction of the Certificate Balance of the Class of
Certificates to which such Certificate belongs.
Prepayments on mortgage loans may be measured by a prepayment standard or
model. The model used in this Prospectus Supplement is the CPR model. As used in
each of the following sets of tables with respect to any particular Class, the
column headed "0%" assumes that none of the Mortgage Loans is prepaid before
maturity or, where applicable, extended maturity. The columns headed "2%", "4%",
"6%", "8%", "10%" and "15%" assume: in the case of the left table of each of the
following sets with respect to any particular Class, that prepayments on each of
the Mortgage Loans are made at those CPRs throughout their remaining terms; and
in the case of the right table of each of the following sets with respect to any
particular Class, that no prepayments are made on any Mortgage Loan during such
Mortgage Loan's prepayment lock-out period, if any, or during such Mortgage
Loan's yield maintenance period, if any, and are otherwise made on each of the
Mortgage Loans at the indicated CPRs. There is no assurance, however, that
prepayments of the Mortgage Loans (whether or not in a prepayment lock-out
period or a yield maintenance period) will conform to any particular CPR, and no
representation is made that the Mortgage Loans will prepay in accordance with
the assumptions at any of the CPRs shown or at any other particular prepayment
rate, that all the Mortgage Loans will prepay in accordance with the assumptions
at the same rate or that Mortgage Loans that are in a prepayment lock-out period
or a yield maintenance period will not prepay as a result of involuntary
liquidations upon default or otherwise. A "prepayment lock-out period" is any
period during which a Mortgage Loan prohibits voluntary prepayments on the part
of the borrower. A "yield maintenance period" is any period during which a
Mortgage Loan provides that voluntary prepayments be accompanied by a Prepayment
Premium calculated on the basis of a yield maintenance formula.
The following tables indicate the percentage of the initial Certificate
Balance of each Class of Offered Certificates (other than the Class X
Certificates) that would be outstanding after each of the dates shown at various
CPRs and the corresponding weighted average life of each such Class of
Certificates. The tables have been prepared on the basis of the following
assumptions (collectively, the "MATURITY ASSUMPTIONS"): (i) the Initial Group 1
Balance is approximately $33,475,147 and the Initial Group 2 Balance is
approximately $423,347,204, (ii) the initial Certificate Balances and Notional
Amounts, as the case may be, and the Pass-Through Rates for the respective
Classes of Offered Certificates are as set forth or otherwise described herein,
(iii) the scheduled Monthly Payments for each Mortgage Loan are, in the case of
each ARM Loan, equal to the Monthly Payment in effect as of the Cut-Off Date
until the next payment adjustment is scheduled to occur and thereafter is based
on such Mortgage Loan's Cut-off Date Balance and stated remaining amortization
term as of the Cut-off Date and the value of Six-Month LIBOR described in clause
(v) below, plus the related Gross Margin, subject to the respective minimum and
maximum Mortgage Rates, and, in the
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<PAGE> 62
case of each other Mortgage Loan, based on such Mortgage Loan's Cut-off Date
Balance, calculated remaining amortization terms (or, in the case of the
Cash-Flow Amortization Loans, a 25-year amortization term) and the Mortgage Rate
in effect as of the Cut-off Date (as such may be increased in the case of one
Mortgage Loan), (iv) all Monthly Payments are assumed to be due on the first day
of each month and, with respect to the Step-Down Loans, the Mortgage Rates
during the interest-only periods are assumed to be equal to a rate that would
produce an amount of interest equal to its Monthly Payment, (v) Six-Month LIBOR
remains constant at 5.5625% per annum (the "BASE LIBOR ASSUMPTION"), and for
purpose of two of the Extension Loans (as defined below), the five year Treasury
is assumed to be 6.12% per annum, (vi) there are no delinquencies or losses in
respect of the Mortgage Loans, there are no extensions of maturity in respect of
the Mortgage Loans (except in those cases where the borrower may require,
subject to the satisfaction of certain conditions, that an extension occur, in
which event the term of the related Mortgage Loan is extended to the maximum
extent permitted under the related Mortgage Note (the "EXTENSION LOANS")), there
are no Appraisal Reduction Amounts with respect to the Mortgage Loans and there
are no casualties or condemnations affecting the Mortgaged Properties, (vii)
scheduled Monthly Payments on the Mortgage Loans are timely received, and
prepayments are made on each of the Mortgage Loans at the indicated CPRs set
forth in the table (without regard to any limitations in such Mortgage Loans on
partial voluntary principal prepayments) (except to the extent modified below by
the assumption numbered (xv)) and in the case of Mortgage Loans with an
extension option, no prepayment occurs during the option period, (viii) all
Mortgage Loans accrue interest on the basis of a 360-day year consisting of
twelve 30-day months, (ix) neither the Servicer nor the Depositor exercises its
right of optional termination described herein, (x) no Mortgage Loan is required
to be repurchased by a Mortgage Loan Seller, (xi) no Prepayment Interest
Shortfalls are incurred and no Prepayment Premiums are collected, (xii) there
are no Additional Trust Fund Expenses, (xiii) distributions on the Certificates
are made on the 15th day of each month, commencing in December 1996, (xiv) the
Certificates are issued on November 7, 1996, (xv) when specifically indicated in
a particular table, no prepayments are received as to any Mortgage Loan during
such Mortgage Loan's prepayment lock-out period ("LOP"), if any, or yield
maintenance period ("YMP"), if any, (xvi) the prepayment provisions for each
Mortgage Loan are assumed to begin on the first payment date of such Mortgage
Loan, and (xvii) the open prepayment period, if any, is assumed to begin on the
first day of the respective month prior to the maturity date. To the extent that
the Mortgage Loans have characteristics that differ from those assumed in
preparing the tables set forth below, the Class A-1, Class A-2A, Class A-2B,
Class B, Class C, Class D and/or Class E Certificates may mature earlier or
later than indicated by the tables. It is highly unlikely that the Mortgage
Loans will prepay in accordance with the Maturity Assumptions at any constant
rate until maturity or that all the Mortgage Loans will prepay in accordance
with the Maturity Assumptions at the same rate. In addition, variations in the
actual prepayment experience and the balance of the Mortgage Loans that prepay
may increase or decrease the percentages of initial Certificate Balances (and
weighted average lives) shown in the following tables. Such variations may occur
even if the average prepayment experience of the Mortgage Loans were to equal
any of the specified CPR percentages.
Investors are urged to conduct their own analyses of the rates at which the
Mortgage Loans may be expected to prepay.
Based on the Maturity Assumptions, the following tables indicate the
resulting weighted average lives of the Class A-1, Class A-2A, Class A-2B, Class
B, Class C, Class D and Class E Certificates and set forth the percentage of the
initial Certificate Balance of each such Class of Certificates that would be
outstanding after each of the dates shown under the applicable assumptions at
the indicated CPRs.
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<PAGE> 63
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE CLASS A-1 CERTIFICATES AT
THE SPECIFIED CPRS
<TABLE>
<CAPTION>
PREPAYMENTS LOCKED OUT THROUGH
NO PREPAYMENTS LOCKED OUT LOP AND YMP, THEN THE FOLLOWING CPR
PREPAYMENT ASSUMPTION (CPR) PREPAYMENT ASSUMPTION (CPR)
--------------------------------------------------- ---------------------------------------------------
DATE 0% 2% 4% 6% 8% 10% 15% 0% 2% 4% 6% 8% 10% 15%
- ---------------- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Delivery Date... 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
November 1997... 99 97 95 93 91 89 84 99 97 96 94 92 90 86
November 1998... 98 94 90 87 83 79 71 98 94 91 88 85 81 74
November 1999... 97 91 86 80 75 71 59 97 92 87 82 78 73 64
November 2000... 95 88 81 75 68 63 50 95 89 83 77 71 66 55
November 2001... 94 85 77 69 62 56 4 94 86 79 72 66 60 48
November 2002... 93 82 72 64 56 39 0 93 83 75 67 60 54 41
November 2003... 83 72 63 23 0 0 0 83 73 63 55 48 41 28
November 2004... 2 2 0 0 0 0 0 2 2 2 2 2 2 2
November 2005... 2 2 0 0 0 0 0 2 2 2 2 2 2 2
November 2006... 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Weighted Average
Life
(years)....... 7.5 7.0 6.4 5.5 5.0 4.4 3.4 7.5 7.0 6.6 6.1 5.8 5.4 4.6
</TABLE>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE CLASS A-2A CERTIFICATES AT
THE SPECIFIED CPRS
<TABLE>
<CAPTION>
PREPAYMENTS LOCKED OUT THROUGH
NO PREPAYMENTS LOCKED OUT LOP AND YMP, THEN THE FOLLOWING CPR
PREPAYMENT ASSUMPTION (CPR) PREPAYMENT ASSUMPTION (CPR)
--------------------------------------------------- ---------------------------------------------------
DATE 0% 2% 4% 6% 8% 10% 15% 0% 2% 4% 6% 8% 10% 15%
- ---------------- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Delivery Date... 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
November 1997... 98 93 89 85 80 76 65 98 98 98 98 98 98 98
November 1998... 95 86 78 70 62 54 35 95 95 95 95 95 95 95
November 1999... 92 79 67 56 45 34 9 92 92 92 92 91 91 91
November 2000... 83 68 52 38 25 13 0 83 83 82 82 81 81 79
November 2001... 53 36 21 7 0 0 0 53 53 52 51 51 50 49
November 2002... 33 16 0 0 0 0 0 33 32 32 31 30 29 27
November 2003... 0 0 0 0 0 0 0 0 0 0 0 0 0 0
November 2004... 0 0 0 0 0 0 0 0 0 0 0 0 0 0
November 2005... 0 0 0 0 0 0 0 0 0 0 0 0 0 0
November 2006... 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Weighted Average
Life
(years)....... 5.2 4.4 3.7 3.1 2.7 2.3 1.6 5.2 5.2 5.2 5.1 5.1 5.1 5.0
</TABLE>
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<PAGE> 64
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE CLASS A-2B CERTIFICATES AT
THE SPECIFIED CPRS
<TABLE>
<CAPTION>
PREPAYMENTS LOCKED OUT THROUGH
NO PREPAYMENTS LOCKED OUT LOP AND YMP, THEN THE FOLLOWING CPR
PREPAYMENT ASSUMPTION (CPR) PREPAYMENT ASSUMPTION (CPR)
--------------------------------------------------- ---------------------------------------------------
DATE 0% 2% 4% 6% 8% 10% 15% 0% 2% 4% 6% 8% 10% 15%
- ---------------- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Delivery Date... 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
November 1997... 100 100 100 100 100 100 100 100 100 100 100 100 100 100
November 1998... 100 100 100 100 100 100 100 100 100 100 100 100 100 100
November 1999... 100 100 100 100 100 100 100 100 100 100 100 100 100 100
November 2000... 100 100 100 100 100 100 61 100 100 100 100 100 100 100
November 2001... 100 100 100 100 82 51 0 100 100 100 100 100 100 100
November 2002... 100 100 99 60 26 0 0 100 100 100 100 100 100 100
November 2003... 99 56 19 0 0 0 0 99 97 96 95 94 93 91
November 2004... 80 35 0 0 0 0 0 80 79 77 76 74 73 70
November 2005... 61 14 0 0 0 0 0 61 59 56 54 52 50 45
November 2006... 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Weighted Average
Life
(years)....... 8.8 7.7 6.7 6.2 5.7 5.2 4.2 8.8 8.7 8.7 8.6 8.6 8.6 8.5
</TABLE>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE CLASS B CERTIFICATES AT
THE SPECIFIED CPRS
<TABLE>
<CAPTION>
PREPAYMENTS LOCKED OUT THROUGH
NO PREPAYMENTS LOCKED OUT LOP AND YMP, THEN THE FOLLOWING CPR
PREPAYMENT ASSUMPTION (CPR) PREPAYMENT ASSUMPTION (CPR)
--------------------------------------------------- ---------------------------------------------------
DATE 0% 2% 4% 6% 8% 10% 15% 0% 2% 4% 6% 8% 10% 15%
- ---------------- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Delivery Date... 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
November 1997... 100 100 100 100 100 100 100 100 100 100 100 100 100 100
November 1998... 100 100 100 100 100 100 100 100 100 100 100 100 100 100
November 1999... 100 100 100 100 100 100 100 100 100 100 100 100 100 100
November 2000... 100 100 100 100 100 100 100 100 100 100 100 100 100 100
November 2001... 100 100 100 100 100 100 100 100 100 100 100 100 100 100
November 2002... 100 100 100 100 100 100 0 100 100 100 100 100 100 100
November 2003... 100 100 100 100 50 0 0 100 100 100 100 100 100 100
November 2004... 100 100 92 15 0 0 0 100 100 100 100 100 100 100
November 2005... 100 100 42 0 0 0 0 100 100 100 100 100 100 100
November 2006... 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Weighted Average
Life
(years)....... 9.4 9.2 8.8 7.9 7.2 6.7 5.5 9.4 9.4 9.4 9.4 9.4 9.4 9.3
</TABLE>
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<PAGE> 65
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE CLASS C CERTIFICATES AT
THE SPECIFIED CPRS
<TABLE>
<CAPTION>
PREPAYMENTS LOCKED OUT THROUGH
NO PREPAYMENTS LOCKED OUT LOP AND YMP, THEN THE FOLLOWING CPR
PREPAYMENT ASSUMPTION (CPR) PREPAYMENT ASSUMPTION (CPR)
--------------------------------------------------- ---------------------------------------------------
DATE 0% 2% 4% 6% 8% 10% 15% 0% 2% 4% 6% 8% 10% 15%
- ---------------- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Delivery Date... 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
November 1997... 100 100 100 100 100 100 100 100 100 100 100 100 100 100
November 1998... 100 100 100 100 100 100 100 100 100 100 100 100 100 100
November 1999... 100 100 100 100 100 100 100 100 100 100 100 100 100 100
November 2000... 100 100 100 100 100 100 100 100 100 100 100 100 100 100
November 2001... 100 100 100 100 100 100 100 100 100 100 100 100 100 100
November 2002... 100 100 100 100 100 100 79 100 100 100 100 100 100 100
November 2003... 100 100 100 100 100 82 0 100 100 100 100 100 100 100
November 2004... 100 100 100 100 38 0 0 100 100 100 100 100 100 100
November 2005... 100 100 100 58 0 0 0 100 100 100 100 100 100 100
November 2006... 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Weighted Average
Life
(years)....... 9.5 9.4 9.3 9.0 8.1 7.5 6.3 9.5 9.5 9.5 9.5 9.5 9.5 9.5
</TABLE>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE CLASS D CERTIFICATES AT
THE SPECIFIED CPRS
<TABLE>
<CAPTION>
PREPAYMENTS LOCKED OUT THROUGH
NO PREPAYMENTS LOCKED OUT LOP AND YMP, THEN THE FOLLOWING CPR
PREPAYMENT ASSUMPTION (CPR) PREPAYMENT ASSUMPTION (CPR)
--------------------------------------------------- ---------------------------------------------------
DATE 0% 2% 4% 6% 8% 10% 15% 0% 2% 4% 6% 8% 10% 15%
- ---------------- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Delivery Date... 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
November 1997... 100 100 100 100 100 100 100 100 100 100 100 100 100 100
November 1998... 100 100 100 100 100 100 100 100 100 100 100 100 100 100
November 1999... 100 100 100 100 100 100 100 100 100 100 100 100 100 100
November 2000... 100 100 100 100 100 100 100 100 100 100 100 100 100 100
November 2001... 100 100 100 100 100 100 100 100 100 100 100 100 100 100
November 2002... 100 100 100 100 100 100 100 100 100 100 100 100 100 100
November 2003... 100 100 100 100 100 100 29 100 100 100 100 100 100 100
November 2004... 100 100 100 100 100 70 0 100 100 100 100 100 100 100
November 2005... 100 100 100 100 80 16 0 100 100 100 100 100 100 100
November 2006... 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Weighted Average
Life
(years)....... 9.7 9.6 9.5 9.3 9.1 8.5 7.0 9.7 9.7 9.7 9.7 9.7 9.7 9.7
</TABLE>
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<PAGE> 66
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE CLASS E CERTIFICATES AT
THE SPECIFIED CPRS
<TABLE>
<CAPTION>
PREPAYMENTS LOCKED OUT THROUGH
NO PREPAYMENTS LOCKED OUT LOP AND YMP, THEN THE FOLLOWING CPR
PREPAYMENT ASSUMPTION (CPR) PREPAYMENT ASSUMPTION (CPR)
--------------------------------------------------- ---------------------------------------------------
DATE 0% 2% 4% 6% 8% 10% 15% 0% 2% 4% 6% 8% 10% 15%
- ---------------- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Delivery Date... 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
November 1997... 100 100 100 100 100 100 100 100 100 100 100 100 100 100
November 1998... 100 100 100 100 100 100 100 100 100 100 100 100 100 100
November 1999... 100 100 100 100 100 100 100 100 100 100 100 100 100 100
November 2000... 100 100 100 100 100 100 100 100 100 100 100 100 100 100
November 2001... 100 100 100 100 100 100 100 100 100 100 100 100 100 100
November 2002... 100 100 100 100 100 100 100 100 100 100 100 100 100 100
November 2003... 100 100 100 100 100 100 100 100 100 100 100 100 100 100
November 2004... 100 100 100 100 100 100 0 100 100 100 100 100 100 100
November 2005... 100 100 100 100 100 100 0 100 100 100 100 100 100 100
November 2006... 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Weighted Average
Life
(years)....... 9.8 9.8 9.6 9.5 9.4 9.2 7.8 9.8 9.8 9.8 9.8 9.8 9.8 9.8
</TABLE>
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<PAGE> 67
CERTAIN PRICE/YIELD TABLES
The tables set forth below show the corporate bond equivalent ("CBE")
yield, modified duration, weighted average life, first Distribution Date on
which principal is to be paid ("FIRST PRINCIPAL DISTRIBUTION DATE") and final
Distribution Date ("LAST PRINCIPAL DISTRIBUTION DATE") with respect to each
Class of Offered Certificates (other than the Class X Certificates) under the
Maturity Assumptions.
The yields set forth in the following tables were calculated by determining
the monthly discount rates which, when applied to the assumed stream of cash
flows to be paid on each Class of Offered Certificates (other than the Class X
Certificates), would cause the discounted present value of such assumed stream
of cash flows as of November 7, 1996 to equal the assumed purchase prices, plus
(except in the case of the Class A-1 Certificates) accrued interest at the
applicable Pass-Through Rate as stated on the cover hereof from and including
the Cut-off Date to but excluding the Delivery Date, and converting such monthly
rates to semi-annual corporate bond equivalent rates. Such calculation does not
take into account variations that may occur in the interest rates at which
investors may be able to reinvest funds received by them as reductions of the
Certificate Balances of such Classes of Offered Certificates and consequently
does not purport to reflect the return on any investment in such Classes of
Offered Certificates when such reinvestment rates are considered. For purposes
of these tables, "modified duration" has been calculated using the modified
Macaulay Duration as specified in the "PSA Standard Formulas." The Macaulay
Duration is calculated as the present value weighted average time to receive
future payments of principal and interest, and the PSA Standards Formula
modified duration is calculated by dividing the Macaulay Duration by the
appropriate semi-annual compounding factor. The duration of a security may be
calculated according to various methodologies; accordingly, no representation is
made by the Depositor or any other person that the "modified duration" approach
used herein is appropriate. Duration, like yield, will be affected by the
prepayment rate of the Mortgage Loans and extensions in respect of Balloon
Payments that actually occur during the life of the Offered Certificates and by
the actual performance of the Mortgage Loans, all of which may differ, and may
differ significantly, from the assumptions used in preparing the tables below.
The modified duration shown in the following tables, in each case, relates to
the yield shown immediately above such modified duration number. Purchase prices
are expressed in 32nds as a percentage of the initial Certificate Balance of the
specified Class (i.e., 99.24 means 99 24/32%).
S-67
<PAGE> 68
PRE-TAX YIELD TO MATURITY (CBE), MODIFIED DURATION, WEIGHTED AVERAGE LIFE, FIRST
PRINCIPAL DISTRIBUTION DATE AND
LAST PRINCIPAL DISTRIBUTION DATE FOR THE CLASS A-1 CERTIFICATES AT THE SPECIFIED
CPRS
<TABLE>
<CAPTION>
PREPAYMENTS LOCKED OUT THROUGH
LOP AND YMP, THEN THE
NO PREPAYMENTS LOCKED OUT FOLLOWING CPR
PREPAYMENT ASSUMPTION (CPR) PREPAYMENT ASSUMPTION (CPR)
-------------------------------------------------------------------------- ------------------------------
PRICE 0% 2% 4% 6% 8% 10% 15% 0% 2% 4%
- -------------------------------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
99.24................. 6.028% 6.032% 6.035% 6.042% 6.047% 6.054% 6.072% 6.028% 6.031% 6.034%
Modified duration
(years)............... 5.86 5.46 5.08 4.45 4.09 3.68 2.90 5.86 5.50 5.18
99.25................. 6.023% 6.026% 6.029% 6.035% 6.039% 6.045% 6.061% 6.023 6.026 6.028
99.26................. 6.018 6.020 6.023 6.028 6.032 6.037 6.050 6.018 6.020 6.022
99.27................. 6.012 6.014 6.016 6.021 6.024 6.028 6.040 6.012 6.014 6.016
99.28................. 6.007 6.009 6.010 6.014 6.016 6.020 6.029 6.007 6.008 6.010
Modified duration
(years)............... 5.86 5.47 5.09 4.45 4.09 3.68 2.90 5.86 5.51 5.18
99.29................. 6.002% 6.003% 6.004% 6.007% 6.009% 6.011% 6.018% 6.002% 6.003% 6.004%
99.30................. 5.996 5.997 5.998 6.000 6.001 6.003 6.007 5.996 5.997 5.998
99.31................. 5.991 5.991 5.992 5.993 5.993 5.994 5.996 5.991 5.991 5.992
100.00................ 5.986 5.986 5.986 5.986 5.986 5.986 5.986 5.986 5.986 5.986
Modified duration
(years)............... 5.86 5.47 5.09 4.46 4.09 3.68 2.90 5.86 5.51 5.18
100.01................ 5.980% 5.980% 5.980% 5.979% 5.978% 5.977% 5.975% 5.980% 5.980% 5.980%
100.02................ 5.975 5.974 5.973 5.972 5.970 5.969 5.964 5.975 5.974 5.974
100.03................ 5.970 5.969 5.967 5.965 5.963 5.960 5.953 5.970 5.969 5.968
100.04................ 5.964 5.963 5.961 5.958 5.955 5.952 5.943 5.964 5.963 5.962
Modified duration
(years)............... 5.87 5.47 5.09 4.46 4.09 3.69 2.90 5.87 5.51 5.18
100.05................ 5.959% 5.957% 5.955% 5.951% 5.948% 5.943% 5.932% 5.959% 5.957% 5.956%
100.06................ 5.954 5.951 5.949 5.944 5.940 5.935 5.921 5.954 5.952 5.950
100.07................ 5.948 5.946 5.943 5.937 5.932 5.926 5.910 5.948 5.946 5.944
100.08................ 5.943 5.940 5.937 5.930 5.925 5.918 5.900 5.943 5.940 5.938
Modified duration
(years)............... 5.87 5.47 5.09 4.46 4.10 3.69 2.90 5.87 5.51 5.18
Weighted Average Life
(years)............... 7.50 6.95 6.42 5.49 4.98 4.42 3.37 7.50 7.01 6.55
First Principal
Distribution Date..... 12/15/96 12/15/96 12/15/96 12/15/96 12/15/96 12/15/96 12/15/96 12/15/96 12/15/96 12/15/96
Last Principal
Distribution Date..... 02/15/06 01/15/06 10/15/04 04/15/04 09/15/03 03/15/03 12/15/01 02/15/06 02/15/06 02/15/06
<CAPTION>
PRICE 6% 8% 10% 15%
- ------------------------ -------- -------- -------- --------
<S> <C<C> <C> <C> <C>
99.24................. 6.037% 6.040% 6.043% 6.052%
Modified duration
(years)............... 4.87 4.59 4.33 3.77
99.25................. 6.031 6.033 6.036 6.044
99.26................. 6.024 6.027 6.029 6.035
99.27................. 6.018 6.020 6.022 6.027
99.28................. 6.011 6.013 6.015 6.019
Modified duration
(years)............... 4.87 4.59 4.34 3.77
99.29................. 6.005% 6.006% 6.007% 6.011%
99.30................. 5.999 5.999 6.000 6.002
99.31................. 5.992 5.993 5.993 5.994
100.00................ 5.986 5.986 5.986 5.986
Modified duration
(years)............... 4.88 4.60 4.34 3.78
100.01................ 5.979% 5.979% 5.979% 5.977%
100.02................ 5.973 5.972 5.971 5.969
100.03................ 5.967 5.965 5.964 5.961
100.04................ 5.960 5.959 5.957 5.953
Modified duration
(years)............... 4.88 4.60 4.34 3.78
100.05................ 5.954% 5.952% 5.950% 5.944%
100.06................ 5.947 5.945 5.943 5.936
100.07................ 5.941 5.938 5.935 5.928
100.08................ 5.935 5.931 5.928 5.920
Modified duration
(years)............... 4.88 4.60 4.34 3.78
Weighted Average Life
(years)............... 6.14 5.75 5.40 4.64
First Principal
Distribution Date..... 12/15/96 12/15/96 12/15/96 12/15/96
Last Principal
Distribution Date..... 02/15/06 02/15/06 02/15/06 01/15/06
</TABLE>
S-68
<PAGE> 69
PRE-TAX YIELD TO MATURITY (CBE), MODIFIED DURATION, WEIGHTED AVERAGE LIFE, FIRST
PRINCIPAL DISTRIBUTION DATE AND
LAST PRINCIPAL DISTRIBUTION DATE FOR THE CLASS A-2A CERTIFICATES AT THE
SPECIFIED CPRS
<TABLE>
<CAPTION>
PREPAYMENTS LOCKED
OUT THROUGH LOP AND
YMP, THEN THE
FOLLOWING CPR
NO PREPAYMENTS LOCKED OUT
PREPAYMENT
PREPAYMENT ASSUMPTION (CPR) ASSUMPTION (CPR)
-------------------------------------------------------------------------------- --------------------
PRICE 0% 2% 4% 6% 8% 10% 15% 0% 2%
- --------------------------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
99.16.................... 6.943% 6.952% 6.963% 6.976% 6.989% 7.005% 7.050% 6.943% 6.943%
Modified duration
(years).................. 4.20 3.61 3.10 2.67 2.32 2.01 1.45 4.20 4.19
99.20.................... 6.913% 6.918% 6.923% 6.929% 6.935% 6.942% 6.964% 6.913% 6.913%
99.24.................... 6.884 6.883 6.882 6.882 6.881 6.880 6.877 6.884 6.884
99.28.................... 6.854 6.848 6.842 6.835 6.827 6.818 6.791 6.854 6.854
100.00................... 6.824 6.814 6.802 6.788 6.773 6.756 6.705 6.824 6.824
Modified duration
(years).................. 4.21 3.62 3.10 2.68 2.32 2.01 1.45 4.21 4.19
100.04................... 6.795% 6.779% 6.762% 6.742% 6.720% 6.694% 6.619% 6.795% 6.794%
100.08................... 6.765 6.745 6.721 6.695 6.666 6.632 6.534 6.765 6.764
100.12................... 6.735 6.711 6.681 6.649 6.612 6.570 6.448 6.735 6.735
100.16................... 6.706 6.676 6.641 6.602 6.559 6.509 6.363 6.706 6.705
Modified duration
(years).................. 4.22 3.62 3.11 2.68 2.33 2.02 1.46 4.22 4.20
100.20................... 6.677% 6.642% 6.601% 6.556% 6.506% 6.447% 6.278% 6.677% 6.676%
100.24................... 6.647 6.608 6.562 6.510 6.453 6.386 6.193 6.647 6.646
100.28................... 6.618 6.574 6.522 6.464 6.400 6.325 6.108 6.618 6.617
101.00................... 6.589 6.540 6.482 6.418 6.347 6.264 6.024 6.589 6.587
Modified duration
(years).................. 4.22 3.63 3.12 2.69 2.34 2.03 1.46 4.22 4.21
101.04................... 6.559% 6.506% 6.443% 6.372% 6.294% 6.203% 5.940% 6.559% 6.558%
101.08................... 6.530 6.472 6.403 6.326 6.241 6.142 5.855 6.530 6.529
101.12................... 6.501 6.438 6.363 6.280 6.188 6.081 5.771 6.501 6.499
101.16................... 6.472 6.404 6.324 6.235 6.136 6.020 5.688 6.472 6.470
Modified duration
(years).................. 4.23 3.64 3.12 2.70 2.34 2.03 1.47 4.23 4.21
Weighted Average Life
(years).................. 5.20 4.39 3.70 3.14 2.68 2.29 1.61 5.20 5.18
First Principal
Distribution Date........ 12/15/96 12/15/96 12/15/96 12/15/96 12/15/96 12/15/96 12/15/96 12/15/96 12/15/96
Last Principal Distribution
Date..................... 09/15/03 07/15/03 11/15/02 06/15/02 09/15/01 07/15/01 03/15/00 09/15/03 09/15/03
<CAPTION>
PRICE 4% 6% 8% 10% 15%
- --------------------------- -------- -------- -------- -------- --------
<S> <C<C> <C> <C> <C> <C>
99.16.................... 6.944% 6.944% 6.944% 6.944% 6.945%
Modified duration
(years).................. 4.17 4.15 4.13 4.12 4.08
99.20.................... 6.914% 6.914% 6.914% 6.914% 6.914%
99.24.................... 6.884 6.884 6.884 6.883 6.883
99.28.................... 6.854 6.853 6.853 6.853 6.853
100.00................... 6.824 6.823 6.823 6.823 6.822
Modified duration
(years).................. 4.17 4.16 4.14 4.12 4.08
100.04................... 6.794% 6.793% 6.793% 6.793% 6.792%
100.08................... 6.764 6.763 6.763 6.762 6.761
100.12................... 6.734 6.733 6.733 6.732 6.731
100.16................... 6.704 6.704 6.703 6.702 6.700
Modified duration
(years).................. 4.18 4.16 4.15 4.13 4.09
100.20................... 6.675% 6.674% 6.673% 6.672% 6.670%
100.24................... 6.645 6.644 6.643 6.642 6.640
100.28................... 6.615 6.614 6.613 6.612 6.609
101.00................... 6.586 6.585 6.583 6.582 6.579
Modified duration
(years).................. 4.19 4.17 4.15 4.14 4.10
101.04................... 6.556% 6.555% 6.554% 6.552% 6.549%
101.08................... 6.527 6.525 6.524 6.522 6.519
101.12................... 6.498 6.496 6.494 6.493 6.489
101.16................... 6.468 6.466 6.465 6.463 6.459
Modified duration
(years).................. 4.19 4.18 4.16 4.14 4.10
Weighted Average Life
(years).................. 5.15 5.13 5.10 5.08 5.02
First Principal
Distribution Date........ 12/15/96 12/15/96 12/15/96 12/15/96 12/15/96
Last Principal Distribution
Date..................... 09/15/03 09/15/03 09/15/03 09/15/03 09/15/03
</TABLE>
S-69
<PAGE> 70
PRE-TAX YIELD TO MATURITY (CBE), MODIFIED DURATION, WEIGHTED AVERAGE LIFE, FIRST
PRINCIPAL DISTRIBUTION DATE AND
LAST PRINCIPAL DISTRIBUTION DATE FOR THE CLASS A-2B CERTIFICATES AT THE
SPECIFIED CPRS
<TABLE>
<CAPTION>
PREPAYMENTS LOCKED
OUT THROUGH
LOP AND YMP, THEN
THE FOLLOWING CPR
NO PREPAYMENTS LOCKED OUT
PREPAYMENT
PREPAYMENT ASSUMPTION (CPR) ASSUMPTION (CPR)
-------------------------------------------------------------------------------- --------------------
PRICE 0% 2% 4% 6% 8% 10% 15% 0% 2%
- --------------------------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
100.16................... 7.206% 7.193% 7.179% 7.169% 7.157% 7.145% 7.109% 7.206% 7.205%
Modified duration
(years).................. 6.31 5.72 5.18 4.86 4.51 4.22 3.54 6.31 6.28
100.20................... 7.186% 7.172% 7.155% 7.143% 7.129% 7.116% 7.074% 7.186% 7.186%
100.24................... 7.167 7.150 7.131 7.118 7.102 7.086 7.039 7.167 7.166
100.28................... 7.147 7.128 7.107 7.092 7.074 7.057 7.004 7.147 7.146
101.00................... 7.127 7.107 7.084 7.067 7.047 7.028 6.969 7.127 7.127
Modified duration
(years).................. 6.32 5.73 5.19 4.86 4.51 4.23 3.54 6.32 6.29
101.04................... 7.108% 7.085% 7.060% 7.042% 7.019% 6.998% 6.934% 7.108% 7.107%
101.08................... 7.088 7.063 7.036 7.016 6.992 6.969 6.900 7.088 7.087
101.12................... 7.069 7.042 7.012 6.991 6.965 6.940 6.865 7.069 7.068
101.16................... 7.049 7.021 6.989 6.966 6.938 6.911 6.830 7.049 7.048
Modified duration
(years).................. 6.32 5.73 5.20 4.87 4.52 4.23 3.55 6.32 6.30
101.20................... 7.030% 6.999% 6.965% 6.940% 6.910% 6.882% 6.795% 7.030% 7.029%
101.24................... 7.010 6.978 6.941 6.915 6.883 6.853 6.761 7.010 7.009
101.28................... 6.991 6.956 6.918 6.890 6.856 6.824 6.726 6.991 6.990
102.00................... 6.972 6.935 6.894 6.865 6.829 6.795 6.692 6.972 6.970
Modified duration
(years).................. 6.33 5.74 5.20 4.87 4.52 4.24 3.55 6.33 6.31
102.04................... 6.952% 6.914% 6.871% 6.840% 6.802% 6.766% 6.657% 6.952% 6.951%
102.08................... 6.933 6.892 6.847 6.815 6.775 6.737 6.623 6.933 6.932
102.12................... 6.914 6.871 6.824 6.790 6.748 6.708 6.589 6.914 6.912
102.16................... 6.895 6.850 6.800 6.765 6.721 6.680 6.554 6.895 6.893
Modified duration
(years).................. 6.34 5.75 5.21 4.88 4.53 4.24 3.56 6.34 6.32
Weighted Average Life
(years).................. 8.77 7.69 6.74 6.21 5.66 5.22 4.23 8.77 8.73
First Principal
Distribution Date........ 09/15/03 07/15/03 11/15/02 06/15/02 09/15/01 07/15/01 03/15/00 09/15/03 09/15/03
Last Principal Distribution
Date..................... 02/15/06 01/15/06 09/15/04 09/15/03 05/15/03 09/15/02 09/15/01 02/15/06 02/15/06
<CAPTION>
PRICE 4% 6% 8% 10% 15%
- --------------------------- -------- -------- -------- -------- --------
<S> <C<C> <C> <C> <C> <C>
100.16................... 7.205% 7.205% 7.204% 7.204% 7.203%
Modified duration
(years).................. 6.26 6.24 6.22 6.21 6.17
100.20................... 7.185% 7.185% 7.184% 7.184% 7.183%
100.24................... 7.165 7.165 7.164 7.164 7.163
100.28................... 7.146 7.145 7.145 7.144 7.143
101.00................... 7.126 7.125 7.125 7.124 7.123
Modified duration
(years).................. 6.27 6.25 6.23 6.21 6.18
101.04................... 7.106% 7.106% 7.105% 7.104% 7.103%
101.08................... 7.087 7.086 7.085 7.084 7.083
101.12................... 7.067 7.066 7.065 7.065 7.063
101.16................... 7.047 7.046 7.046 7.045 7.043
Modified duration
(years).................. 6.28 6.26 6.24 6.22 6.18
101.20................... 7.028% 7.027% 7.026% 7.025% 7.023%
101.24................... 7.008 7.007 7.006 7.005 7.003
101.28................... 6.989 6.988 6.987 6.986 6.983
102.00................... 6.969 6.968 6.967 6.966 6.964
Modified duration
(years).................. 6.29 6.27 6.25 6.23 6.19
102.04................... 6.950% 6.949% 6.947% 6.946% 6.944%
102.08................... 6.930 6.929 6.928 6.927 6.924
102.12................... 6.911 6.910 6.908 6.907 6.904
102.16................... 6.892 6.890 6.889 6.888 6.885
Modified duration
(years).................. 6.30 6.28 6.26 6.24 6.20
Weighted Average Life
(years).................. 8.69 8.65 8.61 8.58 8.51
First Principal
Distribution Date........ 09/15/03 09/15/03 09/15/03 09/15/03 09/15/03
Last Principal Distribution
Date..................... 02/15/06 02/15/06 02/15/06 01/15/06 01/15/06
</TABLE>
S-70
<PAGE> 71
PRE-TAX YIELD TO MATURITY (CBE), MODIFIED DURATION, WEIGHTED AVERAGE LIFE, FIRST
PRINCIPAL DISTRIBUTION DATE AND
LAST PRINCIPAL DISTRIBUTION DATE FOR THE CLASS B CERTIFICATES AT THE SPECIFIED
CPRS
<TABLE>
<CAPTION>
PREPAYMENTS LOCKED
OUT THROUGH
LOP AND YMP, THEN
THE FOLLOWING CPR
NO PREPAYMENTS LOCKED OUT
PREPAYMENT
PREPAYMENT ASSUMPTION (CPR) ASSUMPTION (CPR)
-------------------------------------------------------------------------------- --------------------
PRICE 0% 2% 4% 6% 8% 10% 15% 0% 2%
- --------------------------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
100.16................... 7.334% 7.333% 7.329% 7.319% 7.308% 7.301% 7.276% 7.334% 7.334%
Modified duration
(years).................. 6.59 6.51 6.31 5.83 5.41 5.13 4.41 6.59 6.59
100.20................... 7.315% 7.314% 7.309% 7.297% 7.285% 7.276% 7.247% 7.315% 7.315%
100.24................... 7.297 7.295 7.290 7.276 7.262 7.252 7.219 7.297 7.296
100.28................... 7.278 7.276 7.270 7.255 7.239 7.228 7.191 7.278 7.278
101.00................... 7.259 7.257 7.250 7.234 7.217 7.204 7.163 7.259 7.259
Modified duration
(years).................. 6.60 6.52 6.32 5.84 5.42 5.14 4.42 6.60 6.60
101.04................... 7.240% 7.238% 7.231% 7.213% 7.194% 7.180% 7.135% 7.240% 7.240%
101.08................... 7.222 7.219 7.211 7.192 7.171 7.156 7.108 7.222 7.222
101.12................... 7.203 7.200 7.192 7.170 7.148 7.132 7.080 7.203 7.203
101.16................... 7.184 7.181 7.172 7.149 7.126 7.108 7.052 7.184 7.184
Modified duration
(years).................. 6.61 6.53 6.33 5.85 5.42 5.15 4.42 6.61 6.61
101.20................... 7.166% 7.162% 7.153% 7.128% 7.103% 7.084% 7.024% 7.166% 7.166%
101.24................... 7.147 7.144 7.134 7.107 7.080 7.060 6.996 7.147 7.147
101.28................... 7.129 7.125 7.114 7.086 7.058 7.037 6.969 7.129 7.128
102.00................... 7.110 7.106 7.095 7.066 7.035 7.013 6.941 7.110 7.110
Modified duration
(years).................. 6.62 6.54 6.34 5.86 5.43 5.15 4.43 6.62 6.61
102.04................... 7.092% 7.087% 7.076% 7.045% 7.013% 6.989% 6.913% 7.092% 7.091%
102.08................... 7.073 7.069 7.056 7.024 6.990 6.965 6.886 7.073 7.073
102.12................... 7.055 7.050 7.037 7.003 6.968 6.942 6.858 7.055 7.055
102.16................... 7.036 7.032 7.018 6.982 6.945 6.918 6.831 7.036 7.036
Modified duration
(years).................. 6.63 6.55 6.34 5.86 5.44 5.16 4.43 6.63 6.62
Weighted Average Life
(years).................. 9.38 9.23 8.83 7.92 7.16 6.69 5.53 9.38 9.38
First Principal
Distribution Date........ 02/15/06 01/15/06 10/15/04 04/15/04 09/15/03 03/15/03 12/15/01 02/15/06 02/15/06
Last Principal Distribution
Date..................... 04/15/06 03/15/06 01/15/06 04/15/05 09/15/04 09/15/03 09/15/02 04/15/06 04/15/06
<CAPTION>
PRICE 4% 6% 8% 10% 15%
- --------------------------- -------- -------- -------- -------- --------
<S> <C<C> <C> <C> <C> <C>
100.16................... 7.334% 7.334% 7.334% 7.334% 7.334%
Modified duration
(years).................. 6.58 6.58 6.58 6.58 6.57
100.20................... 7.315% 7.315% 7.315% 7.315% 7.315%
100.24................... 7.296 7.296 7.296 7.296 7.296
100.28................... 7.278 7.278 7.277 7.277 7.277
101.00................... 7.259 7.259 7.259 7.259 7.258
Modified duration
(years).................. 6.59 6.59 6.59 6.58 6.57
101.04................... 7.240% 7.240% 7.240% 7.240% 7.240%
101.08................... 7.221 7.221 7.221 7.221 7.221
101.12................... 7.203 7.203 7.203 7.202 7.202
101.16................... 7.184 7.184 7.184 7.184 7.183
Modified duration
(years).................. 6.60 6.60 6.60 6.59 6.58
101.20................... 7.165% 7.165% 7.165% 7.165% 7.165%
101.24................... 7.147 7.147 7.147 7.146 7.146
101.28................... 7.128 7.128 7.128 7.128 7.127
102.00................... 7.110 7.110 7.110 7.109 7.109
Modified duration
(years).................. 6.61 6.61 6.61 6.60 6.59
102.04................... 7.091% 7.091% 7.091% 7.091% 7.090%
102.08................... 7.073 7.073 7.073 7.072 7.072
102.12................... 7.054 7.054 7.054 7.054 7.053
102.16................... 7.036 7.036 7.036 7.035 7.035
Modified duration
(years).................. 6.62 6.62 6.62 6.61 6.60
Weighted Average Life
(years).................. 9.37 9.36 9.36 9.35 9.33
First Principal
Distribution Date........ 02/15/06 02/15/06 02/15/06 02/15/06 01/15/06
Last Principal Distribution
Date..................... 04/15/06 04/15/06 04/15/06 04/15/06 04/15/06
</TABLE>
S-71
<PAGE> 72
PRE-TAX YIELD TO MATURITY (CBE), MODIFIED DURATION, WEIGHTED AVERAGE LIFE, FIRST
PRINCIPAL DISTRIBUTION DATE AND
LAST PRINCIPAL DISTRIBUTION DATE FOR THE CLASS C CERTIFICATES AT THE SPECIFIED
CPRS
<TABLE>
<CAPTION>
PREPAYMENTS LOCKED
OUT THROUGH
LOP AND YMP, THEN
THE FOLLOWING CPR
NO PREPAYMENTS LOCKED OUT
PREPAYMENT
PREPAYMENT ASSUMPTION (CPR) ASSUMPTION (CPR)
-------------------------------------------------------------------------------- --------------------
PRICE 0% 2% 4% 6% 8% 10% 15% 0% 2%
- --------------------------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
100.16................... 7.427% 7.426% 7.425% 7.423% 7.413% 7.404% 7.384% 7.427% 7.427%
Modified duration
(years).................. 6.63 6.57 6.50 6.39 5.93 5.56 4.85 6.63 6.63
100.20................... 7.408% 7.407% 7.406% 7.403% 7.392% 7.382% 7.358% 7.408% 7.408%
100.24................... 7.390 7.388 7.387 7.384 7.371 7.360 7.333 7.390 7.390
100.28................... 7.371 7.370 7.368 7.364 7.350 7.338 7.307 7.371 7.371
101.00................... 7.352 7.351 7.349 7.345 7.330 7.315 7.282 7.352 7.352
Modified duration
(years).................. 6.64 6.58 6.51 6.40 5.94 5.57 4.86 6.64 6.64
101.04................... 7.334% 7.332% 7.330% 7.326% 7.309% 7.293% 7.256% 7.334% 7.334%
101.08................... 7.315 7.313 7.311 7.307 7.288 7.271 7.231 7.315 7.315
101.12................... 7.297 7.295 7.292 7.287 7.267 7.249 7.206 7.297 7.297
101.16................... 7.278 7.276 7.273 7.268 7.247 7.227 7.180 7.278 7.278
Modified duration
(years).................. 6.65 6.59 6.52 6.40 5.94 5.58 4.87 6.65 6.65
101.20................... 7.260% 7.257% 7.254% 7.249% 7.226% 7.205% 7.155% 7.260% 7.260%
101.24................... 7.241 7.239 7.235 7.230 7.205 7.183 7.130 7.241 7.241
101.28................... 7.223 7.220 7.216 7.211 7.185 7.161 7.105 7.223 7.223
102.00................... 7.205 7.202 7.198 7.191 7.164 7.139 7.079 7.204 7.204
Modified duration
(years).................. 6.64 6.60 6.53 6.41 5.95 5.58 4.87 6.66 6.66
102.04................... 7.186% 7.183% 7.179% 7.172% 7.143% 7.117% 7.054% 7.186% 7.186%
102.08................... 7.168 7.165 7.160 7.153 7.123 7.095 7.029 7.168 7.168
102.12................... 7.149 7.146 7.142 7.134 7.102 7.073 7.004 7.149 7.149
102.16................... 7.131 7.128 7.123 7.115 7.082 7.051 6.979 7.131 7.131
Modified duration
(years).................. 6.67 6.61 6.54 6.42 5.96 5.59 4.88 6.67 6.66
Weighted Average Life
(years).................. 9.52 9.41 9.25 9.02 8.14 7.47 6.25 9.52 9.51
First Principal
Distribution Date........ 04/15/06 03/15/06 01/15/06 04/15/05 09/15/04 09/15/03 09/15/02 04/15/06 04/15/06
Last Principal Distribution
Date..................... 05/15/06 05/15/06 03/15/06 01/15/06 08/15/05 10/15/04 07/15/03 05/15/06 05/15/06
<CAPTION>
PRICE 4% 6% 8% 10% 15%
- --------------------------- -------- -------- -------- -------- --------
<S> <C<C> <C> <C> <C> <C>
100.16................... 7.427% 7.427% 7.427% 7.427% 7.427%
Modified duration
(years).................. 6.62 6.62 6.62 6.62 6.62
100.20................... 7.408% 7.408% 7.408% 7.408% 7.408%
100.24................... 7.390 7.390 7.390 7.390 7.389
100.28................... 7.371 7.371 7.371 7.371 7.371
101.00................... 7.352 7.352 7.352 7.352 7.352
Modified duration
(years).................. 6.63 6.63 6.63 6.63 6.63
101.04................... 7.334% 7.334% 7.334% 7.334% 7.333%
101.08................... 7.315 7.315 7.315 7.315 7.315
101.12................... 7.297 7.297 7.296 7.296 7.296
101.16................... 7.278 7.278 7.278 7.278 7.278
Modified duration
(years).................. 6.64 6.64 6.64 6.64 6.64
101.20................... 7.260% 7.259% 7.259% 7.259% 7.259%
101.24................... 7.241 7.241 7.241 7.241 7.241
101.28................... 7.223 7.223 7.222 7.222 7.222
102.00................... 7.204 7.204 7.204 7.204 7.204
Modified duration
(years).................. 6.65 6.65 6.65 6.65 6.65
102.04................... 7.186% 7.186% 7.186% 7.186% 7.185%
102.08................... 7.167 7.167 7.167 7.167 7.167
102.12................... 7.149 7.149 7.149 7.149 7.149
102.16................... 7.131 7.131 7.131 7.131 7.130
Modified duration
(years).................. 6.66 6.66 6.66 6.66 6.66
Weighted Average Life
(years).................. 9.51 9.51 9.50 9.50 9.49
First Principal
Distribution Date........ 04/15/06 04/15/06 04/15/06 04/15/06 04/15/06
Last Principal Distribution
Date..................... 05/15/06 05/15/06 05/15/06 05/15/06 05/15/06
</TABLE>
S-72
<PAGE> 73
PRE-TAX YIELD TO MATURITY (CBE), MODIFIED DURATION, WEIGHTED AVERAGE LIFE, FIRST
PRINCIPAL DISTRIBUTION DATE AND
LAST PRINCIPAL DISTRIBUTION DATE FOR THE CLASS D CERTIFICATES AT THE SPECIFIED
CPRS
<TABLE>
<CAPTION>
PREPAYMENTS LOCKED
OUT THROUGH LOP AND
YMP, THEN THE
FOLLOWING CPR
NO PREPAYMENTS LOCKED OUT
PREPAYMENT
PREPAYMENT ASSUMPTION (CPR) ASSUMPTION (CPR)
-------------------------------------------------------------------------------- --------------------
PRICE 0% 2% 4% 6% 8% 10% 15% 0% 2%
- --------------------------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
100.16................... 7.735% 7.734% 7.733% 7.731% 7.730% 7.723% 7.702% 7.735% 7.735%
Modified duration
(years).................. 6.62 6.56 6.51 6.44 6.36 6.04 5.21 6.62 6.62
100.20................... 7.716% 7.715% 7.714% 7.712% 7.710% 7.703% 7.679% 7.716% 7.716%
100.24................... 7.698 7.696 7.695 7.693 7.691 7.682 7.655 7.698 7.697
100.28................... 7.679 7.677 7.676 7.674 7.672 7.662 7.631 7.679 7.679
101.00................... 7.660 7.658 7.657 7.655 7.652 7.641 7.607 7.660 7.660
Modified duration
(years).................. 6.64 6.57 6.52 6.45 6.37 6.05 5.22 6.64 6.63
101.04................... 7.642% 7.639% 7.638% 7.635% 7.633% 7.621% 7.584% 7.642% 7.641%
101.08................... 7.623 7.621 7.619 7.616 7.613 7.601 7.560 7.623 7.623
101.12................... 7.604 7.602 7.600 7.597 7.594 7.580 7.536 7.604 7.604
101.16................... 7.586 7.583 7.581 7.578 7.575 7.560 7.513 7.586 7.586
Modified duration
(years).................. 6.65 6.58 6.53 6.46 6.38 6.06 5.23 6.65 6.64
101.20................... 7.567% 7.564% 7.562% 7.559% 7.555% 7.540% 7.489% 7.567% 7.567%
101.24................... 7.549 7.546 7.543 7.540 7.536 7.519 7.466 7.549 7.549
101.28................... 7.531 7.527 7.525 7.521 7.517 7.499 7.442 7.531 7.530
102.00................... 7.512 7.509 7.506 7.502 7.498 7.479 7.419 7.512 7.512
Modified duration
(years).................. 6.66 6.59 6.54 6.47 6.39 6.07 5.23 6.66 6.65
102.04................... 7.494% 7.490% 7.487% 7.483% 7.479% 7.459% 7.396% 7.494% 7.494%
102.08................... 7.475 7.471 7.469 7.464 7.460 7.439 7.372 7.475 7.475
102.12................... 7.457 7.453 7.450 7.446 7.441 7.419 7.349 7.457 7.457
102.16................... 7.439 7.435 7.431 7.427 7.422 7.399 7.326 7.439 7.439
Modified duration
(years).................. 6.67 6.60 6.55 6.48 6.40 6.08 5.24 6.67 6.66
Weighted Average Life
(years).................. 9.71 9.56 9.45 9.31 9.15 8.51 6.95 9.71 9.70
First Principal
Distribution Date........ 05/15/06 05/15/06 03/15/06 01/15/06 08/15/05 10/15/04 07/15/03 05/15/06 05/15/06
Last Principal Distribution
Date..................... 08/15/06 07/15/06 05/15/06 04/15/06 02/15/06 01/15/06 05/15/04 08/15/06 08/15/06
<CAPTION>
PRICE 4% 6% 8% 10% 15%
- --------------------------- -------- -------- -------- -------- --------
<S> <C<C> <C> <C> <C> <C>
100.16................... 7.735% 7.735% 7.735% 7.735% 7.734%
Modified duration
(years).................. 6.62 6.61 6.61 6.61 6.60
100.20................... 7.716% 7.716% 7.716% 7.716% 7.716%
100.24................... 7.697 7.697 7.697 7.697 7.697
100.28................... 7.679 7.679 7.678 7.678 7.678
101.00................... 7.660 7.660 7.660 7.660 7.659
Modified duration
(years).................. 6.63 6.62 6.62 6.62 6.61
101.04................... 7.641% 7.641% 7.641% 7.641% 7.641%
101.08................... 7.623 7.623 7.622 7.622 7.622
101.12................... 7.604 7.604 7.604 7.604 7.603
101.16................... 7.586 7.585 7.585 7.585 7.585
Modified duration
(years).................. 6.64 6.63 6.63 6.63 6.62
101.20................... 7.567% 7.567% 7.567% 7.567% 7.566%
101.24................... 7.549 7.548 7.548 7.548 7.548
101.28................... 7.530 7.530 7.530 7.530 7.529
102.00................... 7.512 7.512 7.511 7.511 7.511
Modified duration
(years).................. 6.65 6.64 6.64 6.64 6.63
102.04................... 7.493% 7.493% 7.493% 7.493% 7.492%
102.08................... 7.475 7.475 7.475 7.474 7.474
102.12................... 7.457 7.456 7.456 7.456 7.456
102.16................... 7.438 7.438 7.438 7.438 7.437
Modified duration
(years).................. 6.66 6.65 6.65 6.65 6.64
Weighted Average Life
(years).................. 9.69 9.68 9.67 9.67 9.65
First Principal
Distribution Date........ 05/15/06 05/15/06 05/15/06 05/15/06 05/15/06
Last Principal Distribution
Date..................... 08/15/06 08/15/06 08/15/06 08/15/06 08/15/06
</TABLE>
S-73
<PAGE> 74
PRE-TAX YIELD TO MATURITY (CBE), MODIFIED DURATION, WEIGHTED AVERAGE LIFE, FIRST
PRINCIPAL DISTRIBUTION DATE AND
LAST PRINCIPAL DISTRIBUTION DATE FOR THE CLASS E CERTIFICATES AT THE SPECIFIED
CPRS
<TABLE>
<CAPTION>
PREPAYMENTS LOCKED
OUT THROUGH LOP AND
YMP, THEN THE
FOLLOWING CPR
NO PREPAYMENTS LOCKED OUT
PREPAYMENT
PREPAYMENT ASSUMPTION (CPR) ASSUMPTION (CPR)
-------------------------------------------------------------------------------- --------------------
PRICE 0% 2% 4% 6% 8% 10% 15% 0% 2%
- --------------------------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
96.16.................... 8.484% 8.486% 8.492% 8.495% 8.500% 8.506% 8.567% 8.484% 8.485%
Modified duration
(years).................. 6.54 6.52 6.45 6.41 6.35 6.28 5.61 6.54 6.54
96.20.................... 8.465% 8.466% 8.472% 8.475% 8.479% 8.485% 8.544% 8.465% 8.465%
96.24.................... 8.445 8.446 8.452 8.455 8.459 8.464 8.521 8.445 8.445
96.28.................... 8.425 8.427 8.432 8.435 8.439 8.444 8.498 8.425 8.425
97.00.................... 8.406 8.407 8.412 8.414 8.418 8.423 8.475 8.406 8.406
Modified duration
(years).................. 6.55 6.53 6.46 6.42 6.36 6.29 5.61 6.55 6.55
97.04.................... 8.386% 8.387% 8.392% 8.394% 8.398% 8.403% 8.453% 8.386% 8.386%
97.08.................... 8.366 8.368 8.372 8.374 8.378 8.383 8.430 8.366 8.367
97.12.................... 8.347 8.348 8.352 8.354 8.358 8.362 8.407 8.347 8.347
97.16.................... 8.327 8.328 8.332 8.334 8.338 8.342 8.384 8.327 8.327
Modified duration
(years).................. 6.56 6.54 6.47 6.43 6.37 6.30 5.62 6.56 6.56
97.20.................... 8.308% 8.309% 8.313% 8.315% 8.318% 8.321% 8.361% 8.308% 8.308%
97.24.................... 8.288 8.289 8.293 8.295 8.298 8.301 8.339 8.288 8.289
97.28.................... 8.269 8.270 8.273 8.275 8.278 8.281 8.316 8.269 8.269
98.00.................... 8.250 8.250 8.253 8.255 8.258 8.261 8.293 8.250 8.250
Modified duration
(years).................. 6.57 6.56 6.48 6.44 6.38 6.31 5.63 6.57 6.57
98.04.................... 8.230% 8.231% 8.234% 8.235% 8.238% 8.241% 8.271% 8.230% 8.230%
98.08.................... 8.211 8.212 8.214 8.216 8.218 8.220 8.248 8.211 8.211
98.12.................... 8.192 8.192 8.195 8.196 8.198 8.200 8.226 8.192 8.192
98.16.................... 8.172 8.173 8.175 8.176 8.178 8.180 8.203 8.172 8.172
Modified duration
(years).................. 6.59 6.57 6.49 6.45 6.39 6.32 5.64 6.59 6.58
Weighted Average Life
(years).................. 9.80 9.76 9.59 9.50 9.36 9.21 7.83 9.80 9.79
First Principal
Distribution Date........ 08/15/06 07/15/06 05/15/06 04/15/06 02/15/06 01/15/06 05/15/04 08/15/06 08/15/06
Last Principal Distribution
Date..................... 09/15/06 08/15/06 07/15/06 05/15/06 04/15/06 02/15/06 10/15/04 09/15/06 09/15/06
<CAPTION>
PRICE 4% 6% 8% 10% 15%
- --------------------------- -------- -------- -------- -------- --------
<S> <C<C> <C> <C> <C> <C>
96.16.................... 8.485% 8.485% 8.485% 8.485% 8.485%
Modified duration
(years).................. 6.54 6.54 6.53 6.53 6.53
96.20.................... 8.465% 8.465% 8.465% 8.466% 8.466%
96.24.................... 8.445 8.445 8.446 8.446 8.446
96.28.................... 8.426 8.426 8.426 8.426 8.426
97.00.................... 8.406 8.406 8.406 8.406 8.406
Modified duration
(years).................. 6.55 6.55 6.54 6.54 6.54
97.04.................... 8.386% 8.386% 8.387% 8.387% 8.387%
97.08.................... 8.367 8.367 8.367 8.367 8.367
97.12.................... 8.347 8.347 8.347 8.347 8.348
97.16.................... 8.328 8.328 8.328 8.328 8.328
Modified duration
(years).................. 6.56 6.56 6.55 6.55 6.55
97.20.................... 8.308% 8.308% 8.308% 8.308% 8.308%
97.24.................... 8.289 8.289 8.289 8.289 8.289
97.28.................... 8.269 8.269 8.269 8.269 8.270
98.00.................... 8.250 8.250 8.250 8.250 8.250
Modified duration
(years).................. 6.57 6.57 6.57 6.56 6.56
98.04.................... 8.230% 8.231% 8.231% 8.231% 8.231%
98.08.................... 8.211 8.211 8.211 8.211 8.211
98.12.................... 8.192 8.192 8.192 8.192 8.192
98.16.................... 8.173 8.173 8.173 8.173 8.173
Modified duration
(years).................. 6.58 6.58 6.58 6.57 6.57
Weighted Average Life
(years).................. 9.79 9.78 9.78 9.77 9.77
First Principal
Distribution Date........ 08/15/06 08/15/06 08/15/06 08/15/06 08/15/06
Last Principal Distribution
Date..................... 09/15/06 09/15/06 09/15/06 09/15/06 08/15/06
</TABLE>
S-74
<PAGE> 75
YIELD SENSITIVITY OF THE CLASS X CERTIFICATES
The yield to maturity of each Class of Class X Certificates will be
especially sensitive to the prepayment, repurchase and default experience on, in
the case of the Class X-1 Certificates, the Group 1 Loans, and, in the case of
the Class X-2 Certificates, the Group 2 Loans (and, to a lesser extent, the
Group 1 Loans), which prepayment, repurchase and default experience may
fluctuate significantly from time to time. A rapid rate of principal payments
will have a material negative effect on the yield to maturity of either or both
Classes of the Class X Certificates. There can be no assurance that the Mortgage
Loans will prepay at any particular rate. Prospective investors in the Class X
Certificates should fully consider the associated risks, including the risk that
such investors may not fully recover their initial investment.
The following tables indicate the sensitivity of the pre-tax yield to
maturity on each Class of the Class X Certificates to various constant rates of
prepayment on the Mortgage Loans by projecting the monthly aggregate payments of
interest on the Class X Certificates and computing the corresponding pre-tax
yields to maturity on a corporate bond equivalent basis, based on the Maturity
Assumptions, as modified by the following additional assumptions: (i) when
specifically indicated in a particular table, Six-Month LIBOR will be assumed to
remain constant at per annum rates that are 2.00% (Alternative LIBOR Assumption
#1) or 4.00% (Alternative LIBOR Assumption #2) higher than the Base LIBOR
Assumption; (ii) when specifically indicated in a particular table, 50% (or, if
so specified, 100%) of any Prepayment Premium calculated as a declining
percentage of the amount prepaid is collected in connection with each prepayment
as to which such a Prepayment Premium is applicable; and (iii) 100% of all
Prepayment Premiums collected as described in the immediately preceding clause
(ii) will be distributed on the Class X-1 Certificates (if assumed received on a
Group 1 Loan) or the Class X-2 Certificates (if assumed received on a Group 2
Loan). It was further assumed that the respective aggregate purchase prices of
the Class X-1 and Class X-2 Certificates are as specified below, in each case
expressed in 32nds (i.e., 9.08 is 9 8/32%) as a percentage of the related
initial Notional Amount (without accrued interest). Any differences between such
assumptions and the actual characteristics and performance of the Mortgage Loans
and of the Class X Certificates may result in yields being different from those
shown in such table. Discrepancies between assumed and actual characteristics
and performance underscore the hypothetical nature of the table, which is
provided only to give a general sense of the sensitivity of yields in varying
prepayment scenarios.
The pre-tax yields set forth in the following tables were calculated by
determining the monthly discount rates that, when applied to the assumed streams
of cash flows to be paid on each Class of Class X Certificates, would cause the
discounted present value of such assumed stream of cash flows to equal the
assumed aggregate purchase price thereof, and by converting such monthly rates
to semi-annual corporate bond equivalent rates. Such calculation does not take
into account shortfalls in collection of interest due to prepayments (or other
liquidations) of the Mortgage Loans or the interest rates at which investors may
be able to reinvest funds received by them as distributions on the Class X
Certificates (and accordingly does not purport to reflect the return on any
investment in the Class X Certificates when such reinvestment rates are
considered).
Notwithstanding the assumed prepayment rates reflected in the preceding
tables, it is highly unlikely that the Mortgage Loans will be prepaid according
to one particular pattern. For this reason, and because the timing of cash flows
is critical to determining yields, the pre-tax yield to maturity on each Class
of Class X Certificates is likely to differ from those shown in the tables, even
if all of the Mortgage Loans prepay at the indicated CPRs over any given time
period or over the entire life of the Certificates.
There can be no assurance that the Mortgage Loans will prepay at any
particular rate or that the yield on either Class of Class X Certificates will
conform to the yields described herein. Investors are urged to make their
investment decisions based on the determinations as to anticipated rates of
prepayment under a variety of scenarios. Investors in the Class X Certificates
should fully consider the risk that a rapid rate of prepayments on the Mortgage
Loans could result in the failure of such investors to fully recover their
investments.
S-75
<PAGE> 76
PRE-TAX YIELD TO MATURITY (CBE)
OF THE CLASS X CERTIFICATES
<TABLE>
<CAPTION>
ASSUMED PREPAYMENT ASSUMPTION (CPR)
PURCHASE ------------------------------------------------------------------------
CLASS PRICE 0% 2% 4% 6% 8% 10% 15%
- ------------------- -------- ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
X-1................ 3.16 70.765% 68.218% 65.644% 63.041% 60.409% 57.746% 50.950%
4.00 60.539 58.072 55.579 53.058 50.508 47.930 41.349
4.16 52.607 50.203 47.773 45.316 42.833 40.320 33.909
X-2................ 9.04 10.655% 8.452% 6.249% 3.978% 1.817% (0.332)% (5.367)%
9.16 9.503 7.316 5.128 2.872 0.729 (1.401) (6.386)
9.28 8.427 6.253 4.080 1.839 (0.288) (2.400) (7.338)
</TABLE>
PRE-TAX YIELD TO MATURITY (CBE)
OF THE CLASS X CERTIFICATES
(PREPAYMENTS LOCKED OUT THROUGH LOP AND YMP, THEN THE FOLLOWING CPR)
<TABLE>
<CAPTION>
ASSUMED PREPAYMENT ASSUMPTION (CPR)
PURCHASE ------------------------------------------------------------------------
CLASS PRICE 0% 2% 4% 6% 8% 10% 15%
- ------------------ -------- ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
X-1............... 3.16 70.765% 68.549% 66.323% 64.089% 61.847% 59.598% 53.955%
4.00 60.539 58.391 56.234 54.071 51.902 49.729 44.289
4.16 52.607 50.511 48.409 46.302 44.191 42.078 36.797
X-2............... 9.04 10.655% 10.565% 10.478% 10.394% 10.313% 10.235% 10.052%
9.16 9.503 9.411 9.323 9.237 9.155 9.076 8.889
9.28 8.427 8.333 8.243 8.156 8.072 7.991 7.802
</TABLE>
PRE-TAX YIELD TO MATURITY (CBE)
OF THE CLASS X CERTIFICATES (ALTERNATIVE LIBOR ASSUMPTION #1)
<TABLE>
<CAPTION>
ASSUMED PREPAYMENT ASSUMPTION (CPR)
PURCHASE ------------------------------------------------------------------------
CLASS PRICE 0% 2% 4% 6% 8% 10% 15%
- ------------------ -------- ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
X-1............... 3.16 70.841% 68.293% 65.717% 63.113% 60.479% 57.816% 51.016%
4.00 60.641 58.172 55.677 53.155 50.604 48.024 41.440
4.16 52.728 50.322 47.891 45.433 42.947 40.433 34.018
X-2............... 9.04 10.656% 8.454% 6.258% 4.144% 2.040% 0.001% (4.817)%
9.16 9.505 7.318 5.137 3.041 0.954 (1.066) (5.837)
9.28 8.428 6.255 4.089 2.009 (0.060) (2.064) (6.790)
</TABLE>
PRE-TAX YIELD TO MATURITY (CBE)
OF THE CLASS X CERTIFICATES (ALTERNATIVE LIBOR ASSUMPTION #1)
(PREPAYMENTS LOCKED OUT THROUGH LOP AND YMP, THEN THE FOLLOWING CPR)
<TABLE>
<CAPTION>
ASSUMED PREPAYMENT ASSUMPTION (CPR)
PURCHASE ------------------------------------------------------------------------
CLASS PRICE 0% 2% 4% 6% 8% 10% 15%
- ------------------ -------- ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
X-1............... 3.16 70.841% 68.615% 66.380% 64.136% 61.883% 59.624% 53.952%
4.00 60.641 58.483 56.317 54.144 51.965 49.781 44.310
4.16 52.728 50.623 48.511 46.394 44.272 42.148 36.836
X-2............... 9.04 10.656% 10.566% 10.480% 10.396% 10.315% 10.237% 10.054%
9.16 9.505 9.413 9.324 9.239 9.157 9.078 8.891
9.28 8.428 8.335 8.245 8.158 8.074 7.993 7.804
</TABLE>
S-76
<PAGE> 77
PRE-TAX YIELD TO MATURITY (CBE)
OF THE CLASS X CERTIFICATES (ALTERNATIVE LIBOR ASSUMPTION #2)
<TABLE>
<CAPTION>
ASSUMED PREPAYMENT ASSUMPTION (CPR)
PURCHASE ------------------------------------------------------------------------
CLASS PRICE 0% 2% 4% 6% 8% 10% 15%
- ------------------ -------- ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
X-1............... 3.16 55.873% 53.448% 50.998% 48.520% 46.015% 43.481% 37.014%
4.00 47.229 44.873 42.491 40.083 37.649 35.186 28.902
4.16 40.498 38.195 35.868 33.515 31.137 28.731 22.592
X-2............... 9.04 10.658% 8.457% 6.267% 4.312% 2.267% 0.335% (4.269)%
9.16 9.506 7.320 5.146 3.211 1.183 (0.730) (5.290)
9.28 8.430 6.257 4.099 2.181 0.170 (1.726) (6.245)
</TABLE>
PRE-TAX YIELD TO MATURITY (CBE)
OF THE CLASS X CERTIFICATES (ALTERNATIVE LIBOR ASSUMPTION #2)
(PREPAYMENTS LOCKED OUT THROUGH LOP AND YMP, THEN THE FOLLOWING CPR)
<TABLE>
<CAPTION>
ASSUMED PREPAYMENT ASSUMPTION (CPR)
PURCHASE ------------------------------------------------------------------------------
CLASS PRICE 0% 2% 4% 6% 8% 10% 15%
- ----------- -------- ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
X-1........ 3.16 55.873% 53.810% 51.743% 49.673% 47.601% 45.528% 40.359%
4.00 47.229 45.221 43.211 41.199 39.187 37.177 32.174
4.16 40.498 38.533 36.567 34.600 32.636 30.675 25.804
X-2........ 9.04 10.658% 10.568% 10.481% 10.398% 10.317% 10.239% 10.056%
9.16 9.506 9.415 9.326 9.241 9.159 9.079 8.894
9.28 8.430 8.337 8.246 8.160 8.076 7.995 7.806
</TABLE>
PRE-TAX YIELD TO MATURITY (CBE)
OF THE CLASS X CERTIFICATES (50% RECOVERY OF DECL. % PREMIUMS)
(PREPAYMENTS LOCKED OUT THROUGH LOP AND YMP, THEN THE FOLLOWING CPR)
<TABLE>
<CAPTION>
ASSUMED PREPAYMENT ASSUMPTION (CPR)
PURCHASE ------------------------------------------------------------------------------
CLASS PRICE 0% 2% 4% 6% 8% 10% 15%
- ----------- -------- ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
X-1........ 3.16 70.765% 69.184% 67.601% 66.015% 64.428% 62.841% 58.873%
4.00 60.539 58.908 57.274 55.638 54.001 52.365 48.280
4.16 52.607 50.944 49.279 47.612 45.945 44.279 40.126
X-2........ 9.04 10.655% 10.578% 10.505% 10.434% 10.366% 10.301% 10.147%
9.16 9.503 9.425 9.350 9.278 9.208 9.141 8.985
9.28 8.427 8.347 8.270 8.196 8.126 8.058 7.898
</TABLE>
S-77
<PAGE> 78
PRE-TAX YIELD TO MATURITY (CBE)
OF THE CLASS X CERTIFICATES (100% RECOVERY OF DECL. % PREMIUMS)
(PREPAYMENTS LOCKED OUT THROUGH LOP AND YMP, THEN THE FOLLOWING CPR)
<TABLE>
<CAPTION>
ASSUMED PREPAYMENT ASSUMPTION (CPR)
PURCHASE ------------------------------------------------------------------------------
CLASS PRICE 0% 2% 4% 6% 8% 10% 15%
- ----------- -------- ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
X-1........ 3.16 70.765% 69.825% 68.899% 67.989% 67.094% 66.217% 64.102%
4.00 60.539 59.429 58.329 57.241 56.165 55.103 52.512
4.16 52.607 51.379 50.160 48.950 47.750 46.562 43.646
X-2........ 9.04 10.655% 10.592% 10.532% 10.474% 10.419% 10.366% 10.242%
9.16 9.503 9.439 9.377 9.318 9.261 9.207 9.080
9.28 8.427 8.361 8.297 8.237 8.179 8.123 7.994
</TABLE>
If each Group 1 Loan were to prepay in full at the later of (i) the first
month following the end of the lockout period (if any), (ii) the first month
following the end of the yield maintenance period (if any), and (iii) the month
in which any prepayment penalty (if any) declines to less than or equal to 2% of
the amount prepaid, and if any prepayment penalties due on the Group 1 Loans are
collected and passed through to the Class X-1 Certificates, the resulting yields
to maturity of the Class X-1 Certificates would be 39.846%, 25.873%, and 15.627%
at prices of 3.5%, 4.0% and 4.5%, respectively, of the related initial Notional
Amount (plus accrued interest).
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
Upon the issuance of the Offered Certificates, Thacher Proffitt & Wood,
counsel to the Depositor, will deliver its opinion generally to the effect that,
assuming compliance with all provisions of the Pooling and Servicing Agreement,
for Federal income tax purposes, REMIC I, REMIC II and REMIC III will each
qualify as a REMIC under the Code. For Federal income tax purposes, the Class
R-I Certificates will be the sole class of "residual interests" in REMIC I; the
Class R-II Certificates will be the sole class of "residual interests" in REMIC
II; the REMIC Regular Certificates will evidence the "regular interests" in, and
will be treated as debt instruments of, REMIC III; and the Class R-III
Certificates will be the sole class of "residual interests" in REMIC III. See
"Certain Federal Income Tax Consequences--REMICs" in the Prospectus.
ORIGINAL ISSUE DISCOUNT AND PREMIUM
The Class X-1 and Class X-2 Certificates will, the Class E Certificates
may, and the Class A-1, Class A-2A, Class A-2B, Class B, Class C and Class D
Certificates will not, be treated as having been issued with original issue
discount for Federal income tax reporting purposes. The prepayment assumption
that will be used in determining the rate of accrual of original issue discount,
market discount and premium, if any, for Federal income tax purposes will be
based on the assumption that subsequent to the date of any determination the
Mortgage Loans will not prepay prior to their respective maturity dates. No
representation is made that the Mortgage Loans will not prepay. See "Certain
Federal Income Tax Consequences--REMICs--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount" in the Prospectus.
The IRS has issued OID Regulations under Sections 1271 to 1275 of the Code
generally addressing the treatment of debt instruments issued with original
issue discount. Purchasers of the Offered Certificates should be aware that the
OID Regulations and Section 1272(a)(6) of the Code do not adequately address
certain issues relevant to, or are not applicable to, prepayable securities such
as the Offered Certificates. In addition, there is considerable uncertainty
concerning the application of Section 1272(a)(6) of the Code and the OID
Regulations to REMIC Regular Certificates that provide for payments based on an
adjustable rate, such as the Class A-1 Certificates and the Class X
Certificates. Because of the uncertainties concerning the application of Section
1272(a)(6) of the Code to the Class A-1 Certificates and the Class X
Certificates and because the rules of the OID Regulations relating to debt
instruments having an adjustable rate of interest are limited in their
application in ways that could preclude their application to the Class A-1
Certificates and the
S-78
<PAGE> 79
Class X Certificates even in the absence of Section 1272(a)(6) of the Code, the
IRS could assert that the Class A-1 Certificates and the Class X Certificates
should be treated as having been issued with original issue discount or should
be governed by some other method not yet set forth in regulations. Prospective
purchasers of the Offered Certificates are advised to consult their tax advisors
concerning the tax treatment of such Certificates.
If the Class A-1 Certificates and the Class X Certificates are required to
be treated as having been issued with original issue discount, it appears that a
reasonable method of reporting original issue discount with respect to the Class
A-1 Certificates and the Class X Certificates, generally would be to report all
income with respect to such Certificates as original issue discount for each
period, computing such original issue discount (i) by assuming that the value of
the applicable index will remain constant for purposes of determining the
original yield to maturity of, and projecting future distributions on, such
Certificates, thereby treating such Certificates as fixed rate instruments to
which the original issue discount computation rules described in the Prospectus
can be applied, and (ii) by accounting for any positive or negative variation in
the actual value of the applicable index in any period from its assumed value as
a current adjustment to original issue discount with respect to such period. See
"Certain Federal Income Tax Consequences--REMICs--Taxation of Owners of REMIC
Regular Certificates--Original Issue Discount" in the Prospectus.
If the method for computing original issue discount described in the
Prospectus results in a negative amount for any period with respect to a holder
of a Class X Certificate, the amount of original issue discount allocable to
such period would be zero and such Certificateholder will be permitted to offset
such negative amount only against future original issue discount (if any)
attributable to such Certificate. Although the matter is not free from doubt, a
holder of a Class X Certificate may be permitted to deduct a loss to the extent
that his or her respective remaining basis in such Certificate exceeds the
maximum amount of future payments to which such Certificateholder is entitled,
assuming no further prepayments of the Mortgage Loans. Any such loss might be
treated as a capital loss.
The OID Regulations in some circumstances permit the holder of a debt
instrument to recognize original issue discount under a method that differs from
that of the issuer. Accordingly, it is possible that holders of Offered
Certificates issued with original issue discount may be able to select a method
for recognizing original issue discount that differs from that used by the REMIC
Administrator in preparing reports to Certificateholders and the IRS.
Prospective purchasers of Offered Certificates issued with original issue
discount are advised to consult their tax advisors concerning the treatment of
such Certificates.
Prepayment Premiums actually collected on the Mortgage Loans will be
distributed to the holders of each Class of Certificates entitled thereto as
described herein. It is not entirely clear under the Code when the amount of a
Prepayment Premium should be taxed to the holder of a Class of Certificates
entitled to a Prepayment Premium. For Federal income tax reporting purposes,
Prepayment Premiums will be treated as income to the holders of a Class of
Certificates entitled to Prepayment Premiums only after the Servicer's actual
receipt of a Prepayment Premium as to which such Class of Certificates is
entitled under the terms of the Pooling and Servicing Agreement. It appears that
Prepayment Premiums are to be treated as ordinary income rather than capital
gain. However, the correct characterization of such income is not entirely clear
and Certificateholders should consult their tax advisors concerning the
treatment of Prepayment Premiums.
The Class A-2A, Class A-2B, Class B, Class C and Class D Certificates will
be treated for Federal income tax purposes as having been issued at a premium.
Whether any holder of any such Class of Certificates will be treated as holding
a Certificate with amortizable bond premium will depend on such
Certificateholder's purchase price and the distributions remaining to be made on
such Certificate at the time of its acquisition by such Certificateholder.
Holders of each such Class of Certificates should consult their tax advisors
regarding the possibility of making an election to amortize such premium. See
"Certain Federal Income Tax Consequences--REMICs--Taxation of Owners of REMIC
Regular Certificates--Premium" in the Prospectus.
CHARACTERIZATION OF INVESTMENTS IN OFFERED CERTIFICATES
The Offered Certificates will be "real estate assets" within the meaning of
Section 856(c)(5)(A) of the Code in the same proportion that the assets of the
Trust Fund would be so treated. In addition, interest
S-79
<PAGE> 80
(including original issue discount, if any) on the Offered Certificates will be
interest described in Section 856(c)(3)(B) of the Code to the extent that such
Certificates are treated as "real estate assets" within the meaning of Section
856(c)(5)(A) of the Code. Moreover, the Offered Certificates will be "qualified
mortgages" under Section 860G(a)(3) of the Code if transferred to another REMIC
on its start-up day in exchange for regular or residual interests therein.
The Offered Certificates will be treated as assets within the meaning of
Section 7701(a)(19)(C) of the Code generally only to the extent that the
Multifamily Mortgage Loans and the loans secured by nursing homes are a
percentage of the principal balance of the Mortgage Asset Pool. The percentage
of such Mortgage Loans included in the initial principal balance of the Mortgage
Asset Pool (which is subject to change due to changes in principal balances and
prepayments) is initially approximately 27.9%. See "Description of Mortgage
Asset Pool" herein and "Certain Federal Income Tax
Consequences--REMICs--Characterization of Investments in REMIC Certificates" in
the Prospectus.
For further information regarding the Federal income tax consequences of
investing in the Offered Certificates, see "Certain Federal Income Tax
Consequences--REMICs" in the Prospectus.
METHOD OF DISTRIBUTION
Subject to the terms and conditions set forth in an Underwriting Agreement,
dated October 30, 1996 (the "UNDERWRITING AGREEMENT"), the Underwriters have
agreed to purchase and the Depositor has agreed to sell to the Underwriters the
Offered Certificates. It is expected that delivery of the Offered Certificates
will be made only in book-entry form through the Same Day Funds Settlement
System of DTC on or about November 7, 1996, against payment therefor in
immediately available funds.
In the Underwriting Agreement, each Underwriter has agreed to purchase
Class A Certificates representing 50% of the Certificate Balance of each Class
of Class A Certificates, and Goldman Sachs & Co. has agreed to purchase all of
the remaining Offered Certificates.
In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all of the Offered
Certificates if any are purchased. In the event of default by either
Underwriter, the Underwriting Agreement provides that, in certain circumstances,
the purchase commitment of the nondefaulting Underwriters may be increased or
the underwriting may be terminated.
The Underwriting Agreement provides that the obligation of each Underwriter
to pay for and accept delivery of its Certificates is subject to, among other
things, the receipt of certain legal opinions and to the conditions, among
others, that no stop order suspending the effectiveness of the Depositor's
Registration Statement shall be in effect, and that no proceedings for such
purpose shall be pending before or threatened by the Securities and Exchange
Commission.
The distribution of the Offered Certificates by the Underwriters may be
effected from time to time in one or more negotiated transactions, or otherwise,
at varying prices to be determined at the time of sale. Proceeds to the
Depositor from the sale of the Offered Certificates, before deducting expenses
payable by the Depositor, will be approximately 111.56% of the aggregate
Certificate Balance of the Offered Certificates, plus accrued interest. Each
Underwriter may effect such transactions by selling its Certificates to or
through dealers, and such dealers may receive compensation in the form of
underwriting discounts, concessions or commissions from the Underwriter for whom
they act as agent. In connection with the sale of the Offered Certificates, each
Underwriter may be deemed to have received compensation from the Depositor in
the form of underwriting compensation. Each Underwriter and any dealers that
participate with such Underwriter in the distribution of the Offered
Certificates may be deemed to be underwriters and any profit on the resale of
the Offered Certificates positioned by them may be deemed to be underwriting
discounts and commissions under the Securities Act of 1933, as amended.
ContiFinancial Services Corporation and ING Baring (U.S.) Securities, Inc.,
affiliates of ContiTrade and ING Capital, respectively, may act as dealers on
behalf of Goldman, Sachs & Co. with respect to certain Classes of the Offered
Certificates to be purchased by such Underwriter.
The Underwriting Agreement provides that the Depositor will indemnify the
Underwriters, and that under limited circumstances the Underwriters will
indemnify the Depositor, against certain civil liabilities under the Securities
Act of 1933, as amended, or contribute to payments to be made in respect
thereof.
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<PAGE> 81
There can be no assurance that a secondary market for the Offered
Certificates will develop or, if it does develop, that it will continue. The
primary source of ongoing information available to investors concerning the
Offered Certificates will be the Trustee Reports discussed herein under
"Description of the Certificates-- Reports to Certificateholders; Certain
Available Information." Except as described herein under "Description of the
Certificates--Reports to Certificateholders; Certain Available Information",
there can be no assurance that any additional information regarding the Offered
Certificates will be available through any other source. In addition, the
Depositor is not aware of any source through which price information about the
Offered Certificates will be generally available on an ongoing basis. The
limited nature of such information regarding the Offered Certificates may
adversely affect the liquidity of the Offered Certificates, even if a secondary
market for the Offered Certificates becomes available.
LEGAL MATTERS
Certain legal matters will be passed upon for the Depositor by Thacher
Proffitt & Wood and for the Underwriters by Brown & Wood LLP.
RATINGS
It is a condition to their issuance that the respective Classes of Offered
Certificates receive the indicated credit ratings from Standard & Poor's Ratings
Services, a Division of the McGraw-Hill Companies, Inc. ("S&P") and/or Moody's
Investors Service, Inc. ("MOODY'S"; and together with S&P, the "RATING
AGENCIES"):
<TABLE>
<CAPTION>
CLASS S&P MOODY'S
----------------------------------------------------------- --------- -------
<S> <C> <C>
Class X-1.................................................. NR Aaa
Class X-2.................................................. NR Aaa
Class A-1.................................................. AAA Aaa
Class A-2A................................................. AAA Aaa
Class A-2B................................................. AAA Aaa
Class B.................................................... AA Aa1
Class C.................................................... A Aa3
Class D.................................................... BBB Baa1
Class E.................................................... BB+ Baa3
</TABLE>
The ratings of the Offered Certificates address the likelihood of the
timely receipt by holders thereof of all payments of interest to which they are
entitled and the ultimate receipt by holders thereof of all payments of
principal to which they are entitled, if any, by the Distribution Date in
October 2028 (the "RATED FINAL DISTRIBUTION DATE"). The ratings take into
consideration the credit quality of the Mortgage Asset Pool, structural and
legal aspects associated with the Certificates, and the extent to which the
payment stream from the Mortgage Asset Pool is adequate to make payments of
principal and interest required under the Offered Certificates. The ratings of
the Offered Certificates do not, however, represent any assessments of (i) the
likelihood or frequency of principal prepayments on the Mortgage Loans, (ii) the
degree to which such prepayments might differ from those originally anticipated
or (iii) whether and to what extent Prepayment Premiums will be collected in
connection with such prepayments or the corresponding effect on yield to
investors.
As described herein, the amounts payable with respect to the Class X
Certificates do not include principal. If all the Mortgage Loans were to prepay
in the initial month, with the result that the Class X Certificates were to
receive only a single month's interest (without regard to any Prepayment
Premiums that may be collected), and thus suffer a nearly complete loss of their
investment, all amounts "due" to such Certificateholders will nevertheless have
been paid, and such result is consistent with the ratings assigned by Moody's to
the Class X Certificates. The ratings of the Class X Certificates by Moody's do
not address the timing or magnitude of reductions of the Notional Amounts of the
Class X Certificates, but only the obligation to pay interest timely on the
Notional Amount of each Class of Class X Certificates, as such may be reduced
from time to time as described herein. Such ratings do not represent any
assessment of the yield to maturity of the Class X Certificates or the
possibility that the Class X Certificateholders might not fully recover their
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<PAGE> 82
investment in the event of rapid prepayments of the Mortgage Loans (including
both voluntary and involuntary prepayments).
There can be no assurance as to whether any rating agency not requested to
rate the Offered Certificates will nonetheless issue a rating to any Class
thereof and, if so, what such rating would be. A rating assigned to any Class of
Offered Certificates by a rating agency that has not been requested by the
Depositor to do so may be lower than the ratings assigned thereto by S&P and
Moody's.
The ratings on the Offered Certificates should be evaluated independently
from similar ratings on other types of securities. A security rating is not a
recommendation to buy, sell or hold securities and may be subject to revision or
withdrawal at any time by the assigning rating agency.
LEGAL INVESTMENT
The Offered Certificates will not be "mortgage related securities" for
purposes of SMMEA. As a result, the appropriate characterization of the Offered
Certificates under various legal investment restrictions, and thus the ability
of investors subject to these restrictions to purchase the Offered Certificates,
is subject to significant interpretive uncertainties.
The Depositor makes no representation as to the proper characterization of
any class of Offered Certificates for legal investment or other purposes, or as
to the ability of particular investors to purchase the Offered Certificates
under applicable legal investment or other restrictions. All institutions whose
investment activities are subject to legal investment laws and regulations,
regulatory capital requirements or review by regulatory authorities should
consult with their legal advisors in determining whether and to what extent the
Offered Certificates constitute legal investments for them or are subject to
investment, capital or other restrictions.
See "Legal Investment" in the Prospectus.
ERISA CONSIDERATIONS
A fiduciary of a Plan should review with its legal advisors whether the
purchase or holding of Offered Certificates could give rise to a transaction
that is prohibited or is not otherwise permitted either under ERISA or Section
4975 of the Code or whether there exists any statutory or administrative
exemption applicable thereto.
An individual prohibited transaction exemption similar to the Exemption (as
described under "ERISA Considerations--Prohibited Transaction Exemption" in the
Prospectus) has been issued by the DOL (as defined in the Prospectus) to each
Underwriter. Accordingly, the purchase or holding of the Class A and Class X
Certificates by, on behalf of or with "plan assets" of a Plan may qualify for
exemptive relief under the Exemption; however, the Exemption contains a number
of conditions, including the requirement that any such Plan must be an
"accredited investor" as defined in Rule 501(a)(1) of Regulation D of the
Securities and Exchange Commission under the Securities Act of 1933, as amended.
In addition, neither the Exemption nor the similar exemptions issued to the
respective Underwriters will apply to any Class of Subordinate Certificates. As
a result, no transfer of a Class B, Class C, Class D or Class E Certificate or
any interest therein may be made to a Plan or to any person who is directly or
indirectly purchasing such Certificate or interest therein on behalf of, as
named fiduciary of, as trustee of, or with assets of a Plan, unless the purchase
and holding of any such Certificate or interest therein is exempt from the
prohibited transaction provisions of Section 406 of ERISA and Section 4975 of
the Code under Prohibited Transaction Class Exemption ("PTCE") 95-60, which
provides an exemption from the prohibited transaction rules for certain
transactions involving an insurance company general account. Any such transferee
shall be deemed to have represented that PTCE 95-60 applies to the purchase and
holding of such Certificate. See "ERISA Considerations" in the Prospectus.
Any Plan fiduciary considering whether to purchase an Offered Certificate
on behalf of a Plan should consult with its counsel regarding the applicability
of the fiduciary responsibility and prohibited transaction provisions of ERISA
and the Code to such investment.
S-82
<PAGE> 83
INDEX OF PRINCIPAL TERMS
<TABLE>
<CAPTION>
PAGE
----------
<S> <C>
Accrued Certificate Interest...... S-50
Additional Trust Fund Expenses.... S-53
Advances.......................... S-40
Anchor Tenant..................... S-28
Appraisal Reduction Amount........ S-55
ARM Loans......................... S-9
Assumed Final Distribution Date... S-2
Assumed Monthly Payment........... S-51
Available Distribution Amount..... S-48
Balloon Loans..................... S-10
Balloon Payment................... S-10
Balloon Payment Interest Excess... S-40
Balloon Payment Interest
Shortfall....................... S-40
Base LIBOR Assumption............. S-62
Cash-Flow Amortization Loans...... S-25
CBE............................... S-67
Certificate Six-Month LIBOR....... S-46
Certificates...................... S-1
Class............................. S-1
Class A Certificates.............. S-1
Class X Certificates.............. S-1
Collection Period................. S-47
Commercial Mortgage Loan.......... S-22
Commercial Mortgaged Property..... S-22
ContiTrade........................ S-7
ContiTrade Mortgage Loans......... S-23
Controlling Class................. S-38
Corrected Mortgage Loan........... S-36
Cross-Collateralized Mortgage
Loans........................... S-7
Cut-off Date...................... S-7
Cut-off Date Balance.............. S-21
Delivery Date..................... S-1
Depositor.........................
Determination Date................ S-47
Discount Rate..................... S-51
Distributable Certificate
Interest........................ S-50
Distribution Date................. S-2
Emergency Advance................. S-40
Extension Adviser................. S-41
Extension Loans................... S-61
First Principal Distribution
Date............................ S-67
Fixed-Rate Loans.................. S-9
Form 8-K.......................... S-36
Formula 1 LIBOR Business Day...... S-25
Formula 2 LIBOR Business Day...... S-25
Formula 1 LIBOR Determination
Date............................ S-24
Formula 2 LIBOR Determination
Date............................ S-25
<CAPTION>
PAGE
----------
<S> <C>
GMACCM............................ S-7
GMACCM Mortgage Loans............. S-23
Gross Margin...................... S-10
Group 1 Loans..................... S-2
Group 2 Loans..................... S-2
HUD............................... S-29
Index............................. S-10
ING Capital....................... S-7
ING Capital Mortgage Loans........ S-23
Initial Group 1 Balance........... S-23
Initial Group 2 Balance........... S-23
Initial Pool Balance.............. S-2
Interest Accrual Period........... S-7
Last Principal Distribution
Date............................ S-67
LIBO.............................. S-24
LIBOR Reference Period............ S-24
Liquidation Fee................... S-39
Liquidation Fee Rate.............. S-39
Loan Group........................ S-2
Loan Group 1...................... S-2
Loan Group 2...................... S-2
Lock-Out Expiration Date.......... S-26
LOP............................... S-62
MAI............................... S-31
Major Tenant...................... S-28
Maturity Assumptions.............. S-61
Modified Mortgage Loan............ S-55
Monthly Payments.................. S-23
Moody's........................... S-81
Mortgage Asset Pool............... S-2
Mortgage Asset Seller............. S-23
Mortgage Loan Purchase
Agreement....................... S-23
Mortgage Loans.................... S-2
Mortgage Loan Sellers............. S-7
Mortgage Rate Adjustment Date..... S-24
Multifamily Mortgage Loan......... S-22
Multifamily Mortgaged Property.... S-22
Net Aggregate Prepayment Interest
Shortfall....................... S-50
Net Cash Flow..................... S-25
Net Mortgage Rate................. S-47
Offered Certificates.............. S-2
P&I Advance....................... S-15
Pass-Through Rate................. S-46
Pooling and Servicing Agreement... S-10
Prepayment Interest Excess........ S-40
Prepayment Interest Shortfall..... S-40
Principal Balance Certificates.... S-2
Principal Distribution Amount..... S-50
</TABLE>
S-83
<PAGE> 84
<TABLE>
<CAPTION>
PAGE
----------
<S> <C>
Purchase Price.................... S-33
Rated Final Distribution Date..... S-81
Rating Agencies................... S-81
Realized Losses................... S-53
Record Date....................... S-7
Reference Banks................... S-25
Reimbursement Rate................ S-54
Related Proceeds.................. S-40
REMIC I........................... S-2
REMIC II.......................... S-2
REMIC III......................... S-2
REMIC Regular Certificates........ S-1
REMIC Residual Certificates....... S-2
REO Tax........................... S-43
Replacement Special Servicer...... S-37
Replacement Special Servicer
Standby Fee..................... S-39
Required Appraisal Loan........... S-55
Reuters Screen LIBO Page.......... S-24
Rules............................. S-45
S&P............................... S-81
Section 42 Properties............. S-29
Senior Certificates............... S-1
PAGE
----------
Servicer.......................... S-7
Servicing Advances................ S-40
Servicing Fee..................... S-38
Servicing Fee Rate................ S-38
Six-Month LIBOR................... S-24
Six-Month LIBOR Formula 1......... S-25
Special Servicing Event........... S-36
Special Servicing Fee............. S-38
Specially Serviced Mortgage
Loan............................ S-36
Spread Rate....................... S-52
Stated Principal Balance.......... S-46
Step-Down Loans................... S-9
Subordinate Certificates.......... S-1
Tax Credits....................... S-29
Trustee........................... S-7
Trust Fund........................ S-2
Trustee Reports................... S-56
Underwriters...................... S-81
Underwriting Agreement............ S-80
Voting Rights..................... S-57
Workout Fee....................... S-38
Workout Fee Rate.................. S-38
YMP............................... S-62
</TABLE>
S-84
<PAGE> 85
ANNEX A
CERTAIN CHARACTERISTICS
OF THE MORTGAGE LOANS
A-1
<PAGE> 86
ANNEX A
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
The schedule and tables appearing in this Annex A set forth certain
information with respect to the Mortgage Loans and Mortgaged Properties. Such
information is presented, where applicable, as of the Cut-off Date. The
statistics in such schedule and tables were derived, in many cases, from
information and operating statements furnished by or on behalf of the respective
borrowers. Such information and operating statements were generally unaudited
and have not been independently verified by the Depositor or the Underwriters or
any of their respective affiliates or any other person. The sum of the amounts
in any column of any of the tables of this Annex A may not equal the indicated
total under such column due to rounding.
Underwriting NOI and the Estimated Annual Revenues and Estimated Annual
Operating Expenses used to determine Underwriting NOI for each Mortgaged
Property are derived from information furnished by the respective borrowers. Net
income for a Mortgaged Property as determined in accordance with generally
accepted accounting principles ("GAAP") would not be the same as the stated
Underwriting NOI, 1995 NOI or 1994 NOI for such Mortgaged Property as set forth
in the following schedule or tables. In addition, none of Underwriting NOI, Most
Recent NOI, 1995 NOI or 1994 NOI is a substitute for or comparable to operating
income as determined in accordance with GAAP as a measure of the results of a
property's operations or a substitute for cash flows from operating activities
determined in accordance with GAAP as a measure of liquidity. No representation
is made as to the future net cash flow of the Mortgaged Properties, nor is the
Underwriting NOI, Most Recent NOI, 1995 NOI or 1994 NOI set forth herein with
respect to any Mortgage Property intended to represent such future net cash
flow.
In the schedule and tables set forth in this Annex A, with respect to
Mortgage Loans evidenced by one Mortgage Note, but secured by multiple Mortgaged
Properties, a portion of the principal balance of the Mortgage Loan has been
allocated to each related Mortgaged Property for certain purposes, including
determining the Cut-off Date Loan-to-Value Ratio, Underwriting Debt Service
Coverage Ratio, Underwriting NOI, Underwriting Cash Flow and Most Recent NOI.
For purposes of the Prospectus Supplement, including the schedule and
tables in this Annex A, the indicated terms shall have the following meanings,
modified accordingly, by reference to the Payment Loan Term Notes and footnotes
to the schedules that follow:
1. "UNDERWRITING NOI" or "U/W NOI" as used herein with respect to any
Mortgaged Property means an estimate, determined prior to the Delivery Date, of
the total cash flow anticipated to be available for annual debt service on a
Mortgage Loan calculated as the excess of Estimated Annual Revenues over
Estimated Annual Operating Expenses, each of which was generally derived in the
following manner:
(i) "ESTIMATED ANNUAL REVENUES" were generally assumed to be equal to
one of the following: (a) the actual amounts of gross rents (in some cases
including percentage rent) received during the latest 12-month period
covered by operating statements supplied by the borrower (or annualized
gross rents if such operating statements covered less than a 12-month
period); or (b) the annualized amounts of gross potential rents or monthly
contractual base rents under leases in effect as reflected on a rent roll
provided by the borrower in connection with the origination of the related
Mortgage Loan; or (c) amounts consistent with historical operating trends
and market and competitive conditions; provided that such revenues were
generally modified by (x) assuming that the occupancy rate for the
Mortgaged Property was consistent with the relevant market if such
occupancy rate was less than the occupancy rate reflected in the most
recent rent roll or operating statements, as the case may be, furnished by
the related borrower or as determined by a site inspection of the Mortgaged
Property, and (y), in the case of retail, industrial/warehouse, office and
medical office Mortgaged Properties, by assuming a level of expense
reimbursements from tenants consistent with the terms of the lease or
historical trends at the property, and in certain cases, assuming that a
specified percentage of rent will become uncollectible. In addition, in the
case of certain Mortgaged Properties, upward adjustments may have been made
with respect to such revenues to account for all or a portion of the rents
provided for under any new leases scheduled to take effect later in the
year.
A-2
<PAGE> 87
(ii) "ESTIMATED ANNUAL OPERATING EXPENSES" were generally assumed to
be equal to historical expenses reflected in the operating statements and
other information furnished by the borrower, except that such expenses were
generally modified as follows: (a) adjusting upwards or downwards to
reflect a market level management fee and franchise fee, as appropriate,
and (b) adjusting certain historical expense items upwards or downwards to
amounts that reflect industry norms for the particular type of property
and/or taking into consideration material changes in the operating position
of the related Mortgaged Property (such as newly signed leases and market
data).
2. "UNDERWRITING CASH FLOW" is Underwriting NOI after certain adjustments
have been made that relate to replacement reserves and reserves for capital
expenditures and tenant improvement and leasing commissions.
3. "1995 NOI" is the net operating income (1995 Revenues less 1995
Expenses) for a Mortgaged Property as established by information provided by the
related borrower, except that in certain cases such net operating income has
been adjusted by removing certain nonrecurring expenses and revenues or by
certain other normalizations and in certain cases may reflect annualization of
partial year numbers. 1995 NOI does not necessarily reflect accrual of certain
costs such as real estate taxes and capital expenditures and does not reflect
non-cash items such as depreciation or amortization. In some cases, capital
expenditures and non-recurring items may have been treated by a borrower as an
expense but were deducted from 1995 Expenses to reflect normalized 1995 NOI. In
most cases, no attempt was made to verify the accuracy of any information
provided by each borrower or to reflect changes in net operating income that may
have occurred since the date of the information provided by each borrower for
the related Mortgaged Property.
4. "1994 NOI" is the net operating income for 1994, calculated in a manner
consistent with 1995 NOI.
5. "MOST RECENT NOI" is the net operating income for any Mortgaged Property
based on the most recent available operating statement (generally for a partial
year period in 1996) or trailing 12-month net operating income reflected as of
the Most Recent NOI End Date, calculated in a manner consistent with 1995 NOI.
Where information was not available for 1996 in respect of a Mortgaged Property,
Most Recent NOI as set forth in this Annex A shall be 1995 NOI.
6. "ANNUAL DEBT SERVICE" means, for any Mortgage Loan 12 times the Monthly
Payment in effect as of the Cut-off Date (or, in the case of each Cash-Flow
Amortization Loan, an assumed Monthly Payment of principal and interest based on
the applicable Current Mortgage Rate and a 25-year amortization term).
7. "DEBT SERVICE COVERAGE RATIO," "UNDERWRITING DEBT SERVICE COVERAGE
RATIO" and "UNDERWRITING DSC" means, with respect to any Mortgage Loan, (a) the
Underwriting NOI for the related Mortgaged Property, divided by (b) the Annual
Debt Service for such Mortgage Loan.
8. "COMBINED DEBT SERVICE COVERAGE RATIO" or "UNDERWRITING COMBINED DSC"
means, with respect to any Cross-Collateralized Mortgage Loan, (a) aggregate
Underwriting NOI for all the related Mortgaged Properties, divided by (b) the
aggregate Annual Debt Service for such Cross-Collateralized Mortgage Loan and
all other Mortgage Loans with which it is cross-collateralized.
9. "APPRAISED VALUE" means, for any Mortgaged Property, the appraiser's
adjusted value as stated in the most recent third party appraisal, available to
the Depositor. No representation is made that any such value would approximate
either the value that would be determined in a current appraisal of the related
Mortgaged Property or the amount that would be realized upon a sale.
10. "CUT-OFF DATE LOAN-TO-VALUE RATIO," "CUT-OFF DATE LTV RATIO,"
"LOAN-TO-VALUE RATIO" or "LTV" means, with respect to any Mortgage Loan, the
Cut-off Date Balance of such Mortgage Loan divided by the Appraised Value of the
related Mortgaged Property.
11. "NET RENTABLE AREA" or "PROPERTY SIZE (SF)" or "SF" means, in the case
of a Mortgaged Property operated as a retail center, office or medical office
complex, industrial/warehouse facility, self-storage facility or combination
retail office facility, the square footage of the net rentable or leasable area.
12. "TOTAL UNITS" means: (i) in the case of a Mortgaged Property operated
as multifamily housing, the number of apartments, regardless of the size of or
number of rooms in such apartment; (ii) in the case of a Mortgaged Property
operated as a self-storage facility, the number of self-storage units; (iii) in
the case of a Mortgaged Property operated as a nursing home, the number of beds;
(iv) in the case of a Mortgaged Property
A-3
<PAGE> 88
constituting a mobile home park, the number of pads; and (v) in the case of a
Mortgaged Property operated as a hotel, the number of guest rooms.
13. "OCCUPANCY %" means the percentage of Net Rentable Area or Total Units,
as the case may be, of the Mortgaged Property that was occupied as of a
specified date (identified on this Annex A as the "Occupancy as of Date"), as
specified by the borrower or as derived from the Mortgaged Property's rent rolls
or as determined by a site inspection of the Mortgaged Property. Information in
this Annex A concerning the "Largest Tenant" and "Second Largest Tenant" is
presented as of the same date as of which the Occupancy % is specified.
14. "BALLOON AMOUNT" means, with respect to any Balloon Loan, the principal
amount that will be due at maturity for such Balloon Loan based on the Maturity
Assumptions and a 0% CPR.
15. "LTV AT BALLOON" or "BALLOON LOAN-TO-VALUE RATIO" means, with respect
to any Balloon Loan, the Balloon Amount for such Balloon Loan divided by the
Appraised Value of the related Mortgaged Property.
16. "CURRENT MORTGAGE RATE" means, with respect to any Mortgage Loan, the
Mortgage Rate in effect of the Cut-off Date.
17. "CURRENT REPLACEMENT RESERVES" means, for any Mortgaged Property,
reserves escrowed for needed repairs and remediation and, except in the case of
the GMACCM Mortgage Loans, abatement of environmental issues as set forth in
engineering and environmental reports. Current Replacement Reserves are reported
as of a date within 90 days prior to the Cut-off Date.
18. "CURRENT OTHER RESERVES" means, for any Mortgaged Property, reserves
(including cash equivalents) escrowed for payment of future leasing commissions,
tenant improvement expenses, capital expenditures and, in the case of the GMACCM
Mortgage Loans, abatement of environmental issues, in each case if any. Current
Other Reserves are reported as of a date within 90 days prior to the Cut-off
Date.
19. PAYMENT LOAN TERM NOTES. The indicated Mortgage Loans have the
following payment terms:
Adjustable Rate Terms
<TABLE>
<CAPTION>
MORTGAGE
CUT-OFF MAXIMUM MINIMUM RATE
LOAN CONTROL DATE GROSS MORTGAGE MORTGAGE ADJUSTMENT
COUNTER NUMBER BALANCE PROPERTY NAME INDEX MARGIN RATE RATE DATE
- ------- -------- ----------- ------------------------- ------- ------ ------- ------- ----------
<C> <C> <C> <S> <C> <C> <C> <C> <C>
1 CONT1010 $13,176,907 Saddleback Apartments LIBOR 2.75 % 11.75 % 6.00% 04-01-97
-- 6
month
2 CONT1020 7,400,272 Sierra Creek Apartments LIBOR 2.75 11.75 6.00 04-01-97
-- 6
month
3 CONT1080 4,642,872 Mill Park Apartments LIBOR 2.75 11.75 6.00 04-01-97
-- 6
month
4 CONT1790 2,840,738 Heather Glen Care Center LIBOR 3.00 12.75 8.50 04-01-97
-- 6
month
5 CONT1150 2,626,065 Misty Ridge Apartments LIBOR 2.75 11.75 6.00 04-01-97
-- 6
month
6 CONT1320 1,764,531 Plantation House LIBOR 2.75 11.75 6.00 04-01-97
Apartments -- 6
month
7 3.15 12.00 9.00 04-01-97
CONT1930 1,023,762 15-17 Microlab Road LIBOR ------- ------ ----
-- 6
month
Total or Wtd. Avg. 2.7834% 11.843 % 6.304%
$33,475,147
</TABLE>
A-4
<PAGE> 89
Loan Counters 9 and 10, 500 Enterprise Drive and Tech Center
Multiple Mortgaged Properties: The two Mortgaged Properties secure one Mortgage
Note with an original balance of $18,731,250. The loan terms are reported
separately with respect to each Mortgaged Property, allocated generally based
upon each property's value.
Loan Counter 11, Dadeland
Interest-Only, Then Amortizing Payments: The Mortgage Loan requires Monthly
Payments of interest only in the amount of $129,544.26 from September 1, 1996
through August 1, 1997. During this period, the Mortgage Rate is 9.6555% per
annum. Commencing on September 1, 1997 and through maturity, Monthly Payments of
principal and interest in the amount of $129,544.26 are required based on a
Mortgage Rate of 9.00% per annum.
Loan Counter 14, 3(rd) & 4(th) Battery
Interest-Only, Then Amortizing Payments: The Mortgage Loan requires Monthly
Payments of interest only in the amount of $102,223.74 from August 1, 1996
through July 1, 1997. During this period, the payment Mortgage Rate is 9.9065%
per annum. Commencing on August 1, 1997 and through maturity, Monthly Payments
of principal and interest in the amount of $102,223.74 are required based on a
Mortgage Rate of 8.80% per annum.
Loan Counter 15, Centra 600
Interest-Only, Then Amortizing Payments: The Mortgage Loan requires Monthly
Payments of interest only in the amount of $97,239.70 from June 1, 1996 through
May 1, 1997. During this period, the Mortgage Rate is 9.8250% per annum.
Commencing on June 1, 1997 and through maturity, Monthly Payments of principal
and interest in the amount of $97,239.70 are required based on a Mortgage Rate
of 8.70% per annum.
Loan Counter 16, Lantana Cascade
Interest-Only, Then Amortizing Payments: The Mortgage Loan requires Monthly
Payments of interest only in the amount of $68,559.66 from January 1, 1996
through December 1, 1997. During this period, the Mortgage Rate is 8.16% per
annum (based upon actual days over a 360-day year interest calculation method).
Commencing on January 1, 1998 and through maturity, Monthly Payments of
principal and interest in the amount of $76,170.06 are required based on a
Mortgage Rate of 8.16% per annum (based upon actual days over a 360-day year
interest calculation period).
Extension Option: The borrower has the option to extend the Mortgage Loan an
additional 2 years, or to November 22, 2002, provided the borrower has satisfied
the following conditions: a) borrower provides written notice ("Extension
Notice") of intent to extend no less than 60 days prior to maturity, b) borrower
is not, at the time of the delivery of the Extension Notice, or at any time
thereafter prior to the maturity date, in default, c) borrower causes the title
insurer to endorse the Title Insurance Policy with such endorsements as lender
may reasonably require to assure lender that the extension does not affect the
lien priority, d) borrower executes and delivers to lender an extension and
modification agreement memorializing the extension of the maturity date and the
new loan terms and that the document be recorded, e) borrower pays all costs and
expenses incurred by lender in connection with such extension and modification,
and f) the borrower agrees that the extension terms will require Monthly
Payments of principal and interest based on a Mortgage Rate equal to the greater
of a) the sum of a six-month LIBO rate as reported in the Money Rates section of
The Wall Street Journal 15 business days prior to such adjustment date plus a 3%
margin or b) 8.16% per annum. This rate is to become effective 1 day after the
initial maturity date of November 22, 2000, and to be adjusted on June 1, 2001
and each 6 month period thereafter. The monthly principal and interest payments
shall be adjusted each time the interest rate is adjusted based upon a 28-year
amortization schedule from the time of extension. During the extension period,
the loan may be prepaid at par.
A-5
<PAGE> 90
Loan Counter 17, 1001 Connecticut Avenue
Interest-Only, Then Amortizing Payments: The Mortgage Loan requires Monthly
Payments of interest only in the amount of $76,702.69 from October 1, 1996
through September 1, 1997. During this period, the Mortgage Rate is 10.005% per
annum. Commencing on October 1, 1997 and through maturity, Monthly Payments of
principal and interest in the amount of $76,702.69 are required based on a
Mortgage Rate of 8.92% per annum.
Extension Option: The borrower has the option to extend the Mortgage Loan an
additional 5 years, or to December 31, 2005. The extension terms require Monthly
Payments of principal and interest based on a Mortgage Rate equal to 240 basis
points over the bid side yield of the 5-year U.S. Treasury Securities determined
as of the close of business on the last business day immediately preceding the
initial maturity date of December 31, 2000. The payments are to be determined
using an initial amortization period of 249 months.
The loan has a prepayment penalty equal to the greater of 1% or yield
maintenance with no open period during the extension period (Note: The loan has
a 60-day open window prior to the initial maturity date of December 31, 2000).
Loan Counter 20, Westwind/Oak Ridge
Interest-Only, Then Amortizing Payments: The Mortgage Loan requires Monthly
Payments of interest only in the amount of $62,739.07 from September 1, 1996
through August 1, 1997. During this period, the Mortgage Rate is 9.9883% per
annum. Commencing on September 1, 1997 and through maturity, Monthly Payments of
principal and interest in the amount of $62,739.07 are required based on a
Mortgage Rate of 8.90% per annum.
Loan Counter 40, 1634 Eye Street
Interest-Only, Then Amortizing Payments: The Mortgage Loan requires Monthly
Payments of interest only in the amount of $42,200.64 from October 1, 1996
through September 1, 1997. During this period, the Mortgage Rate is 9.483% per
annum. Commencing on October 1, 1997 and through maturity, Monthly Payments of
principal and interest in the amount of $42,200.64 are required based on a
Mortgage Rate of 8.80% per annum.
Extension Option: The borrower has the option to extend the loan an additional 5
years, or to December 31, 2005. The extension terms require Monthly Payments of
principal and interest based on a Mortgage Rate equal to 240 basis points over
the bid side yield of the 5-year U.S. Treasury Securities determined as of the
close of business on the last business day immediately preceding the initial
maturity date of December 31, 2000. The payments are to be determined using an
initial amortization period of 309 months. The loan has a prepayment penalty
equal to the greater of 1% or the result of a yield maintenance formula with no
open period during such extension period. The loan has a 60-day open window
prior to the initial maturity date of December 31, 2000.
Loan Counter 42, Georgetowne Apartments
Interest-Only, Then Amortizing Payments: The Mortgage Loan requires Monthly
Payments of interest only in the amount of $41,417.24 from February 1, 1996
through January 1, 1997. During this period, the Mortgage Rate is 9.558% per
annum. Commencing on February 1, 1997 and through maturity, Monthly Payments of
principal and interest in the amount of $41,417.24 are required based on a
Mortgage Rate of 8.37% per annum.
Loan Counter 47, Plaza Del Mar
Interest-Only, Then Amortizing Payments: The Mortgage Loan requires Monthly
Payments of interest only in the amount of $40,455.12 from June 1, 1996 through
May 1, 1997. During this period, the payment interest rate is 10.6825% per
annum. Commencing on June 1, 1997 and through maturity, Monthly Payments of
A-6
<PAGE> 91
principal and interest in the amount of $40,455.12 are required based on a
Mortgage Rate of 8.85% per annum.
Loan Counter 62, Parkway Market Center
Interest-Only, Then Amortizing Payments: The Mortgage Loan requires Monthly
Payments of interest only in the amount of $28,840.56 from October 1, 1996
through March 1, 1997. During this period, the Mortgage Rate is 10.103254% per
annum. Commencing on April 1, 1997 and through maturity, Monthly Payments of
principal and interest in the amount of $28,840.56 are required based on a
Mortgage Rate of 9.04% per annum.
U-Haul Loans
Interest-Only Plus Cash Flow Payments: For the purposes of this Annex A, the
payment amount is based upon a 25-year amortization schedule. The debt service
is equal to monthly payments of interest plus quarterly payments of principal
based on Net Cash Flow. For the first seven years of each Cash-Flow Amortization
Loan, principal payments are due on the last day of each calendar quarter in an
amount equal to 50% of Net Cash Flow from the related Mortgaged Property for
such calendar quarter. For the remaining three loan years, principal payments
are due on the last day of each calendar quarter in an amount equal to 100% of
the Net Cash Flow from the related Mortgaged Property for such calendar quarter.
(See table below for loan payment dates.) Based upon principal reductions to
date, the principal has been reduced more rapidly than a 25-year amortization
schedule would have indicated.
<TABLE>
<CAPTION>
1ST
1ST PRINCIPAL PRINCIPAL
LOAN PROPERTY ORIGINATION 1ST INTEREST DUE DATE END OF START OF DUE DATE LOAN
COUNTER LOCATION DATE DUE DATE (50% NCF) 7 YEARS REMAIN 3 YRS (100% NCF) MATURITY
------- ------------- ----------- ------------ ------------- ---------- -------------- ---------- ----------
<C> <S> <C> <C> <C> <C> <C> <C> <C>
87 Sterling 12/01/93 01/31/94 03/31/94 12/31/2000 01/01/2001 03/31/2001 12/01/2003
97 Richmond 12/01/93 01/31/94 03/31/94 12/31/2000 01/01/2001 03/31/2001 12/01/2003
101 Odenton 09/01/93 10/31/93 12/31/93 09/30/2000 10/01/2000 12/31/2000 09/01/2003
109 Oaklawn Blvd 09/01/94 10/31/94 12/31/94 09/30/2001 10/01/2001 12/31/2001 09/01/2004
111 N Richland 12/01/93 01/31/94 03/31/94 12/31/2000 01/01/2001 03/31/2001 12/01/2003
119 Shreveport 04/01/94 05/31/94 06/30/94 04/30/2001 05/01/2001 06/30/2001* 04/01/2004
123 Marrero 04/01/94 05/31/94 06/30/94 04/30/2001 05/01/2001 06/30/2001* 04/01/2004
125 Myrtle Beach 09/01/93 10/31/93 12/31/93 09/30/2000 10/01/2000 12/31/2000 09/01/2003
126 Jefferson 09/01/94 10/31/94 12/31/94 09/30/2001 10/01/2001 12/31/2001 09/01/2004
</TABLE>
- -------------------------
* Principal payment is a blend of 50% and 100% Net Cash Flow because of an
anniversary date in the middle of a calendar quarter.
A-7
<PAGE> 92
ANNEX A
ANNEX A FOOTNOTES
1. The loans are cross collateralized.
2. The Hobbs Plaza loan is cross collateralized with the Broadmoor
Shopping Center loan, but the Broadmoor Shopping Center loan is not
cross collateralized with the Hobbs Plaza loan.
3. The properties are secured by the same mortgage note. The replacement
reserve information set forth for 500 Enterprise Drive represents the
replacement reserve balance for both properties. The loan currently
requires replacement reserve payments equal to 50% of the properties'
cash flow after debt service until the reserve account is fully funded
at $500,000 and tenant improvement/leasing commission reserve payments
of 100% of cash flow after debt service until the reserve account
equals $10/sf on space rolling within the ensuing 24 months (the
reserve will begin funding if at any point in time the total sf of
vacancies and leases rolling in the next 24 months is greater than 15%
of the total square footage of the properties combined).
4. The Current Replacement Reserve balance of $400,000 and the Current
Other Reserves balance of $200,000 are letters of credit assigned to
the lender.
5. The Current Replacement Reserve balance of $280,000 includes a $250,000
letter of credit assigned to the lender.
6. The Current Replacement Reserve balance and payment information
represent the balance and payment for both the Replacement Reserve and
the Current Other Reserves (tenant improvement/leasing commission
reserves).
7. The prepayment penalty for years 16-25 is 1%, with a 90 day open period
prior to maturity.
8. The prepayment penalty for years 16-20 is 1%, with a 180 day open
period prior to maturity.
9. The prepayment penalty for the 16th loan year is the greater of yield
maintenance or 1%, with a 180 day open period prior to maturity.
10. YM - Treasury-Based Yield Maintenance Plus 50 bp.
11. YM - Treasury-Based Yield Maintenance Plus 200 bp.
PREPAYMENT PENALTY DEFINITIONS
- LO - Lockout
- YM - Treasury-Based Yield Maintenance
- 1%+YM - Treasury-Based Yield Maintenance Plus 1% of Outstanding
Principal Balance
- YM/1%OPB - Greater of Treasury-Based Yield Maintenance or 1% of
Original Principal Balance
- YM/3%OPB - Greater of Treasury-Based Yield Maintenance or 3% of
Original Principal Balance
- YM/1%UPB - Greater of Treasury-Based Yield Maintenance or 1% of
Unpaid Principal Balance
- YM/1%PPB - Greater of Treasury-Based Yield Maintenance or 1% of
Prepaid Principal Balance
(Loans may be prepaid in part or in whole)
- YM(LIB) - LIBOR-Based Yield Maintenance of Outstanding Principal
Balance
- YM(LIB+1%) - LIBOR-Based Yield Maintenance Plus 1% of Outstanding
Principal Balance
- YM(LIB+2%) - LIBOR-Based Yield Maintenance Plus 2% of Outstanding
Principal Balance
- YM(LIB+3%) - LIBOR-Based Yield Maintenance Plus 3% of Outstanding
Principal Balance
- YM(LIB+4%) - LIBOR-Based Yield Maintenance Plus 4% of Outstanding
Principal Balance
- YM(LIB+5%) - LIBOR-Based Yield Maintenance Plus 5% of Outstanding
Principal Balance
- <YM/5% UBP - Lesser of Treasury Based Yield Maintenance or 5% of
Unpaid Principal Balance.
- <YM/3% UBP - Lesser of Treasury Based Yield Maintenance or 3% of
Unpaid Principal Balance.
- <YM/1% UBP - Lesser of Treasury Based Yield Maintenance or 1% of
Unpaid Principal Balance.
A-8
<PAGE> 93
MORTGAGE LOAN SCHEDULE
A-9
<PAGE> 94
ANNEX A
<TABLE>
<CAPTION>
LOAN CONTROL
COUNTER NUMBER PROPERTY NAME PROPERTY ADDRESS CITY
- ------- --------- ----------------------------- ----------------------------------------- ---------------------
<C> <S> <C> <C> <C>
Group 1
1 CONT1010 Saddleback Apartments 4722 East Bell Road Phoenix
2 CONT1020 Sierra Creek Apartments 501 W. Central Texas Expwy Kileen
3 CONT1080 Mill Park Apartments 2900 Mc Cann Road Longview
4 CONT1790 Heather Glen Care Center 5910 West Northern Avenue Glendale
5 CONT1150 Misty Ridge Apartments 301 West Hawkins Parkway Longview
6 CONT1320 Plantation House Apartments 2601 Hudnall Street Dallas
7 CONT1930 15-17 Microlab Road 15-17 Microlab Road Livingston
Group 2
8 CONT1720 Sterling Estates 9300 West 79th Street Justice
9 ING56062 500 Enterprise Drive 500 Enterprise Dr. Rocky Hill
10 ING56062 Tech Center 1-91 Tech Ct., 795-865 Brook St Rocky Hill
11 ING57027 Dadeland 7700 North Kendall Dr. Miami
12 CONT1970 Pigeon Forge Factory Outlet 2850 Parkway (US Hwy 441) Pigeon Forge
13 CONT1730 Whippletree Village 525 North McHenry Road Wheeling
14 ING57012 3rd & 4th Battery 3rd & 4th Battery Seattle
15 ING56875 Centra 600 600 Old Country Road Garden City
16 ING56911 Lantana Cascade 6330 S. Congress Ave Lantana
17 ING57094 1001 Connecticut Avenue 1001 Connecticut Avenue, N.W. Washington DC
18 ING56279 Radisson Agoura Hills 30100 Agoura Road Agoura Hill
19 GMAC1010 Berkeley Center 2200-2240 Shattuck Ave. Berkeley
20 ING57026 Westwind/Oak Ridge 2250-2470 West Mason St Green Bay
21 CONT1030 Westwood Villa Apartments 2901 S. Sepulveda Los Angeles
22 CONT1180 Tulip Ave Apartments 66-70 Tulip Ave. Floral Park
23 CONT1360 Merrick Road Apartments 700 Merrick Road Baldwin
24 CONT1370 555 Front Street 555 Front Street Heampstead
25 CONT1620 Broadway Apartments 56 Broadway Freeport
26 CONT1640 Tulip Ave Apartments 62 Tulip Ave Floral Park
27 CONT1710 26 Burr Avenue 26 Burr Avenue Village of Hempstead
28 ING56347 Freeman Medical 323 Prairie Avenue Inglewood
29 ING56874 Gorham Island One Gorham Island Westport
30 CONT1040 The Meadows 14470 East 13 Avenue Aurora
31 CONT1050 Oxford Center 1172-1198 Third Ave Chula Vista
32 CONT1190 30 North Long Beach Ave 30 North Long Beach Ave Freeport
33 CONT1460 48 South Long Beach Road 48 South Long Beach Road Freeport
34 CONT1630 77 Terrace Avenue 77 Terrace Avenue Hempstead
35 CONT1660 Lincoln Blvd. Apartments 21 Lincoln Blvd. Hempstead
36 CONT1670 193 Washington Street 193 Washington Street Hempstead
37 CONT1690 43 Burr Avenue 43 Burr Avenue Hempstead
38 CONT1700 Van Cott Apartments 85 Van Cott Street Hempstead
39 CONT1060 Torpedo Factory Landing PH V 101 N. Union Street Alexandria
40 ING57095 1634 Eye Street 1634 Eye Street Washington DC
41 GMAC1170 Green Wood Apartments 790 Green Wave Road Gallatin
42 ING56510 Georgetowne Apartments 2222 South 142 Court Omaha
43 CONT2010 Otter Run Apartments 1025 Assisi Lane Atlantic Beach
44 CONT1070 Highland Industrial Park One Highland Industrial Park Peekskill
45 CONT2000 The Inn at Jackson Hole 3345 West McCollister Drive Teton Village
46 ING0002 The Dome Building 1045 - 1099 Westwood Blvd. Los Angeles
47 ING56861 Plaza Del Mar 12835 & 12845 Pointe Del Mar Way; 12865
Caminito Pointe Del Mar San Diego
48 GMAC1020 Plaza de Santa Fe 16950-56 Via De Santa Fe Rancho Santa Fe
49 GMAC1030 Block C 6024 Paseo Delicias Rancho Santa Fe
50 CONT2070 San Francisco Loc-N-Stor 466 Townsend Street San Francisco
</TABLE>
A-10
<PAGE> 95
ANNEX A
<TABLE>
<CAPTION>
CUT-OFF CURRENT
PROPERTY ORIGINAL DATE MORTGAGE FIRST
STATE ZIP TYPE BALANCE BALANCE RATE FOOTNOTE PYMT DATE
- ------ ------ -------------------------- ----------- ----------- -------- -------- ---------
<C> <C> <S> <C> <C> <C> <C> <C>
AZ 85032 Multifamily $13,410,217 $13,176,907 8.531 11/01/94
TX 76541 Multifamily 7,531,300 7,400,272 8.531 11/01/94
TX 75601 Multifamily 4,725,078 4,642,872 8.531 11/01/94
AZ 85301 Nursing Home 2,850,000 2,840,738 8.875 08/01/96
TX 75605 Multifamily 2,672,562 2,626,065 8.531 11/01/94
TX 75235 Multifamily 1,795,774 1,764,531 8.531 11/01/94
NJ 07039 Industrial/Warehouse 1,030,000 1,023,762 9.000 08/01/96
IL 60458 Mobile Home Park 24,000,000 23,970,819 8.500 10/01/96
CT 06067 Office 12,231,000 12,185,012 8.750 (3) 08/01/95
CT 06067 Office 6,500,250 6,475,609 8.750 (3) 08/01/95
FL 33156 Retail 16,100,000 16,100,000 9.656 09/01/96
TN 37863 Retail 15,400,000 15,387,890 9.750 11/01/96
IL 60090 Mobile Home Park 13,000,000 12,984,642 8.640 10/01/96
WA 98121 Office 12,382,600 12,382,600 9.907 08/01/96
NY 11530 Office 11,876,625 11,876,625 9.825 06/01/96
FL 33462 Mobile Home Park 9,950,000 9,950,000 8.160 01/01/96
DC 20036 Office 9,200,000 9,200,000 10.005 (4) 10/01/96
CA 91301 Lodging 8,585,000 8,585,000 9.850 (11) 12/01/96
CA 94704 Office 8,303,870 8,277,341 9.730 (6),(10) 08/01/96
WI 54303 Retail 7,537,500 7,537,500 9.988 09/01/96
CA 90064 Multifamily 7,235,000 7,172,730 8.000 04/01/96
NY 11001 Multifamily 2,467,500 2,450,438 8.000 02/01/96
NY 11510 Multifamily 1,597,500 1,586,454 8.000 02/01/96
NY 11550 Multifamily 1,560,000 1,549,213 8.000 02/01/96
NY 11520 Multifamily 712,500 707,573 8.000 02/01/96
NY 11001 Multifamily 550,000 546,197 8.000 02/01/96
NY 11550 Multifamily 138,750 137,790 8.000 02/01/96
CA 90301 Office 6,554,925 6,554,925 9.020 12/01/95
CT 06880 Office 6,500,000 6,500,000 8.750 06/01/96
CO 80011 Mobile Home Park 6,500,000 6,489,212 8.975 09/01/96
CA 91911 Office 6,140,000 6,130,706 10.000 10/01/96
NY 11520 Multifamily 2,442,300 2,425,412 8.000 02/01/96
NY 11520 Multifamily 1,372,500 1,363,009 8.000 02/01/96
NY 11550 Multifamily 614,600 610,350 8.000 02/01/96
NY 11550 Multifamily 447,750 444,654 8.000 02/01/96
NY 11550 Multifamily 426,750 423,799 8.000 02/01/96
NY 11550 Multifamily 375,000 372,407 8.000 02/01/96
NY 11550 Multifamily 307,380 305,255 8.000 02/01/96
VA 22314 Office 5,600,000 5,558,975 9.000 04/01/96
DC 20006 Office 5,340,000 5,340,000 9.483 (5) 10/01/96
TN 37066 Multifamily 5,322,000 5,271,368 8.860 (6) 08/01/95
NE 68144 Multifamily 5,200,000 5,200,000 9.558 02/01/96
FL 32233 Multifamily 5,200,000 5,192,191 8.875 10/01/96
NY 10566 Self-Storage/Mini-Storage 5,150,000 5,120,951 9.750 05/01/96
WY 83025 Lodging 5,000,000 4,991,997 9.670 10/01/96
CA 90024 Retail 4,700,000 4,697,599 9.320 11/01/96
CA 92014 Office 4,545,000 4,545,000 10.683 06/01/96
CA 92067 Office 3,000,000 2,994,743 9.130 (6),(10) 10/01/96
CA 92068 Office 1,500,000 1,497,372 9.130 (6),(10) 10/01/96
CA 94107 Self-Storage/Mini-Storage 4,400,000 4,392,599 9.375 10/01/96
<CAPTION>
MONTHLY
STATE PAYMENT
- ------ -------------
<C> <C>
AZ $ 103,408.84
TX 58,075.35
TX 36,436.02
AZ 23,683.92
TX 20,608.66
TX 13,847.57
NJ 9,267.18
IL 184,539.23
CT 100,556.38
CT 53,441.39
FL 129,544.26
TN 137,235.18
IL 101,251.44
WA 102,223.74
NY 97,239.70
FL 68,559.66
DC 76,702.69
CA 81,995.73
CA 73,882.65
WI 62,739.07
CA 55,840.91
NY 18,105.64
NY 11,721.89
NY 11,446.73
NY 5,228.07
NY 4,035.71
NY 1,018.10
CA 58,976.36
CT 53,439.34
CO 52,183.59
CA 55,794.23
NY 17,920.73
NY 10,070.92
NY 4,509.72
NY 3,285.43
NY 3,131.34
NY 2,751.62
NY 2,255.45
VA 46,995.00
DC 42,200.64
TN 42,287.00
NE 41,417.24
FL 42,348.71
NY 45,893.58
WY 44,277.14
CA 38,904.39
CA 40,455.12
CA 25,433.49
CA 12,721.75
CA 38,061.02
</TABLE>
A-11
<PAGE> 96
ANNEX A
<TABLE>
<CAPTION>
ORIGINAL REMAINING
TERM ORIGINAL TERM
LOAN TO MATURITY AMORT SEASONING TO MATURITY MATURITY BALLOON
COUNTER PROPERTY NAME (MOS.) TERM (MOS.) (MOS.) (MOS.) DATE AMOUNT
- ------- ----------------------------- ----------- ----------- --------- ----------- ---------- ------------
<C> <S> <C> <C> <C> <C> <C> <C>
Group 1
1 Saddleback Apartments 120 360 25 95 10/01/2004 $ 11,881,920
2 Sierra Creek Apartments 120 360 25 95 10/01/2004 6,672,995
3 Mill Park Apartments 120 360 25 95 10/01/2004 4,186,584
4 Heather Glen Care Center 84 300 4 80 07/01/2003 2,555,139
5 Misty Ridge Apartments 120 360 25 95 10/01/2004 2,367,982
6 Plantation House Apartments 120 360 25 95 10/01/2004 1,591,118
7 15-17 Microlab Road 120 240 4 116 07/01/2006 735,319
Group 2
8 Sterling Estates 60 360 2 58 09/01/2001 22,939,714
9 500 Enterprise Drive 84 300 16 68 07/01/2002 11,178,233
10 Tech Center 84 300 16 68 07/01/2002 5,940,424
11 Dadeland 120 360 3 117 08/01/2006 14,664,260
12 Pigeon Forge Factory Outlet 121 300 1 120 11/01/2006 12,954,499
13 Whippletree Village 84 360 2 82 09/01/2003 12,135,108
14 3rd & 4th Battery 72 300 4 68 07/01/2002 11,543,484
15 Centra 600 120 300 6 114 05/01/2006 10,085,713
16 Lantana Cascade 60 336 11 49 11/22/2000 9,915,717
17 1001 Connecticut Avenue 52 300 2 50 12/31/2000 8,825,374
18 Radisson Agoura Hills 60 240 0 60 11/01/2001 7,714,570
19 Berkeley Center 84 300 4 80 07/01/2003 7,532,340
20 Westwind/Oak Ridge 60 300 3 57 08/01/2001 7,154,776
21 Westwood Villa Apartments 120 300 8 112 03/01/2006 5,860,061
22 Tulip Ave Apartments 120 360 10 110 01/01/2006 2,168,259
23 Merrick Road Apartments 120 360 10 110 01/01/2006 1,403,766
24 555 Front Street 120 360 10 110 01/01/2006 1,370,812
25 Broadway Apartments 120 360 10 110 01/01/2006 626,093
26 Tulip Ave Apartments 120 360 10 110 01/01/2006 483,299
27 26 Burr Avenue 120 360 10 110 01/01/2006 121,922
28 Freeman Medical 120 241 12 108 11/01/2005 4,968,895
29 Gorham Island 120 300 6 114 05/01/2006 5,445,155
30 The Meadows 84 360 3 81 08/01/2003 6,091,489
31 Oxford Center 120 300 2 118 09/01/2006 5,204,490
32 30 North Long Beach Ave 120 360 10 110 01/01/2006 2,146,114
33 48 South Long Beach Road 120 360 10 110 01/01/2006 1,206,051
34 77 Terrace Avenue 120 360 10 110 01/01/2006 540,065
35 Lincoln Blvd. Apartments 120 360 10 110 01/01/2006 393,450
36 193 Washington Street 120 360 10 110 01/01/2006 374,996
37 43 Burr Avenue 120 360 10 110 01/01/2006 329,522
38 Van Cott Apartments 120 360 10 110 01/01/2006 270,103
39 Torpedo Factory Landing PH V 120 300 8 112 03/01/2006 4,645,549
40 1634 Eye Street 52 360 2 50 12/31/2000 5,203,294
41 Green Wood Apartments 180 360 16 164 07/01/2010 4,214,836
42 Georgetowne Apartments 120 300 10 110 01/01/2006 4,385,462
43 Otter Run Apartments 84 324 2 82 09/01/2003 4,756,369
44 Highland Industrial Park 120 300 7 113 04/01/2006 4,342,795
45 The Inn at Jackson Hole 120 300 2 118 09/01/2006 4,209,207
46 The Dome Building 120 360 1 119 10/01/2006 4,232,890
47 Plaza Del Mar 60 240 6 54 05/01/2001 4,157,079
48 Plaza de Santa Fe 120 300 2 118 09/01/2006 2,495,997
49 Block C 120 300 2 118 09/01/2006 1,247,998
50 San Francisco Loc-N-Stor 120 300 2 118 09/01/2006 3,680,687
</TABLE>
A-12
<PAGE> 97
ANNEX A
<TABLE>
<CAPTION>
RELATED PREPAYMENT
MORTGAGE FEE/ PENALTY OPEN PREPAY PREPAY PREPAY PREPAY
LOANS LEASEHOLD EXPIRATION PERIOD YEAR 1 YEAR 2 YEAR 3 YEAR 4
- --------- --------------- ---------- ------ --------- -------------- -------------- --------------
<C> <C> <C> <C> <S> <C> <C> <C>
Yes Fee 10/01/99 60 5% 4% 3% 2%
Yes Fee 10/01/99 60 5% 4% 3% 2%
Yes Fee 10/01/99 60 5% 4% 3% 2%
No Fee 01/01/2003 6 LO YM(LIB)+4%PPB YM(LIB)+3%PPB YM(LIB)+2%PPB
Yes Fee 10/01/99 60 5% 4% 3% 2%
Yes Fee 10/01/99 60 5% 4% 3% 2%
Yes Fee 01/01/2006 6 LO LO LO YM(LIB)+5%UPB
Yes Fee 09/01/2000 12 YM YM YM 1%
Yes(1) Fee 01/01/2002 6 YM/1%PPB YM/1%PPB YM/1%PPB YM/1%PPB
Yes(1) Fee 01/01/2002 6 YM/1%PPB YM/1%PPB YM/1%PPB YM/1%PPB
No Fee 08/01/2006 0 YM/1%OPB YM/1%OPB YM/1%OPB YM/1%OPB
No Both Fee/Lease 09/01/2006 2 LO LO YM/1%UPB YM/1%UPB
Yes Fee 09/01/2001 24 YM YM YM YM
No Fee 07/01/2002 0 YM/1%OPB YM/1%OPB YM/1%OPB YM/1%OPB
No Fee 11/01/2005 6 YM/1%OPB YM/1%OPB YM/1%OPB YM/1%OPB
No Fee 11/22/2000 0 YM/1%PPB YM/1%PPB YM/1%PPB YM/1%PPB
Yes Fee 10/31/2000 2 YM/1%OPB YM/1%OPB YM/1%OPB YM/1%OPB
Yes Fee 11/01/2001 0 YM/1%OPB YM/1%OPB YM/1%OPB YM/1%OPB
No Both Fee/Lease 01/01/2003 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
No Leasehold 08/01/2001 0 YM/1%OPB YM/1%OPB YM/1%OPB YM/1%OPB
No Fee 09/01/2005 6 LO LO LO YM/1%UPB
Yes(1) Fee 07/01/2005 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
Yes(1) Fee 07/01/2005 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
Yes(1) Fee 07/01/2005 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
Yes(1) Fee 07/01/2005 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
Yes(1) Fee 07/01/2005 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
Yes(1) Fee 07/01/2005 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
No Leasehold 11/01/2005 0 YM/1%OPB YM/1%OPB YM/1%OPB YM/1%OPB
No Fee 02/01/2006 3 YM/1%OPB YM/1%OPB YM/1%OPB YM/1%OPB
Yes Fee 08/01/2001 24 YM YM YM YM
No Fee 03/01/2006 6 LO LO LO LO
Yes(1) Fee 07/01/2005 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
Yes(1) Fee 07/01/2005 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
Yes(1) Fee 07/01/2005 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
Yes(1) Fee 07/01/2005 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
Yes(1) Fee 07/01/2005 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
Yes(1) Fee 07/01/2005 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
Yes(1) Fee 07/01/2005 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
No Leasehold 09/01/2005 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
Yes Fee 10/31/2000 2 YM/1%OPB YM/1%OPB YM/1%OPB YM/1%OPB
Yes Fee 01/01/2010 6 LO LO LO LO
No Fee 10/01/2005 3 YM/1%OPB YM/1%OPB YM/1%OPB YM/1%OPB
Yes Fee 03/01/2003 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
No Fee 10/01/2005 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
No Fee 03/01/2006 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
No Fee 10/01/2006 0 YM/1%OPB YM/1%OPB YM/1%OPB YM/1%OPB
No Fee 05/01/2001 0 YM/1%OPB YM/1%OPB YM/1%OPB YM/1%OPB
Yes(1) Fee 03/01/2006 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
Yes(1) Fee 03/01/2006 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
No Fee 09/01/2004 24 LO LO LO 5%
</TABLE>
A-13
<PAGE> 98
ANNEX A
<TABLE>
<CAPTION>
LOAN PREPAY PREPAY PREPAY PREPAY
COUNTER PROPERTY NAME YEAR 5 YEAR 6 YEAR 7 YEAR 8
- ------- ----------------------------- -------------- -------------- -------------- --------------
<C> <S> <C> <C> <C> <C>
Group 1
1 Saddleback Apartments 1% N/A N/A N/A
2 Sierra Creek Apartments 1% N/A N/A N/A
3 Mill Park Apartments 1% N/A N/A N/A
4 Heather Glen Care Center YM(LIB)+1%PPB YM(LIB) YM(LIB) N/A
5 Misty Ridge Apartments 1% N/A N/A N/A
6 Plantation House Apartments 1% N/A N/A N/A
7 15-17 Microlab Road YM(LIB)+4%UPB YM(LIB)+3%UPB YM(LIB)+2%UPB YM(LIB)+1%UPB
Group 2
8 Sterling Estates N/A N/A N/A N/A
9 500 Enterprise Drive YM/1%PPB YM/1%PPB YM/1%PPB N/A
10 Tech Center YM/1%PPB YM/1%PPB YM/1%PPB N/A
11 Dadeland YM/1%OPB YM/1%OPB YM/1%OPB YM/1%OPB
12 Pigeon Forge Factory Outlet YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
13 Whippletree Village 1% N/A N/A N/A
14 3rd & 4th Battery YM/1%OPB YM/1%OPB N/A N/A
15 Centra 600 YM/1%OPB YM/1%OPB YM/1%OPB YM/1%OPB
16 Lantana Cascade YM/1%PPB N/A N/A N/A
17 1001 Connecticut Avenue YM/1%OPB YM/1%OPB YM/1%OPB YM/1%OPB
18 Radisson Agoura Hills YM/1%OPB N/A N/A N/A
19 Berkeley Center YM/1%UPB YM/1%UPB YM/1%UPB N/A
20 Westwind/Oak Ridge YM/1%OPB N/A N/A N/A
21 Westwood Villa Apartments YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
22 Tulip Ave Apartments YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
23 Merrick Road Apartments YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
24 555 Front Street YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
25 Broadway Apartments YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
26 Tulip Ave Apartments YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
27 26 Burr Avenue YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
28 Freeman Medical YM/1%OPB YM/1%OPB YM/1%OPB YM/1%OPB
29 Gorham Island YM/1%OPB YM/1%OPB YM/1%OPB YM/1%OPB
30 The Meadows YM N/A N/A N/A
31 Oxford Center YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
32 30 North Long Beach Ave YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
33 48 South Long Beach Road YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
34 77 Terrace Avenue YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
35 Lincoln Blvd. Apartments YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
36 193 Washington Street YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
37 43 Burr Avenue YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
38 Van Cott Apartments YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
39 Torpedo Factory Landing PH V YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
40 1634 Eye Street YM/1%OPB YM/1%OPB YM/1%OPB YM/1%OPB
41 Green Wood Apartments LO LO LO LO
42 Georgetowne Apartments YM/1%OPB YM/1%OPB YM/1%OPB YM/1%OPB
43 Otter Run Apartments YM/1%UPB YM/1%UPB YM/1%UPB N/A
44 Highland Industrial Park YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
45 The Inn at Jackson Hole YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
46 The Dome Building YM/1%OPB YM/1%OPB YM/1%OPB YM/1%OPB
47 Plaza Del Mar YM/1%OPB N/A N/A N/A
48 Plaza de Santa Fe YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
49 Block C YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
50 San Francisco Loc-N-Stor 4% 3% 2% 1%
</TABLE>
A-14
<PAGE> 99
ANNEX A
<TABLE>
<CAPTION>
PREPAY PREPAY PREPAY PREPAY PREPAY PREPAY PREPAY
YEAR 9 YEAR 10 YEAR 11 YEAR 12 YEAR 13 YEAR 14 YEAR 15
- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
N/A N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A N/A
YM(LIB) YM(LIB) N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A N/A
YM/1%OPB YM/1%OPB N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A N/A
YM/1%OPB YM/1%OPB N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A N/A
YM/1%OPB YM/1%OPB N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%OPB YM/1%OPB N/A N/A N/A N/A N/A
YM/1%OPB YM/1%OPB N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%OPB YM/1%OPB N/A N/A N/A N/A N/A
LO LO 5% 4% 3% 2% 1%
YM/1%OPB YM/1%OPB N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%OPB YM/1%OPB N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A N/A
</TABLE>
A-15
<PAGE> 100
ANNEX A
<TABLE>
<CAPTION>
PREPAY LTV YEAR
LOAN YEAR APPRAISAL APPRAISED AT BUILT/
COUNTER PROPERTY NAME 16-25 DATE VALUE LTV BALLOON RENOVATED
- ------- ----------------------------- --------- --------- ----------- --- ------- ----------
<C> <S> <C> <C> <C> <C> <C> <C>
Group 1
1 Saddleback Apartments N/A 02/13/94 $22,800,000 58 52 1985
2 Sierra Creek Apartments N/A 01/26/94 11,400,000 65 59 1983
3 Mill Park Apartments N/A 01/26/94 7,330,000 63 57 1975
4 Heather Glen Care Center N/A 05/09/96 3,800,000 75 67 1951
5 Misty Ridge Apartments N/A 01/26/94 3,910,000 67 61 1981
6 Plantation House Apartments N/A 02/26/94 2,500,000 71 64 1961/1992
7 15-17 Microlab Road N/A 11/01/95 1,500,000 68 49 1971
Group 2
8 Sterling Estates N/A 07/01/96 35,300,000 68 65 1962/1993
9 500 Enterprise Drive N/A 06/01/95 18,000,000 68 62 1989
10 Tech Center N/A 06/01/95 8,200,000 79 72 1984
11 Dadeland N/A 05/01/96 24,200,000 67 61 1983
12 Pigeon Forge Factory Outlet N/A 10/11/95 25,900,000 59 50 1977/1994
13 Whippletree Village N/A 07/01/96 18,700,000 69 65 1971
14 3rd & 4th Battery N/A 04/09/96 21,650,000 57 53 1946
15 Centra 600 N/A 02/08/96 17,500,000 68 58 1958/1995
16 Lantana Cascade N/A 09/01/95 13,200,000 75 75 1970
17 1001 Connecticut Avenue N/A 04/09/96 13,500,000 68 65 1953
18 Radisson Agoura Hills N/A 10/96 13,000,000 66 59 1987
19 Berkeley Center N/A 04/18/96 12,200,000 68 62 1910/1990
20 Westwind/Oak Ridge N/A 12/15/96 10,500,000 72 68 1990
21 Westwood Villa Apartments N/A 07/01/95 9,650,000 74 61 1973
22 Tulip Ave Apartments N/A 11/01/95 3,290,000 74 66 1938
23 Merrick Road Apartments N/A 11/01/95 2,130,000 74 66 1941
24 555 Front Street N/A 11/01/95 2,140,000 72 64 1958
25 Broadway Apartments N/A 11/01/95 950,000 74 66 1931
26 Tulip Ave Apartments N/A 11/01/95 786,000 69 61 1956
27 26 Burr Avenue N/A 11/01/95 185,000 74 66 1930
28 Freeman Medical N/A 08/10/95 9,500,000 69 52 1972
29 Gorham Island N/A 12/01/95 9,100,000 71 60 1987
30 The Meadows N/A 05/01/96 9,100,000 71 67 1964/1995
31 Oxford Center N/A 02/26/96 9,000,000 68 58 1973/1994
32 30 North Long Beach Ave N/A 11/01/95 3,380,000 72 63 1957
33 48 South Long Beach Road N/A 11/01/95 1,830,000 74 66 1938
34 77 Terrace Avenue N/A 11/01/95 930,000 66 58 1973
35 Lincoln Blvd. Apartments N/A 11/01/95 597,000 74 66 1920
36 193 Washington Street N/A 11/01/95 569,000 74 66 1965
37 43 Burr Avenue N/A 11/01/95 500,000 74 66 1963
38 Van Cott Apartments N/A 11/01/95 440,000 69 61 1928
39 Torpedo Factory Landing PH V N/A 01/01/96 8,100,000 69 57 1942/1989
40 1634 Eye Street N/A 04/09/96 7,600,000 70 68 1962
41 Green Wood Apartments N/A 03/02/95 7,600,000 69 55 1994
42 Georgetowne Apartments N/A 10/04/94 7,970,000 65 55 1975
43 Otter Run Apartments N/A 01/16/96 7,100,000 73 67 1989
44 Highland Industrial Park N/A 11/15/95 6,800,000 75 64 1980
45 The Inn at Jackson Hole N/A 03/15/96 7,700,000 65 55 1968/1991
46 The Dome Building N/A 09/01/96 7,100,000 66 60 1930/1978
47 Plaza Del Mar N/A 04/01/96 7,000,000 65 59 1992
48 Plaza de Santa Fe N/A 05/27/96 4,600,000 65 54 1974
49 Block C N/A 05/27/96 2,450,000 61 51 1924
50 San Francisco Loc-N-Stor N/A 06/28/96 6,560,000 67 56 1921/1978
</TABLE>
A-16
<PAGE> 101
ANNEX A
<TABLE>
<CAPTION>
LOAN BALANCE OCCUPANCY
TOTAL PROPERTY PER UNIT OCCUPANCY AS OF LOAN
UNITS SIZE(SF) SF/UNIT TYPE % DATE TYPE
- ----- -------- ------------ ------ --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
582 316,872 $ 22,640 Units 91 06/01/96 Adjustable
344 232,768 21,512 Units 97 06/26/96 Adjustable
344 287,512 13,496 Units 91 06/01/96 Adjustable
133 26,857 21,359 Beds 89 06/30/96 Adjustable
176 110,528 14,920 Units 98 06/01/96 Adjustable
124 109,078 14,230 Units 98 06/26/96 Adjustable
34,589 30 SqFt 91 08/01/96 Adjustable
807 29,704 Pads 93 08/20/96 Fixed
252,943 48 SqFt 100 07/01/96 Fixed
114,605 57 SqFt 98 07/01/96 Fixed
214,629 75 SqFt 97 06/14/96 Fixed
197,044 78 SqFt 92 08/30/96 Fixed
407 31,903 Pads 97 07/01/96 Fixed
209,521 59 SqFt 96 10/01/96 Fixed
178,591 67 SqFt 90 04/01/96 Fixed
461 21,584 Pads 97 09/20/96 Fixed
139,267 66 SqFt 94 09/24/96 Fixed
281 30,552 Rooms N/A N/A Fixed
83,859 99 SqFt 94 06/06/96 Fixed
316,258 24 SqFt 100 07/02/96 Fixed
204 89,789 35,160 Units 98 04/01/96 Fixed
64 51,538 38,288 Units 96 04/01/96 Fixed
46 44,160 34,488 Units 100 04/01/96 Fixed
53 43,128 29,230 Units 98 04/01/96 Fixed
27 21,840 26,206 Units 100 04/01/96 Fixed
18 15,412 30,344 Units 100 04/01/96 Fixed
6 4,410 22,965 Units 100 04/01/96 Fixed
79,025 83 SqFt 75 06/01/96 Fixed
40,896 159 SqFt 100 05/01/96 Fixed
303 21,417 Pads 98 06/01/96 Fixed
91,577 67 SqFt 88 06/13/96 Fixed
69 64,446 35,151 Units 100 04/01/96 Fixed
39 36,000 34,949 Units 100 04/01/96 Fixed
32 16,128 19,073 Units 91 04/01/96 Fixed
15 10,650 29,644 Units 100 04/01/96 Fixed
14 11,012 30,271 Units 100 04/01/96 Fixed
14 11,756 26,600 Units 100 04/01/96 Fixed
12 9,675 25,438 Units 100 04/01/96 Fixed
34,017 163 SqFt 93 05/01/96 Fixed
65,654 81 SqFt 89 03/19/96 Fixed
164 196,200 32,142 Units 93 08/23/96 Fixed
288 18,056 Units 98 02/29/96 Fixed
192 165,648 27,043 Units 95 08/01/96 Fixed
841 105,875 48 SqFt 75 07/01/96 Fixed
83 48,000 60,145 Rooms N/A N/A Fixed
27,199 173 SqFt 100 08/01/96 Fixed
42,300 107 SqFt 91 06/01/95 Fixed
25,544 117 SqFt 100 08/23/96 Fixed
9,345 160 SqFt 100 08/01/96 Fixed
1083 72,025 61 SqFt 85 08/16/96 Fixed
<CAPTION>
TOTAL
UNITS LARGEST TENANT
- ----- -----------------------------------------
<S> <C>
582
344
344
133
176
124
New Jersey Ballet Company
807
SNET
CT Dept of Econ Dev
Circuit City
Pfaltzgraff
407
Cellular Tech
Lew Lieberman
461
Storch & Brenner
281
Shattuck 8 Cinema
Wal-Mart
204
64
46
53
27
18
6
Praire Med Group
Michael Allen
303
MAAC Project
69
39
32
15
14
14
12
Off-Eurocentres
The Beacon Foundation
164
288
192
841 American Heritage/Mayflower
83
Glendale Federal
Davidson Cosan Partners
Stump's Village
Cyber Cafe
1083
</TABLE>
A-17
<PAGE> 102
ANNEX A
<TABLE>
<CAPTION>
LARGEST LARGEST LARGEST
LOAN TENANT TENANT TENANT SECOND LARGEST
COUNTER PROPERTY NAME LEASED SF % OF TOTAL SF LEASE EXPIRATION TENANT
- ------- ----------------------------- ---------- ------------- ---------------- --------------------------------
<C> <S> <C> <C> <C> <C>
Group 1
1 Saddleback Apartments
2 Sierra Creek Apartments
3 Mill Park Apartments
4 Heather Glen Care Center
5 Misty Ridge Apartments
6 Plantation House Apartments
7 15-17 Microlab Road 13,464 39 05/31/2005 Universal Rehabilitation
Group 2
8 Sterling Estates
9 500 Enterprise Drive 100,653 40 10/01/2000 Digital
10 Tech Center 40,000 35 05/01/99 Met Insurance
11 Dadeland 54,309 25 02/01/2014 Barnes & Noble
12 Pigeon Forge Factory Outlet 12,317 6 02/01/2001 Oshkosh B'Gosh
13 Whippletree Village
14 3rd & 4th Battery 47,195 23 09/01/2000 Crowley Maritime
15 Centra 600 16,799 9 07/01/2002 Skyline Mgmt
16 Lantana Cascade
17 1001 Connecticut Avenue 8,673 6 01/01/97 Institute for Education Leader
18 Radisson Agoura Hills
19 Berkeley Center 18,094 22 05/24/98 Lawrence Berkely
20 Westwind/Oak Ridge 110,580 35 01/01/2010 Sam's Club
21 Westwood Villa Apartments
22 Tulip Ave Apartments
23 Merrick Road Apartments
24 555 Front Street
25 Broadway Apartments
26 Tulip Ave Apartments
27 26 Burr Avenue
28 Freeman Medical 11,384 14 03/01/97 DFH
29 Gorham Island 10,060 25 05/01/2000 Ceruzzi Properties
30 The Meadows
31 Oxford Center 10,863 12 01/31/99 Jimmy's Restaurant
32 30 North Long Beach Ave
33 48 South Long Beach Road
34 77 Terrace Avenue
35 Lincoln Blvd. Apartments
36 193 Washington Street
37 43 Burr Avenue
38 Van Cott Apartments
39 Torpedo Factory Landing PH V 11,468 34 05/31/99 Wheat First
40 1634 Eye Street 7,222 11 05/01/2003 Help Unlimited Temps
41 Green Wood Apartments
42 Georgetowne Apartments
43 Otter Run Apartments
44 Highland Industrial Park 16,200 15 08/31/98 Power Auth.-State of NY
45 The Inn at Jackson Hole
46 The Dome Building 5,400 20 09/01/98 Wherehouse
47 Plaza Del Mar 14,452 34 03/01/2002 Auto Club
48 Plaza de Santa Fe 9,600 38 11/30/99 U.S. Postal Service
49 Block C 1,400 15 01/31/2001 W.M. Allen
50 San Francisco Loc-N-Stor
</TABLE>
A-18
<PAGE> 103
ANNEX A
<TABLE>
<CAPTION>
SECOND LARGEST SECOND LARGEST SECOND LARGEST MOST MOST
TENANT TENANT TENANT RECENT RECENT NOI
LEASED SF % OF TOTAL SF LEASE EXPIRATION 1994 NOI 1995 NOI NOI END DATE
- -------------- -------------- ---------------- --------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
$ 2,049,795 $2,065,485 06/30/96
1,266,587 1,195,285 06/30/96
719,495 747,704 06/30/96
$ 139,076 493,912 600,140 06/30/96
385,231 407,913 06/30/96
251,289 286,536 06/30/96
11,090
32 06/30/2005 89,601 118,189 07/31/96
2,590,456 2,651,897 2,617,166 03/31/96
44,030
17 09/01/99 564,585 748,293 748,293 12/31/95
31,175
27 06/01/2000 1,245,915 1,110,030 1,110,030 12/31/95
18,025
8 10/01/2002 1,838,734 2,357,126 2,357,126 12/31/95
9,909
5 03/21/2001 2,323,146 3,012,996 2,994,664 08/30/96
1,355,821 1,491,762 1,449,762 04/30/96
31,892
15 06/01/2001 1,629,005 1,564,531 1,564,531 12/31/95
11,068
6 12/01/2005 1,162,108 1,579,414 1,579,414 12/31/95
1,100,437 954,284 954,284 12/31/95
8,287
6 01/01/2000 1,678,577 1,889,963 1,889,963 12/31/95
1,919,278 2,168,472 2,168,472 5/31/95
14,378
17 02/16/99 1,087,186 1,278,558 1,278,558 12/31/95
109,398
35 01/01/2015 953,816 1,017,918 1,017,918 12/31/95
990,815 1,036,400 1,054,337 03/31/96
304,460 303,649 03/31/96
230,995 199,568 183,944 03/31/96
184,931 167,132 172,888 03/31/96
88,362 62,538 65,844 03/31/96
82,846 83,677 81,814 03/31/96
16,455 15,530 16,208 03/31/96
7,976
10 09/01/96 785,498 888,419 888,419 12/31/95
8,724
21 08/01/98 1,012,168 1,053,342 1,053,342 12/31/95
826,175 826,175 12/31/95
7,890
9 12/31/99 999,454 978,519 978,519 12/31/95
290,002 331,633 03/31/96
155,001 161,392 176,193 03/31/96
75,596 61,881 34,143 03/31/96
55,471 35,919 47,780 03/31/96
54,537 46,486 46,264 03/31/96
47,859 45,124 53,597 03/31/96
35,017 29,796 39,000 03/31/96
6,034
18 11/01/2002 826,492 685,966 693,120 05/31/96
5,248
8 12/01/96 961,659 803,102 803,102 12/31/95
660,876 660,876 08/31/95
774,919 743,317 743,317 12/31/95
564,578 633,740 674,190 06/30/96
10,000
9 12/31/2000 770,120 671,693 691,122 12/31/95
992,009 930,063 884,080 03/31/96
4,555
17 04/01/2010 1,346,386 669,097 669,097 12/31/95
8,000
19 01/01/2002 601,236 573,245 573,245 12/31/95
5,400
21 11/30/2004 361,255 467,930 467,930 12/31/95
1,400
15 05/31/99 253,941 255,287 255,287 12/31/95
619,305 616,806 616,936 12/31/95
</TABLE>
A-19
<PAGE> 104
ANNEX A
<TABLE>
<CAPTION>
MOST RECENT
LOAN STATEMENT UNDERWRITING UNDERWRITING UNDERWRITING
COUNTER PROPERTY NAME TYPE NOI CASH FLOW DSC(X)
- ------- ----------------------------- -------------------- ------------ ------------ ------------
<C> <S> <C> <C> <C> <C>
Group 1
1 Saddleback Apartments Trailing 12 $ 2,057,075 $ 1,969,775 1.66
2 Sierra Creek Apartments Trailing 12 1,114,636 1,063,036 1.60
3 Mill Park Apartments Trailing 12 740,999 684,239 1.69
4 Heather Glen Care Center Trailing 12 646,371 608,771 2.27
5 Misty Ridge Apartments Trailing 12 384,491 353,515 1.55
6 Plantation House Apartments Trailing 12 241,032 216,232 1.45
7 15-17 Microlab Road Annualized 7 months 165,711 135,898 1.49
Group 2
8 Sterling Estates Trailing 12 2,642,743 2,622,593 1.19
9 500 Enterprise Drive Annual 1995 1,731,587 1,693,646 1.44
10 Tech Center Annual 1995 1,062,568 892,953 1.66
11 Dadeland Annual 1995 2,401,768 2,172,118 1.55
12 Pigeon Forge Factory Outlet Trailing 12 2,797,968 2,597,307 1.70
13 Whippletree Village Trailing 12 1,495,690 1,485,515 1.23
14 3rd & 4th Battery Annual 1995 1,949,111 1,635,496 1.59
15 Centra 600 Annual 1995 1,924,608 1,638,862 1.65
16 Lantana Cascade Annual 1995 1,188,894 1,165,844 1.45
17 1001 Connecticut Avenue Annual 1995 1,602,668 1,379,840 1.74
18 Radisson Agoura Hills Rolling 1,764,530 1,460,617 1.79
19 Berkeley Center Annual 1995 1,151,605 1,019,149 1.30
20 Westwind/Oak Ridge Annual 1995 964,414 917,910 1.28
21 Westwood Villa Apartments Trailing 12 1,012,205 966,305 1.51
22 Tulip Ave Apartments Trailing 12 307,957 295,157 1.42
23 Merrick Road Apartments Trailing 12 184,813 173,313 1.31
24 555 Front Street Trailing 12 172,167 158,917 1.25
25 Broadway Apartments Trailing 12 86,208 80,592 1.37
26 Tulip Ave Apartments Trailing 12 74,345 69,845 1.54
27 26 Burr Avenue Trailing 12 13,390 11,890 1.10
28 Freeman Medical Annual 1995 1,141,776 949,451 1.61
29 Gorham Island Annual 1995 1,067,105 910,426 1.66
30 The Meadows Annual 1995 823,401 815,826 1.31
31 Oxford Center Annual 1995 934,986 872,092 1.40
32 30 North Long Beach Ave Trailing 12 286,968 269,718 1.33
33 48 South Long Beach Road Trailing 12 162,748 152,998 1.35
34 77 Terrace Avenue Trailing 12 78,246 70,246 1.45
35 Lincoln Blvd. Apartments Trailing 12 43,410 39,660 1.10
36 193 Washington Street Trailing 12 44,779 41,279 1.19
37 43 Burr Avenue Trailing 12 43,057 39,557 1.30
38 Van Cott Apartments Trailing 12 33,651 30,651 1.24
39 Torpedo Factory Landing PH V Trailing 12 687,896 639,111 1.22
40 1634 Eye Street Annual 1995 881,239 779,475 1.74
41 Green Wood Apartments Annualized 8 months 668,043 643,443 1.32
42 Georgetowne Apartments Annual 1995 752,166 651,366 1.51
43 Otter Run Apartments Annualized 6 months 693,354 650,154 1.36
44 Highland Industrial Park Trailing 12 695,870 680,748 1.26
45 The Inn at Jackson Hole Trailing 12 750,164 721,233 1.41
46 The Dome Building Annual 1995 577,243 545,964 1.24
47 Plaza Del Mar Annual 1995 726,714 661,149 1.50
48 Plaza de Santa Fe Annual 1995 512,031 484,289 1.68
49 Block C Annual 1995 248,159 237,084 1.63
50 San Francisco Loc-N-Stor Trailing 12 587,177 579,974 1.29
</TABLE>
A-20
<PAGE> 105
ANNEX A
<TABLE>
<CAPTION>
CURRENT CURRENT
UNDERWRITING REPLACEMENT ANNUALIZED OTHER
COMBINED DSC RESERVES REP RESERVE PAYMENT/UNIT OR SF RESERVES
- ------------ ----------- ------------------------------ --------
<S> <C> <C> <C>
$ 197,777 $ 150.00
87,136 150.00
89,966 165.00
3,325 150.00
67,843 180.00
7,088 195.00
2,306 0.10
1.51 319,500
1.51
0.15
$450,060
30,416 42,810
400,000 200,000
18,982 0.43 7,875
13,667
249,148 470.00
1.36 7,125 166.13
1.36 5,461 177.13
1.36 6,715 189.06
1.36 3,764 208.00
1.36 2,815 233.33
1.36 933 232.00
0.25
1.31 8,283 179.13
1.31 5,831 223.08
1.31 5,067 236.25
1.31 2,525 251.20
1.31 1,737 185.14
1.31 1,986 211.71
1.31 2,043 254.00
5,065 0.30 42,986
280,000 100,000
30,771 150.00
350,327
16,881 175.84
5,968 0.15
25,500 1843.37
1.66 447 0.21 1,585
1.66 164 0.21
</TABLE>
A-21
<PAGE> 106
ANNEX A
<TABLE>
<CAPTION>
LOAN CONTROL
COUNTER NUMBER PROPERTY NAME PROPERTY ADDRESS CITY
- ------- --------- ------------------------------- ----------------------------------------- ---------------------
<C> <S> <C> <C> <C>
51 GMAC1110 Copper Ridge Apartments 2080 Lobdell Avenue Baton Rouge
52 ING55872 Pacific Court 1411-13 5th Street Santa Monica
53 ING0003 Woodlands of Kennesaw 2880 N. Cobb Parkway Kennesaw
54 GMAC1190 Alexandria Gardens 652 W. Montgomery Street Allentown
55 GMAC1070 Glynn Place Apartments 820 Scranton Road Brunswick
56 CONT2020 Mallard Cove Apartments 2900 State Road A1A Atlantic Beach
57 GMAC1060 Springwood Apartments 2660 Old Bainbridge Road Tallahassee
58 ING56616 Lemme Building 76-82 River Street Hoboken
59 Aggregate Loan Level Info.
59A CONT1940 Life Center of Galax 112 Painter Street Galax
59B CONT1890 Life Center of Wilmington 2520 Troy Drive Wilmington
59C CONT1920 Keystone Treatment Center 1010 E. Second Street Canton
60 ING55989 The Grand 1717 North Bayshore Drive Miami
61 ING55638 College Plaza 2400 Cerillos Santa Fe
62 ING57093 Parkway Market Center 6075 Parkway Drive Commerce City
63 CONT1100 Safeguard Self Storage 3301 North Causeway Blvd. Metairie
64 CONT1110 Villages at McClintock Apts. 1701 East Don Carlos Avenue Tempe
65 ING56668 Holiday Inn Grand Rapids 225 28th Street, S.W. Grand Rapids
66 GMAC1080 Pine Hill Apartments 600 South Pine Hill Road Griffin
67 GMAC1140 533 W. 21st Street Building 533 W. 21st Street New York
68 CONT1120 Filipello Self Storage 43 Page Street San Francisco
69 CONT1130 Shirlington Self Storage 2710 S. Nelson Street Arlington
70 GMAC1150 Birch Brook Manor Apartments 81-89 South Highland Avenue Ossining
71 ING55648 Broadmoor Shopping Center 1401 North Turner Street Hobbs
72 ING55649 Hobbs Plaza 2400 North Grimes St Hobbs
73 CONT1160 Claridge Court Apartments 400 South Dupont Parkway New Castle
74 GMAC1050 Carriage Hill Apartments 8901 Huron Street Thornton
75 CONT2030 Sunset Square Shopping Center 1897 Highland Avenue Clearwater
76 CONT1220 Sterling House Assisted Living 751 N. Somerset Terrace Olathe
77 GMAC1100 Jill Sanders Boutique 48 East Oak Street Chicago
78 CONT1240 Morena Self Storage 908 Sherman Street San Diego
79 CONT1250 Champions Business Park 13335 Veterans Memorial Houston
80 CONT2050 Valley View Health Care Center 2120 North 10th Street Canon City
81 CONT2060 Holly Nursing Care Center 320 North 8th Street Holly
82 GMAC1040 Pinetree Village Apartments 7500 North Broadway Denver
83 CONT1260 Budget Mini Storage 6512 14th Street West Bradenton
84 CONT1270 All American Self Storage 1500 Marshall Avenue St. Paul
85 CONT1830 Colwick Tower Office Building 4401 Colwick Road Charlotte
86 CONT1280 Mr. Stor-All 316 West Lathrop Road Manteca
87 ING56937 Abington Grove 500 N. Quincy St. Abington
88 GMAC1090 Glenwood Center 5117-5181 Glenwood Street Garden City
89 CONT1290 Secure It Self Storage 37 River Street Waltham
90 CONT1300 Farrington Manor Apartments 1601 Darr Street Irving
91 CONT1850 Heritage Convalescent Center 1009 Clyde Street Amarillo
92 CONT1310 Security Public Storage 2975 Pinole Valley Road Pinole
93 CONT1860 Poway Garden Self Storage 14260 Garden Road Poway
94 CONT1880 Harrison Self Storage 2323 2nd Street Davis
95 CONT1330 LaSombra Apartments 1400 East Crosby Road Carrollton
96 CONT1340 Cypress Commerce 1700 and 1770 NW 64th Street Fort Lauderdale
97 CONT1350 Louetta Mini Storage 6911 Louette Road Spring
</TABLE>
A-22
<PAGE> 107
ANNEX A
<TABLE>
<CAPTION>
CUT-OFF CURRENT
PROPERTY ORIGINAL DATE MORTGAGE FIRST MONTHLY
STATE ZIP TYPE BALANCE BALANCE RATE FOOTNOTE PYMT DATE PAYMENT
- ------ ------ -------------------------- ----------- ----------- -------- -------- --------- ----------
<C> <C> <S> <C> <C> <C> <C> <C> <C>
LA 70806 Multifamily 4,400,000 4,371,318 7.750 (6),(10) 03/01/96 $31,522.14
CA 90401 Office 4,242,000 4,225,636 9.960 (11) 07/01/95 38,427.54
GA 30152 Mobile Home Park 4,215,000 4,204,910 9.470 08/01/96 35,745.60
PA 18103 Multifamily 4,200,000 4,151,724 8.250 (6) 01/01/96 33,114.91
GA 31525 Multifamily 4,140,000 4,117,969 8.160 (6) 04/01/96 30,841.00
FL 32233 Multifamily 4,000,000 3,993,992 8.875 10/01/96 32,575.93
FL 32310 Multifamily 3,990,000 3,968,806 8.170 (6) 04/01/96 29,752.00
NJ 07030 Office 4,000,000 3,967,749 8.410 04/01/96 31,966.84
Nursing Home 3,800,000 3,766,882 11.250 08/01/96 43,789.09
VA 24333 Nursing Home
NC 28403 Nursing Home
SD 57013 Nursing Home
FL 33132 Retail 3,700,000 3,615,529 9.860 08/01/95 35,363.28
NM 87505 Retail 3,500,000 3,468,114 10.750 02/01/95 32,671.85
CO 80022 Retail 3,425,500 3,425,500 10.103 10/01/96 28,840.56
LA 70002 Self-Storage/Mini-Storage 3,300,000 3,292,789 10.250 09/01/96 30,570.65
AZ 85281 Multifamily 3,300,000 3,271,473 10.500 04/01/95 30,186.40
MI 49548 Lodging 3,264,000 3,254,885 9.560 04/01/96 30,552.76
GA 30223 Multifamily 3,270,000 3,252,838 8.230 (6) 04/01/96 24,521.00
NY 10011 Self-Storage/Mini-Storage 3,250,000 3,223,114 9.000 (6) 03/01/96 27,273.88
CA 94102 Self-Storage/Mini-Storage 3,000,000 2,985,312 9.650 06/01/96 26,524.39
VA 22206 Self-Storage/Mini-Storage 2,875,000 2,853,503 8.875 04/01/96 23,881.28
NY 10562 Multifamily 2,850,000 2,841,945 9.250 (6) 08/01/96 23,959.35
NM 88240 Retail 2,100,000 2,080,869 10.750 (2) 02/01/95 19,603.11
NM 88240 Retail 600,000 549,534 10.750 (2) 02/01/95 5,600.89
DE 19720 Multifamily 2,540,000 2,515,311 8.000 03/01/96 19,604.13
CO 80221 Multifamily 2,320,000 2,301,934 8.625 (6),(7) 04/01/96 18,877.10
FL 34621 Retail 2,300,000 2,295,881 9.000 10/01/96 19,301.52
KS 66062 Nursing Home 2,300,000 2,289,155 9.875 06/01/96 20,697.79
IL 60611 Retail 2,200,000 2,194,376 9.320 (6),(10) 09/01/96 18,946.78
CA 92110 Self-Storage/Mini-Storage 2,200,000 2,193,284 10.000 08/01/96 19,991.42
TX 77014 Self-Storage/Mini-Storage 2,200,000 2,187,329 9.625 05/01/96 19,412.83
CO 81212 Nursing Home 1,200,000 1,196,877 10.125 10/01/96 11,679.82
CO 81047 Nursing Home 937,500 935,060 10.125 10/01/96 9,124.86
CO 80221 Multifamily 2,130,000 2,115,539 8.625 (6) 05/01/96 17,331.13
FL 34207 Self-Storage/Mini-Storage 2,100,000 2,089,236 9.375 06/01/96 18,165.49
MN 55104 Self-Storage/Mini-Storage 2,050,000 2,040,334 9.875 06/01/96 18,448.03
NC 28211 Office 2,000,000 1,995,536 10.125 09/01/96 18,350.55
CA 95336 Self-Storage/Mini-Storage 2,000,000 1,990,166 9.625 06/01/96 17,648.03
MA 02351 Multifamily 2,023,400 1,983,391 10.050 12/01/94 18,458.02
ID 83714 Retail 1,950,000 1,935,095 9.490 (6),(10) 09/01/96 20,350.62
MA 02154 Self-Storage/Mini-Storage 1,850,000 1,834,381 8.875 03/01/96 15,367.08
TX 75061 Multifamily 1,810,000 1,798,908 9.250 05/01/96 15,500.51
TX 79106 Nursing Home 1,800,000 1,794,505 10.000 08/01/96 16,356.61
CA 94564 Self-Storage/Mini-Storage 1,800,000 1,786,541 8.875 04/01/96 14,951.76
CA 92064 Self-Storage/Mini-Storage 1,750,000 1,745,750 9.625 09/01/96 15,442.03
CA 95616 Self-Storage/Mini-Storage 1,700,000 1,694,920 10.125 08/01/96 15,597.97
TX 75006 Multifamily 1,700,000 1,694,236 9.375 08/01/96 14,705.40
FL 33316 Office 1,700,000 1,684,748 8.500 03/01/96 13,688.86
TX 77379 Self-Storage/Mini-Storage 1,675,000 1,662,729 9.000 04/01/96 14,056.54
</TABLE>
A-23
<PAGE> 108
ANNEX A
<TABLE>
<CAPTION>
ORIGINAL REMAINING
TERM ORIGINAL TERM
LOAN TO MATURITY AMORT TERM SEASONING TO MATURITY MATURITY BALLOON
COUNTER PROPERTY NAME (MOS.) (MOS.) (MOS.) (MOS.) DATE AMOUNT
- ------- ----------------------------- ----------- ---------- --------- ----------- ---------- ----------
<C> <S> <C> <C> <C> <C> <C> <C>
51 Copper Ridge Apartments 120 360 9 111 02/01/2006 $3,846,402
52 Pacific Court 60 300 17 43 06/01/2000 4,057,880
53 Woodlands of Kennesaw 60 339 4 56 06/05/2001 4,033,250
54 Alexandria Gardens 120 300 11 109 12/01/2005 3,422,995
55 Glynn Place Apartments 180 360 8 172 03/01/2011 3,205,244
56 Mallard Cove Apartments 84 324 2 82 09/01/2003 3,658,744
57 Springwood Apartments 180 360 8 172 03/01/2011 3,089,994
58 Lemme Building 84 300 8 76 03/01/2003 3,559,165
59 Aggregate Loan Level Info. 180 180 4 176 07/01/2011
59A Life Center of Galax
59B Life Center of Wilmington
59C Keystone Treatment Center
60 The Grand 120 240 16 104 07/01/2005 2,704,886
61 College Plaza 60 360 22 38 01/01/2000 3,398,145
62 Parkway Market Center 60 300 2 58 09/01/2001 3,228,686
63 Safeguard Self Storage 120 300 3 117 08/01/2006 2,811,329
64 Villages at McClintock Apts. 84 360 20 64 03/01/2002 3,141,014
65 Holiday Inn Grand Rapids 84 240 8 76 03/01/2003 2,783,033
66 Pine Hill Apartments 180 360 8 172 03/01/2011 2,537,476
67 533 W. 21st Street Building 120 300 9 111 02/01/2006 2,696,079
68 Filipello Self Storage 120 300 6 114 05/01/2006 2,524,454
69 Shirlington Self Storage 121 300 8 113 04/01/2006 2,371,893
70 Birch Brook Manor Apartments 120 324 4 116 07/01/2006 2,464,263
71 Broadmoor Shopping Center 60 360 22 38 01/01/2000 2,038,887
72 Hobbs Plaza 60 360 22 38 01/01/2000 519,946
73 Claridge Court Apartments 119 300 9 110 01/01/2006 2,063,126
74 Carriage Hill Apartments 300 300 8 292 03/01/2021
75 Sunset Square Shopping Center 120 300 2 118 09/01/2006 1,907,992
76 Sterling House Assisted
Living 120 300 6 114 05/01/2006 1,944,562
77 Jill Sanders Boutique 84 300 3 81 08/01/2003 1,984,319
78 Morena Self Storage 96 300 4 92 07/01/2004 1,961,266
79 Champions Business Park 120 300 7 113 04/01/2006 1,850,284
80 Valley View Health Care
Center 120 240 2 118 09/01/2006 883,438
81 Holly Nursing Care Center 120 240 2 118 09/01/2006 690,186
82 Pinetree Village Apartments 120 300 7 113 04/01/2006 1,751,689
83 Budget Mini Storage 84 300 6 78 05/01/2003 1,895,593
84 All American Self Storage 120 300 6 114 05/01/2006 1,733,196
85 Colwick Tower Office Building 120 300 3 117 08/01/2006 1,699,578
86 Mr. Stor-All 120 300 6 114 05/01/2006 1,682,075
87 Abington Grove 84 300 24 60 11/01/2001 1,843,188
88 Glenwood Center 180 180 3 177 08/01/2011
89 Secure It Self Storage 85 300 9 76 03/01/2003 1,654,773
90 Farrington Manor Apartments 120 300 7 113 04/01/2006 1,509,948
91 Heritage Convalescent Center 120 300 4 116 07/01/2006 1,525,747
92 Security Public Storage 120 300 8 112 03/01/2006 1,488,950
93 Poway Garden Self Storage 120 300 3 117 08/01/2006 1,471,817
94 Harrison Self Storage 120 300 4 116 07/01/2006 1,444,642
95 LaSombra Apartments 84 300 4 80 07/01/2003 1,534,527
96 Cypress Commerce 119 300 9 110 01/01/2006 1,397,703
97 Louetta Mini Storage 120 300 8 112 03/01/2006 1,389,516
</TABLE>
A-24
<PAGE> 109
ANNEX A
<TABLE>
<CAPTION>
RELATED PREPAYMENT
MORTGAGE FEE/ PENALTY OPEN PREPAY PREPAY PREPAY PREPAY
LOANS LEASEHOLD EXPIRATION PERIOD YEAR 1 YEAR 2 YEAR 3 YEAR 4
- --------- --------------- ---------- ------ --------- -------------- -------------- --------------
<C> <C> <C> <C> <S> <C> <C> <C>
No Fee 02/01/2005 12 LO YM/1%UPB YM/1%UPB YM/1%UPB
No Fee 06/01/2000 0 YM/1%OPB YM/1%OPB YM/1%OPB YM/1%OPB
No Fee 06/05/2001 0 LO LO YM YM
No Fee 09/01/2005 3 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
Yes Fee 09/01/2010 6 LO LO LO LO
Yes Fee 03/01/2003 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
Yes Fee 09/01/2010 6 LO LO LO LO
No Fee 12/01/2002 3 YM/1%OPB YM/1%OPB YM/1%OPB YM/1%OPB
No Fee 01/01/2011 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
No Fee 07/01/2005 YM/1%OPB YM/1%OPB YM/1%OPB YM/1%OPB
Yes Fee 01/01/2000 YM/1%OPB YM/1%OPB YM/1%OPB YM/1%OPB
No Fee 09/01/2001 YM/1%OPB YM/1%OPB YM/1%OPB YM/1%OPB
No Fee 02/01/2006 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
No Fee 03/01/2000 24 LO 2.5% 2.5% 1.5%
No Fee 03/01/2003 0 YM/1%OPB YM/1%OPB YM/1%OPB YM/1%OPB
Yes Fee 09/01/2010 6 LO LO LO LO
No Fee 01/17/2002 48 LO LO YM/1%UPB 3%
Yes Fee 11/01/2005 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
No Fee 10/01/2005 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
No Fee 01/01/2006 6 LO LO LO LO
Yes(1) Fee 01/01/2000 0 YM/1%OPB YM/1%OPB YM/1%OPB YM/1%OPB
Yes Fee 01/01/2000 0 YM/1%OPB YM/1%OPB YM/1%OPB YM/1%OPB
No Fee 07/01/2005 6 LO LO LO YM/1%UPB
No Fee 12/01/2020 3 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
No Fee 03/01/2006 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
No Fee 11/01/2005 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
No Fee 02/01/2003 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
No Fee 07/01/2003 12 YM/1%UPB YM/1%UPB YM/1%UPB <YM/5%UPB
No Fee 10/01/2005 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
Yes(1) Fee 03/01/2006 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
Yes(1) Fee 03/01/2006 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
No Fee 02/01/2006 2 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
No Fee 11/01/2002 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
No Fee 11/01/2005 6 YM YM YM YM
No Fee 02/01/2006 6 LO LO LO YM/1%UPB
Yes Fee 11/01/2005 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
No Fee 11/01/2001 0 YM/3%OPB YM/3%OPB YM/3%OPB YM/3%OPB
No Fee 02/01/2011 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
No Fee 09/01/2002 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
No Fee 10/01/2005 6 LO LO LO YM/1%UPB
No Fee 01/01/2006 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
Yes Fee 09/01/2005 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
No Fee 02/01/2006 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
No Fee 01/01/2006 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
No Fee 01/01/2003 6 LO LO LO YM/1%UPB
No Leasehold 07/01/2005 6 LO LO LO YM/1%UPB
No Fee 09/01/2005 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
</TABLE>
A-25
<PAGE> 110
ANNEX A
<TABLE>
<CAPTION>
LOAN PREPAY PREPAY PREPAY PREPAY
COUNTER PROPERTY NAME YEAR 5 YEAR 6 YEAR 7 YEAR 8
- ------- ----------------------------- -------------- -------------- -------------- --------------
<C> <S> <C> <C> <C> <C>
51 Copper Ridge Apartments YM/1%UPB YM/1%UPB 3% 2%
52 Pacific Court YM/1%OPB N/A N/A N/A
53 Woodlands of Kennesaw YM N/A N/A N/A
54 Alexandria Gardens YM/1%UPB YM/1%UPB YM/1%UPB 1%
55 Glynn Place Apartments LO LO LO LO
56 Mallard Cove Apartments YM/1%UPB YM/1%UPB YM/1%UPB N/A
57 Springwood Apartments LO LO LO LO
58 Lemme Building YM/1%OPB YM/1%OPB YM/1%OPB N/A
59 Aggregate Loan Level Info. YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
59A Life Center of Galax
59B Life Center of Wilmington
59C Keystone Treatment Center
60 The Grand YM/1%OPB YM/1%OPB YM/1%OPB YM/1%OPB
61 College Plaza YM/1%OPB N/A N/A N/A
62 Parkway Market Center YM/1%OPB N/A N/A N/A
63 Safeguard Self Storage YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
64 Villages at McClintock Apts. 1.5% N/A N/A N/A
65 Holiday Inn Grand Rapids YM/1%OPB YM/1%OPB YM/1%OPB N/A
66 Pine Hill Apartments LO LO LO LO
67 533 W. 21st Street Building 2% 1% N/A N/A
68 Filipello Self Storage YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
69 Shirlington Self Storage YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
70 Birch Brook Manor Apartments LO YM/1%UPB YM/1%UPB YM/1%UPB
71 Broadmoor Shopping Center YM/1%OPB N/A N/A N/A
72 Hobbs Plaza YM/1%OPB N/A N/A N/A
73 Claridge Court Apartments YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
74 Carriage Hill Apartments YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
75 Sunset Square Shopping Center YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
76 Sterling House Assisted
Living YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
77 Jill Sanders Boutique YM/1%UPB YM/1%UPB YM/1%UPB N/A
78 Morena Self Storage <YM/5%UPB <YM/3%UPB <YM/1%UPB N/A
79 Champions Business Park YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
80 Valley View Health Care
Center YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
81 Holly Nursing Care Center YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
82 Pinetree Village Apartments YM/1%UPB YM/1%UPB YM/1%UPB 1%
83 Budget Mini Storage YM/1%UPB YM/1%UPB YM/1%UPB N/A
84 All American Self Storage YM YM YM YM
85 Colwick Tower Office Building YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
86 Mr. Stor-All YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
87 Abington Grove YM/3%OPB 2% 1% N/A
88 Glenwood Center YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
89 Secure It Self Storage YM/1%UPB YM/1%UPB YM/1%UPB N/A
90 Farrington Manor Apartments YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
91 Heritage Convalescent Center YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
92 Security Public Storage YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
93 Poway Garden Self Storage YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
94 Harrison Self Storage YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
95 LaSombra Apartments YM/1%UPB YM/1%UPB YM/1%UPB N/A
96 Cypress Commerce YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
97 Louetta Mini Storage YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
</TABLE>
A-26
<PAGE> 111
ANNEX A
<TABLE>
<CAPTION>
PREPAY PREPAY PREPAY PREPAY PREPAY PREPAY PREPAY
YEAR 9 YEAR 10 YEAR 11 YEAR 12 YEAR 13 YEAR 14 YEAR 15
- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
1% N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A N/A
1% 1% N/A N/A N/A N/A N/A
LO LO 5% 4% 3% 2% 1%
N/A N/A N/A N/A N/A N/A N/A
LO LO 5% 4% 3% 2% 1%
N/A N/A N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
YM/1%OPB YM/1%OPB N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A N/A
LO LO 5% 4% 3% 2% 1%
N/A N/A N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB 1% 1% 1% 1% 1%
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
1% 1% N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A N/A
YM YM N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
N/A N/A N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
</TABLE>
A-27
<PAGE> 112
ANNEX A
<TABLE>
<CAPTION>
PREPAY LTV YEAR
LOAN YEAR APPRAISAL APPRAISED AT BUILT/
COUNTER PROPERTY NAME 16-25 DATE VALUE LTV BALLOON RENOVATED
- ------- ----------------------------- --------- --------- ----------- --- ------- ----------
<C> <S> <C> <C> <C> <C> <C> <C>
51 Copper Ridge Apartments N/A 11/15/95 6,100,000 72 63 1968
52 Pacific Court N/A 02/01/95 7,000,000 60 58 1988
53 Woodlands of Kennesaw N/A 03/05/96 5,700,000 74 71 1974
54 Alexandria Gardens N/A 09/25/95 5,400,000 77 63 1971/1996
55 Glynn Place Apartments N/A 12/08/95 5,040,000 82 64 1995
56 Mallard Cove Apartments N/A 01/16/96 5,650,000 71 65 1987
57 Springwood Apartments N/A 12/07/95 4,800,000 83 64 1995
58 Lemme Building N/A 01/01/96 6,200,000 64 57 1900/1984
59 Aggregate Loan Level Info. N/A 09/01/95 10,800,000 35
59A Life Center of Galax 2,800,000 1950
59B Life Center of Wilmington 3,600,000 1984
59C Keystone Treatment Center 4,400,000 1959/1994
60 The Grand N/A 03/01/94 6,800,000 53 40 1985
61 College Plaza N/A 10/96 6,800,000 51 50 1984
62 Parkway Market Center N/A 05/15/96 5,500,000 62 59 1987
63 Safeguard Self Storage N/A 04/05/96 5,350,000 62 53 1968/1995
64 Villages at McClintock Apts. N/A 11/18/94 4,950,000 66 63 1962/1994
65 Holiday Inn Grand Rapids N/A 01/01/96 5,850,000 56 48 1970/1988
66 Pine Hill Apartments N/A 12/17/95 3,850,000 84 66 1995
67 533 W. 21st Street Building N/A 10/01/95 5,000,000 64 54 1921/1994
68 Filipello Self Storage N/A 03/23/96 4,230,000 71 60 1911/1982
69 Shirlington Self Storage N/A 11/30/95 4,000,000 71 59 1965/1985
70 Birch Brook Manor Apartments N/A 12/18/95 3,800,000 75 65 1950
71 Broadmoor Shopping Center N/A 11/21/94 3,700,000 56 55 1958
72 Hobbs Plaza N/A 11/21/94 1,560,000 35 33 1981/1981
73 Claridge Court Apartments N/A 09/13/95 3,520,000 71 59 1970/1994
74 Carriage Hill Apartments 1% 11/20/95 3,200,000 72 1975
75 Sunset Square Shopping Center N/A 03/30/96 3,785,000 61 50 1958
76 Sterling House Assisted
Living N/A 11/20/95 3,165,000 72 61 1992
77 Jill Sanders Boutique N/A 04/17/96 3,200,000 69 62 1902/1994
78 Morena Self Storage N/A 03/19/96 3,680,000 60 53 1955/1995
79 Champions Business Park N/A 11/30/95 3,500,000 62 53 1977
80 Valley View Health Care
Center N/A 05/20/96 1,600,000 75 55 1965
81 Holly Nursing Care Center N/A 05/21/96 1,250,000 75 55 1970
82 Pinetree Village Apartments N/A 02/20/96 2,860,000 74 61 1972
83 Budget Mini Storage N/A 01/18/96 2,800,000 75 68 1979
84 All American Self Storage N/A 02/16/96 3,700,000 55 47 1987/1993
85 Colwick Tower Office Building N/A 04/25/96 3,500,000 57 49 1970/1991
86 Mr. Stor-All N/A 02/02/96 3,000,000 66 56 1973
87 Abington Grove N/A 09/01/94 2,700,000 73 68 1971
88 Glenwood Center N/A 05/15/96 3,400,000 57 1984
89 Secure It Self Storage N/A 10/14/95 2,550,000 72 65 1895/1986
90 Farrington Manor Apartments N/A 04/05/95 2,393,000 75 63 1964/1995
91 Heritage Convalescent Center N/A 01/12/96 2,450,000 73 62 1963
92 Security Public Storage N/A 11/13/95 2,600,000 69 57 1957/1988
93 Poway Garden Self Storage N/A 05/20/96 2,340,000 75 63 1979
94 Harrison Self Storage N/A 11/01/95 2,500,000 68 58 1988
95 LaSombra Apartments N/A 05/20/96 2,550,000 66 60 1970
96 Cypress Commerce N/A 07/21/95 2,631,000 64 53 1990
97 Louetta Mini Storage N/A 11/30/95 2,330,000 71 60 1993
</TABLE>
A-28
<PAGE> 113
ANNEX A
<TABLE>
<CAPTION>
LOAN BALANCE OCCUPANCY
TOTAL PROPERTY PER UNIT OCCUPANCY AS OF LOAN
UNITS SIZE(SF) SF/UNIT TYPE % DATE TYPE
- ----- -------- ------------ ------ --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
313 261,324 $ 13,966 Units 97 08/30/96 Fixed
43,840 96 SqFt 95 02/01/95 Fixed
274 15,346 Pads 99 06/04/96 Fixed
294 217,126 14,122 Units 72 08/16/96 Fixed
128 151,832 32,172 Units 88 01/26/96 Fixed
160 138,752 24,962 Units 94 06/30/96 Fixed
113 134,128 35,122 Units 100 08/19/96 Fixed
43,076 92 SqFt 100 01/18/96 Fixed
107 62,998 35,205 Beds Fixed
38 23,268 95 07/30/96
27 16,288 100 07/31/96
42 23,442 83 08/03/96
73,130 49 SqFt 100 03/01/96 Fixed
56,486 61 SqFt 97 07/03/96 Fixed
78,333 44 SqFt 83 05/01/96 Fixed
737 76,134 43 SqFt 87 06/30/96 Fixed
181 134,810 18,074 Units 82 07/31/96 Fixed
156 20,865 Rooms N/A N/A Fixed
128 152,032 25,413 Units 84 08/28/96 Fixed
870 44,685 72 SqFt 100 08/22/96 Fixed
722 41,044 73 SqFt 92 03/23/96 Fixed
880 50,975 56 SqFt 91 12/31/95 Fixed
79 52,900 35,974 Units 99 01/02/96 Fixed
152,744 14 SqFt 89 07/03/96 Fixed
41,201 13 SqFt 83 07/03/96 Fixed
123 113,465 20,450 Units 87 04/24/96 Fixed
102 69,756 22,568 Units 95 01/01/96 Fixed
74,342 31 SqFt 100 08/01/96 Fixed
37 19,667 61,869 Beds 100 11/01/95 Fixed
10,148 216 SqFt 100 07/08/96 Fixed
1086 70,112 31 SqFt 83 02/01/96 Fixed
258 161,457 14 SqFt 93 07/18/96 Fixed
60 16,025 19,948 Beds 98 08/11/96 Fixed
53 16,653 17,643 Beds 89 08/10/96 Fixed
116 56,140 18,237 Units 100 08/24/96 Fixed
654 68,618 30 SqFt 92 07/13/96 Fixed
746 89,558 23 SqFt 96 05/01/96 Fixed
51,465 39 SqFt 98 04/01/96 Fixed
528 70,313 28 SqFt 97 01/01/96 Fixed
90 22,038 Units 97 05/01/95 Fixed
46,271 42 SqFt 100 07/10/96 Fixed
479 36,471 50 SqFt 96 07/10/96 Fixed
128 116,616 14,054 Units 95 05/01/96 Fixed
116 32,369 15,470 Beds 91 12/01/95 Fixed
641 59,913 30 SqFt 96 06/30/96 Fixed
394 46,170 38 SqFt 99 06/30/96 Fixed
471 54,400 31 SqFt 89 09/01/95 Fixed
120 92,808 14,119 Units 92 07/06/96 Fixed
59,240 28 SqFt 97 07/16/96 Fixed
411 46,739 36 SqFt 84 07/18/96 Fixed
<CAPTION>
TOTAL
UNITS LARGEST TENANT
- ----- -----------------------------------------
<C> <S>
313
Executive Suites
274
294
128
160
113
US Army
107
38
27
42
Grandview Inc.
Hastings
University Hospital
737
181
156
128
870
722 1632A Market St.
880
79
JC Penney
Big Cheese Pizza
123
102
Kash 'N Karry
37
Mich-Oak Enterprise
1086
258
60
53
116
654
746
Hallmark Clinic
528
90
Life Resources
479
128
116
641
394
471
120
Attorneys Title Insurance Fund
411
</TABLE>
A-29
<PAGE> 114
ANNEX A
<TABLE>
<CAPTION>
LARGEST LARGEST LARGEST
LOAN TENANT TENANT TENANT SECOND LARGEST
COUNTER PROPERTY NAME LEASED SF % OF TOTAL SF LEASE EXPIRATION TENANT
- ------- ----------------------------- --------- ------------- ---------------- --------------------------------
<C> <S> <C> <C> <C> <C>
51 Copper Ridge Apartments
52 Pacific Court 9,000 21 Monthly Petermann
53 Woodlands of Kennesaw
54 Alexandria Gardens
55 Glynn Place Apartments
56 Mallard Cove Apartments
57 Springwood Apartments
58 Lemme Building 6,230 14 10/01/98 Texas Arizona
59 Aggregate Loan Level Info.
59A Life Center of Galax
59B Life Center of Wilmington
59C Keystone Treatment Center
60 The Grand 10,608 15 08/01/2004 China Bay Club
61 College Plaza 19,330 34 02/01/2005 Austin's Steaks
62 Parkway Market Center 16,970 22 07/01/2006 DSP Contractors
63 Safeguard Self Storage
64 Villages at McClintock Apts.
65 Holiday Inn Grand Rapids
66 Pine Hill Apartments
67 533 W. 21st Street Building
68 Filipello Self Storage 2,000 5 08/31/99 15 Page Street
69 Shirlington Self Storage
70 Birch Brook Manor Apartments
71 Broadmoor Shopping Center 30,000 20 03/01/97 Anthony's
72 Hobbs Plaza 8,528 21 11/01/96 Blockbuster Video
73 Claridge Court Apartments
74 Carriage Hill Apartments
75 Sunset Square Shopping Center 30,474 41 02/28/2004 Highland Liquor Depot
76 Sterling House Assisted
Living
77 Jill Sanders Boutique 10,148 100 12/31/2003
78 Morena Self Storage
79 Champions Business Park
80 Valley View Health Care
Center
81 Holly Nursing Care Center
82 Pinetree Village Apartments
83 Budget Mini Storage
84 All American Self Storage
85 Colwick Tower Office Building 5,284 10 03/31/98 Key Man (Executive)
86 Mr. Stor-All
87 Abington Grove
88 Glenwood Center 18,617 40 08/31/99 Acapulco
89 Secure It Self Storage
90 Farrington Manor Apartments
91 Heritage Convalescent Center
92 Security Public Storage
93 Poway Garden Self Storage
94 Harrison Self Storage
95 LaSombra Apartments
96 Cypress Commerce 14,840 25 06/30/97 State of Fla. Dept of Business
97 Louetta Mini Storage
</TABLE>
A-30
<PAGE> 115
ANNEX A
<TABLE>
<CAPTION>
SECOND LARGEST SECOND LARGEST SECOND LARGEST MOST RECENT
TENANT TENANT TENANT MOST RECENT NOI
LEASED SF % OF TOTAL SF LEASE EXPIRATION 1994 NOI 1995 NOI NOI END DATE
- -------------- -------------- ---------------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
$ 418,297 $ 560,659 $ 560,659 11/30/95
5,600 13 04/01/99 555,829 512,147 512,147 12/31/95
494,098 534,837 534,837 12/31/95
77,256 547,395 547,395 08/31/95
208,745 208,745 12/31/95
458,792 501,720 512,243 06/30/96
158,643 158,643 12/31/95
5,500 13 05/01/2015 427,694 507,720 507,720 12/31/95
1,440,230 1,462,549 871,160
372,445 375,915 360,897 03/31/96
503,176 467,480 230,401 03/31/96
564,609 619,154 279,862 03/31/96
7,719 11 08/01/2005 749,659 814,389 814,389 12/31/95
5,817 10 07/01/2003 536,697 659,753 659,753 12/31/95
7,500 10 08/01/98 211,479 453,458 453,458 12/31/95
373,251 417,259 06/30/96
229,722 340,006 270,068 06/30/96
553,624 844,495 844,495 12/31/95
305,507 305,507 12/31/95
70,752 550,222 550,222 12/31/95
1,850 5 10/31/96 394,751 447,367 449,234 12/31/95
429,781 429,792 467,505 06/30/96
412,406 401,026 401,026 12/31/95
23,280 15 01/01/2000 424,554 424,760 424,760 12/31/95
5,680 14 02/01/97 169,562 187,991 187,991 12/31/95
205,830 330,626 339,818 04/30/96
305,473 418,845 418,845 08/31/95
3,000 4 10/31/2003 344,517 414,066 412,829 07/31/96
244,415 359,191 286,549 06/30/96
192,610 220,632 220,632 12/31/95
346,830 339,204 385,374 06/30/96
388,689 399,523 06/30/96
243,507 268,944 06/30/96
243,430 90,498 06/30/96
229,856 262,268 262,268 12/31/95
228,066 286,287 279,970 06/30/96
380,746 393,513 418,146 06/30/96
4,150 8 08/01/96 231,471 380,399 361,662 04/01/96
301,999 307,655 06/30/96
206,666 318,795 318,795 12/31/95
7,571 16 09/30/2000 308,316 354,207 354,207 12/31/95
299,016 367,559 400,148 06/30/96
71,555 323,685 323,685 05/20/96
331,961 311,275 321,186 12/31/95
244,159 280,725 311,222 06/30/96
235,236 257,614 281,595 04/30/96
246,440 276,556 271,998 06/30/96
245,630 267,828 270,994 04/30/96
10,409 18 05/31/2001 75,137 205,692 340,113 06/30/96
212,401 261,699 300,222 06/30/96
</TABLE>
A-31
<PAGE> 116
ANNEX A
<TABLE>
<CAPTION>
MOST
RECENT
LOAN STATEMENT UNDERWRITING UNDERWRITING UNDERWRITING
COUNTER PROPERTY NAME TYPE NOI CASH FLOW DSC
- ------- ----------------------------- --------------------- ------------ ------------ ------------
<C> <S> <C> <C> <C> <C>
51 Copper Ridge Apartments Annualized 11 months $ 675,667 $ 519,167 1.79x
52 Pacific Court Annual 1995 627,495 562,993 1.36
53 Woodlands of Kennesaw Annual 1995 553,232 536,792 1.29
54 Alexandria Gardens Annualized 8 months 510,741 437,241 1.29
55 Glynn Place Apartments Annual 1995 398,398 379,198 1.08
56 Mallard Cove Apartments Annualized 6 months 553,898 513,898 1.42
57 Springwood Apartments Annual 1995 481,423 464,473 1.35
58 Lemme Building Annual 1995 687,760 614,146 1.79
59 Aggregate Loan Level Info. Annualized 6 months 1,395,243 1,332,245 2.66
59A Life Center of Galax Annualized 6 months 345,174 321,906
59B Life Center of Wilmington Annualized 6 months 518,124 501,836
59C Keystone Treatment Center Annualized 6 months 531,945 508,503
60 The Grand Annual 1995 786,881 673,530 1.85
61 College Plaza Annual 1995 615,052 550,093 1.57
62 Parkway Market Center Annual 1995 566,516 485,579 1.64
63 Safeguard Self Storage Trailing 12 513,953 507,862 1.40
64 Villages at McClintock Apts. Trailing 12 456,711 417,796 1.26
65 Holiday Inn Grand Rapids Annual 1995 814,571 623,718 2.22
66 Pine Hill Apartments Annual 1995 309,011 289,811 1.05
67 533 W. 21st Street Building Annual 1995 643,210 633,245 1.97
68 Filipello Self Storage Trailing 12 429,585 425,481 1.35
69 Shirlington Self Storage Trailing 12 395,720 390,622 1.38
70 Birch Brook Manor Apartments Annual 1995 387,929 368,179 1.35
71 Broadmoor Shopping Center Annual 1995 473,511 374,148 2.01
72 Hobbs Plaza Annual 1995 175,285 127,903 2.61
73 Claridge Court Apartments Trailing 12 355,762 321,973 1.51
74 Carriage Hill Apartments Annualized 8 months 360,937 337,987 1.59
75 Sunset Square Shopping Center Annualized 7 months 395,006 365,779 1.71
76 Sterling House Assisted
Living Trailing 12 323,603 314,353 1.30
77 Jill Sanders Boutique Annual 1995 312,577 311,562 1.37
78 Morena Self Storage Trailing 12 382,203 375,192 1.59
79 Champions Business Park Trailing 12 332,976 302,006 1.43
80 Valley View Health Care
Center Annualized 6 months 265,903 249,878 1.90
81 Holly Nursing Care Center Annualized 6 months 161,135 152,808 1.47
82 Pinetree Village Apartments Annual 1995 283,680 257,000 1.36
83 Budget Mini Storage Trailing 12 307,418 300,556 1.41
84 All American Self Storage Trailing 12 395,990 391,512 1.79
85 Colwick Tower Office Building Trailing 12 377,954 335,933 1.72
86 Mr. Stor-All Trailing 12 286,547 283,031 1.35
87 Abington Grove Annual 1995 322,155 295,155 1.45
88 Glenwood Center Annual 1995 371,594 349,107 1.52
89 Secure It Self Storage Annualized 6 months 337,631 335,151 1.83
90 Farrington Manor Apartments Annualized 5 months 244,971 219,371 1.32
91 Heritage Convalescent Center Trailing 12 332,323 312,578 1.69
92 Security Public Storage Trailing 12 283,638 277,048 1.58
93 Poway Garden Self Storage Trailing 12 237,239 233,084 1.28
94 Harrison Self Storage Trailing 12 268,415 265,004 1.43
95 LaSombra Apartments Trailing 12 264,870 230,310 1.50
96 Cypress Commerce Annualized 6 months 318,236 241,342 1.94
97 Louetta Mini Storage Trailing 12 255,258 250,584 1.51
</TABLE>
A-32
<PAGE> 117
ANNEX A
<TABLE>
<CAPTION>
CURRENT CURRENT
UNDERWRITING REPLACEMENT ANNUALIZED OTHER
COMBINED DSC RESERVES REP RESERVE PAYMENT/UNIT OR SF RESERVES
- ------------ ----------- ------------------------------ --------
<S> <C> <C> <C>
41,969 $ 200.00
--
--
7,761 250.00 33,251
11,200 150.00
9,933 248.33
9,888 150.00
28,533 400.00
200,000
--
405,000
15,399 214.00
11,200 150.00
13,118 0.17 89,250
9,313 250.00 38,250
2.15
22,550 275.00
8,925 150.00
5,638 0.15 125,000
3,242 149.78
170 0.10 750
1.71 2,510 251.00
1.71 2,208 249.96
13,387 230.07
1,294 0.30
66,929 247.73
4,155 0.36 525
-- --
6,399 199.97
34,838 100.00
5,042 252.08
7,898 0.20 100,000
</TABLE>
A-33
<PAGE> 118
ANNEX A
<TABLE>
<CAPTION>
LOAN CONTROL
COUNTER NUMBER PROPERTY NAME PROPERTY ADDRESS CITY
- ------- --------- ----------------------------- ----------------------------------------- ---------------------
<C> <S> <C> <C> <C>
98 CONT2090 U-Haul Storage (Sterling) 45715 Old Ox Road Sterling
99 Aggregate Loan Level Info.
99A CONT3090 Annabelle's Restaurant 4106 Oleander Drive Wilmington
99B CONT3091 Annabelle's Restaurant 2735 Park Avenue Petersburg
100 CONT1380 Sierra Vista Self Storage 900 E. Wilcox Drive Sierra Vista
101 CONT1400 Security Public Storage 24873 Huntwood Avenue Hayward
102 CONT1410 Capital City Self Storage 1700 Pleasant Valley Road Austin
103 CONT1420 I Avenue Self Storage 10150 I Avenue Hesperia
104 CONT1430 Ambassador Self Storage 1702 South Highway 121 Lewisville
105 CONT1390 Arovista Self Storage 270 Arovista Avenue Brea
106 CONT1440 Willowbrook Apartments 7135-7165 Raleigh Street Westminster
107 CONT1450 67 East Willow Street 67 East Willow Street Millburn
108 CONT3010 U-Haul Storage (Richmond) 2930 North Boulevard Richmond
109 CONT1910 Harwin Business Park 9410-9440 Harwin Drive Houston
110 CONT1470 State College Self-Storage 5185 Hallmark Parkway San Bernardino
111 CONT1480 A Storage Place 8330 Littleton Road North Fort Myers
112 CONT3020 U-Haul Storage (Odenton) 1480 Annapolis Road Odenton
113 CONT1490 UC Mini Storage 4601 Shattuck Avenue Oakland
114 CONT1500 Alpine Self Storage 800 Chambers Avenue Eagle
115 CONT1510 Capital Self-Storage 6755 East Golf Links Rd Tucson
116 CONT2040 Colorow Care Center 750 8th Street Olathe
117 CONT1520 Boston Self Storage 135 Old Colony Avenue Boston
118 CONT1530 Waltham Self Storage 115 Bacon Street Waltham
119 CONT1540 Mulberry Hill Apartments 1130 East Mulberry Ave. San Antonio
120 CONT3030 U-Haul Storage (Oaklawn Blvd) 5400 Oaklawn Blvd. Prince George
121 GMAC1160 Farmington Court Apartments 780 Farmington Avenue Pottstown
122 CONT3040 U-Haul Storage (N Richland) 6404 Browning Drive North Richland Hills
123 CONT1550 C & D Mini-Warehouses 191 Deaverview Road Asheville
124 CONT1560 Aloha Self Storage 5029 Haltom Road Haltom City
125 GMAC1130 Steiner Ocean Apartments 65 Steiner Avenue Neptune City
126 CONT1950 Dependable Mini Storage 730 Military Parkway Mesquite
127 GMAC1180 Arms Apartments 27-86 Mercury Court West Springfield
128 CONT1570 Cedar Hill Self Storage 150 North Clark Road Cedar Hill
129 CONT1580 Watson & Taylor Mini Storage 6450-A Spellman Road Houston
130 CONT3050 U-Haul Storage (Shreveport) 5919 Financial Plaza Shreveport
131 CONT1960 Tyler Street Self Storage 3636 Tyler Street Dallas
132 CONT1590 Locker Room Self Storage 5804 N. Denton Highway Haltom City
133 CONT1600 All American Store & Lock 1255 Prospect Street Lakewood
134 CONT3060 U-Haul Storage (Marrero) 7201 Westbank Expressway Marrero
135 CONT1650 Arizona Storage Inns 2929 North 73rd Street Scottsdale
136 CONT3080 U-Haul Storage (Myrtle Beach) 5604 South Kings Highway Myrtle Beach
137 CONT3070 U-Haul Storage (Jefferson) 4725 Jefferson Park Road Prince George
</TABLE>
A-34
<PAGE> 119
ANNEX A
<TABLE>
<CAPTION>
CUT-OFF CURRENT
PROPERTY ORIGINAL DATE MORTGAGE FIRST
STATE ZIP TYPE BALANCE BALANCE RATE FOOTNOTE PYMT DATE
- ------ ------ -------------------------- -------------- -------------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
VA 20166 Self-Storage/Mini-Storage 1,834,058 1,605,796 9.000 01/31/94
Restaurant 1,600,000 1,598,372 11.950 (8) 11/01/96
NC 28403 Restaurant
VA 23805 Restaurant
AZ 85635 Self-Storage/Mini-Storage 1,550,000 1,542,691 9.875 06/01/96
CA 94544 Self-Storage/Mini-Storage 1,500,000 1,492,470 9.500 06/01/96
TX 78741 Self-Storage/Mini-Storage 1,500,000 1,487,591 9.000 03/01/96
CA 92345 Self-Storage/Mini-Storage 1,500,000 1,487,076 8.750 03/01/96
TX 75067 Self-Storage/Mini-Storage 1,500,000 1,487,076 8.750 03/01/96
CA 92621 Self-Storage/Mini-Storage 1,475,000 1,470,497 10.000 08/01/96
CO 80030 Multifamily 1,475,000 1,460,663 8.000 03/01/96
NJ 07041 Industrial/Warehouse 1,400,000 1,382,436 9.750 07/01/96
VA 23220 Self-Storage/Mini-Storage 1,463,938 1,347,320 9.000 01/31/94
TX 77036 Industrial/Warehouse 1,300,000 1,294,904 10.125 09/01/96
CA 92407 Self-Storage/Mini-Storage 1,300,000 1,292,163 9.350 05/01/96
FL 33903 Self-Storage/Mini-Storage 1,300,000 1,289,024 8.875 03/01/96
MD 21113 Self-Storage/Mini-Storage 1,346,800 1,243,224 9.000 10/31/93
CA 94609 Self-Storage/Mini-Storage 1,250,000 1,240,653 8.875 04/01/96
CO 81631 Self-Storage/Mini-Storage 1,250,000 1,240,461 8.750 04/01/96
AZ 85730 Self-Storage/Mini-Storage 1,250,000 1,238,466 9.000 02/01/96
CO 81425 Nursing Home 1,240,000 1,236,773 10.125 10/01/96
MA 02127 Self-Storage/Mini-Storage 1,200,000 1,197,264 10.000 09/01/96
MA 02154 Self-Storage/Mini-Storage 1,200,000 1,194,575 10.125 06/01/96
TX 78215 Multifamily 1,200,000 1,187,252 8.125 (9) 02/01/96
VA 23875 Self-Storage/Mini-Storage 1,242,111 1,140,151 9.000 10/31/94
PA 19464 Multifamily 1,075,000 1,064,551 8.000 (6) 03/01/96
TX 78180 Self-Storage/Mini-Storage 1,163,576 1,048,418 9.000 01/31/94
NC 28813 Self-Storage/Mini-Storage 1,050,000 1,046,862 10.125 08/01/96
TX 76117 Self-Storage/Mini-Storage 1,000,000 996,947 10.000 08/01/96
NJ 07753 Multifamily 1,000,000 996,891 9.400 (6),(10) 08/01/96
TX 75149 Self-Storage/Mini-Storage 945,000 943,508 9.750 10/01/96
MA 01089 Multifamily 1,000,000 938,228 8.125 (6) 01/01/96
TX 75104 Self-Storage/Mini-Storage 850,000 839,806 10.250 07/01/96
TX 77096 Self-Storage/Mini-Storage 835,000 831,062 9.875 06/01/96
LA 71129 Self-Storage/Mini-Storage 866,000 816,800 9.000 05/31/94
TX 75224 Self-Storage/Mini-Storage 800,000 798,737 9.750 10/01/96
TX 76148 Self-Storage/Mini-Storage 800,000 792,768 9.125 02/01/96
NY 08701 Self-Storage/Mini-Storage 795,000 788,423 9.000 03/01/96
LA 70072 Self-Storage/Mini-Storage 729,167 706,783 9.000 05/31/94
AZ 85251 Self-Storage/Mini-Storage 530,000 528,914 10.625 09/01/96
SC 29575 Self-Storage/Mini-Storage 483,889 397,896 9.000 10/31/93
VA 23875 Self-Storage/Mini-Storage 354,951 328,137 9.000 10/31/94
<CAPTION>
MONTHLY
STATE PAYMENT
- ------ -------------
<S> <C>
VA $ 15,391.35
17,561.64
NC
VA
AZ 13,948.51
CA 13,105.45
TX 12,587.95
CA 12,332.15
TX 12,332.15
CA 13,403.34
CO 11,384.29
NJ 14,831.08
VA 12,285.32
TX 12,653.14
CA 11,222.80
FL 10,798.49
MD 11,302.30
CA 10,383.17
CO 10,276.80
AZ 10,489.96
CO 12,069.14
MA 10,904.41
MA 11,010.33
TX 9,361.38
VA 10,423.75
PA 8,297.02
TX 9,764.69
NC 9,634.04
TX 9,087.01
NJ 8,667.55
TX 8,421.25
MA 12,198.91
TX 9,264.58
TX 7,514.20
LA 7,267.44
TX 7,129.10
TX 6,782.18
NY 6,671.61
LA 6,119.15
AZ 5,051.55
SC 4,060.78
VA 2,978.74
------------
$3,846,257.55
=============
</TABLE>
A-35
<PAGE> 120
ANNEX A
<TABLE>
<CAPTION>
ORIGINAL ORIGINAL REMAINING
LOAN TERM TO AMORT SEASONING TERM TO MATURITY
COUNTER PROPERTY NAME MATURITY (MOS.) TERM (MOS.) (MOS.) MATURITY (MOS.) DATE
- ------- ----------------------------- --------------- ----------- ---------------- --------------- ----------
<C> <S> <C> <C> <C> <C> <C>
98 U-Haul Storage (Sterling) 119 300 34 85 12/01/2003
99 Aggregate Loan Level Info. 240 240 1 239 10/01/2016
99A Annabelle's Restaurant
99B Annabelle's Restaurant
100 Sierra Vista Self Storage 120 300 6 114 05/01/2006
101 Security Public Storage 120 300 6 114 05/01/2006
102 Capital City Self Storage 181 300 9 172 03/01/2011
103 I Avenue Self Storage 121 300 9 112 03/01/2006
104 Ambassador Self Storage 181 300 9 172 03/01/2011
105 Arovista Self Storage 120 300 4 116 07/01/2006
106 Willowbrook Apartments 120 300 9 111 02/01/2006
107 67 East Willow Street 120 180 5 115 06/01/2006
108 U-Haul Storage (Richmond) 119 300 34 85 12/01/2003
109 Harwin Business Park 180 240 3 177 08/01/2011
110 State College Self-Storage 120 300 7 113 04/01/2006
111 A Storage Place 121 300 9 112 03/01/2006
112 U-Haul Storage (Odenton) 119 300 37 82 09/01/2003
113 UC Mini Storage 120 300 8 112 03/01/2006
114 Alpine Self Storage 120 300 8 112 03/01/2006
115 Capital Self-Storage 121 300 10 111 02/01/2006
116 Colorow Care Center 120 240 2 118 09/01/2006
117 Boston Self Storage 120 300 3 117 08/01/2006
118 Waltham Self Storage 120 300 6 114 05/01/2006
119 Mulberry Hill Apartments 192 300 10 182 01/01/2012
120 U-Haul Storage (Oaklawn Blvd) 119 300 25 94 09/01/2004
121 Farmington Court Apartments 120 300 9 111 02/01/2006
122 U-Haul Storage (N Richland) 119 300 34 85 12/01/2003
123 C & D Mini-Warehouses 120 300 4 116 07/01/2006
124 Aloha Self Storage 120 300 4 116 07/01/2006
125 Steiner Ocean Apartments 120 300 4 116 07/01/2006
126 Dependable Mini Storage 120 300 2 118 09/01/2006
127 Arms Apartments 120 120 11 109 12/01/2005
128 Cedar Hill Self Storage 180 180 5 175 06/01/2011
129 Watson & Taylor Mini Storage 120 300 6 114 05/01/2006
130 U-Haul Storage (Shreveport) 119 300 30 89 04/01/2004
131 Tyler Street Self Storage 120 300 2 118 09/01/2006
132 Locker Room Self Storage 181 300 10 171 02/01/2011
133 All American Store & Lock 121 300 9 112 03/01/2006
134 U-Haul Storage (Marrero) 119 300 30 89 04/01/2004
135 Arizona Storage Inns 120 300 3 117 08/01/2006
136 U-Haul Storage (Myrtle Beach) 119 300 37 82 09/01/2003
137 U-Haul Storage (Jefferson) 119 300 25 94 09/01/2004
<CAPTION>
LOAN BALLOON
COUNTER AMOUNT
- ------- ------------
<S> <C>
98 $ 1,209,741
99
99A
99B
100 1,310,464
101 1,258,187
102 993,711
103 1,233,897
104 984,002
105 1,250,263
106 1,194,679
107 711,140
108 1,089,376
109 601,381
110 1,086,881
111 1,072,509
112 1,020,246
113 1,033,993
114 1,031,004
115 1,034,239
116 912,887
117 1,017,165
118 1,019,747
119 719,990
120 885,842
121 870,699
122 823,464
123 892,277
124 847,636
125 837,632
126 796,882
127
128
129 705,958
130 673,053
131 674,609
132 532,551
133 657,777
134 603,734
135 454,827
136 276,544
137 257,830
------------
$391,130,671
============
</TABLE>
A-36
<PAGE> 121
ANNEX A
<TABLE>
<CAPTION>
RELATED PREPAYMENT
MORTGAGE FEE/ PENALTY OPEN PREPAY PREPAY PREPAY PREPAY
LOANS LEASEHOLD EXPIRATION PERIOD YEAR 1 YEAR 2 YEAR 3 YEAR 4
- --------- --------------- ---------- ------ --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
No Fee 12/01/2003 0 LO LO LO LO
No Fee 04/01/2016 6 YM/1%PPB YM/1%PPB YM/1%PPB YM/1%PPB
No Fee 11/01/2005 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
Yes Fee 11/01/2005 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
Yes Fee 03/01/2009 24 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
No Fee 09/01/2005 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
Yes Fee 03/01/2009 24 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
No Fee 01/01/2006 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
No Fee 08/01/2005 6 LO LO LO YM/1%UPB
Yes Fee 12/01/2005 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
No Fee 12/01/2003 0 LO LO LO LO
No Fee 02/01/2011 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
No Fee 10/01/2005 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
No Fee 09/01/2005 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
No Fee 09/01/2003 0 LO LO LO LO
No Fee 09/01/2005 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
No Fee 09/01/2005 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
No Fee 08/01/2005 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
Yes Fee 03/01/2006 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
No Fee 08/01/2005 12 YM YM YM YM
No Fee 05/01/2005 12 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
No Fee 07/01/2011 6 LO LO LO LO
No Fee 09/01/2004 0 LO LO LO LO
No Fee 11/01/2005 3 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
No Fee 12/01/2003 0 LO LO LO LO
No Fee 01/01/2006 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
No Fee 01/01/2006 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
No Fee 01/01/2006 6 LO LO LO LO
No Fee 03/01/2006 6 LO LO LO LO
No Fee 09/01/2005 3 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
No Fee 12/01/2010 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
No Fee 11/01/2005 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
Yes(1) Fee 04/01/2004 0 LO LO LO LO
No Fee 03/01/2006 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
Yes Fee 02/01/2009 24 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
No Fee 09/01/2005 6 YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
Yes(1) Fee 04/01/2004 0 LO LO LO LO
No Fee 08/01/2003 36 YM/1%UPB YM/1%UPB YM/1%UPB 3%
No Fee 09/01/2003 0 LO LO LO LO
No Fee 09/01/2004 0 LO LO LO LO
</TABLE>
A-37
<PAGE> 122
ANNEX A
<TABLE>
<CAPTION>
LOAN PREPAY PREPAY PREPAY PREPAY
COUNTER PROPERTY NAME YEAR 5 YEAR 6 YEAR 7 YEAR 8
- ------- ------------------------------ --------- --------- --------- ---------
<C> <S> <C> <C> <C> <C>
98 U-Haul Storage (Sterling) LO LO LO 1%+YM
99 Aggregate Loan Level Info. YM/1%PPB YM/1%PPB YM/1%PPB YM/1%PPB
99A Annabelle's Restaurant
99B Annabelle's Restaurant
100 Sierra Vista Self Storage YM/1%UPB YM/1%UPB YM/1%UPB 3%
101 Security Public Storage YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
102 Capital City Self Storage YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
103 I Avenue Self Storage YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
104 Ambassador Self Storage YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
105 Arovista Self Storage YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
106 Willowbrook Apartments YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
107 67 East Willow Street YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
108 U-Haul Storage (Richmond) LO LO LO 1%+YM
109 Harwin Business Park YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
110 State College Self-Storage YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
111 A Storage Place YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
112 U-Haul Storage (Odenton) LO LO LO 1%+YM
113 UC Mini Storage YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
114 Alpine Self Storage YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
115 Capital Self-Storage YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
116 Colorow Care Center YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
117 Boston Self Storage YM YM YM YM
118 Waltham Self Storage YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
119 Mulberry Hill Apartments LO LO LO LO
120 U-Haul Storage (Oaklawn Blvd) LO LO LO 1%+YM
121 Farmington Court Apartments YM/1%UPB YM/1%UPB YM/1%UPB 1%
122 U-Haul Storage (N Richland) LO LO LO 1%+YM
123 C & D Mini-Warehouses YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
124 Aloha Self Storage YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
125 Steiner Ocean Apartments LO YM/1%UPB YM/1%UPB YM/1%UPB
126 Dependable Mini Storage YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
127 Arms Apartments YM/1%UPB YM/1%UPB YM/1%UPB 1%
128 Cedar Hill Self Storage YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
129 Watson & Taylor Mini Storage YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
130 U-Haul Storage (Shreveport) LO LO LO 1%+YM
131 Tyler Street Self Storage YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
132 Locker Room Self Storage YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
133 All American Store & Lock YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
134 U-Haul Storage (Marrero) LO LO LO 1%+YM
135 Arizona Storage Inns 2% 1% 1% N/A
136 U-Haul Storage (Myrtle Beach) LO LO LO 1%+YM
137 U-Haul Storage (Jefferson) LO LO LO 1%+YM
</TABLE>
A-38
<PAGE> 123
ANNEX A
<TABLE>
<CAPTION>
PREPAY PREPAY PREPAY PREPAY PREPAY PREPAY PREPAY
YEAR 9 YEAR 10 YEAR 11 YEAR 12 YEAR 13 YEAR 14 YEAR 15
- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
1%+YM 1%+YM N/A N/A N/A N/A N/A
YM/1%PPB YM/1%PPB YM/1%PPB YM/1%PPB 1% 1% 1%
2% 1% N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB 5% 3% 1% N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
1%+YM 1%+YM N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
1%+YM 1%+YM N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM N/A N/A N/A N/A N/A N/A
YM/1%UPB N/A N/A N/A N/A N/A N/A
LO LO YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
1%+YM 1%+YM N/A N/A N/A N/A N/A
1% 1% N/A N/A N/A N/A N/A
1%+YM 1%+YM N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
1% 1% N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB YM/1%UPB
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
1%+YM 1%+YM N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
YM/1%UPB YM/1%UPB 5% 3% 1% N/A N/A
YM/1%UPB YM/1%UPB N/A N/A N/A N/A N/A
1%+YM 1%+YM N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A N/A
1%+YM 1%+YM N/A N/A N/A N/A N/A
1%+YM 1%+YM N/A N/A N/A N/A N/A
</TABLE>
A-39
<PAGE> 124
ANNEX A
<TABLE>
<CAPTION>
PREPAY LTV YEAR
LOAN YEAR APPRAISAL APPRAISED AT BUILT/
COUNTER PROPERTY NAME 16-25 DATE VALUE LTV BALLOON RENOVATED
- ------- ----------------------------- --------- --------- ----------- --- ------- ----------
<C> <S> <C> <C> <C> <C> <C> <C>
98 U-Haul Storage (Sterling) N/A 11/01/95 2,900,000 55 42 1988
99 Aggregate Loan Level Info. 1% 07/01/96 3,050,000 52
99A Annabelle's Restaurant 2,050,000 1973
99B Annabelle's Restaurant 1,000,000 1920/1975
100 Sierra Vista Self Storage N/A 11/20/95 2,265,000 68 58 1982
101 Security Public Storage N/A 02/02/96 3,750,000 40 34 1982
102 Capital City Self Storage N/A 12/13/95 2,300,000 65 43 1985/1993
103 I Avenue Self Storage N/A 11/07/95 2,150,000 69 57 1989
104 Ambassador Self Storage N/A 12/14/95 2,850,000 52 35 1986
105 Arovista Self Storage N/A 04/15/96 2,370,000 62 53 1984
106 Willowbrook Apartments N/A 08/24/95 2,000,000 73 60 1973
107 67 East Willow Street N/A 11/01/95 1,990,000 69 36 1969/1995
108 U-Haul Storage (Richmond) N/A 11/01/95 2,300,000 59 47 1946/1985
109 Harwin Business Park N/A 05/10/96 1,930,000 67 31 1974
110 State College Self-Storage N/A 01/16/96 1,750,000 74 62 1989
111 A Storage Place N/A 11/21/95 2,300,000 56 47 1974
112 U-Haul Storage (Odenton) N/A 11/01/95 2,300,000 54 44 1986
113 UC Mini Storage N/A 11/13/95 1,800,000 69 57 1930/1986
114 Alpine Self Storage N/A 11/01/95 2,700,000 46 38 1983
115 Capital Self-Storage N/A 10/12/95 1,800,000 69 57 1986
116 Colorow Care Center N/A 05/30/96 1,700,000 73 54 1978
117 Boston Self Storage N/A 05/08/96 1,620,000 74 63 1925/1989
118 Waltham Self Storage N/A 07/05/95 1,770,000 67 58 1891/1994
119 Mulberry Hill Apartments YM/1%UPB 05/18/95 1,500,000 79 48 1960/1994
120 U-Haul Storage (Oaklawn Blvd) N/A 11/01/95 1,700,000 67 52 1983
121 Farmington Court Apartments N/A 11/07/95 1,375,000 77 63 1970
122 U-Haul Storage (N Richland) N/A 11/01/95 1,800,000 58 46 1989
123 C & D Mini-Warehouses N/A 03/19/96 1,650,000 63 54 1980
124 Aloha Self Storage N/A 12/14/95 1,900,000 52 45 1985
125 Steiner Ocean Apartments N/A 11/30/95 1,815,000 55 46 1965/1987
126 Dependable Mini Storage N/A 03/14/96 1,665,000 57 48 1986
127 Arms Apartments N/A 07/28/95 2,600,000 36 1952
128 Cedar Hill Self Storage N/A 01/13/96 1,330,000 63 1985
129 Watson & Taylor Mini Storage N/A 01/13/95 1,420,000 59 50 1978
130 U-Haul Storage (Shreveport) N/A 11/01/95 1,090,000 75 62 1986
131 Tyler Street Self Storage N/A 05/27/96 1,230,000 65 55 1986
132 Locker Room Self Storage N/A 12/14/95 1,030,000 77 52 1982
133 All American Store & Lock N/A 11/08/95 1,050,000 75 63 1987
134 U-Haul Storage (Marrero) N/A 11/01/95 790,000 89 76 1988
135 Arizona Storage Inns N/A 03/12/96 790,000 67 58 1976
136 U-Haul Storage (Myrtle Beach) N/A 11/01/95 1,015,000 39 27 1972
137 U-Haul Storage (Jefferson) N/A 11/01/95 540,000 61 48 1989
</TABLE>
A-40
<PAGE> 125
ANNEX A
<TABLE>
<CAPTION>
LOAN BALANCE OCCUPANCY
TOTAL PROPERTY PER UNIT OCCUPANCY AS OF LOAN
UNITS SIZE(SF) SF/UNIT TYPE % DATE TYPE LARGEST TENANT
- ----- -------- ------------ ------ --------- --------- ----- -----------------------------------------
<C> <C> <C> <C> <C> <C> <C> <S>
342 41,400 $ 39 SqFt 94 09/18/96 Fixed
17,460 92 SqFt Fixed
9,890 100 07/01/96
7,570 100 07/01/96
749 62,426 25 SqFt 90 01/01/96 Fixed
697 72,170 21 SqFt 91 06/30/96 Fixed
582 64,271 23 SqFt 92 07/11/96 Fixed
644 86,302 17 SqFt 94 07/03/96 Fixed
508 96,942 15 SqFt 89 11/01/95 Fixed First Choice Auto
523 55,317 27 SqFt 95 07/09/96 Fixed
92 57,160 15,877 Units 92 04/01/96 Fixed
77,129 18 SqFt 100 07/10/96 Fixed B.W.B. Company
646 49,964 27 SqFt 88 09/18/96 Fixed
97,424 13 SqFt 93 07/01/96 Fixed N.B. Wholesale
598 57,425 23 SqFt 90 07/03/96 Fixed
360 43,502 30 SqFt 96 10/01/95 Fixed
482 40,600 31 SqFt 94 09/18/96 Fixed
407 16,803 74 SqFt 95 07/29/96 Fixed
450 56,826 22 SqFt 93 09/30/95 Fixed
466 35,090 35 SqFt 83 07/15/96 Fixed
60 21,794 20,613 Beds 100 08/15/96 Fixed
357 26,578 45 SqFt 78 08/02/96 Fixed
368 34,352 35 SqFt 89 07/09/96 Fixed
64 52,654 18,551 Units 91 07/15/96 Fixed
541 59,150 19 SqFt 95 09/25/96 Fixed
60 43,980 17,743 Units 92 01/11/96 Fixed
508 68,635 15 SqFt 76 09/18/96 Fixed
403 62,504 17 SqFt 94 07/29/96 Fixed
481 54,400 18 SqFt 88 07/06/96 Fixed
36 26,700 27,691 Units 88 08/23/96 Fixed
480 57,851 16 SqFt 93 07/11/96 Fixed
101 67,012 9,289 Units 95 08/22/96 Fixed
413 53,138 16 SqFt 97 07/10/96 Fixed
490 62,882 13 SqFt 85 06/29/96 Fixed
412 46,375 18 SqFt 94 09/20/96 Fixed
505 42,285 19 SqFt 94 07/24/96 Fixed
343 39,800 20 SqFt 97 07/06/96 Fixed
156 32,350 24 SqFt 88 11/01/95 Fixed
288 27,363 26 SqFt 99 09/18/96 Fixed
272 15,100 35 SqFt 99 07/01/96 Fixed
342 32,000 12 SqFt 92 09/26/96 Fixed
207 27,150 12 SqFt 87 09/18/96 Fixed
</TABLE>
A-41
<PAGE> 126
ANNEX A
<TABLE>
<CAPTION>
LARGEST LARGEST LARGEST
LOAN TENANT TENANT TENANT SECOND LARGEST
COUNTER PROPERTY NAME LEASED SF % OF TOTAL SF LEASE EXPIRATION TENANT
- ------- ------------------------------ --------- ------------- ---------------- --------------------------------
<C> <S> <C> <C> <C> <C>
98 U-Haul Storage (Sterling)
99 Aggregate Loan Level Info.
99A Annabelle's Restaurant
99B Annabelle's Restaurant
100 Sierra Vista Self Storage
101 Security Public Storage
102 Capital City Self Storage
103 I Avenue Self Storage
104 Ambassador Self Storage 8,200 8 01/01/98
105 Arovista Self Storage
106 Willowbrook Apartments
107 67 East Willow Street 36,500 47 01/31/2006 Sharon Lifestyles
108 U-Haul Storage (Richmond)
109 Harwin Business Park 18,750 19 05/31/97 Abassi Wholesale
110 State College Self-Storage
111 A Storage Place
112 U-Haul Storage (Odenton)
113 UC Mini Storage
114 Alpine Self Storage
115 Capital Self-Storage
116 Colorow Care Center
117 Boston Self Storage
118 Waltham Self Storage
119 Mulberry Hill Apartments
120 U-Haul Storage (Oaklawn Blvd)
121 Farmington Court Apartments
122 U-Haul Storage (N Richland)
123 C & D Mini-Warehouses
124 Aloha Self Storage
125 Steiner Ocean Apartments
126 Dependable Mini Storage
127 Arms Apartments
128 Cedar Hill Self Storage
129 Watson & Taylor Mini Storage
130 U-Haul Storage (Shreveport)
131 Tyler Street Self Storage
132 Locker Room Self Storage
133 All American Store & Lock
134 U-Haul Storage (Marrero)
135 Arizona Storage Inns
136 U-Haul Storage (Myrtle Beach)
137 U-Haul Storage (Jefferson)
</TABLE>
A-42
<PAGE> 127
ANNEX A
<TABLE>
<CAPTION>
SECOND LARGEST SECOND LARGEST SECOND LARGEST
TENANT TENANT TENANT MOST RECENT MOST RECENT
LEASED SF % OF TOTAL SF LEASE EXPIRATION 1994 NOI 1995 NOI NOI NOI END DATE
- -------------- -------------- ---------------- --------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
$ 289,124 $ 325,699 07/31/96
485,819 485,819 07/31/95
407,783 407,783 07/31/95
78,036 78,036 07/31/95
222,913 258,370 06/30/96
$ 359,852 387,208 445,191 06/30/96
186,881 206,878 264,082 03/31/96
196,587 230,861 231,703 11/30/95
367,634 328,913 376,955 03/31/96
231,944 232,517 238,011 06/30/96
179,923 194,751 165,846 03/31/96
35,000 45 08/31/2005 32,956 211,683 06/30/96
247,331 257,926 07/31/96
9,600 10 11/30/96 250,417 308,068 258,642 06/30/96
158,854 168,112 165,989 06/30/96
225,161 237,636 256,533 06/30/96
196,781 231,596 07/31/96
182,577 184,183 191,985 03/31/96
256,816 264,786 287,149 06/30/96
176,761 191,234 182,620 06/30/96
236,834 269,262 302,442 06/30/96
151,861 183,705 200,762 06/30/96
175,647 174,992 197,320 06/30/96
(26,185) 106,970 150,940 06/30/96
215,834 229,225 07/31/96
94,628 94,628 12/31/95
193,173 191,181 07/31/96
199,188 195,491 189,670 06/30/96
164,178 238,106 237,477 06/30/96
191,328 189,991 189,991 12/31/95
155,252 169,385 149,758 06/30/96
201,534 299,881 299,881 10/31/95
184,703 179,609 154,908 06/30/96
121,868 146,258 147,759 06/30/96
126,078 139,157 07/31/96
25,382 120,836 154,584 06/30/96
117,802 115,524 135,702 03/31/96
60,095 111,006 124,730 06/30/96
84,318 110,007 07/31/96
89,810 93,790 98,902 06/30/96
101,750 84,025 07/31/96
52,845 67,029 07/31/96
----------- -----------
$67,986,862 $68,329,455
----------- -----------
----------- -----------
</TABLE>
A-43
<PAGE> 128
ANNEX A
<TABLE>
<CAPTION>
MOST RECENT
LOAN STATEMENT UNDERWRITING UNDERWRITING UNDERWRITING
COUNTER PROPERTY NAME TYPE NOI CASH FLOW DSC
- ------- ----------------------------- --------------------- ------------ ------------ ------------
<C> <S> <C> <C> <C> <C>
98 U-Haul Storage (Sterling) Trailing 12 $ 315,735 $ 309,525 1.71x
99 Aggregate Loan Level Info. Trailing 12 262,739 244,593 1.25
99A Annabelle's Restaurant Trailing 12 168,565 157,624
99B Annabelle's Restaurant Trailing 12 94,174 86,969
100 Sierra Vista Self Storage Trailing 12 246,086 240,745 1.47
101 Security Public Storage Trailing 12 410,080 402,863 2.61
102 Capital City Self Storage Trailing 12 216,250 209,823 1.43
103 I Avenue Self Storage Trailing 12 202,801 198,486 1.37
104 Ambassador Self Storage Trailing 12 284,354 265,300 1.92
105 Arovista Self Storage Trailing 12 231,451 228,685 1.44
106 Willowbrook Apartments Trailing 12 220,776 198,972 1.62
107 67 East Willow Street Annualized 6 months 231,337 223,624 1.30
108 U-Haul Storage (Richmond) Trailing 12 260,508 253,013 1.77
109 Harwin Business Park Trailing 12 226,026 194,364 1.49
110 State College Self-Storage Trailing 12 167,094 164,223 1.24
111 A Storage Place Trailing 12 236,275 234,100 1.82
112 U-Haul Storage (Odenton) Trailing 12 221,491 215,401 1.63
113 UC Mini Storage Trailing 12 172,434 170,586 1.38
114 Alpine Self Storage Trailing 12 239,061 235,083 1.94
115 Capital Self-Storage Trailing 12 175,440 173,685 1.39
116 Colorow Care Center Trailing 12 216,418 205,521 1.49
117 Boston Self Storage Trailing 12 187,722 186,393 1.43
118 Waltham Self Storage Trailing 12 187,846 185,441 1.42
119 Mulberry Hill Apartments Trailing 12 144,011 134,411 1.28
120 U-Haul Storage (Oaklawn Blvd) Trailing 12 213,272 207,357 1.71
121 Farmington Court Apartments Annual 1995 111,272 99,272 1.12
122 U-Haul Storage (N Richland) Trailing 12 188,206 182,029 1.61
123 C & D Mini-Warehouses Trailing 12 172,792 166,542 1.49
124 Aloha Self Storage Trailing 12 195,183 189,743 1.79
125 Steiner Ocean Apartments Annual 1995 163,390 148,990 1.57
126 Dependable Mini Storage Annualized 6 months 170,276 167,433 1.68
127 Arms Apartments Annualized 10 months 302,467 274,995 2.07
128 Cedar Hill Self Storage Trailing 12 161,434 158,777 1.45
129 Watson & Taylor Mini Storage Trailing 12 152,643 146,355 1.69
130 U-Haul Storage (Shreveport) Trailing 12 122,480 117,842 1.40
131 Tyler Street Self Storage Trailing 12 130,610 126,381 1.53
132 Locker Room Self Storage Trailing 12 102,957 100,967 1.27
133 All American Store & Lock Trailing 12 109,772 106,537 1.37
134 U-Haul Storage (Marrero) Trailing 12 89,040 84,936 1.21
135 Arizona Storage Inns Trailing 12 99,396 97,286 1.64
136 U-Haul Storage (Myrtle Beach) Trailing 12 91,812 88,292 1.88
137 U-Haul Storage (Jefferson) Trailing 12 56,039 53,595 1.57
----------- -----------
$ 70,238,526 $ 64,863,819
----------- -----------
----------- -----------
</TABLE>
A-44
<PAGE> 129
ANNEX A
<TABLE>
<CAPTION>
CURRENT CURRENT
UNDERWRITING REPLACEMENT ANNUALIZED OTHER
COMBINED DSC RESERVES REP RESERVE PAYMENT/UNIT OR SF RESERVES
- ------------- ----------- ------------------------------ --------
<S> <C> <C> <C>
$ 22,047
8,730 $ 1.00
12,600 225.00
5,787 0.10
6,225
8,625
2,167 216.60
8,536 200.06
2,922
1,000 200.00 6,246
1,184
32,400 400.00 34,115
0.08
6,733 200.00
1.32 (1,513)
1.32 (5,542)
10,200
2,499
</TABLE>
A-45
<PAGE> 130
DISTRIBUTION OF DEBT SERVICE COVERAGE RATIOS
MORTGAGE POOL
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE OF AVERAGE AVERAGE WEIGHTED
RANGE OF NUMBER OF AGGREGATE AGGREGATE DEBT SERVICE CURRENT AVERAGE
DEBT SERVICE MORTGAGE CUT-OFF DATE CUT-OFF DATE COVERAGE MORTGAGE CUT-OFF DATE
COVERAGE RATIOS LOANS BALANCE BALANCE RATIO RATE LTV RATIO
- ---------------------- --------- ------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
1.05x - 1.10x 4 1.74% $ 7,953,251 1.07x 8.177% 82%
1.11 - 1.20 3 5.57 25,459,169 1.19 8.471 68
1.21 - 1.30 21 16.07 73,419,268 1.26 9.350 70
1.31 - 1.40 23 13.79 63,004,326 1.36 9.107 71
1.41 - 1.50 24 13.88 63,410,219 1.44 9.212 69
1.51 - 1.60 17 15.20 69,414,637 1.56 9.272 65
1.61 - 1.70 17 17.60 80,382,738 1.66 9.210 65
1.71 - 1.80 12 9.39 42,886,032 1.76 9.381 65
1.81 - 1.90 5 1.82 8,333,708 1.85 9.488 60
1.91 - 2.00 4 1.67 7,635,399 1.95 8.800 59
2.01 - 2.25 3 1.37 6,273,981 2.13 9.740 53
2.26 - 2.50 1 0.62 2,840,738 2.27 8.875 75
2.51 - 3.00 3 1.27 5,808,886 2.64 10.753 36
--- ------ ------------ ---- ------
Total/Weighted Average 137 100.00% $456,822,350 1.51x 9.208% 67%
=== ====== ============ ==== ====== ==
</TABLE>
DISTRIBUTION OF DEBT SERVICE COVERAGE RATIOS
LOAN GROUP 1
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE OF AVERAGE DEBT AVERAGE WEIGHTED
RANGE OF NUMBER OF AGGREGATE AGGREGATE SERVICE CURRENT AVERAGE
DEBT SERVICE MORTGAGE CUT-OFF DATE CUT-OFF DATE COVERAGE MORTGAGE CUT-OFF DATE
COVERAGE RATIOS LOANS BALANCE BALANCE RATIO RATE LTV RATIO
- ---------------------- --------- ------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
1.41x - 1.50x 2 8.33% $ 2,788,293 1.47x 8.703% 70%
1.51 - 1.60 2 29.95 10,026,336 1.59 8.531 66
1.61 - 1.70 2 53.23 17,819,780 1.67 8.531 59
2.26 - 2.50 1 8.49 2,840,738 2.27 8.875 75
--- ------ ----------- ---- -----
Total/Weighted Average 7 100.00% $ 33,475,147 1.68x 8.575% 63%
=== ====== =========== ==== ===== ===
</TABLE>
A-46
<PAGE> 131
DISTRIBUTION OF DEBT SERVICE COVERAGE RATIOS
LOAN GROUP 2
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE OF AVERAGE DEBT AVERAGE WEIGHTED
RANGE OF NUMBER OF AGGREGATE AGGREGATE SERVICE CURRENT AVERAGE
DEBT SERVICE MORTGAGE CUT-OFF DATE CUT-OFF DATE COVERAGE MORTGAGE CUT-OFF DATE
COVERAGE RATIOS LOANS BALANCE BALANCE RATIO RATE LTV RATIO
- ---------------------- --------- ------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
1.05x - 1.10x 4 1.88% $ 7,953,251 1.07x 8.177% 82%
1.11 - 1.20 3 6.01 25,459,169 1.19 8.471 68
1.21 - 1.30 21 17.34 73,419,268 1.26 9.350 70
1.31 - 1.40 23 14.88 63,004,326 1.36 9.107 71
1.41 - 1.50 22 14.32 60,62l,926 1.45 9.236 69
1.51 - 1.60 15 14.03 59,388,300 1.55 9.397 64
1.61 - 1.70 15 14.78 62,562,958 1.66 9.403 66
1.71 - 1.80 12 10.13 42,886,032 1.76 9.381 65
1.81 - 1.90 5 1.97 8,333,708 1.85 9.488 60
1.91 - 2.00 4 1.80 7,635,399 1.95 8.800 59
2.01 - 2.25 3 1.48 6,273,981 2.13 9.740 53
2.51 - 3.00 3 1.37 5,808,886 2.64 10.753 36
--- ------ ------------ ---- ----- --
Total/Weighted Average 130 100.00% $423,347,204 1.50x 9.258% 67%
=== ====== ============ ==== ===== ==
</TABLE>
A-47
<PAGE> 132
DISTRIBUTION OF CUT-OFF DATE LOAN-TO-VALUE RATIOS
MORTGAGE POOL
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE OF AVERAGE AVERAGE WEIGHTED
RANGE OF NUMBER OF AGGREGATE AGGREGATE DEBT SERVICE CURRENT AVERAGE
CUT-OFF DATE LTV MORTGAGE CUT-OFF DATE CUT-OFF DATE COVERAGE MORTGAGE CUT-OFF DATE
RATIOS LOANS BALANCE BALANCE RATIO RATE LTV RATIO
- ---------------------- --------- ------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
35% - 50% 6 1.84% $ 8,385,471 2.44x 10.080% 38%
51 - 60 23 17.32 79,144,317 1.68 9.625 57
61 - 65 20 12.55 57,320,996 1.60 9.335 64
66 - 70 35 37.20 169,918,819 1.43 9.274 68
71 - 75 44 25.47 116,334,447 1.45 8.886 73
76 - 80 5 2.99 13,671,905 1.45 8.507 78
81 - 85 3 2.48 11,339,613 1.16 8.184 83
86 - 90 1 0.15 706,783 1.21 9.000 89
--- ------ ------------ ---- ----- --
Total/Weighted Average 137 100.00% $456,822,350 1.51x 9.208%
=== ====== ============ ==== ===== ==
</TABLE>
DISTRIBUTION OF CUT-OFF DATE LOAN-TO-VALUE RATIOS
LOAN GROUP 1
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE OF AVERAGE DEBT AVERAGE WEIGHTED
RANGE OF NUMBER OF AGGREGATE AGGREGATE SERVICE CURRENT AVERAGE
CUT-OFF DATE LTV MORTGAGE CUT-OFF DATE CUT-OFF DATE COVERAGE MORTGAGE CUT-OFF DATE
RATIOS LOANS BALANCE BALANCE RATIO RATE LTV RATIO
- ---------------------- --------- ------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
51% - 60% 1 39.36% $ 13,176,907 1.66x 8.531% 58%
61 - 65 2 35.98 12,043,144 1.64 8.531 64
66 - 70 2 10.90 3,649,827 1.54 8.663 67
71 - 75 2 13.76 4,605,269 1.96 8.743 73
--- ------ ----------- ---- ----- ---
Total/Weighted Average 7 100.00% $ 33,475,147 1.68x 8.575% 63%
=== ====== =========== ==== ===== ===
</TABLE>
DISTRIBUTION OF CUT-OFF DATE LOAN-TO-VALUE RATIOS
LOAN GROUP 2
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE OF AVERAGE DEBT AVERAGE WEIGHTED
RANGE OF NUMBER OF AGGREGATE AGGREGATE SERVICE CURRENT AVERAGE
CUT-OFF DATE LTV MORTGAGE CUT-OFF DATE CUT-OFF DATE COVERAGE MORTGAGE CUT-OFF DATE
RATIOS LOANS BALANCE BALANCE RATIO RATE LTV RATIO
- ---------------------- --------- ------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
35% - 50% 6 1.98% $ 8,385,471 2.44x 10.080% 38%
51 - 60 22 15.58 65,967,409 1.68 9.844 57
61 - 65 18 10.70 45,277,852 1.59 9.549 64
66 - 70 33 39.27 166,268,992 1.43 9.287 68
71 - 75 42 26.39 111,729,178 1.43 8.892 73
76 - 80 5 3.23 13,671,905 1.45 8.507 78
81 - 85 3 2.68 11,339,613 1.16 8.184 83
86 - 90 1 0.17 706,783 1.21 9.000 89
--- ------ ----------- ---- ----- ---
Total/Weighted Average 130 100.00% $423,347,204 1.50x 9.258% 67%
=== ====== =========== ==== ===== ===
</TABLE>
A-48
<PAGE> 133
9
DISTRIBUTION OF BALLOON LOAN-TO-VALUE RATIOS
MORTGAGE POOL
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE OF AVERAGE AVERAGE WEIGHTED
NUMBER OF AGGREGATE AGGREGATE DEBT SERVICE CURRENT AVERAGE
RANGE OF BALLOON MORTGAGE CUT-OFF DATE CUT-OFF DATE COVERAGE MORTGAGE CUT-OFF DATE
LOAN-TO-VALUE RATIOS LOANS BALANCE BALANCE RATIO RATE LTV RATIO
- -------------------- --------- ------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Not Applicable 6 2.49% $ 11,380,317 1.91x 10.187% 51%
27% - 50% 27 11.87 54,231,879 1.75 9.585 57
51 - 60 51 38.92 177,784,409 1.55 9.364 65
61 - 65 33 32.81 149,877,211 1.38 8.942 71
66 - 70 16 9.24 42,211,232 1.43 9.041 73
71 - 75 3 4.52 20,630,520 1.48 8.612 76
76 - 80 1 0.15 706,783 1.21 9.000 89
--- ------ ----------- ---- ----- --
Total/Weighted
Average 137 100.00% $456,822,350 1.51x 9.208% 67%
=== ====== =========== ==== ===== ==
</TABLE>
DISTRIBUTION OF BALLOON LOAN-TO-VALUE RATIOS
LOAN GROUP 1
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE OF AVERAGE DEBT AVERAGE WEIGHTED
NUMBER OF AGGREGATE AGGREGATE SERVICE CURRENT AVERAGE
RANGE OF BALLOON MORTGAGE CUT-OFF DATE CUT-OFF DATE COVERAGE MORTGAGE CUT-OFF DATE
LOAN-TO-VALUE RATIOS LOANS BALANCE BALANCE RATIO RATE LTV RATIO
- -------------------- --------- ------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
49% - 50% 1 3.06% $ 1,023,762 1.49x 9.000% 68%
51 - 60 3 75.34 25,220,051 1.65 8.531 61
61 - 65 2 13.12 4,390,596 1.51 8.531 69
66 - 70 1 8.49 2,840,738 2.27 8.875 75
--- ------ ----------- ---- ----- ---
Total 7 100.00% $ 33,475,147 1.68x 8.575% 63%
=== ====== =========== ==== ===== ===
</TABLE>
DISTRIBUTION OF BALLOON LOAN-TO-VALUE RATIOS
LOAN GROUP 2
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE OF AVERAGE AVERAGE WEIGHTED
NUMBER OF AGGREGATE AGGREGATE DEBT SERVICE CURRENT AVERAGE
RANGE OF BALLOON MORTGAGE CUT-OFF DATE CUT-OFF DATE COVERAGE MORTGAGE CUT-OFF DATE
LOAN-TO-VALUE RATIOS LOANS BALANCE BALANCE RATIO RATE LTV RATIO
- ---------------------- --------- ------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Not Applicable 6 2.69% $ 11,380,317 1.91x 10.187% 51%
27% - 50% 26 12.57 53,208,117 1.75 9.596 57
51 - 60 48 36.04 152,564,358 1.53 9.502 66
61 - 65 31 34.37 145,486,615 1.38 8.954 71
66 - 70 15 9.30 39,370,494 1.37 9.053 73
71 - 75 3 4.87 20,630,520 1.48 8.612 76
76 - 80 1 0.17 706,783 1.21 9.000 89
--- ------ ------------ ---- ----- ---
Total/Weighted Average 130 100.00% $423,347,204 1.50x 9.258% 67%
=== ====== ============ ==== ===== ===
</TABLE>
A-49
<PAGE> 134
DISTRIBUTION OF PROPERTY TYPES
MORTGAGE POOL
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE OF AGGREGATE AVERAGE AVERAGE WEIGHTED
NUMBER OF AGGREGATE CUT-OFF DATE DEBT SERVICE CURRENT AVERAGE
MORTGAGE CUT-OFF DATE PRINCIPAL COVERAGE MORTGAGE CUT-OFF DATE
PROPERTY TYPE LOANS BALANCE BALANCE RATIO RATE LTV RATIO
- ------------------------- --------- ------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Multifamily 41 24.82% $113,396,460 1.45x 8.558% 70%
Office 18 24.38 111,392,577 1.56 9.451 67
Self-Storage/Mini-Storage 47 16.41 74,954,497 1.53 9.434 65
Retail 12 13.85 63,287,887 1.58 9.794 63
Mobile Home Park 5 12.61 57,599,584 1.27 8.597 70
Lodging 3 3.68 16,831,882 1.76 9.741 64
Nursing Home 7 3.08 14,059,990 1.99 10.117 63
Industrial/Warehouse 3 0.81 3,701,102 1.42 9.674 68
Restaurant 1 0.35 1,598,372 1.25 11.950 52
--- ------ ------------ ---- ------ --
Total/Weighted Average 137 100.00% $456,822,350 1.51x 9.208% 67%
=== ====== ============ ==== ====== ==
</TABLE>
DISTRIBUTION OF PROPERTY TYPES
LOAN GROUP 1
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE OF AVERAGE DEBT AVERAGE WEIGHTED
NUMBER OF AGGREGATE AGGREGATE SERVICE CURRENT AVERAGE
MORTGAGE CUT-OFF DATE CUT-OFF DATE COVERAGE MORTGAGE CUT-OFF DATE
PROPERTY TYPE LOANS BALANCE BALANCE RATIO RATE LTV RATIO
- ---------------------- --------- ------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Multifamily 5 88.46% $ 29,610,647 1.63x 8.531% 62%
Nursing Home 1 8.49 2,840,738 2.27 8.875 75
Industrial/Warehouse 1 3.06 1,023,762 1.49 9.000 68
--- ------ ----------- ---- ----- ---
Total/Weighted Average 7 100.00% $ 33,475,147 1.68x 8.575% 63%
=== ====== =========== ==== ===== ===
</TABLE>
DISTRIBUTION OF PROPERTY TYPES
LOAN GROUP 2
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE OF AVERAGE AVERAGE WEIGHTED
NUMBER OF AGGREGATE AGGREGATE DEBT SERVICE CURRENT AVERAGE
MORTGAGE CUT-OFF DATE CUT-OFF DATE COVERAGE MORTGAGE CUT-OFF DATE
PROPERTY TYPE LOANS BALANCE BALANCE RATIO RATE LTV RATIO
- ------------------------- --------- ------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Office 18 26.31% $111,392,577 1.56x 9.451% 67%
Multifamily 36 19.79 83,785,813 1.39 8.567 73
Self-Storage/Mini-Storage 47 17.71 74,954,497 1.53 9.434 65
Retail 12 14.95 63,287,887 1.58 9.794 63
Mobile Home Park 5 13.61 57,599,584 1.27 8.597 70
Lodging 3 3.98 16,831,882 1.76 9.741 64
Nursing Home 6 2.65 11,219,252 1.92 10.432 60
Industrial/Warehouse 2 0.63 2,677,340 1.39 9.931 68
Restaurant 1 0.38 1,598,372 1.25 11.950 52
--- ------ ------------ ---- ----- ---
Total/Weighted Average 130 100.00% $423,347,204 1.50x 9.258% 67%
=== ====== ============ ==== ===== ===
</TABLE>
A-50
<PAGE> 135
DISTRIBUTION OF PROPERTY STATES
MORTGAGE POOL
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE OF AVERAGE AVERAGE WEIGHTED
NUMBER OF AGGREGATE AGGREGATE DEBT SERVICE CURRENT AVERAGE
MORTGAGE CUT-OFF DATE CUT-OFF DATE COVERAGE MORTGAGE CUT-OFF DATE
PROPERTY STATE LOANS BALANCE BALANCE RATIO RATE LTV RATIO
- -------------------- --------- ------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
California 22 17.17% $ 78,452,484 1.49x 9.486% 67%
Florida 10 10.98 50,179,408 1.53 9.013 69
Illinois 3 8.57 39,149,837 1.22 8.592 68
Texas 20 8.16 37,279,516 1.56 9.021 66
New York 18 8.05 36,773,610 1.48 9.039 71
Connecticut 3 5.51 25,160,62l 1.55 8.750 72
Arizona 6 4.95 22,599,189 1.65 9.026 63
Tennessee 2 4.52 20,659,258 1.60 9.523 62
Colorado 9 4.47 20,402,019 1.52 9.195 69
Virginia 7 3.63 16,600,764 1.71 9.489 59
District of Columbia 2 3.18 14,540,000 1.74 9.813 69
Washington 1 2.71 12,382,600 1.59 9.907 57
Georgia 3 2.53 11,575,718 1.15 8.656 80
Louisiana 4 2.01 9,187,690 1.57 8.853 70
Wisconsin 1 1.65 7,537,500 1.28 9.988 72
New Jersey 4 1.61 7,370,838 1.63 8.877 64
Massachusetts 5 1.56 7,147,840 1.62 9.500 67
New Mexico 3 1.33 6,098,517 1.81 10.750 51
Pennsylvania 2 1.14 5,216,276 1.25 8.199 77
Nebraska 1 1.14 5,200,000 1.51 9.558 65
Wyoming 1 1.09 4,991,997 1.41 9.670 65
North Carolina 3 1.02 4,640,769 1.50 10.754 57
Michigan 1 0.71 3,254,885 2.22 9.560 56
Delaware 1 0.55 2,515,311 1.51 8.000 71
Kansas 1 0.50 2,289,155 1.30 9.875 72
Minnesota 1 0.45 2,040,334 1.79 9.875 55
Idaho 1 0.42 1,935,095 1.52 9.490 57
Maryland 1 0.27 1,243,224 1.63 9.000 54
South Carolina 1 0.09 397,896 1.88 9.000 39
--- ------ ------------ ---- ----- --
Total/Weighted
Average 137 100.00% $456,822,350 1.51x 9.208% 67%
=== ====== ============ ==== ===== ==
</TABLE>
A-51
<PAGE> 136
DISTRIBUTION OF PROPERTY STATES
LOAN GROUP 1
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE OF AVERAGE DEBT AVERAGE WEIGHTED
NUMBER OF AGGREGATE AGGREGATE SERVICE CURRENT AVERAGE
MORTGAGE CUT-OFF DATE CUT-OFF DATE COVERAGE MORTGAGE CUT-OFF DATE
PROPERTY STATE LOANS BALANCE BALANCE RATIO RATE LTV RATIO
- -------------- --------- ------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Texas 4 49.09% $ 16,433,740 1.60x 8.531% 65%
Arizona 2 47.85 16,017,645 1.77 8.592 61
New Jersey 1 3.06 1,023,762 1.49 9.000 68
--- ----- ----------- ---- ----- ---
Total/Weighted
Average 7 100.00% $ 33,475,147 1.68x 8.575% 63%
=== ===== =========== ==== ===== ===
</TABLE>
DISTRIBUTION OF PROPERTY STATES
LOAN GROUP 2
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE OF AVERAGE AVERAGE WEIGHTED
NUMBER OF AGGREGATE AGGREGATE DEBT SERVICE CURRENT AVERAGE
MORTGAGE CUT-OFF DATE CUT-OFF DATE COVERAGE MORTGAGE CUT-OFF DATE
PROPERTY STATE LOANS BALANCE BALANCE RATIO RATE LTV RATIO
- -------------------- --------- ------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
California 22 18.53% $ 78,452,484 1.49x 9.486% 67%
Florida 10 11.85 50,179,408 1.53 9.013 69
Illinois 3 9.25 39,149,837 1.22 8.592 68
New York 18 8.69 36,773,610 1.48 9.039 71
Connecticut 3 5.94 25,160,621 1.55 8.750 72
Texas 16 4.92 20,845,776 1.53 9.406 66
Tennessee 2 4.88 20,659,258 1.60 9.523 62
Colorado 9 4.82 20,402,019 1.52 9.195 69
Virginia 7 3.92 16,600,764 1.71 9.489 59
District of Columbia 2 3.43 14,540,000 1.74 9.813 69
Washington 1 2.92 12,382,600 1.59 9.907 57
Georgia 3 2.73 11,575,718 1.15 8.656 80
Louisiana 4 2.17 9,187,690 1.57 8.853 70
Wisconsin 1 1.78 7,537,500 1.28 9.988 72
Massachusetts 5 1.69 7,147,840 1.62 9.500 67
Arizona 4 1.55 6,581,544 1.37 10.081 67
New Jersey 3 1.50 6,347,076 1.65 8.857 64
New Mexico 3 1.44 6,098,517 1.81 10.750 51
Pennsylvania 2 1.23 5,216,276 1.25 8.199 77
Nebraska 1 1.23 5,200,000 1.51 9.558 65
Wyoming 1 1.18 4,991,997 1.41 9.670 65
North Carolina 3 1.10 4,640,769 1.51 10.754 57
Michigan 1 0.77 3,254,885 2.22 9.560 56
Delaware 1 0.59 2,515,311 1.51 8.000 71
Kansas 1 0.54 2,289,155 1.30 9.875 72
Minnesota 1 0.48 2,040,334 1.79 9.875 55
Idaho 1 0.46 1,935,095 1.52 9.490 57
Maryland 1 0.29 1,243,224 1.63 9.000 54
South Carolina 1 0.09 397,896 1.88 9.000 39
--- ------ ------------ ---- ----- --
Total/Weighted
Average 130 100.00% $423,347,204 1.50x 9.258% 67%
=== ====== ============ ==== ===== ==
</TABLE>
A-52
<PAGE> 137
DISTRIBUTION OF CUT-OFF DATE BALANCES
MORTGAGE POOL
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE OF AVERAGE AVERAGE WEIGHTED
NUMBER OF AGGREGATE AGGREGATE DEBT SERVICE CURRENT AVERAGE
CUT-OFF DATE MORTGAGE CUT-OFF DATE CUT-OFF DATE COVERAGE MORTGAGE CUT-OFF DATE
BALANCES LOANS BALANCE BALANCE RATIO RATE LTV RATIO
- ------------------------- --------- ------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
$ 137,790 - $ 499,999 7 0.53% $ 2,409,938 1.36x 8.301% 66%
500,000 - 999,999 17 2.92 13,327,582 1.59 9.358 64
1,000,000 - 1,999,999 46 14.86 67,898,854 1.54 9.276 66
2,000,000 - 2,999,999 19 10.14 46,321,404 1.55 9.098 69
3,000,000 - 3,999,999 12 9.30 42,501,67l 1.68 9.556 63
4,000,000 - 4,999,999 10 9.71 44,341,625 1.40 9.134 69
5,000,000 - 5,999,999 6 6.94 31,683,485 1.40 9.250 70
6,000,000 - 6,999,999 5 7.04 32,150,453 1.53 9.089 72
7,000,000 - 7,999,999 3 4.84 22,110,502 1.46 8.856 70
8,000,000 - 8,999,999 2 3.69 16,862,341 1.55 9.791 67
9,000,000 - 9,999,999 2 4.19 19,150,000 1.59 9.046 72
10,000,000 - 11,999,999 1 2.60 11,876,625 1.65 9.825 68
12,000,000 - 13,999,999 4 11.10 50,729,161 1.48 8.947 63
14,000,000 - 16,999,999 2 6.89 31,487,890 1.62 9.702 63
20,000,000 - 24,999,999 1 5.25 23,970,819 1.19 8.500 68
--- ------ ------------ ---- ----- --
Total/Weighted Average 137 100.00% $456,822,350 1.51x 9.208% 67%
=== ====== ============ ==== ===== ==
</TABLE>
DISTRIBUTION OF CUT-OFF DATE BALANCES
LOAN GROUP 1
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE OF AVERAGE DEBT AVERAGE WEIGHTED
NUMBER OF AGGREGATE AGGREGATE SERVICE CURRENT AVERAGE
CUT-OFF DATE MORTGAGE CUT-OFF DATE CUT-OFF DATE COVERAGE MORTGAGE CUT-OFF DATE
BALANCES LOANS BALANCE BALANCE RATIO RATE LTV RATIO
- ------------------------- --------- ------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
$ 1,000,000 - $ 1,999,999 2 8.33% $ 2,788,293 1.47x 8.703% 70%
2,000,000 - 2,999,999 2 16.33 5,466,802 1.93 8.710 71
4,000,000 - 4,999,999 1 13.87 4,642,872 1.69 8.531 63
7,000,000 - 7,999,999 1 22.11 7,400,272 1.60 8.531 65
12,000,000 - 13,999,999 1 39.36 13,176,907 1.66 8.531 58
--- ------ ----------- ---- ----- --
Total/Weighted Average 7 100.00% $ 33,475,147 1.68x 8.575% 63%
=== ====== =========== ==== ===== ==
</TABLE>
A-53
<PAGE> 138
DISTRIBUTION OF CUT-OFF DATE BALANCES
LOAN GROUP 2
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE OF AVERAGE DEBT AVERAGE WEIGHTED
NUMBER OF AGGREGATE AGGREGATE SERVICE CURRENT AVERAGE
CUT-OFF DATE MORTGAGE CUT-OFF DATE CUT-OFF DATE COVERAGE MORTGAGE CUT-OFF DATE
BALANCES LOANS BALANCE BALANCE RATIO RATE LTV RATIO
- ------------------------- --------- ------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
$ 137,790 - $ 499,999 7 0.57% $ 2,409,938 1.36x 8.301% 66%
500,000 - 999,999 17 3.15 13,327,582 1.59 9.358 64
1,000,000 - 1,999,999 44 15.38 65,110,560 1.55 9.300 66
2,000,000 - 2,999,999 17 9.65 40,854,601 1.50 9.150 68
3,000,000 - 3,999,999 12 10.04 42,501,671 1.68 9.556 63
4,000,000 - 4,999,999 9 9.38 39,698,753 1.36 9.205 70
5,000,000 - 5,999,999 6 7.48 31,683,485 1.40 9.250 70
6,000,000 - 6,999,999 5 7.59 32,150,453 1.53 9.089 72
7,000,000 - 7,999,999 2 3.47 14,710,230 1.39 9.019 73
8,000,000 - 8,999,999 2 3.98 16,862,341 1.55 9.791 67
9,000,000 - 9,999,999 2 4.52 19,150,000 1.59 9.046 72
10,000,000 - 11,999,999 1 2.81 11,876,625 1.65 9.825 68
12,000,000 - 13,999,999 3 8.87 37,552,254 1.42 9.093 65
14,000,000 - 16,999,999 2 7.44 31,487,890 1.62 9.702 63
20,000,000 - 24,999,999 1 5.66 23,970,819 1.19 8.500 68
--- ------ ------------ ---- ----- ---
Total/Weighted Average 130 100.00% $423,347,204 1.50x 9.258% 67%
=== ====== ============ ==== ===== ===
</TABLE>
A-54
<PAGE> 139
DISTRIBUTION OF YEAR OF ORIGINATION
MORTGAGE POOL
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE OF AVERAGE AVERAGE WEIGHTED
NUMBER OF AGGREGATE AGGREGATE DEBT SERVICE CURRENT AVERAGE
MORTGAGE CUT-OFF DATE CUT-OFF DATE COVERAGE MORTGAGE CUT-OFF DATE
YEAR OF ORIGINATION LOANS BALANCE BALANCE RATIO RATE LTV RATIO
- ---------------------- --------- ------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
1993 5 1.24% $ 5,642,654 1.70x 9.000% 55%
1994 13 8.91 40,684,426 1.64 8.972 62
1995 29 17.99 82,180,604 1.47 8.759 70
1996 90 71.87 328,314,666 1.51 9.353 67
--- ------ ------------ ---- ----- --
Total/Weighted Average 137 100.00% $456,822,350 1.51x 9.208% 67%
=== ====== ============ ==== ===== ==
</TABLE>
DISTRIBUTION OF YEAR OF ORIGINATION
LOAN GROUP 1
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE OF AVERAGE DEBT AVERAGE WEIGHTED
NUMBER OF AGGREGATE AGGREGATE SERVICE CURRENT AVERAGE
MORTGAGE CUT-OFF DATE CUT-OFF DATE COVERAGE MORTGAGE CUT-OFF DATE
YEAR OF ORIGINATION LOANS BALANCE BALANCE RATIO RATE LTV RATIO
- ---------------------- --------- ------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
1994 5 88.46% $ 29,6l0,647 1.63x 8.531% 62%
1996 2 11.54 3,864,500 2.07 8.908 73
--- ------ ----------- ---- ----- --
Total/Weighted Average 7 100.00% $ 33,475,147 1.68x 8.575% 63%
=== ====== =========== ==== ===== ==
</TABLE>
DISTRIBUTION OF YEAR OF ORIGINATION
LOAN GROUP 2
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE OF AVERAGE AVERAGE WEIGHTED
NUMBER OF AGGREGATE AGGREGATE DEBT SERVICE CURRENT AVERAGE
MORTGAGE CUT-OFF DATE CUT-OFF DATE COVERAGE MORTGAGE CUT-OFF DATE
YEAR OF ORIGINATION LOANS BALANCE BALANCE RATIO RATE LTV RATIO
- ---------------------- --------- ------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
1993 5 1.33% $ 5,642,654 1.70x 9.000% 55%
1994 8 2.62 11,073,779 1.66 10.152 61
1995 29 19.41 82,180,604 1.47 8.759 70
1996 88 76.64 324,450,167 1.50 9.358 67
--- ------ ------------ ---- ------ --
Total/Weighted Average 130 100.00% $423,347,204 1.50x 9.258% 67%
=== ====== ============ ==== ====== ==
</TABLE>
A-55
<PAGE> 140
DISTRIBUTION OF CURRENT MORTGAGE RATES
MORTGAGE POOL
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE OF AVERAGE AVERAGE WEIGHTED
NUMBER OF AGGREGATE AGGREGATE DEBT SERVICE CURRENT AVERAGE
RANGE OF CURRENT MORTGAGE CUT-OFF DATE CUT-OFF DATE COVERAGE MORTGAGE CUT-OFF DATE
MORTGAGE RATES LOANS BALANCE BALANCE RATIO RATE LTV RATIO
- ---------------------- --------- ------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
7.501% - 7.750% 1 0.96% $ 4,371,318 1.79x 7.750% 72%
7.751 - 8.000 17 5.50 25,135,809 1.41 8.000 73
8.001 - 8.250 7 6.03 27,566,818 1.32 8.181 77
8.251 - 8.500 3 6.48 29,623,316 1.32 8.488 67
8.501 - 8.750 14 16.72 76,387,996 1.53 8.639 67
8.751 - 9.000 27 12.85 58,705,070 1.51 8.940 68
9.001 - 9.250 6 3.61 16,480,660 1.53 9.120 70
9.251 - 9.500 11 6.64 30,329,576 1.47 9.408 67
9.501 - 9.750 14 15.40 70,366,301 1.52 9.683 65
9.751 - 10.000 16 15.04 68,709,337 1.57 9.911 64
10.001 - 10.250 13 6.42 29,336,993 1.60 10.097 67
10.251 - 10.500 1 0.72 3,271,473 1.26 10.500 66
10.501 - 10.750 5 2.45 11,172,431 1.68 10.717 58
10.751 - 11.950 2 1.17 5,365,254 2.24 11.459 40
--- ------ ------------ ---- ----- --
Total/Weighted Average 137 100.00% $456,822,350 1.51x 9.208% 67%
=== ====== ============ ==== ===== ==
</TABLE>
DISTRIBUTION OF CURRENT MORTGAGE RATES
LOAN GROUP 1
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE OF AVERAGE DEBT AVERAGE WEIGHTED
NUMBER OF AGGREGATE AGGREGATE SERVICE CURRENT AVERAGE
RANGE OF CURRENT MORTGAGE CUT-OFF DATE CUT-OFF DATE COVERAGE MORTGAGE CUT-OFF DATE
MORTGAGE RATES LOANS BALANCE BALANCE RATIO RATE LTV RATIO
- ---------------------- --------- ------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
8.501% - 8.750% 5 88.46% $ 29,610,647 1.63x 8.531% 62%
8.751 - 9.000 2 11.54 3,864,500 2.07 8.908 73
--- ----- ----------- ---- ----- ---
Total/Weighted Average 7 100.00% $ 33,475,147 1.68x 8.575% 63%
=== ===== =========== ==== ===== ===
</TABLE>
A-56
<PAGE> 141
DISTRIBUTION OF CURRENT MORTGAGE RATES
LOAN GROUP 2
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE OF AVERAGE AVERAGE WEIGHTED
NUMBER OF AGGREGATE AGGREGATE DEBT SERVICE CURRENT AVERAGE
RANGE OF CURRENT MORTGAGE CUT-OFF DATE CUT-OFF DATE COVERAGE MORTGAGE CUT-OFF DATE
MORTGAGE RATES LOANS BALANCE BALANCE RATIO RATE LTV RATIO
- ---------------------- --------- ------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
7.501% - 7.750% 1 1.03% $ 4,371,318 1.79x 7.750% 72%
7.751 - 8.000 17 5.94 25,135,809 1.41 8.000 73
8.001 - 8.250 7 6.51 27,566,818 1.32 8.181 77
8.251 - 8.500 3 7.00 29,623,316 1.32 8.488 67
8.501 - 8.750 9 11.05 46,777,349 1.47 8.708 70
8.751 - 9.000 25 12.95 54,840,570 1.48 8.942 68
9.001 - 9.250 6 3.89 16,480,660 1.53 9.120 70
9.251 - 9.500 11 7.16 30,329,576 1.47 9.408 67
9.501 - 9.750 14 16.62 70,366,301 1.52 9.683 65
9.751 - 10.000 16 16.23 68,709,337 1.57 9.911 64
10.001 - 10.250 13 6.93 29,336,993 1.60 10.097 67
10.251 - 10.500 1 0.77 3,271,473 1.26 10.500 66
10.501 - 10.750 5 2.64 11,172,431 1.68 10.717 58
10.751 - 11.950 2 1.27 5,365,254 2.24 11.459 40
--- ------ ------------ ---- ------ --
Total/Weighted Average 130 100.00% $423,347,204 1.50x 9.258% 67%
=== ====== ============ ==== ====== ==
</TABLE>
A-57
<PAGE> 142
DISTRIBUTION OF PAYMENT TYPES
MORTGAGE POOL
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE OF AVERAGE AVERAGE WEIGHTED
NUMBER OF AGGREGATE AGGREGATE DEBT SERVICE CURRENT AVERAGE
MORTGAGE CUT-OFF DATE CUT-OFF DATE COVERAGE MORTGAGE CUT-OFF DATE
PAYMENT TYPE LOANS BALANCE BALANCE RATIO RATE LTV RATIO
- ---------------------- --------- ------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Amortizing Balloon 112 76.89% $351,250,284 1.48x 9.070% 68%
IO then Amort. Balloon 10 18.73 85,557,225 1.56 9.664 67
Cash Flow Balloon 9 1.89 8,634,525 1.63 9.000 62
Fully Amortizing 6 2.49 11,380,317 1.91 10.187 51
--- ------ ------------ ---- ------ ---
Total/Weighted Average 137 100.00% $456,822,350 1.51x 9.208% 67%
=== ====== ============ ==== ====== ===
</TABLE>
DISTRIBUTION OF PAYMENT TYPES
LOAN GROUP 1
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE OF AVERAGE AVERAGE WEIGHTED
NUMBER OF AGGREGATE AGGREGATE DEBT SERVICE CURRENT AVERAGE
MORTGAGE CUT-OFF DATE CUT-OFF DATE COVERAGE MORTGAGE CUT-OFF DATE
PAYMENT TYPE LOANS BALANCE BALANCE RATIO RATE LTV RATIO
- ---------------------- --------- ------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Amortizing Balloon 7 100.00% $ 33,475,147 1.68x 8.575% 63%
------ ----------- ---- ----- --
Total/Weighted Average 7 100.00% $ 33,475,147 1.68x 8.575% 63%
= ====== =========== ==== ===== ==
</TABLE>
DISTRIBUTION OF PAYMENT TYPES
LOAN GROUP 2
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE OF AVERAGE DEBT AVERAGE WEIGHTED
NUMBER OF AGGREGATE AGGREGATE SERVICE CURRENT AVERAGE
MORTGAGE CUT-OFF DATE CUT-OFF DATE COVERAGE MORTGAGE CUT-OFF DATE
PAYMENT TYPE LOANS BALANCE BALANCE RATIO RATE LTV RATIO
- ---------------------- --------- ------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Amortizing Balloon 105 75.06% $317,775,137 1.46x 9.122% 68%
IO then Amort. Balloon 10 20.21 85,557,225 1.56 9.664 67
Cash Flow Balloon 9 2.04 8,634,525 1.63 9.000 62
Fully Amortizing 6 2.69 11,380,317 1.91 10.187 51
--- ------ ----------- ---- ----- ---
Total/Weighted Average 130 100.00% $423,347,204 1.50x 9.258% 67%
=== ====== =========== ==== ===== ===
</TABLE>
A-58
<PAGE> 143
DISTRIBUTION OF SEASONING
MORTGAGE POOL
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE OF AVERAGE AVERAGE WEIGHTED
NUMBER OF AGGREGATE AGGREGATE DEBT SERVICE CURRENT AVERAGE
RANGE OF MORTGAGE CUT-OFF DATE CUT-OFF DATE COVERAGE MORTGAGE CUT-OFF DATE
SEASONING (MOS.) LOANS BALANCE BALANCE RATIO RATE LTV RATIO
- ---------------------- --------- ------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
New Loan 1 1.88% $ 8,585,000 1.79x 9.850% 66%
1 - 5 49 45.31 206,965,161 1.48 9.500 66
6 - 10 59 30.28 138,305,604 1.51 8.933 70
11 - 20 10 12.40 56,639,505 1.48 8.903 69
21 - 30 13 8.91 40,684,426 1.64 8.972 62
31 - 40 5 1.24 5,642,654 1.70 9.000 55
--- ------ ------------ ---- ----- ---
Total/Weighted Average 137 100.00% $456,822,350 1.51x 9.208% 67%
=== ====== ============ ==== ===== ===
<CAPTION>
WEIGHTED
RANGE OF AVERAGE
SEASONING (MOS.) SEASONING (MOS.)
- ---------------------- ----------------
<S> <C>
New Loan 0
1 - 5 3
6 - 10 8
11 - 20 15
21 - 30 25
31 - 40 35
--
Total/Weighted Average 8
==
</TABLE>
DISTRIBUTION OF SEASONING
LOAN GROUP 1
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE OF AVERAGE DEBT AVERAGE WEIGHTED
NUMBER OF AGGREGATE AGGREGATE SERVICE CURRENT AVERAGE
RANGE OF MORTGAGE CUT-OFF DATE CUT-OFF DATE COVERAGE MORTGAGE CUT-OFF DATE
SEASONING (MOS.) LOANS BALANCE BALANCE RATIO RATE LTV RATIO
- ----------------- --------- ------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
4 - 5 2 11.54% $ 3,864,500 2.07x 8.908% 73%
21 - 30 5 88.46 29,610,647 1.63 8.531 62
--- ------ ----------- ---- ----- ---
Total 7 100.00% $ 33,475,147 1.68x 8.575% 63%
=== ====== =========== ==== ===== ===
<CAPTION>
RANGE OF WEIGHTED AVERAGE
SEASONING (MOS.) SEASONING (MOS.)
- ----------------- ----------------
<S> <C>
4 - 5 4
21 - 30 25
--
Total 23
==
</TABLE>
DISTRIBUTION OF SEASONING
LOAN GROUP 2
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE OF AVERAGE DEBT AVERAGE WEIGHTED
NUMBER OF AGGREGATE AGGREGATE SERVICE CURRENT AVERAGE
RANGE OF MORTGAGE CUT-OFF DATE CUT-OFF DATE COVERAGE MORTGAGE CUT-OFF DATE
SEASONING (MOS.) LOANS BALANCE BALANCE RATIO RATE LTV RATIO
- ----------------- --------- ------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
New Loan 1 2.03% $ 8,585,000 1.79 9.850% 66%
1 - 5 47 47.97 203,100,662 1.47 9.512 66
6 - 10 59 32.67 138,305,604 1.51 8.933 70
11 - 20 10 13.38 56,639,505 1.48 8.903 69
21 - 30 8 2.62 11,073,779 1.66 10.152 61
31 - 40 5 1.33 5,642,654 1.70 9.000 55
--- ------ ------------ ---- ------ ---
Total 130 100.00% $423,347,204 1.50 9.258% 67%
=== ====== ============ ==== ===== ==
<CAPTION>
RANGE OF WEIGHTED AVERAGE
SEASONING (MOS.) SEASONING (MOS.)
- ----------------- ----------------
<S> <C>
New Loan 0
1 - 5 3
6 - 10 8
11 - 20 15
21 - 30 24
31 - 40 35
--
Total 7
==
</TABLE>
A-59
<PAGE> 144
DISTRIBUTION OF REMAINING TERMS TO MATURITY
MORTGAGE POOL
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE OF AVERAGE AVERAGE WEIGHTED
RANGE OF REMAINING NUMBER OF AGGREGATE AGGREGATE DEBT SERVICE CURRENT AVERAGE
TERMS TO MORTGAGE CUT-OFF DATE CUT-OFF DATE COVERAGE MORTGAGE CUT-OFF DATE
MATURITY (MOS.) LOANS BALANCE BALANCE RATIO RATE LTV RATIO
- ------------------------ --------- ------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
31 - 60 14 19.50% $ 89,066,273 1.47x 9.409% 68%
61 - 90 23 21.08 96,293,910 1.50 9.130 67
91 - 120 86 52.13 238,159,506 1.54 9.174 66
151 - 180 11 6.18 28,215,104 1.50 9.059 68
181 - 210 1 0.26 1,187,252 1.28 8.125 79
211 - 240 1 0.35 1,598,372 1.25 11.950 52
271 - 300 1 0.50 2,301,934 1.59 8.625 72
--- ------ ------------ ---- ----- --
Total/Weighted Average 137 100.00% $456,822,350 1.51x 9.208% 67%
=== ====== ============ ==== ===== ==
<CAPTION>
WEIGHTED
AVERAGE
RANGE OF REMAINING REMAINING
TERMS TO TERM TO
MATURITY (MOS.) MATURITY (MOS.)
- ------------------------ ---------------
<S> <C>
31 - 60 53
61 - 90 76
91 - 120 111
151 - 180 172
181 - 210 182
211 - 240 239
271 - 300 292
--
Total/Weighted Average 98
==
</TABLE>
DISTRIBUTION OF REMAINING TERMS TO MATURITY
LOAN GROUP 1
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE OF AGGREGATE AVERAGE DEBT AVERAGE WEIGHTED
NUMBER OF AGGREGATE CUT-OFF DATE SERVICE CURRENT AVERAGE
RANGE OF REMAINING MORTGAGE CUT-OFF DATE PRINCIPAL COVERAGE MORTGAGE CUT-OFF DATE
TERMS TO MATURITY LOANS BALANCE BALANCE RATIO RATE LTV RATIO
- ---------------------- --------- ------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
61 - 90 1 8.49% $ 2,840,738 2.27x 8.875% 75%
91 - 120 6 91.51 30,634,409 1.62 8.547 62
--- ----- ----------- ---- ----- --
Total/Weighted Average 7 100.00% $ 33,475,147 1.68x 8.575% 63%
=== ===== =========== ==== ===== ==
<CAPTION>
WEIGHTED
AVERAGE
REMAINING TERM
RANGE OF REMAINING TO MATURITY
TERMS TO MATURITY (MOS.)
- ---------------------- ---------------
<S> <C>
61 - 90 80
91 - 120 96
--
Total/Weighted Average 94
===
</TABLE>
DISTRIBUTION OF REMAINING TERMS TO MATURITY
LOAN GROUP 2
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE OF AVERAGE DEBT AVERAGE WEIGHTED
NUMBER OF AGGREGATE AGGREGATE SERVICE CURRENT AVERAGE
RANGE OF REMAINING MORTGAGE CUT-OFF DATE CUT-OFF DATE COVERAGE MORTGAGE CUT-OFF DATE
TERMS TO MATURITY (MOS.) LOANS BALANCE BALANCE RATIO RATE LTV RATIO
- ------------------------ --------- ------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
31 - 60 14 21.04% $ 89,066,273 1.47x 9.409% 68%
61 - 90 22 22.07 93,453,173 1.47 9.138 67
91 - 120 80 49.02 207,525,097 1.53 9.267 67
151 - 180 11 6.66 28,215,104 1.50 9.059 68
181 - 210 1 0.28 1,187,252 1.28 8.125 79
211 - 240 1 0.38 1,598,372 1.25 11.950 52
271 - 300 1 0.54 2,301,934 1.59 8.625 72
--- ----- ----------- ---- ----- ---
Total/Weighted Average 130 100.00% $423,347,204 1.50x 9.258% 67%
=== ===== =========== ==== ===== ===
<CAPTION>
WEIGHTED
AVERAGE
REMAINING TERM
RANGE OF REMAINING TO
TERMS TO MATURITY (MOS.) MATURITY (MOS.)
- ------------------------ ---------------
<S> <C>
31 - 60 53
61 - 90 76
91 - 120 114
151 - 180 172
181 - 210 182
211 - 240 239
271 - 300 292
---
Total/Weighted Average 98
===
</TABLE>
A-60
<PAGE> 145
DISTRIBUTION OF ORIGINAL AMORTIZATION TERMS
MORTGAGE POOL
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE OF AVERAGE AVERAGE WEIGHTED
NUMBER OF AGGREGATE AGGREGATE DEBT SERVICE CURRENT AVERAGE
RANGE OF ORIGINAL MORTGAGE CUT-OFF DATE CUT-OFF DATE COVERAGE MORTGAGE CUT-OFF DATE
AMORTIZATION TERMS (MOS.) LOANS BALANCE BALANCE RATIO RATE LTV RATIO
- ------------------------- --------- ------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
91 - 120 1 0.21% $ 938,228 2.07x 8.125% 36%
151 - 180 4 1.73 7,924,219 2.01 10.453 49
211 - 240 10 5.97 27,286,162 1.73 10.094 63
241 - 270 1 1.43 6,554,925 1.61 9.020 69
271 - 300 83 53.73 245,468,017 1.54 9.367 67
301 - 330 3 2.63 12,028,128 1.38 8.964 73
331 - 360 35 34.29 156,622,67l 1.41 8.775 69
--- ------ ------------ ---- ------ --
Total/Weighted Average 137 100.00% $456,822,350 1.51x 9.208% 67%
=== ====== ============ ==== ====== ==
<CAPTION>
WEIGHTED
AVERAGE
ORIGINAL
RANGE OF ORIGINAL AMORTIZATION
AMORTIZATION TERMS (MOS.) TERM (MOS.)
- ------------------------- ------------
<S> <C>
91 - 120 120
151 - 180 180
211 - 240 240
241 - 270 241
271 - 300 300
301 - 330 324
331 - 360 358
---
Total/Weighted Average 314
===
</TABLE>
DISTRIBUTION OF ORIGINAL AMORTIZATION TERMS
LOAN GROUP 1
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE OF AVERAGE AVERAGE WEIGHTED
NUMBER OF AGGREGATE AGGREGATE DEBT SERVICE CURRENT AVERAGE
RANGE OF ORIGINAL MORTGAGE CUT-OFF DATE CUT-OFF DATE COVERAGE MORTGAGE CUT-OFF DATE
AMORTIZATION TERMS (MOS.) LOANS BALANCE BALANCE RATIO RATE LTV RATIO
- ------------------------- --------- ------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
211 - 240 1 3.06% $ 1,023,762 1.49x 9.000% 68%
271 - 300 1 8.49 2,840,738 2.27 8.875 75
331 - 360 5 88.46 29,610,647 1.63 8.531 62
--- ------ ----------- ---- ----- --
Total/Weighted Average 7 100.00% $ 33,475,147 1.68x 8.575% 63%
=== ====== =========== ==== ===== ==
<CAPTION>
WEIGHTED
AVERAGE
ORIGINAL
RANGE OF ORIGINAL AMORTIZATION
AMORTIZATION TERMS (MOS.) TERM (MOS.)
- ------------------------- ------------
<S> <C>
211 - 240 240
271 - 300 300
331 - 360 360
---
Total/Weighted Average 351
===
</TABLE>
DISTRIBUTION OF ORIGINAL AMORTIZATION TERMS
LOAN GROUP 2
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE OF AVERAGE AVERAGE WEIGHTED
NUMBER OF AGGREGATE AGGREGATE DEBT SERVICE CURRENT AVERAGE
RANGE OF ORIGINAL MORTGAGE CUT-OFF DATE CUT-OFF DATE COVERAGE MORTGAGE CUT-OFF DATE
AMORTIZATION TERMS (MOS.) LOANS BALANCE BALANCE RATIO RATE LTV RATIO
- ------------------------- --------- ------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
91 - 120 1 0.22% $ 938,228 2.07x 8.125% 36%
151 - 180 4 1.87 7,924,219 2.01 10.453 49
211 - 240 9 6.20 26,262,400 1.73 10.136 63
241 - 270 1 1.55 6,554,925 1.61 9.020 69
271 - 300 82 57.31 242,627,279 1.53 9.372 67
301 - 330 3 2.84 12,028,128 1.38 8.964 73
331 - 360 30 30.00 127,012,024 1.36 8.832 70
--- ------ ------------ ---- ------ --
Total/Weighted Average 130 100.00% $423,347,204 1.50x 9.258% 67%
=== ====== ============ ==== ====== ==
<CAPTION>
WEIGHTED
AVERAGE
ORIGINAL
RANGE OF ORIGINAL AMORTIZATION
AMORTIZATION TERMS (MOS.) TERM (MOS.)
- ------------------------- ------------
<S> <C>
91 - 120 120
151 - 180 180
211 - 240 240
241 - 270 241
271 - 300 300
301 - 330 324
331 - 360 357
---
Total/Weighted Average 311
===
</TABLE>
A-61
<PAGE> 146
DISTRIBUTION OF REMAINING AMORTIZATION TERMS
MORTGAGE POOL
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE OF AGGREGATE AVERAGE AVERAGE WEIGHTED
NUMBER OF AGGREGATE CUT-OFF DATE DEBT SERVICE CURRENT AVERAGE
RANGE OF REMAINING MORTGAGE CUT-OFF DATE PRINCIPAL COVERAGE MORTGAGE CUT-OFF DATE
AMORTIZATION TERMS (MOS.) LOANS BALANCE BALANCE RATIO RATE LTV RATIO
- ------------------------- --------- ------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
91 - 120 1 0.21% $ 938,228 2.07x 8.125% 36%
151 - 180 5 1.82 8,322,115 2.01 10.383 49
181 - 210 1 0.35 l,605,796 1.71 9.000 55
211 - 240 16 7.21 32,942,945 1.73 9.935 62
241 - 270 3 1.77 8,078,508 1.56 9.016 71
271 - 300 74 51.84 236,833,492 1.53 9.380 67
301 - 330 3 2.63 12,028,128 1.38 8.964 73
331 - 360 34 34.16 156,073,137 1.41 8.768 69
--- ------ ------------ ---- ------ --
Total/Weighted Average 137 100.00% $456,822,350 1.51x 9.208% 67%
=== ====== ============ ==== ====== ==
<CAPTION>
WEIGHTED
AVERAGE
REMAINING
RANGE OF REMAINING AMORTIZATION
AMORTIZATION TERMS (MOS.) TERM (MOS.)
- ------------------------- ------------
<S> <C>
91 - 120 109
151 - 180 176
181 - 210 204
211 - 240 236
241 - 270 244
271 - 300 296
301 - 330 322
331 - 360 349
---
Total/Weighted Average 306
===
</TABLE>
DISTRIBUTION OF REMAINING AMORTIZATION TERMS
LOAN GROUP 1
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE OF AVERAGE AVERAGE WEIGHTED
NUMBER OF AGGREGATE AGGREGATE DEBT SERVICE CURRENT AVERAGE
RANGE OF REMAINING MORTGAGE CUT-OFF DATE CUT-OFF DATE COVERAGE MORTGAGE CUT-OFF DATE
AMORTIZATION TERMS (MOS.) LOANS BALANCE BALANCE RATIO RATE LTV RATIO
- ------------------------- --------- ------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
211 - 240 1 3.06% $ 1,023,762 1.49x 9.000% 68%
271 - 300 1 8.49 2,840,738 2.27 8.875 75
331 - 360 5 88.46 29,610,647 1.63 8.531 62
--- ------ ----------- ---- ----- --
Total/Weighted Average 7 100.00% $ 33,475,147 1.68x 8.575% 63%
=== ====== =========== ==== ===== ==
<CAPTION>
WEIGHTED
AVERAGE
REMAINING
RANGE OF REMAINING AMORTIZATION
AMORTIZATION TERMS (MOS.) TERM (MOS.)
- ------------------------- ------------
<S> <C>
211 - 240 236
271 - 300 296
331 - 360 334
---
Total/Weighted Average 328
===
</TABLE>
DISTRIBUTION OF REMAINING AMORTIZATION TERMS
LOAN GROUP 2
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
PERCENTAGE OF AGGREGATE AVERAGE AVERAGE WEIGHTED
NUMBER OF AGGREGATE CUT-OFF DATE DEBT SERVICE CURRENT AVERAGE
RANGE OF REMAINING MORTGAGE CUT-OFF DATE PRINCIPAL COVERAGE MORTGAGE CUT-OFF DATE
AMORTIZATION TERMS (MOS.) LOANS BALANCE BALANCE RATIO RATE LTV RATIO
- ------------------------- --------- ------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
91 - 120 1 0.22% $ 938,228 2.07x 8.125% 36%
151 - 180 5 1.97 8,322,115 2.01 10.383 49
181 - 210 1 0.38 1,605,796 1.71 9.000 55
211 - 240 15 7.54 31,919,183 1.74 9.965 62
241 - 270 3 1.91 8,078,508 1.56 9.016 71
271 - 300 73 55.27 233,992,754 1.53 9.386 67
301 - 330 3 2.84 12,028,128 1.38 8.964 73
331 - 360 29 29.87 126,462,490 1.36 8.823 70
--- ------ ------------ ---- ----- --
Total/Weighted Average 130 100.00% $423,347,204 1.50x 9.258% 67%
=== ====== ============ ==== ===== ==
<CAPTION>
WEIGHTED
AVERAGE
REMAINING
RANGE OF REMAINING AMORTIZATION
AMORTIZATION TERMS (MOS.) TERM (MOS.)
- ------------------------- ------------
<S> <C>
91 - 120 109
151 - 180 176
181 - 210 204
211 - 240 236
241 - 270 244
271 - 300 296
301 - 330 322
331 - 360 352
---
Total/Weighted Average 305
===
</TABLE>
A-62
<PAGE> 147
PREPAYMENT LOCK-OUT/PREPAYMENT PREMIUM ANALYSIS
OUTSTANDING PRINCIPAL BALANCE ANALYSIS
MORTGAGE POOL
<TABLE>
<CAPTION>
DEC. 1, 1996 DEC. 1, 1997 DEC. 1, 1998 DEC. 1, 1999 DEC. 1, 2000 DEC. 1, 2001
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Locked Out 19.94% 18.34% 13.33% 8.14% 6.39% 4.61%
Yield Maintenance 72.86 74.46 79.45 77.10 75.50 77.11
5.00 - 5.99% 0.00 0.00 0.00 0.96 0.00 0.00
4.00 - 4.99% 0.00 0.00 0.00 0.00 0.99 0.00
3.00 - 3.99% 6.48 0.00 0.00 0.82 0.00 1.12
2.00 - 2.99% 0.72 7.20 0.00 0.43 0.84 0.00
1.00 - 1.99% 0.00 0.00 7.22 6.03 3.40 0.95
No Penalty 0.00 0.00 0.00 6.51 12.89 16.20
------ ------ ------ ------ ------ ------
Total 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
====== ====== ====== ====== ====== ======
Aggregate Principal Balance
of the Mortgage Loans
($ Millions)(a) $ 456.82 $ 452.26 $ 446.66 $ 440.53 $ 423.88 $ 365.83
Percentage of Aggregate
Cut-off Date Balance of
the Mortgage Loans
Outstanding 100.00% 99.00% 97.78% 96.43% 92.79% 80.08%
<CAPTION>
DEC. 1, 2002 DEC. 1, 2003 DEC. 1, 2004 DEC. 1, 2005 DEC. 1, 2006
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Locked Out 5.08% 6.30% 7.33% 5.38% 0.00%
Yield Maintenance 72.29 73.85 84.10 47.36 29.28
5.00 - 5.99% 0.00 0.00 0.00 2.29 45.57
4.00 - 4.99% 0.00 0.00 0.00 0.00 17.94
3.00 - 3.99% 1.24 0.54 0.00 0.00 0.00
2.00 - 2.99% 1.23 1.54 0.62 0.00 0.00
1.00 - 1.99% 0.15 4.10 4.71 0.86 7.21
No Penalty 20.00 13.67 3.24 44.11 0.00
------ ------ ------ ------ ------
Total 100.00% 100.00% 100.00% 100.00% 100.00%
====== ====== ====== ====== ======
Aggregate Principal Balance
of the Mortgage Loans
($ Millions)(a) $ 327.31 $ 259.95 $ 219.65 $ 205.90 $ 25.79
Percentage of Aggregate
Cut-off Date Balance of
the Mortgage Loans
Outstanding 71.65% 56.90% 48.08% 45.07% 5.64%
</TABLE>
(a) Based upon the Maturity Assumptions and a 0% CPR.
A-63
<PAGE> 148
PREPAYMENT LOCK-OUT/PREPAYMENT PREMIUM ANALYSIS
OUTSTANDING PRINCIPAL BALANCE ANALYSIS
LOAN GROUP 1
<TABLE>
<CAPTION>
DEC. 1, 1996 DEC. 1, 1997 DEC. 1, 1998 DEC. 1, 1999 DEC. 1, 2000 DEC. 1, 2001
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Locked out 11.54% 3.03% 3.00% 0.00% 0.00% 0.00%
Yield Maintenance 0.00 8.47 8.44 11.38 11.31 11.23
5.00 - 5.99% 0.00 0.00 0.00 0.00 0.00 0.00
4.00 - 4.99% 0.00 0.00 0.00 0.00 0.00 0.00
3.00 - 3.99% 88.46 0.00 0.00 0.00 0.00 0.00
2.00 - 2.99% 0.00 88.50 0.00 0.00 0.00 0.00
1.00 - 1.99% 0.00 0.00 88.56 0.00 0.00 0.00
No Penalty 0.00 0.00 0.00 88.62 88.69 88.77
------ ------ ------ ------ ------ ------
Total 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
====== ====== ====== ====== ====== ======
Aggregate Principal Balance
of the Mortgage Loans
($ Millions)(a) $33.48 $33.14 $32.78 $32.38 $31.95 $31.48
Percentage of Cut-off Date
Balance of the Mortgage
Loans Outstanding 100.00% 99.01% 97.92% 96.73% 95.44% 94.04%
<CAPTION>
DEC. 1, 2002 DEC. 1, 2003 DEC. 1, 2004 DEC. 1, 2005 DEC. 1, 2006
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Locked out 0.00% 0.00% 0.00% 0.00% 0.00%
Yield Maintenance 11.14 3.01 100.00 100.00 0.00
5.00 - 5.99% 0.00 0.00 0.00 0.00 0.00
4.00 - 4.99% 0.00 0.00 0.00 0.00 0.00
3.00 - 3.99% 0.00 0.00 0.00 0.00 0.00
2.00 - 2.99% 0.00 0.00 0.00 0.00 0.00
1.00 - 1.99% 0.00 0.00 0.00 0.00 0.00
No Penalty 88.86 96.99 0.00 0.00 0.00
------ ------ ------ ------ ------
Total 100.00% 100.00% 100.00% 100.00% 0.00%
====== ====== ====== ====== ======
Aggregate Principal Balance
of the Mortgage Loans
($ Millions)(a) $30.97 $27.90 $0.80 $0.76 $0.00
Percentage of Cut-off Date
Balance of the Mortgage
Loans Outstanding 92.51% 83.33% 2.39% 2.27% 0.00%
</TABLE>
(a) Based upon the Maturity Assumptions and a 0% CPR.
A-64
<PAGE> 149
PREPAYMENT LOCK-OUT/PREPAYMENT PREMIUM ANALYSIS
OUTSTANDING PRINCIPAL BALANCE ANALYSIS
LOAN GROUP 2
<TABLE>
<CAPTION>
DEC. 1, 1996 DEC. 1, 1997 DEC. 1, 1998 DEC. 1, 1999 DEC. 1, 2000 DEC. 1, 2001
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Locked out 20.61% 19.55% 14.14% 8.79% 6.91% 5.05%
Yield Maintenance 78.62 79.68 85.08 82.31 80.73 83.31
5.00 - 5.99% 0.00 0.00 0.00 1.04 0.00 0.00
4.00 - 4.99% 0.00 0.00 0.00 0.00 1.07 0.00
3.00 - 3.99% 0.00 0.00 0.00 0.88 0.00 1.23
2.00 - 2.99% 0.77 0.78 0.00 0.47 0.91 0.00
1.00 - 1.99% 0.00 0.00 0.78 6.51 3.68 1.04
No Penalty 0.00 0.00 0.00 0.00 6.71 9.37
------ ------ ------ ------ ------ ------
Total 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
====== ====== ====== ====== ====== ======
Aggregate Principal Balance
of the Mortgage Loans
($ Millions)(a) $ 423.35 $ 419.11 $ 413.88 $ 408.15 $ 391.93 $ 334.35
Percentage of Cut-off Date
Balance of the Mortgage
Loans Outstanding 100.00% 99.00% 97.76% 96.41% 92.58% 78.98%
<CAPTION>
DEC. 1, 2002 DEC. 1, 2003 DEC. 1, 2004 DEC. 1, 2005 DEC. 1, 2006
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Locked out 5.61% 7.06% 7.36% 5.40% 0.00%
Yield Maintenance 78.68 82.37 84.04 47.16 29.28
5.00 - 5.99% 0.00 0.00 0.00 2.30 45.57
4.00 - 4.99% 0.00 0.00 0.00 0.00 17.94
3.00 - 3.99% 1.37 0.60 0.00 0.00 0.00
2.00 - 2.99% 1.36 1.73 0.62 0.00 0.00
1.00 - 1.99% 0.17 4.60 4.73 0.86 7.21
No Penalty 12.81 3.65 3.25 44.28 0.00
------ ------ ------ ------ ------
Total 100.00% 100.00% 100.00% 100.00% 100.00%
====== ====== ====== ====== ======
Aggregate Principal Balance
of the Mortgage Loans
($ Millions)(a) $ 296.34 $ 232.05 $ 218.85 $ 205.14 $25.79
Percentage of Cut-off Date
Balance of the Mortgage
Loans Outstanding 70.00% 54.81% 51.70% 48.46% 6.09%
</TABLE>
(a) Based upon the Maturity Assumptions and a 0% CPR.
A-65
<PAGE> 150
ANNEX B
FORM OF STATEMENT
TO CERTIFICATEHOLDERS
B-1
<PAGE> 151
GMAC COMMERCIAL MORTGAGE SECURITIES, INC., AS DEPOSITOR
GMAC COMMERCIAL MORTGAGE CORPORATION, AS A SERVICER AND A MORTGAGE LOAN SELLER
CONTITRADE SERVICES L.L.C., A MORTGAGE LOAN SELLER
INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL CORPORATION, A MORTGAGE LOAN SELLER
STATE STREET BANK AND TRUST COMPANY, AS TRUSTEE
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES,
SERIES 1996-C1 Statement Date:
Payment Date:
Prior Payment:
Record Date:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REPORTING PACKAGE CONTENTS
<TABLE>
<CAPTION>
NUMBER OF PAGES DESCRIPTION
--------------- -----------
<S> <C> <C>
Table of Contents 1 Summary of Reports
REMIC Certificate Report 1 Payment information by Certificate Class
Other Related Information 2 Miscellaneous reporting items as per pooling agreement
Delinquency/Prepayment/Rate History Report 1 Rolling 15 months of summarized information
Delinquency Detail Report 1 Detail listing of all loans not paid through the most recent
payment due date
Mortgage Loan Stratification Report 1 Update of selected stratification tables for all outstanding
loans and loan groups
Loan Level Detail Listing 1 Current status of all loans assigned to the trust on the
Closing Date
Total pages included in this package 8
-
Appendix A -- Special Servicing Summary 1 Current summary information regarding loans now specially
serviced
Appendix B -- Special Servicing Detail 1 Current detail information regarding loans now specially
serviced
Appendix C -- Loan Modification Detail 1 Cumulative list of all loan modifications executed since the
Closing Date
Appendix D -- Realized Loss Detail 1 Cumulative list of all loans experiencing realized losses
since the Closing Date
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ANNEX B
B-2
<PAGE> 152
GMAC COMMERCIAL MORTGAGE SECURITIES, INC., AS DEPOSITOR
GMAC COMMERCIAL MORTGAGE CORPORATION, AS A SERVICER AND A MORTGAGE LOAN SELLER
CONTITRADE SERVICES, L.L.C. A MORTGAGE LOAN SELLER
INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL CORPORATION, A MORTGAGE LOAN SELLER
STATE STREET BANK AND TRUST COMPANY, AS TRUSTEE
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES,
SERIES 1996-C1 Statement Date:
Payment Date:
Prior Payment:
Record Date:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
ORIGINAL OPENING PRINCIPAL PRINCIPAL NEGATIVE CLOSING INTEREST
CLASS FACE VALUE BALANCE PAYMENT ADJ. OR LOSS AMORTIZATION BALANCE PAYMENT
CUSIP PER $1,000 PER $1,000 PER $1,000 PER $1,000 PER $1,000 PER $1,000 PER $1,000
<S> <C> <C> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
<CAPTION>
------------------------------------------------------
INTEREST PREPAYMENT PASS-THROUGH
ADJUSTMENT PENALTIES RATE
PER $1,000 PER $1,000 NEXT RATE
<S> <C> <C> <C>
---------------------------------------------------------
------------------------------------------------------------
---------------------------------------------------------------
------------------------------------------------------------------
---------------------------------------------------------------------
------------------------------------------------------------------------
---------------------------------------------------------------------------
------------------------------------------------------------------------------
---------------------------------------------------------------------------------
------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
</TABLE>
-----------------------------------------
Total P&I Payment
-----------------------------------------
B-3
<PAGE> 153
GMAC COMMERCIAL MORTGAGE SECURITIES, INC., AS DEPOSITOR
GMAC COMMERCIAL MORTGAGE CORPORATION, AS A SERVICER AND A MORTGAGE LOAN SELLER
CONTITRADE SERVICES L.L.C., A MORTGAGE LOAN SELLER
INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL CORPORATION, A MORTGAGE LOAN SELLER
STATE STREET BANK AND TRUST COMPANY, AS TRUSTEE
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES,
SERIES 1996-C1 Statement Date:
Payment Date:
Prior Payment:
Record Date:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
B-4
<PAGE> 154
GMAC COMMERCIAL MORTGAGE SECURITIES, INC., AS DEPOSITOR
GMAC COMMERCIAL MORTGAGE CORPORATION, AS A SERVICER AND A MORTGAGE LOAN SELLER
CONTITRADE SERVICES L.L.C., A MORTGAGE LOAN SELLER
INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL CORPORATION, A MORTGAGE LOAN SELLER
STATE STREET BANK AND TRUST COMPANY, AS TRUSTEE
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES,
SERIES 1996-C1 Statement Date:
Payment Date:
Prior Payment:
Record Date:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OTHER RELATED INFORMATION
Servicing Fees
Servicing Fees per $1,000
Special Servicing Fees
Special Servicing Fees per $1,000
Interest Shortfall
Aggregate Advance Reconciliation (Table)
Prepayment Penalty Collections
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
B-5
<PAGE> 155
GMAC COMMERCIAL MORTGAGE SECURITIES, INC., AS DEPOSITOR
GMAC COMMERCIAL MORTGAGE CORPORATION, AS A SERVICER AND A MORTGAGE LOAN SELLER
CONTITRADE SERVICES L.L.C., A MORTGAGE LOAN SELLER
INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL CORPORATION, A MORTGAGE LOAN SELLER
STATE STREET BANK AND TRUST COMPANY, AS TRUSTEE
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES,
SERIES 1996-C1 Statement Date:
Payment Date:
Prior Payment:
Record Date:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OTHER RELATED INFORMATION
ASER Loan and Aggregate Information
SER Information:
Controlling Class/Operating Advisor Information
Class Determination Balance, etc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
B-6
<PAGE> 156
GMAC COMMERCIAL MORTGAGE SECURITIES, INC., AS DEPOSITOR
GMAC COMMERCIAL MORTGAGE CORPORATION, AS A SERVICER AND A MORTGAGE LOAN SELLER
CONTITRADE SERVICES L.L.C., A MORTGAGE LOAN SELLER
INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL CORPORATION, A MORTGAGE LOAN SELLER
STATE STREET BANK AND TRUST COMPANY, AS TRUSTEE
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES,
SERIES 1996-C1 Statement Date:
Payment Date:
Prior Payment:
Record Date:
DELINQUENCY/PREPAYMENT/RATE HISTORY REPORTING
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DELINQ 1 MONTH DELINQ 2 MONTHS DELINQ 3+ MONTHS FORECLOSURE/BANKRUPTCY REO MODIFICATIONS
DISTRIBUTION ----------------------------------------------------------------------- --------------------------------
DATE # BALANCE # BALANCE # BALANCE # BALANCE # BALANCE # BALANCE
<S> <S> <C> <C> <C> <C> <C>
=====================================================================================================================
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
<CAPTION>
NEW WEIGHTED
DISTRIBUTION --------------------------------
DATE # BALANCE COUPON REMIT
<S> <C> <C>
==============================================
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Note: Foreclosure and REO Totals are Included in the Appropriate Delinquency
Aging Category
B-7
<PAGE> 157
GMAC COMMERCIAL MORTGAGE SECURITIES, INC., AS DEPOSITOR
GMAC COMMERCIAL MORTGAGE CORPORATION, AS A SERVICER AND A MORTGAGE LOAN SELLER
CONTITRADE SERVICES L.L.C., A MORTGAGE LOAN SELLER
INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL CORPORATION, A MORTGAGE LOAN SELLER
STATE STREET BANK AND TRUST COMPANY, AS TRUSTEE
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES,
SERIES 1996-C1 Statement Date:
Payment Date:
Prior Payment:
Record Date:
DELINQUENCY LOAN DETAIL
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OUTSTANDING SPECIAL
OFFERING CURRENT OUTSTANDING PROPERTY ADVANCE LOAN SERVICER
CIRCULAR LOAN PAID THRU P&I P&I PROTECTION DESCRIPTION STATUS TRANSFER
CONTROL# GROUP PERIOD DATE ADVANCE ADVANCES* ADVANCES (1) (2) DATE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
===================================================================================================================================
TOTALS: 0.00 0.00 0.00
===================================================================================================================================
<CAPTION>
OFFERING
CIRCULAR FORECLOSURE BANKRUPTCY
CONTROL# DATE DATE REO DATE
<S> <C> <C> <C>
==================================================
==================================================
(1) Advance Description
0. P&I Advance -- Late Payment but < one month delinquent (2) Loan Status 6. DPO
1. P&I Advance -- Loan delinquent 1 month 1. Specially Serviced 7. Foreclosure Sale
2. P&I Advance -- Loan Delinquent 2 months 2. Foreclosure 8. Bankruptcy Sale
3. P&I Advance -- Loan delinquent 3 months or more 3. Bankruptcy 9. REO Disposition
4. P&I Advance -- Loan in Grace Period 4. REO 10. Modification/Workout
5. P&I Advance -- Assumed Scheduled Payment 5. Prepay in Full
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
* Outstanding P&I Advances include the current period P&I Advance
B-8
<PAGE> 158
GMAC COMMERCIAL MORTGAGE SECURITIES, INC., AS DEPOSITOR
GMAC COMMERCIAL MORTGAGE CORPORATION, AS A SERVICER AND A MORTGAGE LOAN SELLER
CONTITRADE SERVICES L.L.C., A MORTGAGE LOAN SELLER
INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL CORPORATION, A MORTGAGE LOAN SELLER
STATE STREET BANK AND TRUST COMPANY, AS TRUSTEE
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES,
SERIES 1996-C1 Statement Date:
Payment Date:
Prior Payment:
Record Date:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MORTGAGE LOAN STRATIFICATION REPORT
Updated Collateral Tables as they appear in Prospectus
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
B-9
<PAGE> 159
GMAC COMMERCIAL MORTGAGE SECURITIES, INC., AS DEPOSITOR
GMAC COMMERCIAL MORTGAGE CORPORATION, AS A SERVICER AND A MORTGAGE LOAN SELLER
CONTITRADE SERVICES L.L.C., A MORTGAGE LOAN SELLER
INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL CORPORATION, A MORTGAGE LOAN SELLER
STATE STREET BANK AND TRUST COMPANY, AS TRUSTEE
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES,
SERIES 1996-C1 Statement Date:
Payment Date:
Prior Payment:
Record Date:
LOAN LEVEL DETAIL
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SPECIAL
OFFERING SERVICER NEG BEGINNING SCHEDULED
CIRCULAR GRP PROPERTY TRANSFER MATURITY AM SCHEDULED NOTE PRINCIPAL PREPAYMENTS/
CONTROL # ID TYPE DATE STATE DATE (Y/N) BALANCE RATE PAYMENT LIQUIDATIONS
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
==================================================================================================================================
==================================================================================================================================
<CAPTION>
OFFERING PAID PREPAYMENT
CIRCULAR PREPAYMENT THROUGH PREMIUM LOAN
CONTROL # DATE DATE AMOUNT STATUS(*)
<S> <C> <C> <C> <C>
==================================================================
==================================================================
(*) Legend 1) Specially Serviced 4) REO 7) Foreclosure Sale
2) Foreclosure 5) Prepay in Full 8) Bankruptcy Sale
3) Bankruptcy 6) DPO 9) REO Disposition
10) Modification/Workout
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
B-10
<PAGE> 160
GMAC COMMERCIAL MORTGAGE SECURITIES, INC., AS DEPOSITOR
GMAC COMMERCIAL MORTGAGE CORPORATION, AS A SERVICER AND A MORTGAGE LOAN SELLER
CONTITRADE SERVICES L.L.C., A MORTGAGE LOAN SELLER
INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL CORPORATION, A MORTGAGE LOAN SELLER
STATE STREET BANK AND TRUST COMPANY, AS TRUSTEE
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES,
SERIES 1996-C1 Statement Date:
Payment Date:
Prior Payment:
Record Date:
SPECIALLY SERVICED LOAN STATUS LOANS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Number of Loans as of the Closing Date 0
Principal Balance as of the Closing Date 0.00
Current Number of Loans 0
Current Outstanding Principal Balance 0.00
Current Number of Specially Serviced Loans 0
Current Outstanding Principal Balance of Specially Serviced Loans 0.00
Percent of Specially Serviced Loans (per Current Number of Loans) 0.0000%
Percent of Specially Serviced Loans (per Current Outstanding Principal Balance) 0.0000%
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
CURRENT CURRENT
PRINCIPAL PRINCIPAL
CURRENT BALANCE AS A % BALANCE AS A %
SPECIALLY SERVICED LOAN NUMBER OF INITIAL PRINCIPAL PRINCIPAL OF SPECIALLY OF TOTAL POOL
STATUS LOANS BALANCE BALANCE SERVICED LOANS BALANCE
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1) Request for waiver of
Prepayment Penalty
2) Payment Default
3) Request for Loan
Modification or Workout
4) Loans with Borrower
Bankruptcy
5) Loans in Process of
Foreclosure
6) Loans now REO Property
7) Loans Paid Off
8) Loans Returned to Master
Servicer
----------------------------------------------------------------------------------------------------------------------
Total 0.00 0.00 0.00
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
B-11
<PAGE> 161
GMAC COMMERCIAL MORTGAGE SECURITIES, INC., AS DEPOSITOR
GMAC COMMERCIAL MORTGAGE CORPORATION, AS A SERVICER AND A MORTGAGE LOAN SELLER
CONTITRADE SERVICES L.L.C., A MORTGAGE LOAN SELLER
INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL CORPORATION, A MORTGAGE LOAN SELLER
STATE STREET BANK AND TRUST COMPANY, AS TRUSTEE
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES,
SERIES 1996-C1 Statement Date:
Payment Date:
Prior Payment:
Record Date:
SPECIALLY SERVICED LOAN DETAIL
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SPECIAL
OFFERING SERVICER SCHED SCHED NET
CIRCULAR TRANSFER PRINCIPAL INTEREST MATURITY PROPERTY OPERATING
CONTROL # DATE BALANCE RATE DATE TYPE STATE INCOME NOI DATE
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
===================================================================================================================================
<CAPTION>
DEBT SPECIALLY
OFFERING SERVICE SERVICED
CIRCULAR COVERAGE STATUS
CONTROL # RATIO CODE*
----------------------------------------
<S> <C> <C>
========================================
1) Request for waiver of Prepayment Penalty 4) Loans with Borrower Bankruptcy
* Legend 2) Payment Default 5) Loans in Process of Foreclosure
3) Request for Loan Modification or Workout 6) Loans now REO Property
7) Loan Paid Off
8) Loans Returned to Master Servicer
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
B-12
<PAGE> 162
GMAC COMMERCIAL MORTGAGE SECURITIES, INC., AS DEPOSITOR
GMAC COMMERCIAL MORTGAGE CORPORATION, AS A SERVICER AND A MORTGAGE LOAN SELLER
CONTITRADE SERVICES L.L.C., A MORTGAGE LOAN SELLER
INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL CORPORATION, A MORTGAGE LOAN SELLER
STATE STREET BANK AND TRUST COMPANY, AS TRUSTEE
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES,
SERIES 1996-C1 Statement Date:
Payment Date:
Prior Payment:
Record Date:
MODIFIED LOAN DETAIL
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OFFERING
MODIFICATION CIRCULAR MODIFICATION MODIFICATION
DATE CONTROL # DATE DESCRIPTION
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
B-13
<PAGE> 163
GMAC COMMERCIAL MORTGAGE SECURITIES, INC., AS DEPOSITOR
GMAC COMMERCIAL MORTGAGE CORPORATION, AS A SERVICER AND A MORTGAGE LOAN SELLER
CONTITRADE SERVICES L.L.C., A MORTGAGE LOAN SELLER
INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL CORPORATION, A MORTGAGE LOAN SELLER
STATE STREET BANK AND TRUST COMPANY, AS TRUSTEE
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES,
SERIES 1996-C1 Statement Date:
Payment Date:
Prior Payment:
Record Date:
REALIZED LOSS DETAIL
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROSS
APPRAISAL PROCEEDS
OFFERING VALUE/ SCHED AS A % OF AGGREGATE NET
DISTRIBUTION CIRCULAR APPRAISAL BROKERS PRINCIPAL GROSS SCHED LIQUIDATION LIQUIDATION
DATE CONTROL # DATE ESTIMATE BALANCE PROCEEDS PRINCIPAL EXPENSES* PROCEEDS
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------------------------
CURRENT TOTAL 0 0 0 0 0
CUMULATIVE 0 0 0 0 0
<CAPTION>
NET
PROCEEDS
AS A % OF CURRENT
DISTRIBUTION SCHED REALIZED
DATE BALANCE LOSS
----------------------------------------------
<S> <C> <C>
----------------------------------------------
CURRENT TOTAL 0
CUMULATIVE 0
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
* Aggregate liquidation expenses also include outstanding P&I advances and
unpaid servicing fees, unpaid special servicing fees, unpaid trustee fees,
etc.
B-14
<PAGE> 164
GMAC COMMERCIAL MORTGAGE SECURITIES, INC.
MORTGAGE PASS-THROUGH CERTIFICATES
The mortgage pass-through certificates (the "OFFERED CERTIFICATES") offered
hereby and by the supplements hereto (each, a "PROSPECTUS SUPPLEMENT") will be
offered from time to time in series. The Offered Certificates of any series,
together with any other mortgage pass-through certificates of such series, are
collectively referred to herein as the "CERTIFICATES".
Each series of Certificates will represent in the aggregate the entire
beneficial ownership interest in a trust fund (with respect to any series, the
"TRUST FUND") to be formed by GMAC Commercial Mortgage Securities, Inc. (the
"DEPOSITOR") and consisting primarily of a segregated pool (a "MORTGAGE ASSET
POOL") of the Mortgage Loans (as defined in the related Prospectus Supplement),
mortgage-backed securities ("MBS") that evidence interests in, or that are
secured by pledges of, one or more of various types of multifamily or commercial
mortgage loans, or a combination of Mortgage Loans and MBS (collectively,
"MORTGAGE ASSETS"). If so specified in the related Prospectus Supplement, the
Trust Fund for a series of Certificates may include letters of credit, insurance
policies, guarantees, reserve funds or other types of credit support, or any
combination thereof, and also interest rate exchange agreements and other
financial assets, or any combination thereof. See "Description of the Trust
Funds", "Description of the Certificates" and "Description of Credit Support".
The yield on each class of Certificates of a series will be affected by,
among other things, the rate of payment of principal (including prepayments) on
the Mortgage Assets in the related Trust Fund and the timing of receipt of such
payments as described herein and in the related Prospectus Supplement. See
"Yield and Maturity Considerations". A Trust Fund may be subject to early
termination under the circumstances described herein and in the related
Prospectus Supplement. See "Description of the Certificates--Termination;
Retirement of the Certificates".
Retain this Prospectus for future reference. This Prospectus may not be
used to consummate sales of the Offered Certificates of any series unless
accompanied by the Prospectus Supplement for such series.
(cover continued on next page)
------------------------
PROCEEDS OF THE ASSETS IN THE TRUST FUND ARE THE SOLE SOURCE OF PAYMENTS ON
THE OFFERED CERTIFICATES. THE OFFERED CERTIFICATES DO NOT REPRESENT AN
INTEREST IN OR OBLIGATION OF THE DEPOSITOR, THE MASTER SERVICER, GMAC
COMMERCIAL MORTGAGE CORPORATION OR ANY OF THEIR AFFILIATES. NEITHER
THE OFFERED CERTIFICATES NOR THE MORTGAGE ASSETS WILL BE
GUARANTEED OR INSURED BY THE DEPOSITOR, THE MASTER SERVICER,
GMAC COMMERCIAL MORTGAGE CORPORATION OR ANY OF THEIR
AFFILIATES OR, UNLESS OTHERWISE SPECIFIED IN THE RELATED
PROSPECTUS SUPPLEMENT, BY ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
PROSPECTIVE INVESTORS SHOULD REVIEW THE INFORMATION APPEARING ON PAGE 7
HEREIN UNDER THE CAPTION "RISK FACTORS" AND SUCH INFORMATION AS MAY BE SET FORTH
UNDER THE CAPTION "RISK FACTORS" IN THE RELATED PROSPECTUS SUPPLEMENT BEFORE
PURCHASING ANY OFFERED CERTIFICATE.
The Offered Certificates of any series may be offered through one or more
different methods, including offerings through underwriters, as described under
"Method of Distribution" and in the related Prospectus Supplement.
------------------------
THE DATE OF THIS PROSPECTUS IS OCTOBER 22, 1996
<PAGE> 165
(cover continued)
There will be no secondary market for the Offered Certificates of any
series prior to the offering thereof. There can be no assurance that a secondary
market for any Offered Certificates will develop or, if it does develop, that it
will continue. The Certificates will not be listed on any securities exchange.
As described in the related Prospectus Supplement, the Certificates of each
series, including the Offered Certificates of such series, may consist of one or
more classes of Certificates that: (i) provide for the accrual of interest
thereon based on a fixed, variable or adjustable interest rate; (ii) are senior
or subordinate to one or more other classes of Certificates in entitlement to
certain distributions on the Certificates; (iii) are entitled to distributions
of principal, with disproportionate, nominal or no distributions of interest;
(iv) are entitled to distributions of interest, with disproportionate, nominal
or no distributions of principal; (v) provide for distributions of interest
thereon or principal thereof that commence only following the occurrence of
certain events, such as the retirement of one or more other classes of
Certificates of such series; (vi) provide for distributions of principal thereof
to be made, from time to time or for designated periods, at a rate that is
faster (and, in some cases, substantially faster) or slower (and, in some cases,
substantially slower) than the rate at which payments or other collections of
principal are received on the Mortgage Assets in the related Trust Fund; or
(vii) provide for distributions of principal thereof to be made, subject to
available funds, based on a specified principal payment schedule or other
methodology. Distributions in respect of the Certificates of each series will be
made on a monthly, quarterly, semi-annual, annual or other periodic basis as
specified in the related Prospectus Supplement. See "Description of the
Certificates".
If so provided in the related Prospectus Supplement, one or more elections
may be made to treat the related Trust Fund or a designated portion thereof as a
"real estate mortgage investment conduit" (each, a "REMIC") for federal income
tax purposes. If applicable, the Prospectus Supplement for a series of
Certificates will specify which class or classes of such series of Certificates
will be considered to be regular interests in the related REMIC and which class
of Certificates or other interests will be designated as the residual interest
in the related REMIC. See "Certain Federal Income Tax Consequences".
PROSPECTUS SUPPLEMENT
As more particularly described herein, the Prospectus Supplement relating
to each series of Offered Certificates will, among other things, set forth, as
and to the extent appropriate: (i) a description of the class or classes of such
Offered Certificates, including the payment provisions with respect to each such
class, the aggregate principal amount, if any, of each such class, the rate at
which interest accrues from time to time, if at all, with respect to each such
class or the method of determining such rate, and whether interest with respect
to each such class will accrue from time to time on its aggregate principal
amount, if any, or on a specified notional amount, if at all; (ii) information
with respect to any other classes of Certificates of the same series; (iii) the
respective dates on which distributions are to be made; (iv) information as to
the assets, including the Mortgage Assets, constituting the related Trust Fund
(all such assets, with respect to the Certificates of any series, the "TRUST
ASSETS"); (v) the circumstances, if any, under which the related Trust Fund may
be subject to early termination; (vi) additional information with respect to the
method of distribution of such Offered Certificates; (vii) whether one or more
REMIC elections will be made and the designation of the "regular interests" and
"residual interests" in each REMIC to be created; (viii) the initial percentage
ownership interest in the related Trust Fund to be evidenced by each class of
Certificates of such series; (ix) information concerning the Trustee (as defined
herein) of the related Trust Fund; (x) if the related Trust Fund includes
Mortgage Loans, information concerning the Master Servicer and any Special
Servicer (each as defined herein) of such Mortgage Loans; (xi) information as to
the nature and extent of subordination of any class of Certificates of such
series, including a class of Offered Certificates; and (xii) whether such
Offered Certificates will be initially issued in definitive or book-entry form.
AVAILABLE INFORMATION
The Depositor has filed with the Securities and Exchange Commission (the
"COMMISSION") a Registration Statement (of which this Prospectus forms a part)
under the Securities Act of 1933, as amended, with respect to the Offered
Certificates. This Prospectus and the Prospectus Supplement relating to each
series of Offered Certificates contain summaries of the material terms of the
documents referred to herein and therein, but do not contain all of the
information set forth in the Registration Statement pursuant to the rules
2
<PAGE> 166
and regulations of the Commission. For further information, reference is made to
such Registration Statement and the exhibits thereto. Such Registration
Statement and exhibits can be inspected and copied at prescribed rates at the
public reference facilities maintained by the Commission at its Public Reference
Section, 450 Fifth Street, N.W., Washington, D.C. 20549, and at its Midwest
Regional Offices located as follows: Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511; and Northeast Regional Office, Seven
World Trade Center, Suite 1300, New York, New York 10048. The Commission
maintains a Web site at http://www.sec.gov containing reports, proxy and
information statements and other information regarding registrants, including
the Depositor, that file electronically with the Commission.
No dealer, salesman, or any other person has been authorized to give any
information, or to make any representations, other than those contained in this
Prospectus or any related Prospectus Supplement, and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Depositor or any dealer, salesman, or any other person. Neither the
delivery of this Prospectus or any related Prospectus Supplement nor any sale
made hereunder or thereunder shall under any circumstances create an implication
that there has been no change in the information herein or therein since the
date hereof. This Prospectus and any related Prospectus Supplement are not an
offer to sell or a solicitation of an offer to buy any security in any
jurisdiction in which it is unlawful to make such offer or solicitation.
The Master Servicer or another specified person will cause to be provided
to registered holders of the Offered Certificates of each series periodic
unaudited reports concerning the related Trust Fund.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
There are incorporated herein by reference all documents and reports filed
or caused to be filed by the Depositor with respect to a Trust Fund pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act of 1934, as amended, prior
to the termination of an offering of Offered Certificates evidencing interests
therein. The Depositor will provide or cause to be provided without charge to
each person to whom this Prospectus is delivered in connection with the offering
of one or more classes of Offered Certificates, upon written or oral request of
such person, a copy of any or all documents or reports incorporated herein by
reference, in each case to the extent such documents or reports relate to one or
more of such classes of such Offered Certificates, other than the exhibits to
such documents (unless such exhibits are specifically incorporated by reference
in such documents). Requests to the Depositor should be directed in writing to
its principal executive offices at 650 Dresher Road, Horsham, Pennsylvania
19044, or by telephone at (215) 682-3480.
3
<PAGE> 167
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT..................... 2
AVAILABLE INFORMATION..................... 2
INCORPORATION OF CERTAIN INFORMATION BY
REFERENCE............................... 3
SUMMARY OF PROSPECTUS..................... 5
RISK FACTORS.............................. 11
Limited Liquidity..................... 11
Limited Obligations................... 11
Credit Support Limitations............ 11
Yield and Prepayment Considerations... 12
Investment in Commercial and
Multifamily Mortgage Loans.......... 12
Balloon Payments; Borrower Default.... 13
Leases and Rents...................... 13
Environmental Considerations.......... 14
DESCRIPTION OF THE TRUST FUNDS............ 14
General............................... 14
Mortgage Loans........................ 14
MBS................................... 17
Certificate Accounts.................. 18
Credit Support........................ 18
Cash Flow Agreements.................. 19
YIELD AND MATURITY CONSIDERATIONS......... 19
General............................... 19
Pass-Through Rate..................... 19
Payment Delays........................ 19
Certain Shortfalls in Collections of
Interest............................ 19
Yield and Prepayment Considerations... 20
Weighted Average Life and Maturity.... 21
Other Factors Affecting Yield,
Weighted Average Life and
Maturity............................ 22
THE DEPOSITOR............................. 24
GMAC COMMERCIAL MORTGAGE CORPORATION...... 24
DESCRIPTION OF THE CERTIFICATES........... 24
General............................... 24
Distributions......................... 25
Distributions of Interest on the
Certificates........................ 26
Distributions of Principal of the
Certificates........................ 27
Allocation of Losses and Shortfalls... 27
Advances in Respect of
Delinquencies....................... 28
Reports to Certificateholders......... 28
Termination; Retirement of
Certificates........................ 30
Book-Entry Registration and Definitive
Certificates........................ 31
THE POOLING AND SERVICING AGREEMENTS...... 32
General............................... 32
Assignment of Mortgage Loans;
Repurchases......................... 33
Representations and Warranties;
Repurchases......................... 34
Collection and Other Servicing
Procedures.......................... 35
Sub-Servicers......................... 36
Special Servicers..................... 37
Certificate Account................... 37
Realization Upon Defaulted Mortgage
Loans............................... 39
Hazard Insurance Policies............. 41
<CAPTION>
PAGE
----
<S> <C>
Due-on-Sale and Due-on-Encumbrance
Provisions.......................... 42
Servicing Compensation and Payment of
Expenses............................ 42
Evidence as to Compliance............. 42
Certain Matters Regarding the Master
Servicer and the Depositor.......... 43
Events of Default..................... 44
Rights Upon Event of Default.......... 44
Amendment............................. 45
The Trustee........................... 46
Duties of the Trustee................. 46
Certain Matters Regarding the
Trustee............................. 46
Resignation and Removal of the
Trustee............................. 46
DESCRIPTION OF CREDIT SUPPORT............. 47
General............................... 47
Subordinate Certificates.............. 47
Insurance or Guarantees with Respect
to Mortgage Loans................... 47
Letter of Credit...................... 48
Certificate Insurance and Surety
Bonds............................... 48
Reserve Funds......................... 48
Credit Support with respect to MBS.... 48
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS... 49
General............................... 49
Types of Mortgage Instruments......... 49
Leases and Rents...................... 49
Personalty............................ 50
Foreclosure........................... 50
Bankruptcy Laws....................... 53
Environmental Considerations.......... 54
Due-on-Sale and Due-on-Encumbrance.... 55
Subordinate Financing................. 56
Default Interest and Limitations on
Prepayments......................... 56
Applicability of Usury Laws........... 56
Soldiers' and Sailors' Civil Relief
Act of 1940......................... 57
CERTAIN FEDERAL INCOME TAX CONSEQUENCES... 57
General............................... 57
REMICs................................ 58
Grantor Trust Funds................... 73
STATE AND OTHER TAX CONSEQUENCES.......... 81
ERISA CONSIDERATIONS...................... 81
General............................... 81
Plan Asset Regulations................ 82
Prohibited Transaction Exemption...... 82
Consultation With Counsel............. 84
Tax Exempt Investors.................. 84
LEGAL INVESTMENT.......................... 84
USE OF PROCEEDS........................... 86
METHOD OF DISTRIBUTION.................... 86
LEGAL MATTERS............................. 87
FINANCIAL INFORMATION..................... 87
RATING.................................... 87
INDEX OF PRINCIPAL DEFINITIONS............ 88
</TABLE>
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<PAGE> 168
SUMMARY OF PROSPECTUS
The following summary of certain pertinent information is qualified in its
entirety by reference to the more detailed information appearing elsewhere in
this Prospectus and by reference to the information with respect to each series
of Certificates contained in the Prospectus Supplement to be prepared and
delivered in connection with the offering of Offered Certificates of such
series. An Index of Principal Definitions is included at the end of this
Prospectus.
SECURITIES OFFERED........... Mortgage pass-through certificates.
DEPOSITOR.................... GMAC Commercial Mortgage Securities, Inc., a
wholly-owned subsidiary of GMAC Commercial
Mortgage Corporation ("GMACCM"). See "The
Depositor".
TRUSTEE...................... The trustee (the "TRUSTEE") for each series of
Certificates will be named in the related
Prospectus Supplement. See "The Pooling and
Servicing Agreements--The Trustee".
MASTER SERVICER.............. If a Trust Fund includes Mortgage Loans, then the
servicer or the master servicer (each, a "MASTER
SERVICER") for the corresponding series of
Certificates will be named in the related
Prospectus Supplement. The Master Servicer for
any series of Certificates may be GMACCM or
another affiliate of the Depositor. The Master
Servicer may also be the Special Servicer for
such series and, in such dual capacity, would be
referred to as the "SERVICER". See "GMAC
Commercial Mortgage Corporation" and "The
Pooling and Servicing Agreements--Certain
Matters Regarding the Master Servicer and the
Depositor".
SPECIAL SERVICER............. If a Trust Fund includes Mortgage Loans, then any
special servicers (each, a "SPECIAL SERVICER")
for the corresponding series of Certificates
will be named, or the circumstances under which
a Special Servicer may be appointed will be
described, in the related Prospectus Supplement.
A Special Servicer for any series of
Certificates may be the Master Servicer or an
affiliate of the Depositor or the Master
Servicer. See "The Pooling and Servicing
Agreements--Special Servicers".
MBS ADMINISTRATOR............ If a Trust Fund includes MBS, then the entity
responsible for administering such MBS (the "MBS
ADMINISTRATOR") will be named in the related
Prospectus Supplement. If an entity other than
the Trustee and the Master Servicer is the MBS
Administrator, such entity will be herein
referred to as the "MANAGER". The Manager for
any series of Certificates may be GMACCM or
another affiliate of the Depositor.
THE MORTGAGE ASSETS.......... The Mortgage Assets will be the primary asset of
any Trust Fund. The Mortgage Assets with respect
to each series of Certificates will, in general,
consist of a pool of Mortgage Loans secured by
first or junior liens on, as described herein,
multifamily residential properties or commercial
properties. If so specified in the related
Prospectus Supplement, a Trust Fund may include
Mortgage Loans secured by liens on real estate
projects under construction. The Mortgage Loans
will not be guaranteed or insured by the
Depositor, GMACCM or any of their affiliates or,
unless otherwise provided in the related
Prospectus Supplement, by any governmental
agency or
5
<PAGE> 169
instrumentality or by any other person. If so
specified in the related Prospectus Supplement,
some Mortgage Loans may be delinquent or
non-performing as of the date the related Trust
Fund is formed.
As and to the extent described in the related
Prospectus Supplement, a Mortgage Loan (i) may
provide for no accrual of interest or for
accrual of interest thereon at an interest rate
(a "MORTGAGE RATE") that is fixed over its term
or that adjusts from time to time, or that may
be converted at the borrower's election from an
adjustable to a fixed Mortgage Rate, or from a
fixed to an adjustable Mortgage Rate, (ii) may
provide for level payments to maturity or for
payments that adjust from time to time to
accommodate changes in the Mortgage Rate or to
reflect the occurrence of certain events, and
may permit negative amortization, (iii) may be
fully amortizing or may be partially amortizing
or non-amortizing, with a balloon payment due on
its stated maturity date, (iv) may prohibit over
its term or for a certain period prepayments
and/or require payment of a premium or a yield
maintenance penalty in connection with certain
prepayments and (v) may provide for payments of
principal, interest or both, on due dates that
occur monthly, quarterly, semi-annually or at
such other interval as is specified in the
related Prospectus Supplement. Unless otherwise
provided in the related Prospectus Supplement,
each Mortgage Loan will have had an original
term to maturity of not more than 40 years.
Unless otherwise provided in the related
Prospectus Supplement, no Mortgage Loan will
have been originated by the Depositor; however,
some or all of the Mortgage Loans in any Trust
Fund may have been originated by GMACCM or
another affiliate of the Depositor. See
"Description of the Trust Funds-- Mortgage
Loans".
If and to the extent specified in the related
Prospectus Supplement, the Mortgage Assets with
respect to a series of Certificates may also
include, or consist of, MBS, provided that each
MBS will evidence an interest in, or will be
secured by a pledge of, one or more mortgage
loans that conform to the descriptions of the
Mortgage Loans contained herein. See
"Description of the Trust Funds-- MBS".
THE CERTIFICATES............. Each series of Certificates will be issued in one
or more classes pursuant to a pooling and
servicing agreement or other agreement specified
in the related Prospectus Supplement (in either
case, a "POOLING AND SERVICING AGREEMENT") and
will represent in the aggregate the entire
beneficial ownership interest in the related
Trust Fund.
As described in the related Prospectus Supplement,
the Certificates of each series, including the
Offered Certificates of such series, may consist
of one or more classes of Certificates that,
among other things: (i) are senior
(collectively, "SENIOR CERTIFICATES") or
subordinate (collectively, "SUBORDINATE
CERTIFICATES") to one or more other classes of
Certificates in entitlement to certain
distributions on the Certificates; (ii) are
entitled to distributions of principal, with
disproportionate, nominal or no distributions of
interest (collectively, "STRIPPED PRINCIPAL
CERTIFICATES"); (iii) are entitled to
distributions of interest, with
disproportionate, nominal or no distributions of
principal (collectively, "STRIPPED INTEREST
CERTIFICATES");
6
<PAGE> 170
(iv) provide for distributions of interest
thereon or principal thereof that commence only
after the occurrence of certain events, such as
the retirement of one or more other classes of
Certificates of such series; (v) provide for
distributions of principal thereof to be made,
from time to time or for designated periods, at
a rate that is faster (and, in some cases,
substantially faster) or slower (and, in some
cases, substantially slower) than the rate at
which payments or other collections of principal
are received on the Mortgage Assets in the
related Trust Fund; (vi) provide for
distributions of principal thereof to be made,
subject to available funds, based on a specified
principal payment schedule or other methodology;
or (vii) provide for distribution based on
collections on the Mortgage Assets in the
related Trust Fund attributable to prepayment
premiums, yield maintenance penalties or equity
participations.
Each class of Certificates, other than certain
classes of Stripped Interest Certificates and
certain classes of REMIC Residual Certificates
(as defined herein), will have an initial stated
principal amount (a "CERTIFICATE BALANCE"); and
each class of Certificates, other than certain
classes of Stripped Principal Certificates and
certain classes of REMIC Residual Certificates,
will accrue interest on its Certificate Balance
or, in the case of certain classes of Stripped
Interest Certificates, on a notional amount (a
"NOTIONAL AMOUNT") based on a fixed, variable or
adjustable interest rate (a "PASS-THROUGH
RATE"). The related Prospectus Supplement will
specify the Certificate Balance, Notional Amount
and/or Pass-Through Rate (or, in the case of a
variable or adjustable Pass-Through Rate, the
method for determining such rate), as
applicable, for each class of Offered
Certificates.
If so specified in the related Prospectus
Supplement, a class of Certificates may have two
or more component parts, each having
characteristics that are otherwise described
herein as being attributable to separate and
distinct classes.
The Certificates will not be guaranteed or insured
by the Depositor, by the Master Servicer, by
GMACCM or any of their affiliates, by any
governmental agency or instrumentality or by any
other person or entity, unless otherwise
provided in the related Prospectus Supplement.
See "Risk Factors--Limited Obligations".
DISTRIBUTIONS OF INTEREST ON
THE
CERTIFICATES............... Interest on each class of Offered Certificates
(other than certain classes of Stripped
Principal Certificates and certain classes of
REMIC Residual Certificates) of each series will
accrue at the applicable Pass-Through Rate on
the Certificate Balance or, in the case of
certain classes of Stripped Interest
Certificates, the Notional Amount thereof
outstanding from time to time and will be
distributed to Certificateholders as provided in
the related Prospectus Supplement (each of the
specified dates on which distributions are to be
made, a "DISTRIBUTION DATE"). Distributions of
interest with respect to one or more classes of
Certificates (collectively, "ACCRUAL
CERTIFICATES") may not commence until the
occurrence of certain events, such as the
retirement of one or more other classes of
Certificates, and interest accrued with respect
to a class of Accrual
7
<PAGE> 171
Certificates prior to the occurrence of such an
event will either be added to the Certificate
Balance thereof or otherwise deferred as
described in the related Prospectus Supplement.
Distributions of interest with respect to one or
more classes of Certificates may be reduced to
the extent of certain delinquencies, losses and
other contingencies described herein and in the
related Prospectus Supplement. See "Risk
Factors--Yield and Prepayment Considerations",
"Yield and Maturity Considerations--Certain
Shortfalls in Collections of Interest" and
"Description of the Certificates--Distributions
of Interest on the Certificates".
DISTRIBUTIONS OF PRINCIPAL OF
THE CERTIFICATES........... As and to the extent described in each Prospectus
Supplement, distributions of principal with
respect to the related series of Certificates
will be made on each Distribution Date to the
holders of the class or classes of Certificates
of such series entitled thereto until the
Certificate Balances of such Certificates have
been reduced to zero. Distributions of principal
with respect to one or more classes of
Certificates: (i) may be made at a rate that is
faster (and, in some cases, substantially
faster) or slower (and, in some cases,
substantially slower) than the rate at which
payments or other collections of principal are
received on the Mortgage Assets in the related
Trust Fund; (ii) may not commence until the
occurrence of certain events, such as the
retirement of one or more other classes of
Certificates of the same series; (iii) may be
made, subject to certain limitations, based on a
specified principal payment schedule; or (iv)
may be contingent on the specified principal
payment schedule for another class of the same
series and the rate at which payments and other
collections of principal on the Mortgage Assets
in the related Trust Fund are received. Unless
otherwise specified in the related Prospectus
Supplement, distributions of principal of any
class of Offered Certificates will be made on a
pro rata basis among all of the Certificates of
such class. See "Description of the
Certificates-- Distributions of Principal of the
Certificates".
CREDIT SUPPORT AND CASH FLOW
AGREEMENTS................. If so provided in the related Prospectus
Supplement, partial or full protection against
certain defaults and losses on the Mortgage
Assets in the related Trust Fund may be provided
to one or more classes of Certificates of the
related series in the form of subordination of
one or more other classes of Certificates of
such series, which other classes may include one
or more classes of Offered Certificates, or by
one or more other types of credit support, such
as a letter of credit, insurance policy,
guarantee, reserve fund or another type of
credit support, or a combination thereof (any
such coverage with respect to the Certificates
of any series, "CREDIT SUPPORT"). If so provided
in the related Prospectus Supplement, a Trust
Fund may include: (i) guaranteed investment
contracts pursuant to which moneys held in the
funds and accounts established for the related
series will be invested at a specified rate; or
(ii) certain other agreements, such as interest
rate exchange agreements, interest rate cap or
floor agreements, or other agreements designed
to reduce the effects of interest rate
fluctuations on the Mortgage Assets or on one or
more classes of Certificates (any such
agreement, in the case of clause (i) or (ii), a
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<PAGE> 172
"CASH FLOW AGREEMENT"). Certain relevant
information regarding any applicable Credit
Support or Cash Flow Agreement will be set forth
in the Prospectus Supplement for a series of
Offered Certificates. See "Risk Factors--Credit
Support Limitations", "Description of the Trust
Funds--Credit Support" and "--Cash Flow
Agreements" and "Description of Credit Support".
ADVANCES..................... If and to the extent provided in the related
Prospectus Supplement, if a Trust Fund includes
Mortgage Loans, the Master Servicer, a Special
Servicer, the Trustee, any provider of Credit
Support and/or any other specified person may be
obligated to make, or have the option of making,
certain advances with respect to delinquent
scheduled payments of principal and/or interest
on such Mortgage Loans. Any such advances made
with respect to a particular Mortgage Loan will
be reimbursable from subsequent recoveries in
respect of such Mortgage Loan and otherwise to
the extent described herein and in the related
Prospectus Supplement. See "Description of the
Certificates--Advances in respect of
Delinquencies". If and to the extent provided in
the Prospectus Supplement for a series of
Certificates, any entity making such advances
may be entitled to receive interest thereon for
a specified period during which certain or all
of such advances are outstanding, payable from
amounts in the related Trust Fund. See
"Description of the Certificates--Advances in
Respect of Delinquencies". If a Trust Fund
includes MBS, any comparable advancing
obligation of a party to the related Pooling and
Servicing Agreement, or of a party to the
related MBS Agreement, will be described in the
related Prospectus Supplement.
OPTIONAL TERMINATION......... The Master Servicer, the Depositor or, if
specified in the related Prospectus Supplement,
the holder of the residual interest in a REMIC
may at its option either (i) effect early
retirement of a series of Certificates through
the purchase of the assets in the related Trust
Fund or (ii) purchase, in whole but not in part,
the Certificates specified in the related
Prospectus Supplement; in each case under the
circumstances and in the manner set forth herein
under "Description of the
Certificates--Termination; Retirement of
Certificates" and in the related Prospectus
Supplement.
CERTAIN FEDERAL INCOME TAX
CONSEQUENCES............... The Certificates of each series will constitute
either (i) "regular interests" ("REMIC REGULAR
CERTIFICATES") and "residual interests" ("REMIC
RESIDUAL CERTIFICATES") in a Trust Fund, or a
designated portion thereof, treated as a REMIC
under Sections 860A through 860G of the Internal
Revenue Code of 1986 (the "CODE"), or (ii)
interests ("GRANTOR TRUST CERTIFICATES") in a
Trust Fund treated as a grantor trust (or a
partnership) under applicable provisions of the
Code.
Investors are advised to consult their tax
advisors and to review "Certain Federal Income
Tax Consequences" herein and in the related
Prospectus Supplement.
ERISA CONSIDERATIONS......... Fiduciaries of employee benefit plans and certain
other retirement plans and arrangements,
including individual retirement accounts,
annuities, Keogh plans, and collective
investment funds and separate
9
<PAGE> 173
accounts in which such plans, accounts,
annuities or arrangements are invested, that are
subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or
Section 4975 of the Code, should review with
their legal advisors whether the purchase or
holding of Offered Certificates could give rise
to a transaction that is prohibited or is not
otherwise permissible either under ERISA or
Section 4975 of the Code. See "ERISA
Considerations" herein and in the related
Prospectus Supplement.
LEGAL INVESTMENT............. The Offered Certificates will constitute "mortgage
related securities" for purposes of the
Secondary Mortgage Market Enhancement Act of
1984, as amended ("SMMEA"), only if so specified
in the related Prospectus Supplement. Investors
whose investment authority is subject to legal
restrictions should consult their legal advisors
to determine whether and to what extent the
Offered Certificates constitute legal
investments for them. See "Legal Investment"
herein and in the related Prospectus Supplement.
RATING....................... At their respective dates of issuance, each class
of Offered Certificates will be rated not lower
than investment grade by one or more nationally
recognized statistical rating agencies (each, a
"RATING AGENCY"). See "Rating" herein and in the
related Prospectus Supplement.
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RISK FACTORS
In considering an investment in the Offered Certificates of any series,
investors should consider, among other things, the following risk factors and
any other factors set forth under the heading "Risk Factors" in the related
Prospectus Supplement. In general, to the extent that the factors discussed
below pertain to or are influenced by the characteristics or behavior of
Mortgage Loans included in a particular Trust Fund, they would similarly pertain
to and be influenced by the characteristics or behavior of the mortgage loans
underlying any MBS included in such Trust Fund.
LIMITED LIQUIDITY
There can be no assurance that a secondary market for the Offered
Certificates of any series will develop or, if it does develop, that it will
provide holders with liquidity of investment or that it will continue for as
long as such Certificates remain outstanding. The Prospectus Supplement for any
series of Offered Certificates may indicate that an underwriter specified
therein intends to establish a secondary market in such Offered Certificates;
however, no underwriter will be obligated to do so. The Certificates will not be
listed on any securities exchange.
LIMITED OBLIGATIONS
The Certificates will not represent an interest in or obligation of the
Depositor, the Master Servicer, GMACCM or any of their affiliates. The only
obligations of the foregoing entities with respect to the Certificates or the
Mortgage Assets will be the obligations (if any) of the Depositor and the Master
Servicer pursuant to certain limited representations and warranties made with
respect to the Mortgage Assets, the Master Servicer's servicing obligations
under the related Pooling and Servicing Agreement (including its limited
obligation to make certain advances in the event of delinquencies on the
Mortgage Loans, but only to the extent deemed recoverable) and pursuant to the
terms of any MBS, and such other limited obligations of the Master Servicer and
the Depositor as may be described in the related Prospectus Supplement. Neither
the Certificates nor the underlying Mortgage Assets will be guaranteed or
insured by the Depositor, the Master Servicer, GMACCM or any of their affiliates
or, unless otherwise specified in the related Prospectus Supplement, by any
governmental agency or instrumentality. Proceeds of the Trust Assets included in
the related Trust Fund for each series of Certificates (including the Mortgage
Assets, any fund or instrument constituting Credit Support and any Cash Flow
Agreements) will be the sole source of payments on the Certificates, and there
will be no recourse to the Depositor, the Master Servicer, GMACCM or any other
entity in the event that such proceeds are insufficient or otherwise unavailable
to make all payments provided for under the Certificates.
CREDIT SUPPORT LIMITATIONS
The Prospectus Supplement for a series of Certificates will describe any
Credit Support provided with respect thereto. Use of Credit Support will be
subject to the conditions and limitations described herein and in the related
Prospectus Supplement. Moreover, such Credit Support may not cover all potential
losses; for example, Credit Support may or may not cover loss by reason of fraud
or negligence by a mortgage loan originator or other parties.
A series of Certificates may include one or more classes of Subordinate
Certificates (which may include Offered Certificates), if so provided in the
related Prospectus Supplement. Although subordination is intended to reduce the
likelihood of temporary shortfalls and ultimate losses to holders of Senior
Certificates, the amount of subordination will be limited and may decline under
certain circumstances. In addition, if principal payments on one or more classes
of Offered Certificates of a series are made in a specified order of priority,
any related Credit Support may be exhausted before the principal of the later
paid classes of Offered Certificates of such series has been repaid in full. As
a result, the impact of losses and shortfalls experienced with respect to the
Mortgage Assets may fall primarily upon those classes of Offered Certificates
having a later right of payment. Moreover, if a form of Credit Support covers
the Offered Certificates of more than one series and losses on the related
Mortgage Assets exceed the amount of such Credit Support, it is possible that
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the holders of Offered Certificates of one (or more) such series will be
disproportionately benefited by such Credit Support to the detriment of the
holders of Offered Certificates of one (or more) other such series.
The amount of any applicable Credit Support supporting one or more classes
of Offered Certificates, including the subordination of one or more classes of
Certificates, will be determined on the basis of criteria established by each
Rating Agency rating such classes of Certificates based on an assumed level of
defaults, delinquencies and losses on the underlying Mortgage Assets and certain
other factors. There can, however, be no assurance that the loss experience on
the related Mortgage Assets will not exceed such assumed levels. See
"Description of the Certificates--Allocation of Losses and Shortfalls" and
"Description of Credit Support".
YIELD AND PREPAYMENT CONSIDERATIONS
The yield to maturity of the Offered Certificates of each series will
depend on the rate and timing of principal payments (including prepayments,
liquidations due to defaults, and repurchases for breaches of representations
and warranties or document defects) on the Mortgage Loans and the price paid by
Certificateholders. Such yield may be adversely affected by a higher or lower
than anticipated rate of prepayments on the related Mortgage Loans. The yield to
maturity on Stripped Interest Certificates and Stripped Principal Certificates
will be extremely sensitive to the rate of prepayments on the related Mortgage
Loans. In addition, the yield to maturity on certain other types of classes of
Certificates, including Accrual Certificates, Certificates with a Pass-Through
Rate which fluctuates inversely with an index or certain other classes in a
series including more than one class of Certificates, may be relatively more
sensitive to the rate of prepayment on the related Mortgage Loans than other
classes of Certificates. The rate of principal payments on pools of mortgage
loans varies among pools and from time to time is influenced by a variety of
economic, demographic, geographic, social, tax, legal and other factors,
including prevailing mortgage market interest rates and the particular terms of
the Mortgage Loans (e.g., provisions that prohibit voluntary prepayments during
specified periods or impose penalties in connection therewith). There can be no
assurance as to the actual rate of prepayment on the Mortgage Loans in any Trust
Fund or that such rate of prepayment will conform to any model described herein
or in any Prospectus Supplement. See "Yield and Maturity Considerations" herein.
INVESTMENT IN COMMERCIAL AND MULTIFAMILY MORTGAGE LOANS
A description of certain material considerations associated with
investments in mortgage loans is included herein under "Certain Legal Aspects of
Mortgage Loans". Mortgage loans made on the security of multifamily or
commercial property may have a greater likelihood of delinquency and
foreclosure, and a greater likelihood of loss in the event thereof, than loans
made on the security of an owner-occupied single-family property. See
"Description of the Trust Funds--Mortgage Loans--Default and Loss Considerations
with Respect to the Mortgage Loans". The ability of a borrower to repay a loan
secured by an income-producing property typically is dependent primarily upon
the successful operation of such property rather than upon the existence of
independent income or assets of the borrower; thus, the value of an
income-producing property is directly related to the net operating income
derived from such property. If the net operating income of the property is
reduced (for example, if rental or occupancy rates decline or real estate tax
rates or other operating expenses increase), the borrower's ability to repay the
loan may be impaired. A number of the Mortgage Loans may be secured by liens on
owner-occupied Mortgaged Properties or on Mortgaged Properties leased to a
single tenant or a small number of significant tenants. Accordingly, a decline
in the financial condition of the borrower or a significant tenant, as
applicable, may have a disproportionately greater effect on the net operating
income from such Mortgaged Properties than would be the case with respect to
Mortgaged Properties with multiple tenants. Furthermore, the value of any
Mortgaged Property may be adversely affected by factors generally incident to
interests in real property, including changes in general or local economic
conditions and/or specific industry segments; declines in real estate values;
declines in rental or occupancy rates; increases in interest rates, real estate
tax rates and other operating expenses; changes in governmental rules,
regulations and fiscal policies, including environmental legislation; natural
disasters and civil disturbances such as earthquakes, hurricanes, floods,
eruptions or riots; and other circumstances, conditions or events beyond the
control of a Master Servicer.
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Additional considerations may be presented by the type and use of a
particular Mortgaged Property. For instance, Mortgaged Properties that operate
as hospitals and nursing homes are subject to significant governmental
regulation of the ownership, operation, maintenance and financing of health care
institutions. Hotel and motel properties are often operated pursuant to
franchise, management or operating agreements that may be terminable by the
franchisor or operator, and the transferability of a hotel's operating, liquor
and other licenses upon a transfer of the hotel, whether through purchase or
foreclosure, is subject to local law requirements.
It is anticipated that some or all of the Mortgage Loans included in any
Trust Fund will be nonrecourse loans or loans for which recourse may be
restricted or unenforceable. As to any such Mortgage Loan, recourse in the event
of borrower default will be limited to the specific real property and other
assets, if any, that were pledged to secure the Mortgage Loan. However, even
with respect to those Mortgage Loans that provide for recourse against the
borrower and its assets generally, there can be no assurance that enforcement of
such recourse provisions will be practicable, or that the assets of the borrower
will be sufficient to permit a recovery in respect of a defaulted Mortgage Loan
in excess of the liquidation value of the related Mortgaged Property. See
"Certain Legal Aspects of Mortgage Loans--Foreclosure--Anti-Deficiency
Legislation".
Further, the concentration of default, foreclosure and loss risks in
individual Mortgage Loans in a particular Trust Fund will generally be greater
than for pools of single-family loans because Mortgage Loans in a Trust Fund
will generally consist of a smaller number of higher balance loans than would a
pool of single-family loans of comparable aggregate unpaid principal balance.
BALLOON PAYMENTS; BORROWER DEFAULT
Certain of the Mortgage Loans included in a Trust Fund may be
non-amortizing or only partially amortizing over their terms to maturity and,
thus, will require substantial payments of principal and interest (that is,
balloon payments) at their stated maturity. Mortgage Loans of this type involve
a greater likelihood of default than self-amortizing loans because the ability
of a borrower to make a balloon payment typically will depend upon its ability
either to refinance the loan or to sell the related Mortgaged Property. The
ability of a borrower to accomplish either of these goals will be affected by a
number of factors, including the value of the related Mortgaged Property, the
level of available mortgage rates at the time of sale or refinancing, the
borrower's equity in the related Mortgaged Property, the financial condition and
operating history of the borrower and the related Mortgaged Property, tax laws,
rent control laws (with respect to certain residential properties), Medicaid and
Medicare reimbursement rates (with respect to hospitals and nursing homes),
prevailing general economic conditions and the availability of credit for loans
secured by multifamily or commercial, as the case may be, real properties
generally. Neither the Depositor nor any of its affiliates will be required to
refinance any Mortgage Loan.
If and to the extent described herein and in the related Prospectus
Supplement, in order to maximize recoveries on defaulted Mortgage Loans, the
Master Servicer or a Special Servicer will be permitted (within prescribed
limits) to extend and modify Mortgage Loans that are in default or as to which a
payment default is imminent. See "The Pooling and Servicing
Agreements--Realization upon Defaulted Mortgage Loans". While a Master Servicer
or a Special Servicer generally will be required to determine that any such
extension or modification is reasonably likely to produce a greater recovery
than liquidation, taking into account the time value of money, there can be no
assurance that any such extension or modification will in fact increase the
present value of receipts from or proceeds of the affected Mortgage Loans.
LEASES AND RENTS
Each Mortgage Loan included in any Trust Fund secured by Mortgaged Property
that is subject to leases typically will be secured by an assignment of leases
and rents pursuant to which the borrower assigns to the lender its right, title
and interest as landlord under the leases of the related Mortgaged Property, and
the income derived therefrom, as further security for the related Mortgage Loan,
while retaining a license to collect rents for so long as there is no default.
If the borrower defaults, the license terminates and the lender is entitled to
collect rents. Some state laws may require that the lender take possession of
the Mortgaged
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Property and obtain a judicial appointment of a receiver before becoming
entitled to collect the rents. In addition, if bankruptcy or similar proceedings
are commenced by or in respect of the borrower, the lender's ability to collect
the rents may be adversely affected. See "Certain Legal Aspects of Mortgage
Loans--Leases and Rents".
ENVIRONMENTAL CONSIDERATIONS
Under the laws of certain states, contamination of real property may give
rise to a lien on the property to assure the costs of cleanup. In several
states, such a lien has priority over an existing mortgage lien on such
property. In addition, under the laws of some states and under the federal
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, a lender may be liable, as an "owner" or "operator", for costs of
addressing releases or threatened releases of hazardous substances at a
property, if agents or employees of the lender have become sufficiently involved
in the operations of the borrower, regardless of whether the environmental
damage or threat was caused by the borrower or a prior owner. A lender also
risks such liability on foreclosure of the mortgage.
DESCRIPTION OF THE TRUST FUNDS
GENERAL
The primary assets of each Trust Fund will consist of Mortgage Loans (see
"--Mortgage Loans" below), MBS (see "--MBS" below) or a combination of Mortgage
Loans and MBS. Each Trust Fund will be established by the Depositor. Each
Mortgage Asset will be selected by the Depositor for inclusion in a Trust Fund
from among those purchased, either directly or indirectly, from a prior holder
thereof (a "MORTGAGE ASSET SELLER"), which prior holder may or may not be the
originator of such Mortgage Loan or the issuer of such MBS and may be GMACCM or
another affiliate of the Depositor. The Mortgage Assets will not be guaranteed
or insured by the Depositor, GMACCM or any of their affiliates or, unless
otherwise provided in the related Prospectus Supplement, by any governmental
agency or instrumentality or by any other person. The discussion below under the
heading "--Mortgage Loans", unless otherwise noted, applies equally to mortgage
loans underlying any MBS included in a particular Trust Fund.
MORTGAGE LOANS
General. The Mortgage Loans will be evidenced by promissory notes (the
"MORTGAGE NOTES") secured by mortgages, deeds of trust or similar security
instruments (the "MORTGAGES") that create first or junior liens on fee or
leasehold estates in properties (the "MORTGAGED PROPERTIES") consisting of (i)
residential properties consisting of five or more rental or cooperatively-owned
dwelling units in high-rise, mid-rise or garden apartment buildings or other
residential structures ("MULTIFAMILY PROPERTIES") or (ii) office buildings,
retail stores and establishments, hotels or motels, nursing homes, hospitals or
other health care-related facilities, mobile home parks, warehouse facilities,
mini-warehouse facilities, self-storage facilities, industrial plants, parking
lots, mixed use or various other types of income-producing properties or
unimproved land ("COMMERCIAL PROPERTIES"). The Multifamily Properties may
include mixed commercial and residential structures and apartment buildings
owned by private cooperative housing corporations ("COOPERATIVES"). Unless
otherwise specified in the related Prospectus Supplement, each Mortgage will
create a first priority mortgage lien on a borrower's fee estate in a Mortgaged
Property. If a Mortgage creates a lien on a borrower's leasehold estate in a
property, then, unless otherwise specified in the related Prospectus Supplement,
the term of any such leasehold will exceed the term of the Mortgage Note by at
least ten years. Unless otherwise specified in the related Prospectus
Supplement, each Mortgage Loan will have been originated by a person (the
"ORIGINATOR") other than the Depositor; however, the Originator may be GMACCM
or, alternatively, may be or may have been another affiliate of the Depositor.
If so provided in the related Prospectus Supplement, Mortgage Assets for a
series of Certificates may include Mortgage Loans secured by junior liens, and
the loans secured by the related senior liens ("SENIOR LIENS") may not be
included in the Mortgage Pool. The primary risk to holders of Mortgage Loans
secured by junior liens is the possibility that adequate funds will not be
received in connection with a foreclosure of the
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related Senior Liens to satisfy fully both the Senior Liens and the Mortgage
Loan. In the event that a holder of a Senior Lien forecloses on a Mortgaged
Property, the proceeds of the foreclosure or similar sale will be applied first
to the payment of court costs and fees in connection with the foreclosure,
second to real estate taxes, third in satisfaction of all principal, interest,
prepayment or acceleration penalties, if any, and any other sums due and owing
to the holder of the Senior Liens. The claims of the holders of the Senior Liens
will be satisfied in full out of proceeds of the liquidation of the related
Mortgage Property, if such proceeds are sufficient, before the Trust Fund as
holder of the junior lien receives any payments in respect of the Mortgage Loan.
If the Master Servicer were to foreclose on any Mortgage Loan, it would do so
subject to any related Senior Liens. In order for the debt related to such
Mortgage Loan to be paid in full at such sale, a bidder at the foreclosure sale
of such Mortgage Loan would have to bid an amount sufficient to pay off all sums
due under the Mortgage Loan and any Senior Liens or purchase the Mortgaged
Property subject to such Senior Liens. In the event that such proceeds from a
foreclosure or similar sale of the related Mortgaged Property are insufficient
to satisfy all Senior Liens and the Mortgage Loan in the aggregate, the Trust
Fund, as the holder of the junior lien, and, accordingly, holders of one or more
classes of the Certificates of the related series bear (i) the risk of delay in
distributions while a deficiency judgment against the borrower is obtained and
(ii) the risk of loss if the deficiency judgment is not realized upon. Moreover,
deficiency judgments may not be available in certain jurisdictions or the
Mortgage Loan may be nonrecourse.
If so specified in the related Prospectus Supplement, Mortgage Assets for a
series of Certificates may include Mortgage Loans made on the security of real
estate projects under construction. In that case, the related Prospectus
Supplement will describe the procedures and timing for making disbursements from
construction reserve funds as portions of the related real estate project are
completed. In addition, the Mortgage Assets for a particular series of
Certificates may include Mortgage Loans that are delinquent or non-performing as
of the date such Certificates are issued. In that case, the related Prospectus
Supplement will set forth, as to each such Mortgage Loan, available information
as to the period of such delinquency or non-performance, any forbearance
arrangement then in effect, the condition of the related Mortgaged Property and
the ability of the Mortgaged Property to generate income to service the mortgage
debt.
Default and Loss Considerations with Respect to the Mortgage
Loans. Mortgage loans secured by liens on income-producing properties are
substantially different from loans made on the security of owner-occupied
single-family homes. The repayment of a loan secured by a lien on an
income-producing property is typically dependent upon the successful operation
of such property (that is, its ability to generate income). Moreover, some or
all of the Mortgage Loans included in a particular Trust Fund may be
non-recourse loans, which means that, absent special facts, recourse in the case
of default will be limited to the Mortgaged Property and such other assets, if
any, that were pledged to secure repayment of the Mortgage Loan.
Lenders typically look to the Debt Service Coverage Ratio of a loan secured
by income-producing property as an important factor in evaluating the likelihood
of default on such a loan. Unless otherwise defined in the related Prospectus
Supplement, the "DEBT SERVICE COVERAGE RATIO" of a Mortgage Loan at any given
time is the ratio of (i) the Net Operating Income derived from the related
Mortgaged Property for a twelve-month period to (ii) the annualized scheduled
payments of principal and/or interest on the Mortgage Loan and any other loans
senior thereto that are secured by the related Mortgaged Property. Unless
otherwise defined in the related Prospectus Supplement, "NET OPERATING INCOME"
means, for any given period, the total operating revenues derived from a
Mortgaged Property during such period, minus the total operating expenses
incurred in respect of such Mortgaged Property during such period other than (i)
non-cash items such as depreciation and amortization, (ii) capital expenditures
and (iii) debt service on the related Mortgage Loan or on any other loans that
are secured by such Mortgaged Property. The Net Operating Income of a Mortgaged
Property will generally fluctuate over time and may or may not be sufficient to
cover debt service on the related Mortgage Loan at any given time. As the
primary source of the operating revenues of a non-owner occupied,
income-producing property, rental income (and, with respect to a Mortgage Loan
secured by a Cooperative apartment building, maintenance payments from
tenant-stockholders of a Cooperative) may be affected by the condition of the
applicable real estate market and/or area economy. In addition, properties
typically leased, occupied or used on a short-term basis, such as certain health
care-related facilities, hotels and motels, and mini-warehouse and self-storage
facilities, tend to be affected more rapidly by changes in
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market or business conditions than do properties typically leased for longer
periods, such as warehouses, retail stores, office buildings and industrial
plants. Commercial Properties may be owner-occupied or leased to a small number
of tenants. Thus, the Net Operating Income of such a Mortgaged Property may
depend substantially on the financial condition of the borrower or a tenant, and
Mortgage Loans secured by liens on such properties may pose a greater likelihood
of default and loss than loans secured by liens on Multifamily Properties or on
multi-tenant Commercial Properties.
Increases in operating expenses due to the general economic climate or
economic conditions in a locality or industry segment, such as increases in
interest rates, real estate tax rates, energy costs, labor costs and other
operating expenses, and/or to changes in governmental rules, regulations and
fiscal policies, may also affect the likelihood of default on a Mortgage Loan.
As may be further described in the related Prospectus Supplement, in some cases
leases of Mortgaged Properties may provide that the lessee, rather than the
borrower/landlord, is responsible for payment of operating expenses ("NET
LEASES"). However, the existence of such "net of expense" provisions will result
in stable Net Operating Income to the borrower/landlord only to the extent that
the lessee is able to absorb operating expense increases while continuing to
make rent payments.
Lenders also look to the Loan-to-Value Ratio of a mortgage loan as a factor
in evaluating the likelihood of loss if a property must be liquidated following
a default. Unless otherwise defined in the related Prospectus Supplement, the
"LOAN-TO-VALUE RATIO" of a Mortgage Loan at any given time is the ratio
(expressed as a percentage) of (i) the then outstanding principal balance of the
Mortgage Loan and any other loans senior thereto that are secured by the related
Mortgaged Property to (ii) the Value of the related Mortgaged Property. Unless
otherwise specified in the related Prospectus Supplement, the "VALUE" of a
Mortgaged Property will be its fair market value determined in an appraisal
obtained by the Originator at the origination of such loan. The lower the
Loan-to-Value Ratio, the greater the percentage of the borrower's equity in a
Mortgaged Property, and thus (a) the greater the incentive of the borrower to
perform under the terms of the related Mortgage Loan (in order to protect such
equity) and (b) the greater the cushion provided to the lender against loss on
liquidation following a default.
Loan-to-Value Ratios will not necessarily constitute an accurate measure of
the likelihood of liquidation loss in a pool of Mortgage Loans. For example, the
value of a Mortgaged Property as of the date of initial issuance of the related
series of Certificates may be less than the Value determined at loan
origination, and will likely continue to fluctuate from time to time based upon
certain factors including changes in economic conditions and the real estate
market. Moreover, even when current, an appraisal is not necessarily a reliable
estimate of value. Appraised values of income-producing properties are generally
based on the market comparison method (recent resale value of comparable
properties at the date of the appraisal), the cost replacement method (the cost
of replacing the property at such date), the income capitalization method (a
projection of value based upon the property's projected net cash flow), or upon
a selection from or interpolation of the values derived from such methods. Each
of these appraisal methods can present analytical difficulties. It is often
difficult to find truly comparable properties that have recently been sold; the
replacement cost of a property may have little to do with its current market
value; and income capitalization is inherently based on inexact projections of
income and expense and the selection of an appropriate capitalization rate and
discount rate. Where more than one of these appraisal methods are used and
provide significantly different results, an accurate determination of value and,
correspondingly, a reliable analysis of the likelihood of default and loss, is
even more difficult.
Although there may be multiple methods for determining the value of a
Mortgaged Property, value will in all cases be affected by property performance.
As a result, if a Mortgage Loan defaults because the income generated by the
related Mortgaged Property is insufficient to cover operating costs and expenses
and pay debt service, then the value of the Mortgaged Property will reflect such
and a liquidation loss may occur.
While the Depositor believes that the foregoing considerations are
important factors that generally distinguish loans secured by liens on
income-producing real estate from single-family mortgage loans, there can be no
assurance that all of such factors will in fact have been prudently considered
by the Originators of the Mortgage Loans, or that, for a particular Mortgage
Loan, they are complete or relevant. See "Risk
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Factors--Investment in Commercial and Multifamily Mortgage Loans" and "--Balloon
Payments; Borrower Default".
Payment Provisions of the Mortgage Loans. Unless otherwise specified in
the related Prospectus Supplement, all of the Mortgage Loans will (i) have had
original terms to maturity of not more than 40 years and (ii) provide for
scheduled payments of principal, interest or both, to be made on specified dates
("DUE DATES") that occur monthly, quarterly, semi-annually or annually. A
Mortgage Loan (i) may provide for no accrual of interest or for accrual of
interest thereon at a Mortgage Rate that is fixed over its term or that adjusts
from time to time, or that may be converted at the borrower's election from an
adjustable to a fixed Mortgage Rate, or from a fixed to an adjustable Mortgage
Rate, (ii) may provide for level payments to maturity or for payments that
adjust from time to time to accommodate changes in the Mortgage Rate or to
reflect the occurrence of certain events, and may permit negative amortization,
(iii) may be fully amortizing or may be partially amortizing or non-amortizing,
with a balloon payment due on its stated maturity date, and (iv) may prohibit
over its term or for a certain period prepayments (the period of such
prohibition, a "LOCK-OUT PERIOD" and its date of expiration, a "LOCK-OUT DATE")
and/or require payment of a premium or a yield maintenance penalty (a
"PREPAYMENT PREMIUM") in connection with certain prepayments, in each case as
described in the related Prospectus Supplement. A Mortgage Loan may also contain
a provision that entitles the lender to a share of appreciation of the related
Mortgaged Property, or profits realized from the operation or disposition of
such Mortgaged Property or the benefit, if any, resulting from the refinancing
of the Mortgage Loan (any such provision, an "EQUITY PARTICIPATION"), as
described in the related Prospectus Supplement.
Mortgage Loan Information in Prospectus Supplements. Each Prospectus
Supplement will contain certain information pertaining to the Mortgage Loans in
the related Trust Fund, which, to the extent then applicable and specifically
known to the Depositor, will generally include the following: (i) the aggregate
outstanding principal balance and the largest, smallest and average outstanding
principal balance of the Mortgage Loans, (ii) the type or types of property that
provide security for repayment of the Mortgage Loans, (iii) the earliest and
latest origination date and maturity date of the Mortgage Loans, (iv) the
original and remaining terms to maturity of the Mortgage Loans, or the
respective ranges thereof, and the weighted average original and remaining terms
to maturity of the Mortgage Loans, (v) the Loan-to-Value Ratios of the Mortgage
Loans (either at origination or as of a more recent date), or the range thereof,
and the weighted average of such Loan-to-Value Ratios, (vi) the Mortgage Rates
borne by the Mortgage Loans, or range thereof, and the weighted average Mortgage
Rate borne by the Mortgage Loans, (vii) with respect to Mortgage Loans with
adjustable Mortgage Rates ("ARM LOANS"), the index or indices upon which such
adjustments are based, the adjustment dates, the range of gross margins and the
weighted average gross margin, and any limits on Mortgage Rate adjustments at
the time of any adjustment and over the life of the ARM Loan, (viii) information
regarding the payment characteristics of the Mortgage Loans, including, without
limitation, balloon payment and other amortization provisions, Lock-out Periods
and Prepayment Premiums, (ix) the Debt Service Coverage Ratios of the Mortgage
Loans (either at origination or as of a more recent date), or the range thereof,
and the weighted average of such Debt Service Coverage Ratios, and (x) the
geographic distribution of the Mortgaged Properties on a state-by-state basis.
In appropriate cases, the related Prospectus Supplement will also contain
certain information available to the Depositor that pertains to the provisions
of leases and the nature of tenants of the Mortgaged Properties. If the
Depositor is unable to provide the specific information described above at the
time Offered Certificates of a series are initially offered, more general
information of the nature described above will be provided in the related
Prospectus Supplement, and specific information will be set forth in a report
which will be available to purchasers of those Certificates at or before the
initial issuance thereof and will be filed as part of a Current Report on Form
8-K with the Commission within fifteen days following such issuance.
MBS
MBS may include (i) private-label (that is, not guaranteed or insured by
the United States or any agency or instrumentality thereof) mortgage
participations, mortgage pass-through certificates or other mortgage-backed
securities or (ii) certificates insured or guaranteed by the Federal Home Loan
Mortgage Corporation ("FHLMC"), the Federal National Mortgage Association
("FNMA"), the Governmental National
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Mortgage Association or the Federal Agricultural Mortgage Corporation ("FAMC"),
provided that, unless otherwise specified in the related Prospectus Supplement,
each MBS will evidence an interest in, or will be secured by a pledge of,
mortgage loans that conform to the descriptions of the Mortgage Loans contained
herein.
Any MBS will have been issued pursuant to a participation and servicing
agreement, a pooling and servicing agreement, an indenture or similar agreement
(an "MBS AGREEMENT"). The issuer of the MBS (the "MBS ISSUER") and/or the
servicer of the underlying mortgage loans (the "MBS SERVICER") will have entered
into the MBS Agreement, generally with a trustee (the "MBS TRUSTEE") or, in the
alternative, with the original purchaser or purchasers of the MBS.
The MBS may have been issued in one or more classes with characteristics
similar to the classes of Certificates described herein. Distributions in
respect of the MBS will be made by the MBS Issuer, the MBS Servicer or the MBS
Trustee on the dates specified in the related Prospectus Supplement. The MBS
Issuer or the MBS Servicer or another person specified in the related Prospectus
Supplement may have the right or obligation to repurchase or substitute assets
underlying the MBS after a certain date or under other circumstances specified
in the related Prospectus Supplement.
Reserve funds, subordination or other credit support similar to that
described for the Certificates under "Description of Credit Support" may have
been provided with respect to the MBS. The type, characteristics and amount of
such credit support, if any, will be a function of the characteristics of the
underlying mortgage loans and other factors and generally will have been
established on the basis of the requirements of any Rating Agency that may have
assigned a rating to the MBS, or by the initial purchasers of the MBS.
The Prospectus Supplement for a series of Certificates that evidence
interests in MBS will specify, to the extent available, (i) the aggregate
approximate initial and outstanding principal amount and type of the MBS to be
included in the Trust Fund, (ii) the original and remaining term to stated
maturity of the MBS, if applicable, (iii) the pass-through or bond rate of the
MBS or the formula for determining such rates, (iv) the payment characteristics
of the MBS, (v) the MBS Issuer, MBS Servicer and MBS Trustee, as applicable,
(vi) a description of the credit support, if any, (vii) the circumstances under
which the related underlying mortgage loans, or the MBS themselves, may be
purchased prior to their maturity, (viii) the terms on which mortgage loans may
be substituted for those originally underlying the MBS, (ix) the type of
mortgage loans underlying the MBS and, to the extent available to the Depositor
and appropriate under the circumstances, such other information in respect of
the underlying mortgage loans described under "--Mortgage Loans--Mortgage Loan
Information in Prospectus Supplements", and (x) the characteristics of any cash
flow agreements that relate to the MBS.
CERTIFICATE ACCOUNTS
Each Trust Fund will include one or more accounts (collectively, the
"CERTIFICATE ACCOUNT") established and maintained on behalf of the
Certificateholders into which all payments and collections received or advanced
with respect to the Mortgage Assets and other assets in the Trust Fund will be
deposited to the extent described herein and in the related Prospectus
Supplement. See "The Pooling and Servicing Agreements--Certificate Account".
CREDIT SUPPORT
If so provided in the Prospectus Supplement for a series of Certificates,
partial or full protection against certain defaults and losses on the Mortgage
Assets in the related Trust Fund may be provided to one or more classes of
Certificates of such series in the form of subordination of one or more other
classes of Certificates of such series or by one or more other types of credit
support, such as a letter of credit, insurance policy, guarantee or reserve
fund, among others, or a combination thereof. The amount and types of Credit
Support, the identification of the entity providing it (if applicable) and
related information with respect to each type of Credit Support, if any, will be
set forth in the Prospectus Supplement for a series of Certificates. See "Risk
Factors--Credit Support Limitations" and "Description of Credit Support".
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CASH FLOW AGREEMENTS
If so provided in the Prospectus Supplement for a series of Certificates,
the related Trust Fund may include guaranteed investment contracts pursuant to
which moneys held in the funds and accounts established for such series will be
invested at a specified rate. The Trust Fund may also include certain other
agreements, such as interest rate exchange agreements, interest rate cap or
floor agreements, or other agreements designed to reduce the effects of interest
rate fluctuations on the Mortgage Assets on one or more classes of Certificates.
The principal terms of any such Cash Flow Agreement, including, without
limitation, provisions relating to the timing, manner and amount of payments
thereunder and provisions relating to the termination thereof, will be described
in the related Prospectus Supplement. The related Prospectus Supplement will
also identify the obligor under the Cash Flow Agreement.
YIELD AND MATURITY CONSIDERATIONS
GENERAL
The yield on any Offered Certificate will depend on the price paid by the
Certificateholder, the Pass-Through Rate of the Certificate and the amount and
timing of distributions on the Certificate. See "Risk Factors--Yield and
Prepayment Considerations". The following discussion contemplates a Trust Fund
that consists solely of Mortgage Loans. While the characteristics and behavior
of mortgage loans underlying an MBS can generally be expected to have the same
effect on the yield to maturity and/or weighted average life of a class of
Certificates as will the characteristics and behavior of comparable Mortgage
Loans, the effect may differ due to the payment characteristics of the MBS. If a
Trust Fund includes MBS, the related Prospectus Supplement will discuss the
effect, if any, that the payment characteristics of the MBS may have on the
yield to maturity and weighted average lives of the Offered Certificates of the
related series.
PASS-THROUGH RATE
The Certificates of any class within a series may have a fixed, variable or
adjustable Pass-Through Rate, which may or may not be based upon the interest
rates borne by the Mortgage Loans in the related Trust Fund. The Prospectus
Supplement with respect to any series of Certificates will specify the
Pass-Through Rate for each class of Offered Certificates of such series or, in
the case of a class of Offered Certificates with a variable or adjustable
Pass-Through Rate, the method of determining the Pass-Through Rate; the effect,
if any, of the prepayment of any Mortgage Loan on the Pass-Through Rate of one
or more classes of Offered Certificates; and whether the distributions of
interest on the Offered Certificates of any class will be dependent, in whole or
in part, on the performance of any obligor under a Cash Flow Agreement.
PAYMENT DELAYS
With respect to any series of Certificates, a period of time will elapse
between the date upon which payments on the Mortgage Loans in the related Trust
Fund are due and the Distribution Date on which such payments are passed through
to Certificateholders. That delay will effectively reduce the yield that would
otherwise be produced if payments on such Mortgage Loans were distributed to
Certificateholders on the date they were due.
CERTAIN SHORTFALLS IN COLLECTIONS OF INTEREST
When a principal prepayment in full or in part is made on a Mortgage Loan,
the borrower is generally charged interest on the amount of such prepayment only
through the date of such prepayment, instead of through the Due Date for the
next succeeding scheduled payment. However, interest accrued on any series of
Certificates and distributable thereon on any Distribution Date will generally
correspond to interest accrued on the Mortgage Loans to their respective Due
Dates during the related Due Period. Unless otherwise specified in the
Prospectus Supplement for a series of Certificates, a "DUE PERIOD" will be a
specified time period (generally running from the second day of one month to the
first day of the next month, inclusive) and all scheduled payments on the
Mortgage Loans in the related Trust Fund that are due during a given Due Period
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will, to the extent received by a specified date (the "DETERMINATION DATE") or
otherwise advanced by the related Master Servicer or other specified person, be
distributed to the holders of the Certificates of such series on the next
succeeding Distribution Date. Consequently, if a prepayment on any Mortgage Loan
is distributable to Certificateholders on a particular Distribution Date, but
such prepayment is not accompanied by interest thereon to the Due Date for such
Mortgage Loan in the related Due Period, then the interest charged to the
borrower (net of servicing and administrative fees) may be less (such shortfall,
a "PREPAYMENT INTEREST SHORTFALL") than the corresponding amount of interest
accrued and otherwise payable on the Certificates of the related series. If and
to the extent that any such shortfall is allocated to a class of Offered
Certificates, the yield thereon will be adversely affected. The Prospectus
Supplement for each series of Certificates will describe the manner in which any
such shortfalls will be allocated among the classes of such Certificates. The
related Prospectus Supplement will also describe any amounts available to offset
such shortfalls.
YIELD AND PREPAYMENT CONSIDERATIONS
A Certificate's yield to maturity will be affected by the rate of principal
payments on the Mortgage Loans in the related Trust Fund and the allocation
thereof to reduce the principal balance (or notional amount, if applicable) of
such Certificate. The rate of principal payments on the Mortgage Loans in any
Trust Fund will in turn be affected by the amortization schedules thereof
(which, in the case of ARM Loans, may change periodically to accommodate
adjustments to the Mortgage Rates thereon), the dates on which any balloon
payments are due, and the rate of principal prepayments thereon (including for
this purpose, voluntary prepayments by borrowers and also prepayments resulting
from liquidations of Mortgage Loans due to defaults, casualties or condemnations
affecting the Mortgaged Properties, or purchases of Mortgage Loans out of the
related Trust Fund). Because the rate of principal prepayments on the Mortgage
Loans in any Trust Fund will depend on future events and a variety of factors
(as described below), no assurance can be given as to such rate.
The extent to which the yield to maturity of a class of Offered
Certificates of any series may vary from the anticipated yield will depend upon
the degree to which they are purchased at a discount or premium and when, and to
what degree, payments of principal on the Mortgage Loans in the related Trust
Fund are in turn distributed on such Certificates (or, in the case of a class of
Stripped Interest Certificates, result in the reduction of the Notional Amount
thereof). An investor should consider, in the case of any Offered Certificate
purchased at a discount, the risk that a slower than anticipated rate of
principal payments on the Mortgage Loans in the related Trust Fund could result
in an actual yield to such investor that is lower than the anticipated yield
and, in the case of any Offered Certificate purchased at a premium, the risk
that a faster than anticipated rate of principal payments on such Mortgage Loans
could result in an actual yield to such investor that is lower than the
anticipated yield. In addition, if an investor purchases an Offered Certificate
at a discount (or premium), and principal payments are made in reduction of the
principal balance or notional amount of such investor's Offered Certificates at
a rate slower (or faster) than the rate anticipated by the investor during any
particular period, the consequent adverse effects on such investor's yield would
not be fully offset by a subsequent like increase (or decrease) in the rate of
principal payments.
In general, the Notional Amount of a class of Stripped Interest
Certificates will either (i) be based on the principal balances of some or all
of the Mortgage Assets in the related Trust Fund or (ii) equal the Certificate
Balances of one or more of the other classes of Certificates of the same series.
Accordingly, the yield on such Stripped Interest Certificates will be inversely
related to the rate at which payments and other collections of principal are
received on such Mortgage Assets or distributions are made in reduction of the
Certificate Balances of such classes of Certificates, as the case may be.
Consistent with the foregoing, if a class of Certificates of any series
consists of Stripped Interest Certificates or Stripped Principal Certificates, a
lower than anticipated rate of principal prepayments on the Mortgage Loans in
the related Trust Fund will negatively affect the yield to investors in Stripped
Principal Certificates, and a higher than anticipated rate of principal
prepayments on such Mortgage Loans will negatively affect the yield to investors
in Stripped Interest Certificates. If the Offered Certificates of a series
include any such Certificates, the related Prospectus Supplement will include a
table showing the effect of
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various constant assumed levels of prepayment on yields on such Certificates.
Such tables will be intended to illustrate the sensitivity of yields to various
constant assumed prepayment rates and will not be intended to predict, or to
provide information that will enable investors to predict, yields or prepayment
rates.
The Depositor is not aware of any relevant publicly available or
authoritative statistics with respect to the historical prepayment experience of
a group of multifamily or commercial mortgage loans. However, the extent of
prepayments of principal of the Mortgage Loans in any Trust Fund may be affected
by a number of factors, including, without limitation, the availability of
mortgage credit, the relative economic vitality of the area in which the
Mortgaged Properties are located, the quality of management of the Mortgaged
Properties, the servicing of the Mortgage Loans, possible changes in tax laws
and other opportunities for investment. In addition, the rate of principal
payments on the Mortgage Loans in any Trust Fund may be affected by the
existence of Lock-out Periods and requirements that principal prepayments be
accompanied by Prepayment Premiums, and by the extent to which such provisions
may be practicably enforced. To the extent enforceable, such provisions could
constitute either an absolute prohibition (in the case of a Lock-out Period) or
a disincentive (in the case of a Prepayment Premium) to a borrower's voluntarily
prepaying its Mortgage Loan.
The rate of prepayment on a pool of mortgage loans is likely to be affected
by prevailing market interest rates for mortgage loans of a comparable type,
term and risk level. When the prevailing market interest rate is below a
mortgage coupon, a borrower may have an increased incentive to refinance its
mortgage loan. Even in the case of ARM Loans, as prevailing market interest
rates decline, and without regard to whether the Mortgage Rates on such ARM
Loans decline in a manner consistent therewith, the related borrowers may have
an increased incentive to refinance for purposes of either (i) converting to a
fixed rate loan and thereby "locking in" such rate or (ii) taking advantage of a
different index, margin or rate cap or floor on another adjustable rate mortgage
loan.
Depending on prevailing market interest rates, the outlook for market
interest rates and economic conditions generally, some borrowers may sell
Mortgaged Properties in order to realize their equity therein, to meet cash flow
needs or to make other investments. In addition, some borrowers may be motivated
by federal and state tax laws (which are subject to change) to sell Mortgaged
Properties prior to the exhaustion of tax depreciation benefits. The Depositor
makes no representation as to the particular factors that will affect the
prepayment of the Mortgage Loans in any Trust Fund, as to the relative
importance of such factors, as to the percentage of the principal balance of
such Mortgage Loans that will be paid as of any date or as to the overall rate
of prepayment on such Mortgage Loans.
WEIGHTED AVERAGE LIFE AND MATURITY
The rate at which principal payments are received on the Mortgage Loans in
any Trust Fund will affect the ultimate maturity and the weighted average life
of one or more classes of the Certificates of such series. Unless otherwise
specified in the related Prospectus Supplement, weighted average life refers to
the average amount of time that will elapse from the date of issuance of an
instrument until each dollar allocable as principal of such instrument is repaid
to the investor.
The weighted average life and maturity of a class of Certificates of any
series will be influenced by the rate at which principal on the related Mortgage
Loans, whether in the form of scheduled amortization or prepayments (for this
purpose, the term "prepayment" includes voluntary prepayments, liquidations due
to default and purchases of Mortgage Loans out of the related Trust Fund), is
paid to such class. Prepayment rates on loans are commonly measured relative to
a prepayment standard or model, such as the Constant Prepayment Rate ("CPR")
prepayment model or the Standard Prepayment Assumption ("SPA") prepayment model.
CPR represents an assumed constant rate of prepayment each month (expressed as
an annual percentage) relative to the then outstanding principal balance of a
pool of loans for the life of such loans. SPA represents an assumed variable
rate of prepayment each month (expressed as an annual percentage) relative to
the then outstanding principal balance of a pool of loans, with different
prepayment assumptions often expressed as percentages of SPA. For example, a
prepayment assumption of 100% of SPA assumes prepayment rates of 0.2% per annum
of the then outstanding principal balance of such loans in the first month of
the life of the loans and an additional 0.2% per annum in each month thereafter
until the thirtieth month.
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Beginning in the thirtieth month, and in each month thereafter during the life
of the loans, 100% of SPA assumes a constant prepayment rate of 6% per annum
each month.
Neither CPR nor SPA nor any other prepayment model or assumption purports
to be a historical description of prepayment experience or a prediction of the
anticipated rate of prepayment of any particular pool of loans. Moreover, the
CPR and SPA models were developed based upon historical prepayment experience
for single-family loans. Thus, it is unlikely that the prepayment experience of
the Mortgage Loans included in any Trust Fund will conform to any particular
level of CPR or SPA.
The Prospectus Supplement with respect to each series of Certificates will
contain tables, if applicable, setting forth the projected weighted average life
of each class of Offered Certificates of such series and the percentage of the
initial Certificate Balance of each such class that would be outstanding on
specified Distribution Dates based on the assumptions stated in such Prospectus
Supplement, including assumptions that prepayments on the related Mortgage Loans
are made at rates corresponding to various percentages of CPR or SPA, or at such
other rates specified in such Prospectus Supplement. Such tables and assumptions
will illustrate the sensitivity of the weighted average lives of the
Certificates to various assumed prepayment rates and will not be intended to
predict, or to provide information that will enable investors to predict, the
actual weighted average lives of the Certificates.
OTHER FACTORS AFFECTING YIELD, WEIGHTED AVERAGE LIFE AND MATURITY
Balloon Payments; Extensions of Maturity. Some or all of the Mortgage
Loans included in a particular Trust Fund may require that balloon payments be
made at maturity. Because the ability of a borrower to make a balloon payment
typically will depend upon its ability either to refinance the loan or to sell
the related Mortgaged Property, there is a possibility that Mortgage Loans that
require balloon payments may default at maturity, or that the maturity of such a
Mortgage Loan may be extended in connection with a workout. In the case of
defaults, recovery of proceeds may be delayed by, among other things, bankruptcy
of the borrower or adverse conditions in the market where the property is
located. In order to minimize losses on defaulted Mortgage Loans, the Master
Servicer or a Special Servicer, to the extent and under the circumstances set
forth herein and in the related Prospectus Supplement, may be authorized to
modify Mortgage Loans that are in default or as to which a payment default is
imminent. Any defaulted balloon payment or modification that extends the
maturity of a Mortgage Loan may delay distributions of principal on a class of
Offered Certificates and thereby extend the weighted average life of such
Certificates and, if such Certificates were purchased at a discount, reduce the
yield thereon.
Negative Amortization. The weighted average life of a class of
Certificates can be affected by Mortgage Loans that permit negative amortization
to occur. A Mortgage Loan that provides for the payment of interest calculated
at a rate lower than the rate at which interest accrues thereon would, in the
case of an ARM Loan, be expected during a period of increasing interest rates to
amortize at a slower rate (and perhaps not at all) than if interest rates were
declining or were remaining constant. Such slower rate of Mortgage Loan
amortization would correspondingly be reflected in a slower rate of amortization
for one or more classes of Certificates of the related series. In addition,
negative amortization on one or more Mortgage Loans in any Trust Fund may result
in negative amortization on the Certificates of the related series. The related
Prospectus Supplement will describe, if applicable, the manner in which negative
amortization in respect of the Mortgage Loans in any Trust Fund is allocated
among the respective classes of Certificates of the related series. The portion
of any Mortgage Loan negative amortization allocated to a class of Certificates
may result in a deferral of some or all of the interest payable thereon, which
deferred interest may be added to the Certificate Balance thereof. Accordingly,
the weighted average lives of Mortgage Loans that permit negative amortization
(and that of the classes of Certificates to which any such negative amortization
would be allocated or that would bear the effects of a slower rate of
amortization on such Mortgage Loans) may increase as a result of such feature.
Negative amortization also may occur in respect of an ARM Loan that (i)
limits the amount by which its scheduled payment may adjust in response to a
change in its Mortgage Rate, (ii) provides that its scheduled payment will
adjust less frequently than its Mortgage Rate or (iii) provides for constant
scheduled payments
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notwithstanding adjustments to its Mortgage Rate. Accordingly, during a period
of declining interest rates, the scheduled payment on such a Mortgage Loan may
exceed the amount necessary to amortize the loan fully over its remaining
amortization schedule and pay interest at the then applicable Mortgage Rate,
thereby resulting in the accelerated amortization of such Mortgage Loan. Any
such acceleration in amortization of its principal balance will shorten the
weighted average life of such Mortgage Loan and, correspondingly, the weighted
average lives of those classes of Certificates entitled to a portion of the
principal payments on such Mortgage Loan.
The extent to which the yield on any Offered Certificate will be affected
by the inclusion in the related Trust Fund of Mortgage Loans that permit
negative amortization, will depend upon (i) whether such Offered Certificate was
purchased at a premium or a discount and (ii) the extent to which the payment
characteristics of such Mortgage Loans delay or accelerate the distributions of
principal on such Certificate (or, in the case of a Stripped Interest
Certificate, delay or accelerate the reduction of the notional amount thereof).
See "--Yield and Prepayment Considerations" above.
Foreclosures and Payment Plans. The number of foreclosures and the
principal amount of the Mortgage Loans that are foreclosed in relation to the
number and principal amount of Mortgage Loans that are repaid in accordance with
their terms will affect the weighted average lives of those Mortgage Loans and,
accordingly, the weighted average lives of and yields on the Certificates of the
related series. Servicing decisions made with respect to the Mortgage Loans,
including the use of payment plans prior to a demand for acceleration and the
restructuring of Mortgage Loans in bankruptcy proceedings or otherwise, may also
have an effect upon the payment patterns of particular Mortgage Loans and thus
the weighted average lives of and yields on the Certificates of the related
series.
Losses and Shortfalls on the Mortgage Assets. The yield to holders of the
Offered Certificates of any series will directly depend on the extent to which
such holders are required to bear the effects of any losses or shortfalls in
collections arising out of defaults on the Mortgage Loans in the related Trust
Fund and the timing of such losses and shortfalls. In general, the earlier that
any such loss or shortfall occurs, the greater will be the negative effect on
yield for any class of Certificates that is required to bear the effects
thereof.
The amount of any losses or shortfalls in collections on the Mortgage
Assets in any Trust Fund (to the extent not covered or offset by draws on any
reserve fund or under any instrument of Credit Support) will be allocated among
the respective classes of Certificates of the related series in the priority and
manner, and subject to the limitations, specified in the related Prospectus
Supplement. As described in the related Prospectus Supplement, such allocations
may be effected by a reduction in the entitlements to interest and/or
Certificate Balances of one or more such classes of Certificates, and/or by
establishing a priority of payments among such classes of Certificates.
The yield to maturity on a class of Subordinate Certificates may be
extremely sensitive to losses and shortfalls in collections on the Mortgage
Loans in the related Trust Fund.
Additional Certificate Amortization. In addition to entitling the holders
thereof to a specified portion (which may during specified periods range from
none to all) of the principal payments received on the Mortgage Assets in the
related Trust Fund, one or more classes of Certificates of any series, including
one or more classes of Offered Certificates of such series, may provide for
distributions of principal thereof from (i) amounts attributable to interest
accrued but not currently distributable on one or more classes of Accrual
Certificates, (ii) Excess Funds or (iii) any other amounts described in the
related Prospectus Supplement. Unless otherwise specified in the related
Prospectus Supplement, "EXCESS FUNDS" will, in general, represent that portion
of the amounts distributable in respect of the Certificates of any series on any
Distribution Date that represent (i) interest received or advanced on the
Mortgage Assets in the related Trust Fund that is in excess of the interest
currently accrued on the Certificates of such series, or (ii) Prepayment
Premiums, payments from Equity Participations or any other amounts received on
the Mortgage Assets in the related Trust Fund that do not constitute interest
thereon or principal thereof.
The amortization of any class of Certificates out of the sources described
in the preceding paragraph would shorten the weighted average life of such
Certificates and, if such Certificates were purchased at a
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premium, reduce the yield thereon. The related Prospectus Supplement will
discuss the relevant factors to be considered in determining whether
distributions of principal of any class of Certificates out of such sources is
likely to have any material effect on the rate at which such Certificates are
amortized and the consequent yield with respect thereto.
Optional Early Termination. The Master Servicer, the Depositor or, if
specified in the related Prospectus Supplement, the holder of the residual
interest in a REMIC may at its option either (i) effect early retirement of a
series of Certificates through the purchase of the assets in the related Trust
Fund or (ii) purchase, in whole but not in part, the Certificates specified in
the related Prospectus Supplement; in each case under the circumstances and in
the manner set forth herein under "Description of the Certificates--Termination;
Retirement of Certificates" and in the related Prospectus Supplement. In the
absence of other factors, any such early retirement of a class of Offered
Certificates would shorten the weighted average life thereof and, if such
Certificates were purchased at premium, reduce the yield thereon.
THE DEPOSITOR
GMAC Commercial Mortgage Securities, Inc. is a wholly-owned subsidiary of
GMACCM which is a wholly-owned subsidiary of GMAC Mortgage Corporation, a
Michigan Corporation. The Depositor was incorporated in the State of Delaware on
June 22, 1995. The Depositor was organized for the purpose of serving as a
private secondary mortgage market conduit. The Depositor maintains its principal
office at 650 Dresher Road, Horsham, Pennsylvania 19044. Its telephone number is
(215) 682-3480. The Depositor does not have, nor is it expected in the future to
have, any significant assets.
GMAC COMMERCIAL MORTGAGE CORPORATION
Unless otherwise specified in the related Prospectus Supplement, GMAC
Commercial Mortgage Corporation, an affiliate of the Company and a corporation
duly organized and existing under the laws of the State of California, will act
as the Master Servicer or Manager for a series of Certificates.
GMACCM buys mortgage loans primarily through its branch network and also
from mortgage loan originators or sellers nationwide and services mortgage loans
for its own account and for others. GMACCM's principal executive offices are
located at 650 Dresher Road, Horsham, Pennsylvania 19044. Its telephone number
is (215) 682-4622. GMACCM conducts operations from its headquarters in
Pennsylvania and from offices located in California, Colorado, the District of
Columbia, Illinois, Michigan, Minnesota, Missouri, Nebraska, New York, Ohio,
Texas, Virginia, Washington and Wisconsin.
The size of the loan portfolio which GMACCM was servicing as of the end of
the most recent calendar quarter will be set forth in each Prospectus Supplement
relating to a Mortgage Pool master serviced by it. GMACCM's delinquency,
foreclosure and loan loss experience as of the end of the most recent calendar
quarter for which such information is available on the portfolio of loans master
serviced by it that were originated under its modified loan purchase criteria
will be summarized in each Prospectus Supplement relating to a Mortgage Pool
master serviced by it. There can be no assurance that such experience will be
representative of the results that may be experienced with respect to any
particular Mortgage Pool.
DESCRIPTION OF THE CERTIFICATES
GENERAL
Each series of Certificates will represent the entire beneficial ownership
interest in the Trust Fund created pursuant to the related Pooling and Servicing
Agreement. As described in the related Prospectus Supplement, the Certificates
of each series, including the Offered Certificates of such series, may consist
of one or more classes of Certificates that, among other things: (i) provide for
the accrual of interest on the Certificate Balance or Notional Amount thereof at
a fixed, variable or adjustable rate; (ii) constitute Senior Certificates or
Subordinate Certificates; (iii) constitute Stripped Interest Certificates or
Stripped Principal Certificates; (iv) provide for distributions of interest
thereon or principal thereof that commence only after the occurrence
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of certain events, such as the retirement of one or more other classes of
Certificates of such series; (v) provide for distributions of principal thereof
to be made, from time to time or for designated periods, at a rate that is
faster (and, in some cases, substantially faster) or slower (and, in some cases,
substantially slower) than the rate at which payments or other collections of
principal are received on the Mortgage Assets in the related Trust Fund; (vi)
provide for distributions of principal thereof to be made, subject to available
funds, based on a specified principal payment schedule or other methodology; or
(vii) provide for distributions based on collections on the Mortgage Assets in
the related Trust Fund attributable to Prepayment Premiums and Equity
Participations.
If so specified in the related Prospectus Supplement, a class of
Certificates may have two or more component parts, each having characteristics
that are otherwise described herein as being attributable to separate and
distinct classes. For example, a class of Certificates may have a Certificate
Balance on which it accrues interest at a fixed, variable or adjustable rate.
Such class of Certificates may also have certain characteristics attributable to
Stripped Interest Certificates insofar as it may also entitle the holders
thereof to distributions of interest accrued on a Notional Amount at a different
fixed, variable or adjustable rate. In addition, a class of Certificates may
accrue interest on one portion of its Certificate Balance at one fixed, variable
or adjustable rate and on another portion of its Certificate Balance at a
different fixed, variable or adjustable rate.
Each class of Offered Certificates of a series will be issued in minimum
denominations corresponding to the principal balances or, in case of certain
classes of Stripped Interest Certificates or REMIC Residual Certificates,
notional amounts or percentage interests, specified in the related Prospectus
Supplement. As provided in the related Prospectus Supplement, one or more
classes of Offered Certificates of any series may be issued in fully registered,
definitive form (such Certificates, "DEFINITIVE CERTIFICATES") or may be offered
in book-entry format (such Certificates, "BOOK-ENTRY CERTIFICATES") through the
facilities of The Depository Trust Company ("DTC"). The Offered Certificates of
each series (if issued as Definitive Certificates) may be transferred or
exchanged, subject to any restrictions on transfer described in the related
Prospectus Supplement, at the location specified in the related Prospectus
Supplement, without the payment of any service charges, other than any tax or
other governmental charge payable in connection therewith. Interests in a class
of Book-Entry Certificates will be transferred on the book-entry records of DTC
and its participating organizations.
DISTRIBUTIONS
Distributions on the Certificates of each series will be made on each
Distribution Date from the Available Distribution Amount for such series and
such Distribution Date. Unless otherwise provided in the related Prospectus
Supplement, the "AVAILABLE DISTRIBUTION AMOUNT" for any series of Certificates
and any Distribution Date will refer to the total of all payments or other
collections (or advances in lieu thereof) on, under or in respect of the
Mortgage Assets and any other assets included in the related Trust Fund that are
available for distribution to the holders of Certificates of such series on such
date. The particular components of the Available Distribution Amount for any
series and Distribution Date will be more specifically described in the related
Prospectus Supplement. In general, the Distribution Date for a series of
Certificates will be the 25th day of each month (or, if any such 25th day is not
a business day, the next succeeding business day), commencing in the month
immediately following the month in which such series of Certificates is issued.
Except as otherwise specified in the related Prospectus Supplement,
distributions on the Certificates of each series (other than the final
distribution in retirement of any such Certificate) will be made to the persons
in whose names such Certificates are registered at the close of business on the
last business day of the month preceding the month in which the applicable
Distribution Date occurs (the "RECORD DATE"). All distributions with respect to
each class of Certificates on each Distribution Date will be allocated pro rata
among the outstanding Certificates in such class in proportion to the respective
Percentage Interests evidenced thereby unless otherwise specified in the related
Prospectus Supplement. Payments will be made either by wire transfer in
immediately available funds to the account of a Certificateholder at a bank or
other entity having appropriate facilities therefor, if such Certificateholder
has provided the person required to make such payments with wiring instructions
no later than the related Record Date or such other date specified in the
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related Prospectus Supplement (and, if so provided in the related Prospectus
Supplement, such Certificateholder holds Certificates in the requisite amount or
denomination specified therein), or by check mailed to the address of such
Certificateholder as it appears on the Certificate Register; provided, however,
that the final distribution in retirement of any class of Certificates (whether
Definitive Certificates or Book-Entry Certificates) will be made only upon
presentation and surrender of such Certificates at the location specified in the
notice to Certificateholders of such final distribution. The undivided
percentage interest (the "PERCENTAGE INTEREST") represented by an Offered
Certificate of a particular class will be equal to the percentage obtained by
dividing the initial principal balance or notional amount of such Certificate by
the initial Certificate Balance or Notional Amount of such class.
DISTRIBUTIONS OF INTEREST ON THE CERTIFICATES
Each class of Certificates of each series (other than certain classes of
Stripped Principal Certificates and certain classes of REMIC Residual
Certificates that have no Pass-Through Rate) may have a different Pass-Through
Rate, which in each case may be fixed, variable or adjustable. The related
Prospectus Supplement will specify the Pass-Through Rate or, in the case of a
variable or adjustable Pass-Through Rate, the method for determining the
Pass-Through Rate, for each class. Unless otherwise specified in the related
Prospectus Supplement, interest on the Certificates of each series will be
calculated on the basis of a 360-day year consisting of twelve 30-day months.
Distributions of interest in respect of any class of Certificates (other
than a class of Accrual Certificates, which will be entitled to distributions of
accrued interest commencing only on the Distribution Date, or under the
circumstances, specified in the related Prospectus Supplement, and other than
any class of Stripped Principal Certificates or REMIC Residual Certificates that
is not entitled to any distributions of interest) will be made on each
Distribution Date based on the Accrued Certificate Interest for such class and
such Distribution Date, subject to the sufficiency of the portion of the
Available Distribution Amount allocable to such class on such Distribution Date.
Prior to the time interest is distributable on any class of Accrual
Certificates, the amount of Accrued Certificate Interest otherwise distributable
on such class will be added to the Certificate Balance thereof on each
Distribution Date or otherwise deferred as described in the related Prospectus
Supplement. With respect to each class of Certificates (other than certain
classes of Stripped Interest Certificates and certain classes of REMIC Residual
Certificates), the "ACCRUED CERTIFICATE INTEREST" for each Distribution Date
will be equal to interest at the applicable Pass-Through Rate accrued for a
specified period (generally the most recently ended calendar month) on the
outstanding Certificate Balance of such class of Certificates immediately prior
to such Distribution Date. Unless otherwise provided in the related Prospectus
Supplement, the Accrued Certificate Interest for each Distribution Date on a
class of Stripped Interest Certificates will be similarly calculated except that
it will accrue on a Notional Amount that is either (i) based on the principal
balances of some or all of the Mortgage Assets in the related Trust Fund or (ii)
equal to the Certificate Balances of one or more other classes of Certificates
of the same series. Reference to a Notional Amount with respect to a class of
Stripped Interest Certificates is solely for convenience in making certain
calculations and does not represent the right to receive any distributions of
principal. If so specified in the related Prospectus Supplement, the amount of
Accrued Certificate Interest that is otherwise distributable on (or, in the case
of Accrual Certificates, that may otherwise be added to the Certificate Balance
of) one or more classes of the Certificates of a series may be reduced to the
extent that any Prepayment Interest Shortfalls, as described under "Yield and
Maturity Considerations--Certain Shortfalls in Collections of Interest", exceed
the amount of any sums that are applied to offset the amount of such shortfalls.
The particular manner in which such shortfalls will be allocated among some or
all of the classes of Certificates of that series will be specified in the
related Prospectus Supplement. The related Prospectus Supplement will also
describe the extent to which the amount of Accrued Certificate Interest that is
otherwise distributable on (or, in the case of Accrual Certificates, that may
otherwise be added to the Certificate Balance of) a class of Offered
Certificates may be reduced as a result of any other contingencies, including
delinquencies, losses and deferred interest on or in respect of the Mortgage
Assets in the related Trust Fund. Unless otherwise provided in the related
Prospectus Supplement, any reduction in the amount of Accrued Certificate
Interest otherwise distributable on a class of Certificates by reason of the
allocation to such class of a portion of any deferred interest on or in respect
of the Mortgage Assets in the related Trust Fund will result
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in a corresponding increase in the Certificate Balance of such class. See "Risk
Factors--Yield and Prepayment Considerations" and "Yield and Maturity
Considerations--Certain Shortfalls in Collections of Interest".
DISTRIBUTIONS OF PRINCIPAL OF THE CERTIFICATES
Each class of Certificates of each series (other than certain classes of
Stripped Interest Certificates and certain classes of REMIC Residual
Certificates) will have a Certificate Balance, which, at any time, will equal
the then maximum amount that the holders of Certificates of such class will be
entitled to receive as principal out of the future cash flow on the Mortgage
Assets and other assets included in the related Trust Fund. The outstanding
Certificate Balance of a class of Certificates will be reduced by distributions
of principal made thereon from time to time and, if so provided in the related
Prospectus Supplement, further by any losses incurred in respect of the related
Mortgage Assets allocated thereto from time to time. In turn, the outstanding
Certificate Balance of a class of Certificates may be increased as a result of
any deferred interest on or in respect of the related Mortgage Assets being
allocated thereto from time to time, and will be increased, in the case of a
class of Accrual Certificates prior to the Distribution Date on which
distributions of interest thereon are required to commence, by the amount of any
Accrued Certificate Interest in respect thereof (reduced as described above).
Unless otherwise provided in the related Prospectus Supplement, the initial
aggregate Certificate Balance of all classes of a series of Certificates will
not be greater than the aggregate outstanding principal balance of the related
Mortgage Assets as of a specified date (the "CUT-OFF DATE"), after application
of scheduled payments due on or before such date, whether or not received. The
initial Certificate Balance of each class of a series of Certificates will be
specified in the related Prospectus Supplement. As and to the extent described
in the related Prospectus Supplement, distributions of principal with respect to
a series of Certificates will be made on each Distribution Date to the holders
of the class or classes of Certificates of such series entitled thereto until
the Certificate Balances of such Certificates have been reduced to zero.
Distributions of principal with respect to one or more classes of Certificates
may be made at a rate that is faster (and, in some cases, substantially faster)
than the rate at which payments or other collections of principal are received
on the Mortgage Assets in the related Trust Fund. Distributions of principal
with respect to one or more classes of Certificates may not commence until the
occurrence of certain events, such as the retirement of one or more other
classes of Certificates of the same series, or may be made at a rate that is
slower (and, in some cases, substantially slower) than the rate at which
payments or other collections of principal are received on the Mortgage Assets
in the related Trust Fund. Distributions of principal with respect to one or
more classes of Certificates (each such class, a "CONTROLLED AMORTIZATION
CLASS") may be made, subject to available funds, based on a specified principal
payment schedule. Distributions of principal with respect to one or more classes
of Certificates (each such class, a "COMPANION CLASS") may be contingent on the
specified principal payment schedule for a Controlled Amortization Class of the
same series and the rate at which payments and other collections of principal on
the Mortgage Assets in the related Trust Fund are received. Unless otherwise
specified in the related Prospectus Supplement, distributions of principal of
any class of Offered Certificates will be made on a pro rata basis among all of
the Certificates of such class.
ALLOCATION OF LOSSES AND SHORTFALLS
The amount of any losses or shortfalls in collections on the Mortgage
Assets in any Trust Fund (to the extent not covered or offset by draws on any
reserve fund or under any instrument of Credit Support) will be allocated among
the respective classes of Certificates of the related series in the priority and
manner, and subject to the limitations, specified in the related Prospectus
Supplement. As described in the related Prospectus Supplement, such allocations
may be effected by a reduction in the entitlements to interest and/or the
Certificate Balances of one or more such classes of Certificates, or by
establishing a priority of payments among such classes of Certificates. See
"Description of Credit Support".
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ADVANCES IN RESPECT OF DELINQUENCIES
If and to the extent provided in the related Prospectus Supplement, if a
Trust Fund includes Mortgage Loans, the Master Servicer, a Special Servicer, the
Trustee, any provider of Credit Support and/or any other specified person may be
obligated to advance, or have the option of advancing, on or before each
Distribution Date, from its or their own funds or from excess funds held in the
related Certificate Account that are not part of the Available Distribution
Amount for the related series of Certificates for such Distribution Date, an
amount up to the aggregate of any payments of principal (other than the
principal portion of any balloon payments) and interest that were due on or in
respect of such Mortgage Loans during the related Due Period and were delinquent
on the related Determination Date.
Advances are intended to maintain a regular flow of scheduled interest and
principal payments to holders of the class or classes of Certificates entitled
thereto, rather than to guarantee or insure against losses. Accordingly, all
advances made out of a specific entity's own funds will be reimbursable out of
related recoveries on the Mortgage Loans (including amounts drawn under any fund
or instrument constituting Credit Support) respecting which such advances were
made (as to any Mortgage Loan, "RELATED PROCEEDS") and such other specific
sources as may be identified in the related Prospectus Supplement, including in
the case of a series that includes one or more classes of Subordinate
Certificates, collections on other Mortgage Assets in the related Trust Fund
that would otherwise be distributable to the holders of one or more classes of
such Subordinate Certificates. No advance will be required to be made by a
Master Servicer, Special Servicer or Trustee if, in the judgment of the Master
Servicer, Special Servicer or Trustee, as the case may be, such advance would
not be recoverable from Related Proceeds or another specifically identified
source (any such advance, a "NONRECOVERABLE ADVANCE"); and, if previously made
by a Master Servicer, Special Servicer or Trustee, a Nonrecoverable Advance will
be reimbursable thereto from any amounts in the related Certificate Account
prior to any distributions being made to the related series of
Certificateholders.
If advances have been made by a Master Servicer, Special Servicer, Trustee
or other entity from excess funds in a Certificate Account, such Master
Servicer, Special Servicer, Trustee or other entity, as the case may be, will be
required to replace such funds in such Certificate Account on any future
Distribution Date to the extent that funds in such Certificate Account on such
Distribution Date are less than payments required to be made to the related
series of Certificateholders on such date. If so specified in the related
Prospectus Supplement, the obligation of a Master Servicer, Special Servicer,
Trustee or other entity to make advances may be secured by a cash advance
reserve fund or a surety bond. If applicable, information regarding the
characteristics of, and the identity of any obligor on, any such surety bond,
will be set forth in the related Prospectus Supplement.
If and to the extent so provided in the related Prospectus Supplement, any
entity making advances will be entitled to receive interest on certain or all of
such advances for a specified period during which such advances are outstanding
at the rate specified in such Prospectus Supplement, and such entity will be
entitled to payment of such interest periodically from general collections on
the Mortgage Loans in the related Trust Fund prior to any payment to the related
series of Certificateholders or as otherwise provided in the related Pooling and
Servicing Agreement and described in such Prospectus Supplement.
The Prospectus Supplement for any series of Certificates evidencing an
interest in a Trust Fund that includes MBS will describe any comparable
advancing obligation of a party to the related Pooling and Servicing Agreement
or of a party to the related MBS Agreement.
REPORTS TO CERTIFICATEHOLDERS
On each Distribution Date, together with the distribution to the holders of
each class of the Offered Certificates of a series, a Master Servicer, Manager
or Trustee, as provided in the related Prospectus Supplement, will forward to
each such holder, a statement (a "DISTRIBUTION DATE STATEMENT") that, unless
otherwise provided in the related Prospectus Supplement, will set forth, among
other things, in each case to the extent applicable:
(i) the amount of such distribution to holders of such class of
Offered Certificates that was applied to reduce the Certificate Balance
thereof;
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(ii) the amount of such distribution to holders of such class of
Offered Certificates that was applied to pay Accrued Certificate Interest;
(iii) the amount, if any, of such distribution to holders of such
class of Offered Certificates that was allocable to (A) Prepayment Premiums
and (B) payments on account of Equity Participations;
(iv) the amount, if any, by which such distribution is less than the
amounts to which holders of such class of Offered Certificates are
entitled;
(v) if the related Trust Fund includes Mortgage Loans, the aggregate
amount of advances included in such distribution;
(vi) if the related Trust Fund includes Mortgage Loans, the amount of
servicing compensation received by the related Master Servicer (and, if
payable directly out of the related Trust Fund, by any Special Servicer and
any Sub-Servicer) and, if the related Trust Fund includes MBS, the amount
of administrative compensation received by the REMIC Administrator;
(vii) information regarding the aggregate principal balance of the
related Mortgage Assets on or about such Distribution Date;
(viii) if the related Trust Fund includes Mortgage Loans, information
regarding the number and aggregate principal balance of such Mortgage Loans
that are delinquent;
(ix) if the related Trust Fund includes Mortgage Loans, information
regarding the aggregate amount of losses incurred and principal prepayments
made with respect to such Mortgage Loans during the related Prepayment
Period (that is, the specified period, generally corresponding to the
related Due Period, during which prepayments and other unscheduled
collections on the Mortgage Loans in the related Trust Fund must be
received in order to be distributed on a particular Distribution Date);
(x) the Certificate Balance or Notional Amount, as the case may be, of
such class of Certificates at the close of business on such Distribution
Date, separately identifying any reduction in such Certificate Balance or
Notional Amount due to the allocation of any losses in respect of the
related Mortgage Assets, any increase in such Certificate Balance or
Notional Amount due to the allocation of any negative amortization in
respect of the related Mortgage Assets and any increase in the Certificate
Balance of a class of Accrual Certificates, if any, in the event that
Accrued Certificate Interest has been added to such balance;
(xi) if such class of Offered Certificates has a variable Pass-Through
Rate or an adjustable Pass-Through Rate, the Pass-Through Rate applicable
thereto for such Distribution Date and, if determinable, for the next
succeeding Distribution Date;
(xii) the amount deposited in or withdrawn from any reserve fund on
such Distribution Date, and the amount remaining on deposit in such reserve
fund as of the close of business on such Distribution Date;
(xiii) if the related Trust Fund includes one or more instruments of
Credit Support, such as a letter of credit, an insurance policy and/or a
surety bond, the amount of coverage under each such instrument as of the
close of business on such Distribution Date; and
(xiv) the amount of Credit Support being afforded by any classes of
Subordinate Certificates.
In the case of information furnished pursuant to subclauses (i)-(iii)
above, the amounts will be expressed as a dollar amount per minimum denomination
of the relevant class of Offered Certificates or as a percentage.
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The Prospectus Supplement for each series of Certificates may describe
additional information to be included in reports to the holders of the Offered
Certificates of such series.
Within a reasonable period of time after the end of each calendar year, the
Master Servicer, Manager or Trustee for a series of Certificates, as the case
may be, will be required to furnish to each person who at any time during the
calendar year was a holder of an Offered Certificate of such series a statement
containing the information set forth in subclauses (i)-(iii) above, aggregated
for such calendar year or the applicable portion thereof during which such
person was a Certificateholder. Such obligation will be deemed to have been
satisfied to the extent that substantially comparable information is provided
pursuant to any requirements of the Code as are from time to time in force. See,
however, "--Book-Entry Registration and Definitive Certificates" below.
If the Trust Fund for a series of Certificates includes MBS, the ability of
the related Master Servicer, Manager or Trustee, as the case may be, to include
in any Distribution Date Statement information regarding the mortgage loans
underlying such MBS will depend on the reports received with respect to such
MBS. In such cases, the related Prospectus Supplement will describe the
loan-specific information to be included in the Distribution Date Statements
that will be forwarded to the holders of the Offered Certificates of that series
in connection with distributions made to them.
TERMINATION; RETIREMENT OF CERTIFICATES
The obligations created by the Pooling and Servicing Agreement for each
series of Certificates (other than limited payment and notice obligations of the
applicable parties) will terminate upon the payment to Certificateholders of
that series of all amounts held in the Certificate Account or by the Master
Servicer and required to be paid to them pursuant to such Pooling and Servicing
Agreement following the earlier of (i) the final payment or other liquidation or
disposition (or any advance with respect thereto) of the last Mortgage Asset
subject thereto or of any property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan subject thereto and (ii) the purchase by the
Master Servicer, the Depositor or, if specified in the related Prospectus
Supplement, by the holder of the REMIC Residual Certificates (see "Certain
Federal Income Tax Consequences" below) from the Trust Fund for such series of
all remaining Mortgage Assets therein and property, if any, acquired in respect
of the Mortgage Loans therein. In addition to the foregoing, the Master Servicer
or the Depositor will have the option to purchase, in whole but not in part, the
Certificates specified in the related Prospectus Supplement in the manner set
forth in the related Prospectus Supplement. Upon the purchase of such
Certificates or at any time thereafter, at the option of the Master Servicer or
the Depositor, the Mortgage Assets may be sold, thereby effecting a retirement
of the Certificates and the termination of the Trust Fund, or the Certificates
so purchased may be held or resold by the Master Servicer or the Depositor. In
no event, however, will the trust created continue beyond the expiration of 21
years from the death of the survivor of certain persons named in such Pooling
and Servicing Agreement. Written notice of termination of the Pooling and
Servicing Agreement will be given to each Certificateholder, and the final
distribution will be made only upon surrender and cancellation of the
Certificates at an office or agency appointed by the Trustee which will be
specified in the notice of termination. If the Certificateholders are permitted
to terminate the trust under the applicable Pooling and Servicing Agreement, a
penalty may be imposed upon the Certificateholders based upon the fee that would
be foregone by the Master Servicer and/or any Special Servicer because of such
termination.
Any such purchase of Mortgage Assets and property acquired in respect of
Mortgage Loans evidenced by a series of Certificates shall be made at the option
of the Master Servicer, the Depositor or, if applicable, the holder of the REMIC
Residual Certificates at the price specified in the related Prospectus
Supplement. The exercise of such right will effect early retirement of the
Certificates of that series, but the right of the Master Servicer, the Depositor
or, if applicable, such holder to so purchase is subject to the aggregate
principal balance of the Mortgage Assets for that series as of the Distribution
Date on which the purchase proceeds are to be distributed to Certificateholders
being less than the percentage specified in the related Prospectus Supplement of
the aggregate principal balance of the Mortgage Assets at the Cut-off Date for
that series. The Prospectus Supplement for each series of Certificates will set
forth the amounts that the holders of such Certificates will be entitled to
receive upon such early retirement. Such early termination may adversely affect
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the yield to holders of certain classes of such Certificates. If a REMIC
election has been made, the termination of the related Trust Fund will be
effected in a manner consistent with applicable federal income tax regulations
and its status as a REMIC.
BOOK-ENTRY REGISTRATION AND DEFINITIVE CERTIFICATES
If so provided in the Prospectus Supplement for a series of Certificates,
one or more classes of the Offered Certificates of such series will be offered
in book-entry format through the facilities of DTC, and each such class will be
represented by one or more global Certificates registered in the name of DTC or
its nominee.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking corporation" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
was created to hold securities for its participating organizations
("PARTICIPANTS") and facilitate the clearance and settlement of securities
transactions between Participants through electronic computerized book-entry
changes in their accounts, thereby eliminating the need for physical movement of
securities certificates. "DIRECT PARTICIPANTS", which maintain accounts with
DTC, include securities brokers and dealers, banks, trust companies and clearing
corporations and may include certain other organizations. DTC is owned by a
number of its Direct Participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Access to the DTC system also is available to others such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Direct Participant, either directly or indirectly
("INDIRECT PARTICIPANTS"). The rules applicable to DTC and its Participants are
on file with the Commission.
Purchases of Book-Entry Certificates under the DTC system must be made by
or through Direct Participants, which will receive a credit for the Book-Entry
Certificates on DTC's records. The ownership interest of each actual purchaser
of a Book-Entry Certificate (a "CERTIFICATE OWNER") is in turn to be recorded on
the Direct and Indirect Participants' records. Certificate Owners will not
receive written confirmation from DTC of their purchases, but Certificate Owners
are expected to receive written confirmations providing details of such
transactions, as well as periodic statements of their holdings, from the Direct
or Indirect Participant through which each Certificate Owner entered into the
transaction. Transfers of ownership interest in the Book-Entry Certificates are
to be accomplished by entries made on the books of Participants acting on behalf
of Certificate Owners. Certificate Owners will not receive certificates
representing their ownership interests in the Book-Entry Certificates, except in
the event that use of the book-entry system for the Book-Entry Certificates of
any series is discontinued as described below.
DTC has no knowledge of the actual Certificate Owners of the Book-Entry
Certificates; DTC's records reflect only the identity of the Direct Participants
to whose accounts such Certificates are credited, which may or may not be the
Certificate Owners. The Participants will remain responsible for keeping account
of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Certificate Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Distributions on the Book-Entry Certificates will be made to DTC. DTC's
practice is to credit Direct Participants' accounts on the related Distribution
Date in accordance with their respective holdings shown on DTC's records unless
DTC has reason to believe that it will not receive payment on such date.
Disbursement of such distributions by Participants to Certificate Owners will be
governed by standing instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or registered in
"street name", and will be the responsibility of each such Participant (and not
of DTC, the Depositor or any Trustee or Master Servicer), subject to any
statutory or regulatory requirements as may be in effect from time to time.
Under a book-entry system, Certificate Owners may receive payments after the
related Distribution Date.
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Unless otherwise provided in the related Prospectus Supplement, the only
"Certificateholder"(as such term is used in the related Pooling and Servicing
Agreement) of Book-Entry Certificates will be the nominee of DTC, and the
Certificate Owners will not be recognized as Certificateholders under the
Pooling and Servicing Agreement. Certificate Owners will be permitted to
exercise the rights of Certificateholders under the related Pooling and
Servicing Agreement only indirectly through the Participants who in turn will
exercise their rights through DTC. The Depositor is informed that DTC will take
action permitted to be taken by a Certificateholder under a Pooling and
Servicing Agreement only at the direction of one or more Participants to whose
account with DTC interests in the Book-Entry Certificates are credited.
Because DTC can act only on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain Certificate Owners, the ability of a
Certificate Owner to pledge its interest in Book-Entry Certificates to persons
or entities that do not participate in the DTC system, or otherwise take actions
in respect of its interest in Book-Entry Certificates, may be limited due to the
lack of a physical certificate evidencing such interest.
Unless otherwise specified in the related Prospectus Supplement,
Certificates initially issued in book-entry form will be issued as Definitive
Certificates to Certificate Owners or their nominees, rather than to DTC or its
nominee, only if (i) the Depositor advises the Trustee in writing that DTC is no
longer willing or able to discharge properly its responsibilities as depository
with respect to such Certificates and the Depositor is unable to locate a
qualified successor or (ii) the Depositor, at its option, elects to terminate
the book-entry system through DTC with respect to such Certificates. Upon the
occurrence of either of the events described in the preceding sentence, DTC will
be required to notify all Participants of the availability through DTC of
Definitive Certificates. Upon surrender by DTC of the certificate or
certificates representing a class of Book-Entry Certificates, together with
instructions for registration, the Trustee for the related series or other
designated party will be required to issue to the Certificate Owners identified
in such instructions the Definitive Certificates to which they are entitled, and
thereafter the holders of such Definitive Certificates will be recognized as
Certificateholders under the related Pooling and Servicing Agreement.
THE POOLING AND SERVICING AGREEMENTS
GENERAL
The Certificates of each series will be issued pursuant to a Pooling and
Servicing Agreement. In general, the parties to a Pooling and Servicing
Agreement will include the Depositor, the Trustee, the Master Servicer and, in
some cases, a Special Servicer appointed as of the date of the Pooling and
Servicing Agreement. However, a Pooling and Servicing Agreement that relates to
a Trust Fund that includes MBS may include a Manager as a party, but may not
include a Master Servicer or other servicer as a party. All parties to each
Pooling and Servicing Agreement under which Certificates of a series are issued
will be identified in the related Prospectus Supplement. If so specified in the
related Prospectus Supplement, an affiliate of the Depositor, or the Mortgage
Asset Seller or an affiliate thereof, may perform the functions of Master
Servicer, Special Servicer or Manager. Any party to a Pooling and Servicing
Agreement or any affiliate thereof may own Certificates issued thereunder.
A form of a pooling and servicing agreement has been filed as an exhibit to
the Registration Statement of which this Prospectus is a part. However, the
provisions of each Pooling and Servicing Agreement will vary depending upon the
nature of the Certificates to be issued thereunder and the nature of the related
Trust Fund. The following summaries describe certain provisions that may appear
in a Pooling and Servicing Agreement under which Certificates that evidence
interests in Mortgage Loans will be issued. The Prospectus Supplement for a
series of Certificates will describe any provision of the related Pooling and
Servicing Agreement that materially differs from the description thereof
contained in this Prospectus and, if the related Trust Fund includes MBS, will
summarize all of the material provisions of the related Pooling and Servicing
Agreement. The summaries herein do not purport to be complete and are subject
to, and are qualified in their entirety by reference to, all of the provisions
of the Pooling and Servicing Agreement for each series of Certificates and the
description of such provisions in the related Prospectus Supplement. The
Depositor will provide a copy of the Pooling and Servicing Agreement (without
exhibits) that relates to any series of
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Certificates without charge upon written request of a holder of a Certificate of
such series addressed to it at its principal executive offices specified herein
under "The Depositor".
ASSIGNMENT OF MORTGAGE LOANS; REPURCHASES
At the time of issuance of any series of Certificates, the Depositor will
assign (or cause to be assigned) to the designated Trustee the Mortgage Loans to
be included in the related Trust Fund, together with, unless otherwise specified
in the related Prospectus Supplement, all principal and interest to be received
on or with respect to such Mortgage Loans after the Cut-off Date, other than
principal and interest due on or before the Cut-off Date. The Trustee will,
concurrently with such assignment, deliver the Certificates to or at the
direction of the Depositor in exchange for the Mortgage Loans and the other
assets to be included in the Trust Fund for such series. Each Mortgage Loan will
be identified in a schedule appearing as an exhibit to the related Pooling and
Servicing Agreement. Such schedule generally will include detailed information
that pertains to each Mortgage Loan included in the related Trust Fund, which
information will typically include the address of the related Mortgaged Property
and type of such property; the Mortgage Rate and, if applicable, the applicable
index, gross margin, adjustment date and any rate cap information; the original
and remaining term to maturity; the original amortization term; and the original
and outstanding principal balance.
In addition, unless otherwise specified in the related Prospectus
Supplement, the Depositor will, as to each Mortgage Loan to be included in a
Trust Fund, deliver, or cause to be delivered, to the related Trustee (or to a
custodian appointed by the Trustee as described below) the Mortgage Note
endorsed, without recourse, either in blank or to the order of such Trustee (or
its nominee), the Mortgage with evidence of recording indicated thereon (except
for any Mortgage not returned from the public recording office), an assignment
of the Mortgage in blank or to the Trustee (or its nominee) in recordable form,
together with any intervening assignments of the Mortgage with evidence of
recording thereon (except for any such assignment not returned from the public
recording office), and, if applicable, any riders or modifications to such
Mortgage Note and Mortgage, together with certain other documents at such times
as set forth in the related Pooling and Servicing Agreement. Such assignments
may be blanket assignments covering Mortgages on Mortgaged Properties located in
the same county, if permitted by law. Notwithstanding the foregoing, a Trust
Fund may include Mortgage Loans where the original Mortgage Note is not
delivered to the Trustee if the Depositor delivers, or causes to be delivered,
to the related Trustee (or such custodian) a copy or a duplicate original of the
Mortgage Note, together with an affidavit certifying that the original thereof
has been lost or destroyed. In addition, if the Depositor cannot deliver, with
respect to any Mortgage Loan, the Mortgage or any intervening assignment with
evidence of recording thereon concurrently with the execution and delivery of
the related Pooling and Servicing Agreement because of a delay caused by the
public recording office, the Depositor will deliver, or cause to be delivered,
to the related Trustee (or such custodian) a true and correct photocopy of such
Mortgage or assignment as submitted for recording. The Depositor will deliver,
or cause to be delivered, to the related Trustee (or such custodian) such
Mortgage or assignment with evidence of recording indicated thereon after
receipt thereof from the public recording office. If the Depositor cannot
deliver, with respect to any Mortgage Loan, the Mortgage or any intervening
assignment with evidence of recording thereon concurrently with the execution
and delivery of the related Pooling and Servicing Agreement because such
Mortgage or assignment has been lost, the Depositor will deliver, or cause to be
delivered, to the related Trustee (or such custodian) a true and correct
photocopy of such Mortgage or assignment with evidence of recording thereon.
Unless otherwise specified in the related Prospectus Supplement, assignments of
Mortgage to the Trustee (or its nominee) will be recorded in the appropriate
public recording office, except in states where, in the opinion of counsel
acceptable to the Trustee, such recording is not required to protect the
Trustee's interests in the Mortgage Loan against the claim of any subsequent
transferee or any successor to or creditor of the Depositor or the originator of
such Mortgage Loan.
The Trustee (or a custodian appointed by the Trustee) for a series of
Certificates will be required to review the Mortgage Loan documents delivered to
it within a specified period of days after receipt thereof, and the Trustee (or
such custodian) will hold such documents in trust for the benefit of the
Certificateholders of such series. Unless otherwise specified in the related
Prospectus Supplement, if any such document is found to be missing or defective,
and such omission or defect, as the case may be, materially and adversely
affects the
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interests of the Certificateholders of the related series, the Trustee (or such
custodian) will be required to notify the Master Servicer and the Depositor, and
one of such persons will be required to notify the relevant Mortgage Asset
Seller. In that case, and if the Mortgage Asset Seller cannot deliver the
document or cure the defect within a specified number of days after receipt of
such notice, then, except as otherwise specified below or in the related
Prospectus Supplement, the Mortgage Asset Seller will be obligated to repurchase
the related Mortgage Loan from the Trustee at a price generally equal to the
unpaid principal balance thereof, together with accrued but unpaid interest
through a date on or about the date of purchase, or at such other price as will
be specified in the related Prospectus Supplement (in any event, the "PURCHASE
PRICE"). If so provided in the Prospectus Supplement for a series of
Certificates, a Mortgage Asset Seller, in lieu of repurchasing a Mortgage Loan
as to which there is missing or defective loan documentation, will have the
option, exercisable upon certain conditions and/or within a specified period
after initial issuance of such series of Certificates, to replace such Mortgage
Loan with one or more other mortgage loans, in accordance with standards that
will be described in the Prospectus Supplement. Unless otherwise specified in
the related Prospectus Supplement, this repurchase or substitution obligation
will constitute the sole remedy to holders of the Certificates of any series or
to the related Trustee on their behalf for missing or defective Mortgage Asset
documentation and neither the Depositor nor, unless it is the Mortgage Asset
Seller, the Master Servicer will be obligated to purchase or replace a Mortgage
Loan if a Mortgage Asset Seller defaults on its obligation to do so.
The Trustee will be authorized at any time to appoint one or more
custodians pursuant to a custodial agreement to hold title to the Mortgage Loans
in any Trust Fund, and to maintain possession of and, if applicable, to review,
the documents relating to such Mortgage Loans, in any case as the agent of the
Trustee. The identity of any such custodian to be appointed on the date of
initial issuance of the Certificates will be set forth in the related Prospectus
Supplement. Any such custodian may be an affiliate of the Depositor or the
Master Servicer.
REPRESENTATIONS AND WARRANTIES; REPURCHASES
Unless otherwise provided in the Prospectus Supplement for a series of
Certificates, the Depositor will, with respect to each Mortgage Loan in the
related Trust Fund, make or assign, or cause to be made or assigned, certain
representations and warranties (the person making such representations and
warranties, the "WARRANTING PARTY") covering, by way of example: (i) the
accuracy of the information set forth for such Mortgage Loan on the schedule of
Mortgage Loans appearing as an exhibit to the related Pooling and Servicing
Agreement; (ii) the enforceability of the related Mortgage Note and Mortgage and
the existence of title insurance insuring the lien priority of the related
Mortgage; (iii) the Warranting Party's title to the Mortgage Loan and the
authority of the Warranting Party to sell the Mortgage Loan; and (iv) the
payment status of the Mortgage Loan. It is expected that in most cases the
Warranting Party will be the Mortgage Asset Seller; however, the Warranting
Party may also be an affiliate of the Mortgage Asset Seller, the Depositor or an
affiliate of the Depositor, the Master Servicer, a Special Servicer or another
person acceptable to the Depositor. The Warranting Party, if other than the
Mortgage Asset Seller, will be identified in the related Prospectus Supplement.
Unless otherwise provided in the related Prospectus Supplement, the Master
Servicer and/or Trustee will be required to notify promptly any Warranting Party
of any breach of any representation or warranty made by it in respect of a
Mortgage Loan that materially and adversely affects the interests of the
Certificateholders of the related series. If such Warranting Party cannot cure
such breach within a specified period following the date on which it was
notified of such breach, then, unless otherwise provided in the related
Prospectus Supplement, it will be obligated to repurchase such Mortgage Loan
from the Trustee at the applicable Purchase Price. If so provided in the
Prospectus Supplement for a series of Certificates, a Warranting Party, in lieu
of repurchasing a Mortgage Loan as to which a breach has occurred, will have the
option, exercisable upon certain conditions and/or within a specified period
after initial issuance of such series of Certificates, to replace such Mortgage
Loan with one or more other mortgage loans, in accordance with standards that
will be described in the Prospectus Supplement. Unless otherwise specified in
the related Prospectus Supplement, this repurchase or substitution obligation
will constitute the sole remedy available to holders of the Certificates of any
series or to the related Trustee on their behalf for a breach of representation
and warranty by a
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Warranting Party and neither the Depositor nor the Master Servicer, in either
case unless it is the Warranting Party, will be obligated to purchase or replace
a Mortgage Loan if a Warranting Party defaults on its obligation to do so.
In some cases, representations and warranties will have been made in
respect of a Mortgage Loan as of a date prior to the date upon which the related
series of Certificates is issued, and thus may not address events that may occur
following the date as of which they were made. However, the Depositor will not
include any Mortgage Loan in the Trust Fund for any series of Certificates if
anything has come to the Depositor's attention that would cause it to believe
that the representations and warranties made in respect of such Mortgage Loan
will not be accurate in all material respects as of the date of issuance. The
date as of which the representations and warranties regarding the Mortgage Loans
in any Trust Fund were made will be specified in the related Prospectus
Supplement.
COLLECTION AND OTHER SERVICING PROCEDURES
Unless otherwise specified in the related Prospectus Supplement, the Master
Servicer for any Mortgage Pool, directly or through Sub-Servicers, will be
obligated under the related Pooling and Servicing Agreement to service and
administer the Mortgage Loans in such Mortgage Pool for the benefit of the
related Certificateholders, in accordance with applicable law and with the terms
of such Pooling and Servicing Agreement, such Mortgage Loans and any instrument
of Credit Support included in the related Trust Fund. Subject to the foregoing,
the Master Servicer will have full power and authority to do any and all things
in connection with such servicing and administration that it may deem necessary
and desirable.
As part of its servicing duties, a Master Servicer will be required to make
reasonable efforts to collect all payments called for under the terms and
provisions of the Mortgage Loans that it services and will be obligated to
follow such collection procedures as it would follow with respect to mortgage
loans that are comparable to such Mortgage Loans and held for its own account,
provided (i) such procedures are consistent with the terms of the related
Pooling and Servicing Agreement, and (ii) do not impair recovery under any
instrument of Credit Support included in the related Trust Fund. Consistent with
the foregoing, the Master Servicer will be permitted, in its discretion, unless
otherwise specified in the related Prospectus Supplement, to waive any
Prepayment Premium, late payment charge or other charge in connection with any
Mortgage Loan.
Under a Pooling and Servicing Agreement, a Master Servicer will be granted
certain discretion to extend relief to Mortgagors whose payments become
delinquent. Unless otherwise specified in the related Prospectus Supplement, if
a material default occurs or a payment default is reasonably foreseeable with
respect to a Mortgage Loan, the Master Servicer will be permitted, subject to
any specific limitations set forth in the related Pooling and Servicing
Agreement and described in the related Prospectus Supplement, to modify, waive
or amend any term of such Mortgage Loan, including deferring payments, extending
the stated maturity date or otherwise adjusting the payment schedule, provided
that such modification, waiver or amendment (i) is reasonably likely to produce
a greater recovery with respect to such Mortgage Loan on a present value basis
than would liquidation and (ii) will not adversely affect the coverage under any
applicable instrument of Credit Support.
A mortgagor's failure to make required Mortgage Loan payments may mean that
operating income is insufficient to service the mortgage debt, or may reflect
the diversion of that income from the servicing of the mortgage debt. In
addition, a mortgagor that is unable to make Mortgage Loan payments may also be
unable to make timely payment of taxes and otherwise to maintain and insure the
related Mortgaged Property. In general, the related Master Servicer will be
required to monitor any Mortgage Loan that is in default, evaluate whether the
causes of the default can be corrected over a reasonable period without
significant impairment of the value of the related Mortgaged Property, initiate
corrective action in cooperation with the Mortgagor if cure is likely, inspect
the related Mortgaged Property and take such other actions as it deems necessary
and appropriate. A significant period of time may elapse before the Master
Servicer is able to assess the success of any such corrective action or the need
for additional initiatives. The time within which the Master Servicer can make
the initial determination of appropriate action, evaluate the success of
corrective action, develop additional initiatives, institute foreclosure
proceedings and actually foreclose (or accept a deed to a Mortgaged
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Property in lieu of foreclosure) on behalf of the Certificateholders of the
related series may vary considerably depending on the particular Mortgage Loan,
the Mortgaged Property, the mortgagor, the presence of an acceptable party to
assume the Mortgage Loan and the laws of the jurisdiction in which the Mortgaged
Property is located. If a mortgagor files a bankruptcy petition, the Master
Servicer may not be permitted to accelerate the maturity of the Mortgage Loan or
to foreclose on the related Mortgaged Property for a considerable period of
time. See "Certain Legal Aspects of Mortgage Loans--Bankruptcy Laws."
Mortgagors may, from time to time, request partial releases of the
Mortgaged Properties, easements, consents to alteration or demolition and other
similar matters. The Master Servicer may approve such a request if it has
determined, exercising its business judgment in the same manner as it would if
it were the owner of the related Mortgage Loan, that such approval will not
adversely affect the security for, or the timely and full collectability of, the
related Mortgage Loan. Any fee collected by the Master Servicer for processing
such request will be retained by the Master Servicer as additional servicing
compensation.
In the case of Mortgage Loans secured by junior liens on the related
Mortgaged Properties, unless otherwise provided in the related Prospectus
Supplement, the Master Servicer will be required to file (or cause to be filed)
of record a request for notice of any action by a superior lienholder under the
Senior Lien for the protection of the related Trustee's interest, where
permitted by local law and whenever applicable state law does not require that a
junior lienholder be named as a party defendant in foreclosure proceedings in
order to foreclose such junior lienholder's equity of redemption. Unless
otherwise specified in the related Prospectus Supplement, the Master Servicer
also will be required to notify any superior lienholder in writing of the
existence of the Mortgage Loan and request notification of any action (as
described below) to be taken against the mortgagor or the Mortgaged Property by
the superior lienholder. If the Master Servicer is notified that any superior
lienholder has accelerated or intends to accelerate the obligations secured by
the related Senior Lien, or has declared or intends to declare a default under
the mortgage or the promissory note secured thereby, or has filed or intends to
file an election to have the related Mortgaged Property sold or foreclosed,
then, unless otherwise specified in the related Prospectus Supplement, the
Master Servicer will be required to take, on behalf of the related Trust Fund,
whatever actions are necessary to protect the interests of the related
Certificateholders, and/or to preserve the security of the related Mortgage
Loan, subject to the application of the REMIC Provisions. Unless otherwise
specified in the related Prospectus Supplement, the Master Servicer will be
required to advance the necessary funds to cure the default or reinstate the
Senior Lien, if such advance is in the best interests of the related
Certificateholders and the Master Servicer determines such advances are
recoverable out of payments on or proceeds of the related Mortgage Loan.
The Master Servicer for any Trust Fund, directly or through Sub-Servicers,
will also be required to perform as to the Mortgage Loans in such Trust Fund
various other customary functions of a servicer of comparable loans, including
maintaining escrow or impound accounts, if required under the related Pooling
and Servicing Agreement, for payment of taxes, insurance premiums, ground rents
and similar items, or otherwise monitoring the timely payment of those items;
attempting to collect delinquent payments; supervising foreclosures; negotiating
modifications; conducting property inspections on a periodic or other basis;
managing (or overseeing the management of) Mortgaged Properties acquired on
behalf of such Trust Fund through foreclosure, deed-in-lieu of foreclosure or
otherwise (each, an "REO PROPERTY"); and maintaining servicing records relating
to such Mortgage Loans. Unless otherwise specified in the related Prospectus
Supplement, the Master Servicer will be responsible for filing and settling
claims in respect of particular Mortgage Loans under any applicable instrument
of Credit Support. See "Description of Credit Support".
SUB-SERVICERS
A Master Servicer may delegate its servicing obligations in respect of the
Mortgage Loans serviced thereby to one or more third-party servicers (each, a
"SUB-SERVICER"); provided that, unless otherwise specified in the related
Prospectus Supplement, such Master Servicer will remain obligated under the
related Pooling and Servicing Agreement. A Sub-Servicer for any series of
Certificates may be an affiliate of the Depositor or Master Servicer. Unless
otherwise provided in the related Prospectus Supplement, each sub-servicing
agreement between a Master Servicer and a Sub-Servicer (a "SUB-SERVICING
AGREEMENT") will
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provide for servicing of the applicable Mortgage Loans consistent with the
related Pooling and Servicing Agreement. A Master Servicer will be required to
monitor the performance of Sub-Servicers retained by it and will have the right
to remove a Sub-Servicer retained by it at any time it considers such removal to
be in the best interests of Certificateholders.
Unless otherwise provided in the related Prospectus Supplement, a Master
Servicer will be solely liable for all fees owed by it to any Sub-Servicer,
irrespective of whether the Master Servicer's compensation pursuant to the
related Pooling and Servicing Agreement is sufficient to pay such fees. Each
Sub-Servicer will be reimbursed by the Master Servicer that retained it for
certain expenditures which it makes, generally to the same extent the Master
Servicer would be reimbursed under a Pooling and Servicing Agreement. See
"--Certificate Account" and "--Servicing Compensation and Payment of Expenses".
SPECIAL SERVICERS
To the extent so specified in the related Prospectus Supplement, one or
more Special Servicers may be a party to the related Pooling and Servicing
Agreement or may be appointed by the Master Servicer or another specified party.
A Special Servicer for any series of Certificates may be an affiliate of the
Depositor or the Master Servicer and may hold, or be affiliated with the holder
of, Subordinate Certificates of such series. A Special Servicer may be entitled
to any of the rights, and subject to any of the obligations, described herein in
respect of a Master Servicer. In general, a Special Servicer's duties will
relate to defaulted Mortgage Loans, including instituting foreclosures and
negotiating work-outs. The related Prospectus Supplement will describe the
rights, obligations and compensation of any Special Servicer for a particular
series of Certificates. The Master Servicer will be liable for the performance
of a Special Servicer only if, and to the extent, set forth in the related
Prospectus Supplement. In certain cases the Master Servicer may be appointed the
Special Servicer.
CERTIFICATE ACCOUNT
General. The Master Servicer, the Trustee and/or a Special Servicer will,
as to each Trust Fund that includes Mortgage Loans, establish and maintain or
cause to be established and maintained the corresponding Certificate Account,
which will be established so as to comply with the standards of each Rating
Agency that has rated any one or more classes of Certificates of the related
series. A Certificate Account may be maintained as an interest-bearing or a
non-interest-bearing account and the funds held therein may be invested pending
each succeeding Distribution Date in United States government securities and
other obligations that are acceptable to each Rating Agency that has rated any
one or more classes of Certificates of the related series ("PERMITTED
INVESTMENTS"). Unless otherwise provided in the related Prospectus Supplement,
any interest or other income earned on funds in a Certificate Account will be
paid to the related Master Servicer, Trustee or Special Servicer (if any) as
additional compensation. A Certificate Account may be maintained with the
related Master Servicer, Special Servicer or Mortgage Asset Seller or with a
depository institution that is an affiliate of any of the foregoing or of the
Depositor, provided that it complies with applicable Rating Agency standards. If
permitted by the applicable Rating Agency or Agencies, a Certificate Account may
contain funds relating to more than one series of mortgage pass-through
certificates and may contain other funds representing payments on mortgage loans
owned by the related Master Servicer or Special Servicer (if any) or serviced by
either on behalf of others.
Deposits. Unless otherwise provided in the related Pooling and Servicing
Agreement and described in the related Prospectus Supplement, the following
payments and collections received or made by the Master Servicer, the Trustee or
any Special Servicer subsequent to the Cut-off Date (other than payments due on
or before the Cut-off Date) are to be deposited in the Certificate Account for
each Trust Fund that includes Mortgage Loans, within a certain period following
receipt (in the case of collections on or in respect of the Mortgage Loans) or
otherwise as provided in the related Pooling and Servicing Agreement:
(i) all payments on account of principal, including principal
prepayments, on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans,
including any default interest collected, in each case net of any portion
thereof retained by the Master Servicer or any Special Servicer as its
servicing compensation or as compensation to the Trustee;
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(iii) all proceeds received under any hazard, title or other insurance
policy that provides coverage with respect to a Mortgaged Property or the
related Mortgage Loan (other than proceeds applied to the restoration of
the property or released to the related borrower) (collectively, "INSURANCE
PROCEEDS"), all proceeds received in connection with the condemnation or
other governmental taking of all or any portion of a Mortgaged Property
(other than proceeds applied to the restoration of the property or released
to the related borrower) (collectively, "CONDEMNATION PROCEEDS"), and all
other amounts received and retained in connection with the liquidation of
defaulted Mortgage Loans or property acquired in respect thereof, by
foreclosure or otherwise (such amounts, together with those amounts listed
in clause (vii) below, "LIQUIDATION PROCEEDS"), together with the net
operating income (less reasonable reserves for future expenses) derived
from the operation of any Mortgaged Properties acquired by the Trust Fund
through foreclosure or otherwise;
(iv) any amounts paid under any instrument or drawn from any fund that
constitutes Credit Support for the related series of Certificates;
(v) any advances made with respect to delinquent scheduled payments of
principal and interest on the Mortgage Loans;
(vi) any amounts paid under any Cash Flow Agreement;
(vii) all proceeds of the purchase of any Mortgage Loan, or property
acquired in respect thereof, by the Depositor, any Mortgage Asset Seller or
any other specified person as described under "--Assignment of Mortgage
Loans; Repurchases" and "--Representations and Warranties; Repurchases",
all proceeds of the purchase of any defaulted Mortgage Loan as described
under "--Realization Upon Defaulted Mortgage Loans", and all proceeds of
any Mortgage Asset purchased as described under "Description of the
Certificates--Termination; Retirement of Certificates";
(viii) to the extent that any such item does not constitute additional
servicing compensation to the Master Servicer or a Special Servicer and is
not otherwise retained by the Depositor or another specified person, any
payments on account of modification or assumption fees, late payment
charges, Prepayment Premiums or Equity Participations with respect to the
Mortgage Loans;
(ix) all payments required to be deposited in the Certificate Account
with respect to any deductible clause in any blanket insurance policy
described under "--Hazard Insurance Policies";
(x) any amount required to be deposited by the Master Servicer or the
Trustee in connection with losses realized on investments for the benefit
of the Master Servicer or the Trustee, as the case may be, of funds held in
the Certificate Account; and
(xi) any other amounts required to be deposited in the Certificate
Account as provided in the related Pooling and Servicing Agreement and
described in the related Prospectus Supplement.
Withdrawals. Unless otherwise provided in the related Pooling and
Servicing Agreement and described in the related Prospectus Supplement, a Master
Servicer, Trustee or Special Servicer may make withdrawals from the Certificate
Account for each Trust Fund that includes Mortgage Loans for any of the
following purposes:
(i) to make distributions to the Certificateholders on each
Distribution Date;
(ii) to pay the Master Servicer or a Special Servicer any servicing
fees not previously retained thereby, such payment to be made out of
payments and other collections of interest on the particular Mortgage Loans
as to which such fees were earned;
(iii) to reimburse the Master Servicer, a Special Servicer or any
other specified person for unreimbursed advances of delinquent scheduled
payments of principal and interest made by it, and certain unreimbursed
servicing expenses incurred by it, with respect to Mortgage Loans in the
Trust Fund and properties acquired in respect thereof, such reimbursement
to be made out of amounts that represent late payments collected on the
particular Mortgage Loans, Liquidation Proceeds, Condemnation Proceeds and
Insurance Proceeds collected on the particular Mortgage Loans and
properties, and net
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income collected on the particular properties, with respect to which such
advances were made or such expenses were incurred or out of amounts drawn
under any form of Credit Support with respect to such Mortgage Loans and
properties, or if in the judgment of the Master Servicer, the Special
Servicer or such other person, as applicable, such advances and/or expenses
will not be recoverable from such amounts, such reimbursement to be made
from amounts collected on other Mortgage Loans in the same Trust Fund or,
if and to the extent so provided by the related Pooling and Servicing
Agreement and described in the related Prospectus Supplement, only from
that portion of amounts collected on such other Mortgage Loans that is
otherwise distributable on one or more classes of Subordinate Certificates
of the related series;
(iv) if and to the extent described in the related Prospectus
Supplement, to pay the Master Servicer, a Special Servicer or any other
specified person interest accrued on the advances and servicing expenses
described in clause (iii) above incurred by it while such remain
outstanding and unreimbursed;
(v) to pay for costs and expenses incurred by the Trust Fund for
environmental site assessments performed with respect to Mortgaged
Properties that constitute security for defaulted Mortgage Loans, and for
any containment, clean-up or remediation of hazardous wastes and materials
present on such Mortgaged Properties, as described under "--Realization
Upon Defaulted Mortgage Loans";
(vi) to reimburse the Master Servicer, the Depositor, the Trustee, or
any of their respective directors, officers, employees and agents, as the
case may be, for certain expenses, costs and liabilities incurred thereby,
as and to the extent described under "--Certain Matters Regarding the
Master Servicer and the Depositor" and "--Certain Matters Regarding the
Trustee";
(vii) if and to the extent described in the related Prospectus
Supplement, to pay the fees of the Trustee and any provider of Credit
Support;
(viii) if and to the extent described in the related Prospectus
Supplement, to reimburse prior draws on any form of Credit Support;
(ix) to pay the Master Servicer, a Special Servicer or the Trustee, as
appropriate, interest and investment income earned in respect of amounts
held in the Certificate Account as additional compensation;
(x) to pay any servicing expenses not otherwise required to be
advanced by the Master Servicer, a Special Servicer or any other specified
person;
(xi) if one or more elections have been made to treat the Trust Fund
or designated portions thereof as a REMIC, to pay any federal, state or
local taxes imposed on the Trust Fund or its assets or transactions, as and
to the extent described under "Certain Federal Income Tax
Consequences--REMICs--Prohibited Transactions Tax and Other Taxes";
(xii) to pay for the cost of various opinions of counsel obtained
pursuant to the related Pooling and Servicing Agreement for the benefit of
Certificateholders;
(xiii) to make any other withdrawals permitted by the related Pooling
and Servicing Agreement and described in the related Prospectus Supplement;
and
(xiv) to clear and terminate the Certificate Account upon the
termination of the Trust Fund.
REALIZATION UPON DEFAULTED MORTGAGE LOANS
If a default on a Mortgage Loan has occurred or, in the Master Servicer's
judgment, a payment default is imminent, the Master Servicer, on behalf of the
Trustee, may at any time institute foreclosure proceedings, exercise any power
of sale contained in the related Mortgage, obtain a deed in lieu of foreclosure,
or otherwise acquire title to the related Mortgaged Property, by operation of
law or otherwise. Unless otherwise specified in the related Prospectus
Supplement, the Master Servicer may not, however, acquire title to any Mortgaged
Property, have a receiver of rents appointed with respect to any Mortgaged
Property or take any other action with respect to any Mortgaged Property that
would cause the Trustee, for the benefit of the related series of
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Certificateholders, or any other specified person to be considered to hold title
to, to be a "mortgagee-in-possession" of, or to be an "owner" or an "operator"
of such Mortgaged Property within the meaning of certain federal environmental
laws, unless the Master Servicer has previously received a report prepared by a
person who regularly conducts environmental audits (which report will be an
expense of the Trust Fund) and either:
(i) such report indicates that (a) the Mortgaged Property is in
compliance with applicable environmental laws and regulations and (b) there
are no circumstances or conditions present at the Mortgaged Property that
have resulted in any contamination for which investigation, testing,
monitoring, containment, clean-up or remediation could be required under
any applicable environmental laws and regulations; or
(ii) the Master Servicer, based solely (as to environmental matters
and related costs) on the information set forth in such report, determines
that taking such actions as are necessary to bring the Mortgaged Property
into compliance with applicable environmental laws and regulations and/or
taking the actions contemplated by clause (i)(b) above, is reasonably
likely to produce a greater recovery, taking into account the time value of
money, than not taking such actions. See "Certain Legal Aspects of Mortgage
Loans--Environmental Considerations".
A Pooling and Servicing Agreement may grant to the Master Servicer, a
Special Servicer, a provider of Credit Support and/or the holder or holders of
certain classes of the related series of Certificates a right of first refusal
to purchase from the Trust Fund, at a predetermined purchase price (which, if
insufficient to fully fund the entitlements of Certificateholders to principal
and interest thereon, will be specified in the related Prospectus Supplement),
any Mortgage Loan as to which a specified number of scheduled payments are
delinquent. In addition, unless otherwise specified in the related Prospectus
Supplement, the Master Servicer may offer to sell any defaulted Mortgage Loan if
and when the Master Servicer determines, consistent with its normal servicing
procedures, that such a sale would produce a greater recovery, taking into
account the time value of money, than would liquidation of the related Mortgaged
Property. In the absence of any such sale, the Master Servicer will generally be
required to proceed against the related Mortgaged Property, subject to the
discussion below.
Unless otherwise provided in the related Prospectus Supplement, if title to
any Mortgaged Property is acquired by a Trust Fund as to which a REMIC election
has been made, the Master Servicer, on behalf of the Trust Fund, will be
required to sell the Mortgaged Property within two years of acquisition, unless
(i) the Internal Revenue Service (the "IRS") grants an extension of time to sell
such property or (ii) the Trustee receives an opinion of independent counsel to
the effect that the holding of the property by the Trust Fund for more than two
years after its acquisition will not result in the imposition of a tax on the
Trust Fund or cause the Trust Fund (or any designated portion thereof) to fail
to qualify as a REMIC under the Code at any time that any Certificate is
outstanding. Subject to the foregoing and any other tax-related limitations, the
Master Servicer will generally be required to attempt to sell any Mortgaged
Property so acquired on the same terms and conditions it would if it were the
owner. Unless otherwise provided in the related Prospectus Supplement, if title
to any Mortgaged Property is acquired by a Trust Fund as to which a REMIC
election has been made, the Master Servicer will also be required to ensure that
the Mortgaged Property is administered so that it constitutes "foreclosure
property" within the meaning of Code Section 860G(a)(8) at all times, that the
sale of such property does not result in the receipt by the Trust Fund of any
income from non-permitted assets as described in Code Section 860F(a)(2)(B), and
that the Trust Fund does not derive any "net income from foreclosure property"
within the meaning of Code Section 860G(c)(2), with respect to such property. If
the Trust Fund acquires title to any Mortgaged Property, the Master Servicer, on
behalf of the Trust Fund, may retain an independent contractor to manage and
operate such property. The retention of an independent contractor, however, will
not relieve the Master Servicer of its obligation to manage such Mortgaged
Property as required under the related Pooling and Servicing Agreement.
If Liquidation Proceeds collected with respect to a defaulted Mortgage Loan
are less than the outstanding principal balance of the defaulted Mortgage Loan
plus interest accrued thereon plus the aggregate amount of reimbursable expenses
incurred by the Master Servicer in connection with such Mortgage Loan, then, to
the
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extent that such shortfall is not covered by any instrument or fund constituting
Credit Support, the Trust Fund will realize a loss in the amount of such
shortfall. The Master Servicer will be entitled to reimbursement out of the
Liquidation Proceeds recovered on any defaulted Mortgage Loan, prior to the
distribution of such Liquidation Proceeds to Certificateholders, amounts that
represent unpaid servicing compensation in respect of the Mortgage Loan,
unreimbursed servicing expenses incurred with respect to the Mortgage Loan and
any unreimbursed advances of delinquent payments made with respect to the
Mortgage Loan. In addition, if and to the extent set forth in the related
Prospectus Supplement, amounts otherwise distributable on the Certificates may
be further reduced by interest payable to the Master Servicer on such servicing
expenses and advances.
If any Mortgaged Property suffers damage such that the proceeds, if any, of
the related hazard insurance policy are insufficient to restore fully the
damaged property, the Master Servicer will not be required to expend its own
funds to effect such restoration unless (and to the extent not otherwise
provided in the related Prospectus Supplement) it determines (i) that such
restoration will increase the proceeds to Certificateholders on liquidation of
the Mortgage Loan after reimbursement of the Master Servicer for its expenses
and (ii) that such expenses will be recoverable by it from related Insurance
Proceeds, Condemnation Proceeds, Liquidation Proceeds and/or amounts drawn on
any instrument or fund constituting Credit Support.
HAZARD INSURANCE POLICIES
Unless otherwise specified in the related Prospectus Supplement, each
Pooling and Servicing Agreement will require the Master Servicer to use
reasonable efforts to cause each Mortgage Loan borrower to maintain a hazard
insurance policy that provides for such coverage as is required under the
related Mortgage or, if the Mortgage permits the holder thereof to dictate to
the borrower the insurance coverage to be maintained on the related Mortgaged
Property, such coverage as is consistent with the Master Servicer's normal
servicing procedures. Unless otherwise specified in the related Prospectus
Supplement, such coverage generally will be in an amount equal to the lesser of
the principal balance owing on such Mortgage Loan and the replacement cost of
the related Mortgaged Property. The ability of a Master Servicer to assure that
hazard insurance proceeds are appropriately applied may be dependent upon its
being named as an additional insured under any hazard insurance policy and under
any other insurance policy referred to below, or upon the extent to which
information concerning covered losses is furnished by borrowers. All amounts
collected by a Master Servicer under any such policy (except for amounts to be
applied to the restoration or repair of the Mortgaged Property or released to
the borrower in accordance with the Master Servicer's normal servicing
procedures and/or to the terms and conditions of the related Mortgage and
Mortgage Note) will be deposited in the related Certificate Account. The Pooling
and Servicing Agreement may provide that the Master Servicer may satisfy its
obligation to cause each borrower to maintain such a hazard insurance policy by
maintaining a blanket policy insuring against hazard losses on all of the
Mortgage Loans in a Trust Fund. If such blanket policy contains a deductible
clause, the Master Servicer will be required, in the event of a casualty covered
by such blanket policy, to deposit in the related Certificate Account all
additional sums that would have been deposited therein under an individual
policy but were not because of such deductible clause.
In general, the standard form of fire and extended coverage policy covers
physical damage to or destruction of the improvements of the property by fire,
lightning, explosion, smoke, windstorm and hail, and riot, strike and civil
commotion, subject to the conditions and exclusions specified in each policy.
Although the policies covering the Mortgaged Properties will be underwritten by
different insurers under different state laws in accordance with different
applicable state forms, and therefore will not contain identical terms and
conditions, most such policies typically do not cover any physical damage
resulting from war, revolution, governmental actions, floods and other
water-related causes, earth movement (including earthquakes, landslides and
mudflows), wet or dry rot, vermin and domestic animals. Accordingly, a Mortgaged
Property may not be insured for losses arising from any such cause unless the
related Mortgage specifically requires, or permits the holder thereof to
require, such coverage.
The hazard insurance policies covering the Mortgaged Properties will
typically contain co-insurance clauses that in effect require an insured at all
times to carry insurance of a specified percentage (generally 80% to 90%) of the
full replacement value of the improvements on the property in order to recover
the full amount
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of any partial loss. If the insured's coverage falls below this specified
percentage, such clauses generally provide that the insurer's liability in the
event of partial loss does not exceed the lesser of (i) the replacement cost of
the improvements less physical depreciation and (ii) such proportion of the loss
as the amount of insurance carried bears to the specified percentage of the full
replacement cost of such improvements.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE PROVISIONS
Certain of the Mortgage Loans may contain a due-on-sale clause that
entitles the lender to accelerate payment of the Mortgage Loan upon any sale or
other transfer of the related Mortgaged Property made without the lender's
consent. Certain of the Mortgage Loans may also contain a due-on-encumbrance
clause that entitles the lender to accelerate the maturity of the Mortgage Loan
upon the creation of any other lien or encumbrance upon the Mortgaged Property.
Unless otherwise provided in the related Prospectus Supplement, the Master
Servicer will determine whether to exercise any right the Trustee may have under
any such provision in a manner consistent with the Master Servicer's normal
servicing procedures. Unless otherwise specified in the related Prospectus
Supplement, the Master Servicer will be entitled to retain as additional
servicing compensation any fee collected in connection with the permitted
transfer of a Mortgaged Property. See "Certain Legal Aspects of Mortgage
Loans--Due-on-Sale and Due-on-Encumbrance".
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
Unless otherwise specified in the related Prospectus Supplement, a Master
Servicer's primary servicing compensation with respect to a series of
Certificates will come from the periodic payment to it of a specified portion of
the interest payments on each Mortgage Loan in the related Trust Fund. Because
such compensation is generally based on a percentage of the principal balance of
each such Mortgage Loan outstanding from time to time, it will decrease in
accordance with the amortization of the Mortgage Loans. If and to the extent
described in the related Prospectus Supplement, a Master Servicer's compensation
may also include: (i) an additional specified portion of the interest payments
on each defaulted Mortgage Loan serviced by the Master Servicer; (ii) subject to
any specified limitations, a fixed percentage of some or all of the collections
and proceeds received with respect to any defaulted Mortgage Loan as to which it
negotiated a work-out or that it liquidated; and (iii) any other amounts
specified in the related Prospectus Supplement. Unless otherwise specified in
the related Prospectus Supplement, the Master Servicer may retain, as additional
compensation, all or a portion of late payment charges, Prepayment Premiums,
modification fees and other fees collected from borrowers and any interest or
other income that may be earned on funds held in the Certificate Account. Any
Sub-Servicer will receive a portion of the Master Servicer's compensation as its
sub-servicing compensation.
In addition to amounts payable to any Sub-Servicer, a Master Servicer may
be required, to the extent provided in the related Prospectus Supplement, to pay
from amounts that represent its servicing compensation certain expenses incurred
in connection with the administration of the related Trust Fund, including,
without limitation, payment of the fees and disbursements of independent
accountants, payment of fees and disbursements of the Trustee and any custodians
appointed thereby and payment of expenses incurred in connection with
distributions and reports to Certificateholders. Certain other expenses,
including certain expenses related to Mortgage Loan defaults and liquidations
and, to the extent so provided in the related Prospectus Supplement, interest on
such expenses at the rate specified therein, and the fees of any Special
Servicer, may be required to be borne by the Trust Fund.
EVIDENCE AS TO COMPLIANCE
Each Pooling and Servicing Agreement will provide that on or before a
specified date in each year, beginning the first such date that is at least a
specified number of months after the Cut-off Date, a firm of independent public
accountants will furnish a statement to the related Trustee to the effect that,
on the basis of an examination by such firm conducted substantially in
compliance with the Uniform Single Audit Program for Mortgage Bankers or the
Audit Program for Mortgages serviced for FHLMC, the servicing of mortgage loans
under agreements (including the related Pooling and Servicing Agreement)
substantially similar to each other was conducted in compliance with such
agreements except for such significant exceptions or errors in
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records that, in the opinion of the firm, the Uniform Single Audit Program for
Mortgage Bankers or the Audit Program for Mortgages serviced for FHLMC requires
it to report. In rendering its statement such firm may rely, as to the matters
relating to the direct servicing of mortgage loans by Sub-Servicers, upon
comparable statements for examinations conducted substantially in compliance
with the Uniform Single Audit Program for Mortgage Bankers or the Audit Program
for Mortgages serviced for FHLMC (rendered within one year of such statement) of
firms of independent public accountants with respect to those Subservicers which
also have been the subject of such an examination.
Each Pooling and Servicing Agreement will also provide that, on or before a
specified date in each year, beginning the first such date that is at least a
specified number of months after the Cut-off Date, there is to be delivered to
the related Trustee an annual statement signed by one or more officers of the
Master Servicer to the effect that, to the best knowledge of each such officer,
the Master Servicer has fulfilled in all material respects its obligations under
the Pooling and Servicing Agreement throughout the preceding year or, if there
has been a material default in the fulfillment of any such obligation, such
statement shall specify each such known default and the nature and status
thereof. Such statement may be provided as a single form making the required
statements as to more than one Pooling and Servicing Agreement.
Unless otherwise specified in the related Prospectus Supplement, copies of
the annual accountants' statement and the annual statement of officers of a
Master Servicer may be obtained by Certificateholders upon written request to
the Trustee.
CERTAIN MATTERS REGARDING THE MASTER SERVICER AND THE DEPOSITOR
The entity servicing as Master Servicer under a Pooling and Servicing
Agreement may be an affiliate of the Depositor and may have other normal
business relationships with the Depositor or the Depositor's affiliates. Unless
otherwise specified in the related Prospectus Supplement, the Pooling and
Servicing Agreement for a series of Certificates will provide that the Master
Servicer may not resign from its obligations and duties thereunder except upon a
determination that performance of such duties is no longer permissible under
applicable law or except in connection with a permitted transfer of servicing.
No such resignation will become effective until the Trustee or a successor
servicer has assumed the Master Servicer's obligations and duties under the
Pooling and Servicing Agreement.
Unless otherwise specified in the related Prospectus Supplement, each
Pooling and Servicing Agreement will also provide that, except as set forth
below, neither the Master Servicer, the Depositor, nor any director, officer,
employee or agent of the Master Servicer or the Depositor will be under any
liability to the Trust Fund or the Certificateholders 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 neither the Master Servicer, the Depositor, nor any such person will be
protected against any liability which would otherwise be imposed by reason of
willful misfeasance, bad faith or negligence in the performance of duties or by
reason of reckless disregard of obligations and duties thereunder. Unless
otherwise specified in the related Prospectus Supplement, each Pooling and
Servicing Agreement will further provide that the Master Servicer, the
Depositor, and any director, officer, employee or agent of the Master Servicer
or the Depositor is entitled to indemnification by the Trust Fund and will be
held harmless against any loss, liability or expense incurred in connection with
any legal action relating to the Pooling and Servicing Agreement or the related
series of Certificates, other than any loss, liability or expense related to any
specific Mortgage Loan or Mortgage Loans (except any such loss, liability or
expense otherwise reimbursable pursuant to the Pooling and Servicing Agreement)
and any loss, liability or expense incurred by reason of willful misfeasance,
bad faith or negligence in the performance of duties thereunder or by reason of
reckless disregard of obligations and duties thereunder. In addition, each
Pooling and Servicing Agreement will provide that neither the Master Servicer
nor the Depositor will be under any obligation to appear in, prosecute or defend
any legal or administrative action that is not incidental to its respective
duties under the Pooling and Servicing Agreement and which in its opinion may
involve it in any expense or liability. The Master Servicer or the Depositor
may, however, in its discretion undertake any such action which it may deem
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. In such event, the legal expenses and costs of
such action and any liability resulting therefrom will
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be expenses, costs and liabilities of the Trust Fund, and the Master Servicer or
the Depositor, as the case may be, will be entitled to be reimbursed therefor
out of funds otherwise distributable to Certificateholders.
Any person into which the Master Servicer may be merged or consolidated,
any person resulting from any merger or consolidation to which the Master
Servicer is a party or any person succeeding to the business of the Master
Servicer will be the successor of the Master Servicer under the Pooling and
Servicing Agreement, provided that, unless otherwise specified in the related
Prospectus Supplement, (i) such person is qualified to service mortgage loans on
behalf of FNMA or FHLMC and (ii) such merger, consolidation or succession does
not adversely affect the then-current ratings of the classes of Certificates of
the related series that have been rated. In addition, notwithstanding the
prohibition on its resignation, the Master Servicer may assign its rights under
a Pooling and Servicing Agreement to any person to whom the Master Servicer is
transferring a substantial portion of its mortgage servicing portfolio, provided
clauses (i) and (ii) above are satisfied. In the case of any such assignment,
the Master Servicer will be released from its obligations under such Pooling and
Servicing Agreement, other than liabilities and obligations incurred by it prior
to the time of such assignment.
EVENTS OF DEFAULT
Events of Default under the Pooling and Servicing Agreement in respect of a
series of Certificates, unless otherwise specified in the Prospectus Supplement,
will include, without limitation, (i) any failure by the Master Servicer to make
a required deposit to the Certificate Account or, if the Master Servicer is so
required, to distribute to the holders of any class of Certificates of such
series any required payment which continues unremedied for 5 days after the
giving of written notice of such failure to the Master Servicer by the Trustee
or the Depositor, or to the Master Servicer, the Depositor and the Trustee by
the holders of Certificates of such class evidencing not less than 25% of the
aggregate Percentage Interests constituting such class; (ii) any failure by the
Master Servicer duly to observe or perform in any material respect any other of
its covenants or agreements in the Pooling and Servicing Agreement with respect
to such series of Certificates which continues unremedied for 30 days after the
giving of written notice of such failure to the Master Servicer by the Trustee
or the Depositor, or to the Master Servicer, the Depositor and the Trustee by
the holders of any class of Certificates of such series evidencing not less than
25% of the aggregate Percentage Interests constituting such class; and (iii)
certain events of insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings regarding the Master Servicer and certain
actions by the Master Servicer indicating its insolvency or inability to pay its
obligations. Material variations to the foregoing Events of Default (other than
to add thereto or to make them more restrictive) will be specified in the
related Prospectus Supplement. A default pursuant to the terms of any MBS
included in any Trust Fund will not constitute an Event of Default under the
related Pooling and Servicing Agreement.
RIGHTS UPON EVENT OF DEFAULT
So long as an Event of Default remains unremedied, either the Depositor or
the Trustee may, and at the direction of the holders of Certificates evidencing
not less than 51% of the aggregate undivided interests (or, if so specified in
the related Prospectus Supplement, voting rights) in the related Trust Fund the
Trustee shall, by written notification to the Master Servicer and to the
Depositor or the Trustee, as applicable, terminate all of the rights and
obligations of the Master Servicer under the Pooling and Servicing Agreement
covering such Trust Fund and in and to the related Mortgage Loans and the
proceeds thereof (other than any rights of the Master Servicer as
Certificateholder and other than any rights of the Master Servicer to payment
and/or reimbursement for previously earned servicing fees and outstanding
advances), whereupon the Trustee or, upon notice to the Depositor and with the
Depositor's consent, its designee will succeed to all responsibilities, duties
and liabilities of the Master Servicer under such Pooling and Servicing
Agreement (other than the obligation to purchase Mortgage Loans under certain
circumstances) and will be entitled to similar compensation arrangements. In the
event that the Trustee would be obligated to succeed the Master Servicer but is
unwilling so to act, it may appoint (or if it is unable so to act, it shall
appoint) or petition a court of competent jurisdiction for the appointment of, a
FNMA- or FHLMC-approved mortgage servicing institution with a net worth of at
least $10,000,000 to act as successor to the Master Servicer under the Pooling
and Servicing Agreement (unless otherwise set forth in the Pooling and Servicing
Agreement). Pending such appointment, the Trustee is obligated to act in such
capacity. The Trustee and such successor may agree upon
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the servicing compensation to be paid, which in no event may be greater than the
compensation to the initial Master Servicer under the Pooling and Servicing
Agreement.
No Certificateholder will have any right under a Pooling and Servicing
Agreement to institute any proceeding with respect to such Pooling and Servicing
Agreement unless such holder previously has given to the Trustee written notice
of default and the continuance thereof and unless the holders of Certificates of
any class evidencing not less than 25% of the aggregate Percentage Interests
constituting such class have made written request upon the Trustee to institute
such proceeding in its own name as Trustee thereunder and have offered to the
Trustee reasonable indemnity and the Trustee for 60 days after receipt of such
request and indemnity has neglected or refused to institute any such proceeding.
However, the Trustee will 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 thereunder or in relation thereto at the
request, order or direction of any of the holders of Certificates covered by
such Pooling and Servicing Agreement, unless such Certificateholders have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby.
AMENDMENT
Each Pooling and Servicing Agreement may be amended by the parties thereto,
without the consent of any of the holders of Certificates covered by such
Pooling and Servicing Agreement, (i) to cure any ambiguity, (ii) to correct or
supplement any provision therein which may be inconsistent with any other
provision therein or to correct any error, (iii) to change the timing and/or
nature of deposits in the Certificate Account, provided that (A) such change
would not adversely affect in any material respect the interests of any
Certificateholder, as evidenced by an opinion of counsel, and (B) such change
would not adversely affect the then-current rating of any rated classes of
Certificates, as evidenced by a letter from each applicable Rating Agency, (iv)
if a REMIC election has been made with respect to the related Trust Fund, to
modify, eliminate or add to any of its provisions (A) to such extent as shall be
necessary to maintain the qualification of the Trust Fund as a REMIC or to avoid
or minimize the risk of imposition of any tax on the related Trust Fund,
provided that the Trustee has received an opinion of counsel to the effect that
(1) such action is necessary or desirable to maintain such qualification or to
avoid or minimize such risk, and (2) such action will not adversely affect in
any material respect the interests of any holder of Certificates covered by the
Pooling and Servicing Agreement, or (C) to restrict the transfer of the REMIC
Residual Certificates, provided that the Depositor has determined that the
then-current ratings of the classes of the Certificates that have been rated
will not be adversely affected, as evidenced by a letter from each applicable
Rating Agency, and that any such amendment will not give rise to any tax with
respect to the transfer of the REMIC Residual Certificates to a non-Permitted
Transferee, (v) to make any other provisions with respect to matters or
questions arising under such Pooling and Servicing Agreement or any other
change, provided that such action will not adversely affect in any material
respect the interests of any Certificateholder, or (vi) to amend specified
provisions that are not material to holders of any class of Certificates offered
hereunder.
The Pooling and Servicing Agreement may also be amended by the parties
thereto with the consent of the holders of Certificates of each class affected
thereby evidencing, in each case, not less than 66% of the aggregate Percentage
Interests constituting such class for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of such Pooling and
Servicing Agreement or of modifying in any manner the rights of the holders of
Certificates covered by such Pooling and Servicing Agreement, except that no
such amendment may (i) reduce in any manner the amount of, or delay the timing
of, payments received on Mortgage Loans which are required to be distributed on
a Certificate of any class without the consent of the holder of such Certificate
or (ii) reduce the aforesaid percentage of Certificates of any class the holders
of which are required to consent to any such amendment without the consent of
the holders of all Certificates of such class covered by such Pooling and
Servicing Agreement then outstanding.
Notwithstanding the foregoing, if a REMIC election has been made with
respect to the related Trust Fund, the Trustee will not be required to consent
to any amendment to a Pooling and Servicing Agreement without having first
received an opinion of counsel to the effect that such amendment or the exercise
of any power granted to the Master Servicer, the Depositor, the Trustee or any
other specified person in accordance
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with such amendment will not result in the imposition of a tax on the related
Trust Fund or cause such Trust Fund to fail to qualify as a REMIC.
THE TRUSTEE
The Trustee under each Pooling and Servicing Agreement will be named in the
related Prospectus Supplement. The commercial bank, national banking
association, banking corporation or trust company that serves as Trustee may
have typical banking relationships with the Depositor and its affiliates.
DUTIES OF THE TRUSTEE
The Trustee for each series of Certificates will make no representation as
to the validity or sufficiency of the related Pooling and Servicing Agreement,
the Certificates or any underlying Mortgage Asset or related document and will
not be accountable for the use or application by or on behalf of any Master
Servicer or Special Servicer of any funds paid to the Master Servicer or Special
Servicer in respect of the Certificates or the underlying Mortgage Assets. If no
Event of Default has occurred and is continuing, the Trustee for each series of
Certificates will be required to perform only those duties specifically required
under the related Pooling and Servicing Agreement. However, upon receipt of any
of the various certificates, reports or other instruments required to be
furnished to it pursuant to the related Pooling and Servicing Agreement, a
Trustee will be required to examine such documents and to determine whether they
conform to the requirements of such agreement.
CERTAIN MATTERS REGARDING THE TRUSTEE
As and to the extent described in the related Prospectus Supplement, the
fees and normal disbursements of any Trustee may be the expense of the related
Master Servicer or other specified person or may be required to be borne by the
related Trust Fund.
Unless otherwise specified in the related Prospectus Supplement, the
Trustee for each series of Certificates will be entitled to indemnification,
from amounts held in the Certificate Account for such series, for any loss,
liability or expense incurred by the Trustee in connection with the Trustee's
acceptance or administration of its trusts under the related Pooling and
Servicing Agreement; provided, however, that such indemnification will not
extend to any loss liability or expense incurred by reason of willful
misfeasance, bad faith or negligence on the part of the Trustee in the
performance of its obligations and duties thereunder, or by reason of its
reckless disregard of such obligations or duties.
Unless otherwise specified in the related Prospectus Supplement, the
Trustee for each series of Certificates will be entitled to execute any of its
trusts or powers under the related Pooling and Servicing Agreement or perform
any of this duties thereunder either directly or by or through agents or
attorneys.
RESIGNATION AND REMOVAL OF THE TRUSTEE
The Trustee may resign at any time, in which event the Depositor will be
obligated to appoint a successor Trustee. The Depositor 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. Upon
becoming aware of such circumstances, the Depositor will be obligated to appoint
a successor Trustee. The Trustee may also be removed at any time by the holders
of Certificates evidencing not less than 51% of the aggregate undivided
interests (or, if so specified in the related Prospectus Supplement, voting
rights) in the related Trust Fund. 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.
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DESCRIPTION OF CREDIT SUPPORT
GENERAL
Credit Support may be provided with respect to one or more classes of the
Certificates of any series, or with respect to the related Mortgage Assets.
Credit Support may be in the form of a letter of credit, the subordination of
one or more classes of Certificates, the use of a pool insurance policy or
guarantee insurance, the establishment of one or more reserve funds or another
method of Credit Support described in the related Prospectus Supplement, or any
combination of the foregoing. If and to the extent so provided in the related
Prospectus Supplement, any of the foregoing forms of Credit Support may provide
credit enhancement for more than one series of Certificates.
Unless otherwise provided in the related Prospectus Supplement for a series
of Certificates, the Credit Support will not provide protection against all
risks of loss and will not guarantee payment to Certificateholders of all
amounts to which they are entitled under the related Pooling and Servicing
Agreement. If losses or shortfalls occur that exceed the amount covered by the
related Credit Support or that are of a type not covered by such Credit Support,
Certificateholders will bear their allocable share of deficiencies. Moreover, if
a form of Credit Support covers the Offered Certificates of more than one series
and losses on the related Mortgage Assets exceed the amount of such Credit
Support, it is possible that the holders of Offered Certificates of one (or
more) such series will be disproportionately benefited by such Credit Support to
the detriment of the holders of Offered Certificates of one (or more) other such
series.
If Credit Support is provided with respect to one or more classes of
Certificates of a series, or with respect to the related Mortgage Assets, the
related Prospectus Supplement will include a description of (i) the nature and
amount of coverage under such Credit Support, (ii) any conditions to payment
thereunder not otherwise described herein, (iii) the conditions (if any) under
which the amount of coverage under such Credit Support may be reduced and under
which such Credit Support may be terminated or replaced and (iv) the material
provisions relating to such Credit Support. Additionally, the related Prospectus
Supplement will set forth certain information with respect to the obligor, if
any, under any instrument of Credit Support. See "Risk Factors--Credit Support
Limitations".
SUBORDINATE CERTIFICATES
If so specified in the related Prospectus Supplement, one or more classes
of Certificates of a series may be Subordinate Certificates. To the extent
specified in the related Prospectus Supplement, the rights of the holders of
Subordinate Certificates to receive distributions from the Certificate Account
on any Distribution Date will be subordinated to the corresponding rights of the
holders of Senior Certificates. If so provided in the related Prospectus
Supplement, the subordination of a class may apply only in the event of certain
types of losses or shortfalls. The related Prospectus Supplement will set forth
information concerning the method and amount of subordination provided by a
class or classes of Subordinate Certificates in a series and the circumstances
under which such subordination will be available.
If the Mortgage Assets in any Trust Fund are divided into separate groups,
each supporting a separate class or classes of Certificates of the related
series, Credit Support may be provided by cross-support provisions requiring
that distributions be made on Senior Certificates evidencing interests in one
group of Mortgage Assets prior to distributions on Subordinate Certificates
evidencing interests in a different group of Mortgage Assets within the Trust
Fund. The Prospectus Supplement for a series that includes a cross-support
provision will describe the manner and conditions for applying such provisions.
INSURANCE OR GUARANTEES WITH RESPECT TO MORTGAGE LOANS
If so provided in the Prospectus Supplement for a series of Certificates,
Mortgage Loans included in the related Trust Fund will be covered for certain
default risks by insurance policies or guarantees. The related Prospectus
Supplement will describe the nature of such default risks and the extent of such
coverage.
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LETTER OF CREDIT
If so provided in the Prospectus Supplement for a series of Certificates,
deficiencies in amounts otherwise payable on such Certificates or certain
classes thereof will be covered by one or more letters of credit, issued by a
bank or other financial institution specified in such Prospectus Supplement (the
"LETTER OF CREDIT BANK"). Under a letter of credit, the Letter of Credit Bank
will be obligated to honor draws thereunder in an aggregate fixed dollar amount,
net of unreimbursed payments thereunder, generally equal to a percentage
specified in the related Prospectus Supplement of the aggregate principal
balance of the Mortgage Assets on the related Cut-off Date or of the initial
aggregate Certificate Balance of one or more classes of Certificates. If so
specified in the related Prospectus Supplement, the letter of credit may permit
draws only in the event of certain types of losses and shortfalls. The amount
available under the letter of credit will, in all cases, be reduced to the
extent of the unreimbursed payments thereunder and may otherwise be reduced as
described in the related Prospectus Supplement. The obligations of the Letter of
Credit Bank under the letter of credit for each series of Certificates will
expire at the earlier of the date specified in the related Prospectus Supplement
or the termination of the Trust Fund.
CERTIFICATE INSURANCE AND SURETY BONDS
If so provided in the Prospectus Supplement for a series of Certificates,
deficiencies in amounts otherwise payable on such Certificates or certain
classes thereof will be covered by insurance policies or surety bonds provided
by one or more insurance companies or sureties. Such instruments may cover, with
respect to one or more classes of Certificates of the related series, timely
distributions of interest or 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. The related Prospectus
Supplement will describe any limitations on the draws that may be made under any
such instrument.
RESERVE FUNDS
If so provided in the Prospectus Supplement for a series of Certificates,
deficiencies in amounts otherwise payable on such Certificates or certain
classes thereof will be covered (to the extent of available funds) by one or
more reserve funds in which cash, a letter of credit, Permitted Investments, a
demand note or a combination thereof will be deposited, in the amounts specified
in such Prospectus Supplement. If so specified in the related Prospectus
Supplement, the reserve fund for a series may also be funded over time by a
specified amount of certain collections received on the related Mortgage Assets.
Amounts on deposit in any reserve fund for a series will be applied for the
purposes, in the manner, and to the extent specified in the related Prospectus
Supplement. If so specified in the related Prospectus Supplement, reserve funds
may be established to provide protection only against certain types of losses
and shortfalls. Following each Distribution Date, amounts in a reserve fund in
excess of any amount required to be maintained therein may be released from the
reserve fund under the conditions and to the extent specified in the related
Prospectus Supplement.
If so specified in the related Prospectus Supplement, amounts deposited in
any reserve fund will be invested in Permitted Investments. Unless otherwise
specified in the related Prospectus Supplement, any reinvestment income or other
gain from such investments will be credited to the related reserve fund for such
series, and any loss resulting from such investments will be charged to such
reserve fund. However, such income may be payable to any related Master Servicer
or another service provider as additional compensation for its services. The
reserve fund, if any, for a series will not be a part of the Trust Fund unless
otherwise specified in the related Prospectus Supplement.
CREDIT SUPPORT WITH RESPECT TO MBS
If so provided in the Prospectus Supplement for a series of Certificates,
any MBS included in the related Trust Fund and/or the related underlying
mortgage loans may be covered by one or more of the types of Credit Support
described herein. The related Prospectus Supplement will specify, as to each
such form of
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Credit Support, the information indicated above with respect thereto, to the
extent such information is material and available.
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS
The following discussion contains general summaries of certain legal
aspects of loans secured by commercial and multifamily residential properties.
Because such legal aspects are governed by applicable state law (which laws may
differ substantially), the summaries do not purport to be complete, to reflect
the laws of any particular state, or to encompass the laws of all states in
which the security for the Mortgage Loans (or mortgage loans underlying any MBS)
is situated. Accordingly, the summaries are qualified in their entirety by
reference to the applicable laws of those states. See "Description of the Trust
Funds--Mortgage Loans". For purposes of the following discussion, "Mortgage
Loan" includes a mortgage loan underlying an MBS.
GENERAL
Each Mortgage Loan will be evidenced by a note or bond and secured by an
instrument granting a security interest in real property, which may be a
mortgage, deed of trust or a deed to secure debt, depending upon the prevailing
practice and law in the state in which the related Mortgaged Property is
located. Mortgages, deeds of trust and deeds to secure debt are herein
collectively referred to as "mortgages". A mortgage creates a lien upon, or
grants a title interest in, the real property covered thereby, and represents
the security for the repayment of the indebtedness customarily evidenced by a
promissory note. The priority of the lien created or interest granted will
depend on the terms of the mortgage and, in some cases, on the terms of separate
subordination agreements or intercreditor agreements with others that hold
interests in the real property, the knowledge of the parties to the mortgage
and, generally, the order of recordation of the mortgage in the appropriate
public recording office. However, the lien of a recorded mortgage will generally
be subordinate to later-arising liens for real estate taxes and assessments and
other charges imposed under governmental police powers.
TYPES OF MORTGAGE INSTRUMENTS
There are two parties to a mortgage: a mortgagor (the borrower and usually
the owner of the subject property) and a mortgagee (the lender). In contrast, a
deed of trust is a three-party instrument, among a trustor (the equivalent of a
borrower), a trustee to whom the real property is conveyed, and a beneficiary
(the lender) for whose benefit the conveyance is made. Under a deed of trust,
the trustor grants the property, irrevocably until the debt is paid, in trust
and generally with a power of sale, to the trustee to secure repayment of the
indebtedness evidenced by the related note. A deed to secure debt typically has
two parties, pursuant to which the borrower, or grantor, conveys title to the
real property to the grantee, or lender, generally with a power of sale, until
such time as the debt is repaid. In a case where the borrower is a land trust,
there would be an additional party because legal title to the property is held
by a land trustee under a land trust agreement for the benefit of the borrower.
At origination of a mortgage loan involving a land trust, the borrower may
execute a separate undertaking to make payments on the mortgage note. In no
event is the land trustee personally liable for the mortgage note obligation.
The mortgagee's authority under a mortgage, the trustee's authority under a deed
of trust and the grantee's authority under a deed to secure debt are governed by
the express provisions of the related instrument, the law of the state in which
the real property is located, certain federal laws and, in some deed of trust
transactions, the directions of the beneficiary.
LEASES AND RENTS
Mortgages that encumber income-producing property often contain an
assignment of rents and leases and/or may be accompanied by a separate
assignment of rents and leases, pursuant to which the borrower assigns to the
lender the borrower's right, title and interest as landlord under each lease and
the income derived therefrom, while (unless rents are to be paid directly to the
lender) retaining a revocable license to collect the rents for so long as there
is no default. If the borrower defaults, the license terminates and the
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lender is entitled to collect the rents. Local law may require that the lender
take possession of the property and/or obtain a court-appointed receiver before
becoming entitled to collect the rents.
In most states, hotel and motel room rates are considered accounts
receivable under the Uniform Commercial Code ("UCC"); in cases where hotels or
motels constitute loan security, the rates are generally pledged by the borrower
as additional security for the loan. In general, the lender must file financing
statements in order to perfect its security interest in the room rates and must
file continuation statements, generally every five years, to maintain perfection
of such security interest. In certain cases, Mortgage Loans secured by hotels or
motels may be included in a Trust Fund even if the security interest in the room
rates was not perfected or the requisite UCC filings were allowed to lapse. Even
if the lender's security interest in room rates is perfected under applicable
non-bankruptcy law, it will generally be required to commence a foreclosure
action or otherwise take possession of the property in order to enforce its
rights to collect the room rates following a default. In the bankruptcy setting,
however, the lender will be stayed from enforcing its rights to collect room
rates, but those room rates (in light of certain revisions to the Bankruptcy
Code which are effective for all bankruptcy cases commenced on or after October
22, 1994) constitute "cash collateral" and therefore cannot be used by the
bankruptcy debtor without a hearing or lender's consent and unless the lender's
interest in the room rates is given adequate protection (e.g., cash payment for
otherwise encumbered funds or a replacement lien on unencumbered property, in
either case equal in value to the amount of room rates that the debtor proposes
to use, or other similar relief). See "--Bankruptcy Laws".
PERSONALTY
In the case of certain types of mortgaged properties, such as hotels,
motels and nursing homes, personal property (to the extent owned by the borrower
and not previously pledged) may constitute a significant portion of the
property's value as security. The creation and enforcement of liens on personal
property are governed by the UCC. Accordingly, if a borrower pledges personal
property as security for a mortgage loan, the lender generally must file UCC
financing statements in order to perfect its security interest therein, and must
file continuation statements, generally every five years, to maintain that
perfection. In certain cases, Mortgage Loans secured in part by personal
property may be included in a Trust Fund even if the security interest in such
personal property was not perfected or the requisite UCC filings were allowed to
lapse.
FORECLOSURE
General. Foreclosure is a legal procedure that allows the lender to
recover its mortgage debt by enforcing its rights and available legal remedies
under the mortgage. If the borrower defaults in payment or performance of its
obligations under the note or mortgage, the lender has the right to institute
foreclosure proceedings to sell the real property at public auction to satisfy
the indebtedness.
Foreclosure procedures vary from state to state. Two primary methods of
foreclosing a mortgage are judicial foreclosure, involving court proceedings,
and non-judicial foreclosure pursuant to a power of sale granted in the mortgage
instrument. Other foreclosure procedures are available in some states, but they
are either infrequently used or available only in limited circumstances.
A foreclosure action is subject to most of the delays and expenses of other
lawsuits if defenses are raised or counterclaims are interposed, and sometimes
requires several years to complete.
Judicial Foreclosure. A judicial foreclosure proceeding is conducted in a
court having jurisdiction over the mortgaged property. Generally, the action is
initiated by the service of legal pleadings upon all parties having a
subordinate interest of record in the real property and all parties in
possession of the property, under leases or otherwise, whose interests are
subordinate to the mortgage. Delays in completion of the foreclosure may
occasionally result from difficulties in locating defendants. When the lender's
right to foreclose is contested, the legal proceedings can be time-consuming.
Upon successful completion of a judicial foreclosure proceeding, the court
generally issues a judgment of foreclosure and appoints a referee or other
officer to conduct a public sale of the mortgaged property, the proceeds of
which are used to satisfy the judgment. Such sales are made in accordance with
procedures that vary from state to state.
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Equitable and Other Limitations on Enforceability of Certain
Provisions. United States courts have traditionally imposed general equitable
principles to limit the remedies available to lenders in foreclosure actions.
These principles are generally designed to relieve borrowers from the effects of
mortgage defaults perceived as harsh or unfair. Relying on such principles, a
court may alter the specific terms of a loan to the extent it considers
necessary to prevent or remedy an injustice, undue oppression or overreaching,
or may require the lender to undertake affirmative actions to determine the
cause of the borrower's default and the likelihood that the borrower will be
able to reinstate the loan. In some cases, courts have substituted their
judgment for the lender's and have required that lenders reinstate loans or
recast payment schedules in order to accommodate borrowers who are suffering
from a temporary financial disability. In other cases, courts have limited the
right of the lender to foreclose in the case of a nonmonetary default, such as a
failure to adequately maintain the mortgaged property or an impermissible
further encumbrance of the mortgaged property. Finally, some courts have
addressed the issue of whether federal or state constitutional provisions
reflecting due process concerns for adequate notice require that a borrower
receive notice in addition to statutorily-prescribed minimum notice. For the
most part, these cases have upheld the reasonableness of the notice provisions
or have found that a public sale under a mortgage providing for a power of sale
does not involve sufficient state action to trigger constitutional protections.
In addition, some states may have statutory protection such as the right of
the borrower to reinstate mortgage loans after commencement of foreclosure
proceedings but prior to a foreclosure sale.
Non-Judicial Foreclosure/Power of Sale. In states permitting non-judicial
foreclosure proceedings, foreclosure of a deed of trust is generally
accomplished by a non-judicial trustee's sale pursuant to a power of sale
typically granted in the deed of trust. A power of sale may also be contained in
any other type of mortgage instrument if applicable law so permits. A power of
sale under a deed of trust allows a non-judicial public sale to be conducted
generally following a request from the beneficiary/lender to the trustee to sell
the property upon default by the borrower and after notice of sale is given in
accordance with the terms of the mortgage and applicable state law. In some
states, prior to such sale, the trustee under the deed of trust must record a
notice of default and notice of sale and send a copy to the borrower and to any
other party who has recorded a request for a copy of a notice of default and
notice of sale. In addition, in some states the trustee must provide notice to
any other party having an interest of record in the real property, including
junior lienholders. A notice of sale must be posted in a public place and, in
most states, published for a specified period of time in one or more newspapers.
The borrower or junior lienholder may then have the right, during a
reinstatement period required in some states, to cure the default by paying the
entire actual amount in arrears (without regard to the acceleration of the
indebtedness), plus the lender's expenses incurred in enforcing the obligation.
In other states, the borrower or the junior lienholder is not provided a period
to reinstate the loan, but has only the right to pay off the entire debt to
prevent the foreclosure sale. Generally, state law governs the procedure for
public sale, the parties entitled to notice, the method of giving notice and the
applicable time periods.
Public Sale. A third party may be unwilling to purchase a mortgaged
property at a public sale because of the difficulty in determining the exact
status of title to the property (due to, among other things, redemption rights
that may exist) and because of the possibility that physical deterioration of
the property may have occurred during the foreclosure proceedings. Therefore, it
is common for the lender to purchase the mortgaged property for an amount equal
to the secured indebtedness and accrued and unpaid interest plus the expenses of
foreclosure, in which event the borrower's debt will be extinguished, or for a
lesser amount in order to preserve its right to seek a deficiency judgment if
such is available under state law and under the terms of the Mortgage Loan
documents. (The Mortgage Loans, however, are generally expected to be
non-recourse. See "Risk Factors--Investment in Commercial and Multifamily
Mortgage Loans".) Thereafter, subject to the borrower's right in some states to
remain in possession during a redemption period, the lender will become the
owner of the property and have both the benefits and burdens of ownership,
including the obligation to pay debt service on any senior mortgages, to pay
taxes, to obtain casualty insurance and to make such repairs as are necessary to
render the property suitable for sale. The costs of operating and maintaining a
commercial or multifamily residential property may be significant and may be
greater than the income derived from that property. The lender also will
commonly obtain the services of a real estate broker and pay the broker's
commission in connection with the sale or lease of the property. Depending upon
market conditions, the
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ultimate proceeds of the sale of the property may not equal the lender's
investment in the property. Moreover, because of the expenses associated with
acquiring, owning and selling a mortgaged property, a lender could realize an
overall loss on a mortgage loan even if the mortgaged property is sold at
foreclosure, or resold after it is acquired through foreclosure, for an amount
equal to the full outstanding principal amount of the loan plus accrued
interest.
The holder of a junior mortgage that forecloses on a mortgaged property
does so subject to senior mortgages and any other prior liens, and may be
obliged to keep senior mortgage loans current in order to avoid foreclosure of
its interest in the property. In addition, if the foreclosure of a junior
mortgage triggers the enforcement of a "due-on-sale" clause contained in a
senior mortgage, the junior mortgagee could be required to pay the full amount
of the senior mortgage indebtedness or face foreclosure.
Rights of Redemption. The purposes of a foreclosure action are to enable
the lender to realize upon its security and to bar the borrower, and all persons
who have interests in the property that are subordinate to that of the
foreclosing lender, from exercise of their "equity of redemption". The doctrine
of equity of redemption provides that, until the property encumbered by a
mortgage has been sold in accordance with a properly conducted foreclosure and
foreclosure sale, those having interests that are subordinate to that of the
foreclosing lender have an equity of redemption and may redeem the property by
paying the entire debt with interest. Those having an equity of redemption must
generally be made parties and joined in the foreclosure proceeding in order for
their equity of redemption to be terminated.
The equity of redemption is a common-law (non-statutory) right which should
be distinguished from post-sale statutory rights of redemption. In some states,
after sale pursuant to a deed of trust or foreclosure of a mortgage, the
borrower and foreclosed junior lienors are given a statutory period in which to
redeem the property. In some states, statutory redemption may occur only upon
payment of the foreclosure sale price. In other states, redemption may be
permitted if the former borrower pays only a portion of the sums due. The effect
of a statutory right of redemption is to diminish the ability of the lender to
sell the foreclosed property because the exercise of a right of redemption would
defeat the title of any purchaser through a foreclosure. Consequently, the
practical effect of the redemption right is to force the lender to maintain the
property and pay the expenses of ownership until the redemption period has
expired. In some states, a post-sale statutory right of redemption may exist
following a judicial foreclosure, but not following a trustee's sale under a
deed of trust.
Anti-Deficiency Legislation. Some or all of the Mortgage Loans may be
nonrecourse loans, as to which recourse in the case of default will be limited
to the Mortgaged Property and such other assets, if any, that were pledged to
secure the Mortgage Loan. However, even if a mortgage loan by its terms provides
for recourse to the borrower's other assets, a lender's ability to realize upon
those assets may be limited by state law. For example, in some states a lender
cannot obtain a deficiency judgment against the borrower following foreclosure
or sale under a deed of trust. A deficiency judgment is a personal judgment
against the former borrower equal to the difference between the net amount
realized upon the public sale of the real property and the amount due to the
lender. Other statutes may require the lender to exhaust the security afforded
under a mortgage before bringing a personal action against the borrower. In
certain other states, the lender has the option of bringing a personal action
against the borrower on the debt without first exhausting such security;
however, in some of those states, the lender, following judgment on such
personal action, may be deemed to have elected a remedy and thus may be
precluded from foreclosing upon the security. Consequently, lenders in those
states where such an election of remedy provision exists will usually proceed
first against the security. Finally, other statutory provisions, designed to
protect borrowers from exposure to large deficiency judgments that might result
from bidding at below-market values at the foreclosure sale, limit any
deficiency judgment to the excess of the outstanding debt over the fair market
value of the property at the time of the sale.
Leasehold Considerations. Mortgage Loans may be secured by a mortgage on
the borrower's leasehold interest in a ground lease. Leasehold mortgage loans
are subject to certain risks not associated with mortgage loans secured by a
lien on the fee estate of the borrower. The most significant of these risks is
that if the borrower's leasehold were to be terminated upon a lease default, the
leasehold mortgagee would lose its security. This risk may be lessened if the
ground lease requires the lessor to give the leasehold mortgagee
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notices of lessee defaults and an opportunity to cure them, permits the
leasehold estate to be assigned to and by the leasehold mortgagee or the
purchaser at a foreclosure sale, and contains certain other protective
provisions typically included in a "mortgageable" ground lease. Certain Mortgage
Loans, however, may be secured by ground leases which do not contain these
provisions.
Cross-Collateralization. Certain of the Mortgage Loans may be secured by
more than one mortgage covering properties located in more than one state.
Because of various state laws governing foreclosure or the exercise of a power
of sale and because, in general, foreclosure actions are brought in state court
and the courts of one state cannot exercise jurisdiction over property in
another state, it may be necessary upon a default under a cross-collateralized
Mortgage Loan to foreclose on the related mortgages in a particular order rather
than simultaneously in order to ensure that the lien of the mortgages is not
impaired or released.
BANKRUPTCY LAWS
Operation of the Bankruptcy Code and related state laws may interfere with
or affect the ability of a lender to realize upon collateral and/or to enforce a
deficiency judgment. For example, under the Bankruptcy Code, virtually all
actions (including foreclosure actions and deficiency judgment proceedings) to
collect a debt are automatically stayed upon the filing of the bankruptcy
petition and, often, no interest or principal payments are made during the
course of the bankruptcy case. The delay and the consequences thereof caused by
such automatic stay can be significant. Also, under the Bankruptcy Code, the
filing of a petition in bankruptcy by or on behalf of a junior lienor may stay
the senior lender from taking action to foreclose out such junior lien.
Under the Bankruptcy Code, provided certain substantive and procedural
safeguards protective of the lender are met, the amount and terms of a mortgage
loan secured by a lien on property of the debtor may be modified under certain
circumstances. For example, the outstanding amount of the loan may be reduced to
the then-current value of the property (with a corresponding partial reduction
of the amount of lender's security interest) pursuant to a confirmed plan or
lien avoidance proceeding, thus leaving the lender a general unsecured creditor
for the difference between such value and the outstanding balance of the loan.
Other modifications may include the reduction in the amount of each scheduled
payment, by means of a reduction in the rate of interest and/or an alteration of
the repayment schedule (with or without affecting the unpaid principal balance
of the loan), and/or by an extension (or shortening) of the term to maturity.
Some bankruptcy courts have approved plans, based on the particular facts of the
reorganization case, that effected the cure of a mortgage loan default by paying
arrearages over a number of years. Also, a bankruptcy court may permit a debtor,
through its rehabilitative plan, to reinstate a loan mortgage payment schedule
even if the lender has obtained a final judgment of foreclosure prior to the
filing of the debtor's petition.
Federal bankruptcy law may also have the effect of interfering with or
affecting the ability of a secured lender to enforce the borrower's assignment
of rents and leases related to the mortgaged property. Under the Bankruptcy
Code, a lender may be stayed from enforcing the assignment, and the legal
proceedings necessary to resolve the issue could be time-consuming, with
resulting delays in the lender's receipt of the rents. Recent amendments to the
Bankruptcy code, however, may minimize the impairment of the lender's ability to
enforce the borrower's assignment of rents and leases. In addition to the
inclusion of hotel revenues within the definition of "cash collateral" as noted
previously in the section entitled "--Leases and Rents", the amendments provide
that a pre-petition security interest in rents or hotel revenues is designed to
overcome those cases holding that a security interest in rents is unperfected
under the laws of certain states until the lender has taken some further action,
such as commencing foreclosure or obtaining a receiver prior to activation of
the assignment of rents.
If a borrower's ability to make payment on a mortgage loan is dependent on
its receipt of rent payments under a lease of the related property, that ability
may be impaired by the commencement of a bankruptcy case relating to a lessee
under such lease. Under the Bankruptcy Code, the filing of a petition in
bankruptcy by or on behalf of a lessee results in a stay in bankruptcy against
the commencement or continuation of any state court proceeding for past due
rent, for accelerated rent, for damages or for a summary eviction order with
respect to a default under the lease that occurred prior to the filing of the
lessee's petition. In addition, the
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Bankruptcy Code generally provides that a trustee or debtor-in-possession may,
subject to approval of the court, (i) assume the lease and retain it or assign
it to a third party or (ii) reject the lease. If the lease is assumed, the
trustee or debtor-in-possession (or assignee, if applicable) must cure any
defaults under the lease, compensate the lessor for its losses and provide the
lessor with "adequate assurance" of future performance. Such remedies may be
insufficient, and any assurances provided to the lessor may, in fact, be
inadequate. If the lease is rejected, the lessor will be treated as an unsecured
creditor with respect to its claim for damages for termination of the lease. The
Bankruptcy Code also limits a lessor's damages for lease rejection to the rent
reserved by the lease (without regard to acceleration) for the greater of one
year, or 15%, not to exceed three years, of the remaining term of the lease.
ENVIRONMENTAL CONSIDERATIONS
General. A lender may be subject to environmental risks when taking a
security interest in real property. Of particular concern may be properties that
are or have been used for industrial, manufacturing, military or disposal
activity. Such environmental risks include the possible diminution of the value
of a contaminated property or, as discussed below, potential liability for
clean-up costs or other remedial actions that could exceed the value of the
property or the amount of the lender's loan. In certain circumstances, a lender
may decide to abandon a contaminated mortgaged property as collateral for its
loan rather than foreclose and risk liability for clean-up costs.
Superlien Laws. Under the laws of many states, contamination on a property
may give rise to a lien on the property for clean-up costs. In several states,
such a lien has priority over all existing liens, including those of existing
mortgages. In these states, the lien of a mortgage may lose its priority to such
a "superlien".
CERCLA. The federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), imposes strict liability on
present and past "owners" and "operators" of contaminated real property for the
costs of clean-up. A secured lender may be liable as an "owner" or "operator" of
a contaminated mortgaged property if agents or employees of the lender have
participated in the management of such mortgaged property or the operations of
the borrower. Such liability may exist even if the lender did not cause or
contribute to the contamination and regardless of whether the lender has
actually taken possession of a mortgaged property through foreclosure, deed in
lieu of foreclosure or otherwise. Moreover, such liability is not limited to the
original or unamortized principal balance of a loan or to the value of the
property securing a loan. Excluded from CERCLA's definition of "owner" or
"operator", however, is a person "who without participating in the management of
the facility, holds indicia of ownership primarily to protect his security
interest". This is the so called "secured creditor exemption".
The Asset Conservation, Lender Liability and Deposit Insurance Act of 1996
(the "ACT") amended, among other things, the provisions of CERCLA with respect
to lender liability and the secured creditor exemption. The Act offers
substantial protection to lenders by defining the activities in which a lender
can engage and still have the benefit of the secured creditor exemption. In
order for a lender to be deemed to have participated in the management of a
mortgaged property, the lender must actually participate in the operational
affairs of the property of the borrower. The Act provides that "merely having
the capacity to influence, or unexercised right to control" operations does not
constitute participation in management. A lender will lose the protection of the
secured creditor exemption only if it exercises decision-making control over the
borrower's environmental compliance and hazardous substance handling and
disposal practices, or assumes day-to-day management of all operational
functions of the mortgaged property. The Act also provides that a lender will
continue to have the benefit of the secured creditor exemption even if it
forecloses on a mortgaged property, purchases it at a foreclosure sale or
accepts a deed-in-lieu of foreclosure provided that the lender seeks to sell the
mortgaged property at the earliest practicable commercially reasonable time on
commercially reasonable terms.
Certain Other Federal and State Laws. Many states have statutes similar to
CERCLA, and not all those statutes provide for a secured creditor exemption. In
addition, under federal law, there is potential liability
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relating to hazardous wastes and underground storage tanks under the federal
Resource Conservation and Recovery Act ("RCRA").
In addition, the definition of "hazardous substances" under CERCLA
specifically excludes petroleum products. Subtitle I of RCRA governs underground
petroleum storage tanks. Under the Act the protections accorded to lenders under
CERCLA are also accorded to the holders of security interests in underground
storage tanks. It should be noted, however, that liability for cleanup of
petroleum contamination may be governed by state law, which may not provide for
any specific protection for secured creditors.
In a few states, transfers of some types of properties are conditioned upon
cleanup of contamination prior to transfer. In these cases, a lender that
becomes the owner of a property through foreclosure, deed in lieu of foreclosure
or otherwise, may be required to clean up the contamination before selling or
otherwise transferring the property.
Beyond statute-based environmental liability, there exist common law causes
of action (for example, actions based on nuisance or on toxic tort resulting in
death, personal injury or damage to property) related to hazardous environmental
conditions on a property. While it may be more difficult to hold a lender liable
in such cases, unanticipated or uninsured liabilities of the borrower may
jeopardize the borrower's ability to meet its loan obligations.
Additional Considerations. The cost of remediating hazardous substance
contamination at a property can be substantial. If a lender becomes liable, it
can bring an action for contribution against the owner or operator who created
the environmental hazard, but that individual or entity may be without
substantial assets. Accordingly, it is possible that such costs could become a
liability of the Trust Fund and occasion a loss to the Certificateholders.
To reduce the likelihood of such a loss, unless otherwise specified in the
related Prospectus Supplement, the Pooling and Servicing Agreement will provide
that the Master Servicer, acting on behalf of the Trustee, may not acquire title
to a Mortgaged Property or take over its operation unless the Master Servicer,
based solely (as to environmental matters) on a report prepared by a person who
regularly conducts environmental audits, has made the determination that it is
appropriate to do so, as described under "The Pooling and Servicing
Agreements--Realization Upon Defaulted Mortgage Loans".
If a lender forecloses on a mortgage secured by a property, the operations
on which are subject to environmental laws and regulations, the lender will be
required to operate the property in accordance with those laws and regulations.
Such compliance may entail substantial expense, especially in the case of
industrial or manufacturing properties.
In addition, a lender may be obligated to disclose environmental conditions
on a property to government entities and/or to prospective buyers (including
prospective buyers at a foreclosure sale or following foreclosure). Such
disclosure may decrease the amount that prospective buyers are willing to pay
for the affected property, sometimes substantially, and thereby decrease the
ability of the lender to recoup its investment in a loan upon foreclosure.
Environmental Site Assessments. In most cases, an environmental site
assessment of each Mortgaged Property will have been performed in connection
with the origination of the related Mortgage Loan or at some time prior to the
issuance of the related Certificates. Environmental site assessments, however,
vary considerably in their content, quality and cost. Even when adhering to good
professional practices, environmental consultants will sometimes not detect
significant environmental problems because to do an exhaustive environmental
assessment would be far too costly and time-consuming to be practical.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE
Certain of the Mortgage Loans may contain "due-on-sale" and
"due-on-encumbrance" clauses that purport to permit the lender to accelerate the
maturity of the loan if the borrower transfers or encumbers the related
Mortgaged Property. In recent years, court decisions and legislative actions
placed substantial restrictions on the right of lenders to enforce such clauses
in many states. However, the Garn-St Germain
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Depository Institutions Act of 1982 (the "GARN ACT") generally preempts state
laws that prohibit the enforcement of due-on-sale clauses and permits lenders to
enforce these clauses in accordance with their terms, subject to certain
limitations as set forth in the Garn Act and the regulations promulgated
thereunder. Accordingly, a Master Servicer may nevertheless have the right to
accelerate the maturity of a Mortgage Loan that contains a "due-on-sale"
provision upon transfer of an interest in the property, without regard to the
Master Servicer's ability to demonstrate that a sale threatens its legitimate
security interest.
SUBORDINATE FINANCING
The terms of certain of the Mortgage Loans may not restrict the ability of
the borrower to use the Mortgaged Property as security for one or more
additional loans, or such restrictions may be unenforceable. Where a borrower
encumbers a mortgaged property with one or more junior liens, the senior lender
is subjected to additional risk. First, the borrower may have difficulty
servicing and repaying multiple loans. Moreover, if the subordinate financing
permits recourse to the borrower (as is frequently the case) and the senior loan
does not, a borrower may have more incentive to repay sums due on the
subordinate loan. Second, acts of the senior lender that prejudice the junior
lender or impair the junior lender's security may create a superior equity in
favor of the junior lender. For example, if the borrower and the senior lender
agree to an increase in the principal amount of or the interest rate payable on
the senior loan, the senior lender may lose its priority to the extent any
existing junior lender is harmed or the borrower is additionally burdened.
Third, if the borrower defaults on the senior loan and/or any junior loan or
loans, the existence of junior loans and actions taken by junior lenders can
impair the security available to the senior lender and can interfere with or
delay the taking of action by the senior lender. Moreover, the bankruptcy of a
junior lender may operate to stay foreclosure or similar proceedings by the
senior lender.
DEFAULT INTEREST AND LIMITATIONS ON PREPAYMENTS
Notes and mortgages may contain provisions that obligate the borrower to
pay a late charge or additional interest if payments are not timely made, and in
some circumstances, may prohibit prepayments for a specified period and/or
condition prepayments upon the borrower's payment of prepayment fees or yield
maintenance penalties. In certain states, there are or may be specific
limitations upon the late charges which a lender may collect from a borrower for
delinquent payments. Certain states also limit the amounts that a lender may
collect from a borrower as an additional charge if the loan is prepaid. In
addition, the enforceability of provisions that provide for prepayment fees or
penalties upon an involuntary prepayment is unclear under the laws of many
states.
APPLICABILITY OF USURY LAWS
Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980 ("TITLE V") provides that state usury limitations shall not apply to
certain types of residential (including multifamily) first mortgage loans
originated by certain lenders after March 31, 1980. Title V authorized any state
to reimpose interest rate limits by adopting, before April 1, 1983, a law or
constitutional provision that expressly rejects application of the federal law.
In addition, even where Title V is not so rejected, any state is authorized by
the law to adopt a provision limiting discount points or other charges on
mortgage loans covered by Title V. Certain states have taken action to reimpose
interest rate limits and/or to limit discount points or other charges.
No Mortgage Loan originated in any state in which application of Title V
has been expressly rejected or a provision limiting discount points or other
charges has been adopted, will (if originated after that rejection or adoption)
be eligible for inclusion in a Trust Fund unless (i) such Mortgage Loan provides
for such interest rate, discount points and charges as are permitted in such
state or (ii) such Mortgage Loan provides that the terms thereof are to be
construed in accordance with the laws of another state under which such interest
rate, discount points and charges would not be usurious and the borrower's
counsel has rendered an opinion that such choice of law provision would be given
effect.
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SOLDIERS' AND SAILORS' CIVIL RELIEF ACT OF 1940
Under the terms of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended (the "RELIEF ACT"), a borrower who enters military service after the
origination of such borrower's mortgage loan (including a borrower who was in
reserve status and is called to active duty after origination of the Mortgage
Loan), may not be charged interest (including fees and charges) above an annual
rate of 6% during the period of such borrower's active duty status, unless a
court orders otherwise upon application of the lender. The Relief Act applies to
individuals who are members of the Army, Navy, Air Force, Marines, National
Guard, Reserves, Coast Guard and officers of the U.S. Public Health Service
assigned to duty with the military. Because the Relief Act applies to
individuals who enter military service (including reservists who are called to
active duty) after origination of the related mortgage loan, no information can
be provided as to the number of loans with individuals as borrowers that may be
affected by the Relief Act. Application of the Relief Act would adversely
affect, for an indeterminate period of time, the ability of a Master Servicer or
Special Servicer to collect full amounts of interest on certain of the Mortgage
Loans. Any shortfalls in interest collections resulting from the application of
the Relief Act would result in a reduction of the amounts distributable to the
holders of the related series of Certificates, and would not be covered by
advances or, unless otherwise specified in the related Prospectus Supplement,
any form of Credit Support provided in connection with such Certificates. In
addition, the Relief Act imposes limitations that would impair the ability of a
Master Servicer or Special Servicer to foreclose on an affected Mortgage Loan
during the borrower's period of active duty status, and, under certain
circumstances, during an additional three month period thereafter.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following is a general discussion of the anticipated material federal
income tax consequences of the purchase, ownership and disposition of Offered
Certificates. This discussion is directed solely to Certificateholders that hold
the Certificates as capital assets within the meaning of Section 1221 of the
Code and it does not purport to discuss all federal income tax consequences that
may be applicable to particular categories of investors, some of which (such as
banks, insurance companies and foreign investors) may be subject to special
rules. Further, the authorities on which this discussion, and the opinion
referred to below, are based are subject to change or differing interpretations,
which could apply retroactively. Taxpayers and preparers of tax returns
(including those filed by any REMIC or other issuer) should be aware that under
applicable Treasury regulations a provider of advice on specific issues of law
is not considered an income tax return preparer unless the advice (i) is given
with respect to events that have occurred at the time the advice is rendered and
is not given with respect to the consequences of contemplated actions, and (ii)
is directly relevant to the determination of an entry on a tax return.
Accordingly, taxpayers should consult their tax advisors and tax return
preparers regarding the preparation of any item on a tax return, even where the
anticipated tax treatment has been discussed herein. In addition to the federal
income tax consequences described herein, potential investors should consider
the state and local tax consequences, if any, of the purchase, ownership and
disposition of Offered Certificates. See "State and Other Tax Consequences".
Certificateholders are advised to consult their tax advisors concerning the
federal, state, local or other tax consequences to them of the purchase,
ownership and disposition of Offered Certificates.
The following discussion addresses securities of two general types: (i)
certificates ("REMIC CERTIFICATES") representing interests in a Trust Fund, or a
portion thereof, that the Master Servicer or the Trustee will elect to have
treated as a REMIC under Sections 860A through 860G (the "REMIC PROVISIONS") of
the Code, and (ii) Grantor Trust Certificates representing interests in a Trust
Fund ("GRANTOR TRUST FUND") as to which no such election will be made. The
Prospectus Supplement for each series of Certificates will indicate whether a
REMIC election (or elections) will be made for the related Trust Fund and, if
such an election is to be made, will identify all "regular interests" and
"residual interests" in the REMIC. For purposes of this tax discussion,
references to a "CERTIFICATEHOLDER" or a "holder" are to the beneficial owner of
a Certificate.
The following discussion is limited in applicability to Offered
Certificates. Moreover, this discussion applies only to the extent that Mortgage
Assets held by a Trust Fund consist solely of Mortgage Loans. To the
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extent that other Mortgage Assets, including REMIC certificates and mortgage
pass-through certificates, are to be held by a Trust Fund, the tax consequences
associated with the inclusion of such assets will be disclosed in the related
Prospectus Supplement. In addition, if Cash Flow Agreements, other than
guaranteed investment contracts, are included in a Trust Fund, the tax
consequences associated with such Cash Flow Agreements also will be disclosed in
the related Prospectus Supplement. See "Description of the Trust Funds--Cash
Flow Agreements".
Furthermore, the following discussion is based in part upon the rules
governing original issue discount that are set forth in Sections 1271-1273 and
1275 of the Code and in the Treasury regulations issued thereunder (the "OID
REGULATIONS"), and in part upon the REMIC Provisions and the Treasury
regulations issued thereunder (the "REMIC REGULATIONS"). The OID Regulations do
not adequately address certain issues relevant to, and in some instances provide
that they are not applicable to, securities such as the Certificates.
REMICS
Classification of REMICs. Upon the issuance of each series of REMIC
Certificates, counsel to the Depositor will deliver its opinion generally to the
effect that, assuming compliance with all provisions of the related Pooling and
Servicing Agreement, the related Trust Fund (or each applicable portion thereof)
will qualify as a REMIC and the REMIC Certificates offered with respect thereto
will be considered to evidence ownership of REMIC Regular Certificates or REMIC
Residual Certificates in that REMIC within the meaning of the REMIC Provisions.
If an entity electing to be treated as a REMIC fails to comply with one or
more of the ongoing requirements of the Code for such status during any taxable
year, the Code provides that the entity will not be treated as a REMIC for such
year and thereafter. In that event, such entity may be taxable as a corporation
under Treasury regulations, and the related REMIC Certificates may not be
accorded the status or given the tax treatment described below. Although the
Code authorizes the Treasury Department to issue regulations providing relief in
the event of an inadvertent termination of REMIC status, no such regulations
have been issued. Any such relief, moreover, may be accompanied by sanctions,
such as the imposition of a corporate tax on all or a portion of the Trust
Fund's income for the period in which the requirements for such status are not
satisfied. The Pooling and Servicing Agreement with respect to each REMIC will
include provisions designed to maintain the Trust Fund's status as a REMIC under
the REMIC Provisions. It is not anticipated that the status of any Trust Fund as
a REMIC will be inadvertently terminated.
Characterization of Investments in REMIC Certificates. In general, unless
otherwise provided in the related Prospectus Supplement, the REMIC Certificates
will be "real estate assets" within the meaning of Section 856(c)(5)(A) of the
Code and assets described in Section 7701(a)(19)(C) of the Code in the same
proportion that the assets of the REMIC underlying such Certificates would be so
treated. However, to the extent that the REMIC assets constitute mortgages on
property not used for residential or certain other prescribed purposes, the
REMIC Certificates will not be treated as assets qualifying under Section
7701(a)(19)(C). Moreover, if 95% or more of the assets of the REMIC qualify for
any of the foregoing treatments at all times during a calendar year, the REMIC
Certificates will qualify for the corresponding status in their entirety for
that calendar year. Interest (including original issue discount) on the REMIC
Regular Certificates and income allocated to the REMIC Residual Certificates
will be interest described in Section 856(c)(3)(B) of the Code to the extent
that such Certificates are treated as "real estate assets" within the meaning of
Section 856(c)(5)(A) of the Code. In addition, the REMIC Regular Certificates
will be "qualified mortgages" within the meaning of Section 860G(a)(3) of the
Code. The determination as to the percentage of the REMIC's assets that
constitute assets described in the foregoing sections of the Code will be made
with respect to each calendar quarter based on the average adjusted basis of
each category of the assets held by the REMIC during such calendar quarter. The
Master Servicer or the Trustee will report those determinations to
Certificateholders in the manner and at the times required by applicable
Treasury regulations.
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The assets of the REMIC will include, in addition to Mortgage Loans,
payments on Mortgage Loans held pending distribution on the REMIC Certificates
and property acquired by foreclosure held pending sale, and may include amounts
in reserve accounts. It is unclear whether property acquired by foreclosure held
pending sale, and amounts in reserve accounts would be considered to be part of
the Mortgage Loans, or whether such assets (to the extent not invested in assets
described in the foregoing sections) otherwise would receive the same treatment
as the Mortgage Loans for purposes of all of the foregoing sections. In
addition, in some instances Mortgage Loans may not be treated entirely as assets
described in the foregoing sections. If so, the related Prospectus Supplement
will describe the Mortgage Loans that may not be so treated. The REMIC
Regulations do provide, however, that payments on Mortgage Loans held pending
distribution are considered part of the Mortgage Loans for purposes of Section
856(c)(5)(A) of the Code. Furthermore, foreclosure property will qualify as
"real estate assets" under Section 856(c)(5)(A) of the Code.
Tiered REMIC Structures. For certain series of REMIC Certificates, two or
more separate elections may be made to treat designated portions of the related
Trust Fund as REMICs ("TIERED REMICS") for federal income tax purposes. Upon the
issuance of any such series of REMIC Certificates, counsel to the Depositor will
deliver its opinion generally to the effect that, assuming compliance with all
provisions of the related Pooling and Servicing Agreement, the Tiered REMICs
will each qualify as a REMIC and the REMIC Certificates issued by the Tiered
REMICs, will be considered to evidence ownership of REMIC Regular Certificates
or REMIC Residual Certificates in the related REMIC within the meaning of the
REMIC Provisions.
Solely for purposes of determining whether the REMIC Certificates will be
"real estate assets" within the meaning of Section 856(c)(5)(A) of the Code and
"loans secured by an interest in real property" under Section 7701(a)(19)(C) of
the Code, and whether the income on such Certificates is interest described in
Section 856(c)(3)(B) of the Code, the Tiered REMICs will be treated as one
REMIC.
Taxation of Owners of REMIC Regular Certificates.
General. Except as otherwise stated in this discussion, REMIC Regular
Certificates will be treated for federal income tax purposes as debt instruments
issued by the REMIC and not as ownership interests in the REMIC or its assets.
Moreover, holders of REMIC Regular Certificates that otherwise report income
under a cash method of accounting will be required to report income with respect
to REMIC Regular Certificates under an accrual method.
Original Issue Discount. Certain REMIC Regular Certificates may be issued
with "original issue discount" within the meaning of Section 1273(a) of the
Code. Any holders of REMIC Regular Certificates issued with original issue
discount generally will be required to include original issue discount in income
as it accrues, in accordance with the method described below, in advance of the
receipt of the cash attributable to such income. In addition, Section 1272(a)(6)
of the Code provides special rules applicable to REMIC Regular Certificates and
certain other debt instruments issued with original issue discount. Regulations
have not been issued under that section.
The Code requires that a prepayment assumption be used with respect to
Mortgage Loans held by a REMIC in computing the accrual of original issue
discount on REMIC Regular Certificates issued by that REMIC, and that
adjustments be made in the amount and rate of accrual of such discount to
reflect differences between the actual prepayment rate and the prepayment
assumption. The prepayment assumption is to be determined in a manner prescribed
in Treasury regulations; as noted above, those regulations have not been issued.
The Conference Committee Report accompanying the Tax Reform Act of 1986 (the
"COMMITTEE REPORT") indicates that the regulations will provide that the
prepayment assumption used with respect to a REMIC Regular Certificate must be
the same as that used in pricing the initial offering of such REMIC Regular
Certificate. The prepayment assumption (the "PREPAYMENT ASSUMPTION") used in
reporting original issue discount for each series of REMIC Regular Certificates
will be consistent with this standard and will be disclosed in the related
Prospectus Supplement. However, neither the Depositor nor any other person will
make any representation that the Mortgage Loans will in fact prepay at a rate
conforming to the Prepayment Assumption or at any other rate.
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The original issue discount, if any, on a REMIC Regular Certificate will be
the excess of its stated redemption price at maturity over its issue price. The
issue price of a particular class of REMIC Regular Certificates will be the
first cash price at which a substantial amount of REMIC Regular Certificates of
that class is sold (excluding sales to bond houses, brokers and underwriters).
If less than a substantial amount of a particular class of REMIC Regular
Certificates is sold for cash on or prior to the date of their initial issuance
(the "CLOSING DATE"), the issue price for such class will be the fair market
value of such class on the Closing Date. Under the OID Regulations, the stated
redemption price of a REMIC Regular Certificate is equal to the total of all
payments to be made on such Certificate other than "qualified stated interest".
"Qualified stated interest" is interest that is unconditionally payable at least
annually at a single fixed rate, or at a "qualified floating rate", an
"objective rate", a combination of a single fixed rate and one or more
"qualified floating rates" or one "qualified inverse floating rate", or a
combination of "qualified floating rates" that does not operate in a manner that
accelerates or defers interest payments on such REMIC Regular Certificate.
In the case of REMIC Regular Certificates bearing adjustable interest
rates, the determination of the total amount of original issue discount and the
timing of the inclusion thereof will vary according to the characteristics of
such REMIC Regular Certificates. If the original issue discount rules apply to
such Certificates, the related Prospectus Supplement will describe the manner in
which such rules will be applied with respect to those Certificates in preparing
information returns to the Certificateholders and the IRS.
Certain classes of the REMIC Regular Certificates may provide for the first
interest payment with respect to such Certificates to be made more than one
month after the date of issuance, a period which is longer than the subsequent
monthly intervals between interest payments. Assuming the "accrual period" (as
defined below) for original issue discount is each monthly period that ends on a
Distribution Date, in some cases, as a consequence of this "long first accrual
period", some or all interest payments may be required to be included in the
stated redemption price of the REMIC Regular Certificate and accounted for as
original issue discount. Because interest on REMIC Regular Certificates must in
any event be accounted for under an accrual method, applying this analysis would
result in only a slight difference in the timing of the inclusion in income of
the yield on the REMIC Regular Certificates.
In addition, if the accrued interest to be paid on the first Distribution
Date is computed with respect to a period that begins prior to the Closing Date,
a portion of the purchase price paid for a REMIC Regular Certificate will
reflect such accrued interest. In such cases, information returns provided to
the Certificateholders and the IRS will be based on the position that the
portion of the purchase price paid for the interest accrued with respect to
periods prior to the Closing Date is treated as part of the overall cost of such
REMIC Regular Certificate (and not as a separate asset the cost of which is
recovered entirely out of interest received on the next Distribution Date) and
that portion of the interest paid on the first Distribution Date in excess of
interest accrued for a number of days corresponding to the number of days from
the Closing Date to the first Distribution Date should be included in the stated
redemption price of such REMIC Regular Certificate. However, the OID Regulations
state that all or some portion of such accrued interest may be treated as a
separate asset the cost of which is recovered entirely out of interest paid on
the first Distribution Date. It is unclear how an election to do so would be
made under the OID Regulations and whether such an election could be made
unilaterally by a Certificateholder.
Notwithstanding the general definition of original issue discount, original
issue discount on a REMIC Regular Certificate will be considered to be de
minimis if it is less than 0.25% of the stated redemption price of the REMIC
Regular Certificate multiplied by its weighted average life. For this purpose,
the weighted average life of the REMIC Regular Certificate is computed as the
sum of the amounts determined, as to each payment included in the stated
redemption price of such REMIC Regular Certificate, by multiplying (i) the
number of complete years (rounding down for partial years) from the issue date
until such payment is expected to be made (presumably taking into account the
Prepayment Assumption) by (ii) a fraction, the numerator of which is the amount
of the payment, and the denominator of which is the stated redemption price at
maturity of such REMIC Regular Certificate. Under the OID Regulations, original
issue discount of only a de minimis amount (other than de minimis original issue
discount attributable to a so-called "teaser" interest rate or an initial
interest holiday) will be included in income as each payment of stated principal
is made, based on the product of the total amount of such de minimis original
issue discount and a fraction, the
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numerator of which is the amount of such principal payment and the denominator
of which is the outstanding stated principal amount of the REMIC Regular
Certificate. The OID Regulations also would permit a Certificateholder to elect
to accrue de minimis original issue discount into income currently based on a
constant yield method. See "--Taxation of Owners of REMIC Regular
Certificates--Market Discount" for a description of such election under the OID
Regulations.
If original issue discount on a REMIC Regular Certificate is in excess of a
de minimis amount, the holder of such Certificate must include in ordinary gross
income the sum of the "daily portions" of original issue discount for each day
during its taxable year on which it held such REMIC Regular Certificate,
including the purchase date but excluding the disposition date. In the case of
an original holder of a REMIC Regular Certificate, the daily portions of
original issue discount will be determined as follows.
As to each "accrual period", that is, unless otherwise stated in the
related Prospectus Supplement, each period that ends on a date that corresponds
to a Distribution Date and begins on the first day following the immediately
preceding accrual period (or in the case of the first such period, begins on the
Closing Date), a calculation will be made of the portion of the original issue
discount that accrued during such accrual period. The portion of original issue
discount that accrues in any accrual period will equal the excess, if any, of
(i) the sum of (a) the present value, as of the end of the accrual period, of
all of the distributions remaining to be made on the REMIC Regular Certificate,
if any, in future periods and (b) the distributions made on such REMIC Regular
Certificate during the accrual period of amounts included in the stated
redemption price, over (ii) the adjusted issue price of such REMIC Regular
Certificate at the beginning of the accrual period. The present value of the
remaining distributions referred to in the preceding sentence will be calculated
(i) assuming that distributions on the REMIC Regular Certificate will be
received in future periods based on the Mortgage Loans being prepaid at a rate
equal to the Prepayment Assumption and (ii) using a discount rate equal to the
original yield to maturity of the Certificate. For these purposes, the original
yield to maturity of the Certificate will be calculated based on its issue price
and assuming that distributions on the Certificate will be made in all accrual
periods based on the Mortgage Loans being prepaid at a rate equal to the
Prepayment Assumption. The adjusted issue price of a REMIC Regular Certificate
at the beginning of any accrual period will equal the issue price of such
Certificate, increased by the aggregate amount of original issue discount that
accrued with respect to such Certificate in prior accrual periods, and reduced
by the amount of any distributions made on such REMIC Regular Certificate in
prior accrual periods of amounts included in the stated redemption price. The
original issue discount accruing during any accrual period, computed as
described above, will be allocated ratably to each day during the accrual period
to determine the daily portion of original issue discount for such day.
A subsequent purchaser of a REMIC Regular Certificate that purchases such
Certificate at a cost (excluding any portion of such cost attributable to
accrued qualified stated interest) less than its remaining stated redemption
price will also be required to include in gross income the daily portions of any
original issue discount with respect to such Certificate. However, each such
daily portion will be reduced, if such cost is in excess of its "adjusted issue
price", in proportion to the ratio such excess bears to the aggregate original
issue discount remaining to be accrued on such REMIC Regular Certificate. The
adjusted issue price of a REMIC Regular Certificate on any given day equals the
sum of (i) the adjusted issue price (or, in the case of the first accrual
period, the issue price) of such Certificate at the beginning of the accrual
period which includes such day and (ii) the daily portions of original issue
discount for all days during such accrual period prior to such day.
Market Discount. A Certificateholder that purchases a REMIC Regular
Certificate at a market discount, that is, in the case of a REMIC Regular
Certificate issued without original issue discount, at a purchase price less
than its remaining stated principal amount, or in the case of a REMIC Regular
Certificate issued with original issue discount, at a purchase price less than
its adjusted issue price will recognize gain upon receipt of each distribution
representing stated redemption price. In particular, under Section 1276 of the
Code such a Certificateholder generally will be required to allocate the portion
of each such distribution representing stated redemption price first to accrued
market discount not previously included in income, and to recognize ordinary
income to that extent. A Certificateholder may elect to include market discount
in income currently as it accrues rather than including it on a deferred basis
in accordance with the foregoing. If
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made, such election will apply to all market discount bonds acquired by such
Certificateholder on or after the first day of the first taxable year to which
such election applies. In addition, the OID Regulations permit a
Certificateholder to elect to accrue all interest, discount (including de
minimis market or original issue discount) and premium in income as interest,
based on a constant yield method. If such an election were made with respect to
a REMIC Regular Certificate with market discount, the Certificateholder would be
deemed to have made an election to include currently market discount in income
with respect to all other debt instruments having market discount that such
Certificateholder acquires during the taxable year of the election or
thereafter, and possibly previously acquired instruments. Similarly, a
Certificateholder that made this election for a Certificate that is acquired at
a premium would be deemed to have made an election to amortize bond premium with
respect to all debt instruments having amortizable bond premium that such
Certificateholder owns or acquires. See "--Taxation of Owners of REMIC Regular
Certificates--Premium" below. Each of these elections to accrue interest,
discount and premium with respect to a Certificate on a constant yield method or
as interest would be irrevocable.
However, market discount with respect to a REMIC Regular Certificate will
be considered to be de minimis for purposes of Section 1276 of the Code if such
market discount is less than 0.25% of the remaining stated redemption price of
such REMIC Regular Certificate multiplied by the number of complete years to
maturity remaining after the date of its purchase. In interpreting a similar
rule with respect to original issue discount on obligations payable in
installments, the OID Regulations refer to the weighted average maturity of
obligations, and it is likely that the same rule will be applied with respect to
market discount, presumably taking into account the Prepayment Assumption. If
market discount is treated as de minimis under this rule, it appears that the
actual discount would be treated in a manner similar to original issue discount
of a de minimis amount. See "--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount" above. Such treatment would result in
discount being included in income at a slower rate than discount would be
required to be included in income using the method described above.
Section 1276(b)(3) of the Code specifically authorizes the Treasury
Department to issue regulations providing for the method for accruing market
discount on debt instruments, the principal of which is payable in more than one
installment. Until regulations are issued by the Treasury Department, certain
rules described in the Committee Report apply. The Committee Report indicates
that in each accrual period market discount on REMIC Regular Certificates should
accrue, at the Certificateholder's option: (i) on the basis of a constant yield
method, (ii) in the case of a REMIC Regular Certificate issued without original
issue discount, in an amount that bears the same ratio to the total remaining
market discount as the stated interest paid in the accrual period bears to the
total amount of stated interest remaining to be paid on the REMIC Regular
Certificate as of the beginning of the accrual period, or (iii) in the case of a
REMIC Regular Certificate issued with original issue discount, in an amount that
bears the same ratio to the total remaining market discount as the original
issue discount accrued in the accrual period bears to the total original issue
discount remaining on the REMIC Regular Certificate at the beginning of the
accrual period. Moreover, the Prepayment Assumption used in calculating the
accrual of original issue discount is also used in calculating the accrual of
market discount. Because the regulations referred to in this paragraph have not
been issued, it is not possible to predict what effect such regulations might
have on the tax treatment of a REMIC Regular Certificate purchased at a discount
in the secondary market.
To the extent that REMIC Regular Certificates provide for monthly or other
periodic distributions throughout their term, the effect of these rules may be
to require market discount to be includible in income at a rate that is not
significantly slower than the rate at which such discount would accrue if it
were original issue discount. Moreover, in any event a holder of a REMIC Regular
Certificate generally will be required to treat a portion of any gain on the
sale or exchange of such 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.
Further, under Section 1277 of the Code a holder of a REMIC Regular
Certificate may be required to defer a portion of its interest deductions for
the taxable year attributable to any indebtedness incurred or continued to
purchase or carry a REMIC Regular Certificate purchased with market discount.
For these purposes, the de minimis rule referred to above applies. Any such
deferred interest expense would not exceed
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the market discount that accrues during such taxable year and is, in general,
allowed as a deduction not later than the year in which such market discount is
includible in income. If such holder elects to include market discount in income
currently as it accrues on all market discount instruments acquired by such
holder in that taxable year or thereafter, the interest deferral rule described
above will not apply.
Premium. A REMIC Regular Certificate purchased at a cost (excluding any
portion of such cost attributable to accrued qualified stated interest) greater
than its remaining stated redemption price will be considered to be purchased at
a premium. The holder of such a REMIC Regular Certificate may elect under
Section 171 of the Code to amortize such premium under the constant yield method
over the life of the Certificate. If made, such an election will apply to all
debt instruments having amortizable bond premium that the holder owns or
subsequently acquires. Amortizable premium will be treated as an offset to
interest income on the related debt instrument, rather than as a separate
interest deduction. The OID Regulations also permit Certificateholders to elect
to include all interest, discount and premium in income based on a constant
yield method, further treating the Certificateholder as having made the election
to amortize premium generally. See "--Taxation of Owners of REMIC Regular
Certificates--Market Discount" above. The Committee Report states that the same
rules that apply to accrual of market discount (which rules will require use of
a Prepayment Assumption in accruing market discount with respect to REMIC
Regular Certificates without regard to whether such Certificates have original
issue discount) will also apply in amortizing bond premium under Section 171 of
the Code.
Realized Losses. Under Section 166 of the Code, both corporate holders of
the REMIC Regular Certificates and noncorporate holders of the REMIC Regular
Certificates that acquire such 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 Certificates become wholly or partially
worthless as the result of one or more realized losses on the Mortgage Loans.
However, it appears that a noncorporate holder that does not acquire a REMIC
Regular Certificate in connection with a trade or business will not be entitled
to deduct a loss under Section 166 of the Code until such holder's Certificate
becomes wholly worthless (i.e., until its outstanding principal balance has been
reduced to zero) and that the loss will be characterized as a short-term capital
loss.
Each holder of a REMIC Regular Certificate will be required to accrue
interest and original issue discount with respect to such Certificate, without
giving effect to any reductions in distributions attributable to defaults or
delinquencies on the Mortgage Loans or the Underlying Certificates until it can
be established that any such reduction ultimately will not be recoverable. As a
result, the amount of taxable income reported in any period by the holder of a
REMIC Regular Certificate could exceed the amount of economic income actually
realized by the holder in such period. Although the holder of a REMIC Regular
Certificate eventually will recognize a loss or reduction in income attributable
to previously accrued and included income that as the 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.
Taxation of Owners of REMIC Residual Certificates.
General. As residual interests, the REMIC Residual Certificates will be
subject to tax rules that differ significantly from those that would apply if
the REMIC Residual Certificates were treated for federal income tax purposes as
direct ownership interests in the Mortgage Loans or as debt instruments issued
by the REMIC.
A holder of a REMIC Residual Certificate generally will be required to
report its daily portion of the taxable income or, subject to the limitations
noted in this discussion, the net loss of the REMIC for each day during a
calendar quarter that such holder owned such REMIC Residual Certificate. For
this purpose, the taxable income or net loss of the REMIC will be allocated to
each day in the calendar quarter ratably using a "30 days per month/90 days per
quarter/360 days per year" convention unless otherwise disclosed in the related
Prospectus Supplement. The daily amounts so allocated will then be allocated
among the REMIC Residual Certificateholders in proportion to their respective
ownership interests on such day. Any amount included in the gross income or
allowed as a loss of any REMIC Residual Certificateholder by virtue of this
paragraph will be treated as ordinary income or loss. The taxable income of the
REMIC will be determined
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under the rules described below in "--Taxable Income of the REMIC" and will be
taxable to the REMIC Residual Certificateholders without regard to the timing or
amount of cash distributions by the REMIC. Ordinary income derived from REMIC
Residual Certificates will be "portfolio income" for purposes of the taxation of
taxpayers subject to limitations under Section 469 of the Code on the
deductibility of "passive losses".
A holder of a REMIC Residual Certificate that purchased such Certificate
from a prior holder of such Certificate also will be required to report on its
federal income tax return amounts representing its daily share of the taxable
income (or net loss) of the REMIC for each day that it holds such REMIC Residual
Certificate. Those daily amounts generally will equal the amounts of taxable
income or net loss determined as described above. The Committee Report indicates
that certain modifications of the general rules may be made, by regulations,
legislation or otherwise to reduce (or increase) the income of a REMIC Residual
Certificateholder that purchased such REMIC Residual Certificate from a prior
holder of such Certificate at a price greater than (or less than) the adjusted
basis (as defined below) such REMIC Residual Certificate would have had in the
hands of an original holder of such Certificate. The REMIC Regulations, however,
do not provide for any such modifications.
Any payments received by a holder of a REMIC Residual Certificate in
connection with the acquisition of such REMIC Residual Certificate will be taken
into account in determining the income of such holder for federal income tax
purposes. Although it appears likely that any such payment would be includible
in income immediately upon its receipt, the IRS might assert that such payment
should be included in income over time according to an amortization schedule or
according to some other method. Because of the uncertainty concerning the
treatment of such payments, holders of REMIC Residual Certificates should
consult their tax advisors concerning the treatment of such payments for income
tax purposes.
The amount of income REMIC Residual Certificateholders will be required to
report (or the tax liability associated with such income) may exceed the amount
of cash distributions received from the REMIC for the corresponding period.
Consequently, REMIC Residual Certificateholders should have other sources of
funds sufficient to pay any federal income taxes due as a result of their
ownership of REMIC Residual Certificates or unrelated deductions against which
income may be offset, subject to the rules relating to "excess inclusions",
residual interests without "significant value" and "noneconomic" residual
interests discussed below. The fact that the tax liability associated with the
income allocated to REMIC Residual Certificateholders may exceed the cash
distributions received by such REMIC Residual Certificateholders for the
corresponding period may significantly adversely affect such REMIC Residual
Certificateholders' after-tax rate of return.
Taxable Income of the REMIC. The taxable income of the REMIC will equal
the income from the Mortgage Loans and other assets of the REMIC plus any
cancellation of indebtedness income due to the allocation of realized losses to
REMIC Regular Certificates, less the deductions allowed to the REMIC for
interest (including original issue discount and reduced by any premium on
issuance) on the REMIC Regular Certificates (and any other class of REMIC
Certificates constituting "regular interests" in the REMIC not offered hereby),
amortization of any premium on the Mortgage Loans, bad debt losses with respect
to the Mortgage Loans and, except as described below, for servicing,
administrative and other expenses.
For purposes of determining its taxable income, the REMIC will have an
initial aggregate basis in its assets equal to the sum of the issue prices of
all REMIC Certificates (or, if a class of REMIC Certificates is not sold
initially, their fair market values). Such aggregate basis will be allocated
among the Mortgage Loans and the other assets of the REMIC in proportion to
their respective fair market values. The issue price of any REMIC Certificates
offered hereby will be determined in the manner described above under
"--Taxation of Owners of REMIC Regular Certificates--Original Issue Discount".
The issue price of a REMIC Certificate received in exchange for an interest in
the Mortgage Loans or other property will equal the fair market value of such
interests in the Mortgage Loans or other property. Accordingly, if one or more
classes of REMIC Certificates are retained initially rather than sold, the
Master Servicer or the Trustee may be required to estimate the fair market value
of such interests in order to determine the basis of the REMIC in the Mortgage
Loans and other property held by the REMIC.
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Subject to possible application of the de minimis rules, the method of
accrual by the REMIC of original issue discount income and market discount
income with respect to Mortgage Loans that it holds will be equivalent to the
method for accruing original issue discount income for holders of REMIC Regular
Certificates (that is, under the constant yield method taking into account the
Prepayment Assumption). However, a REMIC that acquires loans at a market
discount must include such market discount in income currently, as it accrues,
on a constant yield basis. See "--Taxation of Owners of REMIC Regular
Certificates" above, which describes a method for accruing such discount income
that is analogous to that required to be used by a REMIC as to Mortgage Loans
with market discount that it holds.
A Mortgage Loan will be deemed to have been acquired with discount (or
premium) to the extent that the REMIC's basis therein, determined as described
in the preceding paragraph, is less than (or greater than) its stated redemption
price. Any such discount will be includible in the income of the REMIC as it
accrues, in advance of receipt of the cash attributable to such income, under a
method similar to the method described above for accruing original issue
discount on the REMIC Regular Certificates. It is anticipated that each REMIC
will elect under Section 171 of the Code to amortize any premium on the Mortgage
Loans. Premium on any Mortgage Loan to which such election applies may be
amortized under a constant yield method, presumably taking into account a
Prepayment Assumption. Further, such an election would not apply to any Mortgage
Loan originated on or before September 27, 1985. Instead, premium on such a
Mortgage Loan should be allocated among the principal payments thereon and be
deductible by the REMIC as those payments become due or upon the prepayment of
such Mortgage Loan.
A REMIC will be allowed deductions for interest (including original issue
discount) on the REMIC Regular Certificates (including any other class of REMIC
Certificates constituting "regular interests" in the REMIC not offered hereby)
equal to the deductions that would be allowed if the REMIC Regular Certificates
(including any other class of REMIC Certificates constituting "regular
interests" in the REMIC not offered hereby) were indebtedness of the REMIC.
Original issue discount will be considered to accrue for this purpose as
described above under "--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount", except that the de minimis rule and the
adjustments for subsequent holders of REMIC Regular Certificates (including any
other class of REMIC Certificates constituting "regular interests" in the REMIC
not offered hereby) described therein will not apply.
If a class of REMIC Regular Certificates is issued at a price in excess of
the stated redemption price of such class (such excess "ISSUE PREMIUM"), the net
amount of interest deductions that are allowed the REMIC in each taxable year
with respect to the REMIC Regular Certificates of such class will be reduced by
an amount equal to the portion of the Issue Premium that is considered to be
amortized or repaid in that year. Although the matter is not entirely certain,
it is likely that Issue Premium would be amortized under a constant yield method
in a manner analogous to the method of accruing original issue discount
described above under "--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount".
As a general rule, the taxable income of a REMIC will be determined in the
same manner as if the REMIC were an individual having the calendar year as its
taxable year and using the accrual method of accounting. However, no item of
income, gain, loss or deduction allocable to a prohibited transaction will be
taken into account. See "--Prohibited Transactions Tax and Other Taxes" below.
Further, the limitation on miscellaneous itemized deductions imposed on
individuals by Section 67 of the Code (which allows such deductions only to the
extent they exceed in the aggregate two percent of the taxpayer's adjusted gross
income) will not be applied at the REMIC level so that the REMIC will be allowed
deductions for servicing, administrative and other non-interest expenses in
determining its taxable income. All such expenses will be allocated as a
separate item to the holders of REMIC Certificates, subject to the limitation of
Section 67 of the Code. See "--Possible Pass-Through of Miscellaneous Itemized
Deductions" below. If the deductions allowed to the REMIC exceed its gross
income for a calendar quarter, such excess will be the net loss for the REMIC
for that calendar quarter.
Basis Rules, Net Losses and Distributions. The adjusted basis of a REMIC
Residual Certificate will be equal to the amount paid for such REMIC Residual
Certificate, increased by amounts included in the income
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of the REMIC Residual Certificateholder and decreased (but not below zero) by
distributions made, and by net losses allocated, to such REMIC Residual
Certificateholder.
A REMIC Residual Certificateholder is not allowed to take into account any
net loss for any calendar quarter to the extent such net loss exceeds such REMIC
Residual Certificateholder's adjusted basis in its REMIC Residual Certificate as
of the close of such calendar quarter (determined without regard to such net
loss). Any loss that is not currently deductible by reason of this limitation
may be carried forward indefinitely to future calendar quarters and, subject to
the same limitation, may be used only to offset income from the REMIC Residual
Certificate. The ability of REMIC Residual Certificateholders to deduct net
losses may be subject to additional limitations under the Code, as to which
REMIC Residual Certificateholders should consult their tax advisors.
Any distribution on a REMIC Residual Certificate will be treated as a
non-taxable return of capital to the extent it does not exceed the holder's
adjusted basis in such REMIC Residual Certificate. To the extent a distribution
on a REMIC Residual Certificate exceeds such adjusted basis, it will be treated
as gain from the sale of such REMIC Residual Certificate. Holders of certain
REMIC Residual Certificates may be entitled to distributions early in the term
of the related REMIC under circumstances in which their bases in such REMIC
Residual Certificates will not be sufficiently large that such distributions
will be treated as non-taxable returns of capital. Their bases in such REMIC
Residual Certificates will initially equal the amount paid for such REMIC
Residual Certificates and will be increased by their allocable shares of taxable
income of the REMIC. However, such bases increases may not occur until the end
of the calendar quarter, or perhaps the end of the calendar year, with respect
to which such REMIC taxable income is allocated to the REMIC Residual
Certificateholders. To the extent such REMIC Residual Certificateholders'
initial bases are less than the distributions to such REMIC Residual
Certificateholders, and increases in such initial bases either occur after such
distributions or (together with their initial bases) are less than the amount of
such distributions, gain will be recognized to such REMIC Residual
Certificateholders on such distributions and will be treated as gain from the
sale of their REMIC Residual Certificates.
The effect of these rules is that a REMIC Residual Certificateholder may
not amortize its basis in a REMIC Residual Certificate, but may only recover its
basis through distributions, through the deduction of any net losses of the
REMIC or upon the sale of its REMIC Residual Certificate. See "--Sales of REMIC
Certificates" below. For a discussion of possible modifications of these rules
that may require adjustments to income of a holder of a REMIC Residual
Certificate other than an original holder in order to reflect any difference
between the cost of such REMIC Residual Certificate to such REMIC Residual
Certificateholder and the adjusted basis such REMIC Residual Certificate would
have in the hands of an original holder see "--Taxation of Owners of REMIC
Residual Certificates--General" above.
Excess Inclusions. Any "excess inclusions" with respect to a REMIC
Residual Certificate will be subject to federal income tax in all events.
In general, the "excess inclusions" with respect to a REMIC Residual
Certificate for any calendar quarter will be the excess, if any, of (i) the
daily portions of REMIC taxable income allocable to such REMIC Residual
Certificate over (ii) the sum of the "daily accruals" (as defined below) for
each day during such quarter that such REMIC Residual Certificate was held by
such REMIC Residual Certificateholder. The daily accruals of a REMIC Residual
Certificateholder will be determined by allocating to each day during a calendar
quarter its ratable portion of the product of the "adjusted issue price" of the
REMIC Residual Certificate at the beginning of the calendar quarter and 120% of
the "long-term Federal rate" in effect on the Closing Date. For this purpose,
the adjusted issue price of a REMIC Residual Certificate as of the beginning of
any calendar quarter will be equal to the issue price of the REMIC Residual
Certificate, increased by the sum of the daily accruals for all prior quarters
and decreased (but not below zero) by any distributions made with respect to
such REMIC Residual Certificate before the beginning of such quarter. The issue
price of a REMIC Residual Certificate is the initial offering price to the
public (excluding bond houses and brokers) at which a substantial amount of the
REMIC Residual Certificates were sold. The "long-term Federal rate" is an
average of current yields on Treasury securities with a remaining term of
greater than nine years, computed and published monthly by the IRS. Although it
has not done so, the Treasury has authority to issue
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regulations that would treat the entire amount of income accruing on a REMIC
Residual Certificate as an excess inclusion if the REMIC Residual Certificates
are considered not to have "significant value."
For REMIC Residual Certificateholders, excess inclusions (i) will not be
permitted to be offset by deductions, losses or loss carryovers from other
activities, (ii) will be treated as "unrelated business taxable income" to an
otherwise tax-exempt organization and (iii) will not be eligible for any rate
reduction or exemption under any applicable tax treaty with respect to the 30%
United States withholding tax imposed on distributions to REMIC Residual
Certificateholders that are foreign investors. See, however, "--Foreign
Investors in REMIC Certificates" below. Furthermore, for purposes of the
alternative minimum tax, (i) excess inclusions will not be permitted to be
offset by the alternative tax net operating loss deduction and (ii) alternative
minimum taxable income may not be less than the taxpayer's excess inclusions.
The latter rule has the effect of preventing non-refundable tax credits from
reducing the taxpayer's income tax to an amount lower than the tentative minimum
tax on excess inclusions.
In the case of any REMIC Residual Certificates held by a real estate
investment trust, the aggregate excess inclusions with respect to such REMIC
Residual Certificates, reduced (but not below zero) by the real estate
investment trust taxable income (within the meaning of Section 857(b)(2) of the
Code, excluding any net capital gain), will be allocated among the shareholders
of such trust in proportion to the dividends received by such shareholders from
such trust, and any amount so allocated will be treated as an excess inclusion
with respect to a REMIC Residual Certificate as if held directly by such
shareholder. Treasury regulations yet to be issued could apply a similar rule to
regulated investment companies, common trust funds and certain cooperatives; the
REMIC Regulations currently do not address this subject.
Noneconomic REMIC Residual Certificates. Under the REMIC Regulations,
transfers of "noneconomic" REMIC Residual Certificates will be disregarded for
all federal income tax purposes if "a significant purpose of the transfer was to
enable the transferor to impede the assessment or collection of tax". If such
transfer is disregarded, the purported transferor will continue to remain liable
for any taxes due with respect to the income on such "noneconomic" REMIC
Residual Certificate. The REMIC Regulations provide that a REMIC Residual
Certificate is noneconomic unless, based on the Prepayment Assumption and on any
required or permitted clean up calls, or required liquidation provided for in
the REMIC's organizational documents, (1) the present value of the expected
future distributions (discounted using the "applicable Federal rate" for
obligations whose term ends on the close of the last quarter in which excess
inclusions are expected to accrue with respect to the REMIC Residual
Certificate, which rate is computed and published monthly by the IRS) on the
REMIC Residual Certificate equals at least the present value of the expected tax
on the anticipated excess inclusions, and (2) the transferor reasonably expects
that the transferee will receive distributions with respect to the REMIC
Residual Certificate at or after the time the taxes accrue on the anticipated
excess inclusions in an amount sufficient to satisfy the accrued taxes.
Accordingly, all transfers of REMIC Residual Certificates that may constitute
noneconomic residual interests will be subject to certain restrictions under the
terms of the related Pooling and Servicing Agreement that are intended to reduce
the possibility of any such transfer being disregarded. Such restrictions will
require each party to a transfer to provide an affidavit that no purpose of such
transfer is to impede the assessment or collection of tax, including certain
representations as to the financial condition of the prospective transferee, as
to which the transferor is also required to make a reasonable investigation to
determine such transferee's historic payment of its debts and ability to
continue to pay its debts as they come due in the future. Prior to purchasing a
REMIC Residual Certificate, prospective purchasers should consider the
possibility that a purported transfer of such REMIC Residual Certificate by such
a purchaser to another purchaser at some future date may be disregarded in
accordance with the above-described rules which would result in the retention of
tax liability by such purchaser.
The related Prospectus Supplement will disclose whether offered REMIC
Residual Certificates may be considered "noneconomic" residual interests under
the REMIC Regulations; provided, however, that any disclosure that a REMIC
Residual Certificate will not be considered "noneconomic" will be based upon
certain assumptions, and the Depositor will make no representation that a REMIC
Residual Certificate will not be considered "noneconomic" for purposes of the
above-described rules. See "--Foreign Investors in
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REMIC Certificates--REMIC Residual Certificates" below for additional
restrictions applicable to transfers of certain REMIC Residual Certificates to
foreign persons.
Mark-to-Market Rules. On December 28, 1993, the IRS released temporary
regulations (the "MARK-TO-MARKET REGULATIONS") relating to the requirement that
a securities dealer mark to market securities held for sale to customers. This
mark-to-market requirement applies to all securities owned by a dealer, except
to the extent that the dealer has specifically identified a security as held for
investment. The Mark-to-Market Regulations provide that for purposes of this
mark-to-market requirement, a "negative value" REMIC Residual Certificate is not
treated as a security and thus generally may not be marked to market. This
exclusion from the mark-to-market requirement is expanded to include all REMIC
Residual Certificates under proposed Treasury regulations published January 4,
1995 which provide that any REMIC Residual Certificate issued after January 4,
1995 will not be treated as a security and therefore generally may not be marked
to market. Prospective purchasers of a REMIC Residual Certificate should consult
their tax advisors regarding the possible application of the mark-to-market
requirement to REMIC Residual Certificates.
Possible Pass-Through of Miscellaneous Itemized Deductions. Fees and
expenses of a REMIC generally will be allocated to the holders of the related
REMIC Residual Certificates. The applicable Treasury regulations indicate,
however, that in the case of a REMIC that is similar to a single class grantor
trust, all or a portion of such fees and expenses should be allocated to the
holders of the related REMIC Regular Certificates. Unless otherwise stated in
the related Prospectus Supplement, such fees and expenses will be allocated to
holders of the related REMIC Residual Certificates in their entirety and not to
the holders of the related REMIC Regular Certificates.
With respect to REMIC Residual Certificates or REMIC Regular Certificates
the holders of which receive an allocation of fees and expenses in accordance
with the preceding discussion, if any holder thereof is an individual, estate or
trust, or a "pass-through entity" beneficially owned by one or more individuals,
estates or trusts, (i) an amount equal to such individual's, estate's or trust's
share of such fees and expenses will be added to the gross income of such holder
and (ii) such individual's, estate's or trust's share of such fees and expenses
will be treated as a miscellaneous itemized deduction allowable subject to the
limitation of Section 67 of the Code, which permits such deductions only to the
extent they exceed in the aggregate two percent of a taxpayer's adjusted gross
income. In addition, Section 68 of the Code provides that the amount of itemized
deductions otherwise allowable for an individual whose adjusted gross income
exceeds a specified amount will be reduced by the lesser of (i) 3% of the excess
of the individual's adjusted gross income over such amount or (ii) 80% of the
amount of itemized deductions otherwise allowable for the taxable year. The
amount of additional taxable income reportable by REMIC Certificateholders that
are subject to the limitations of either Section 67 or Section 68 of the Code
may be substantial. Furthermore, in determining the alternative minimum taxable
income of such a holder of a REMIC Certificate that is an individual, estate or
trust, or a "pass-through entity" beneficially owned by one or more individuals,
estates or trusts, no deduction will be allowed for such holder's allocable
portion of servicing fees and other miscellaneous itemized deductions of the
REMIC, even though an amount equal to the amount of such fees and other
deductions will be included in such holder's gross income. Accordingly, such
REMIC Certificates may not be appropriate investments for individuals, estates,
or trusts, or pass-through entities beneficially owned by one or more
individuals, estates or trusts. Such prospective investors should consult with
their tax advisors prior to making an investment in such Certificates.
Sales of REMIC Certificates. If a REMIC Certificate is sold, the selling
Certificateholder will recognize gain or loss equal to the difference between
the amount realized on the sale and its adjusted basis in the REMIC Certificate.
The adjusted basis of a REMIC Regular Certificate generally will equal the cost
of such REMIC Regular Certificate to such Certificateholder, increased by income
reported by such Certificateholder with respect to such REMIC Regular
Certificate (including original issue discount and market discount income) and
reduced (but not below zero) by distributions on such REMIC Regular Certificate
received by such Certificateholder and by any amortized premium. The adjusted
basis of a REMIC Residual Certificate will be determined as described under
"--Taxation of Owners of REMIC Residual Certificates--Basis Rules, Net Losses
and Distributions". Except as provided in the following four paragraphs, any
such gain or loss will be capital gain or loss, provided such REMIC Certificate
is held as a capital asset (generally, property held for
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investment) within the meaning of Section 1221 of the Code. The Code as of the
date of this Prospectus provides for a top marginal tax rate of 39.6% for
individuals and a maximum marginal rate for long-term capital gains of
individuals of 28%. No such rate differential exists for corporations. In
addition, the distinction between a capital gain or loss and ordinary income or
loss remains relevant for other purposes.
Gain from the sale of a REMIC Regular Certificate that might otherwise be
capital gain will be treated as ordinary income to the extent such gain does not
exceed the excess, if any, of (i) the amount that would have been includible in
the seller's income with respect to such REMIC Regular Certificate assuming that
income had accrued thereon at a rate equal to 110% of the "applicable Federal
rate" (generally, a rate based on an average of current yields on Treasury
securities having a maturity comparable to that of the Certificate based on the
application of the Prepayment Assumption to such Certificate which rate is
computed and published monthly by the IRS), determined as of the date of
purchase of such REMIC Regular Certificate, over (ii) the amount of ordinary
income actually includible in the seller's income prior to such sale. In
addition, gain recognized on the sale of a REMIC Regular Certificate by a seller
who purchased such REMIC Regular Certificate at a market discount will be
taxable as ordinary income in an amount not exceeding the portion of such
discount that accrued during the period such REMIC Certificate was held by such
holder, reduced by any market discount included in income under the rules
described above under "--Taxation of Owners of REMIC Regular
Certificates--Market Discount" and "--Premium".
REMIC Certificates will be "evidences of indebtedness" within the meaning
of Section 582(c)(1) of the Code, so that gain or loss recognized from the sale
of a REMIC Certificate by a bank or thrift institution to which such section
applies will be ordinary income or loss.
A portion of any gain from the sale of a REMIC 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 the same or similar
property that reduce or eliminate market risk, if substantially all of the
taxpayer's return is attributable to the time value of the taxpayer's net
investment in such transaction. The amount of gain so 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 IRS) at the time the taxpayer enters into the
conversion transaction, subject to appropriate reduction for prior inclusion of
interest and other ordinary income items from the transaction.
Finally, a taxpayer may elect to have net capital gain taxed at ordinary
income rates rather than capital gains rates in order to include such net
capital gain in total net investment income for the taxable year, for purposes
of the rule that limits the deduction of interest on indebtedness incurred to
purchase or carry property held for investment to a taxpayer's net investment
income.
Except as may be provided in Treasury regulations yet to be issued, if the
seller of a REMIC Residual Certificate reacquires such REMIC Residual
Certificate, or acquires any other residual interest in a REMIC or any similar
interest in a "taxable mortgage pool" (as defined in Section 7701(i) of the
Code) during the period beginning six months before, and ending six months
after, the date of such sale, such sale will be subject to the "wash sale" rules
of Section 1091 of the Code. In that event, any loss realized by the REMIC
Residual Certificateholder on the sale will not be deductible, but instead will
be added to such REMIC Residual Certificateholder's adjusted basis in the
newly-acquired asset.
Prohibited Transactions Tax and Other Taxes. The Code imposes a tax on
REMICs equal to 100% of the net income derived from "prohibited transactions" (a
"PROHIBITED TRANSACTIONS TAX"). In general, subject to certain specified
exceptions a prohibited transaction means the disposition of a Mortgage Loan,
the receipt of income from a source other than a Mortgage Loan or certain other
permitted investments, the receipt of compensation for services, or gain from
the disposition of an asset purchased with the payments on the Mortgage Loans
for temporary investment pending distribution on the REMIC Certificates. It is
not anticipated that any REMIC will engage in any prohibited transactions in
which it would recognize a material amount of net income.
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In addition, certain contributions to a REMIC made after the day on which
the REMIC issues all of its interests could result in the imposition of a tax on
the REMIC equal to 100% of the value of the contributed property (a
"CONTRIBUTIONS TAX"). Each Pooling and Servicing Agreement will include
provisions designed to prevent the acceptance of any contributions that would be
subject to such tax.
REMICs also are subject to federal income tax at the highest corporate rate
on "net income from foreclosure property", determined by reference to the rules
applicable to real estate investment trusts. "Net income from foreclosure
property" generally means gain from the sale of a foreclosure property that is
inventory property and gross income from foreclosure property other than
qualifying rents and other qualifying income for a real estate investment trust.
Unless otherwise disclosed in the related Prospectus Supplement, it is not
anticipated that any REMIC will recognize "net income from foreclosure property"
subject to federal income tax.
Unless otherwise disclosed in the related Prospectus Supplement, it is not
anticipated that any material state or local income or franchise tax will be
imposed on any REMIC.
Unless otherwise stated in the related Prospectus Supplement, and to the
extent permitted by then applicable laws, any Prohibited Transactions Tax,
Contributions Tax, tax on "net income from foreclosure property" or state or
local income or franchise tax that may be imposed on the REMIC will be borne by
the related Master Servicer, Special Servicer, Manager or Trustee in any case
out of its own funds, provided that such person has sufficient assets to do so,
and provided further that such tax arises out of a breach of such person's
obligations under the related Pooling and Servicing Agreement and in respect of
compliance with applicable laws and regulations. Any such tax not borne by a
Master Servicer, Special Servicer, Manager or Trustee will be charged against
the related Trust Fund resulting in a reduction in amounts payable to holders of
the related REMIC Certificates.
Tax and Restrictions on Transfers of REMIC Residual Certificates to Certain
Organizations. If a REMIC Residual Certificate is transferred to a
"disqualified organization" (as defined below), a tax would be imposed in an
amount (determined under the REMIC Regulations) equal to the product of (i) the
present value (discounted using the "applicable Federal rate" for obligations
whose term ends on the close of the last quarter in which excess inclusions are
expected to accrue with respect to the REMIC Residual Certificate, which rate is
computed and published monthly by the IRS) of the total anticipated excess
inclusions with respect to such REMIC Residual Certificate for periods after the
transfer and (ii) the highest marginal federal income tax rate applicable to
corporations. The anticipated excess inclusions must be determined as of the
date that the REMIC Residual Certificate is transferred and must be based on
events that have occurred up to the time of such transfer, the Prepayment
Assumption and any required or permitted clean up calls or required liquidation
provided for in the REMIC's organizational documents. Such a tax generally would
be imposed on the transferor of the REMIC Residual Certificate, except that
where such transfer is through an agent for a disqualified organization, the tax
would instead be imposed on such agent. However, a transferor of a REMIC
Residual Certificate would in no event be liable for such tax with respect to a
transfer if the transferee furnishes to the transferor an affidavit 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. Moreover, an entity will not qualify as a REMIC unless there are
reasonable arrangements designed to ensure that (i) residual interests in such
entity are not held by disqualified organizations and (ii) information necessary
for the application of the tax described herein will be made available.
Restrictions on the transfer of REMIC Residual Certificates and certain other
provisions that are intended to meet this requirement will be included in each
Pooling and Servicing Agreement, and will be discussed in any Prospectus
Supplement relating to the offering of any REMIC Residual Certificate.
In addition, if a "pass-through entity" (as defined below) includes in
income excess inclusions with respect to a REMIC Residual Certificate, and a
disqualified organization is the record holder of an interest in such entity,
then a tax will be imposed on such entity equal to the product of (i) the amount
of excess inclusions on the REMIC Residual Certificate that are allocable to the
interest in the pass-through entity held by such disqualified organization and
(ii) the highest marginal federal income tax rate imposed on corporations. A
pass-through entity will not be subject to this tax for any period, however, if
each record
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holder of an interest in such pass-through entity furnishes to such pass-through
entity (i) such holder's social security number and a statement under penalties
of perjury that such social security number is that of the record holder or (ii)
a statement under penalties of perjury that such record holder is not a
disqualified organization.
For these purposes, a "disqualified organization" means (i) the United
States, any State or political subdivision thereof, any foreign government, any
international organization, or any agency or instrumentality of the foregoing
(but would not include instrumentalities described in Section 168(h)(2)(D) of
the Code or the Federal Home Loan Mortgage Corporation), (ii) any organization
(other than a cooperative described in Section 521 of the Code) that is exempt
from federal income tax, unless it is subject to the tax imposed by Section 511
of the Code or (iii) any organization described in Section 1381(a)(2)(C) of the
Code. For these purposes, a "pass-through entity" means any regulated investment
company, real estate investment trust, trust, partnership or certain other
entities described in Section 860E(e)(6) of the Code. In addition, a person
holding an interest in a pass-through entity as a nominee for another person
will, with respect to such interest, be treated as a pass-through entity.
Termination. A REMIC will terminate immediately after the Distribution
Date following receipt by the REMIC of the final payment in respect of the
Mortgage Loans or upon a sale of the REMIC's assets following the adoption by
the REMIC of a plan of complete liquidation. The last distribution on a REMIC
Regular Certificate will be treated as a payment in retirement of a debt
instrument. In the case of a REMIC Residual Certificate, if the last
distribution on such REMIC Residual Certificate is less than the REMIC Residual
Certificateholder's adjusted basis in such Certificate, such REMIC Residual
Certificateholder should (but may not) be treated as realizing a loss equal to
the amount of such difference, and such loss may be treated as a capital loss.
Reporting and Other Administrative Matters. Solely for purposes of the
administrative provisions of the Code, the REMIC will be treated as a
partnership and REMIC Residual Certificateholders will be treated as partners.
Unless otherwise stated in the related Prospectus Supplement, the Trustee or the
Master Servicer, which generally will hold at least a nominal amount of REMIC
Residual Certificates, will file REMIC federal income tax returns on behalf of
the related REMIC, and will be designated as and will act as the "tax matters
person" with respect to the REMIC in all respects.
As the tax matters person, the Trustee or the Master Servicer, as the case
may be, subject to certain notice requirements and various restrictions and
limitations, generally will have the authority to act on behalf of the REMIC and
the REMIC Residual Certificateholders in connection with the administrative and
judicial review of items of income, deduction, gain or loss of the REMIC, as
well as the REMIC's classification. REMIC Residual Certificateholders generally
will be required to report such REMIC items consistently with their treatment on
the related REMIC's tax return and may in some circumstances be bound by a
settlement agreement between the Trustee or the Master Servicer, as the case may
be, as tax matters person, and the IRS concerning any such REMIC item.
Adjustments made to the REMIC tax return may require a REMIC Residual
Certificateholder to make corresponding adjustments on its return, and an audit
of the REMIC's tax return, or the adjustments resulting from such an audit,
could result in an audit of a REMIC Residual Certificateholder's return. No
REMIC will be registered as a tax shelter pursuant to Section 6111 of the Code
because it is not anticipated that any REMIC will have a net loss for any of the
first five taxable years of its existence. Any person that holds a REMIC
Residual Certificate as a nominee for another person may be required to furnish
to the related REMIC, in a manner to be provided in Treasury regulations, the
name and address of such person and other information.
Reporting of interest income, including any original issue discount, with
respect to REMIC Regular Certificates is required annually, and may be required
more frequently under Treasury regulations. These information reports generally
are required to be sent to individual holders of REMIC Regular Interests and the
IRS; holders of REMIC Regular Certificates that are corporations, trusts,
securities dealers and certain other non-individuals will be provided interest
and original issue discount income information and the information set forth in
the following paragraph upon request in accordance with the requirements of the
applicable regulations. The information must be provided by the later of 30 days
after the end of the quarter
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for which the information was requested, or two weeks after the receipt of the
request. The REMIC must also comply with rules requiring a REMIC Regular
Certificate issued with original issue discount to disclose on its face the
amount of original issue discount and the issue date, and requiring such
information to be reported to the IRS. Reporting with respect to REMIC Residual
Certificates, including income, excess inclusions, investment expenses and
relevant information regarding qualification of the REMIC's assets will be made
as required under the Treasury regulations, generally on a quarterly basis.
As applicable, the REMIC Regular Certificate information reports will
include a statement of the adjusted issue price of the REMIC Regular Certificate
at the beginning of each accrual period. In addition, the reports will include
information required by regulations with respect to computing the accrual of any
market discount. Because exact computation of the accrual of market discount on
a constant yield method would require information relating to the holder's
purchase price that the REMIC may not have, such regulations only require that
information pertaining to the appropriate proportionate method of accruing
market discount be provided. See "--Taxation of Owners of REMIC Regular
Certificates--Market Discount".
Unless otherwise specified in the related Prospectus Supplement, the
responsibility for complying with the foregoing reporting rules will be borne by
either the Trustee or the Master Servicer.
Backup Withholding with Respect to REMIC Certificates. Payments of
interest and principal, as well as payments of proceeds from the sale of REMIC
Certificates, may be subject to the "backup withholding tax" under Section 3406
of the Code at a rate of 31% if recipients of such payments fail to furnish to
the payor certain information, including their taxpayer identification numbers,
or otherwise fail to establish an exemption from such tax. Any amounts deducted
and withheld from a distribution to a recipient would be allowed as a credit
against such recipient's federal income tax. Furthermore, certain penalties may
be imposed by the IRS on a recipient of payments that is required to supply
information but that does not do so in the proper manner.
Foreign Investors in REMIC Certificates. A REMIC Regular Certificateholder
that is not a "United States Person" (as defined below) and is not subject to
federal income tax as a result of any direct or indirect connection to the
United States in addition to its ownership of a REMIC Regular Certificate will
not, unless otherwise disclosed in the related Prospectus Supplement, be subject
to United States federal income or withholding tax in respect of a distribution
on a REMIC Regular Certificate, provided that the holder complies to the extent
necessary with certain identification requirements (including delivery of a
statement, signed by the Certificateholder under penalties of perjury,
certifying that such Certificateholder is not a United States Person and
providing the name and address of such Certificateholder). For these purposes,
"UNITED STATES PERSON" means a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate
whose income is subject to United States income tax regardless of its source, or
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. It is possible that the IRS may assert that the foregoing tax exemption
should not apply with respect to a REMIC Regular Certificate held by a REMIC
Residual Certificateholder that owns directly or indirectly a 10% or greater
interest in the REMIC Residual Certificates. If the holder does not qualify for
exemption, distributions of interest, including distributions in respect of
accrued original issue discount, to such holder may be subject to a tax rate of
30%, subject to reduction under any applicable tax treaty.
In addition, the foregoing rules will not apply to exempt a United States
shareholder of a controlled foreign corporation from taxation on such United
States shareholder's allocable portion of the interest income received by such
controlled foreign corporation.
Further, it appears that a REMIC Regular Certificate would not be included
in the estate of a non-resident alien individual and would not be subject to
United States estate taxes. However, Certificateholders who are non-resident
alien individuals should consult their tax advisors concerning this question.
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Unless otherwise stated in the related Prospectus Supplement, transfers of
REMIC Residual Certificates to investors that are not United States Persons will
be prohibited under the related Pooling and Servicing Agreement.
GRANTOR TRUST FUNDS
Classification of Grantor Trust Funds. With respect to each series of
Grantor Trust Certificates, counsel to the Depositor will deliver its opinion to
the effect that, assuming compliance with all provisions of the related Pooling
and Servicing Agreement, the related Grantor Trust Fund will be classified as a
grantor trust under subpart E, part I of subchapter J of the Code and not as a
partnership or an association taxable as a corporation. Accordingly, each holder
of a Grantor Trust Certificate generally will be treated as the owner of an
interest in the Mortgage Loans included in the Grantor Trust Fund.
For purposes of the following discussion, a Grantor Trust Certificate
representing an undivided equitable ownership interest in the principal of the
Mortgage Loans constituting the related Grantor Trust Fund, together with
interest thereon at a pass-through rate, will be referred to as a "GRANTOR TRUST
FRACTIONAL INTEREST CERTIFICATE". A Grantor Trust Certificate representing
ownership of all or a portion of the difference between interest paid on the
Mortgage Loans constituting the related Grantor Trust Fund (net of normal
administration fees) and interest paid to the holders of Grantor Trust
Fractional Interest Certificates issued with respect to such Grantor Trust Fund
will be referred to as a "GRANTOR TRUST STRIP CERTIFICATE". A Grantor Trust
Strip Certificate may also evidence a nominal ownership interest in the
principal of the Mortgage Loans constituting the related Grantor Trust Fund.
Characterization of Investments in Grantor Trust Certificates.
Grantor Trust Fractional Interest Certificates. In the case of Grantor
Trust Fractional Interest Certificates, unless otherwise disclosed in the
related Prospectus Supplement, counsel to the Depositor will deliver an opinion
that, in general, Grantor Trust Fractional Interest Certificates will represent
interests in (i) "loans...secured by an interest in real property" within the
meaning of Section 7701(a)(19)(C)(v) of the Code except to the extent that
Grantor Trust assets are secured by mortgages on real property not used for
residential or certain other prescribed purposes; (ii) "obligation[s] (including
any participation or Certificate of beneficial ownership therein) which...[are]
principally secured by an interest in real property" within the meaning of
Section 860G(a)(3) of the Code; and (iii) "real estate assets" within the
meaning of Section 856(c)(5)(B) of the Code. In addition, counsel to the
Depositor will deliver an opinion that interest on Grantor Trust Fractional
Interest Certificates will to the same extent be considered "interest on
obligations secured by mortgages on real property or on interests in real
property" within the meaning of Section 856(c)(3)(B) of the Code.
Grantor Trust Strip Certificates. Even if Grantor Trust Strip Certificates
evidence an interest in a Grantor Trust Fund consisting of Mortgage Loans that
are "loans...secured by an interest in real property" within the meaning of
Section 7701(a)(19)(C)(v) of the Code, and "real estate assets" within the
meaning of Section 856(c)(5)(A) of the Code, and the interest on which is
"interest on obligations secured by mortgages on real property" within the
meaning of Section 856(c)(3)(A) of the Code, it is unclear whether the Grantor
Trust Strip Certificates, and the income therefrom, will be so characterized.
However, the policies underlying such sections (namely, to encourage or require
investments in mortgage loans by thrift institutions and real estate investment
trusts) may suggest that such characterization is appropriate. Counsel to the
Depositor will not deliver any opinion on these questions. Prospective
purchasers to which such characterization of an investment in Grantor Trust
Strip Certificates is material should consult their tax advisors regarding
whether the Grantor Trust Strip Certificates, and the income therefrom, will be
so characterized.
The Grantor Trust Strip Certificates will be "obligation[s] (including any
participation or Certificate of beneficial ownership therein) which...[are]
principally secured by an interest in real property" within the meaning of
Section 860G(a)(3)(A) of the Code.
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Taxation of Owners of Grantor Trust Fractional Interest Certificates.
General. Holders of a particular series of Grantor Trust Fractional
Interest Certificates generally will be required to report on their federal
income tax returns their shares of the entire income from the Mortgage Loans
(including amounts used to pay reasonable servicing fees and other expenses) and
will be entitled to deduct their shares of any such reasonable servicing fees
and other expenses. Because of stripped interests, market or original issue
discount, or premium, the amount includible in income on account of a Grantor
Trust Fractional Interest Certificate may differ significantly from the amount
distributable thereon representing interest on the Mortgage Loans. Under Section
67 of the Code, an individual, estate or trust holding a Grantor Trust
Fractional Interest Certificate directly or through certain pass-through
entities will be allowed a deduction for such reasonable servicing fees and
expenses only to the extent that the aggregate of such holder's miscellaneous
itemized deductions exceeds two percent of such holder's adjusted gross income.
In addition, Section 68 of the Code provides that the amount of itemized
deductions otherwise allowable for an individual whose adjusted gross income
exceeds a specified amount will be reduced by the lesser of (i) 3% of the excess
of the individual's adjusted gross income over such amount or (ii) 80% of the
amount of itemized deductions otherwise allowable for the taxable year. The
amount of additional taxable income reportable by holders of Grantor Trust
Fractional Interest Certificates who are subject to the limitations of either
Section 67 or Section 68 of the Code may be substantial. Further,
Certificateholders (other than corporations) subject to the alternative minimum
tax may not deduct miscellaneous itemized deductions in determining such
holder's alternative minimum taxable income. Although it is not entirely clear,
it appears that in transactions in which multiple classes of Grantor Trust
Certificates (including Grantor Trust Strip Certificates) are issued, such fees
and expenses should be allocated among the classes of Grantor Trust Certificates
using a method that recognizes that each such class benefits from the related
services. In the absence of statutory or administrative clarification as to the
method to be used, it currently is intended to base information returns or
reports to the IRS and Certificateholders on a method that allocates such
expenses among classes of Grantor Trust Certificates with respect to each period
based on the distributions made to each such class during that period.
The federal income tax treatment of Grantor Trust Fractional Interest
Certificates of any series will depend on whether they are subject to the
"stripped bond" rules of Section 1286 of the Code. Grantor Trust Fractional
Interest Certificates may be subject to those rules if (i) a class of Grantor
Trust Strip Certificates is issued as part of the same series of Certificates or
(ii) the Depositor or any of its affiliates retains (for its own account or for
purposes of resale) a right to receive a specified portion of the interest
payable on a Mortgage Asset. Further, the IRS has ruled that an unreasonably
high servicing fee retained by a seller or servicer will be treated as a
retained ownership interest in mortgages that constitutes a stripped coupon. For
purposes of determining what constitutes reasonable servicing fees for various
types of mortgages the IRS has established certain "safe harbors." The servicing
fees paid with respect to the Mortgage Loans for certain series of Grantor Trust
Certificates may be higher than the "safe harbors" and, accordingly, may not
constitute reasonable servicing compensation. The related Prospectus Supplement
will include information regarding servicing fees paid to a Master Servicer, a
Special Servicer, any Sub-Servicer or their respective affiliates necessary to
determine whether the preceding "safe harbor" rules apply.
If Stripped Bond Rules Apply. If the stripped bond rules apply, each
Grantor Trust Fractional Interest Certificate will be treated as having been
issued with "original issue discount" within the meaning of Section 1273(a) of
the Code, subject, however, to the discussion below regarding the treatment of
certain stripped bonds as market discount bonds and the discussion regarding de
minimis market discount. See "--Taxation of Owners of Grantor Trust Fractional
Interest Certificates--Market Discount" below. Under the stripped bond rules,
the holder of a Grantor Trust Fractional Interest Certificate (whether a cash or
accrual method taxpayer) will be required to report interest income from its
Grantor Trust Fractional Interest Certificate for each month in an amount equal
to the income that accrues on such Certificate in that month calculated under a
constant yield method, in accordance with the rules of the Code relating to
original issue discount.
The original issue discount on a Grantor Trust Fractional Interest
Certificate will be the excess of such Certificate's stated redemption price
over its issue price. The issue price of a Grantor Trust Fractional Interest
Certificate as to any purchaser will be equal to the price paid by such
purchaser of the Grantor Trust
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Fractional Interest Certificate. The stated redemption price of a Grantor Trust
Fractional Interest Certificate will be the sum of all payments to be made on
such Certificate, other than "qualified stated interest", if any, as well as
such Certificate's share of reasonable servicing fees and other expenses. See
"--Taxation of Owners of Grantor Trust Fractional Interest Certificates--If
Stripped Bond Rules Do Not Apply" for a definition of "qualified stated
interest". In general, the amount of such income that accrues in any month would
equal the product of such holder's adjusted basis in such Grantor Trust
Fractional Interest Certificate at the beginning of such month (see "--Sales of
Grantor Trust Certificates" below) and the yield of such Grantor Trust
Fractional Interest Certificate to such holder. Such yield would be computed as
the rate (compounded based on the regular interval between payment dates) that,
if used to discount the holder's share of future payments on the Mortgage Loans,
would cause the present value of those future payments to equal the price at
which the holder purchased such Certificate. In computing yield under the
stripped bond rules, a Certificateholder's share of future payments on the
Mortgage Loans will not include any payments made in respect of any ownership
interest in the Mortgage Loans retained by the Depositor, a Master Servicer, a
Special Servicer, any Sub-Servicer or their respective affiliates, but will
include such Certificateholder's share of any reasonable servicing fees and
other expenses.
Section 1272(a)(6) of the Code requires (i) the use of a reasonable
prepayment assumption in accruing original issue discount and (ii) adjustments
in the accrual of original issue discount when prepayments do not conform to the
prepayment assumption, with respect to certain categories of debt instruments,
and regulations could be adopted applying those provisions to the Grantor Trust
Fractional Interest Certificates. It is unclear whether those provisions would
be applicable to the Grantor Trust Fractional Interest Certificates or whether
use of a reasonable prepayment assumption may be required or permitted without
reliance on these rules. It is also uncertain, if a prepayment assumption is
used, whether the assumed prepayment rate would be determined based on
conditions at the time of the first sale of the Grantor Trust Fractional
Interest Certificate or, with respect to any holder, at the time of purchase of
the Grantor Trust Fractional Interest Certificate by that holder.
Certificateholders are advised to consult their tax advisors concerning
reporting original issue discount in general and, in particular, whether a
prepayment assumption should be used in reporting original issue discount with
respect to Grantor Trust Fractional Interest Certificates.
In the case of a Grantor Trust Fractional Interest Certificate acquired at
a price equal to the principal amount of the Mortgage Loans allocable to such
Certificate, the use of a prepayment assumption generally would not have any
significant effect on the yield used in calculating accruals of interest income.
In the case, however, of a Grantor Trust Fractional Interest Certificate
acquired at a discount or premium (that is, at a price less than or greater than
such principal amount, respectively), the use of a reasonable prepayment
assumption would increase or decrease such yield, and thus accelerate or
decelerate, respectively, the reporting of income.
If a prepayment assumption is not used, then when a Mortgage Loan prepays
in full, the holder of a Grantor Trust Fractional Interest Certificate acquired
at a discount or a premium generally will recognize ordinary income or loss
equal to the difference between the portion of the prepaid principal amount of
the Mortgage Loan that is allocable to such Certificate and the portion of the
adjusted basis of such Certificate that is allocable to such Certificateholder's
interest in the Mortgage Loan. If a prepayment assumption is used, it appears
that no separate item of income or loss should be recognized upon a prepayment.
Instead, a prepayment should be treated as a partial payment of the stated
redemption price of the Grantor Trust Fractional Interest Certificate and
accounted for under a method similar to that described for taking account of
original issue discount on REMIC Regular Certificates. See "--REMICs--Taxation
of Owners of REMIC Regular Certificates--Original Issue Discount". It is unclear
whether any other adjustments would be required to reflect differences between
an assumed prepayment rate and the actual rate of prepayments.
In the absence of statutory or administrative clarification, it is
currently intended to base information reports or returns to the IRS and
Certificateholders in transactions subject to the stripped bond rules on a
prepayment assumption that will be disclosed in the related Prospectus
Supplement and on a constant yield computed using a representative initial
offering price for each class of Certificates. However, neither the Depositor
nor any other person will make any representation that the Mortgage Loans will
in fact prepay at a rate conforming to such prepayment assumption or any other
rate and Certificateholders should bear in mind
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that the use of a representative initial offering price will mean that such
information returns or reports, even if otherwise accepted as accurate by the
IRS, will in any event be accurate only as to the initial Certificateholders of
each series who bought at that price.
Under Treasury regulation Section 1.1286-1T, certain stripped bonds are to
be treated as market discount bonds and, accordingly, any purchaser of such a
bond is to account for any discount on the bond as market discount rather than
original issue discount. This treatment only applies, however, if immediately
after the most recent disposition of the bond by a person stripping one or more
coupons from the bond and disposing of the bond or coupon (i) there is no
original issue discount (or only a de minimis amount of original issue discount)
or (ii) the annual stated rate of interest payable on the original bond is no
more than one percentage point lower than the gross interest rate payable on the
original mortgage loan (before subtracting any servicing fee or any stripped
coupon). If interest payable on a Grantor Trust Fractional Interest Certificate
is more than one percentage point lower than the gross interest rate payable on
the Mortgage Loans, the related Prospectus Supplement will disclose that fact.
If the original issue discount or market discount on a Grantor Trust Fractional
Interest Certificate determined under the stripped bond rules is less than 0.25%
of the stated redemption price multiplied by the weighted average maturity of
the Mortgage Loans, then such original issue discount or market discount will be
considered to be de minimis. Original issue discount or market discount of only
a de minimis amount will be included in income in the same manner as de minimis
original issue and market discount described in "--Taxation of Owners of Grantor
Trust Fractional Interest Certificates--If Stripped Bond Rules Do Not Apply" and
"--Market Discount" below.
If Stripped Bond Rules Do Not Apply. Subject to the discussion below on
original issue discount, if the stripped bond rules do not apply to a Grantor
Trust Fractional Interest Certificate, the Certificateholder will be required to
report its share of the interest income on the Mortgage Loans in accordance with
such Certificateholder's normal method of accounting. The original issue
discount rules will apply, even if the stripped bond rules do not apply, to a
Grantor Trust Fractional Interest Certificate to the extent it evidences an
interest in Mortgage Loans issued with original issue discount.
The original issue discount, if any, on the Mortgage Loans will equal the
difference between the stated redemption price of such Mortgage Loans and their
issue price. For a definition of "stated redemption price," see "--Taxation of
Owners of REMIC Regular Certificates--Original Issue Discount" above. In
general, the issue price of a Mortgage Loan will be the amount received by the
borrower from the lender under the terms of the Mortgage Loan, less any "points"
paid by the borrower, and the stated redemption price of a Mortgage Loan will
equal its principal amount, unless the Mortgage Loan provides for an initial
"teaser," or below-market interest rate. The determination as to whether
original issue discount will be considered to be de minimis will be calculated
using the same test as in the REMIC discussion. See "--Taxation of Owners of
REMIC Regular Certificates--Original Issue Discount" above.
In the case of Mortgage Loans bearing adjustable or variable interest
rates, the related Prospectus Supplement will describe the manner in which such
rules will be applied with respect to those Mortgage Loans by the Trustee or
Master Servicer, as applicable, in preparing information returns to the
Certificateholders and the IRS.
If original issue discount is in excess of a de minimis amount, all
original issue discount with respect to a Mortgage Loan will be required to be
accrued and reported in income each month, based on a constant yield. The OID
Regulations suggest that no prepayment assumption is appropriate in computing
the yield on prepayable obligations issued with original issue discount. In the
absence of statutory or administrative clarification, it currently is not
intended to base information reports or returns to the IRS and
Certificateholders on the use of a prepayment assumption in transactions not
subject to the stripped bond rules. However, Section 1272(a)(6) of the Code may
require that a prepayment assumption be made in computing yield with respect to
all mortgage-backed securities. Certificateholders are advised to consult their
own tax advisors concerning whether a prepayment assumption should be used in
reporting original issue discount with respect to Grantor Trust Fractional
Interest Certificates. Certificateholders should refer to the related Prospectus
Supplement with respect to each series to determine whether and in what manner
the original issue discount rules will apply to Mortgage Loans in such series.
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A purchaser of a Grantor Trust Fractional Interest Certificate that
purchases such Grantor Trust Fractional Interest Certificate at a cost less than
such Certificate's allocable portion of the aggregate remaining stated
redemption price of the Mortgage Loans held in the related Trust Fund will also
be required to include in gross income such Certificate's daily portions of any
original issue discount with respect to such Mortgage Loans. However, each such
daily portion will be reduced, if the cost of such Grantor Trust Fractional
Interest Certificate to such purchaser is in excess of such Certificate's
allocable portion of the aggregate "adjusted issue prices" of the Mortgage Loans
held in the related Trust Fund, approximately in proportion to the ratio such
excess bears to such Certificate's allocable portion of the aggregate original
issue discount remaining to be accrued on such Mortgage Loans. The adjusted
issue price of a Mortgage Loan on any given day equals the sum of (i) the
adjusted issue price (or, in the case of the first accrual period, the issue
price) of such Mortgage Loan at the beginning of the accrual period that
includes such day and (ii) the daily portions of original issue discount for all
days during such accrual period prior to such day. The adjusted issue price of a
Mortgage Loan at the beginning of any accrual period will equal the issue price
of such Mortgage Loan, increased by the aggregate amount of original issue
discount with respect to such Mortgage Loan that accrued in prior accrual
periods, and reduced by the amount of any payments made on such Mortgage Loan in
prior accrual periods of amounts included in its stated redemption price.
Unless otherwise provided in the related Prospectus Supplement, the Trustee
or Master Servicer, as applicable, will provide to any holder of a Grantor Trust
Fractional Interest Certificate such information as such holder may reasonably
request from time to time with respect to original issue discount accruing on
Grantor Trust Fractional Interest Certificates. See "--Grantor Trust Reporting"
below.
Market Discount. If the stripped bond rules do not apply to a Grantor
Trust Fractional Interest Certificate, a Certificateholder may be subject to the
market discount rules of Sections 1276 through 1278 of the Code to the extent an
interest in a Mortgage Loan is considered to have been purchased at a "market
discount", that is, in the case of a Mortgage Loan issued without original issue
discount, at a purchase price less than its remaining stated redemption price
(as defined above), or in the case of a Mortgage Loan issued with original issue
discount, at a purchase price less than its adjusted issue price (as defined
above). If market discount is in excess of a de minimis amount (as described
below), the holder generally will be required to include in income in each month
the amount of such discount that has accrued (under the rules described in the
next paragraph) through such month that has not previously been included in
income, but limited, in the case of the portion of such discount that is
allocable to any Mortgage Loan, to the payment of stated redemption price on
such Mortgage Loan that is received by (or, in the case of accrual basis
Certificateholders, due to) the Trust Fund in that month. A Certificateholder
may elect to include market discount in income currently as it accrues (under a
constant yield method based on the yield of the Certificate to such holder)
rather than including it on a deferred basis in accordance with the foregoing
under rules similar to those described in "--Taxation of Owners of REMIC Regular
Interests--Market Discount" above.
Section 1276(b)(3) of the Code authorized the Treasury Department to issue
regulations providing for the method for accruing market discount on debt
instruments, the principal of which is payable in more than one installment.
Until such time as regulations are issued by the Treasury Department, certain
rules described in the Committee Report apply. Under those rules, in each
accrual period market discount on the Mortgage Loans should accrue, at the
holder's option: (i) on the basis of a constant yield method, (ii) in the case
of a Mortgage Loan issued without original issue discount, in an amount that
bears the same ratio to the total remaining market discount as the stated
interest paid in the accrual period bears to the total stated interest remaining
to be paid on the Mortgage Loan as of the beginning of the accrual period, or
(iii) in the case of a Mortgage Loan issued with original issue discount, in an
amount that bears the same ratio to the total remaining market discount as the
original issue discount accrued in the accrual period bears to the total
original issue discount remaining at the beginning of the accrual period. The
prepayment assumption, if any, used in calculating the accrual of original issue
discount is to be used in calculating the accrual of market discount. The effect
of using a prepayment assumption could be to accelerate the reporting of such
discount income. Because the regulations referred to in this paragraph have not
been issued, it is not possible to predict what effect such regulations might
have on the tax treatment of a Mortgage Loan purchased at a discount in the
secondary market.
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Because the Mortgage Loans will provide for periodic payments of stated
redemption price, such discount may be required to be included in income at a
rate that is not significantly slower than the rate at which such discount would
be included in income if it were original issue discount.
Market discount with respect to Mortgage Loans may be considered to be de
minimis and, if so, will be includible in income under de minimis rules similar
to those described in "--REMICs--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount" above within the exception that it is
less like that a prepayment assumption will be used for purposes of such rules
with respect to the Mortgage Loans.
Further, under the rules described in "--REMICs--Taxation of Owners of
REMIC Regular Certificates--Market Discount", any discount that is not original
issue discount and exceeds a de minimis amount may require the deferral of
interest expense deductions attributable to accrued market discount not yet
includible in income, unless an election has been made to report market discount
currently as it accrues.
Premium. If a Certificateholder is treated as acquiring the underlying
Mortgage Loans at a premium, that is, at a price in excess of their remaining
stated redemption price, such Certificateholder may elect under Section 171 of
the Code to amortize using a constant yield method the portion of such premium
allocable to Mortgage Loans originated after September 27, 1985. Amortizable
premium is treated as an offset to interest income on the related debt
instrument, rather than as a separate interest deduction. However, premium
allocable to Mortgage Loans originated before September 28, 1985 or to Mortgage
Loans for which an amortization election is not made, should be allocated among
the payments of stated redemption price on the Mortgage Loan and be allowed as a
deduction as such payments are made (or, for a Certificateholder using the
accrual method of accounting, when such payments of stated redemption price are
due).
It is unclear whether a prepayment assumption should be used in computing
amortization of premium allowable under Section 171 of the Code. If premium is
not subject to amortization using a prepayment assumption and a Mortgage Loan
prepays in full, the holder of a Grantor Trust Fractional Interest Certificate
acquired at a premium should recognize a loss equal to the difference between
the portion of the prepaid principal amount of the Mortgage Loan that is
allocable to the Certificate and the portion of the adjusted basis of the
Certificate that is allocable to the Mortgage Loan. If a prepayment assumption
is used to amortize such premium, it appears that such a loss would be
unavailable. Instead, if a prepayment assumption is used, a prepayment should be
treated as a partial payment of the stated redemption price of the Grantor Trust
Fractional Interest Certificate and accounted for under a method similar to that
described for taking account of original issue discount on REMIC Regular
Certificates. See "--REMICs--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount". It is unclear whether any other
adjustments would be required to reflect differences between the prepayment
assumption and the actual rate of prepayments.
Taxation of Owners of Grantor Trust Strip Certificates. The "stripped
coupon" rules of Section 1286 of the Code will apply to the Grantor Trust Strip
Certificates. Except as described above in "--Taxation of Owners of Grantor
Trust Fractional Interest Certificates--If Stripped Bond Rules Apply", no
regulations or published rulings under Section 1286 of the Code have been issued
and some uncertainty exists as to how it will be applied to securities such as
the Grantor Trust Strip Certificates. Accordingly, holders of Grantor Trust
Strip Certificates should consult their tax advisors concerning the method to be
used in reporting income or loss with respect to such Certificates.
The OID Regulations do not apply to "stripped coupons", although they
provide general guidance as to how the original issue discount sections of the
Code will be applied. In addition, the discussion below is subject to the
discussion under "--Possible Application of Proposed Contingent Payment Rules"
below and assumes that the holder of a Grantor Trust Strip Certificate will not
own any Grantor Trust Fractional Interest Certificates.
Under the stripped coupon rules, it appears that original issue discount
will be required to be accrued in each month on the Grantor Trust Strip
Certificates based on a constant yield method. In effect, each holder of Grantor
Trust Strip Certificates would include as interest income in each month an
amount equal to the product of such holder's adjusted basis in such Grantor
Trust Strip Certificate at the beginning of such month and the yield of such
Grantor Trust Strip Certificate to such holder. Such yield would be calculated
based on
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the price paid for that Grantor Trust Strip Certificate by its holder and the
payments remaining to be made thereon at the time of the purchase, plus an
allocable portion of the servicing fees and expenses to be paid with respect to
the Mortgage Loans. See "--Taxation of Owners of Grantor Trust Fractional
Interest Certificates--If Stripped Bond Rules Apply" above.
As noted above, Section 1272(a)(6) of the Code requires that a prepayment
assumption be used in computing the accrual of original issue discount with
respect to certain categories of debt instruments, and that adjustments be made
in the amount and rate of accrual of such discount when prepayments do not
conform to such prepayment assumption. Regulations could be adopted applying
those provisions to the Grantor Trust Strip Certificates. It is unclear whether
those provisions would be applicable to the Grantor Trust Strip Certificates or
whether use of a prepayment assumption may be required or permitted in the
absence of such regulations. It is also uncertain, if a prepayment assumption is
used, whether the assumed prepayment rate would be determined based on
conditions at the time of the first sale of the Grantor Trust Strip Certificate
or, with respect to any subsequent holder, at the time of purchase of the
Grantor Trust Strip Certificate by that holder.
The accrual of income on the Grantor Trust Strip Certificates will be
significantly slower if a prepayment assumption is permitted to be made than if
yield is computed assuming no prepayments. In the absence of statutory or
administrative clarification, it currently is intended to base information
returns or reports to the IRS and Certificateholders on the Prepayment
Assumption disclosed in the related Prospectus Supplement and on a constant
yield computed using a representative initial offering price for each class of
Certificates. However, neither the Depositor nor any other person will make any
representation that the Mortgage Loans will in fact prepay at a rate conforming
to the Prepayment Assumption or at any other rate and Certificateholders should
bear in mind that the use of a representative initial offering price will mean
that such information returns or reports, even if otherwise accepted as accurate
by the IRS, will in any event be accurate only as to the initial
Certificateholders of each series who bought at that price. Prospective
purchasers of the Grantor Trust Strip Certificates should consult their tax
advisors regarding the use of the Prepayment Assumption.
It is unclear under what circumstances, if any, the prepayment of a
Mortgage Loan will give rise to a loss to the holder of a Grantor Trust Strip
Certificate. If a Grantor Trust Strip Certificate is treated as a single
instrument (rather than an interest in discrete mortgage loans) and the effect
of prepayments is taken into account in computing yield with respect to such
Grantor Trust Strip Certificate, it appears that no loss may be available as a
result of any particular prepayment unless prepayments occur at a rate faster
than the Prepayment Assumption. However, if a Grantor Trust Strip Certificate is
treated as an interest in discrete Mortgage Loans, or if the Prepayment
Assumption is not used, then when a Mortgage Loan is prepaid, the holder of a
Grantor Trust Strip Certificate should be able to recognize a loss equal to the
portion of the adjusted issue price of the Grantor Trust Strip Certificate that
is allocable to such Mortgage Loan.
Possible Application of Proposed Contingent Payment Rules. The coupon
stripping rules' general treatment of stripped coupons is to regard them as
newly issued debt instruments in the hands of each purchaser. To the extent that
payments on the Grantor Trust Strip Certificates would cease if the Mortgage
Loans were prepaid in full, the Grantor Trust Strip Certificates could be
considered to be debt instruments providing for contingent payments. Under the
OID Regulations, debt instruments providing for contingent payments are not
subject to the same rules as debt instruments providing for noncontingent
payments, but no final regulations have been promulgated with respect to
contingent payment debt instruments. Proposed regulations were promulgated on
December 16, 1994 regarding contingent payment debt instruments, but it appears
that the Grantor Trust Strip Certificates, due to their similarity to other
mortgage-backed securities (such as REMIC regular interests) that are expressly
exempted from the application of such proposed regulations, may be excepted from
such proposed regulations. Like the OID Regulations, such proposed regulations
do not specifically address securities, such as the Grantor Trust Strip
Certificates, that are subject to the stripped bond rules of Section 1286 of the
Code.
If the contingent payment rules under the proposed regulations were to
apply, the holder of a Grantor Trust Strip Certificate would be required to
apply the "noncontingent bond method." Under the
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"noncontingent bond method," the issuer of a Grantor Trust Strip Certificate
determines a projected payment schedule on which interest will accrue. Holders
of Grantor Trust Strip Certificates are bound by the issuer's projected payment
schedule. The projected payment schedule consists of all noncontingent payments
and a projected amount for each contingent payment based on the projected yield
(as described below) of the Grantor Trust Strip Certificate. The projected
amount of each payment is determined so that the projected payment schedule
reflects the projected yield. The projected amount of each payment must
reasonably reflect the relative expected values of the payments to be received
by the holders of a Grantor Trust Strip Certificate. The projected yield
referred to above is a reasonable rate, not less than the "applicable Federal
rate" that, as of the issue date, reflects general market conditions, the credit
quality of the issuer, and the terms and conditions of the Mortgage Loans. The
holder of a Grantor Trust Strip Certificate would be required to include as
interest income in each month the adjusted issue price of the Grantor Trust
Strip Certificate at the beginning of the period multiplied by the projected
yield.
Assuming that a prepayment assumption were used, if the proposed
regulations or their principles were applied to Grantor Trust Strip
Certificates, the amount of income reported with respect thereto would be
substantially similar to that described under "Taxation of Owners of Grantor
Trust Strip Certificates."
Certificateholders should consult their tax advisors concerning the
possible application of the contingent payment rules to the Grantor Trust Strip
Certificates.
Sales of Grantor Trust Certificates. Any gain or loss, equal to the
difference between the amount realized on the sale or exchange of a Grantor
Trust Certificate and its adjusted basis, recognized on such sale or exchange of
a Grantor Trust Certificate by an investor who holds such Grantor Trust
Certificate as a capital asset, will be capital gain or loss, except to the
extent of accrued and unrecognized market discount, which will be treated as
ordinary income, and (in the case of banks and other financial institutions)
except as provided under Section 582(c) of the Code. The adjusted basis of a
Grantor Trust Certificate generally will equal its cost, increased by any income
reported by the seller (including original issue discount and market discount
income) and reduced (but not below zero) by any previously reported losses, any
amortized premium and by any distributions with respect to such Grantor Trust
Certificate. The Code as of the date of this Prospectus provides a top marginal
tax rate of 39.6% for individuals and a maximum marginal rate for long-term
capital gains of individuals of 28%. No such rate differential exists for
corporations. In addition, the distinction between a capital gain or loss and
ordinary income or loss remains relevant for other purposes.
Gain or loss from the sale of a Grantor Trust Certificate may be partially
or wholly ordinary and not capital in certain circumstances. Gain attributable
to accrued and unrecognized market discount will be treated as ordinary income,
as will gain or loss recognized by banks and other financial institutions
subject to Section 582(c) of the Code. Furthermore, a portion of any gain that
might otherwise be capital gain may be treated as ordinary income to the extent
that the Grantor Trust 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 the
same or similar property that reduce or eliminate market risk, if substantially
all of the taxpayer's 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 IRS) at the time the taxpayer enters into the
conversion transaction, subject to appropriate reduction for prior inclusion of
interest and other ordinary income items from the transaction.
Finally, a taxpayer may elect to have net capital gain taxed at ordinary
income rates rather than capital gains rates in order to include such net
capital gain in total net investment income for that taxable year, for purposes
of the rule that limits the deduction of interest on indebtedness incurred to
purchase or carry property held for investment to a taxpayer's net investment
income.
Grantor Trust Reporting. Unless otherwise provided in the related
Prospectus Supplement, the Trustee or Master Servicer, as applicable, will
furnish to each holder of a Grantor Trust Certificate with each distribution a
statement setting forth the amount of such distribution allocable to principal
on the underlying Mortgage Loans and to interest thereon at the related
Pass-Through Rate. In addition, the Trustee or Master
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Servicer, as applicable, will furnish, within a reasonable time after the end of
each calendar year, to each holder of a Grantor Trust Certificate who was such a
holder at any time during such year, information regarding the amount of
servicing compensation received by the Master Servicer, the Special Servicer or
any Sub-Servicer, and such other customary factual information as the Depositor
or the reporting party deems necessary or desirable to enable holders of Grantor
Trust Certificates to prepare their tax returns and will furnish comparable
information to the IRS as and when required by law to do so. Because the rules
for accruing discount and amortizing premium with respect to the Grantor Trust
Certificates are uncertain in various respects, there is no assurance the IRS
will agree with the Trustee's or Master Servicer's, as the case may be,
information reports of such items of income and expense. Moreover, such
information reports, even if otherwise accepted as accurate by the IRS, will in
any event be accurate only as to the initial Certificateholders that bought
their Certificates at the representative initial offering price used in
preparing such reports.
Backup Withholding. In general, the rules described in "--REMICs--Backup
Withholding with Respect to REMIC Certificates" will also apply to Grantor Trust
Certificates.
Foreign Investors. In general, the discussion with respect to REMIC
Regular Certificates in "--REMICs--Foreign Investors in REMIC Certificates"
applies to Grantor Trust Certificates except that Grantor Trust Certificates
will, unless otherwise disclosed in the related Prospectus Supplement, be
eligible for exemption from U.S. withholding tax, subject to the conditions
described in such discussion, only to the extent the related Mortgage Loans were
originated after July 18, 1984.
To the extent that interest on a Grantor Trust Certificate would be exempt
under Sections 871(h)(1) and 881(c) of the Code from United States withholding
tax, and the Grantor Trust Certificate is not held in connection with a
Certificateholder's trade or business in the United States, such Grantor Trust
Certificate will not be subject to United States estate taxes in the estate of a
non-resident alien individual.
STATE AND OTHER TAX CONSEQUENCES
In addition to the federal income tax consequences described in "Certain
Federal Income Tax Consequences," potential investors should consider the state
and local tax consequences of the acquisition, ownership, and disposition of the
Offered Certificates. State tax law may differ substantially from the
corresponding federal law, and the discussion above does not purport to describe
any aspect of the income tax laws of any state or other jurisdiction. Therefore,
potential investors should consult their tax advisors with respect to the
various tax consequences of investments in the Offered Certificates.
ERISA CONSIDERATIONS
GENERAL
ERISA and the Code impose certain requirements on employee benefit plans
and on certain other retirement plans and arrangements, including individual
retirement accounts and annuities, Keogh plans and collective investment funds
and separate accounts (and as applicable, insurance company general accounts) in
which such plans, accounts or arrangements are invested that are subject to the
fiduciary responsibility provisions of ERISA and Section 4975 of the Code
("PLANS") and on persons who are fiduciaries with respect to such Plans in
connection with the investment of Plan assets. Certain employee benefit plans,
such as governmental plans (as defined in ERISA Section 3(32)), and, if no
election has been made under Section 410(d) of the Code, church plans (as
defined in Section 3(33) of ERISA) are not subject to ERISA requirements.
Accordingly, assets of such plans may be invested in Offered Certificates
without regard to the ERISA considerations described below, subject to the
provisions of other applicable federal and state law. Any such plan which is
qualified and exempt from taxation under Sections 401(a) and 501(a) of the Code,
however, is subject to the prohibited transaction rules set forth in Section 503
of the Code.
ERISA generally imposes on Plan fiduciaries certain general fiduciary
requirements, including those of investment prudence and diversification and the
requirement that a Plan's investments be made in accordance with the documents
governing the Plan. In addition, Section 406 of ERISA and Section 4975 of the
Code
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prohibit a broad range of transactions involving assets of a Plan and persons
("PARTIES IN INTEREST") who have certain specified relationships to the Plan
unless a statutory or administrative exemption is available. Unless an exemption
is available, a Plan's purchase or holding of a Certificate may constitute a
prohibited transaction if any of the Depositor, the Trustee, the Master
Servicer, the Manager, the Special Servicer or a Sub-Servicer is a Party in
Interest with respect to that Plan. Certain Parties in Interest that participate
in a prohibited transaction may be subject to an excise tax imposed pursuant to
Section 4975 of the Code or a penalty imposed pursuant to Section 502(i) of
ERISA, unless a statutory or administrative exemption is available. These
prohibited transactions generally are set forth in Section 406 of ERISA and
Section 4975 of the Code.
PLAN ASSET REGULATIONS
A Plan's investment in Offered Certificates may cause the underlying
Mortgage Loans, MBS and other assets included in a related Trust Fund to be
deemed assets of such Plan. A regulation of the United States Department of
Labor ("DOL") at 29 C.F.R. sec.2510.3-101 provides that when a Plan acquires an
equity interest in an entity, the Plan's assets include both such equity
interest and an undivided interest in each of the underlying assets of the
entity, unless certain exceptions not applicable here apply, or unless the
equity participation in the entity by "benefit plan investors" (i.e., Plans and
certain employee benefit plans not subject to ERISA) is not "significant", both
as defined therein. Equity participation in a Trust Fund will be significant on
any date if immediately after the most recent acquisition of any Certificate,
25% or more of any class of Certificates is held by benefit plan investors.
Any person who has discretionary authority or control respecting the
management or disposition of Plan assets, and any person who provides investment
advice with respect to such assets for a fee, is a fiduciary of the investing
Plan. If the Mortgage Loans, MBS and other assets included in a Trust Fund
constitute Plan assets, then any party exercising management or discretionary
control regarding those assets, such as the Master Servicer, any Special
Servicer, any Sub-Servicer, any Manager, the Trustee, the obligor under any
credit enhancement mechanism, or certain affiliates thereof may be deemed to be
a Plan "fiduciary" and thus subject to the fiduciary responsibility provisions
and prohibited transaction provisions of ERISA and the Code with respect to the
investing Plan. In addition, if the Mortgage Loans, MBS and other assets
included in a Trust Fund constitute Plan assets, the purchase of Certificates by
a Plan, as well as the operation of the Trust Fund, may constitute or involve a
prohibited transaction under ERISA or the Code.
PROHIBITED TRANSACTION EXEMPTION
On March 29, 1994, the DOL issued (with an effective date of June 9, 1992)
an individual exemption (the "EXEMPTION"), to certain of the Depositor's
affiliates, which generally exempts from the application of the prohibited
transaction provisions of Section 406 of ERISA, and the excise taxes imposed on
such prohibited transactions pursuant to Section 4975(a) and (b) of the Code,
certain transactions, among others, relating to the servicing and operation of
mortgage pools and the purchase, sale and holding of mortgage pass-through
certificates in a trust as to which (i) the Depositor is the sponsor if any
entity which has received from the DOL an individual prohibited transaction
exemption which is similar to the Exemption is the sole underwriter, or manager
or co-manager of the underwriting syndicate or a seller or placement agent, or
(ii) the Depositor or an affiliate is the Underwriter (as hereinafter defined),
provided that certain conditions set forth in the Exemption are satisfied. For
purposes of this Section "ERISA Considerations," the term "UNDERWRITER" shall
include (a) the Depositor and certain of its affiliates, (b) any person directly
or indirectly, through one or more intermediaries, controlling, controlled by or
under common control with the Depositor and certain of its affiliates, (c) any
member of the underwriting syndicate or selling group of which a person
described in (a) or (b) is a manager or co-manager with respect to a class of
Certificates, or (d) any entity which has received an exemption from the DOL
relating to Certificates which is similar to the Exemption.
The Exemption sets forth six general conditions which must be satisfied for
a transaction involving the purchase, sale and holding of Offered Certificates
to be eligible for exemptive relief thereunder. First, the acquisition of
Offered Certificates by a Plan must be on terms that are at least as favorable
to the Plan as they would be in an arm's-length transaction with an unrelated
party. Second, the Exemption only applies to Offered Certificates evidencing
rights and interests that are not subordinated to the rights and interests
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evidenced by the other Certificates of the same trust. Third, the Offered
Certificates at the time of acquisition by a Plan must be rated in one of the
three highest generic rating categories by Standard & Poor's Ratings Services,
Moody's Investors Service, Inc., Duff & Phelps, Inc. or Fitch Investors Service,
L.P. Fourth, the Trustee cannot be an affiliate of any member of the "RESTRICTED
GROUP" which consists of any Underwriter, the Depositor, the Master Servicer,
any Special Servicer, any Sub-Servicer, any obligor under any credit enhancement
mechanism, any Manager and any mortgagor with respect to Trust Assets
constituting more than 5% of the aggregate unamortized principal balance of the
Trust Assets in the related Trust Fund as of the date of initial issuance of the
Certificates. Fifth, the sum of all payments made to and retained by the
Underwriters must represent not more than reasonable compensation for
underwriting the Certificates; the sum of all payments made to and retained by
the Depositor pursuant to the assignment of the Trust Assets to the related
Trust Fund must represent not more than the fair market value of such
obligations, and the sum of all payments made to and retained by the Master
Servicer, any Special Servicer, any Sub-Servicer and any Manager must represent
not more than reasonable compensation for such person's services under the
related Pooling and Servicing Agreement and reimbursement of such person's
reasonable expenses in connection therewith. Sixth, the Exemption states that
the investing Plan must be an accredited investor as defined in Rule 501(a)(1)
of Regulation D of the Securities and Exchange Commission under the Securities
Act of 1933, as amended.
The Exemption also requires that each Trust Fund meet the following
requirements: (i) the Trust Fund must consist solely of assets of the type that
have been included in other investment pools; (ii) certificates in such other
investment pools must have been rated in one of the three highest categories of
one of the rating agencies specified above for at least one year prior to the
Plan's acquisition of Certificates; and (iii) certificates 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.
It is not clear whether certain Certificates that may be offered hereunder
would constitute "certificates" for purposes of the Exemption, including but not
limited to, (i) Certificates evidencing an interest in certificates insured or
guaranteed by FAMC, (ii) Certificates evidencing an interest in Mortgage Loans
secured by liens on real estate projects under construction, (iii) Certificates
evidencing an interest in a Trust Fund including equity participations, (iv)
Certificates evidencing an interest in a Trust Fund including Cash Flow
Agreements, or (v) subordinated Classes of Certificates. In promulgating the
Exemption, the DOL did not have under consideration interests in pools of the
exact nature described in this paragraph and accordingly, unless otherwise
provided in the related Prospectus Supplement, Plans should not purchase
Certificates representing interests as described in the immediately preceding
sentence based solely upon the Exemption.
A fiduciary of a Plan contemplating purchasing an Offered Certificate must
make its own determination that the general conditions set forth above will be
satisfied with respect to such Certificate.
If the general conditions of the Exemption are satisfied, the Exemption may
provide an exemption from the restrictions imposed by Sections 406(a) and 407 of
ERISA (as well as the excise taxes imposed by Sections 4975(a) and (b) of the
Code by reason of Sections 4975(c)(1)(A) through (D) of the Code) in connection
with the direct or indirect sale, exchange, transfer, holding or the direct or
indirect acquisition or disposition in the secondary market of Offered
Certificates by a Plan. However, no exemption is provided from the restrictions
of Sections 406(a)(1)(E) and 406(a)(2) of ERISA for the acquisition or holding
of an Offered Certificate on behalf of an "EXCLUDED PLAN" by any person who has
discretionary authority or renders investment advice with respect to assets of
such Excluded Plan. For purposes of the Certificates, an Excluded Plan is a Plan
sponsored by any member of the Restricted Group.
If certain specific conditions of the Exemption are also satisfied, the
Exemption may provide an exemption from the restrictions imposed by Sections
406(b)(1) and (b)(2) of ERISA and the taxes imposed by Section 4975(c)(1)(E) of
the Code in connection with (1) the direct or indirect sale, exchange or
transfer of Certificates in the initial issuance of Certificates between the
Depositor or an Underwriter and a Plan when the person who has discretionary
authority or renders investment advice with respect to the investment of the
relevant Plan Assets in the Certificates is (a) a mortgagor with respect to 5%
or less of the fair market value of
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the Trust Assets or (b) an affiliate of such a person, (2) the direct or
indirect acquisition or disposition in the secondary market of Certificates by a
Plan and (3) the holding of Certificates by a Plan.
Further, if certain specific conditions of the Exemption are satisfied, the
Exemption may provide an exemption from the restrictions imposed by Sections
406(a), 406(b) and 407 of ERISA, and the taxes imposed by Sections 4975(a) and
(b) of the Code by reason of Section 4975(c) of the Code for transactions in
connection with the servicing, management and operation of the pools of Mortgage
Assets. The Depositor expects that the specific conditions of the Exemption
required for this purpose will be satisfied with respect to the Certificates so
that the Exemption would provide an exemption from the restrictions imposed by
Sections 406(a) and (b) of ERISA (as well as the excise taxes imposed by
Sections 4975(a) and (b) of the Code by reason of Section 4975(c) of the Code)
for transactions in connection with the servicing, management and operation of
the pools of Mortgage Assets, provided that the general conditions of the
Exemption are satisfied.
The Exemption also may provide an exemption from the restrictions imposed
by Sections 406(a) and 407(a) of ERISA, and the taxes imposed by Section 4975(a)
and (b) of the Code by reason of Sections 4975(c)(1)(A) through (D) of the Code
if such restrictions are deemed to otherwise apply merely because a person is
deemed to be a "party in interest" (within the meaning of Section 3(14) of
ERISA) or a "disqualified person" (within the meaning of Section 4975(e)(2) of
the Code) with respect to an investing Plan by virtue of providing services to
the Plan (or by virtue of having certain specified relationships to such a
person) solely as a result of the Plan's ownership of Certificates.
Before purchasing an Offered Certificate, a fiduciary of a Plan should
itself confirm (a) that the Certificates constitute "certificates" for purposes
of the Exemption and (b) that the specific and general conditions set forth in
the Exemption and the other requirements set forth in the Exemption would be
satisfied. In addition to making its own determination as to the availability of
the exemptive relief provided in the Exemption, the fiduciary should consider
its general fiduciary obligations under ERISA in determining whether to purchase
any Offered Certificates with assets of a Plan.
CONSULTATION WITH COUNSEL
Any Plan fiduciary which proposes to purchase Offered Certificates on
behalf of or with assets of a Plan should consult with its counsel with respect
to the potential applicability of ERISA and the Code to such investment and the
availability of the Exemption or any other prohibited transaction exemption in
connection therewith. The Prospectus Supplement with respect to a series of
Certificates may contain additional information regarding the application of the
Exemption, or any other exemption, with respect to the Certificates offered
thereby.
TAX EXEMPT INVESTORS
A Plan that is exempt from federal income taxation pursuant to Section 501
of the Code (a "TAX EXEMPT INVESTOR") nonetheless will be subject to federal
income taxation to the extent that its income is "unrelated business taxable
income" ("UBTI") within the meaning of Section 512 of the Code. All "excess
inclusions" of a REMIC allocated to a REMIC Residual Certificate held by a
Tax-Exempt Investor will be considered UBTI and thus will be subject to federal
income tax. See "Certain Federal Income Tax Consequences--Taxation of Owners of
REMIC Residual Certificates--Excess Inclusions."
LEGAL INVESTMENT
If so specified in the related Prospectus Supplement, the Offered
Certificates will constitute "mortgage related securities" for purposes of
SMMEA. Accordingly, investors whose investment authority is subject to legal
restrictions should consult their legal advisors to determine whether and to
what extent the Offered Certificates constitute legal investments for them.
Generally, only classes of Offered Certificates that (i) are rated in one
of the two highest rating categories by one or more Rating Agencies and (ii) are
part of a series evidencing interests in a Trust Fund consisting of
84
<PAGE> 248
loans secured by a single parcel of real estate upon which is located a dwelling
or mixed residential and commercial structure, such as certain Multifamily
Loans, and originated by types of Originators specified in SMMEA, will be
"mortgage related securities" for purposes of SMMEA. "Mortgage related
securities" are legal investments to the same extent that, under applicable law,
obligations issued by or guaranteed as to principal and interest by the United
States or any agency or instrumentality thereof constitute legal investments for
persons, trusts, corporations, partnerships, associations, business trusts and
business entities (including depository institutions, insurance companies and
pension funds created pursuant to or existing under the laws of the United
States or of any state, the authorized investments of which are subject to state
regulation). Under SMMEA, if a state enacted legislation prior to October 3,
1991 that specifically limits the legal investment authority of any such
entities with respect to "mortgage related securities", Offered Certificates
would constitute legal investments for entities subject to such legislation only
to the extent provided in such 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 with "mortgage
related securities" without limitation as to the percentage of their assets
represented thereby, federal credit unions may invest in such securities, and
national banks may purchase such securities for their own account without regard
to the limitations generally applicable to investment securities set forth in 12
U.S.C. 24 (Seventh), subject in each case to such regulations as the applicable
federal regulatory authority may prescribe.
Upon the issuance of final implementing regulations under the Riegle
Community Development and Regulatory Improvement Act of 1994 and subject to any
limitations such regulations may impose, a modification of the definition of
"mortgage related securities" will become effective to expand the types of loans
to which such securities may relate to include loans secured by "one or more
parcels of real estate upon which is located one or more commercial structures".
In addition, the related legislative history states that this expanded
definition includes multifamily residential loans secured by more than one
parcel of real estate upon which is located more than one structure. Until
September 23, 2001 any state may enact legislation limiting the extent to which
"mortgage related securities" under this expanded definition would constitute
legal investments under that state's laws.
The Federal Financial Institutions Examination Council has issued a
supervisory policy statement (the "POLICY STATEMENT") applicable to all
depository institutions, setting forth guidelines for and significant
restrictions on investments in "high-risk mortgage securities". The Policy
Statement has been adopted by the Federal Reserve Board, the Office of the
Comptroller of the Currency, the FDIC and the OTS. The Policy Statement
generally indicates that a mortgage derivative product will be deemed to be high
risk if it exhibits greater price volatility than a standard fixed rate
thirty-year mortgage security. According to the Policy Statement, prior to
purchase, a depository institution will be required to determine whether a
mortgage derivative product that it is considering acquiring is high-risk, and
if so that the proposed acquisition would reduce the institution's overall
interest rate risk. Reliance on analysis and documentation obtained from a
securities dealer or other outside party without internal analysis by the
institution would be unacceptable. There can be no assurance as to which classes
of Certificates, including Offered Certificates, will be treated as high-risk
under the Policy Statement.
The predecessor to the Office of Thrift Supervision (the "OTS") issued a
bulletin, entitled, "Mortgage Derivative Products and Mortgage Swaps", which is
applicable to thrift institutions regulated by the OTS. The bulletin established
guidelines for the investment by savings institutions in certain "high-risk"
mortgage derivative securities and limitations on the use of such securities by
insolvent, undercapitalized or otherwise "troubled" institutions. According to
the bulletin, such "high-risk" mortgage derivative securities include securities
having certain specified characteristics, which may include certain classes of
Offered Certificates. In addition, the National Credit Union Administration has
issued regulations governing federal credit union investments which prohibit
investment in certain specified types of securities, which may include certain
classes of Offered Certificates. Similar policy statements have been issued by
regulators having jurisdiction over other types of depository institutions.
85
<PAGE> 249
There may be other restrictions on the ability of certain investors either
to purchase certain classes of Offered Certificates or to purchase any class of
Offered Certificates representing more than a specified percentage of the
investor's assets. The Depositor will make no representations as to the proper
characterization of any class of Offered Certificates for legal investment or
other purposes, or as to the ability of particular investors to purchase any
class of Offered Certificates under applicable legal investment restrictions.
These uncertainties may adversely affect the liquidity of any class of Offered
Certificates. Accordingly, all investors whose investment activities are subject
to legal investment laws and regulations, regulatory capital requirements or
review by regulatory authorities should consult with their legal advisors in
determining whether and to what extent the Offered Certificates of any class
constitute legal investments or are subject to investment, capital or other
restrictions.
USE OF PROCEEDS
The net proceeds to be received from the sale of the Certificates of any
series will be applied by the Depositor to the purchase of Trust Assets or will
be used by the Depositor for general corporate purposes. The Depositor expects
to sell the Certificates from time to time, but the timing and amount of
offerings of Certificates will depend on a number of factors, including the
volume of Mortgage Assets acquired by the Depositor, prevailing interest rates,
availability of funds and general market conditions.
METHOD OF DISTRIBUTION
The Certificates offered hereby and by the related Prospectus Supplements
will be offered in series through one or more of the methods described below.
The Prospectus Supplement prepared for each series will describe the method of
offering being utilized for that series and will state the net proceeds to the
Depositor from such sale.
The Depositor intends that Offered Certificates will be offered through the
following methods from time to time and that offerings may be made concurrently
through more than one of these methods or that an offering of the Offered
Certificates of a particular series may be made through a combination of two or
more of these methods. Such methods are as follows:
1. By negotiated firm commitment or best efforts underwriting and
public re-offering by underwriters;
2. By placements by the Depositor with institutional investors through
dealers; and
3. By direct placements by the Depositor with institutional investors.
In addition, if specified in the related Prospectus Supplement, the Offered
Certificates of a series may be offered in whole or in part to the seller of the
related Mortgage Assets that would comprise the Trust Fund for such
Certificates.
If underwriters are used in a sale of any Offered Certificates (other than
in connection with an underwriting on a best efforts basis), such Certificates
will be acquired by the underwriters for their own account and may be resold
from time to time in one or more transactions, including negotiated
transactions, at fixed public offering prices or at varying prices to be
determined at the time of sale or at the time of commitment therefor. Such
underwriters may be broker-dealers affiliated with the Depositor whose
identities and relationships to the Depositor will be as set forth in the
related Prospectus Supplement. The managing underwriter or underwriters with
respect to the offer and sale of Offered Certificates of a particular series
will be set forth on the cover of the Prospectus Supplement relating to such
series and the members of the underwriting syndicate, if any, will be named in
such Prospectus Supplement.
In connection with the sale of Offered Certificates, underwriters may
receive compensation from the Depositor or from purchasers of the Offered
Certificates in the form of discounts, concessions or commissions. Underwriters
and dealers participating in the distribution of the Offered Certificates may be
deemed to be underwriters in connection with such Certificates, and any
discounts or commissions received by them from
86
<PAGE> 250
the Depositor and any profit on the resale of Offered Certificates by them may
be deemed to be underwriting discounts and commissions under the Securities Act
of 1933, as amended.
It is anticipated that the underwriting agreement pertaining to the sale of
the Offered Certificates of any series will provide that the obligations of the
underwriters will be subject to certain conditions precedent, that the
underwriters will be obligated to purchase all such Certificates if any are
purchased (other than in connection with an underwriting on a best efforts
basis) and that, in limited circumstances, the Depositor will indemnify the
several underwriters and the underwriters will indemnify the Depositor against
certain civil liabilities, including liabilities under the Securities Act of
1933, as amended, or will contribute to payments required to be made in respect
thereof.
The Prospectus Supplement with respect to any series offered by placements
through dealers will contain information regarding the nature of such offering
and any agreements to be entered into between the Depositor and purchasers of
Offered Certificates of such series.
The Depositor anticipates that the Certificates offered hereby will be sold
primarily to institutional investors. Purchasers of Offered Certificates,
including dealers, may, depending on the facts and circumstances of such
purchases, be deemed to be "underwriters" within the meaning of the Securities
Act of 1933, as amended, in connection with reoffers and sales by them of
Offered Certificates. Holders of Offered Certificates should consult with their
legal advisors in this regard prior to any such reoffer or sale.
LEGAL MATTERS
Unless otherwise specified in the related Prospectus Supplement, certain
legal matters in connection with the Certificates of each series, including
certain federal income tax consequences, will be passed upon for the Depositor
by Mayer, Brown & Platt, Chicago, Illinois or Thacher Proffitt & Wood, New York,
New York.
FINANCIAL INFORMATION
A new Trust Fund will be formed with respect to each series of
Certificates, and no Trust Fund will engage in any business activities or have
any assets or obligations prior to the issuance of the related series of
Certificates. Accordingly, no financial statements with respect to any Trust
Fund will be included in this Prospectus or in the related Prospectus
Supplement. The Depositor has determined that its financial statements will not
be material to the offering of any Offered Certificates.
RATING
It is a condition to the issuance of any class of Offered Certificates that
they shall have been rated not lower than investment grade, that is, in one of
the four highest rating categories, by at least one Rating Agency.
Ratings on mortgage pass-through certificates address the likelihood of
receipt by the holders thereof of all collections on the underlying mortgage
assets to which such holders are entitled. These ratings address the structural,
legal and issuer-related aspects associated with such certificates, the nature
of the underlying mortgage assets and the credit quality of the guarantor, if
any. Ratings on mortgage pass-through certificates do not represent any
assessment of the likelihood of principal prepayments by borrowers or of the
degree by which such prepayments might differ from those originally anticipated.
As a result, certificateholders might suffer a lower than anticipated yield,
and, in addition, holders of stripped interest certificates in extreme cases
might fail to recoup their initial investments. Furthermore, ratings on mortgage
pass-through certificates do not address the price of such certificates or the
suitability of such certificates to the investor.
A security rating is not a recommendation to buy, sell or hold securities
and may be subject to revision or withdrawal at any time by the assigning rating
organization. Each security rating should be evaluated independently of any
other security rating.
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<PAGE> 251
INDEX OF PRINCIPAL DEFINITIONS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Accrual Certificates.................. 7
Accrued Certificate Interest.......... 26
Act................................... 54
ARM Loans............................. 17
Available Distribution Amount......... 25
Book-Entry Certificates............... 25
Cash Flow Agreement................... 9
CERCLA................................ 54
Certificate Account................... 18
Certificate Balance................... 7
Certificate Owner..................... 31
Certificateholder..................... 57
Certificates.......................... 1
Closing Date.......................... 60
Code.................................. 9
Commercial Properties................. 14
Commission............................ 2
Committee Report...................... 59
Companion Class....................... 27
Condemnation Proceeds................. 38
Contributions Tax..................... 70
Controlled Amortization Class......... 27
Cooperatives.......................... 14
CPR................................... 21
Credit Support........................ 8
Cut-off Date.......................... 27
Debt Service Coverage Ratio........... 15
Definitive Certificates............... 25
Depositor............................. 1
Determination Date.................... 20
Direct Participants................... 31
Distribution Date..................... 7
Distribution Date Statement........... 28
DOL................................... 82
DTC................................... 25
Due Dates............................. 17
Due Period............................ 19
Equity Participation.................. 17
ERISA................................. 10
Excess Funds.......................... 23
Excluded Plan......................... 83
Exemption............................. 82
FAMC.................................. 18
FHLMC................................. 17
FNMA.................................. 17
Garn Act.............................. 56
GMACCM................................ 5
Grantor Trust Certificates............ 9
Grantor Trust Fractional Interest
Certificate......................... 73
<CAPTION>
PAGE
-----
<S> <C>
Grantor Trust Fund.................... 57
Grantor Trust Strip Certificate....... 73
Indirect Participants................. 31
Insurance Proceeds.................... 38
IRS................................... 40
Issue Premium......................... 65
Letter of Credit Bank................. 48
Liquidation Proceeds.................. 38
Loan-to-Value Ratio................... 16
Lock-out Date......................... 17
Lock-out Period....................... 17
Manager............................... 5
Mark-to-Market Regulations............ 68
Master Servicer....................... 5
MBS................................... 1
MBS Administrator..................... 5
MBS Agreement......................... 18
MBS Issuer............................ 18
MBS Servicer.......................... 18
MBS Trustee........................... 18
Mortgage Asset Pool................... 1
Mortgage Asset Seller................. 14
Mortgage Assets....................... 1
Mortgage Notes........................ 14
Mortgage Rate......................... 6
Mortgaged Properties.................. 14
Mortgages............................. 14
Multifamily Properties................ 14
Net Leases............................ 16
Net Operating Income.................. 15
Nonrecoverable Advance................ 28
Notional Amount....................... 7
Offered Certificates.................. 1
OID Regulations....................... 58
Originator............................ 14
OTS................................... 85
Participants.......................... 31
Parties in Interest................... 82
Pass-Through Rate..................... 7
Percentage Interest................... 26
Permitted Investments................. 37
Plans................................. 81
Policy Statement...................... 85
Pooling and Servicing Agreement....... 6
Prepayment Assumption................. 59
Prepayment Interest Shortfall......... 20
Prepayment Premium.................... 17
Prohibited Transactions Tax........... 69
Prospectus Supplement................. 1
Purchase Price........................ 34
</TABLE>
88
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<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Rating Agency......................... 10
RCRA.................................. 55
Record Date........................... 25
Related Proceeds...................... 28
Relief Act............................ 57
REMIC................................. 2
REMIC Certificates.................... 57
REMIC Provisions...................... 57
REMIC Regular Certificates............ 9
REMIC Regulations..................... 58
REMIC Residual Certificates........... 9
REO Property.......................... 36
Restricted Group...................... 83
Senior Certificates................... 6
Senior Liens.......................... 14
Servicer.............................. 5
SMMEA................................. 10
SPA................................... 21
PAGE
-----
Special Servicer...................... 5
Stripped Interest Certificates........ 6
Stripped Principal Certificates....... 6
Sub-Servicer.......................... 36
Sub-Servicing Agreement............... 36
Subordinate Certificates.............. 6
Tax Exempt Investor................... 84
Tiered REMICs......................... 59
Title V............................... 56
Trust Assets.......................... 2
Trust Fund............................ 1
Trustee............................... 5
UBTI.................................. 84
UCC................................... 50
Underwriter........................... 82
United States Person.................. 72
Value................................. 16
Warranting Party...................... 34
</TABLE>
89
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NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
DEPOSITOR OR BY THE UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
DO NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE
SECURITIES OFFERED HEREBY TO ANYONE IN ANY JURISDICTION IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM
IT IS UNLAWFUL TO MAKE ANY SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT INFORMATION HEREIN OR
THEREIN IS CORRECT AS OF ANY TIME SINCE THE DATE OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS.
------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Transaction Overview................... S-6
Summary................................ S-7
Risk Factors........................... S-18
Description of the Mortgage Asset
Pool................................. S-22
Servicing of the Mortgage Loans........ S-36
Description of the Certificates........ S-44
Yield and Maturity Considerations...... S-58
Certain Federal Income Tax
Consequences......................... S-78
Method of Distribution................. S-80
Legal Matters.......................... S-81
Ratings................................ S-81
Legal Investment....................... S-82
ERISA Considerations................... S-82
Index of Principal Terms............... S-83
Annex A................................ A-1
Annex B................................ B-1
PROSPECTUS
Prospectus Supplement.................. 2
Available Information.................. 2
Incorporation of Certain Information by
Reference............................ 3
Summary of Prospectus.................. 5
Risk Factors........................... 11
Description of the Trust Funds......... 14
Yield and Maturity Considerations...... 19
The Depositor.......................... 24
GMAC Commercial Mortgage Corporation... 24
Description of the Certificates........ 24
The Pooling and Servicing Agreements... 32
Description of Credit Support.......... 47
Certain Legal Aspects of Mortgage
Loans................................ 49
Certain Federal Income Tax
Consequences......................... 57
State and Other Tax Consequences....... 81
ERISA Considerations................... 81
Legal Investment....................... 84
Use of Proceeds........................ 86
Method of Distribution................. 86
Legal Matters.......................... 87
Financial Information.................. 87
Rating................................. 87
Index of Principal Definitions......... 88
</TABLE>
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$395,151,146
(APPROXIMATE)
GMAC COMMERCIAL MORTGAGE SECURITIES, INC.
CLASS X-1, CLASS X-2, CLASS A-1,
CLASS A-2A, CLASS A-2B, CLASS B,
CLASS C, CLASS D AND CLASS E
MORTGAGE PASS-THROUGH
CERTIFICATES
SERIES 1996-C1
------------------------
PROSPECTUS SUPPLEMENT
------------------------
GOLDMAN, SACHS & CO.
MORGAN STANLEY & CO.
INCORPORATED
AND SOLELY AS MEMBERS OF THE SELLING GROUP
CONTIFINANCIAL SERVICES CORPORATION
[ING BARINGS LOGO]
OCTOBER 30, 1996
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