<PAGE>
Filed Pursuant to Rule 424(b)(5)
Registration File No.: 333-64963
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED NOVEMBER 5, 1998
$879,488,000 (APPROXIMATE)
GMAC COMMERCIAL MORTGAGE SECURITIES, INC.
Depositor
GMAC COMMERCIAL MORTGAGE CORPORATION
Servicer
SERIES 1999-C2 MORTGAGE PASS-THROUGH CERTIFICATES
YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE S-12 IN THIS
PROSPECTUS SUPPLEMENT AND PAGE 11 IN THE PROSPECTUS.
The certificates represent interests only in the trust created for Series
1999-C2. They do not represent interests in or obligations of GMAC Commercial
Mortgage Securities, Inc., GMAC Commercial Mortgage Corporation or any of
their affiliates.
This prospectus supplement may be used to offer and sell the offered
certificates only if accompanied by the prospectus.
THE CERTIFICATES WILL CONSIST OF:
o The 9 classes of offered certificates described
in the table on page S-4. The offered
certificates are the only securities offered
pursuant to this prospectus supplement.
o 6 additional classes of private certificates, all
of which are subordinated to, and provide credit
enhancement for, the offered certificates. The
private certificates are not offered by this
prospectus supplement.
THE ASSETS UNDERLYING THE CERTIFICATES WILL INCLUDE:
o A pool of 121 fixed rate, monthly pay mortgage
loans secured by first priority liens on 162
commercial and multifamily residential
properties. The mortgage pool will have an
initial pool balance of approximately
$974,502,237.
CREDIT ENHANCEMENT:
The subordination of certificates other than the
Class A-1 and A-2 certificates will provide credit
enhancement to the Class A-1 and A-2 certificates.
Each class of subordinated certificates will provide
credit enhancement to subordinated certificates with
earlier alphabetical class designations.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR
ANY STATE SECURITIES COMMISSION HAS APPROVED THE
OFFERED CERTIFICATES OR DETERMINED THAT THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IS ACCURATE
OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The underwriters will sell the offered certificates at varying prices to be
determined at the time of sale. The proceeds to GMAC Commercial Mortgage
Securities, Inc. from the sale of the offered certificates will be
approximately 104.32% of their principal balance plus accrued interest,
before deducting expenses. The underwriters' commission will be the
difference between the price they pay to GMAC Commercial Mortgage Securities,
Inc. for the offered certificates and the amount they receive from the sale
of the offered certificates to the public.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
DEUTSCHE BANK SECURITIES
GOLDMAN, SACHS & CO.
MAY 25, 1999
<PAGE>
GMAC COMMERCIAL MORTGAGE SECURITIES, INC.
Mortgage Pass-Through Certificates, Series 1999-C2
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ALASKA OHIO MARYLAND COLORADO
1 property 2 properties 3 properties 2 properties
$7,488,235 $17,936,784 $24,419,023 $56,167,758
0.77% of total 1.84% of total 2.51% of total 5.76% of total
SOUTH DAKOTA PENNSYLVANIA VIRGINIA ARIZONA
1 property 30 properties 4 properties 3 properties
$1,193,708 $72,269,982 $26,507,797 $41,590,286
0.12% of total 7.42% of total 2.72% of total 4.27% of total
MISSOURI NEW HAMPSHIRE KENTUCKY NEVADA
4 properties 1 property 1 property 2 properties
$14,266,460 $5,589,454 $4,562,409 $28,497,783
1.46% of total 0.57% of total 0.47% of total 2.92% of total
IOWA MASSACHUSETTS NORTH CAROLINA CALIFORNIA
1 property 6 properties 3 properties 26 properties
$4,112,079 $15,996,634 $11,816,419 $194,922,148
0.42% of total 1.64% of total 1.21% of total 20.00% of total
MINNESOTA CONNECTICUT GEORGIA
1 property 6 properties 5 properties
$2,128,514 $17,443,028 $15,878,461
0.22% of total 1.79% of total 1.63% of total
ILLINOIS RHODE ISLAND FLORIDA
2 properties 1 property 9 properties
$46,132,141 $3,897,657 $70,566,782
4.73% of total 0.40% of total 7.24% of total
MICHIGAN NEW YORK LOUISIANA
5 properties 17 properties 2 properties
$16,040,567 $197,449,412 $4,793,411
1.65% of total 20.26% of total 0.49% of total
INDIANA NEW JERSEY TEXAS
1 property 8 properties 15 properties
$1,998,830 $26,032,047 $44,804,427
0.21% of total 2.67% of total 4.60% of total
</TABLE>
DISTRIBUTION OF PROPERTY TYPES
Mixed Use 0.94%
Office 27.89%
Retail 26.78%
Multifamily 26.85%
Other 7.10%
Hospitality 5.89%
Industrial 4.54%
[ ] (less than or equal to) 1.00% of Initial Pool Balance
[ ] 1.01 - 5.00% of Initial Pool Balance
[ ] 5.01 - 10.00% of Initial Pool Balance
[ ] (greater than) 10.00% of Initial Pool Balance
For purposes of this map, each Mortgage Loan secured by multiple Mortgaged
Properties is treated as the number of Mortgage Loans equal to the number of
Mortgaged Properties, each of which is allocated a Cut-off Date Balance based
on the Allocated Principal Amounts thereof (as defined herein).
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
We tell you about the offered certificates in two separate documents that
progressively provide more detail:
o the accompanying prospectus, which provides general information, some
of which may not apply to your series of certificates; and
o this prospectus supplement, which describes the specific terms of your
series of certificates.
IF THE DESCRIPTION OF YOUR CERTIFICATES IN THIS PROSPECTUS SUPPLEMENT
DIFFERS FROM THE DESCRIPTION IN THE ACCOMPANYING PROSPECTUS, YOU SHOULD RELY
ON THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT.
We include cross references in this prospectus supplement and the
accompanying prospectus to captions in these materials where you can find
further related discussions. The following table of contents and the table of
contents included in the accompanying prospectus provide the pages on which
these captions are located.
You can find a listing of the pages where significant defined terms used
in this prospectus supplement and the accompanying prospectus are defined
under the caption "Index of Significant Definitions" in this prospectus
supplement and in the accompanying prospectus.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
SUMMARY.................................. S-6
The Mortgage Pool....................... S-6
Geographic Concentrations............... S-7
Call Protection......................... S-7
Payment Terms........................... S-7
The Certificates ....................... S-7
Initial Certificate Balances of the
Certificates........................... S-7
Distributions on the offered
certificates........................... S-7
Subordination........................... S-8
Allocation of Losses and Expenses ...... S-8
Advances................................ S-9
Optional Termination.................... S-9
Book-Entry Registration................. S-9
Denominations .......................... S-10
Yield and Prepayment Considerations .... S-10
Legal Investment........................ S-10
ERISA Considerations ................... S-10
Tax Status.............................. S-10
Ratings ................................ S-10
RISK FACTORS............................. S-12
DESCRIPTION OF THE MORTGAGE POOL ....... S-30
Calculations of Interest................ S-30
Balloon Loans........................... S-30
ARD Loans............................... S-30
Amortization of Principal............... S-31
Due Dates............................... S-31
Defeasance.............................. S-31
Prepayment Provisions................... S-32
Related Borrowers, Cross-Collateralized
Mortgage Loans and Mortgage Loans
Collateralized by Multiple Properties . S-32
Due-on-Sale and Due-on-Encumbrance
Provisions............................. S-33
Secured Subordinate Financing........... S-33
Ground Leases........................... S-34
Loan Documentation...................... S-34
Credit Lease Loans...................... S-35
Significant Mortgage Loans.............. S-36
The Seller.............................. S-47
Underwriting Matters.................... S-47
Hazard, Liability and Other Insurance .. S-48
Assignment of the Mortgage Loan;
Repurchases and Substitutions.......... S-49
Representations and Warranties;
Repurchases............................ S-50
Pool Characteristics; Changes in
Mortgage Pool.......................... S-53
SERVICING OF THE MORTGAGE LOANS ........ S-53
The Servicer............................ S-53
Servicing Standard...................... S-53
Specially Serviced Mortgage Loans ...... S-53
S-2
<PAGE>
PAGE
---------
Termination of the Servicer with
Respect to Specially Serviced Mortgage
Loans and REO Properties............... S-54
Servicing and Other Compensation and
Payment of Expenses.................... S-56
Modifications, Waivers, Amendments and
Consents............................... S-58
Enforcement of ARD Loans................ S-60
Sale of Defaulted Mortgage Loans ....... S-60
REO Properties.......................... S-60
Inspections; Collection of Operating
Information............................ S-61
DESCRIPTION OF THE CERTIFICATES ........ S-62
Denominations........................... S-62
Book-Entry Registration of the Offered
Certificates........................... S-62
Certificate Balances and Notional
Amounts................................ S-65
Pass-Through Rates...................... S-65
Distributions........................... S-66
Distributions of Prepayment Premiums ... S-70
Distributions of Excess Interest ....... S-71
Distributions of Excess Liquidation
Proceeds............................... S-71
Treatment of REO Properties............. S-71
Interest Reserve Account................ S-71
Subordination; Allocation of Losses and
Expenses............................... S-72
P&I Advances............................ S-73
Appraisal Reductions.................... S-74
Reports to Certificateholders;
Available Information.................. S-75
Information Available Electronically ... S-77
Other Information....................... S-78
Voting Rights........................... S-78
Termination; Retirement of
Certificates........................... S-79
The Trustee and Fiscal Agent............ S-79
YIELD AND MATURITY CONSIDERATIONS ...... S-80
Yield Considerations.................... S-80
Factors that Affect the Rate and Timing
of Payments and Defaults .............. S-82
Delay in Payment of Distributions ...... S-82
Unpaid Distributable Certificate
Interest............................... S-82
Weighted Average Life................... S-82
Price/Yield Tables...................... S-89
Yield Sensitivity of the Class X
Certificates........................... S-94
FEDERAL INCOME TAX CONSEQUENCES ........ S-96
Original Issue Discount and Premium .... S-96
New Withholding Regulations............. S-98
Characterization of Investments in
Offered Certificates................... S-98
METHOD OF DISTRIBUTION................... S-99
LEGAL MATTERS............................ S-100
RATINGS.................................. S-100
LEGAL INVESTMENT......................... S-101
ERISA CONSIDERATIONS..................... S-101
INDEX OF SIGNIFICANT DEFINITIONS ...... S-103
ANNEX A--CHARACTERISTICS OF THE
MORTGAGE LOANS ........................ A-1
ANNEX B--FORM OF STATEMENT TO
CERTIFICATEHOLDERS AND SERVICER
REPORTS ............................... B-1
ANNEX C--STRUCTURAL AND COLLATERAL TERM
SHEET ................................. C-1
ANNEX D--GLOBAL CLEARANCE, SETTLEMENT
AND TAX DOCUMENTATION PROCEDURES ..... D-1
</TABLE>
S-3
<PAGE>
TRANSACTION OVERVIEW
THIS TRANSACTION OVERVIEW PROVIDES AN OVERVIEW OF CERTAIN CALCULATIONS,
CASH FLOWS AND OTHER INFORMATION TO AID YOUR UNDERSTANDING OF THIS OFFERING.
MORE DETAIL REGARDING THESE CALCULATIONS, CASH FLOWS AND OTHER INFORMATION IS
PROVIDED IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS.
THE SERIES 1999-C2 MORTGAGE PASS-THROUGH CERTIFICATES
<TABLE>
<CAPTION>
APPROXIMATE INITIAL APPROXIMATE
ORIGINAL PRINCIPAL PERCENT OF PASS- WEIGHTED AVG. PRINCIPAL
RATINGS OR NOTIONAL CREDIT THROUGH LIFE (6) WINDOW (7)
CLASS MOODY'S/S&P/FITCH AMOUNT (1) SUPPORT (5) RATE (IN YEARS) (MONTH/YEAR)
- ------- ----------------- ------------------ ------------- ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
X Aaa/AAAr/AAA $974,502,236(2) N/A 0.4144%(3) 10.0 7/99-1/24
A-1 Aaa/AAA/AAA $150,250,000 28.25% 6.5700%(4) 5.7 7/99-12/08
A-2 Aaa/AAA/AAA $548,955,000 28.25% 6.9450%(8) 9.7 12/08-5/09
B Aa2/AA/AA $ 51,161,000 23.00% 7.1400%(8) 9.9 5/09-5/09
C A2/A/A $ 48,725,000 18.00% 7.2400%(8) 9.9 5/09-5/09
D A3/A-/A- $ 14,618,000 16.50% 7.3116%(8) 10.0 5/09-6/09
E Baa2/BBB/BBB $ 41,416,000 12.25% 7.3116%(9) 10.9 6/09-8/11
F Baa3/BBB-/BBB- $ 12,181,000 11.00% 7.3116%(9) 12.8 8/11-11/12
G Baa3/NR/NR $ 12,182,000 9.75% 7.3116%(9) 14.0 11/12-1/14
H (10) $ 46,289,000 5.00% 6.4810%(8) 15.7 1/14-7/15
J (10) $ 7,308,000 4.25% 6.4810%(8) 16.2 7/15-12/15
K (10) $ 19,490,000 2.25% 6.4810%(8) 18.1 12/15-1/19
L (10) $ 7,309,000 1.50% 6.4810%(8) 19.7 1/19-8/19
M (10) $ 4,873,000 1.00% 6.4810%(8) 21.3 8/19-5/21
N (10) $ 9,745,236 N/A 6.4810%(8) 22.9 5/21-1/24
</TABLE>
- ------------
(1) These amounts are approximate. They may vary upward or downward by no
more than 5%, depending upon the final composition of the pool of
mortgage loans sold to the trust.
(2) The Class X certificates will accrue interest on the Class X notional
amount. The initial Class X notional amount is approximate and will
decline as the aggregate principal balance of the underlying mortgage
loans declines. The Class X certificates will only be entitled to
receive distributions of interest.
(3) The Class X certificates will accrue interest at a variable rate
based upon the weighted average net mortgage rate. See "Description
of the Certificates--Pass-Through Rates."
(4) The pass-through rate for the Class A-1 certificates is a fixed rate.
(5) The percent of credit support reflects the aggregate certificate
balances of all classes of certificates that will be subordinate to
each class on the date the certificates are issued, expressed as a
percentage of the initial pool balance.
(6) The weighted average life of a security is the average amount of time
that will elapse from the time the security is issued until the
investor receives all principal payments on the security, weighted on
the basis of principal paid (or, in the case of Class X certificates,
the reduction in notional amount). The weighted average life of each
class is calculated assuming that there are no prepayments on the
mortgage loans and according to the maturity assumptions described
under "Yield and Maturity Considerations" in this prospectus
supplement.
(7) The principal window is the period during which each class would
receive distributions of principal assuming that there are no
prepayments on the mortgage loans and according to the maturity
assumptions described under "Yield and Maturity Considerations" in
this prospectus supplement. The principal window for the Class X
certificates is the period during which that class would have an
outstanding notional balance, based on the same assumptions.
(8) Lesser of fixed rate or weighted average net mortgage rate. The fixed
rate for each of these classes of certificates other than the Class D
certificates is the rate indicated in the table. The fixed rate for
the Class D certificates is 7.375%.
(9) Weighted average net mortgage rate.
(10) This class is not offered by this prospectus supplement.
S-4
<PAGE>
The following table shows certain information regarding the mortgage
loans and the mortgaged properties as of the cut-off date, which is the due
date of any mortgage loan in June, 1999.
All weighted averages set forth below are based on the balances of the
mortgage loans as of that date. The balance of each mortgage loan as of the
due date for any mortgage loan in June, 1999 is its unpaid principal balance
as of that date, after applying all payments of principal due on or before
that date, whether or not those payments are received.
MORTGAGE POOL CHARACTERISTICS
<TABLE>
<CAPTION>
CHARACTERISTICS ENTIRE MORTGAGE POOL
- ---------------------------------------------- --------------------
<S> <C>
Initial pool balance .......................... $974,502,237
Number of mortgage loans ...................... 121
Number of mortgaged properties ................ 162
Average balance as of the cut-off date ....... $8,053,737
Range of mortgage rates
as of the cut-off date ....................... 6.25% to 9.03%
Weighted average mortgage rate................. 7.406%
Weighted average remaining term to maturity or
anticipated repayment date.................... 136.6 months
Weighted average debt service coverage ratio .. 1.40
Weighted average loan-to-value ratio........... 68.28%
</TABLE>
The calculation of "loan-to-value ratio" and "debt service coverage ratio"
is described in Annex A to this prospectus supplement and the calculations of
the weighted average debt service coverage ratio and weighted average
loan-to-value ratio do not include 8 credit lease loans which constitute
14.15% of the initial pool balance.
S-5
<PAGE>
SUMMARY
This summary highlights selected information from this document and does not
contain all of the information that you need to consider in making your
investment decision. To understand all of the terms of the offered
certificates, you should read carefully this entire document and the
accompanying prospectus.
<TABLE>
<CAPTION>
<S> <C> <C>
RELEVANT PARTIES AND IMPORTANT DATES
TITLE OF SERIES: Series 1999-C2 Mortgage CUT-OFF DATES: June 1 and June 10, 1999
Pass-Through Certificates
THE ISSUER: GMAC Commercial Mortgage Securities Inc. DISTRIBUTION DATE: The 15th day of each month
Series 1999-C2 Trust formed to issue the or, if the 15th day is not a business day, the
mortgage pass-through certificates and to immediately succeeding business day, beginning
acquire the mortgage pool. in July, 1999.
DEPOSITOR: GMAC Commercial Mortgage Securities, Inc. CLOSING DATE: On or about June 9, 1999.
650 Dresher Road
Horsham, Pennsylvania 19044-8015 DETERMINATION DATE: The 5th day of each month
(215) 328-4622 or, if the 5th day is not a business day, the
immediately succeeding business day.
SELLER: GMAC Commercial Mortgage Corporation
COLLECTION PERIOD: For any distribution date,
SERVICER: GMAC Commercial Mortgage Corporation the period that begins immediately following
the determination date in the prior calendar
TRUSTEE: LaSalle Bank National Association month and continues through and includes the
determination date in the calendar month in
FISCAL AGENT: ABN AMRO Bank N.V. which that distribution date occurs, except
that the first collection period for each
mortgage loan begins immediately following its
cut-off date.
- -------------------- --------------------------------------------
</TABLE>
THE MORTGAGE POOL
The mortgage pool will consist of a pool of mortgage loans secured by first
mortgage liens on fee simple and/or leasehold interests in one or more
mortgaged properties used for commercial or multifamily residential purposes.
GMAC Commercial Mortgage Corporation originated all of the mortgage loans.
The mortgage loans were originated between December 8, 1998 and May 6, 1999.
The seller will make representations and warranties with respect to the
mortgage loans. The depositor will assign these representations and
warranties to the trustee.
The following tables summarize selected mortgage loan information. In these
tables and this prospectus supplement, the percentage of the initial pool
balance refers to the principal balance of the mortgage loans or the
allocated loan amount secured by a mortgaged property. The initial pool
balance of the mortgage loans is equal to their unpaid aggregate principal
balances as of their cut-off dates, after application of all payments of
principal due on or before that date, whether or not received. All mortgage
pool information is approximate and depends upon the final composition of the
mortgage loans sold to the trust.
Annex A to this prospectus supplement provides certain characteristics of the
mortgage loans on a loan-by-loan basis. Also see "Description of the Mortgage
Pool" in this prospectus supplement.
S-6
<PAGE>
GEOGRAPHIC CONCENTRATIONS
The mortgaged properties are located in 28 states. The following table lists
the number and percentage of mortgaged properties that are located in the
five states with the highest concentrations.
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE
MORTGAGED OF INITIAL
STATE PROPERTIES POOL BALANCE
- --------------- ------------ --------------
<S> <C> <C>
New York ....... 17 20.26%
California ..... 26 20.00
Pennsylvania .. 30 7.42
Florida ........ 9 7.24
Colorado ....... 2 5.76
</TABLE>
The following table lists the number and percentage of mortgaged properties
that are operated for each indicated or other purpose.
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE
MORTGAGED OF INITIAL
PROPERTY TYPE PROPERTIES POOL BALANCE
- --------------- ------------ --------------
<S> <C> <C>
Office ......... 23 27.89%
Multifamily ... 75 26.85
Retail ......... 36 26.78
Other .......... 7 7.10
Hospitality ... 5 5.89
Industrial ..... 13 4.54
Mixed Use ...... 3 0.94
</TABLE>
CALL PROTECTION
The terms of each of the mortgage loans restrict the ability of the borrower
to prepay the loan. All the mortgage loans permit defeasance after a lockout
period. For a description of defeasance provisions in the mortgage loans, See
"Description of the Mortgage Pool--Defeasance."
PAYMENT TERMS
All the mortgage loans accrue interest at a fixed rate, although the rate on
a loan with an anticipated repayment date may increase if that loan is not
repaid on its anticipated repayment date. See "Description of the Mortgage
Pool--Calculations of Interest," and "--ARD Loans" in this prospectus
supplement.
THE CERTIFICATES
Your certificates represent the right to a portion of the collections on the
trust's assets. The certificates represent all of the beneficial ownership
interest in the trust.
The approximate initial class principal balance and initial pass-through rate
of each class of the certificates is shown on page S-4.
CERTIFICATE DESIGNATIONS
We refer to the certificates by the following designations:
<TABLE>
<CAPTION>
<S> <C>
Designation Related Class(es)
- ------------------------ -----------------------------------------
Offered certificates Classes X, A-1, A-2, B, C, D, E, F and G
- ------------------------ -----------------------------------------
Senior certificates Classes X, A-1 and A-2
- ------------------------ -----------------------------------------
Interest only Class X
certificates
- ------------------------ -----------------------------------------
Subordinate certificates Classes B, C, D, E, F, G, H, J, K, L, M
and N
- ------------------------ -----------------------------------------
REMIC Residual Classes R-I, R-II and R-III
certificates
- ------------------------ -----------------------------------------
REMIC regular Classes X, A-1, A-2, B, C, D, E, F, G, H,
certificates J, K, L, M and N
- ------------------------ -----------------------------------------
</TABLE>
The Class H, J, K, L, M and N certificates are not being offered by this
prospectus supplement.
INITIAL CERTIFICATE BALANCES OF THE CERTIFICATES
The aggregate principal balance of the certificates issued by the trust will
be approximately $974,502,236, but may vary upward or downward by no more
than 5%.
The senior certificates will comprise approximately 71.75% and the
subordinate certificates will comprise approximately 28.25% of the initial
aggregate certificate balance of the certificates.
The Class X certificates will not have a certificate balance, but will accrue
interest on the Class X notional amount.
DISTRIBUTIONS ON THE OFFERED CERTIFICATES
The trustee will make distributions to certificateholders on each
distribution date. The first distribution date will be July 15, 1999.
Until paid in full, each class of offered certificates will be entitled to
receive monthly distributions of interest.
The Class X certificates will not receive any distributions of principal.
The borrowers make payments of interest and principal to the servicer. The
servicer will deduct its servicing fee and send the remainder to the trustee.
After deducting its trustee fee, the trustee will distribute the remaining
amount, up to the available distribution amount to the certificateholders as
follows:
S-7
<PAGE>
Available distribution amount
Step 1
Distribution of interest to the senior certificates
Step 2
Distribution of principal to the
Class A-1 and A-2 certificates
Step 3
Distribution of the
amount of interest due and
principal due each class of the subordinate
certificates. These distributions are made in the
priority of the alphabetic order of the subordinate
certificates and as described below.
Step 4
Any remaining funds to the residual certificates
Distributions of interest and principal generally are not made to a class of
certificates if its certificate balance has been reduced to zero. Realized
losses or additional trust fund expenses allocated to reduce the certificate
balance of a class of certificates may be reimbursed if the available
distribution amount is sufficient. See "Description of the
Certificates--Distributions" for a discussion of the available distribution
amount and the priorities and amounts of distributions on the certificates.
Because payments are made in the order described above, there may not be
sufficient funds to make the payments described above after distributions to
classes of certificates with a higher priority. Funds may be insufficient if
the trust experiences realized losses, incurs unanticipated expenses or an
appraisal reduction event occurs.
On any given distribution date, there may be insufficient payments received
from the mortgage loans for all classes of certificates to receive the full
amount of interest due on that date. Those certificates that do not receive
their full interest distributions on any distribution date will be entitled
to receive the shortfall in each month thereafter up to the aggregate amount
of the shortfall, in the same priority as their distribution of interest.
However, there will be no extra interest paid to make up for such delay in
distribution of interest.
The amount of interest distributed on each class on each distribution date
generally will equal:
o 1/12th of the pass-through rate for that class
multiplied by
o the related class certificate balance or class notional amount.
See "Description of the Certificates--Distributions" in this prospectus
supplement.
SUBORDINATION
The senior certificates will receive all distributions of interest and
principal before the subordinate certificates are entitled to receive
distributions of interest or principal. This subordination of the subordinate
certificates to the senior certificates provides credit support to the senior
certificates. Similarly, each class of subordinate certificates will provide
credit support to the subordinate certificates with earlier alphabetical
class designations.
ALLOCATION OF LOSSES AND EXPENSES
A loss is realized on a mortgage loan when the servicer determines that it
has received all amounts it expects to receive from the mortgage loan and
that amount is less than the outstanding principal balance on the loan plus
accrued and unpaid interest.
An additional trust fund expense is an expense incurred by the trust that is
not covered by a corresponding payment from a borrower.
S-8
<PAGE>
Additional trust fund expenses include, among other things:
o special servicing compensation,
o interest on advances made by the servicer,
o extraordinary expenses, such as indemnification and reimbursements paid to
the trustee, and
o loan-specific expenses incurred because of defaults on mortgage loans or
to remediate environmental conditions on mortgaged properties.
Losses and additional trust fund expenses will be allocated to the
certificates by deducting those losses from the certificate balances of the
certificates without making any payments to the certificateholders. In
general, losses and additional trust fund expenses are allocated if the
aggregate outstanding principal balance of the mortgage loans immediately
following the distributions to be made on the certificates on any
distribution date is less than the aggregate outstanding certificate balance
of the certificates. If this happens, the certificate balances of the
certificates will be reduced as shown in the following chart:
Step 1
Reduce the certificate balances of the Class N, Class M, Class L, Class K,
Class J, Class H, Class G, Class F, Class E, Class D, Class C and Class B
certificates to zero, in that order
Step 2
Reduce the certificate balances of the
Class A-1 and Class A-2 certificates to zero
A deficit may result from losses incurred on the mortgage loans and
additional trust fund expenses of the trust. Reductions in the certificate
balances of the certificates as the result of the allocation of losses and
trust fund expenses will also have the effect of reducing the notional amount
of the Class X certificates.
For a detailed description of the allocation of losses and trust fund
expenses among the certificates, see "Description of the
Certificates--Subordination; Allocation of Losses and Expenses" in this
prospectus supplement.
ADVANCES
For any month, if the servicer receives a payment on a mortgage loan that is
less than the full scheduled payment, or if no payment is received at all,
the servicer will advance its own funds to cover that shortfall. However, the
servicer will make an advance only if it determines that the advance will be
recoverable from future payments or collections on that mortgage loan.
The servicer will not be required to advance the amount of any delinquent
balloon payment or any default interest or excess interest that may be due on
any ARD loan. If the servicer fails to make a required advance, the trustee
or the fiscal agent will be required to make that advance only if it
determines that the advance will be recoverable from future payments or
collections on that mortgage loan.
The servicer, the trustee and the fiscal agent each will be entitled to
interest on any advances of monthly payments made by it and certain advances
of servicing expenses incurred by it or on its behalf. See "Description of
the Certificates--P&I Advances" in this prospectus supplement and
"Description of the Certificates--Advances in Respect of Delinquencies" and
"The Pooling and Servicing Agreements--Certificate Account" in the
prospectus.
OPTIONAL TERMINATION
If the remaining aggregate principal balance of the mortgage pool is less
than 1% of the initial pool balance on any distribution date, the servicer or
the depositor may, but are not required to, purchase the mortgage loans. If
the servicer or depositor does purchase the loans, the outstanding principal
balance of the certificates will be paid in full, together with accrued
interest. See "Description of the Certificates--Certificate Balances and
Notional Amounts" and "--Termination; Retirement of Certificates."
BOOK-ENTRY REGISTRATION
Generally, the offered certificates will be available only in book-entry form
through the facilities of The Depository Trust Company in the United States
or through Cedelbank or the Euroclear System in Europe. See "Description
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of the Certificates--Book-Entry Registration of the Offered Certificates"
and Annex D in this prospectus supplement and "Description of the
Certificates--Book-Entry Registration and Definitive Certificates" in the
prospectus.
DENOMINATIONS
The offered certificates other than the Class X certificates are offered in
minimum denominations of $25,000 each and multiples of $1 in excess thereof.
The Class X certificates are offered in minimum denominations of $1,000,000
initial notional amount each and multiples of $1 in excess thereof.
YIELD AND PREPAYMENT CONSIDERATIONS
The yield to maturity of each class of certificates will depend upon:
o the purchase price of the certificates;
o the applicable pass-through rate;
o the characteristics of the mortgage loans; and
o the rate and timing of payments on the mortgage loans.
The interest only certificates and the subordinate certificates will be
especially sensitive to the rate of prepayments. For a discussion of special
yield and prepayment considerations applicable to these classes of
certificates, see "Risk Factors" and "Yield and Maturity Considerations" in
this prospectus supplement.
LEGAL INVESTMENT
At the time of their issuance, any of the offered certificates rated in the
category of "AAA" or "AA" or the equivalent by at least one rating agency
will be "mortgage related securities" and all other offered certificates will
not be "mortgage related securities" for purposes of the Secondary Mortgage
Market Enhancement Act of 1984. See "Legal Investment" in this prospectus
supplement for important information concerning possible restrictions on
ownership of the offered certificates by regulated institutions. You should
consult your own legal advisors in determining the extent to which the
offered certificates constitute legal investments for you.
ERISA CONSIDERATIONS
Subject to important considerations described under "ERISA Considerations" in
this prospectus supplement and in the accompanying prospectus, the senior
certificates may be eligible for purchase by persons investing assets of
employee benefit plans or individual retirement accounts. The other offered
certificates may not be sold to such plans and accounts except as may be
permitted under a prohibited transaction class exemption available to certain
insurance companies using general account assets.
TAX STATUS
The certificates (other than the residual certificates) will generally be
treated as debt for federal income tax purposes. Certificateholders (other
than holders of residual certificates) will be required to include in their
income all interest and original issue discount with respect to such debt in
accordance with the accrual method of accounting regardless of the
certificateholders' usual methods of accounting.
For federal income tax purposes, elections will be made to treat the asset
pools that make up the trust as three separate real estate mortgage
investment conduits. Except to the extent they represent the right to excess
interest, the certificates (other than the residual certificates) will
represent ownership of regular interests in one of these real estate mortgage
investment conduits. For federal income tax purposes, the residual
certificates will be the residual interests in the pool.
For further information regarding the federal income tax consequences of
investing in the offered certificates, see "Federal Income Tax Consequences"
in this prospectus supplement and in the accompanying prospectus.
RATINGS
The offered certificates are required to receive ratings from Standard &
Poor's Ratings Services, a division of The McGraw-Hill Companies ("S&P"),
Fitch IBCA, Inc. ("Fitch") and Moody's Investors Service, Inc. ("Moody's")
that are not lower than those indicated under "Transaction Overview." The
ratings on the offered certificates address the likelihood that the holders
of offered certificates will receive
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timely distributions of interest and the ultimate repayment of principal
before the rated final distribution date that occurs in September, 2033. A
security rating is not a recommendation to buy, sell or hold a security and
is subject to change or withdrawal at any time by the assigning rating
agency. The ratings do not address the likelihood that holders will receive
any prepayment premiums, default interest or excess interest. The ratings
also do not address the tax treatment of payments on the certificates or the
likely actual rate of prepayments. The rate of prepayments, if different than
originally anticipated, could adversely affect the yield realized by holders
of the offered certificates or cause the Class X certificateholders to fail
to recover their initial investment.
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RISK FACTORS
The offered certificates are not suitable investments for all investors.
In particular, you should not purchase any class of offered certificates
unless you understand and are able to bear the risks associated with that
class.
The offered certificates are complex securities and it is important that
you possess, either alone or together with an investment advisor, the
expertise necessary to evaluate the information contained in this prospectus
supplement and the accompanying prospectus in the context of your financial
situation.
<TABLE>
<CAPTION>
<S> <C>
ALLOCATIONS OF LOSSES ON THE MORTGAGE If losses on the mortgage loans are allocated to your
LOANS WOULD REDUCE YOUR PAYMENTS AND class of certificates, the amount payable to you will
YIELD ON YOUR CERTIFICATES be reduced by the amount of these losses and the
yield to maturity on your certificates will be
reduced. Losses allocated to a class reduce the
principal balance of the class without making a
payment to the class.
Because losses on the mortgage loans, together with
expenses relating to defaulted mortgage loans, will
be allocated first to the most subordinated class of
subordinated certificates with a positive balance,
the yields on the subordinate certificates will be
extremely sensitive to losses on the mortgage loans.
If the principal balance of all of the subordinate
certificates has been reduced to zero due to losses
on and expenses of defaulted mortgage loans, these
losses and expenses will be allocated pro rata to the
Class A-1 and A-2 certificates.
Reductions in the principal balance of any class
reduce the notional amount of the Class X
certificates by a corresponding amount, resulting in
smaller interest distributions to the Class X
certificateholders.
See "Description of the Certificates--Subordination;
Allocation of Losses and Expenses" in this prospectus
supplement.
DELINQUENCIES, LOSSES AND PREPAYMENTS The yield to maturity on the certificates will depend
ON THE MORTGAGE LOANS WILL AFFECT THE significantly on the rate and timing of payments of
YIELD ON THE CERTIFICATES principal and interest on the certificates. The rate
and timing of principal and interest payments on the
mortgage loans, including the rates of delinquency,
loss and prepayment, will affect the rate and timing
of payments of principal and interest on the
certificates. For a discussion of the impact on the
yields of the certificates of the rate of
delinquency, loss and prepayment on the mortgage
rates and factors that affect those rates, see "Yield
and Maturity Considerations" and "Description of the
Certificates--Subordination; Allocation of Losses and
Expenses" in this prospectus supplement and "Risk
Factors--Yield and Prepayment Considerations" in the
prospectus.
THE MORTGAGE LOANS ARE NOT INSURED None of the mortgages are insured or guaranteed by
the United States, any governmental entity or
instrumentality, by any private mortgage insurer or
by the depositor, the underwriters, the servicer, the
seller, the trustee or the fiscal agent. Therefore,
you should consider payment on each mortgage loan to
depend exclusively on the borrower and any guarantor
under the particular mortgage loan documents.
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CONFLICTS OF INTEREST MAY OCCUR WHEN An affiliate of the servicer expects to acquire some
CERTIFICATEHOLDERS OF VARIOUS CLASSES of the subordinate certificates including a portion
HAVE DIFFERING INTERESTS of the Class N certificates. The affiliate's
ownership of certificates could cause a conflict
between the servicer's duties as servicer and its
affiliate's interest as a holder of a certificate,
especially if actions would have a disproportionate
effect on one or more classes of certificates. One
action over which the servicer has considerable
latitude is determining whether to liquidate or
modify defaulted mortgage loans. The servicer may
also waive provisions in ARD loans that would require
the payment of excess interest or the replacement of
the property manager if the loan is not paid on the
anticipated repayment date.
In addition, under certain circumstances, the
certificateholders representing more than 50% of the
voting rights allocated to a specified class may
terminate the rights and obligations of the servicer
to service specially serviced mortgage loans and
properties acquired through foreclosure and appoint a
replacement to perform these duties. The servicer's
affiliate may hold more than 50% of the voting rights
allocated to that specified class. As a result, the
interests of the servicer's affiliate may conflict
with those of other certificateholders that desire to
replace the servicer of specially serviced mortgage
loans and foreclosure properties.
The servicer is, however, required to administer the
mortgage loans in accordance with the servicing
standards without regard to its ownership of any
certificate.
See "Servicing of the Mortgage Loans--Termination of
the Servicer with Respect to Specially Serviced
Mortgage Loans and REO Properties" and "Servicing of
the Mortgage Loans--Modifications, Waivers,
Amendments and Consents" in this prospectus
supplement.
ADVERSE ENVIRONMENTAL CONDITIONS MAY The trust could become liable for a material adverse
REDUCE OR DELAY YOUR PAYMENTS environmental condition at a mortgaged property. Any
such potential liability could reduce or delay
payments to certificateholders.
Environmental assessments have been performed on all
of the mortgaged properties. None of the
environmental assessments revealed material adverse
environmental conditions or circumstances affecting
any mortgaged property, except those cases:
o in which the adverse conditions were remediated
or abated before the date of issuance of the
certificates;
o in which an operations and maintenance plan or
periodic monitoring of the mortgaged property
or nearby properties was recommended;
o involving a leaking underground storage tank or
groundwater contamination at a nearby property
that had not yet materially affected the
mortgaged property and for which a responsible
party either has been identified under
applicable
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law or was then conducting remediation of the
related condition;
o in which groundwater, soil or other
contamination was identified or suspected, and
an escrow reserve, indemnity or other
collateral was provided to cover the estimated
costs of continued monitoring, investigation,
testing or remediation;
o involving radon; or
o in which the related borrower has agreed to
seek a "case closed" status for the issue from
the applicable governmental agency.
To decrease the likelihood of any environmental
liability against the trust, the servicer is required
to obtain a satisfactory environmental site
assessment of a mortgaged property and see that any
required remedial action is taken before acquiring
title or assuming its operation.
See "Description of the Mortgage Pool--Underwriting
Matters--Environmental Assessments" in this
prospectus supplement and "The Pooling and Servicing
Agreements--Realization upon Defaulted Mortgage
Loans" and "Legal Aspects of Mortgage
Loans--Environmental Considerations" in the
prospectus.
GEOGRAPHIC CONCENTRATION MAY INCREASE The 5 states with the highest concentration of
REALIZED LOSSES ON THE MORTGAGE LOANS mortgage loans secured by mortgaged properties are
listed in the table titled "Geographic
Concentrations" on page S-7. Any deterioration in the
real estate market or economy or events in that state
or region, including earthquakes, hurricanes and
other natural disasters, may increase realized losses
on the mortgage loans in the trust.
In addition, improvements on mortgaged properties
located in California may be more susceptible to
earthquakes than properties located in other parts of
the country. Generally, the mortgaged properties are
not insured for earthquake or hurricane risk. If
mortgaged properties are insured, they may be insured
for amounts less than the outstanding principal
balances of the related mortgage loans.
THE MORTGAGE LOANS ARE NON-RECOURSE All of the mortgage loans are non-recourse loans. If
LOANS a borrower defaults on such a loan, only the
mortgaged property, and not the other assets of the
borrower, is available to satisfy the debt. Even if
the mortgage loan documents permit recourse to the
borrower or a guarantor, the trust may not be able to
ultimately collect the amount due under that mortgage
loan.
Consequently, before maturity, you should consider
payment on each mortgage loan to depend primarily on
the sufficiency of the cash flow of the mortgaged
property. At scheduled maturity or upon acceleration
of maturity after a default, payment depends
primarily on the market value of the mortgaged
property or the ability of the borrower to refinance
the mortgaged property.
SELLER IS THE ONLY PERSON MAKING The seller will be the only person making
REPRESENTATIONS AND WARRANTIES ON representations and warranties on the mortgage loans
MORTGAGE LOANS sold to the depositor. Neither the depositor nor any
of its affiliates will be obligated to
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repurchase any mortgage loan upon a breach of the
seller's representations and warranties or any
document defects if the seller defaults on its
repurchase obligation. The seller may not have the
financial ability to effect these repurchases. See
"Description of the Mortgage Pool--Assignment of the
Mortgage Loans; Repurchases and Substitutions" and
"--Representations and Warranties; Repurchases and
Substitutions" in this prospectus supplement.
BALLOON PAYMENTS MAY INCREASE LOSSES ON 109 mortgage loans, which represent 79.73% of the
THE MORTGAGE LOANS AND EXTEND THE initial pool balance, require balloon payments at
WEIGHTED AVERAGE LIFE OF YOUR their stated maturity. These mortgage loans involve a
CERTIFICATE greater degree of risk than fully amortizing loans,
because the ability of a borrower to make a balloon
payment typically depends on its ability to refinance
the mortgage loan or sell the mortgaged property.
A borrower's ability to repay a loan on its stated
maturity date will depend upon its ability either to
refinance the loan or to sell the mortgaged property
at a price sufficient to permit repayment. A
borrower's ability to achieve either of these goals
will be affected by a number of factors, including:
o the availability of, and competition for,
credit for commercial or multifamily real
estate projects, which fluctuate over time;
o the prevailing interest rates;
o the fair market value of the related
properties;
o the borrower's equity in the related
properties;
o the borrower's financial condition;
o the operating history and occupancy level of
the property;
o the tax laws; and
o prevailing general and regional economic
conditions.
Any delay in collection of a balloon payment that
otherwise would be distributable to a class, whether
the delay is due to borrower default or to
modification of the mortgage loan by the servicer, is
likely to extend the weighted average life of that
class.
See "Servicing of the Mortgage Loans--Modifications,
Waivers, Amendments and Consents," "Description of
the Mortgage Pool--Balloon Loans," and "Yield and
Maturity Considerations" in this prospectus
supplement and "Risk Factors--Investment in
Commercial and Multifamily Mortgage Loans" and "Yield
and Maturity Considerations" in the prospectus.
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<PAGE>
IF BORROWERS DO NOT MAKE ARD PAYMENTS, 4 of the mortgage loans, which represent 15.27% of
THE WEIGHTED AVERAGE LIFE OF YOUR CLASS the initial pool balance, are ARD loans. "ARD loans"
OF CERTIFICATES MAY BE EXTENDED have anticipated repayment dates prior to their
maturity dates. The failure of a borrower to prepay
an ARD loan before its anticipated repayment date
will likely extend the weighted average life of any
class of offered certificates that would receive a
distribution of the prepayment. The ability of a
borrower to prepay an ARD loan before or at its
anticipated repayment date typically depends on its
ability to either refinance the loan or to sell the
mortgaged property. The provisions for accelerated
amortization and a higher interest rate after the
anticipated repayment date of an ARD loan are
intended to provide a borrower with an incentive to
pay the mortgage loan in full on or before its
anticipated repayment date, but this incentive may
not be sufficient. To the extent the borrower on an
ARD loan makes payments of interest accrued at a rate
of interest higher than the normal mortgage interest
rate, the excess interest will be distributed to the
holders of the Class N certificates. See "Description
of the Mortgage Pool--Terms and Conditions of the
Mortgage Loans--ARD Loans" and "Risk Factors --
Conflicts of interest may occur when
certificateholders of various classes have differing
interests" in this prospectus supplement.
RISKS PARTICULAR TO OFFICE PROPERTIES:
ECONOMIC DECLINE IN TENANT BUSINESSES 23 mortgaged properties, securing mortgage loans that
OR CHANGES IN DEMOGRAPHIC CONDITIONS represent 27.89% of the initial pool balance, are
COULD ADVERSELY AFFECT THE VALUE AND office properties.
CASH FLOW FROM OFFICE PROPERTIES
Economic decline in the businesses operated by the
tenants of office properties may increase the
likelihood that a tenant may be unable to pay its
rent, which could result in realized losses on the
mortgage loans. For a description of risk factors
relating to single tenant properties, see "--Losses
may be caused by tenant credit risk on the mortgage
loans" below. A number of other economic and
demographic factors may adversely affect the value of
office properties, including:
o the quality of the tenants in the building;
o the physical attributes of the building in
relation to competing buildings;
o access to transportation;
o whether tax benefits are available;
o the strength and stability of businesses
operated by the tenant or tenants;
o the desirability of the location for business;
and
o the cost of refitting office space for a new
tenant (which is often significantly higher
than the cost of refitting other types of
properties for new tenants).
These risks may be increased if revenue depends on a
single tenant or if there is a significant
concentration of tenants in a
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particular business or industry. 5 of the mortgage
loans representing 8.77% of the initial pool balance
are secured by single tenant office properties. See
"--A significant tenant ceasing to operate at a
retail property could adversely affect its value and
cash flow" below.
COMPETITION WITH OTHER OFFICE Office properties are subject to competition with
PROPERTIES COULD ALSO ADVERSELY AFFECT other office properties in the same market. A
THE VALUE AND CASH FLOW FROM OFFICE decrease in occupancy resulting from competition
PROPERTIES could result in realized losses on the mortgage
loans. Competition is affected by a property's age,
condition, design, such as floor sizes and layout,
location, access to transportation and ability to
offer generally amenities to its tenants including
sophisticated building systems, such as fiber optic
cables, satellite communications or other base
building technological features.
RISKS PARTICULAR TO RETAIL PROPERTIES:
A SIGNIFICANT TENANT CEASING TO OPERATE 36 mortgaged properties, securing mortgage loans that
AT A RETAIL PROPERTY COULD ADVERSELY represent 26.78% of the initial pool balance, are
AFFECT ITS VALUE AND CASH FLOW retail properties.
The correlation between the success of tenant
businesses and property value is more direct with
respect to retail properties than other types of
commercial property, because some component of the
total rent paid by retail tenants may be tied to a
percentage of gross sales. Significant tenants or
anchor 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 that property. Some tenants at retail
properties may be entitled to terminate their leases
or pay reduced rent if an anchor tenant ceases
operations at that property. If anchor stores in a
mortgaged property were to close, the borrower may be
unable to replace those anchor tenants in a timely
manner or without suffering adverse economic
consequences. A retail "anchor tenant" is generally
understood to be a tenant that is larger in size and
is important in attracting customers to a retail
property, whether or not it is located on the
mortgaged property.
A significant tenant ceasing to do business at a
retail property could result in realized losses on
the mortgage loans. The loss of a significant tenant
may be the result of the tenant's voluntary decision
not to renew a lease, the bankruptcy or insolvency of
the tenant, the tenant's general cessation of
business activities or for other reasons. There is no
guarantee that any tenants will continue to occupy
space in the related retail property.
These risks may be increased when the property is a
single tenant property. For a description of risk
factors relating to single tenant properties, see
"--Losses may be caused by tenant credit risk on the
mortgage loans" below.
RETAIL PROPERTIES ARE VULNERABLE TO Retail properties are particularly vulnerable to
CHANGES IN CONSUMER PREFERENCES changes in consumer preferences market demographics
that could relate to:
S-17
<PAGE>
o adverse changes in consumer spending patterns;
o local competitive conditions (such as an
increased supply of retail space or the
construction of other shopping centers);
o the attractiveness of the properties and the
surrounding neighborhood to tenants and their
customers;
o the public perception of the safety of the
neighborhood; and
o the need to make major repairs or improvements
to satisfy major tenants.
COMPETITION FROM ALTERNATIVE RETAIL Retail properties face competition from sources
DISTRIBUTION CHANNELS MAY ADVERSELY outside a given real estate market. Catalogue
AFFECT THE VALUE AND CASH FLOW FROM retailers, home shopping networks, the internet,
RETAIL PROPERTIES telemarketing and outlet centers all compete with
more traditional retail properties for consumer
dollars. Continued growth of these alternative retail
outlets that often are characterized by lower
operating costs could adversely affect the rents
collectible at the retail properties which secure
mortgage loans in the trust and result in realized
losses on the mortgage loans.
RISKS PARTICULAR TO MULTIFAMILY
PROPERTIES:
REDUCTIONS IN OCCUPANCY AND RENT LEVELS 75 mortgaged properties, securing mortgage loans that
ON MULTIFAMILY PROPERTIES COULD represent 26.85% of the initial pool balance, are
ADVERSELY AFFECT THEIR VALUE AND CASH multifamily rental properties. A decrease in
FLOW occupancy or rent levels could result in realized
losses on the mortgage loans. Occupancy and rent
levels on multifamily properties may be adversely
affected by:
o local, regional or national economic
conditions, which may limit the amount of rent
that can be charged for rental units or result
in a reduction in timely rent payments or a
reduction in occupancy levels;
o construction of additional housing units in the
same market which may compete for tenants;
o local military base closings;
o developments at local colleges and
universities;
o national, regional and local politics,
including, in the case of multifamily rental
properties, current or future rent
stabilization and rent control laws and
agreements;
o the level of mortgage interest rates, which may
encourage tenants in multifamily rental
properties to purchase housing; and
o lack of amenities, unattractive physical
attributes or bad reputation of the mortgaged
property.
RESTRICTIONS IMPOSED ON MULTIFAMILY Multifamily properties may be subject to tax credit,
PROPERTIES BY GOVERNMENT PROGRAMS COULD and city, state and federal housing subsidies or
ALSO ADVERSELY AFFECT THEIR VALUE AND similar programs. The limitations and restrictions
CASH FLOW imposed by these programs could result in realized
losses on the mortgage loans. The limitations
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<PAGE>
and restrictions include:
o rent limitations that could adversely affect
the ability of borrowers to increase rents to
maintain the condition of their mortgaged
properties; and
o tenant income restrictions that may reduce the
number of eligible tenants in those mortgaged
properties and result in a reduction in
occupancy rates.
The differences in rents between subsidized or
supported properties and other multifamily rental
properties in the same area may not be a sufficient
economic incentive for some eligible tenants to
reside at a subsidized or supported property that may
have fewer amenities or be less attractive as a
residence.
LIMITED ALTERNATIVE USES OF OTHER 10 mortgaged properties, securing mortgage loans that
PROPERTY TYPES COULD ADVERSELY AFFECT represent approximately 8.04% of the initial pool
THEIR VALUE AND CASH FLOW balance, are "special purpose" properties that have
limited alternative uses. The three mortgage loans
secured by "special purpose" properties that have the
largest principal balances are credit lease loans
that represent 6.02% of the initial pool balance.
These credit lease loans are the loans identified on
Annex A as the University of Nevada loan, the
Carmax-The Auto Superstore loan and the Costco
(Newport News) loan. The collateral on the Costco
loan consists of a fee interest in land leased to
Costco on which Costco has constructed a retail
warehouse facility. For a description of the credit
lease loans, see "The Mortgage Pool--Credit Lease
Loans." See Annex A for additional information
concerning "special purpose" properties.
"Special purpose" limitations could result in
realized losses on the mortgage loans. Mortgage loans
secured by other property types including mixed use
properties, may pose risks not associated with
mortgage loans secured by liens on other types of
income-producing real estate.
RISKS PARTICULAR TO HOSPITALITY
PROPERTIES:
REDUCTIONS IN ROOM RATES OR OCCUPANCY 5 mortgaged properties, securing mortgage loans that
AT A HOSPITALITY PROPERTY COULD represent 5.89% of the initial pool balance, are
ADVERSELY AFFECT ITS VALUE AND CASH hospitality properties. A decrease in room rates or
FLOW occupancy at hospitality properties could result in
realized losses on the mortgage loans. Room rates and
occupancy levels may depend upon the following
factors.
o The proximity of a hospitality property to
major population centers or attractions.
o Adverse local, regional or national economic
conditions or the construction of competing
hospitality properties. Because hospitality
property rooms generally are rented for short
periods of time, hospitality properties tend to
respond more quickly to adverse economic
conditions and competition than do other
commercial properties.
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<PAGE>
o A hospitality property's ability to attract
customers and a portion of its revenues may
depend on its having a liquor license. A liquor
license may not be transferable if a
foreclosure on the related mortgaged property
occurs.
o In many parts of the country the hotel and
lodging industry is generally seasonal in
nature. This seasonality will cause periodic
fluctuations in room and other revenues,
occupancy levels, room rates and operating
expenses.
o The viability of hospitality properties that
are franchisees of national or regional hotel
chains depends in large part on the continued
existence and financial strength of the
franchisor. The public perception of the
franchise service mark and the duration of the
franchise license agreement are also important.
If the franchisee defaults on its debt, the
trustee may be unable to use the franchise
license without the consent of the franchisor
due to restrictions on transfers imposed by the
franchise license agreements.
RISKS PARTICULAR TO INDUSTRIAL
PROPERTIES:
CHANGES IN ECONOMIC AND DEMOGRAPHIC 13 mortgaged properties, securing mortgage loans that
CONDITIONS COULD ADVERSELY AFFECT THE represent 4.54% of the initial pool balance, are
VALUE AND CASH FLOW FROM INDUSTRIAL industrial properties.
PROPERTIES
The risks of economic decline in the businesses
operated by the tenants of industrial properties are
similar in both office properties and industrial
properties, although industrial properties may be
more dependent on a single tenant. 6 of the mortgage
loans representing 2.49% of the initial pool balance
are secured by single tenant industrial properties.
For a description of risk factors relating to office
properties, see "--Economic decline in tenant
businesses or changes in demographic conditions could
adversely affect the value and cash flow from office
properties," and for a description of risk factors
relating to single tenant properties, see "--Losses
may be caused by tenant credit risk on the mortgage
loans" below.
RESTRICTIONS IMPOSED BY SITE Site characteristics at industrial properties may
CHARACTERISTICS AND INCREASED impose restrictions that could cause realized losses
ENVIRONMENTAL RISKS COULD ALSO on the mortgage loans. Site characteristics which
ADVERSELY AFFECT THE VALUE AND CASH affect the value of an industrial property include:
FLOW FROM INDUSTRIAL PROPERTIES
o clear heights;
o column spacing;
o zoning restrictions;
o number of bays and bay depths;
o divisibility;
o truck turning radius; and
o overall functionality and accessibility.
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An industrial property requires availability of labor
sources, proximity to supply sources and customers,
and accessibility to rail lines, major roadways and
other distribution channels.
Properties used for many industrial purposes are more
prone to environmental concerns than other property
types.
LOSSES MAY BE CAUSED BY TENANT CREDIT Tenant credit risk could reduce cash flow or value of
RISK ON THE MORTGAGE LOANS a mortgaged property if tenants were unable to meet
their lease obligations or became insolvent.
o If tenant sales in retail properties decline,
rents based on sales also will decline, and
tenants may be unable to pay their rent or
other occupancy costs. If a tenant defaults,
the borrower may experience delays and costs in
enforcing the lessor's rights.
o If a significant tenant were to become
insolvent and subject to any bankruptcy or
similar law, the collection of rental payments
could be interrupted and foreclosure on the
mortgaged property made more difficult.
These risks may be increased when the property is a
single tenant property or is leased to relatively few
tenants. 20 of the mortgage loans representing 19.09%
of the initial pool balance are secured by single
tenant properties.
LOSSES MAY BE CAUSED BY THE EXPIRATION The income from and market value of retail, office
OF OR TENANT DEFAULTS ON LEASES and industrial properties would decline if space
leases expired or tenants defaulted and the borrowers
were unable to renew the leases or relet the space on
comparable terms. Even if borrowers successfully
relet vacated space, the costs associated with
reletting, including tenant improvements, leasing
commissions and free rent, can exceed the amount of
any reserves maintained for that purpose and reduce
cash flow from the mortgaged properties. Although
many of the mortgage loans require the borrower to
maintain escrows for leasing expenses, there is no
guarantee that these reserves will be sufficient.
PAYMENTS ON CREDIT LEASE LOANS ARE 8 of the mortgage loans, which represent 14.15% of
HIGHLY DEPENDENT UPON THE the initial pool balance, are credit lease loans that
CREDITWORTHINESS OF THE CREDIT TENANT have been made on mortgaged properties leased to
credit tenants or tenants with related guarantors
that have a public or private rating. In reliance on
these ratings, credit lease loans generally have
lower debt service coverage ratios and higher loan to
value ratios than other types of loans. The seller
has not independently assessed the creditworthiness
of the credit tenant or any guarantor of its
obligations under the credit lease.
The payment of interest and principal on a credit
lease loan depends principally on the payment by the
related credit tenant and/or its guarantor of monthly
rental payments and other payments due under its
credit lease. If a default were to occur under the
credit lease or the associated guarantee, the
borrower under the credit lease loan may not be able
to make the
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required payments under the credit lease loan until
the property is re-let. The liquidation of the
related mortgaged property may not generate
sufficient funds to pay all of the principal and
interest due on the related credit lease loan. Some
credit lease loans may provide that a default under
the credit lease will not constitute a default under
the credit lease loan. Under these loans, the
servicer will not be able to take any corrective
action following a default on the credit lease unless
a default occurs under the credit lease loan. The
"dark value" or unleased value of a mortgaged
property securing a credit lease loan may be less
than the balance of the credit lease loan on the
mortgaged property.
RELIANCE ON RESIDUAL VALUE INSURANCE Some credit lease loans may require a payment of
POLICIES HAS SPECIAL RISKS principal on their maturity date that is materially
in excess of their constant monthly payment and which
do not fully amortize over their terms.
The borrowers on these loans have obtained residual
value insurance policies naming the seller as loss
payee that require the insurer to pay on or about the
maturity date of the loan an amount equal to the
amount of any deficiency between the proceeds of the
sale of the mortgaged property and the lesser of:
o the insured value of the mortgaged property;
and
o any indebtedness remaining under the credit
lease loan that is not paid by the borrower.
The insured value of a credit lease property is
typically the amount of the balloon payment due on
the credit lease loan. If a borrower defaults on a
credit lease loan at a time when the amount of the
indebtedness on the loan exceeds the insured value,
the certificateholders may suffer losses. The
residual value policies were issued by R.V.I. America
Insurance Company. As of the date of this prospectus
supplement, R.V.I. America had a claims paying rating
of "A" by S&P, "A" by Fitch and "AA-" by Duff &
Phelps Credit Rating Co.
EACH RESIDUAL VALUE POLICY CONTAINS Each residual value insurance policy contains certain
EXCLUSIONS TO COVERAGE exclusions to coverage, including the sale,
assignment or other transfer of the credit lease
property to a person other than the named loss payee
(or an affiliate) in a foreclosure or similar
proceeding without the consent of R.V.I. America.
If the holder of a credit lease loan were to take any
of these actions without the consent of R.V.I.
America, coverage under the policy would not be
available.
TENANT BANKRUPTCY ENTAILS RISKS The bankruptcy or insolvency of a major tenant (such
as an anchor tenant or a credit lease tenant), or a
number of smaller tenants, may adversely affect the
income produced by a mortgaged property. Under the
federal bankruptcy code, a tenant has the option of
assuming or rejecting any unexpired lease. If the
tenant rejects the lease, the landlord's claim for
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breach of the lease would be a general unsecured
claim against the tenant (unless collateral secures
the claim). The claim would be limited to the unpaid
rent reserved under the lease for the periods prior
to the bankruptcy petition or earlier surrender of
the leased premises that are unrelated to the
rejection, plus the greater of one year's rent or 15%
of the remaining reserved rent (but not more than
three years' rent). Even if provisions in the lease
prohibit assignment, in a bankruptcy, the tenant may
assign the lease to another entity that could be less
creditworthy than the tenant may have been at the
time of origination of the mortgage loan. See
"Certain Legal Aspects of Mortgage Loans" in the
prospectus.
If any of the credit tenants of a mortgage property
subject to a credit lease loan were to become a
debtor in a bankruptcy proceeding under the federal
bankruptcy code, that tenant or its bankruptcy
trustee could reject the credit lease.
LOSSES MAY BE CAUSED BY INADEQUATE Losses may be realized on the mortgage loans if
PROPERTY MANAGEMENT property management is inadequate. The property
manager is responsible for the following activities:
o responding to changes in the local market;
o planning and implementing the rental structure,
including establishing levels of rent payments;
and
o ensuring that maintenance and capital
improvements are carried out in a timely
fashion.
Sound property management controls costs, provides
appropriate service to tenants and ensures that
improvements are maintained. Sound property
management can also maintain cash flow, reduce
vacancy, leasing and repair costs and preserve
building value. Property management errors can impair
the long-term viability of a real estate project and
may result in losses.
CONFLICTS OF INTERESTS BETWEEN PROPERTY Losses may result if the managers of mortgaged
MANAGERS AND OWNERS MAY RESULT IN properties and the borrowers experience conflicts of
LOSSES interest in the management or ownership of mortgaged
properties. These conflicts of interests may exist
because:
o the mortgaged properties may be managed by
property managers affiliated with the
borrowers;
o the mortgaged properties may be managed by
property managers who also manage other
properties that compete with the mortgaged
properties; and
o affiliates of the managers or the borrowers, or
the managers and/or the borrowers themselves,
may also own other properties, including
competing properties.
LOSSES MAY RESULT IF THE SERVICER IS An appraisal was conducted for each mortgaged
UNABLE TO SELL A MORTGAGED PROPERTY FOR property, and the loan-to-value ratios as of the
ITS APPRAISED VALUE cut-off date referred to in this prospectus
supplement are based on the appraisals. Appraisals,
however, are not guarantees of present or future
value, and the
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servicer may be unable to sell a mortgaged property
for its appraised value. Appraisals seek to establish
the amount a typically motivated buyer would pay a
typically motivated seller. This amount could be
significantly higher than the amount obtained from
the sale of a mortgaged property under a distress or
liquidation sale.
Appraisals are estimates of value at the time of the
appraisal based on the analysis and opinion of the
appraiser. The values of the mortgaged properties may
have changed significantly since the appraisal was
performed. Generally, appraisals have not been
updated since the mortgage loan was originated.
SUBORDINATE FINANCING ON THE MORTGAGED 3 of the mortgaged properties securing 4.75% of the
PROPERTY MAY INCREASE RISKS initial pool balance are encumbered by subordinate
debt that is not part of the mortgage pool. The
existence of additional subordinate indebtedness may
adversely affect the borrower's financial viability
or the lender's security interest in the mortgaged
property and result in realized losses because:
o refinancing the mortgage loan at maturity for
the purpose of making any balloon payments may
be more difficult;
o reduced cash flow could result in deferred
maintenance; and
o if the holder of the subordinated debt files
for bankruptcy or is placed in involuntary
receivership, foreclosing on the mortgaged
property could be delayed.
The holder of any material subordinate debt on the
mortgaged properties has agreed not to foreclose for
so long as the mortgage loan is outstanding and the
trust is not pursuing a foreclosure action.
Substantially all of the mortgage loans either
prohibit the borrower from encumbering the mortgaged
property with additional secured debt or require the
consent of the holder of the first lien before so
encumbering the mortgaged property. A violation of
this prohibition, however, may not become evident
until the mortgage loan otherwise defaults. For a
description of subordinate debt relating to the
mortgaged properties, see "Description of the
Mortgage Pool--Secured Subordinate Financing" in this
prospectus supplement.
MEZZANINE DEBT SECURED BY EQUITY IN THE The direct parents of some borrowers have pledged
BORROWER MAY INCREASE RISK their equity interest in the borrower to secure
mezzanine debt incurred by the parent. However, the
existence of this indebtedness could adversely affect
the financial viability of such borrower or the value
of the equity in the borrower held by the sponsoring
entities of the borrower. There is a risk that any
holder of mezzanine debt may attempt to use its
rights as owner of the mezzanine loan to protect
itself against an exercise of rights by the lender
under the mortgage loan. For a description of
mezzanine debt relating to the mortgaged properties
see "Description of the Mortgage Pool--Secured
Subordinate Financing" in this prospectus supplement.
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RELATED BORROWERS MAY MAKE LOSSES ON Some borrowers under the mortgage loans are
THE MORTGAGE LOANS MORE SEVERE affiliated or under common control with one another.
When borrowers are related, any adverse circumstances
relating to one borrower or its affiliates, and
affecting one mortgage loan or mortgaged property,
also can affect the related borrower's mortgage loans
or mortgaged properties which could make losses more
severe than would be the case if there were no
related borrowers.
For example, a borrower that owns or controls several
mortgaged properties and experiences financial
difficulty at one mortgaged property might defer
maintenance at one or more other mortgaged properties
to satisfy current expenses of the mortgaged property
experiencing financial difficulty. Alternatively, the
borrower could attempt to avert foreclosure by filing
a bankruptcy petition. The bankruptcy or insolvency
of one borrower or its affiliate could have an
adverse effect on the operation of all of the
mortgaged properties of that borrower and its
affiliates and on the ability of those mortgaged
properties to produce sufficient cash flow to make
required payments on the mortgage loans. See "Legal
Aspects of Mortgage Loans--Bankruptcy Laws" in the
prospectus.
LARGER-THAN-AVERAGE BALANCE LOANS MAY Several mortgage loans, either individually or
MAKE LOSSES MORE SEVERE together with other mortgage loans with which they
are cross-collateralized, have outstanding balances
that are substantially higher than the average
outstanding balance. Generally, if a mortgage pool
includes loans with larger-than-average balances,
losses are likely to be more severe, relative to the
size of the pool, than would be the case if the
aggregate balance of the pool were distributed among
a larger number of loans.
LOSSES COULD RESULT FROM LIMITATION ON 10 mortgage loans, representing 2.88% of the initial
ENFORCEABILITY OF pool balance, are cross-collateralized with one or
CROSS-COLLATERALIZATION more other mortgage loans. Cross-collateralization
arrangements involving more than one borrower could
be challenged as a fraudulent conveyance by creditors
of a borrower or by the representative or the
bankruptcy estate of a borrower, if that borrower
were to become a debtor in a bankruptcy case
resulting in realized losses on the mortgage loans.
Generally, under federal and most state fraudulent
conveyance statutes, a lien granted by a borrower to
secure repayment of another borrower's mortgage loan
could be voided if a court were to determine that:
(1) the borrower was insolvent at the time of
granting the lien, was rendered insolvent by the
granting of the lien, or was left with inadequate
capital or was unable to pay its debts as they
matured; and
(2) when it allowed its mortgaged property to be
encumbered by a lien securing the entire indebtedness
represented by the other mortgage loan, the borrower
did not receive fair consideration or reasonably
equivalent value in return.
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The additional security provided by
cross-collateralization would not be available if a
court determines that the grant was a fraudulent
conveyance. See "Description of the Mortgage
Pool--Terms and Conditions of the Mortgage
Loans--Related Borrowers, Cross-Collateralized
Mortgage Loans and Mortgage Loans Collateralized by
Multiple Properties" in this prospectus supplement.
TAX CONSIDERATIONS RELATED TO Payment of taxes on any net income from "foreclosure
FORECLOSURE MAY REDUCE PAYMENTS TO property" acquired by the trust will reduce the net
CERTIFICATEHOLDERS proceeds available for distribution to
certificateholders. If the trust acquires a mortgaged
property after a default on the related mortgage loan
under a foreclosure or delivery of a deed in lieu of
foreclosure, that property will be considered
"foreclosure property" under the tax rules applicable
to real estate mortgage investment conduits, which
are the same rules applicable to real estate
investment trusts. It will continue to be considered
"foreclosure property" for a period of three full
years after the taxable year of acquisition by the
trust, with possible extensions. Any net income from
this "foreclosure property", other than qualifying
"rents from real property," will subject the real
estate mortgage investment conduit containing the
mortgage loans to federal and possibly state or local
tax on that income at the highest marginal corporate
tax rate.
STATE LAW LIMITATIONS ON REMEDIES Certain jurisdictions (including California) have
laws that prohibit more than one "judicial action" to
enforce a mortgage, and some courts have viewed the
term "judicial action" broadly. The pooling and
servicing agreement will require the servicer and any
replacement special servicer to obtain legal advice
prior to enforcing any rights under the mortgage
loans that relate to properties where the rule could
be applicable. In addition, the servicer and any
replacement special servicer may be required to
foreclose on properties in states where the "one
action" rules apply before foreclosing on properties
located in states where judicial foreclosure is the
only permitted method of foreclosure. See "Certain
Legal Aspects of Mortgage Loans--Foreclosure" in the
prospectus.
Because of these considerations, the ability of the
servicer and any replacement special servicer to
foreclose on the mortgage loans may be limited by the
application of state laws. Such actions could also
subject the trust to liability as a
"mortgagee-in-possession" or result in equitable
subordination of the claims of the trustee to the
claims of other creditors of the borrower. The
servicer will be required to consider these factors
in deciding what alternative to pursue after a
default.
INCREASES IN GROUND RENTS FOR MORTGAGED 2 mortgaged properties securing mortgage loans, which
PROPERTIES MAY CAUSE LOSSES represent 4.15% of the initial pool balance, are
subject solely to the lien of a mortgage on the
applicable borrower's leasehold interest under a
ground lease. 2 mortgaged properties securing
mortgage loans, which represent 1.22% of the initial
pool balance, are subject to the lien of either a
mortgage on both the
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borrower's leasehold interest and the ground lessor's
fee simple interest in the mortgaged property or a
mortgage on the borrower's leasehold interest in a
portion of the mortgaged property and the borrower's
fee simple interest in the remaining portion of the
mortgaged property.
Increases in ground rents may adversely affect a
borrower's ability to make payments under a related
mortgage loan and cause realized losses on the
mortgage loans. Mortgage loans secured by leasehold
interests may provide for the resetting of ground
lease rents based on factors such as the fair market
value of the related mortgaged property or prevailing
interest rates.
BANKRUPTCY RULES MAY LIMIT ABILITY OF Operation of the federal bankruptcy code and related
LENDER TO ENFORCE REMEDIES state laws may interfere with the ability of a lender
to foreclose upon a mortgaged property and to take
other actions to enforce its remedies against the
borrower or the mortgaged property. For a description
of risks related to bankruptcy, see "Certain Legal
Aspects of Mortgage Loans--Bankruptcy Laws" in the
prospectus.
Some sponsors of borrowers or their affiliates have
been subject to bankruptcy proceedings. The depositor
is aware that the individual owner of a portion of
the equity of the borrower on the mortgage loan
constituting 1.44% of the initial pool balance that
is secured by the property identified as the
Huntington Westminster Apartments on Annex A has
filed a personal bankruptcy petition under chapter 11
of the bankruptcy code.
THE BANKRUPTCY OF A LESSOR OR A LESSEE Upon bankruptcy of a lessor or a lessee under a
UNDER A GROUND LEASE COULD RESULT IN ground lease, the debtor entity has the right to
LOSSES assume and continue or reject and terminate the
ground lease. Section 365(h) of the federal
bankruptcy code permits a ground lessee whose ground
lease is rejected by a debtor ground lessor to remain
in possession of its leased premises under the rent
reserved in the lease for the term, including
renewals of the ground lease. The ground lessee,
however, is not entitled to enforce the obligation of
the ground lessor to provide any services required
under the ground lease. If a ground lessee/borrower
in bankruptcy rejected any or all of its ground
leases, the leasehold mortgagee would have the right
to succeed to the ground lessee/borrower's position
under the lease only if the ground lessor had
specifically granted the mortgagee that right. If the
ground lessor and the ground lessee/borrower are
involved in concurrent bankruptcy proceedings, the
trustee may be unable to enforce the bankrupt ground
lessee/borrower's obligation to refuse to treat a
ground lease rejected by a bankrupt ground lessor as
terminated. If this happened, a ground lease could be
terminated notwithstanding lender protection
provisions contained therein or in the mortgage. If
the borrower's leasehold were to be terminated after
a lease default, the leasehold mortgagee would lose
its security.
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Each of the ground leases related to the mortgage
loans, however, generally contains the following
protections to mitigate this risk:
o It requires the lessor to give the leasehold
mortgagee notice of lessee defaults and an
opportunity to cure them.
o It permits the leasehold estate to be assigned
to and by the leasehold mortgagee at and after
a foreclosure sale.
o It contains certain other protective provisions
typically included in a "mortgageable" ground
lease.
See "Description of the Mortgage Pool--Ground Leases"
in this prospectus supplement.
YOUR PAYMENTS MAY BE REDUCED OR DELAYED Noncompliance with zoning and building codes may
BY ZONING AND BUILDING CODE cause the borrower to experience cash flow delays and
NONCOMPLIANCE ON THE MORTGAGED shortfalls that would reduce or delay the amount of
PROPERTIES proceeds available for distributions to
certificateholders. The seller has taken steps to
establish that the use and operation of the mortgaged
properties securing the mortgage loans are in
compliance in all material respects with all
applicable zoning, land-use, building, fire and
health ordinances, rules, regulations, and orders.
Evidence of this compliance may be in the form of
legal opinions, certifications from government
officials, title policy endorsements and/or
representations by the related borrower in the
related mortgage loan documents. These steps may not
have revealed all possible violations.
Some violations may exist at any particular mortgaged
property, but the seller generally does not consider
those defects 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 that may not be
rebuilt to its current state if a material casualty
event occurs. Generally, insurance proceeds would be
available for application to the mortgage loan if a
material casualty event were to occur, or the
mortgage property, as rebuilt for a conforming use,
would generate sufficient income to service the
mortgage loan. If a mortgaged property could not be
rebuilt to its current state or its current use were
no longer permitted due to building violations or
changes in zoning or other regulations, then the
borrower might experience cash flow delays and
shortfalls that would reduce or delay the amount of
proceeds available for distributions to
certificateholders.
CHANGES IN CONCENTRATIONS OF BORROWER, The receipt of payments of principal, including
LOAN OR PROPERTY CHARACTERISTICS MAY voluntary principal prepayments, liquidation proceeds
CAUSE LOSSES ON THE MORTGAGE LOANS and the repurchase prices for any mortgage loans
repurchased due to breaches of representations or
warranties or defaults, will cause changes in the
relative concentrations of properties, property
characteristics, number of borrowers and affiliated
borrowers and geographic location.
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Because principal on the classes of certificates
entitled to payments of principal is payable in the
sequential order described above, the classes that
have a lower priority for the payment of principal
are relatively more likely to be exposed to risks
associated with any changes in concentrations of
borrower, loan or property characteristics.
COMPLIANCE WITH THE AMERICANS WITH If the borrower were required to pay expenses and
DISABILITIES ACT MAY REDUCE PAYMENTS TO fines imposed by the Americans with Disabilities Act
CERTIFICATEHOLDERS of 1990, the amount available to make payments on the
mortgage loan would be reduced. Under the Americans
with Disabilities Act, all public accommodations are
required to meet federal requirements related to
access and use by disabled persons. If the mortgaged
properties do not comply with this law, the borrowers
may be required to incur costs of compliance.
Noncompliance could result in the imposition of fines
by the federal government or an award of damages to
private litigants.
LITIGATION MAY REDUCE PAYMENTS TO Legal proceedings may be pending and, from time to
CERTIFICATEHOLDERS time, threatened, against the borrowers and their
affiliates relating to the business of the borrowers
and their affiliates, or arising out of the ordinary
course of that business. This litigation could have a
material adverse effect on the distributions to
certificateholders.
YEAR 2000 PROBLEM MAY REDUCE OR DELAY Disruptions in the collection or distribution of
COLLECTIONS AND DISTRIBUTIONS OF receipts on the mortgage loans due to the year 2000
RECEIPTS ON THE MORTGAGE LOANS problem could reduce or delay your distributions.
Computer problems may arise if the servicer and the
trustee have not completed their efforts to avoid
year 2000 issues on time, or if the computer systems
of the servicer or the trustee are not fully year
2000-ready. The "year 2000 problem" is pervasive and
complex; virtually every computer operation will be
affected in some way by the rollover of the two-digit
year value to 00. Systems that do not properly
recognize date-sensitive information when the year
changes to 2000 could generate erroneous data or
cause a system to fail.
We have been advised by each of the servicer and the
trustee that they are committed to do one of the
following:
o to implement modifications to their respective
existing systems to the extent required to
cause them to be year 2000-ready; and/or
o acquire computer systems that are year
2000-ready in each case before January 1, 2000.
We have not, however, made any independent
investigation of the computer systems of the servicer
or the trustee.
</TABLE>
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DESCRIPTION OF THE MORTGAGE POOL
A detailed presentation of characteristics of the mortgage loans and
mortgaged properties on an individual basis and in tabular format is
presented in Annex A.
CALCULATIONS OF INTEREST
3 of the mortgage loans, which represent 8.70% of the initial pool
balance, accrue interest at fixed interest rates on the basis of a 360-day
year consisting of twelve 30-day months. 118 of the mortgage loans, which
represent 91.30% of the initial pool balance, accrue interest on the basis of
a 360-day year and the actual number of days elapsed.
In addition, 4 mortgage loans, which represent 18.91% of the initial pool
balance, provide for payments of interest only for up to 24 months after
origination, during which period no payments of principal are due. The amount
of the monthly payment with respect to some of such mortgage loans will be
subject to a one-time increase to permit the commencement of scheduled
amortization of such loan. No mortgage loan, other than the ARD loans,
permits negative amortization or the deferral of accrued interest.
Each mortgage loan bears interest at a mortgage rate that is fixed for the
entire remaining term of the mortgage loan, except that certain mortgage
loans will accrue interest at a revised rate if not repaid on or before their
respective anticipated repayment dates.
BALLOON LOANS
109 of the mortgage loans, which represent approximately 79.73% of the
initial pool balance, are "balloon loans" that provide for monthly payments
of principal based on amortization schedules significantly longer than the
remaining terms of those mortgage loans. In some cases, monthly payments of
principal begin after an interest-only period. As a result, a substantial
principal amount will be due and payable together with the corresponding
interest payment on each balloon loan on its maturity date, unless the
borrower prepays the balloon loan before its maturity date. 8 of the mortgage
loans, which represent approximately 5.00% of the initial pool balance, are
fully amortizing.
ARD LOANS
4 of the mortgage loans, which represent approximately 15.27% of the
initial pool balance, are ARD loans that provide for changes in the accrual
of interest and the payment of principal as of their respective anticipated
repayment dates. The anticipated repayment date for each ARD loan is set
forth on Annex A to this prospectus supplement. If a borrower elects to
prepay its ARD loan in full on its anticipated repayment date, a substantial
amount of principal will be due. If a borrower does not prepay its ARD loan
on or before its anticipated repayment date, that ARD loan will bear interest
at a revised rate that will be a fixed rate per annum equal to the mortgage
rate plus 2.0% per annum. Beginning on its anticipated repayment date,
"excess interest" accrued on an ARD loan at the excess of the revised rate
over the original mortgage rate compounded as described below, will be
deferred until the principal balance of the ARD loan has been reduced to
zero. If a borrower does not prepay its ARD loan on or before its anticipated
repayment date, all or a substantial portion of the monthly cash flow from
the related mortgaged property collected after that date, other than some
minimum debt service and specified property expenses will be applied to the
payment of principal on the ARD loan and, after its principal balance has
been reduced to zero, to the payment of accrued and unpaid excess interest.
The failure to pay excess interest will not constitute a default under
such mortgage loans before the related maturity date. Unpaid excess interest
will, except where limited by applicable law, continue to accrue interest at
the revised rate.
As of or shortly after the anticipated repayment date, borrowers under ARD
loans will be required to enter into a lockbox agreement whereby all revenue
will be deposited directly into a designated lockbox account controlled by
the servicer. From and after the anticipated repayment date, in addition to
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paying interest at the mortgage rate and principal based on the amortization
schedule, the related borrower generally will be required to apply all
remaining monthly cash flow from the related mortgaged property to pay the
following amounts in the following order of priority:
(1) payments to required escrow funds;
(2) payment of operating expenses under the terms of an annual budget
approved by the servicer;
(3) payment of approved extraordinary operating expenses or capital
expenses not a part of the approved annual budget or allotted for in
any escrow fund;
(4) principal on the mortgage loan until the principal is paid in full;
and
(5) excess interest.
ARD loans generally prohibit the related borrower from prepaying the
mortgage loan before or, in some cases, until a specified date before the
anticipated repayment date. At that time, the borrower may prepay the loan,
in whole or in part, without payment of a penalty or yield maintenance in the
form of a "prepayment premium." To the extent the borrower on a ARD loan
makes payments of interest accrued at a rate of interest higher than the
normal mortgage interest rate, the excess interest will be distributed to the
holders of the Class N certificates.
AMORTIZATION OF PRINCIPAL
In addition to the balloon loans and the ARD loans, the mortgage pool
includes 8 fully amortizing mortgage loans, which represent 5.00% of the
initial pool balance. 3 mortgage loans, which represent 8.70% of the initial
pool balance, are "step amortization" mortgage loans, each of which amortizes
on an initial amortization schedule for a specified period following
origination, and then amortizes at a different amortization schedule until
maturity.
DUE DATES
A "due date" is the date in any month on which a monthly payment on a
mortgage loan is first due. Eight (8) of the mortgage loans, which represent
18.57% of the initial pool balance, provide for scheduled monthly payments of
principal and/or interest (but not excess interest or principal payments
calculated with respect to excess cash flow on any ARD loan, "monthly
payments") to be due on the first day of each month. 113 of the mortgage
loans, which represent 81.43% of the initial pool balance, provide for due
dates on the tenth day of each month. See "Servicing of the Mortgage
Loans--Servicing and Other Compensation and Payment of Expenses" in this
prospectus supplement.
None of the mortgage loans provide for a grace period for the payment of
monthly payments of more than 15 days.
DEFEASANCE
All of the mortgage loans provide that after a specified period, if no
default exists under the mortgage loan, the borrower may exercise a
"defeasance option" to obtain the release of one or more of the mortgaged
properties, from the lien of the mortgage upon satisfaction of conditions,
including that the borrower:
(1) pays on any due date
o all interest accrued and unpaid on the principal balance of the
mortgage note to and including that due date,
o all other sums (excluding scheduled interest or principal payments not
yet due and owing) due under the mortgage loan, and
o any costs and expenses related to the release,
(2) delivers or pledges to the trustee "defeasance collateral"
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o that consists of direct, non-callable obligations of (or non-callable
obligations, fully guaranteed as to timely payment by) the United
States of America; and
o that provides payments:
o on or before all successive scheduled payment dates from such due
date to the related maturity date (or anticipated repayment date
in the case of any ARD loan), and
o in an amount equal to or greater than the scheduled payments due
on such dates under the mortgage loan (or, with respect to
cross-collateralized mortgage loans or mortgage loans secured by
multiple mortgaged properties which permit defeasance, an amount
equal to not less than the portion of such scheduled payments
allocable to the released mortgaged property), and
(3) delivers a security agreement granting the trust a first priority
security interest in the defeasance collateral and an opinion of
counsel to that effect.
Simultaneously with such actions, the mortgaged property will be released
from the lien of the mortgage loan and the defeasance collateral will be
substituted as the collateral securing the mortgage loan. The depositor makes
no representation as to the enforceability of the defeasance provisions of
any mortgage loan.
PREPAYMENT PROVISIONS
Each mortgage loan prohibits voluntary principal prepayments at any time
except during an open period following the expiration of the lockout period
and defeasance period for that mortgage loan. See Annex A for information
regarding the lockout and defeasance periods for each mortgage loan.
Any 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" in this
prospectus supplement. The enforceability of provisions similar to the
provisions of the mortgage loans providing for the payment of a prepayment
premium upon an involuntary prepayment is unclear under the laws of a number
of states. The obligation to make a prepayment premium with an involuntary
prepayment may not be enforceable under applicable law or, if enforceable,
the foreclosure proceeds may not be sufficient to make such payment.
Liquidation proceeds recovered in respect of any defaulted mortgage loan
will, generally, be applied to cover outstanding servicing expenses and
unpaid principal and interest before being applied to cover any prepayment
premium due. 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. Generally, no
prepayment premium will be payable upon any mandatory prepayment of a
mortgage loan caused by a casualty or condemnation. See "Legal Aspects of
Mortgage Loans--Default Interest and Limitations on Prepayments" in the
prospectus.
No prepayment premium will be payable with the repurchase of a mortgage
loan by the seller for a material breach of representation or warranty on the
part of the seller or any failure to deliver any related documentation. No
prepayment premium will be payable with the purchase of all of the mortgage
loans and any REO properties in connection with the termination of the trust
fund or 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 "--Assignment of the Mortgage Loan; Repurchases and
Substitutions" and "--Representations and Warranties; Repurchases" and
"Description of the Certificates--Termination; Retirement of Certificates" in
this prospectus supplement.
RELATED BORROWERS, CROSS-COLLATERALIZED MORTGAGE LOANS AND MORTGAGE LOANS
COLLATERALIZED BY MULTIPLE PROPERTIES
10 mortgage loans, which represent 2.88% of the initial pool balance, are
"cross-collateralized mortgage loans" among groups of related borrowers. For
a discussion of risks related to cross-
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<PAGE>
collateralized loans, see "Risk Factors" in this prospectus supplement.
Losses could result from limitations on the enforceability of
cross-collateralization. See Annex A for information regarding the
cross-collateralized mortgage loans. 8 mortgage loans (other than the
cross-collateralized mortgage loans), which represent 5.51% of the initial
pool balance, are secured by one or more mortgages encumbering multiple
mortgaged properties. Each of these mortgage loans are evidenced by a
separate mortgage note, and are not treated as a set of cross-collateralized
mortgage loans. Because of this, the total number of mortgage loans in the
mortgage pool is 121, while the total number of mortgaged properties in the
mortgage pool is 162. Generally, we treat a mortgage loan that is secured by
mortgaged properties that are located in more than one state as an individual
mortgage loan, except that when we describe the geographic concentration and
property type distribution of the mortgage pool, we treat these mortgage
loans as multiple mortgage loans that are allocated a cut-off date balance
based on the allocated loan amount.
In addition to the cross-collateralized loans and the loans secured by
multiple mortgaged properties, some sets of mortgage loans were made to
borrowers who are affiliated or under common control with one another. None
of these sets of mortgage loans represents more than 13.98% of the initial
pool balance.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE PROVISIONS
All of the mortgage loans contain both "due-on-sale" and
"due-on-encumbrance" clauses. Subject to limited exceptions, these clauses
either:
o permit the holder of the mortgage to accelerate the maturity of the
related mortgage loan if the borrower sells or transfers or encumbers
the mortgaged property in violation of the terms of the mortgage or
other loan documents, or
o prohibit the borrower from doing so without the consent of the holder
of the mortgage. See "--Secured Subordinate Financing" in this
prospectus supplement.
Some of the mortgage loans permit either:
o transfer of the related mortgaged property if specified conditions are
satisfied or if the transfer is to a borrower reasonably acceptable to
the lender, or
o transfers to certain parties related to the borrower.
The servicer will determine, in accordance with the servicing standard,
whether to exercise any right the holder of any mortgage may have under a
due-on-sale or due-on-encumbrance clause to accelerate payment of the related
mortgage loan or to withhold its consent to the transfer or encumbrance of
the mortgaged property. See "The Pooling and Servicing
Agreements--Due-on-Sale and Due-on-Encumbrance Provisions" and "Legal Aspects
of Mortgage Loans--Due-on-Sale and Due-on-Encumbrance" in the prospectus.
SECURED SUBORDINATE FINANCING
3 mortgage loans representing 4.75% of the initial pool balance are
secured by mortgaged properties known to be encumbered by subordinated debt
that is not part of the mortgage pool. In all cases, the holder of any
material subordinated debt has agreed not to foreclose for so long as the
related mortgage loan is outstanding and the trust is not pursuing a
foreclosure action. Substantially all of the remaining mortgage loans either
prohibit the borrower from encumbering the mortgaged property with additional
secured debt or will require the consent of the trustee before so encumbering
such property. In addition, with respect to 2 mortgage loans, representing
2.89% of the initial pool balance, the principals of the borrowers are known
to have incurred debt secured by interests in the borrower. See "Risk
Factors--Subordinate financing on the mortgaged property may increase risks"
and "--Mezzanine debt secured by equity in the borrower may increase risk" in
this prospectus supplement and "Legal Aspects of Mortgage Loans--Subordinate
Financing" in the prospectus.
S-33
<PAGE>
The following table indicates those mortgaged properties that are known
to the depositor to be encumbered by secured subordinate debt, the initial
principal amount of the secured subordinate debt and the cut-off date
principal balances of the related mortgage loans. Each holder of secured
subordinate debt has executed a subordination agreement and/or a standstill
agreement.
SECURED SUBORDINATE DEBT
<TABLE>
<CAPTION>
INITIAL
PRINCIPAL
AMOUNT OF
SECURED
CONTROL CUT-OFF DATE % OF INITIAL SUBORDINATE
NUMBER LOAN NUMBER PROPERTY NAME BALANCE POOL BALANCE DEBT
- --------- ------------- ---------------------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
12 GMAC4060 489 Fifth Avenue $20,000,000 2.05 $1,500,000
15 GMAC4700 Midcon Apartment Portfolio 17,443,028 1.79 900,000
27 GMAC5380 Briarcliff Summit Apartments 8,894,345 0.91 2,326,000
</TABLE>
Some of the mortgage loans, including the Queens Center Mall loan, may
permit the borrower to incur unsecured subordinated debt in the future,
subject to delivery of a subordination agreement and/or standstill agreement
and requirements that limit the use of proceeds to refurbishing or renovating
the property and/or acquiring furniture, fixtures and equipment for the
property. Additional debt, in any form, may cause a diversion of funds from
property maintenance and increase the likelihood that the borrower will
become the subject of a bankruptcy proceeding.
Except as described above, the depositor has not been able to confirm
whether the respective borrowers under the mortgage loans have any other debt
outstanding.
In addition, the depositor is aware that owners of the borrowers under 2
mortgage loans representing 2.89% of the initial pool balance have incurred
so-called "mezzanine debt" that is secured by their ownership interest in
such borrowers. This financing effectively reduces the indirect equity
interest of any such owner in the related mortgaged property. No such
"mezzanine debt" is included in the mortgage pool.
GROUND LEASES
2 mortgaged properties securing mortgage loans, which represent 4.15% of
the initial pool balance, are subject solely to the lien of a mortgage on the
applicable borrower's leasehold interest in such mortgaged property.
2 mortgaged properties securing mortgage loans, which represent 1.22% of
the initial pool balance, are subject to the lien of either:
o a mortgage on both the borrower's leasehold interest and the ground
lessor's fee simple interest in the mortgaged property or
o 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
remaining portion of the mortgaged property.
None of the ground leases expire less than ten years after the stated
maturity of the related mortgage loan. Under the terms of each such ground
lease, the ground lessor generally has either made its fee interest subject
to the related mortgage or, generally, 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.
LOAN DOCUMENTATION
Except as otherwise described under "Terms and Conditions of the Mortgage
Loans--Related Borrowers, Cross-Collateralized Mortgage Loans and Mortgage
Loans Collateralized by Multiple Properties," each mortgage loan is evidenced
by a promissory note and secured by a mortgage, deed of trust or similar
security instrument that creates a first mortgage lien on a fee simple and/or
leasehold interest in a multifamily, retail, office, industrial, warehouse,
hospitality or other commercial property.
S-34
<PAGE>
CREDIT LEASE LOANS
8 of the mortgage loans, which represent 14.15% of the initial pool
balance, are "credit lease loans" or "CTL loans" that are secured by
mortgages on mortgaged properties that are, in each case, subject to a lease
to a tenant or a tenant with a guarantor with a private or public rating
assigned by a rating agency. Some of the tenants and/or guarantors of the
tenants' obligations may not have an investment grade rating, and the seller
has not independently assessed the creditworthiness of the tenants or the
related guarantors of the credit leases. Scheduled monthly rent payments
under the credit leases are generally sufficient to pay in full and on a
timely basis all interest and principal scheduled to be paid with respect to
the related credit lease loans (other than the balloon payments on credit
lease loans which are balloon loans).
The credit leases generally provide that the tenant is responsible for all
costs and expenses incurred in connection with the maintenance and operation
of the mortgaged property. Reserves funded from payments under the credit
lease are available to fund some costs anticipated to be incurred by the
borrower. Under some credit lease loans, the borrower may have the obligation
to pay some of these costs and expenses and the failure of the borrower to do
so may give the tenant the right to offset rent payments and to terminate the
credit lease.
Generally, if a casualty or condemnation of a material portion of the
mortgaged property occurs, either
o the credit lease provides that the tenant must continue to make rent
payments or make an offer to purchase the applicable mortgaged property
for an amount not less than the unpaid principal balance plus accrued
interest on the related credit lease loan, or
o the trustee on behalf of the certificateholders will have the benefit
of certain noncancelable credit lease enhancement policies issued by
insurance companies obtained to cover specified casualty and/or
condemnation risks.
The following table lists each credit lease tenant and related cut-off
date balances and credit rating for each tenant or guarantor:
CREDIT LEASE TENANTS
<TABLE>
<CAPTION>
NUMBER AGGREGATE CREDIT
OF CUT-OFF DATE RATING(1)
TENANT/GUARANTOR LOANS BALANCE PROPERTY TYPE MOODY'S/S&P
- -------------------------- -------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
Arbor Drugs (CVS).......... 1 $ 1,448,750 Retail A3/A
Carmax/Circuit City
Stores.................... 1 19,656,135 Special Purpose (2)
Costco..................... 1 12,173,039 Land A2/A-
University of Nevada....... 1 26,856,137 Special Purpose Aa3(3)/(2)(4)
Ingram Micro Corp.......... 2 72,640,817 Office Baa3(5)/BBB(4)
Rite Aid Corporation....... 1 2,714,045 Retail Baa1/BBB+
Walgreens.................. 1 2,386,967 Retail Aa3/A+
</TABLE>
- ------------
(1) Unless otherwise indicated, the senior unsecured debt rating assigned
to the tenant or the guarantor by Moody's and the long-term local
issuer credit rating assigned by S&P. Some ratings assigned by Moody's
or S&P may be on positive or negative alerts.
(2) Not publicly rated.
(3) Reflects the ratings assigned by Moody's to the University of Nevada
university system.
(4) See "--Significant Mortgage Loans."
(5) Reflects the bank loan debt rating assigned by Moody's. Ingram Micro
also has a senior unsecured debt rating of BBB+ by Fitch.
Each credit lease loan other than the loan for which Walgreens is the
credit lease tenant is either fully amortizing or is a balloon loan with a
residual value insurance policy. In order to minimize the risks
S-35
<PAGE>
associated with the related balloon payments, each of the borrowers other
than the borrower on the credit lease loan for which Walgreens is the credit
lease tenant has obtained a residual value policy naming the seller as loss
payee. The trust will receive an assignment of the seller's rights under each
residual value policy. Upon the maturity of a credit lease loan, if the
related credit lease property cannot be sold or the proceeds from the
disposition of such property are insufficient to repay the indebtedness
secured by that credit lease property, the insurer will be required to pay an
amount equal to the remaining indebtedness, up to the insured amount for the
mortgaged property. No residual value insurance policy requires that the
related credit lease property be sold prior to payment of the claim. However,
if the related credit lease property has not been sold by the date the claim
is paid, the related mortgage note will be transferred to the insurer. The
"insured amount" of a credit lease property is the lesser of the insured
value of the mortgaged property and the principal amount of any indebtedness
and accrued interest remaining on the credit lease loan that has not been
paid by the borrower. The "insured value" is the amount of the balloon
payment due on the mortgage loan. The premium for each residual policy was
fully paid at the time of the issuance of such policy and the policy is
non-cancelable.
A claim for payment under the residual value policies issued by R.V.I.
America must be filed no more than one year and no less than 10 days prior to
the policy termination date. The residual value policies generally permit
notice of a claim to be given at a time after the date on which the balloon
payment is due on the credit lease loan.
Each borrower under a credit lease loan has assigned to the lender, as
security for its borrower's obligations, the rights under the credit lease
and its rights to all income and profits from the operation and leasing of
the related credit lease property, including an assignment of its rights
under any guaranty of the credit tenant's obligations under the related
credit lease and an assignment of the right to receive all monthly rental
payments due under the related credit lease.
Although each credit lease requires the credit tenant to fulfill its
payment and maintenance obligations during the term of the credit lease, in
some cases the credit tenant may not have agreed to operate the related
credit lease property for the term of the credit lease. Each of these tenants
may at any time cease actual operations at the credit lease property, but
would remain obligated to continue to meet all of its obligations under the
credit lease.
SIGNIFICANT MORTGAGE LOANS
The PREIT Loans
The Loans. The "PREIT loans" consist of eight mortgage loans representing
in the aggregate 11.07% of the initial pool balance. The PREIT loans were
originated by GMACCM on April 13, 1999 and have an aggregate principal
balance as of the cut-off date of approximately $107,920,483. Each PREIT loan
is a balloon loan with a maturity date of May 10, 2009.
The PREIT loans consist of eight separate mortgage loans to eight
different but affiliated "PREIT loan borrowers," six of which are special
purpose, bankruptcy remote limited liability companies or limited
partnerships that were formed for the purposes of purchasing, owning and
operating one of the PREIT properties. The PREIT borrowers are sponsored by
the Pennsylvania Real Estate Investment Trust or "PREIT," a real estate
investment trust with publicly traded shares on the New York Stock Exchange.
The remaining PREIT loan borrowers, which are not special purpose entities,
include PREIT and an affiliate of PREIT. Each PREIT loan is secured by, among
other things, a fee mortgage encumbering one of eight multifamily properties
except for one PREIT loan that is secured under an indemnity deed of trust
and security agreement. Under this indemnity deed of trust arrangement, the
guarantor of the borrower's obligations under the mortgage loan owns the
mortgaged property and the deed of trust secures the guarantee obligation.
The separate mortgage loans that comprise the PREIT loans are neither
cross-collateralized nor cross-defaulted.
Payment and prepayment terms for the PREIT loans are described on Annex A.
The Properties; Value; DSC Ratio. The PREIT properties consist of eight
multifamily properties located in Florida, Ohio, Pennsylvania and Maryland.
The cut-off date LTVs and underwritten NCF DSCR of each of the PREIT loans
and other information regarding the PREIT properties follows:
S-36
<PAGE>
THE PREIT PROPERTIES
<TABLE>
<CAPTION>
YEAR UW
APPRAISED NUMBER BUILT/ NCF CUT-OFF DATE
PROPERTY NAME STATE VALUE OF UNITS RENOVATED DSCR LTV
- ---------------------------- -------------- ------------- ---------- ------------ ------- --------------
<S> <C> <C> <C> <C> <C> <C>
Boca Palms Apartments Florida $37,700,000 522 1967/89/90 1.53x 59.90%
Cobblestone Apartments Florida 22,300,000 384 1986 1.56 62.06
Hidden Lakes Apartments Ohio 14,500,000 360 1986 1.57 73.74
Kenwood Gardens Apartments Ohio 10,100,000 504 1952 1.60 71.73
Lakewood Hills Apartments Pennsylvania 26,500,000 562 1970/72/81 1.58 70.70
2031 Locust Street Pennsylvania 8,400,000 88 1928 1.58 70.78
The Marylander Apartments Maryland 17,000,000 507 1951 1.60 72.30
Palms of Pembroke Apartments Florida 24,450,000 348 1989 1.56 67.84
</TABLE>
Defeasance. Each PREIT loan borrower may obtain the release of the PREIT
property owned by it from the lien of the related mortgage by exercising a
defeasance option on or after the second anniversary of the delivery date.
The Manager. The PREIT properties are managed by PREIT Associates, L.P.,
an affiliate of PREIT and one of the PREIT loan borrowers.
Permitted Substitutions. After April 13, 2002, each PREIT loan borrower is
permitted to substitute collateral without prepayment or defeasance of the
principal amount of the related PREIT loan provided that the related PREIT
loan borrower satisfies certain conditions. These conditions include, among
other things, that such collateral is a similar multifamily property and has
not previously been subject to a substitution, any substitution may not
materially increase geographic concentration in any state, certain value and
debt service coverage tests must be satisfied and written confirmation must
be received from the rating agencies that any such substitution will not
cause a downgrade, withdrawal or qualification of the ratings then assigned
to the certificates. The PREIT loan borrowers in the aggregate may not
substitute greater than 50% of the aggregate value of the collateral under
the PREIT loans and are permitted no more than four such collateral
substitutions.
The Queens Center Mall Loan
The Loan. The "Queens Center Mall loan," representing 10.26% of the
initial pool balance, was originated by GMACCM on February 4, 1999 and has a
principal balance as of the cut-off date of approximately $100,000,000. The
Queens Center Mall loan is an ARD loan with an anticipated repayment date of
March 1, 2009 and a maturity date of March 1, 2029. The loan is secured by,
among other things, a fee mortgage encumbering an anchored regional mall
located in the Borough of Queens in Elmhurst, New York. The payment terms of
the Queens Center Mall loan require only payments of interest for the first
twelve months after its origination date.
Other payment and prepayment terms for the Queens Center Mall loan are
described on Annex A.
The Borrower. The Queens Center Mall loan was made to Macerich Queens
Limited Partnership, a limited partnership whose sole 1% general partner is
Macerich Queens GP Corp., a Delaware corporation and wholly-owned subsidiary
of The Macerich Company, a Maryland corporation that operates as a publicly
traded real estate investment trust. Macerich Partnership LP, a Delaware
limited partnership, owns the 99% limited partnership interest in the Queens
Center Mall borrower and is an affiliate of The Macerich Company. The
borrower was organized for the limited purpose of owning and operating the
Queens Center Mall property and engaging in certain related activities and
owns no material assets other than those related to its interest in the
Queens Center Mall property. The borrower is not permitted to incur any debt
other than the Queens Center Mall loan and indebtedness specifically
permitted under the mortgage loan documents. See "--Permitted Financing"
below.
The Queens Center Mall Property. The Queens Center Mall property is an
urban shopping mall with approximately 73 in-line stores, a food court and
kiosks. The property consists of approximately 156,194 square feet of in-line
space and a parking garage located in an anchored regional mall. The
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<PAGE>
Queens Center Mall is currently anchored by Macy's and JC Penney which
occupy space that is not part of the collateral for the Queens Center Mall
loan. The appraisal performed for the Queens Center Mall property indicates
that the in-line stores had approximate average sales per square foot of $659
for the twelve-month period ended December, 1997. As of November, 1998, the
Queens Center Mall property was 100% occupied.
The following table summarizes the breakdown of the gross leasable area,
or "GLA," base rent information and sales per square foot or "SF" of in-line
tenants at the Queens Center Mall property:
TEN LARGEST TENANTS
<TABLE>
<CAPTION>
APPROXIMATE ANNUALIZED
LEASE TENANT % OF ANNUALIZED % OF BASE RENT
TENANT NAME EXPIRATION GLA GLA BASE RENT TOTAL RENT PER SF
- -------------------- ------------ --------- -------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Modell's Sporting 1/31/10 20,095 12.87 $421,995 4.48 $21.00
The GAP 1/31/08 8,382 5.37 461,000 4.90 55.00
Warner Bros. Studios 6/30/06 7,900 5.06 165,900 1.76 21.00
Forever 21 1/31/09 7,250 4.64 234,124 2.49 32.29
Children's Place 5/31/02 6,060 3.88 272,700 2.90 45.00
Sam Goody 6/30/08 5,860 3.75 406,098 4.31 69.30
Bang Bang 1/31/01 5,677 3.63 158,956 1.69 28.00
Municipal Credit
Union 3/31/10 5,642 3.61 78,988 0.84 14.00
GAP Kids 1/31/10 5,168 3.31 439,280 4.67 85.00
Victoria's Secret 1/31/07 5,020 3.21 251,000 2.67 50.00
Other Various 79,140 50.67 6,525,209 69.30 82.45
--------- -------- ------------ ------------- ------------
Totals/Avg. 156,194 100.00 $9,415,250 100.00 $60.28
========= ======== ============ ============= ============
</TABLE>
The following table summarizes information related to the expiration of
leases of the Queens Center Mall property:
LEASE EXPIRATION SCHEDULE
<TABLE>
<CAPTION>
NUMBER EXPIRING % TOTAL ANNUALIZED % OF TOTAL
YEAR OF LEASES SF SF BASE RENT BASE RENT
- ------- ----------- ---------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
1999 4 4,449 2.9 $450,395 4.78
2000 12 14,690 9.4 1,256,514 13.35
2001 18 29,538 18.9 2,161,554 22.96
2002 8 13,740 8.8 855,840 9.09
2003 4 3,284 2.1 354,750 3.77
2004 0 0 0 0 0
2005 2 2,000 1.3 116,922 1.24
2006 8 15,112 9.7 696,087 7.39
2007 6 13,527 8.7 876,069 9.30
2008+ 13 21,699 13.9 2,647,119 28.12
</TABLE>
Operating Agreement. The operating agreement between each of JC Penney
Company, Inc. and A&S Real Estate, Inc., an affiliate of Federated Department
Stores, Inc., doing business as Macy's, on the one hand and the borrower on
the other, provides for, among other things, operating cost contributions and
covenants to operate. Under these operating covenants, JC Penney and Macy's
must operate at least 60% of the square footage of each floor of their
respective buildings as department stores or specialty stores under specified
trade names. However, in the event of a condemnation or casualty affecting
either of the anchor stores, neither JC Penney nor Macy's has any obligation
to rebuild its store. See "Risk
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<PAGE>
Factors--A significant tenant ceasing to operate at a retail property could
adversely affect its value and cash flow." The operating agreement also
imposes standards of operation and maintenance upon the borrower for the
property and certain common areas. The operating agreement expires on
December 15, 2138.
The Queens Center Mall property and JC Penney and Macy's properties
currently constitute a single tax lot. The operating agreement specifically
provides for an allocation of real estate taxes and assessments imposed by
The City of New York on the Queens Center Mall property and the JC Penney and
Macy's stores among the borrower (for taxes relating to the Queens Center
Mall property) and JC Penney and Macy's (for taxes relating to their
respective stores). The agreement, however, is not binding on governmental
taxing authorities. Therefore, to the extent that JC Penney and Macy's do not
pay real estate taxes and assessments allocated to them under the operating
agreement, the borrower would be liable for those taxes and the amount of
such unpaid tax would constitute a lien on the Queens Center Mall property
senior to the mortgage.
Defeasance. The borrower may obtain the release of the Queens Center Mall
property from the lien of the mortgage by exercising a defeasance option on
or after the second anniversary of the delivery date.
Value. The Queens Center Mall loan has a 62.50% cut-off date LTV. An
appraisal performed in December, 1998 determined a value for the Queens
Center Mall property of $160,000,000.
Underwritten NCF and DSC Ratio. The Queens Center Mall loan has an
underwritten NCF of $12,209,304 and an underwritten NCF DSCR of 1.61x.
Modified Lockbox; Certain Reserves. The borrower is required to deposit or
cause to be deposited all rents payable by tenants of the Queens Center Mall
property directly into a lockbox account established under a tri-party
agreement among the borrower, the servicer and the lockbox bank. Following
the earliest to occur of the anticipated repayment date, an event of default
under the mortgage loan or a decrease in six-month trailing DSCR for the
Queens Center Mall property below 1.35x, all rents payable by tenants of the
Queens Center Mall are required to be deposited directly into the lockbox
account that will thereafter be controlled by the servicer. The Queens Center
Mall borrower has delivered irrevocable notices to all tenants of the Queens
Center Mall property directing them to comply with the servicer's
instructions to make rent payments directly to a lockbox account. If the
six-month trailing DSCR for the Queens Center Mall property decreases below
1.35x, the borrower is required to deposit certain tenant improvement and
leasing commission reserves with the servicer. If the six-month trailing DSCR
increases to 1.35x or more at any time after being less than 1.35x, the
servicer will direct tenants to send payments to the borrower for deposit
into the lockbox.
Property Management. The Queens Center Mall property is managed by
Macerich Property Management Company, an affiliate of the borrower.
Proposed Expansion. The mortgage permits an affiliate of the borrower to
expand the in-line space at the Queens Center Mall into the space currently
occupied by JC Penney and to relocate JC Penney to an adjacent site if
certain conditions are satisfied. The conditions include:
o maintenance of a six-month trailing DSCR of 1.60x on the Queens Center
Mall loan;
o delivery of evidence of compliance with applicable zoning laws;
o assurance of no reduction in access to and from the former JC Penney
space;
o the borrower makes a deposit with the servicer of an amount equal to
two times the estimated common area maintenance charges for the current
JC Penney space (the deposit will be returned to the borrower if 95% of
the existing space is leased to tenants on a full rent paying basis);
and
o a prohibition upon leasing the new space to specified existing tenants
without a required rating agency confirmation that the relocation of
those tenants would not result in the downgrade, withdrawal or
qualification of its current ratings of the certificates.
Permitted Financing. The borrower is permitted to incur up to $2,000,000
of indebtedness that relates solely to financing capital improvements, tenant
improvements or building equipment and leasing costs for the Queens Center
Mall property, if that indebtedness remains unsecured and subject to a
subordination and intercreditor agreement acceptable to the servicer.
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<PAGE>
Transfer of Ownership Interests. The Queens Center Mall loan permits a
one-time sale or other transfer of the Queens Center Mall property or of the
equity interests in the borrower or its general partner if no event of
default has occurred and is continuing under the mortgage loan and upon the
satisfaction of other conditions including:
o the proposed transferee and its principals must have demonstrated
expertise in owning and operating properties similar in location, size
and operation to the Queens Center Mall property and the transferee and
its principals must have an aggregate net worth and liquidity
reasonably acceptable to the servicer and must not have been a party to
any bankruptcy or similar proceeding within seven years prior to the
date of the transfer;
o the transferee assumes all of the obligations of the borrower under the
mortgage note and other mortgage loan documents by entering into an
assumption agreement satisfactory to the servicer;
o the transferee delivers an endorsement to the existing title policy
insuring the mortgage as modified by the assumption agreement as a
valid first lien on the Queens Center Mall property;
o there is no material litigation pending against the transferee and its
principals that is not reasonably acceptable to the servicer;
o payment of a transfer fee equal to 1% of the outstanding principal
balance of the loan upon transfer approval; and
o the transferee delivers written confirmation to the servicer that the
transfer will not result in any downgrade, withdrawal or qualification
of the then current ratings assigned by rating agencies to the
certificates.
The Ingram Loans
The Loans. The "Ingram loans" are two mortgage loans representing 7.45% of
the initial pool balance that were originated by GMACCM on December 30, 1998
and have a principal balance as of the cut-off date of approximately
$72,640,817. The Ingram loans consist of two separate mortgage loans to two
different "Ingram loan borrowers" that are special purpose, bankruptcy remote
limited liability companies formed for the purposes of purchasing, owning and
operating the related mortgaged properties. The Ingram loans have maturity
dates of July 10, 2015 and are secured by, among other things, fee mortgages
encumbering three office buildings located in Santa Ana, California that
serve as the corporate headquarters for Ingram Micro, Inc. Although each of
S&P and Fitch have affirmed their respective "BBB" and "BBB+" ratings of the
long-term unsecured debt of Ingram, each has issued a ratings alert with a
"negative outlook" on Ingram's unsecured debt. Moody's has assigned a rating
of Baa3 to the bank loan debt of Ingram. The separate mortgage loans which
comprise the Ingram loans are neither cross-collateralized nor
cross-defaulted.
Payment and prepayment terms for the Ingram loans are described on Annex
A.
The Ingram Properties. The Ingram properties consists of three buildings
containing an aggregate of approximately 567,790 square feet. The Ingram
properties were constructed or renovated between 1991 and 1998. The "Ingram
Place One properties" consist of two buildings containing an aggregate of
approximately 396,460 square feet that are collateral for the "Ingram Place
One loan" that has a principal balance as of the cut-off date of
approximately $50,722,972. The "Ingram Place Two property" consists of one
building containing approximately 171,330 square feet that is collateral for
the "Ingram Place Two loan" which has a principal balance as of the cut-off
date of approximately $21,917,844.
Defeasance. Either Ingram loan borrower may obtain the release of the
related Ingram property or properties from the lien of the related mortgage
by exercising a defeasance option on or after the second anniversary of the
delivery date.
Value. The Ingram Place One loan has a 98.30% cut-off date LTV and the
Ingram Place Two loan has a 98.29% cut-off date LTV. Appraisals performed in
December 1998 determined a value for the Ingram Place One properties of
$51,600,000 and the Ingram Place Two property of $22,300,000.
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DSC Ratio. Each Ingram loan has an underwritten NCF DSCR of 1.00x.
The Ingram Leases; Condemnation and Residual Value Insurance. The Ingram
properties are leased in their entirety to Ingram Micro, Inc. under
"triple-net" leases having an initial term of sixteen years and six months.
For a description of credit lease loans and related risks, see "Description
of the Mortgage Pool--Credit Lease Loans" and "Risk Factors--Payments on
credit lease loans are highly dependent upon the creditworthiness of the
credit tenant" in this prospectus supplement. The Ingram loan borrowers can
terminate the leases upon the occurrence of specified condemnation events.
However, the Ingram loan borrowers have obtained condemnation insurance
policies from Chubb Custom Insurance Company that require the insurer to make
certain payments then due and payable under the Ingram loans if Ingram
terminates either of the Ingram leases as a result of specified condemnation
events. Chubb currently has been assigned a claims paying ability of "AAA" by
S&P. In addition, the Ingram loan borrowers have obtained residual value
insurance policies from R.V.I. America Insurance Company that require the
insurer to make payments up to an amount equal to the lesser of the balloon
payment and the indebtedness owing on each of the Ingram loans if the Ingram
loans are not paid in full or sales proceeds of the Ingram properties are
insufficient to pay in full the indebtedness remaining outstanding as of each
Ingram loan's maturity date. For a description of the residual value policies
and related risks, see "Description of the Mortgage Pool--Credit Lease Loans"
and "Risk Factors--Reliance on residual value insurance policies has special
risks."
Lockbox. All rents payable under the Ingram leases are required to be
deposited directly by Ingram into a lockbox account controlled by the
servicer.
The Palmer Center Loan
The Loan. The "Palmer Center loan," representing 5.52% of the initial pool
balance, was originated by GMACCM on December 23, 1998 and has a principal
balance as of the cut-off date of approximately $53,769,239. The Palmer
Center loan is a balloon loan with a maturity date of January 10, 2009. The
Palmer Center loan is secured by, among other things, a fee mortgage
encumbering a condominium interest consisting of three office buildings, a
retail arcade and a parking garage located in Colorado Springs, Colorado. The
Palmer Center loan was made to Palmer Center, Ltd., a special purpose,
bankruptcy remote limited partnership.
Payment and prepayment terms for the Palmer Center loan are described on
Annex A.
The Palmer Center Property. The Palmer Center property consists of
approximately 450,275 net rentable square feet of office space, 8,155 net
rentable square feet of retail space and a parking facility located in a
mixed-use development in Colorado Springs, Colorado. The Palmer Center
property was constructed in phases beginning in 1968 through 1990 and was
most recently renovated in 1998. The Palmer Center property was 97% occupied
as of December, 1998.
Defeasance. The borrower may obtain the release of the Palmer Center
property from the lien of the mortgage by exercising a defeasance option on
or after the second anniversary of the delivery date.
Value. The Palmer Center loan has a 74.47% cut-off date LTV calculated
based on the principal balance as of the cut-off date net of the earnout
reserve amount established for the Palmer Center loan and a 79.66% cut-off
date LTV calculated based on the principal balance of the Palmer Center loan
as of the cut-off date. See "--Earnout and Tenant Improvement Reserves;
Limited Guaranty" below. An appraisal performed in October, 1998 determined a
value for the Palmer Center property of $67,500,000.
DSC Ratio. The Palmer Center loan has an underwritten NCF DSCR of 1.24x
calculated based on the principal balance of the Palmer Center loan as of the
cut-off date net of the Palmer Center earnout reserve amount and an
underwritten NCF DSCR of 1.16x calculated based on the principal balance of
the Palmer Center loan as of the cut-off date.
Lockbox. All rents payable by tenants of the Palmer Center property are
required to be deposited by the borrower into a lockbox account controlled by
the servicer.
Property Management. The Palmer Center property is managed by Unilev
Management Corp., an affiliate of the borrower. Under a property management
and leasing agreement between the borrower and
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Unilev, the borrower consents to Unilev's delegation to Cushman & Wakefield
of Texas, Inc. of some of its property management duties, including duties
related to re-tenanting. The Unilev property management agreement terminates
on December 23, 1999, but will automatically be renewed for one-year periods
unless terminated by either party. Under an assignment and subordination
agreement, Unilev agrees to subordinate its right to receive management fees
to the rights of the lender under the mortgage loan.
Earnout and Tenant Improvement Reserves; Limited Guaranty. The Palmer
Center borrower has provided two letters of credit in an aggregate earnout
reserve amount of $3,500,000 as additional collateral for the Palmer Center
loan. The earnout reserve amount will be released in whole or in part to the
borrower if:
o the Palmer Center property has achieved a DSCR of 1.25x as of the dates
the release is requested and made (calculated based on the principal
balance of the Palmer Center loan net of the earnout reserve amount)
for two consecutive calendar quarters,
o specified lease requirements are satisfied for a portion of the space
currently leased by Oracle Corp., and
o at the time of the proposed release, no event of default has occurred
and remains uncured under the Palmer Center loan.
If the DSCR of the Palmer Center property is below 1.10x (calculated based on
the principal balance of the Palmer Center loan) at any time for a period of
two consecutive calendar quarters, then the Palmer Center borrower may be
required to provide as an additional reserve amount either:
o an additional $1,500,000 letter of credit, or
o cash in the amount of $1,500,000.
If the debt service coverage ratio (calculated based on the principal
balance of the Palmer Center loan) falls below 1.05x for two consecutive
calendar quarters, then the servicer may apply the earnout reserve amount and
the additional reserve amount to partially defease the Palmer Center loan or
for other purposes as the servicer may determine. However, the additional
reserve amount will be released to the Palmer Center borrower if the DSCR
(calculated based on the principal balance of the Palmer Center loan)
thereafter exceeds 1.10x for a period of two consecutive calendar quarters.
On a monthly basis beginning July 1, 1999, the Palmer Center borrower will
deposit all net cash flow from the Palmer Center property into a tenant
improvement reserve until the funds held in the reserve total at least
$1,000,000. In addition, certain sponsors of the Palmer Center borrower have
provided a guaranty of up to $2,000,000 of the tenant improvement and leasing
commission costs relating to the space leased by Oracle Corp. The guaranty
will be reduced dollar-for-dollar, down to a minimum of $1,000,000, to
reflect the amounts deposited in the tenant improvement reserve.
Casualty and Condemnation Insurance. The Palmer Center property is part of
a commercial condominium and is subject to a condominium declaration. The
lien of the Palmer Center mortgage is subordinate to the condominium
declaration. This condominium declaration requires certain insurance proceeds
or condemnation awards resulting from a casualty or condemnation to be
applied to the repair or restoration of specified portions of the Palmer
Center property.
The Squaw Peak Loan
The Loan. The "Squaw Peak loan," representing 3.69% of the initial pool
balance, was originated by GMACCM on December 11, 1998 and has a principal
balance as of the cut-off date of approximately $36,000,000. The Squaw Peak
loan is a balloon loan with a maturity date of December 10, 2008. The Squaw
Peak loan is secured by, among other things, a fee mortgage encumbering three
office buildings located in Phoenix, Arizona. The Squaw Peak loan was made to
Pivotal Simon Office XVI L.L.C., a special purpose limited liability company.
Payment and prepayment terms for the Squaw Peak loan are described on
Annex A.
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The Squaw Peak Property. The Squaw Peak property consists of
approximately 422,385 net rentable square feet of office space. The Squaw
Peak property was constructed between 1985 and 1987. The Squaw Peak property
was 98% occupied as of November, 1998.
Defeasance. The Squaw Peak borrower may obtain the release of the Squaw
Peak property from the lien of the Squaw Peak mortgage by exercising a
defeasance option on or after the second anniversary of the delivery date.
Value. The Squaw Peak loan has a 66.06% cut-off date LTV. An appraisal
performed in October, 1998 determined a value for the Squaw Peak property of
$54,500,00.
DSC Ratio. The Squaw Peak loan has an underwritten NCF DSCR of 1.20x.
Property Management. The Squaw Peak property is managed by Grubb & Ellis
Management Services, Inc.
Debt Service Reserve; Modified Lockbox. Beginning on August 1, 1999, the
Squaw Peak borrower must fund a $1,400,000 debt service reserve by depositing
all net cash flow from the Squaw Peak property into a lockbox account
controlled by the servicer unless:
o the effective gross income of the Squaw Peak property is greater than
$7,375,000, and
o the debt service coverage ratio for the Squaw Peak property is equal to
or greater than 1.25x.
However, the Squaw Peak borrower will not be required to deposit excess
cash flow to fund the debt service reserve if the borrower has otherwise
funded a debt service reserve account with the servicer in an amount
sufficient to reduce the net principal amount of the Squaw Peak loan to
achieve a debt service coverage ratio of 1.25x. The servicer will release
amounts held in the Squaw Peak debt service reserve upon satisfaction of both
of the conditions described above.
The Red Rose Commons Loan
The Loan. The "Red Rose Commons loan," representing 2.91% of the initial
pool balance, was originated by GMACCM on April 28, 1999 and has a principal
balance as of the cut-off date of approximately $28,320,000. The loan is a
balloon loan with a maturity date of May 10, 2009. The Red Rose Commons loan
is secured by, among other things, a fee mortgage encumbering certain
commercial condominium units in a regional power center located in Lancaster,
Pennsylvania. The Red Rose Commons loan was made to Red Rose Commons
Associates, L. P., a special purpose, bankruptcy remote limited liability
company. The Red Rose Commons loan requires monthly payments of interest only
through and including May 10, 2001 and provides for payments of principal and
interest thereafter.
Other payment and prepayment terms for the Red Rose Commons loan are
described on Annex A.
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The Red Rose Commons Property. The Red Rose Commons property consists of
ten of twelve condominium units in a regional power center located in
Lancaster, Pennsylvania. The condominium units which are collateral for the
Red Rose Commons loan consist of approximately 263,452 net rentable square
feet of retail space and storage space which was constructed in 1998 together
with a related undivided interest in the common areas of the shopping center.
Two other condominium units, which are currently occupied by Weis Market and
The Home Depot, are not collateral for the Red Rose Commons loan. The
following table summarizes the net square foot rental information for the
tenants of the Red Rose Commons property:
<TABLE>
<CAPTION>
% OF
TENANT APPROXIMATE NET SF SF TOTAL
- ------------------- ------------------ ----------
<S> <C> <C>
Office Max ......... 30,078 11
Party City ......... 11,491 4
Linens-n-Things ... 39,873 15
Sports Authority .. 43,091 16
Old Navy (The Gap) 15,688 6
Circuit City ....... 32,296 12
Barnes & Noble ..... 26,306 10
Hollywood Video ... 6,106 2
Pep Boys ........... 18,522 7
PetsMart ........... 28,710 11
Old Country Buffet 9,100 3
</TABLE>
Some of the leases have "go dark" provisions that permit the tenant to close
its store and continue to pay rent. However, the Red Rose Commons borrower
generally has the right to cancel these leases after a specified period of
time. In addition, some of the leases include co-tenancy provisions that
permit cancellation of leases if occupancy levels for the Red Rose Commons
property drop substantially.
Defeasance. The Red Rose Commons borrower may obtain the release of the
Red Rose Commons property from the lien of the mortgage by exercising a
defeasance option on or after the second anniversary of the delivery date.
Value. The Red Rose Commons loan has an 80.0% cut-off date LTV. An
appraisal performed in May, 1999 determined a value for the Red Rose Commons
property of $35,400,000.
DSC Ratio. The Red Rose Commons loan has an underwritten NCF DSCR of
1.24x.
Property Management. The Red Rose Commons property is managed by The
Goldenberg Group, Inc., an affiliate of the Red Rose Commons borrower.
Ground Water Remediation. Groundwater remediation arising from the former
use of the Red Rose Commons property by the Aluminum Company of America or
"ALCOA", is currently being conducted at the Red Rose Commons property. Under
the terms of a consent order agreement with the Pennsylvania Department of
Environmental Protection or "PADEP", ALCOA has acknowledged responsibility
for the contamination and ongoing remediation and PADEP has agreed not to
take action against the Red Rose Commons borrower provided that it has not
caused or contributed to the contamination and it complies with the terms of
the consent order. An environmental consultant retained by the servicer at
the borrower's expense will monitor compliance with the consent order. In
addition, an environmental indemnity agreement was delivered by the Red Rose
Commons borrower, Kenneth Goldenberg and PREIT at closing.
The University of Nevada Loan
The Loan. The "University of Nevada loan," representing 2.76% of the
initial pool balance was originated by GMACCM on March 8, 1999 and has a
principal balance as of the cut-off date of approximately $26,856,137. The
University of Nevada loan is a fully amortizing credit lease loan, with a
maturity date of March 10, 2019. The University of Nevada loan is secured by,
among other things, a fee
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mortgage encumbering an academic firefighter training facility campus
located in Carlin, Nevada and an assignment of a twenty-year "triple-net,"
non-cancelable lease from the University and Community College System of
Nevada. Under the terms of the credit lease, ownership of the property will
transfer from the borrower to the University of Nevada at the termination of
the lease. The University of Nevada loan was made to All Star Investments
Nevada, LLC, a special purpose, limited liability company that was formed for
the limited purpose of owning, managing and operating the property.
Payment and prepayment terms for the University of Nevada loan are
described on Annex A.
The University of Nevada Property. The University of Nevada property is a
special use project located near Carlin, Nevada. Improvements consist of
75,709 square feet of space that includes an academic building, a fire
station, a cafeteria, an administration building, residences, grounds and
storage facilities and a building which houses equipment and showers.
Defeasance. The borrower may obtain the release of the University of
Nevada property from the lien of the mortgage by exercising a defeasance
option on or after the second anniversary of the delivery date.
Value. The University of Nevada loan has a 89.52% cut-off date LTV. An
appraisal performed for the University of Nevada property determined a value
of $30,000,000.
DSC Ratio. The underwritten NCF DSCR of the University of Nevada loan is
1.15x.
Lockbox. All rents payable by the University of Nevada are required to be
deposited directly into a lockbox controlled by the lender.
The Holiday Inn Mart Plaza Loan
The Loan. The "Holiday Inn Mart Plaza loan," representing 2.72% of the
initial pool balance, was originated by GMACCM on April 26, 1999 and has a
principal balance as of the cut-off date of approximately $26,476,006. The
Holiday Inn Mart Plaza loan is an ARD loan with an anticipated repayment date
of June 1, 2009 and a maturity date of June 1, 2024. The loan is secured by,
among other things, an air rights leasehold mortgage encumbering a full
service, Holiday Inn flagged hotel located in Chicago, Illinois. The "Holiday
Inn Mart Plaza borrower" is both the Wolf Point Hotel Company, a special
purpose general partnership, and a trust of which Wolf Point Hotel Company is
the sole beneficiary.
Payment and prepayment terms for the Holiday Inn Mart Plaza loan are
described on Annex A.
The Holiday Inn Mart Plaza Property. The Holiday Inn Mart Plaza property
consists of a full service hotel containing 528 rooms together with meeting
and banquet space, restaurant facilities and a fitness center operated under
the Holiday Inn brand name located in Chicago, Illinois. The Holiday Inn Mart
Plaza property was constructed in 1977 and renovated in 1997 and 1998.
Defeasance. The Holiday Inn Mart Plaza borrower may obtain the release of
the Holiday Inn Mart Plaza property from the lien of the mortgage by
exercising a defeasance option on or after May 1, 2003.
Value. The Holiday Inn Mart Plaza loan has a 47.36% cut-off date LTV. An
appraisal performed in March, 1999 determined a value for the Holiday Inn
Mart Plaza property of $55,900,000.
DSC Ratio. The Holiday Inn Mart Plaza loan has an underwritten NCF DSCR of
2.08x.
Franchise and Property Management. The Holiday Inn Mart Plaza property
operates as a Holiday Inn under license from Holiday Hospitality Franchising,
Inc. or "HHFI." The servicer generally has the right to receive notice from
HHFI of certain defaults under the license agreement, an opportunity to cure
those defaults and the right to obtain a new license from HHFI following
foreclosure upon satisfaction of specified conditions. The Holiday Inn Mart
Plaza property is managed by Hostmark Investors, L.P.
Lockbox. The Holiday Inn Mart Plaza borrower is obligated to establish a
lockbox account controlled by the servicer three months prior to the loan's
anticipated repayment date into which the Holiday Inn Mart Plaza borrower
must deposit all sums collected from the Holiday Inn Mart Plaza property.
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Fairfield Towers
The Loan. The "Fairfield Towers loan," representing 2.58% of the initial
pool balance, was originated by GMACCM on February 22, 1999 and has a
principal balance as of the cut-off date of approximately $25,177,781. The
Fairfield Towers loan is a balloon loan with a maturity date of March 10,
2009. The Fairfield Towers loan is secured by, among other things, a fee
mortgage encumbering 977 residential condominium units located in Brooklyn,
New York. The loan was made to Fairfield Presidential Associates, L.P., a
special purpose, bankruptcy remote, limited liability company.
Payment and prepayment terms for the Fairfield Towers loan are described
on Annex A.
The Fairfield Towers Property. The Fairfield Towers property consists of
977 of 1,152 residential condominium units in a condominium development
located in Brooklyn, New York, together with a related undivided interest in
the common areas of the property. Approximately 61.21% of the units are
subject to rent stabilization. The Fairfield Towers property was constructed
between 1964 and 1966.
Defeasance. The Fairfield Towers borrower may obtain the release of the
Fairfield Towers property from the lien of the mortgage by exercising a
defeasance option on or after the second anniversary of the delivery date.
Value. The Fairfield Towers loan has a 74.48% cut-off date LTV. An
appraisal performed in May, 1998 determined a value for the Fairfield Towers
property of $33,804,200.
DSC Ratio. The Fairfield Towers loan has an underwritten NCF DSCR of
1.23x.
Property Management. The Fairfield Towers property is managed by Fairfield
Presidential Management Corp., an affiliate of the Fairfield Towers borrower.
Mezzanine Financing. The limited partner of the Fairfield Towers borrower
has pledged its limited partnership as collateral for a note having an
outstanding principal balance of approximately $10,000,000 as of the closing
date of the Fairfield Towers loan. The note is held by an affiliate of the
Fairfield Towers borrower.
The 729 Seventh Avenue Loan
The Loan. The "729 Seventh Avenue loan," representing 2.40% of the initial
pool balance, was originated by GMACCM on December 29, 1998 and has a
principal balance as of the cut-off date of approximately $23,412,934. The
729 Seventh Avenue loan is a balloon loan with a maturity date of January 10,
2009. The 729 Seventh Avenue loan is secured by, among other things, a fee
mortgage encumbering an office building located at 729 Seventh Avenue in New
York City, New York. The 729 Seventh Avenue loan was made to 729 Acquisition
LLC, a special purpose, bankruptcy remote, limited liability company.
Payment and prepayment terms for the 729 Seventh Avenue loan are described
on Annex A.
The 729 Seventh Avenue Property. The 729 Seventh Avenue property consists
of one of two condominium units located at 729 Seventh Avenue in New York
City, New York. The condominium unit that is collateral for the 729 Seventh
Avenue loan represents 85% of the condominium interests and consists of
approximately 163,400 net rentable square feet of office space which was
constructed in 1916 and renovated in 1984. The second condominium unit, which
represents 15% of the condominium interests, is not collateral for the 729
Seventh Avenue loan. The 729 Seventh Avenue borrower has delivered to the
holder of the 729 Seventh Avenue loan an irrevocable proxy permitting the
holder, among other things, to vote and act as unit owner with respect the
729 Seventh Avenue borrower's condominium unit under specified circumstances.
The 729 Seventh Avenue property was 99% occupied as of November, 1998.
Defeasance. The 729 Seventh Avenue borrower may obtain the release of the
729 Seventh Avenue property from the lien of the 729 Seventh Avenue mortgage
by exercising a defeasance option on or after the second anniversary of the
delivery date.
Value. The 729 Seventh Avenue loan has a 61.66% cut-off date LTV
calculated based on the principal balance as of the 729 Seventh Avenue loan
as of the cut-off date net of the 729 Seventh Avenue
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earnout reserve amount and a 63.28% cut-off date LTV calculated on the
principal balance of the 729 Seventh Avenue loan as of the cut-off date. See
"--Earnout Reserve" below. An appraisal performed in November, 1998
determined a value for the 729 Seventh Avenue property of $37,000,000.
DSC Ratio. The 729 Seventh Avenue loan has an underwritten NCF DSCR of
1.24x.
Property Management. The 729 Seventh Avenue property is managed by
Meringoff Properties, Inc., an affiliate of the 729 Seventh Avenue borrower.
Earnout Reserve. The 729 Seventh Avenue borrower has deposited with the
holder of the 729 Seventh Avenue loan cash in the amount of $600,000 in an
earnout reserve as additional collateral for the 729 Seventh Avenue loan. The
earnout reserve amount may be released to the 729 Seventh Avenue borrower
upon delivery to the servicer before March 29, 2000, among other things,
evidence that an irrevocable sign license agreement has been executed for an
outdoor advertising display on the roof of the 729 Seventh Avenue property
for a term of not less than three years that yields net annual rental
payments of not less than $600,000 to the 729 Seventh Avenue borrower. If the
net annual rental payments under a sign license agreement are less than
$600,000, the 729 Seventh Avenue earnout reserve amount will be released to
the 729 Seventh Avenue borrower at any time the 729 Seventh Avenue loan
achieves a DSCR of 1.25x calculated based on a trailing six months basis.
THE SELLER
The seller is GMAC Commercial Mortgage Corporation, a corporation
organized under the laws of the State of California. The seller is an
affiliate of the depositor and an indirect wholly-owned subsidiary of GMAC
Mortgage Group, Inc., which is a wholly-owned direct subsidiary of General
Motors Acceptance Corporation.
The seller provided the information set forth in this prospectus
supplement concerning the seller and the underwriting conducted by it with
respect to the mortgage loans. Neither the depositor nor the underwriters
make any representation or warranty as to the accuracy or completeness of
such information.
UNDERWRITING MATTERS
Environmental Assessments
"Phase I" environmental site assessments or updates of previously
conducted assessments were performed on all of the mortgaged properties.
"Phase II" environmental site assessments were performed on some mortgaged
properties. These environmental site assessments were performed for the
seller or the report was delivered to the seller as part of its acquisition
or origination of the mortgage loan. For all but four of the mortgaged
properties which represent 4.32% of the initial pool balance, these
environmental assessments were performed during the 12-month period before
the cut-off date.
Material adverse environmental conditions or circumstances revealed by
these environmental assessments with respect to the mortgaged properties are
disclosed in "Risk Factors--Adverse environmental conditions may reduce or
delay your payments."
The information contained in this prospectus supplement is based on the
environmental assessments and has not been independently verified by the
depositor, the seller, the servicer, the underwriters or any of their
respective affiliates.
Property Condition Assessments
Inspections or updates of previously conducted inspections of all except 2
of the mortgaged properties were conducted for the seller by independent
licensed engineers and/or architects. With respect to all but 2 of the
mortgaged properties, which secure mortgage loans representing 0.98% of the
initial pool balance, such inspections were conducted within the 12-month
period before the cut-off date for the related mortgage loan. Such
inspections were generally commissioned to inspect the exterior walls,
roofing, interior construction, mechanical and electrical systems and general
condition of the site,
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buildings and other improvements located at a mortgaged property. The
resulting reports on some of the mortgaged properties indicated a variety of
deferred maintenance items and recommended capital expenditures. In some
instances, repairs or maintenance were completed prior to closing or cash
reserves were established to fund such deferred maintenance and/or
replacement items.
Appraisals
An appraisal for each mortgaged property was performed or an existing
appraisal updated on behalf of the seller. For all but one of the mortgaged
properties, which secures a mortgage loan representing 0.51% of the initial
pool balance, the appraisals were performed during the 12-month period before
the cut-off date. The appraised value of the mortgaged property or properties
is greater than the original principal balance of the mortgage loan or the
aggregate original principal balance of any set of cross-collateralized
loans. All appraisals except one were conducted by an independent appraiser
that is state certified and/or designated as a member of the Appraisal
Institute. The appraisal for each mortgaged property or a separate letter
contains a statement by the appraiser to the effect that the appraisal
guidelines set forth in Title XI of the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, as amended, were followed in preparing
such appraisal. However, none of the depositor, the underwriters, or the
seller has independently verified the accuracy of the appraiser's statement.
For a discussion of the risks related to appraisals, see "Risk
Factors--Losses may result if the servicer is unable to sell a mortgaged
property for its appraised value."
For information about the values of the mortgaged properties available to
the depositor as of the cut-off date, see Annex A to this prospectus
supplement.
HAZARD, LIABILITY AND OTHER INSURANCE
Most of the mortgage loans require that the mortgaged property be insured
by a hazard insurance policy subject to a customary deductible and in an
amount at least equal to the lesser of the outstanding principal balance of
the mortgage loan and 100% of the full insurable replacement cost of the
improvements located on the mortgaged property. If applicable, the policy
contains appropriate endorsements to avoid the application of co-insurance
and does not permit reduction in insurance proceeds for depreciation. Some
credit lease loans allow the tenant under the credit lease to self-insure.
Flood insurance, if available, must be in effect for any mortgaged
property that at the time of origination included any area identified in the
Federal Register by the Federal Emergency Management Agency as having special
flood hazards. The flood insurance policy must meet the requirements of the
then current guidelines of the Federal Insurance Administration, be provided
by a generally acceptable insurance carrier and be in an amount representing
coverage not less than the least of:
o the outstanding principal balance of the mortgage loan,
o the full insurable value of the mortgaged property,
o the maximum amount of insurance available under the National Flood
Insurance Act of 1968, and
o 100% of the replacement cost of the improvements located on the
mortgaged property, except in some cases where self-insurance was
permitted.
Generally, the standard form of hazard insurance policy covers physical
damage or destruction of the improvements on the mortgaged property caused by
fire, lightning, explosion, smoke, windstorm and hail, riot or strike and
civil commotion. The policies may also contain some conditions and exclusions
to coverage.
Each mortgage generally also requires the borrower to maintain
comprehensive general liability insurance against claims for personal and
bodily injury, death or property damage occurring on, in or about the
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 twelve months.
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In general, the mortgaged properties are not insured for earthquake risk.
For mortgaged properties located in California and some other seismic zones,
the seller generally conducted seismic studies to assess the "probable
maximum loss" for the related mortgaged properties. In certain circumstances,
the related borrower was required to obtain earthquake insurance covering the
mortgaged properties. Some of these mortgaged properties may be insured for
earthquake risk in amounts less than the outstanding principal balances of
the mortgage loan.
Earnouts and Additional Collateral Loans
Some of the mortgage loans are additionally secured by cash reserves or
irrevocable letters of credit that will be released upon satisfaction by the
borrower of certain leasing-related or other conditions including, in some
cases, achieving certain debt service coverage ratios or loan-to-value
ratios. If these conditions are not met, under some mortgage loans, the
related reserve or credit enhancement amount will be applied to partially
defease or prepay the related mortgage loan. Under other mortgage loans,
amounts will be retained as additional collateral. Any resulting partial
prepayment may not be required to be accompanied by payment of a prepayment
premium or yield maintenance payment. For a description of the cash reserves
or letters of credit and related earnout information, see Annex A.
ASSIGNMENT OF THE MORTGAGE LOAN; REPURCHASES AND SUBSTITUTIONS
On or before June 9, 1999, the depositor will acquire the mortgage loans
directly or indirectly from the seller, under a mortgage loan purchase
agreement dated as of the delivery date or a similar agreement to be entered
into by or assigned to the depositor, who will thereupon assign its interests
in the mortgage loans, without recourse, to the trustee for the benefit of
the holders of the certificates.
The seller is a "mortgage asset seller" for purposes of the prospectus.
The seller is generally required to deliver or cause to be delivered the
following documents, to the trustee:
o the original mortgage note, endorsed, without recourse, in blank or to
the order of the trustee;
o the original or a copy of the 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;
o the original or a copy of any 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, in each case with
evidence of recording thereon, unless such document(s) have not been
returned by the applicable recorder's office;
o an assignment of each mortgage in blank or in favor of the trustee, in
recordable form;
o an assignment of any 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;
o any UCC financing statements and original assignments thereof to the
trustee;
o 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 the mortgage loan; and
o when relevant, the ground lease or a copy.
If the seller cannot deliver the original mortgage note for any mortgage
loan, the seller will deliver a copy or duplicate original of such mortgage
note, together with an affidavit certifying that the original thereof has
been lost or destroyed.
The trustee will be required to review the documents delivered to it with
respect to each mortgage loan within 60 days following the delivery date. The
trustee will hold the documents in trust. Within 45
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days following the delivery date, the trustee, at the expense of the seller,
will cause the assignment of each mortgage and any assignments of rents and
leases 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.
If the trustee determines that any of these documents were not delivered
or that any document is defective, and the omission or defect materially and
adversely affects the value of the related mortgage loan or the interests of
certificateholders in the loan, the seller may deliver the document or cure
the defect within 90 days after its receipt of notice of the omission or
defect. If the seller does not cure the omission or defect, the mortgage loan
purchase agreement requires the seller to repurchase the affected mortgage
loan or substitute a replacement mortgage loan for the affected mortgage loan
and pay any substitution shortfall amount. The seller will be obligated to
repurchase the affected mortgage loan within the 90-day period at a "purchase
price" at least equal to the unpaid principal balance of such mortgage loan,
together with any accrued but unpaid interest to but not including the due
date in the collection period of the repurchase and any related unreimbursed
servicing advances. The seller's repurchase or substitution obligation will
be the sole remedy available to the certificateholders and the trustee. None
of the depositor or any other person or entity will be obligated to
repurchase the affected mortgage loan if the seller defaults on its
obligation to do so.
Instead of repurchasing a mortgage loan, the seller is permitted for two
years following the delivery date to substitute a new replacement mortgage
loan for the affected mortgage loan. To qualify as a replacement mortgage
loan, the replacement mortgage loan must have financial terms substantially
similar to the deleted mortgage loan and meet a number of specific
requirements.
A "replacement mortgage loan" must:
o have a stated principal balance of not more than the stated principal
balance of the deleted mortgage loan,
o accrue interest at a rate of interest at least equal to that of the
deleted mortgage loan,
o be a fixed-rate mortgage loan,
o have a remaining term to stated maturity or anticipated repayment date,
in the case of an ARD loan, of not greater than, and not more than two
years less than, the deleted mortgage loan, and
o be a "qualified replacement mortgage" within the meaning of 860G(a)(4)
of the Code.
In addition, the seller must deposit in the distribution account a
substitution shortfall amount, equal to any excess of the purchase price of
the deleted mortgage loan over the initial stated principal balance of the
replacement mortgage loan.
REPRESENTATIONS AND WARRANTIES; REPURCHASES
In the mortgage loan purchase agreement or in related documentation,
subject to some exceptions, the seller makes representations and warranties
for each of the mortgage loans, as of the delivery date, or as of the date
stated in the representation and warranty. Some of these representations and
warranties are listed below.
(1) Immediately before the transfer to the depositor, the seller had good
and marketable title to, and was the sole owner and holder of, the
mortgage loan, free and clear of any and all liens, encumbrances and
other interests on, in or to the mortgage loan other than, in some
cases, the right of a subservicer to primary service the mortgage
loan.
(2) The seller has full right and authority to sell, assign and transfer
the mortgage loan.
(3) The information pertaining to the mortgage loan provided in the
mortgage loan schedule attached to the mortgage loan purchase
agreement was true and correct in all material respects as of the
cut-off date for such mortgage loan.
(4) The mortgage loan was not, as of the cut-off date for the mortgage
loan, 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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(5) 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 mortgage loan, its successors
and assigns, as to the first priority lien of the mortgage in the
original principal amount of the mortgage loan after all advances of
principal, subject only to permitted encumbrances including:
o the lien of current real property taxes and assessments not yet due
and payable,
o covenants, conditions and restrictions, rights of way, easements
and other matters of public record, and
o 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 for the mortgage loan.
The permitted encumbrances 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.
(6) The seller has not waived any material default, breach, violation or
event of acceleration existing under the related mortgage or mortgage
note.
(7) There is no valid offset, defense or counterclaim to such mortgage
loan.
(8) The related mortgaged property is, except as otherwise stated in the
related engineering report, to the knowledge of the seller, free and
clear of any damage that would materially and adversely affect its
value as security for the mortgage loan and the seller has no actual
notice of the commencement of a proceeding for the condemnation of
all or any material portion of the mortgaged property.
(9) At origination, the mortgage loan complied with all applicable usury
laws.
(10) The proceeds of the mortgage loan have been fully disbursed and there
is no requirement for future advances thereunder.
(11) The mortgage note and mortgage for the mortgage loan and all other
documents and instruments evidencing, guaranteeing, insuring or
otherwise securing the 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.
(12) All improvements upon the mortgaged property are insured against loss
by hazards of extended coverage in an amount, subject to a customary
deductible, at least equal to the lesser of the outstanding balance
of the mortgage loan and 100% of the full replacement cost of the
improvements located on the mortgaged property, and the related
hazard insurance policy contains appropriate endorsements to avoid
the application of co-insurance provisions and does not permit
reduction in insurance proceeds for depreciation.
(13) The 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 the seller, or for which the related
report was delivered to the seller in connection with its origination
or acquisition of such mortgage loan; and the 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 the
mortgaged property that was not disclosed in the related report(s).
(14) The mortgage loan is not cross-collateralized with a mortgage loan
other than another mortgage loan included in the mortgage pool.
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(15) All escrow deposits relating to the mortgage loan that were required
to be deposited with the mortgagee or its agent under the terms of
the related loan documents have been so deposited.
(16) As of the date of origination of the mortgage loan and, to the actual
knowledge of the seller, as of the delivery 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 before that created by the related mortgage, except those which
are insured against by the title policy referred to in (5) above.
(17) 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.
(18) To the seller's knowledge, based on due diligence customarily
performed in the origination of comparable mortgage loans by the
seller, as of the date of origination of the mortgage loan, the
related mortgagor or operator was in possession of all material
licenses, permits and authorizations required by applicable laws for
the ownership and operation of the mortgaged property as it was then
operated.
(19) The mortgage or mortgage note, together with applicable state law,
contains customary and enforceable provisions, subject to the
exceptions listed in paragraph (11) above, 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.
(20) In connection with the origination or acquisition of the mortgage
loan, the seller has inspected or caused to be inspected the
mortgaged property.
(21) The mortgage loan contains provisions for the acceleration of the
payment of the unpaid principal balance of the mortgage loan if,
without complying with the requirements of the mortgage loan, the
related mortgaged property is directly or indirectly transferred or
sold.
(22) The related mortgagor is an entity, other than an individual, whose
organizational documents or the mortgage loan documents provide
substantially to the effect that such mortgagor:
o is formed or organized solely for the purpose of owning and operating
one or more of the mortgaged properties securing the mortgage loan;
o may not engage in any business unrelated to such mortgaged property or
properties;
o may not incur indebtedness other than as permitted by the mortgage or
other mortgage loan documents;
o has its own books and records separate and apart from any other person;
o holds itself out as a legal entity, separate and apart from any other
person; and
o does not have any material assets other than those related to its
interest in and the operation of the mortgaged property or properties.
If any of the foregoing representations and warranties of the seller are
materially breached for any of the mortgage loans, the seller may cure the
breach within 90 days after its receipt of notice of the breach. If the
seller does not cure the breach, the mortgage loan purchase agreement
requires the seller to repurchase the affected mortgage loan or substitute a
replacement mortgage loan. The seller will be obligated to repurchase the
affected mortgage loan within such 90-day period at the applicable purchase
price or, for two years following the delivery date, substitute a replacement
mortgage loan for the affected mortgage loan and pay any substitution
shortfall amount. The seller's repurchase or substitution obligation will be
the sole remedy available to the certificateholders and the trustee for any
breach of the seller's representations and warranties regarding any of the
mortgage loans. The seller will be the sole warranting party for each
mortgage loan. None of the depositor nor any other person or entity will be
obligated to repurchase any affected mortgage loan as a result of a breach of
the seller's representations and warranties if the seller defaults on its
obligation to do so. See "The Pooling and Servicing
Agreements--Representations and Warranties; Repurchases" in the prospectus.
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POOL CHARACTERISTICS; CHANGES IN MORTGAGE POOL
The description in this prospectus supplement of the mortgage pool and the
mortgaged properties is based upon the mortgage loans that are expected to
constitute the mortgage pool at the time the offered certificates are issued.
The principal balances of the mortgage loans are reduced to reflect the
scheduled principal payments due on or before the cut-off date. Before the
issuance of the offered certificates, a mortgage loan may be removed from the
mortgage 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 pool before the issuance of the offered certificates, unless
including such mortgage loans would materially alter the characteristics of
the mortgage pool as described in this prospectus supplement. As a result,
the range of mortgage rates and maturities and some other characteristics of
the mortgage pool may vary depending on the actual composition of the
mortgage pool at the time the offered certificates are issued.
A Current Report on 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 and the mortgage loan
purchase agreement, with the SEC within fifteen days after the initial
issuance of the offered certificates. If mortgage loans are removed from or
added to the mortgage pool as described in the preceding paragraph, such
removal or addition will be noted in the Form 8-K.
SERVICING OF THE MORTGAGE LOANS
THE SERVICER
As of March 31, 1999, GMAC Commercial Mortgage Corporation had a total
commercial and multifamily mortgage loan servicing portfolio of approximately
$53.975 billion. See "GMAC Commercial Mortgage Corporation" in the
prospectus.
Set forth below is a description of 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 is a "master servicer" and a "special servicer" for
purposes of the prospectus. Information provided in the prospectus should be
read taking account of all supplemental information contained in this
prospectus supplement.
SERVICING STANDARD
The servicer will be responsible for the servicing and administration of
the mortgage loans. The servicer, either directly or through sub-servicers,
will be required to service and administer the mortgage loans under the
following "servicing standard":
o in the best interests of and for the benefit of the certificateholders
as determined by the servicer in its good faith and reasonable
judgment,
o in accordance with applicable law, the terms of the pooling and
servicing agreement and the terms of the respective mortgage loans, and
o to the extent consistent with the foregoing, in the same manner as is
normal and usual in its general mortgage servicing and REO property
management activities with respect to mortgage loans and REO properties
that are comparable to those for which it is responsible under the
pooling and servicing agreement.
SPECIALLY SERVICED MORTGAGE LOANS
A "specially serviced mortgage loan" is any mortgage loan as to which any
of the following "special servicing events" has occurred:
(1) any balloon payment is more than 30 days late;
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(2) any monthly payment or other payment required under the mortgage
note or the mortgage(s) (other than a balloon payment) is more than
60 days late;
(3) 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 mortgage note or the 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;
(4) a default under the loan documents, other than as described in
clause (1) or (2) above, that materially impairs the value of the
mortgaged property as security for the mortgage loan, or otherwise
materially and adversely affects the interests of
certificateholders, exists for the applicable grace period under
the terms of the mortgage loan or, if no grace period is specified,
60 days;
(5) 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, marshaling of
assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, has been entered against
the borrower and the decree or order shall have remained in force
undischarged or unstayed for 60 days;
(6) the borrower shall have consented to the appointment of a
conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshaling of assets and liabilities or
similar proceedings of or relating to the borrower or of or
relating to all or substantially all of its property;
(7) the borrower has 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
(8) the servicer has received notice of the commencement of foreclosure
or similar proceedings with respect to the related mortgaged
property or properties.
A specially serviced mortgage loan will become a "corrected mortgage loan"
if each special servicing event that applies to that mortgage loan is
remedied as follows:
o for the circumstances described in clauses (1) and (2) of the preceding
paragraph, the related borrower has made three consecutive full and
timely monthly payments under the terms of such mortgage loan (as the
terms may be changed or modified in 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);
o for the circumstances described in clauses (3), (5), (6) and (7) of the
preceding paragraph, the circumstances cease to exist in the good faith
and reasonable judgment of the servicer;
o for the circumstances described in clause (4) of the preceding
paragraph, the default is cured; and
o for the circumstances described in clause (8) of the preceding
paragraph, the 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 it deems necessary and appropriate, consistent with the servicing
standard. 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 will subsequently
become a corrected mortgage loan, unless all special servicing events related
to each other mortgage loan that is cross-collateralized with it are
corrected as described in the preceding paragraph.
TERMINATION OF THE SERVICER WITH RESPECT TO SPECIALLY SERVICED MORTGAGE
LOANS AND REO PROPERTIES
The holder or holders of certificates entitled to more than 50% of the
voting rights allocated to the controlling class may at any time terminate
substantially all of the rights and duties of the servicer to
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service specially serviced mortgage loans and REO properties and appoint a
"replacement special servicer" to perform such duties under substantially the
same terms and conditions as applicable to the servicer. The holder(s)
entitled to more than 50% of the voting rights allocated to the controlling
class will designate a replacement by delivering to the trustee a written
notice stating such designation. The trustee will, promptly after receiving
that notice, notify the rating agencies and the servicer. The "controlling
class" will be the most subordinate class of principal balance certificates
outstanding, with the Class A-1 and Class A-2 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. 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, provided that if two or more classes of principal balance
certificates have the largest certificate balance, the most subordinate class
will be the controlling class. Initially the controlling class will be the
Class N certificates. It is anticipated that the servicer or an affiliate
will acquire certain subordinate certificates, including the Class N
certificates.
The designated replacement will become the replacement special servicer as
of the date the trustee has received:
o written confirmation from each rating agency stating that if the
designated replacement were to serve as replacement special servicer
under the pooling and servicing agreement, none of the then-current
ratings of the outstanding classes of the certificates would be
qualified, downgraded or withdrawn as a result;
o a written acceptance of all obligations of a replacement special
servicer, executed by the designated replacement; and
o an opinion of counsel to the effect that the designation of the
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 the designated replacement 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 in a proceeding in equity or at law.
The servicer will resign from its duties in respect of specially serviced
mortgage loans and REO properties simultaneously with the designated
replacement's becoming the replacement special servicer under the pooling and
servicing agreement. Any replacement special servicer may be similarly
replaced by the holder or holders of certificates entitled to more than 50%
of the voting rights allocated to the controlling class.
Generally, 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 the Master
Servicer and the Depositor." A replacement special servicer will also be
responsible for performing the servicing and other administrative duties of
the servicer in this prospectus supplement or a master servicer under "The
Pooling and Servicing Agreements" in the prospectus, to the extent the duties
relate to specially serviced mortgage loans and REO properties.
Following any appointment of a replacement special servicer, the servicer
will continue to collect information and prepare all reports to the trustee
and to pay the trustee's fee based on the trustee fee rate provided in the
pooling and servicing agreement for any specially serviced mortgage loans and
REO properties. The servicer will also provide incidental services on
specially serviced mortgage loans and REO properties as required by the
pooling and servicing agreement. Unless the same person acts in the capacity
as both servicer and special servicer, 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.
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The controlling class may have special relationships and interests that
conflict with those of the holders of one or more classes of certificates. In
addition, the controlling class does not have any duties to the holders of
any class of certificates. It may act solely in the interests of the
certificateholders of the controlling class and will have no liability to any
other certificateholders for having done so. No certificateholder may take
any action against the controlling class for having acted solely in the
interests of the certificateholders of the controlling class.
SERVICING AND OTHER COMPENSATION AND PAYMENT OF EXPENSES
The principal compensation to be paid to the servicer in respect of its
servicing activities generally will be the servicing fee, the special
servicing fee, the workout fee and the liquidation fee.
Servicing Fee
The "servicing fee" will be a fee payable monthly on a loan-by-loan basis
from amounts received or advanced for 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). The servicing fee
will accrue at the servicing fee rate set forth as an annual percentage in
Annex A for each mortgage loan. The servicing fee will be computed on the
same basis and the same principal amount as any related interest payment due
or deemed due on the related mortgage loan is computed.
Special Servicing Fee
The "special servicing fee" will accrue solely for each specially serviced
mortgage loan and each mortgage loan for which the related mortgaged property
has become an REO property. The special servicing fee will accrue at a rate
equal to 0.25% per annum, on the same basis and the same principal amount as
any related interest payment due or deemed due on the mortgage loan is
computed, and will be payable monthly from general collections on the
mortgage loans then on deposit in the certificate account.
Workout Fee
A "workout fee" will generally be payable for each corrected mortgage
loan. For each corrected mortgage loan, the workout fee will be 1.0% of each
collection of interest and principal, including scheduled payments,
prepayments, balloon payments and payments at maturity, received on the
mortgage loan for so long as it remains a corrected mortgage loan. The
workout fee for any corrected mortgage loan will cease to be payable if the
loan again becomes a specially serviced mortgage loan or if the related
mortgaged property becomes an REO property. However, a new workout fee will
become payable if the mortgage loan again becomes a corrected mortgage loan.
If the servicer is terminated other than for cause or resigns from any or all
of its servicing duties, it will retain the right to receive all workout fees
payable for 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 the
termination or resignation. The successor servicer or replacement special
servicer will not be entitled to any portion of these workout fees, in each
case until the workout fee for any such loan ceases to be payable in
accordance with the preceding sentence.
Liquidation Fee
A "liquidation fee" will be payable for each specially serviced mortgage
loan for which the servicer obtains a full or discounted payoff from the
related borrower and, except as described below, for each specially serviced
mortgage loan or REO property for which the servicer receives any liquidation
proceeds. For each of these specially serviced mortgage loans and REO
properties, the liquidation fee will be 1.0% of the related payment or
proceeds. No liquidation fee will be payable on liquidation proceeds received
from 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
as
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a result of the termination of the trust. If, however, liquidation proceeds
are received on any corrected mortgage loan and the servicer is properly
entitled to a workout fee, the workout fee will be payable based on the
portion of such liquidation proceeds that constitute principal and/or
interest.
Additional Compensation
The servicer will be entitled to 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 or
ancillary fees, in each case to the extent actually paid by a borrower under
a mortgage loan.
The servicer will be entitled to prepayment interest excesses and balloon
payment interest excesses collected on the mortgage loans. The servicer will
also be entitled to any default interest actually collected on the mortgage
loans that is not allocable to cover interest on any advances made in respect
of the related mortgage loan.
Generally, if a borrower voluntarily prepays a mortgage loan, in whole or
in part, after the due date in any collection period, the amount of interest,
net of related servicing fees and, if applicable, excess interest, accrued on
the prepayment from that 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,
before the due date in any collection period and does not pay interest on
that prepayment through the due date, then the shortfall in a full month's
interest net of related servicing fees and, if applicable, excess interest on
such prepayment will constitute a "prepayment interest shortfall."
Similarly, if the due date for any balloon payment occurs after the normal
due date in any collection period, the amount of interest net of related
servicing fees and, if applicable, excess interest accrued on the related
balloon loan from such normal due date to the maturity date will, to the
extent actually collected in connection with the payment of such balloon
payment on or before the succeeding determination date, constitute a "balloon
payment interest excess." Conversely, if the due date for any balloon payment
occurs before the due date for monthly payments in any collection period, the
amount of interest net of related servicing fees and, if applicable, excess
interest that would have accrued on the related balloon loan from the stated
maturity date through such due date 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.
If any mortgage loan with a due date after the determination date in any
month is prepaid in full or in part, including, without limitation, an early
balloon payment during any collection period, and such prepayment is applied
to such mortgage loan before such mortgage loan's due date in the next
succeeding collection period, the amount of interest that would have accrued
at the related net mortgage rate on the amount of such prepayment from the
date as of which such prepayment was received to but not including the due
date of such mortgage loan in the next succeeding collection period, to the
extent not collected from the related borrower without regard to any
prepayment premium or excess interest that may have been collected, and to
the extent that any portion thereof does not represent a balloon payment
interest shortfall, will constitute an "extraordinary prepayment interest
shortfall." The servicer will cover, out of its own funds, any balloon
payment interest shortfalls, prepayment interest shortfalls and extraordinary
prepayment interest shortfalls incurred on the mortgage loans during any
collection period; provided, however, that with respect to those mortgage
loans having due dates which fall on or before the determination date, the
servicer will cover prepayment interest shortfalls only to the extent of its
aggregate master servicing fee for the same collection period calculated for
all mortgage loans at a rate equal to the "master servicing fee rate" of
0.02%.
The servicer will be authorized to invest or direct the investment of
funds held in any and all accounts maintained by it that constitute part of
the certificate account, the interest reserve account and the REO account, if
established. Any replacement special servicer will be authorized to invest or
direct the investment of funds held in the REO account, if established. The
servicer and replacement special servicer, respectively, will be entitled to
retain any interest or other income earned on such funds, but will
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be required to cover any losses from its own funds without any right to
reimbursement. The servicer and replacement special servicer will have these
rights and obligations whether or not the servicer or replacement special
servicer, as applicable, actually directs the investment of such funds.
As compensation for performing its duties for specially serviced mortgage
loans and REO properties, a 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 those duties. A replacement special servicer will also be entitled
to any default interest actually collected on the mortgage loans that is
allocable to the period that the mortgage loan constituted a specially
serviced mortgage loan and that is not allocable to cover interest on any
advances made on the mortgage loan.
Generally, the servicer and any replacement special servicer will be
required to pay their respective overhead and general and administrative
expenses incurred as a result of servicing activities under the pooling and
servicing agreement, including the fees of any sub-servicers retained by it.
The servicer and any replacement special servicer will not be entitled to
reimbursement for these expenses unless expressly provided in the pooling and
servicing agreement. Servicing advances will be reimbursable from future
payments and other collections, including in the form of "related proceeds"
consisting of liquidation proceeds, insurance proceeds and condemnation
proceeds, in any event on or in respect of the related mortgage loan or REO
property. "Servicing advances" generally include customary, reasonable and
necessary out-of-pocket costs and expenses incurred by the servicer or a
replacement special servicer as a result of the servicing of a mortgage loan
after a default, delinquency or other unanticipated event or a mortgage loan
on which a default is imminent, or in connection with the administration of
any REO property. Servicing advances and P&I advances are referred to as
"advances."
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 or the REO account, as applicable. Payments for
some servicing expenses (such as remediation of any adverse environmental
circumstance or condition at a mortgaged property or an REO property) may be
made without regard to the relationship between the expense and the funds
from which it is being paid. The servicer, however, may instead advance the
costs thereof.
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, the replacement special servicer may, in its sole discretion, request
that the servicer make such advance. The request must be made in writing and
in a timely manner that does not adversely affect the interests of any
certificateholder. The servicer is required to make any servicing advance
other than a nonrecoverable advance or an advance that would be in violation
of the servicing standard requested by a replacement special servicer within
ten days of the servicer's receipt of the request. A replacement special
servicer will have no obligation to make an advance that it requests the
servicer to make.
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 the servicing advance is required to be made, then
the trustee will, if it has actual knowledge of the failure, be required to
make the servicing advance. The servicer, any replacement special servicer
and the trustee are required to make servicing advances only to the extent
that the servicing advances are, in the reasonable and good faith judgment of
that person, ultimately recoverable from related proceeds.
As described in this prospectus supplement, the servicer, any replacement
special servicer and the trustee are each entitled to receive interest at the
reimbursement rate on servicing advances. The servicing fee includes the
compensation of the trustee which will be withdrawn by the trustee from the
distribution account. 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" in this
prospectus supplement.
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,
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and/or permit the release of the borrower on or any guarantor of any mortgage
loan without the consent of the trustee or any certificateholder, subject,
however, to each of the following limitations, conditions and restrictions:
(1) with limited exception, the servicer may not agree to
o any modification, waiver or amendment of any term of, or take any of
the other actions described above on any mortgage loan that would
affect the amount or timing of any related payment of principal,
interest or other amount payable thereunder or affect the obligation of
the related borrower to pay a prepayment premium or permit a principal
prepayment during the applicable lockout period or, in the servicer's
good faith and reasonable judgment, would materially impair the
security for 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 the modification, waiver, amendment or other
action is reasonably likely to produce a greater recovery to
certificateholders on a present value basis than would liquidation;
(2) the servicer may not extend the maturity of any mortgage loan beyond
the date that is two years before September 2033, the "rated final
distribution date;"
(3) the servicer will not make or permit any modification, waiver or
amendment of any term of, or take any of the other above-referenced
actions on, any mortgage loan that would:
o cause any of 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 any such
REMIC under the REMIC Provisions, or
o 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 will not be liable for decisions related to the status of a
mortgage loan on a "qualified mortgage" that are 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 these decisions);
(4) the servicer will not permit any borrower to add or substitute any
collateral for an outstanding mortgage loan, if the collateral
constitutes real property, unless the servicer has first determined in
its good faith and reasonable judgment, based upon a Phase I
environmental assessment and the additional environmental testing as
the servicer deems necessary and appropriate, that the additional or
substitute collateral is in compliance with applicable environmental
laws and regulations and that there are no circumstances or conditions
present related 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
(5) with limited exceptions, the servicer may not release any collateral
securing an outstanding mortgage loan;
provided that:
o the limitations, conditions and restrictions in clauses (1) through (5)
above will not apply to any modification of any term of any mortgage
loan that is required under the terms of the mortgage loan in effect on
the delivery date or that is solely within the control of the related
borrower, and
o 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.
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ENFORCEMENT OF ARD LOANS
With respect to ARD loans, the servicer and any replacement special
servicer may not take any enforcement action with respect to the payment of
excess interest or principal in excess of the principal component of the
constant monthly payment, other than request for collection, until the
maturity date of the ARD loan. The foregoing will not limit the servicer's or
replacement special servicer's obligation to direct the related borrower to
establish a lockbox account under the provisions of the pooling and servicing
agreement. If a borrower elects not to repay the principal due and
outstanding on an ARD loan on its anticipated repayment date, the servicer
will generally notify any such borrower that the revised rate for such
mortgage loan will not exceed the related initial mortgage rate plus 2.00%.
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 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 notify in writing the trustee. Within 10 days after
receipt of that notice, the trustee will notify the holders of the
controlling class. Any holder or holders of certificates evidencing a
majority interest in the controlling class may purchase any such defaulted
mortgage loan from the trust for a price equal to the purchase price. If
those certificateholders have not purchased the defaulted mortgage loan
within 15 days after they received notice, either the servicer or any
replacement special servicer may purchase the defaulted mortgage loan from
the trust, at a price equal to the purchase price. If neither the servicer
nor the replacement special servicer purchases the defaulted mortgage loan,
the servicer may offer to sell the defaulted mortgage loan if the servicer
determines, consistent with the servicing standard, that a sale would be in
the best economic interests of the trust. The offer to sell is to be made in
a commercially reasonable manner for a period of not less than 10 days or
more than 90 days. Unless the servicer determines that acceptance of any
offer would not be in the best economic interests of the trust, the servicer
will accept the highest cash offer received from any person that constitutes
a fair price even if that offer is for less than the purchase price. However,
none of the servicer, any replacement special servicer, the depositor, the
holder of any certificate or any of their affiliates may purchase the
mortgage loan for less than the purchase price unless it is the highest bid
received and 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
Generally, 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's net after-tax proceeds
from the REO property. After the servicer reviews the operation of the REO
property and consults with the trustee to determine the trust's federal
income tax reporting position with respect to income it is anticipated that
the trust would derive from such property, the servicer could determine that
it would not be commercially feasible to manage and operate the 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 in this prospectus supplement as an "REO tax").
To the extent that income the trust receives from an REO property is
subject to a tax on (1) "net income from foreclosure property," such income
would be subject to federal tax at the highest marginal corporate tax rate
and (2) "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 that income
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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 that income could be subject to federal tax 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's income from an REO property would reduce the amount available for
distribution to certificateholders. Certificateholders are advised to consult
their tax advisors regarding the possible imposition of REO taxes resulting
from the operation of commercial REO properties by REMICs. The servicer will
be required to sell any REO property acquired on behalf of the trust within
the time period and in the manner described under "The Pooling and Servicing
Agreements--Realization Upon Defaulted Mortgage Loans" in the prospectus.
The servicer, or, if appointed, the replacement special servicer, will
establish and maintain one or more eligible REO accounts, to be held on
behalf of the trustee in trust for the benefit of the certificateholders, for
the retention of revenues, net liquidation proceeds (other than excess
liquidation proceeds) and insurance proceeds derived from each REO property.
The servicer or replacement special servicer, as applicable, will use the
funds in the REO account to pay for the proper operation, management,
maintenance, disposition and liquidation of any REO property, but from
amounts on deposit in the REO account that relate to the REO property. If
amounts in the REO account in respect of any REO property are insufficient to
make such payments, the servicer or replacement special servicer will make a
servicing advance to cover any insufficiency, unless it determines the
servicing advance would be nonrecoverable. Within one business day following
the end of each collection period, the servicer or replacement special
servicer will deposit all amounts collected or received for each REO property
during the collection period, net of any amounts withdrawn to make any
permitted disbursements, to the certificate account. The servicer and the
replacement special servicer, however, may retain permitted reserves in the
REO account.
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
$2,000,000, at least once every year and, if the related mortgage loan is a
credit lease loan, once every three years if the related credit tenant or
guarantor has a published rating of not less than BBB-or its equivalent,
every two years if the related credit tenant or guarantor has a published
rating between BB+ and BB-or its equivalent, and annually if the related
credit tenant or guarantor has a published rating of less than BB-or its
equivalent. The servicer will inspect or cause to be inspected annually each
mortgaged property for which no published rating is publicly available for
the related credit tenant if the related credit lease loan represents 5% or
more of the aggregate initial pool balance of the mortgage loans, and will
inspect or cause to be inspected every second year each other mortgaged
property for which the related credit tenant has no published, publicly
available rating. If the published rating for any credit tenant or guarantor
is downgraded by any rating agency by one or more rating increment (i.e., AA
to A, or BBB-to BB-) and no inspection has been performed due to a ratings
downgrade in the preceding 12 months for the related mortgaged property, then
the servicer will cause all mortgaged properties leased to that credit tenant
to be inspected as soon as reasonably practical. In addition, the servicer,
subject to statutory limitations or limitations in the related loan
documents, is required to perform a physical inspection of each mortgaged
property as soon as practicable after the mortgage loan becomes a specially
serviced mortgage loan. The servicer will be required to prepare or cause to
be prepared a written report of each such inspection performed that describes
the condition of the mortgaged property.
For each mortgage loan, other than any credit lease loan, that requires
the borrower to deliver operating statements for the related mortgaged
property, the servicer will also make reasonable efforts to collect and
review those statements. However, any operating statements required to be
delivered may not in fact be delivered, and the servicer is not likely to
have any practical means of compelling delivery if the mortgage loan is not
in default.
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DESCRIPTION OF THE CERTIFICATES
The certificates will be issued under the pooling and servicing agreement
and will represent in the aggregate the entire beneficial ownership interest
in the trust consisting of:
(1) the mortgage loans and all payments under and proceeds of the
mortgage loans received after the cut-off date for such mortgage
loan (exclusive of payments of principal and interest due on or
before the cut-off date for such mortgage loan);
(2) any mortgaged property acquired on behalf of the certificateholders
through foreclosure, deed in lieu of foreclosure or otherwise (upon
acquisition, an "REO property");
(3) the funds or assets that are deposited in the certificate account,
any REO account and the interest reserve account;
(4) the rights of the mortgagee under all insurance policies relating
to the mortgage loans; and
(5) rights of the depositor under the mortgage loan purchase agreement
relating to mortgage loan document delivery requirements and the
representations and warranties of the seller regarding the mortgage
loans.
DENOMINATIONS
The trust will offer the offered certificates other than the Class X
certificates in minimum denominations of $25,000 and multiples of $1 in
excess thereof. The trust will offer the Class X certificates in minimum
denominations of $1,000,000 initial notional amount and multiples of $1 in
excess thereof.
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 described 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 in this prospectus supplement 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 under DTC's procedures. Until
definitive certificates are issued for any class of offered certificates,
interests in those certificates will be transferred on the book-entry records
of DTC and its participants. The certificate owners may hold their
certificates through DTC, in the United States, or Cedelbank or Euroclear, in
Europe, through participants in such systems, or indirectly through
organizations which are participants in such systems. See "Description of the
Certificates--Book-Entry Registration and Definitive Certificates" in the
prospectus.
BOOK-ENTRY REGISTRATION OF THE OFFERED CERTIFICATES
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 definitive certificates are issued for
any class, 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. Except under
the limited circumstances described in this prospectus supplement,
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.
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Under the rules, regulations and procedures regarding DTC and its
operations, 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 similarly are required
to make book-entry transfers and receive and transmit payments on behalf of
their respective certificate owners. Although certificate owners will not
hold physical certificates evidencing their interests in the offered
certificates, the DTC rules, regulations and procedures 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 servicer, the trustee or the depositor 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.
Euroclear and Cedelbank
The offered certificates will be initially issued to investors through the
book-entry facilities of DTC, or Cedelbank or the Euroclear system in Europe
if the investors are participants of those systems, or indirectly through
organizations that are participants in such systems. For any of these classes
of offered certificates, the record holder will be DTC's nominee. Cedelbank
and Euroclear will hold omnibus positions on behalf of their participants
through customers' securities accounts in Cedelbank's and Euroclear's names
on the books of their respective depositories (the "depositories"). The
depositories in turn, will hold such positions in customers' securities
accounts in the depositories' names on the books of DTC.
Because of time zone differences, the securities account of a Cedelbank or
Euroclear participant as a result of a transaction with a participant (other
than a depositary holding on behalf of Cedelbank or Euroclear) will be
credited during the securities settlement processing day (which must be a
business day for Cedelbank or Euroclear, as the case may be) immediately
following the DTC settlement date. These credits or any transactions in the
securities settled during the processing will be reported to the relevant
Euroclear participant or Cedelbank participant on that business day. Cash
received in Cedelbank or Euroclear as a result of sales of securities by or
through a Cedelbank participant or Euroclear participant to a DTC Participant
(other than the depository for Cedelbank or Euroclear) will be received with
value on the DTC settlement date, but will be available in the relevant
Cedelbank or Euroclear cash account only as of the business day following
settlement in DTC.
Transfers between Participants will occur in accordance with DTC rules.
Transfers between Cedelbank participants or Euroclear participants will occur
in accordance with their respective rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedelbank
participants or Euroclear participants, on the other, will be effected in DTC
in accordance with DTC rules on behalf of the relevant European international
clearing system by the relevant depositories; however, such cross-market
transactions will require delivery of instructions to the relevant European
international clearing system by the counterparty in such system in
accordance with its rules and procedures and within its established deadlines
(European time). The relevant European international clearing system will, if
the transaction meets its settlement requirements, deliver instructions to
its depository to take action to effect final settlement on its behalf by
delivering or receiving securities in DTC, and making or receiving payment in
accordance with normal procedures for same day funds settlement applicable to
DTC. Cedelbank participants or Euroclear participants may not deliver
instructions directly to the depositories.
Cedelbank, as a professional depository, holds securities for its
participating organizations ("Cedelbank participants") and facilitates the
clearance and settlement of securities transactions between
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Cedelbank participants through electronic book-entry changes in accounts of
Cedelbank participants, thereby eliminating the need for physical movement of
certificates. As a professional depository, Cedelbank is subject to
regulation by the Luxembourg Monetary Institute.
Euroclear was created to hold securities for participants of Euroclear
("Euroclear participants") and to clear and settle transactions between
Euroclear participants through simultaneous electronic book-entry delivery
against payment, thereby eliminating the need for physical movement of
certificates and any risk from lack of simultaneous transfers of securities
and cash. Euroclear is operated by the Brussels, Belgium office of Morgan
Guaranty Trust Company of New York (the "Euroclear operator"), under contract
with Euroclear Clearance Systems S.C., a Belgian co-operative corporation
(the "clearance cooperative"). All operations are conducted by the Euroclear
operator, and all Euroclear securities clearance accounts and Euroclear cash
accounts are accounts with the Euroclear operator, not the clearance
cooperative. The clearance cooperative establishes policies for Euroclear on
behalf of Euroclear's participants. The Euroclear operator is the Belgian
branch of a New York banking corporation which is a member bank of the
Federal Reserve System. As such, it is regulated and examined by the Board of
Governors of the Federal Reserve System and the New York State Banking
Department, as well as the Belgian Banking Commission. Securities clearance
accounts and cash accounts with the Euroclear operator are governed by the
Terms and Conditions Governing Use of Euroclear and the related operating
procedures of the Euroclear system and applicable Belgian law (collectively,
the "terms and conditions"). The terms and conditions govern transfers of
securities and cash within Euroclear, withdrawals of securities and cash from
Euroclear, and receipts of payments with respect to securities in Euroclear.
All securities in Euroclear are held on a fungible basis without attribution
of specific certificates to specific securities clearance accounts.
Distributions in respect of the offered certificates will be forwarded by
the trustee to DTC, and DTC will be responsible for forwarding such payments
to participants, each of which will be responsible for disbursing such
payments to the certificate owners it represents or, if applicable, to
indirect participants. Accordingly, certificate owners may experience delays
in the receipt of payments in respect of their certificates. Under DTC's
procedures, DTC will take actions permitted to be taken by holders of any
class of offered certificates under the pooling and servicing agreement only
at the direction of one or more participants to whose account such offered
certificates are credited and whose aggregate holdings represent no less than
any minimum amount of percentage interests or voting rights required
therefor. DTC may take conflicting actions with respect to any action of
certificateholders of any class to the extent that participants authorize
such actions. None of the depositor, the trustee or any of their respective
affiliates will have any liability for any aspect of the records relating to,
or payments made on account of, beneficial ownership interests in the offered
certificates or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
Certificate owners will not be recognized by the trustee or servicer as
certificateholders, as such term is used in the pooling and servicing
agreement; provided, however, that certificate owners will be permitted to
request and receive information furnished to certificateholders by the
trustee subject to receipt by the trustee of a certification in form and
substance acceptable to the trustee stating that the person requesting such
information is a certificate owner.
Although DTC, Cedelbank and Euroclear have agreed to the foregoing
procedures to facilitate transfers of the offered certificates among
participants of DTC, Cedelbank and Euroclear, they are under no obligation to
perform or continue to perform such procedures and such procedures may be
discontinued at any time. See Annex D hereto.
Year 2000
DTC has informed its participants and other members of the financial
community that it has developed and is implementing a program to deal with
the "year 2000 problem" so that its systems, as the same relate to the timely
payment of distributions to certificateholders, book-entry deliveries, and
settlement of trades within DTC, continue to function appropriately.
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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 described 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.
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
On each distribution date, the certificate balance of each class of
certificates with a certificate balance ("principal balance certificates")
will be reduced by any distributions of principal actually made on such class
of certificates on such distribution date. Those certificates' balances will
be further reduced by any realized losses and additional trust expenses
allocated to such class of certificates on such distribution date.
The Class X certificates will not have a certificate balance. The Class X
certificates will represent the right to receive distributions of interest
accrued as described in this prospectus supplement on a notional amount equal
to the aggregate certificate balance of the principal balance certificates
outstanding from time to time. The Class X certificates will have an initial
notional amount of $974,502,236 (subject to a variance of plus or minus 5%).
The Class X certificates consist of 14 components each corresponding to a
different class of principal balance certificates (the "Class X components").
No class of REMIC residual certificates will have a certificate balance.
PASS-THROUGH RATES
The annual rate at which any class of certificates accrues interest from
time to time is referred to as its "pass-through rate."
The pass-through rate applicable to the Class A-1 certificates will be
fixed and, at all times, will be equal to the pass-through rate specified for
such class on page S-4. The pass-through rate applicable to the Class A-2,
Class B, Class C and Class D certificates for any distribution date will be
equal to the lesser of the specified fixed rate described in footnote 7 on
page S-4 and the weighted average net mortgage rate with respect to such
distribution date. The pass-through rates applicable to the Class E, Class F
and Class G certificates for any distribution date will be equal to the
weighted average net mortgage rate with respect to such distribution date.
The pass-through rate applicable to the Class X certificates for the initial
distribution date will equal approximately 0.4144% per annum. The
pass-through rate applicable to the Class X certificates for any distribution
date will be variable and will be equal to the weighted average (by
certificate balance of the corresponding class of principal balance
certificates) of the pass-through rates then applicable to each Class X
component. The pass-through rate of each Class X component for any
distribution date will equal the excess, if any, of the weighted average net
mortgage rate for that distribution date over the pass-through rate for that
distribution date applicable to the related class of principal balance
certificates. If a class of principal balance certificates has a pass-through
rate equal to the weighted average net mortgage rate, the pass-through rate
of the related Class X component will be zero. The pass-through rates for the
Class H, Class J, Class K, Class L, Class M and Class N certificates for any
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distribution date will be equal to the lesser of a specified fixed rate and
the weighted average net mortgage rate for that distribution date. No class
of REMIC residual certificates will have a specified pass-through rate.
The "weighted average net mortgage rate" for each distribution date is the
weighted average of the net mortgage rates for the mortgage loans as of the
beginning of the related collection period, weighted on the basis of their
respective stated principal balances outstanding immediately before such
distribution date.
The "net mortgage rate" for any mortgage loan is, generally, an annual
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 will be determined without
regard to any modification, waiver or amendment of the terms of the mortgage
loan, whether agreed to by the servicer or resulting from a bankruptcy,
insolvency or similar proceeding involving the related borrower or the
application of the revised rate to any ARD loan.
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 that mortgage loan
for any one-month period before a related due date will be equal to:
o the annualized rate at which interest would have to accrue on the loan
on the basis of a 360-day year consisting of twelve 30-day months to
produce the aggregate amount of interest actually accrued in respect
of such loan during such one-month period at the related mortgage rate
minus the related "servicing fee rate" for that mortgage loan
specified on Annex A;
however, for each interest reserve loan,
o the net mortgage rate for the one-month period before the due dates
in
o January and February in each year that is not a leap year or
o February only in each year that is a leap year
will be determined net of the withheld amounts, and
o the net mortgage rate for the one-month period before the due date
in March will be determined after taking into account the addition
of the withheld amounts with respect to each such mortgage loan.
See "Servicing of the Mortgage Loans--Servicing and Other Compensation and
Payment of Expenses" and "--Modifications, Waivers, Amendments and Consents"
in this prospectus supplement.
The "stated principal balance" of each mortgage loan will generally equal
its cut-off date balance, or for a replacement mortgage loan, the outstanding
principal balance as of the related date of substitution, reduced to not less
than zero on each distribution date by
o any payments or other collections or advances of principal of the
mortgage loan that have been or, if they had not been applied to cover
additional trust expenses, would have been distributed on the
certificates on such date, and
o the principal portion of any realized loss incurred on or allocable to
the mortgage loan during the related collection period.
The "determination date" will be the 5th day of each month or, if any such
5th day is not a business day, the next business day.
DISTRIBUTIONS
The trustee will make distributions on certificates, to the extent of
available funds, on each distribution date. Except as otherwise described
below, the trustee will make these distributions to the persons in whose
names the certificates are registered on the record date, which is the close
of business
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on the last business day of the preceding month. The trustee will make these
distributions by wire transfer in immediately available funds to the account
specified by the certificateholder at a bank or other entity, if the
certificateholder has given the trustee wiring instructions at least five
business days before the related record date. Distributions not made by wire
transfer will be made 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
expense previously allocated to that certificate) will also be made by wire
transfer or check, but only upon presentation and surrender of such
certificate at the location that will be specified in a notice of the final
distribution. In the unlikely case of any distribution made on a certificate
to reimburse a realized loss or additional trust expense after the date the
certificate is surrendered, the distribution will be made by check mailed to
the certificateholder that surrendered the certificate. All distributions
made on a class of certificates will be allocated pro rata among those
certificates based on their respective percentage interests in that class.
The Available Distribution Amount
The amount of funds that will be available for distribution to
certificateholders on each distribution date is the "available distribution
amount" for that distribution date, and will generally equal:
(1) all amounts on deposit in the certificate account as of the close
of business on the related determination date, excluding any
portion thereof that represents one or more of the following:
o monthly payments collected but due on a due date after the
related collection period;
o prepayment premiums;
o 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 to reimburse outstanding advances and amounts
payable for additional trust expenses;
o amounts deposited in the certificate account in error;
o for any distribution date in February, and in any January in a
year that is not a leap year, the withheld amounts for the
interest reserve loans to be deposited in the interest reserve
account and held for future distribution; and
o amounts that represent excess interest or excess liquidation
proceeds; plus
(2) to the extent not already included in clause (1), any P&I advances
made for that distribution date and payments made by the servicer
to cover prepayment interest shortfalls, balloon payment interest
shortfalls and extraordinary prepayment interest shortfalls
incurred during the related collection period; plus
(3) for the distribution date occurring in each March, the withheld
amounts for the interest reserve loans then on deposit in the
interest reserve account as described under "--Interest Reserve
Account" below; plus
(4) for any mortgage loan with a due date after the determination date
in each month, the monthly payment, other than any balloon payment,
due in the same month as that distribution date if received by the
related due date in that month.
See "The Pooling and Servicing Agreements--Certificate Account" in the
prospectus.
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Application of the Available Distribution Amount
On each distribution date, the trustee will apply the available
distribution amount for that date 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 those
classes in accordance with, all distributable certificate interest
for each of those classes of certificates for that distribution
date and, to the extent not previously paid, for each prior
distribution date, if any;
(2) to pay principal: first to the holders of the Class A-1
certificates, and then to the holders of the Class A-2
certificates, in each case, up to an amount equal to the lesser of:
o the then outstanding certificate balance of that class of
certificates, and
o the principal distribution amount for that 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 those
classes in accordance with, the respective amounts of realized
losses and additional trust expenses, if any, previously allocated
to those classes of certificates and for which no reimbursement has
previously been paid;
(4) to make payments to the holders of each class of subordinate
certificates (after all required distributions to any subordinated
class of certificates with an earlier alphabetical class
designation have been made pursuant to this clause (4)) as follows:
o first, to pay interest, up to an amount equal to all
distributable certificate interest on that class of
certificates for that distribution date and, to the extent not
previously paid, for each prior distribution date, if any;
o second, if the certificate balances of the Class A certificates
and each 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
o the then outstanding certificate balance of that class of
certificates, and
o the remaining portion, if any, of the principal
distribution amount for that distribution date (or, on the
final distribution date resulting from the termination of
the trust, up to an amount equal to the then outstanding
certificate balance of that class of certificates); and
o third, to distributions for purposes of reimbursement, up to an
amount equal to all realized losses and additional trust
expenses, if any, previously allocated to that class of
certificates and for which no reimbursement has previously been
paid; and
(5) the remaining portion, if any, of the available distribution
amounts to the holders of the REMIC residual certificates.
However, 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 resulting from a termination of the trust, the
payments of principal to be made as contemplated by clause (2) above on the
Class A certificates, will be made to the holders of the respective classes
of those certificates, up to an amount equal to, and pro rata as among those
classes in accordance with, the respective then outstanding certificate
balances of those classes of certificates.
Distributable Certificate Interest
The "distributable certificate interest" for each class of REMIC regular
certificates for each distribution date is equal to the accrued certificate
interest for that class of certificates for that distribution date, reduced
by that class of certificates' allocable share (calculated as described
below) of any net aggregate prepayment interest shortfall for such
distribution date.
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The "accrued certificate interest" for each class of REMIC regular
certificates for each distribution date is equal to one month's interest at
the pass-through rate applicable to that class of certificates for that
distribution date accrued on the certificate balance or notional amount, as
the case may be, of that class of certificates outstanding immediately before
that distribution date. Accrued certificate interest will be calculated on
the basis of a 360-day year consisting of twelve 30-day months.
The servicer is required to make a nonreimbursable payment on each
distribution date to cover the aggregate of any prepayment interest
shortfalls and extraordinary prepayment interest shortfalls incurred on the
mortgage pool during the related collection period. However, for mortgage
loans with due dates that fall on or before the related determination date,
the servicer will cover prepayment interest shortfalls only to the extent of
its aggregate master servicing fee for the same collection period.
The "net aggregate prepayment interest shortfall" for any distribution
date will be the following amount, if any, by which:
o the aggregate of all prepayment interest shortfalls incurred on the
mortgage pool during the related collection period, exceeds
o any such payment made by the servicer for that distribution date to
cover those prepayment interest shortfalls.
See "Servicing of the Mortgage Loans--Servicing and Other Compensation and
Payment of Expenses" in this prospectus supplement. The net aggregate
prepayment interest shortfall, if any, for each distribution date will be
allocated on such distribution date among each class of REMIC regular
certificates, pro rata, in accordance with the respective amounts of accrued
certificate interest for each such class of certificates for such
distribution date.
Principal Distribution Amount
The "principal distribution amount" with respect to any distribution date
will, generally, equal the aggregate of the following (without duplication):
(1) 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, on the mortgage loans for their respective due
dates occurring during the same calendar month as that distribution
date;
(2) all voluntary principal prepayments received on the mortgage loans
during the related collection period;
(3) for any balloon loan for which the stated maturity date occurred,
or any ARD loan for which the anticipated repayment date occurred,
during or before the related collection period, any payment of
principal (exclusive of any voluntary principal prepayment and any
amount described in clause (4) 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,
for that mortgage loan on a due date during or before the same
calendar month as that distribution date and not previously
recovered;
(4) the portion of all liquidation proceeds, condemnation proceeds and
insurance proceeds received on the mortgage loans during the
related collection period that were identified and applied by the
servicer as recoveries of principal, in each case (exclusive of any
portion of those amounts that represents a recovery of the
principal portion of any monthly payment (other than a balloon
payment) due and any excess liquidation proceeds), or the principal
portion of any assumed monthly payment deemed due, for the related
mortgage loan on a due date during or before the same calendar
month as that distribution date and not previously recovered; and
(5) if that distribution date is after the initial distribution date,
the excess, if any, of the principal distribution amount for the
immediately preceding distribution date, over the aggregate
distributions of principal made on the principal balance
certificates from the principal distribution amount on that
immediately preceding distribution date.
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An "assumed monthly payment" is an amount deemed due for:
o any balloon loan that is delinquent on its balloon payment beyond
the first determination date that follows its stated maturity date
and for which no arrangements have been agreed to for collection of
the delinquent amounts;
o the stated maturity date of any balloon loan that has a due date
after the determination date in any month; or
o any mortgage loan for which the related mortgaged property or
properties have become REO property or properties.
The assumed monthly payment deemed due on any balloon loan on its stated
maturity date and on any successive due date that it remains or is deemed to
remain outstanding will equal the monthly payment that would have been due on
such date if the related balloon payment had not come due, but rather such
mortgage loan had continued to amortize in accordance with the loan's
amortization schedule, if any, in effect immediately before maturity and had
continued to accrue interest in accordance with the loan's terms in effect
immediately before maturity. The assumed monthly payment deemed due on any
mortgage loan for 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, will equal the monthly
payment (or, in the case of a balloon loan described in the prior sentence,
the assumed monthly payment) due or deemed due on the last due date before
the acquisition of that REO property or properties.
DISTRIBUTIONS OF PREPAYMENT PREMIUMS
Any prepayment premium (whether described in the related mortgage loan
documents as a fixed percentage prepayment premium) actually collected on a
mortgage loan during any collection period will be distributed on the related
distribution date to the holders of the Class A-1, Class A-2, Class B, Class
C, Class D, Class E, Class F and Class G certificates as additional interest
and not in reduction of their certificate balances in an amount up to, in the
case of each such class, the product of
such prepayment x discount rate fraction x principal allocation fraction
premium for such class of such class
The "discount rate fraction" for any such class of certificates is equal
to a fraction not greater than 1.0 or less than 0.0 of:
pass-through rate for
such class of certificates - relevant discount rate
---------------------------------------------------
mortgage rate of the
related mortgage loan - relevant discount rate
The "principal allocation fraction" for each such class of certificates
for any distribution date is:
the portion, if any, of the principal distribution
amount allocated to such class of certificates
for such distribution date
--------------------------------------------------
entire principal distribution amount
for such distribution date
The portion of the prepayment premium remaining after the payment of the
amount calculated as described above will be distributed to the holders of
the Class X certificates.
For any prepaid mortgage loan, the "discount rate" means the yield for
"This Week" as reported by the Federal Reserve Board in Federal Reserve
Statistical Release H.15(519) for the constant maturity treasury having a
maturity coterminous with the maturity date or anticipated repayment date of
that mortgage loan as of the determination date. If there is no discount rate
for instruments having a maturity coterminous with the remaining term to
maturity or anticipated repayment date, where applicable, of the mortgage
loan, then the discount rate will be equal to the linear interpolation of the
yields of the constant
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maturity treasuries with maturities next longer and shorter than such
remaining term to maturity or anticipated repayment date. For some of the
mortgage loans, the discount rate is a semiannual rate.
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.
DISTRIBUTIONS OF EXCESS INTEREST
No excess interest collected on an ARD loan will be available for
distribution to the holders of the offered certificates.
DISTRIBUTIONS OF EXCESS LIQUIDATION PROCEEDS
Excess liquidation proceeds generally will not be available for
distribution to the holders of the offered certificates.
"Excess liquidation proceeds" are the excess of:
o proceeds from the sale or liquidation of a mortgage loan or REO
property, net of expenses and related advances and interest on
advances, over
o the amount that would have been received if a prepayment in full
had been made on the mortgage loan on the date the proceeds were
received.
TREATMENT OF REO PROPERTIES
A mortgage loan secured by mortgaged property that is acquired as part of
the trust (through foreclosure, deed in lieu of foreclosure or otherwise),
will be treated as remaining outstanding until the related REO property is
liquidated for the following purposes:
o determining distributions on the certificates,
o allocating of realized losses and additional trust expenses to the
certificates, and
o calculating the amount of servicing fees and special servicing fees
payable under the pooling and servicing agreement.
Among other things, the mortgage loan will be taken into account when
determining pass-through rates and the principal distribution amount.
Operating revenues and other proceeds from an REO property (after payment of
certain costs and taxes, including certain reimbursements payable to the
servicer, any replacement special servicer 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
the mortgage loan, and, subject to the limitations described under "--P&I
Advances" below, the servicer will be required to make P&I advances on the
mortgage loan, in all cases as if the mortgage loan had remained outstanding.
INTEREST RESERVE ACCOUNT
The trustee will establish and maintain an "interest reserve account" in
the name of the trustee for the benefit of the holders of the certificates.
For each distribution date in February and each distribution date in any
January in a year that is not a leap year, the servicer will deposit in the
interest reserve account for each mortgage loan bearing interest computed on
an actual/360 basis (the "interest reserve loans"), an amount equal to one
day's interest at the related mortgage rate (net of any servicing fee) on the
respective stated principal balance as of the immediately preceding due date,
to the extent a monthly payment or P&I advance is made on that mortgage loan.
Amounts so deposited in any January (if applicable) and February are referred
to as "withheld amounts." For each distribution date in March, the servicer
will withdraw an amount from the interest reserve account for each interest
reserve loan equal to the related withheld amounts from the preceding January
(if applicable) and February, if any, and deposit this amount into the
certificate account.
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SUBORDINATION; ALLOCATION OF LOSSES AND EXPENSES
As described in this prospectus supplement, 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 on 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 that 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
on their certificates on each distribution date, and the ultimate receipt by
holders of the other classes of offered certificates of principal equal to
the entire certificate balance of that 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.
A deficit will exist on a distribution date, if the aggregate stated
principal balance of the mortgage pool outstanding immediately following such
distribution date is less than the aggregate certificate balance of the
principal balance certificates after giving effect to distributions on the
certificates on that distribution date. If a deficit exists on a distribution
date, the respective certificate balances of the Class N, Class M, Class L,
Class K, Class J, 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 the deficit (or the related certificate balance) is
reduced to zero (whichever occurs first). If any portion of the deficit
remains after the certificate balances of those classes of certificates are
reduced to zero, then the respective certificate balances of the Class A-1
and Class A-2 certificates will be reduced, pro rata in accordance with the
relative sizes of the remaining certificate balances of those classes of
certificates, until the deficit (or each of those certificate balances) is
reduced to zero.
A deficit may be the result of realized losses incurred on the mortgage
loans and/or additional trust expenses. These reductions in the certificate
balances of the principal balance certificates will constitute an allocation
of any realized losses and additional trust expenses. Any such reduction will
also have the effect of reducing the notional amount of the Class X
certificates.
"Realized losses" are losses on the mortgage loans arising from the
inability of the servicer to collect all amounts due and owing under the
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 on a liquidated mortgage loan (or related REO property
or properties) is an amount generally equal to the excess, if any, of:
o the outstanding principal balance of the mortgage loan as of the
date of liquidation, together with all accrued and unpaid interest
thereon at the related mortgage rate to but not including the due
date in the month in which the liquidation proceeds are distributed
and all related unreimbursed servicing advances and outstanding
liquidation expenses, over
o the aggregate amount of liquidation proceeds, if any, recovered in
connection with such liquidation.
If any portion of the debt (other than excess interest) 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 expenses" will reduce amounts payable to
certificateholders and, consequently, may result in a loss on the offered
certificates. Additional trust expenses include, among other things:
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o special servicing fees, workout fees and liquidation fees,
o interest on unreimbursed advances,
o the cost of various opinions of counsel required or permitted to be
obtained for the servicing of the mortgage loans and the
administration of the trust,
o unanticipated, nonmortgage loan specific expenses of the trust,
including indemnities and reimbursements to the trustee as described
under "The Pooling and Servicing Agreements--Matters Regarding the
Trustee" in the prospectus, indemnities and reimbursements to the
servicer and the depositor (and indemnities and reimbursements to a
replacement special servicer comparable to those for the servicer) as
described under "The Pooling and Servicing Agreements--Matters
Regarding the Master Servicer and the Depositor" in the prospectus and
federal, state and local taxes, and tax-related expenses, payable out
of the trust as described under "Servicing of the Mortgage Loans--REO
Properties" in this prospectus supplement and "Federal Income Tax
Consequences--REMICs--Taxation of Owners of REMIC Residual
Certificates--Prohibited Transactions Tax and Other Taxes" in the
prospectus,
o any amounts expended on behalf of the trust to remediate an adverse
environmental condition at any mortgaged property securing a defaulted
mortgage loan. See "The Pooling and Servicing Agreements--Realization
Upon Defaulted Mortgage Loans" in the prospectus, and
o any other expense of the trust not specifically included in the
calculation of "realized loss" for which there is no corresponding
collection from a borrower.
P&I ADVANCES
On each distribution date, the servicer will be obligated to make "P&I
advances" consisting of advances of delinquent principal and interest on the
mortgage loans, other than balloon payments 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. The
servicer will not be required to make a P&I advance if 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. P&I advances for any distribution date will be
in an amount generally equal to the aggregate of all monthly payments (other
than balloon payments or excess interest) and any assumed monthly payments
(in each case net of any related workout fee) that were due or deemed due on
the mortgage loans during the same month as such distribution date and that
were not paid by or on behalf of the related borrowers or otherwise collected
as of the close of business on the later of such due date or the last day of
the related collection period or other specified date before such
distribution date. The servicer's obligations to make P&I advances on any
mortgage loan will continue through liquidation of that mortgage loan or
disposition of any related REO property.
If it is determined that an appraisal reduction amount exists with respect
to any required appraisal mortgage loan and subsequent delinquencies occur on
the mortgage loan, the interest portion of the P&I advance for that mortgage
loan will be reduced on each distribution date for so long as the appraisal
reduction amount exists (no reduction to be made in the principal portion,
however) to equal the product of
o the amount of the interest portion of the P&I advance that would be
required to be made for that distribution date without regard to this
sentence, multiplied by
o a fraction (expressed as a percentage), the numerator of which is
equal to the stated principal balance of that mortgage loan, net of
such appraisal reduction amount, and the denominator of which is equal
to the stated principal balance of that mortgage loan.
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See "--Appraisal Reductions" below. If the servicer fails to make a
required P&I advance, the trustee will be required to make that P&I advance.
If the trustee fails to make a required P&I advance, the fiscal agent will be
required to make that P&I advance. See "The Trustee" below.
The servicer, the trustee and the fiscal agent will each be entitled to
recover any P&I advance made by it from related proceeds collected on the
mortgage loan for which that P&I advance was made. However, none of the
servicer, the trustee or the fiscal agent is required to make a P&I advance
that would constitute a nonrecoverable advance. If at any time, a P&I advance
made by the servicer, the trustee or the fiscal agent is determined to be a
nonrecoverable advance, the servicer, the trustee or the fiscal agent will be
entitled to recover the amount of such P&I 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, the trustee, the fiscal agent and any replacement special
servicer each will be entitled to interest accrued on the amount of any
advance it makes at a "reimbursement rate" per annum equal to the "prime
rate" as published in the "Money Rates" section of The Wall Street Journal,
as that "prime rate" may change from time to time. Interest on any advance
will be payable to the servicer, any replacement special servicer, the
trustee or the fiscal agent, as the case may be, out of default interest
collected on the related mortgage loan or, together with the reimbursement of
that advance, out of any amounts then on deposit in the certificate account.
Interest accrued on outstanding advances will result in a reduction in
amounts payable on the certificates unless the amount of default interest
collected on the related mortgage loan is sufficient to pay that interest in
full.
APPRAISAL REDUCTIONS
A mortgage loan will become a "required appraisal loan" upon the earliest
of
o the date on which the mortgage loan becomes a modified mortgage loan,
o the 90th day following the occurrence of any uncured delinquency in
monthly payments on the mortgage loan,
o the date on which a receiver is appointed and continues in that
capacity for a mortgaged property securing the mortgage loan, and
o the date on which a mortgaged property securing the mortgage loan
becomes an REO property.
Within 30 days of a mortgage loan becoming a required appraisal loan (or
longer period if the servicer is diligently and in good faith proceeding to
obtain such appraisal), the servicer is required to obtain an appraisal of
the related mortgaged property from an independent MAI-designated appraiser.
No appraisal will be required if such an appraisal had been obtained within
the prior twelve months. The cost of the appraisal will be advanced by the
servicer, subject to its right to be reimbursed therefor as a servicing
advance.
As a result of this appraisal, the servicer may determine that an
appraisal reduction amount exists on 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
o the sum of:
(1) the stated principal balance of such required appraisal loan,
(2) 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 before that
determination date at a per annum rate equal to the related
mortgage rate,
(3) all related unreimbursed advances made for that required appraisal
loan plus interest accrued on those advances at the reimbursement
rate, and
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(4) all currently due and unpaid real estate taxes and assessments,
insurance premiums, and, if applicable, ground rents on the related
mortgaged property, net of any escrow reserves held by the servicer
to cover any of these items,
o over:
90% of the appraised value of the related mortgaged property or REO
property as determined by the appraisal, net of the amount of any
obligation secured by liens on the property that are prior to the lien of
the required appraisal loan, and are not amounts related to items included
in clause (4) above and were not taken into account in the calculation of
such appraised value.
If an appraisal is not obtained from an independent MAI-designated
appraiser within 120 days following the earliest of the dates described in
the first sentence of this paragraph, then until the appraisal is obtained,
the appraisal reduction amount will equal 25% of the stated principal balance
of the related required appraisal loan. Upon receipt of an appraisal from an
independent MAI-designated appraiser, the appraisal reduction amount for the
required appraisal loan will be recalculated based upon the formula described
above.
Within 30 days of each anniversary of the date a loan became a required
appraisal loan, the servicer is required to order an update of the prior
appraisal. Based on the update, the servicer will redetermine and report to
the trustee the appraisal reduction amount, if any, for that mortgage loan.
No update is required for a mortgage loan that has become a corrected
mortgage loan and has remained current for twelve consecutive monthly
payments, and for which no other special servicing event has occurred during
the preceding twelve months. The cost of the updates will be covered by and
reimbursable as a servicing advance.
A "modified mortgage loan" is any mortgage loan for which any special
servicing event has occurred and that has been modified by the servicer in a
manner that:
o affects the amount or timing of any payment of principal or interest
due on the mortgage loan (other than, or in addition to, bringing
current monthly payments on that mortgage loan);
o 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
o in the reasonable good faith judgment of the servicer, materially
impairs the security for that mortgage loan or reduces the likelihood
of timely payment of amounts due on that mortgage loan.
REPORTS TO CERTIFICATEHOLDERS; AVAILABLE INFORMATION
Trustee Reports
On each distribution date, the trustee will be required to provide or make
available to each holder of an offered certificate as of the related record
date a "distribution date statement" providing information relating to
distributions made on that date for the relevant class and the recent status
of the mortgage pool. For a discussion of the particular items of information
included in each distribution date statement, as well as a discussion of
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 provide or make
available 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 provided in
Annex B (although the forms may be subject to change over time) and
containing, among other things, substantially the following information:
(1) A report as of the close of business on the immediately preceding
determination date, containing some categories of information
regarding the mortgage loans provided in Annex A of this
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prospectus supplement in the tables under the caption
"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 presented in a loan-by-loan and tabular format
substantially similar to the formats utilized in Annex A.
(2) A "delinquent loan status report" containing, among other things,
those mortgage loans that, 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
that have become REO property.
(3) An "historical loan modification report" containing, among other
things, those mortgage loans that, as of the close of business on
the immediately preceding determination date, have been modified
under the pooling and servicing agreement
o during the collection period ending on that determination date
and
o since the cut-off date for that mortgage loan, showing its
original and the revised terms.
(4) An "historical loss estimate report" containing, among other
things, as of the close of business on the immediately preceding
determination date,
o the aggregate amount of liquidation proceeds and liquidation
expenses, both for the collection period ending on that
determination date and for all prior collection periods, and
o the amount of realized losses occurring both during that
collection period and historically, set forth on a mortgage
loan-by-mortgage loan basis.
(5) An "REO status report" containing, among other things, for each REO
property included in the trust as of the close of business on the
immediately preceding determination date,
o the acquisition date of that REO property,
o the amount of income collected on that REO property (net of
related expenses) and other amounts, if any, received on that
REO property during the collection period ending on that
determination date, and
o 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 "servicer watch list" containing, among other things, a list of
mortgage loans that have experienced a material decrease in debt
service coverage, a loss of or bankruptcy of the largest tenant (if
the servicer has actual knowledge of such loss or bankruptcy) or
are approaching maturity.
None of these reports will include any information that the servicer
regards as 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.
Before each distribution date, the servicer will deliver to the trustee by
electronic means:
o a "comparative financial status report" containing substantially the
content provided in Annex B, including, among other things, the
occupancy, revenue, net operating income and debt service coverage
ratio for each mortgage loan (other than the credit lease loans) or
related mortgaged property as of the determination date immediately
preceding the preparation of such report for each of the following
three periods (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):
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o the most current available year-to-date;
o each of the previous two full fiscal years stated separately; and
o the "base year" (representing the original analysis of information
used as of the cut-off date for such mortgage loan); and
o a "CSSA loan file" containing information on the mortgage loans and
the mortgaged properties.
In addition, the servicer is also required to perform for each mortgaged
property and REO property (except any mortgaged property securing a credit
lease loan):
o Within 30 days after receipt of a quarterly operating statement, if
any, beginning with the calendar quarter ended September 30, 1999, an
"operating statement analysis" containing revenue, expense, and net
operating income information substantially in accordance with Annex B
(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 the mortgaged property or REO
property as of the end of that calendar quarter. The servicer will
deliver to the trustee by electronic means the operating statement
analysis upon request.
o Within 30 days after receipt by the servicer of an annual operating
statement, an NOI adjustment analysis containing substantially the
content provided in Annex B (the "NOI adjustment worksheet") (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) presenting the computation made in
accordance with the methodology described in the pooling and servicing
agreement to "normalize" the full year net operating income and debt
service coverage numbers used by the servicer to satisfy its reporting
obligation described in clause (1) above. The servicer will deliver to
the trustee by electronic means the "NOI adjustment worksheet" upon
request.
Certificate owners who have certified to the trustee their beneficial
ownership of any offered certificate may also obtain copies of any of the
trustee reports upon request. Otherwise, until the time definitive
certificates are issued to evidence the offered certificates, the information
described above will be available to the related certificate owners only if
DTC and its participants provide the information to certificate owners.
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.
INFORMATION AVAILABLE ELECTRONICALLY
For those who have obtained an account number on the trustee's ASAP
(Automatic Statements Accessed by Phone) system, the distribution date
statement may be obtained from the trustee via automated facsimile by placing
a telephone call to (714) 282-5518 and following the voice prompts to request
"Statement Number '416'." Account numbers on the trustee's ASAP system may be
obtained by calling the same telephone number and following the voice prompts
for obtaining account numbers. Separately, bond factor information may be
obtained from the trust by calling (800) 246-5761. In addition, if the
depositor so directs the trustee and on terms acceptable to the trustee, the
trustee will make available through its electronic bulletin board system
certain information related to the mortgage loans (as presented in the
standard CSSA format) as provided for in the pooling and servicing agreement.
The bulletin board is located at (714) 282-3990. A directory has been set up
on the bulletin board in which an electronic file is stored containing
monthly servicer data. All files are password protected. Passwords to each
file will be released by the trustee in accordance with the terms of the
pooling and servicing agreement. Those who have an account on the bulletin
board may retrieve the loan level data file for each transaction in the
directory. An account number may be obtained by typing "NEW" upon logging
into the bulletin board. The trustee also intends to make the servicer watch
list, the comparative financial status report and certain information
relating to the certificates and the mortgage loans available on the Internet
at www.lnbabs.com. Such internet access may require the use of a password
which can be obtained from the trustee.
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As a condition to access the trustee's internet website or electronic
bulletin board, the trustee may require registration and the acceptance of a
disclaimer. The trustee will not be liable for the dissemination of
information in accordance with the pooling and servicing agreement.
OTHER INFORMATION
The trustee will make available at its offices, during normal business
hours, for review by any holder, certificate owner or prospective purchaser
of an offered certificate, originals or copies of the following items to the
extent they are held by the trustee:
o the pooling and servicing agreement and any amendments thereto,
o all trustee reports delivered to holders of the relevant class of
offered certificates since the delivery date,
o all officers' 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,
o the most recent property inspection report prepared by or on behalf of
the servicer and delivered to the trustee for each mortgaged property,
o the most recent annual operating statements, if any, collected by or
on behalf of the servicer and delivered to the trustee for each
mortgaged property, and
o 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.
The trustee will provide copies of the items described above upon
reasonable written request. The trustee may require payment for the
reasonable costs and expenses of providing such copies and may also require:
o 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 the person or entity making
the request is a beneficial owner of offered certificates, is
requesting the information solely for use in evaluating its investment
in the certificates and will otherwise keep the information
confidential and
o 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 the person or entity making the
request is a prospective purchaser of offered certificates or an
interest therein, is requesting the information solely for use in
evaluating a possible investment in the certificates and will
otherwise keep the information confidential.
Certificateholders, by the acceptance of their certificates, will be
deemed to have agreed to keep this information confidential. The servicer
may, but is not required to, make certain information available over the
internet.
VOTING RIGHTS
At all times during the term of the pooling and servicing agreement, the
voting rights for the certificates (the "voting rights") will be allocated as
follows:
o 98% among the holders of the respective classes of principal balance
certificates in proportion to the certificate balances (adjusted as
described below) of their certificates,
o 1% among the holders of the Class X certificates, and
o 1% allocated equally among the holders of the respective classes of
REMIC residual certificates.
Voting rights allocated to a class of certificateholders will be allocated
among those certificateholders in proportion to the percentage interests in
the class evidenced by their respective certificates. Appraisal
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reduction amounts will be allocated to reduce the respective certificate
balances of the Class N, Class M, Class L, Class K, Class J, Class H, Class
G, Class F, Class E, Class D, Class C, Class B and Class A-1 and Class A-2
certificates (pro rata between the Class A-1 and Class A-2 certificates), in
that order, solely for purposes of calculating voting rights.
TERMINATION; RETIREMENT OF CERTIFICATES
The obligations created by the pooling and servicing agreement will
terminate following the earliest of:
o the final payment (or advance of that payment) or other liquidation of
the last mortgage loan or REO property, and
o the purchase of all of the assets of the trust by the servicer or, if
the servicer elects not to make such purchase, the depositor, when the
then aggregate stated principal balance of the mortgage pool is less
than 1% of the initial pool balance.
Any purchase by the servicer or the depositor of all the mortgage loans
and other assets in the trust is required to be made at a price equal to:
o the aggregate purchase price of all the mortgage loans (exclusive of
mortgage loans for which the related mortgaged properties have become
REO properties) then included in the trust; plus
o the aggregate fair market value of all REO properties then included in
the trust (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; minus
o if such purchase is by the servicer, the aggregate of all amounts
payable or reimbursable to the servicer under the pooling and
servicing agreement.
Written notice of termination of the pooling and servicing agreement will
be given to each certificateholder. 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 the notice of
termination.
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 (if the trust is to be terminated as a result of the purchase of
all of the assets), together with all other amounts on deposit in the
certificate account, net of any portion of the foregoing 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 AND FISCAL AGENT
The trustee is LaSalle Bank National Association. The trustee is at all
times required to be, and will be required to resign if it fails to be,
o a corporation or association, organized and doing business under the
laws of the United States of America or any state thereof or the
District of Columbia, authorized under those laws to exercise
corporate trust powers, having a combined capital and surplus of not
less than $100,000,000 (or, under certain conditions, such lesser
amount that each rating agency has confirmed would not cause it to
qualify, downgrade or withdraw its rating on any class of
certificates) and subject to supervision or examination by federal or
state authority and
o an institution whose long-term senior unsecured debt (or that of its
fiscal agent, if applicable) is rated not less than "AA" or its
equivalent by the rating agencies (or such lower ratings as the rating
agencies would permit without causing them to qualify, downgrade or
withdraw any of the then-current ratings of the certificates).
The corporate trust office of the trustee responsible for administration
of the trust ("corporate trust office") is located at 135 South LaSalle
Street, Suite 1625, Chicago, Illinois 60674, Attention: Asset-Backed
Securities Trust Services Group--GMAC Commercial Mortgage Securities, Inc.,
Mortgage Pass-Through Certificates, Series 1999-C2.
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ABN AMRO Bank N.V., a Netherlands banking corporation and the indirect
corporate parent of the trustee, will act as fiscal agent for the trust and
is obligated to make any advance required to be made, and not made, by the
servicer and the trustee under the pooling and servicing agreement, provided
that the fiscal agent is not obligated to make any advance unless it
determines that the advance will be recoverable from future payments or
collections. The fiscal agent is entitled to rely conclusively on any
determination by the servicer (solely in the case of servicing advances) or
the trustee that an advance, if made, would be nonrecoverable. The fiscal
agent is entitled to reimbursement for each advance made by it in the same
manner and to the same extent as, but prior to, the servicer and the trustee.
See "--P&I Advances" above. The fiscal agent is entitled to various rights,
protections and indemnities similar to those afforded the trustee. The
trustee is responsible for payment of the compensation of the fiscal agent.
As of December 31, 1998, the fiscal agent had consolidated assets of
approximately $505 billion. In the event that LaSalle Bank National
Association shall, for any reason, cease to act as trustee under the pooling
and servicing agreement, ABN AMRO Bank N.V. will also no longer serve in the
capacity of fiscal agent under the pooling and servicing agreement.
YIELD AND MATURITY CONSIDERATIONS
YIELD CONSIDERATIONS
The yield to maturity of each class of certificates will depend on, among
other things:
o the purchase price of the certificates;
o the applicable pass-through rate;
o the actual characteristics of the mortgage loans; and
o the rate and timing of payments on the mortgage loans.
The Purchase Price of the Certificates
The amount by which the yield to maturity of an offered certificate may
vary from the anticipated yield will depend upon the degree to which that
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 that certificate. 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 that 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 that certificate could result in an actual yield to such investor that is
lower than the anticipated yield. Generally, 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 that
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 the Class X certificates will be
highly sensitive to the rate and timing of principal payments (including by
reason of prepayments, defaults and liquidations) on the mortgage 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 mortgage loans could result in the failure of such
investors to fully recoup their initial investments.
Applicable Pass-Through Rate
The pass-through rate for the Class A-1 certificates will be fixed. The
pass-through rate for the Class X certificates for any distribution date will
be variable and will be based on the weighted average net mortgage rate for
such distribution date. The pass-through rates applicable to the Class A-2,
Class B, Class C and Class D certificates for any distribution date will be
equal to the lesser of a specified rate and the weighted average net mortgage
rate with respect to such distribution date. The pass-through rates
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applicable to the Class E, Class F and Class G certificates for any
distribution date will be equal to the weighted average net mortgage rate
with respect to such distribution date. Accordingly, the yield on the offered
certificates (other than the Class A-1 certificates) will be sensitive to
changes in the relative composition of the mortgage loans as a result of
scheduled amortization, voluntary prepayments, liquidations of mortgage loans
following default and repurchases of mortgage loans. Losses or payments of
principal on the mortgage loans with higher net mortgage rates could result
in a reduction in the weighted average net mortgage rate, thereby reducing
the pass-through rates for the Class X, Class E, Class F and Class G
certificates and, to the extent that the weighted average net mortgage rate
is reduced below the specified fixed rate with respect to the Class A-2,
Class B, Class C and Class D certificates, reducing the pass-through rates on
such classes of offered certificates.
See "Description of the Certificates--Pass-Through Rates" and "Description
of the Mortgage Pool" in this prospectus supplement and "--Yield
Considerations--Rate and Timing of Principal Payments on the Mortgage Loans"
and "--Yield Sensitivity of the Class X Certificates" below.
Actual Characteristics of the Mortgage Loans
The yield to holders of the offered certificates will also depend on the
extent to which 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,
o first, by the holders of the respective classes of subordinate
certificates, in reverse alphabetical order of class designation,
to the extent of amounts otherwise distributable on their
certificates; and
o second, by the holders of the senior certificates.
Reductions in the balances of the principal balance certificates will also
reduce the notional amount of the Class X certificates. Any net aggregate
prepayment interest shortfall for each distribution date will be allocated on
that distribution date among each class of REMIC regular certificates, pro
rata, in accordance with the respective amounts of accrued certificate
interest for that class of certificates for that distribution date.
Rate and Timing of Payments on the Mortgage Loans
The yield to holders of the offered certificates 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, among other things, their amortization schedules, the dates on which
balloon payments are due and the rate and timing of principal prepayments and
other unscheduled collections on the mortgage loans (including for this
purpose collections resulting from liquidations of mortgage loans due to
defaults, casualties or condemnations affecting the mortgaged properties, or
purchases of mortgage loans out of the trust). Prepayments and, assuming the
respective stated maturity dates thereof 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 amount 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" in
this prospectus supplement and "The Pooling and Servicing
Agreements--Realization Upon Defaulted Mortgage Loans" and "Legal Aspects of
Mortgage Loans--Foreclosure" in the prospectus.
The failure on the part of any borrower to pay its ARD loan on its
anticipated repayment date may result in significant delays in payments of
principal on that ARD loan and on the offered certificates. 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
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prepayments in particular. The depositor is not aware of any relevant
publicly available or authoritative statistics that address the historical
prepayment experience of a large group of mortgage loans comparable to the
mortgage loans.
FACTORS THAT AFFECT THE RATE AND TIMING OF PAYMENTS AND DEFAULTS
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, prevailing interest rates, the terms of the mortgage loans (for
example, prepayment premiums, prepayment lock-out periods 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 Pool" in this prospectus supplement and "Risk Factors" and "Yield
and Maturity Considerations--Yield and Prepayment Considerations" in the
prospectus.
The rate of prepayment on the mortgage 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. See "Description of the Mortgage Pool--Terms and Conditions of
the Mortgage Loans" in this prospectus supplement.
DELAY IN PAYMENT OF DISTRIBUTIONS
Because monthly distributions will not be made to certificateholders until
a date that is scheduled to be at least 15 days following the end of the
related interest accrual period, the effective yield to the holders of the
offered certificates will be lower than the yield that would otherwise be
produced by the applicable pass-through rates and purchase prices (assuming
such prices did not account for such delay).
UNPAID DISTRIBUTABLE CERTIFICATE INTEREST
As described under "Description of the
Certificates--Distributions--Application of the Available Distribution
Amount" in this prospectus supplement, 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 will be
distributable to holders of such class of certificates on subsequent
distribution dates, to the extent of available funds. Any 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 certificate refers to the average amount of
time that will elapse from the date of its issuance until each dollar
allocable to principal or the notional amount of that certificate is
distributed to the investor or the notional amount is reduced to zero, in the
case of the Class X certificates. For purposes of this prospectus supplement,
the weighted average life of a balance certificate is determined by
o multiplying the amount of each principal distribution or reduction of
the notional amount on the certificate by the number of years from the
delivery date to the related distribution date,
o summing the results, and
o dividing the sum by the aggregate amount of the reductions in the
principal balance or notional amount of that certificate.
The weighted average life of any 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
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such payments, collections and/or advances of principal are in turn applied
in reduction of the certificate balance or notional amount of the class of
certificates to which the certificate belongs. If the balloon payment on a
balloon loan having a due date after the determination date in any month is
received on the stated maturity date thereof, the excess of such payment over
the related assumed monthly payment will not be included in the available
distribution amount until the distribution date in the following month. As a
result, the weighted average life of the certificates may be extended.
Prepayments on mortgage loans may be measured by a prepayment standard or
model. The model used in this prospectus supplement is the "CPR" or constant
prepayment rate model. The CPR model assumes that a group of mortgage loans
experiences prepayments each month at a specified constant annual rate. 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 the anticipated repayment date, in the case of an
ARD loan). The columns headed "25%," "50%," "75%," and "100%" assume that no
prepayments are made on any mortgage loan during that mortgage loan's
prepayment lock-out or defeasance period and are otherwise made on each of
the mortgage loans at the indicated CPR percentages. There is no assurance,
however, that prepayments of the mortgage loans (whether or not in a
prepayment lock-out or defeasance period) will conform to any particular CPR
percentages, and no representation is made that the mortgage loans will
prepay in accordance with the assumptions at any of the CPR percentages 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 or defeasance period will not prepay
as a result of involuntary liquidations upon default or otherwise.
A "prepayment lock-out period" is any period during which the terms of the
mortgage loan prohibit voluntary prepayments on the part of the borrower. A
"defeasance period" is any period during which the borrower may, under the
terms of the mortgage loan, exercise a defeasance option.
The following tables indicate the percentage of the initial certificate
balance or initial notional amount of each class of offered certificates that
would be outstanding after each of the dates shown at the indicated CPR
percentages and the corresponding weighted average life of each of that class
of certificates. The tables have been prepared on the basis of the
information set forth on Annex A and the following maturity assumptions:
(1) the initial certificate balance or notional amount, as the case may
be, and the pass-through rate for each class of certificates are as
set forth in this prospectus supplement,
(2) the scheduled monthly payments for each mortgage loan are based on
payments of principal and interest described on Annex A,
(3) all scheduled monthly payments (including balloon payments) are
assumed to be timely received on the first day of each month
beginning in July 1999,
(4) there are no delinquencies or losses on the mortgage loans, there are
no extensions of maturity on the mortgage loans, there are no
appraisal reduction amounts on the mortgage loans and there are no
casualties or condemnations affecting the mortgaged properties,
(5) prepayments are made on each of the mortgage loans at the indicated
CPR percentages provided 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 (13)),
(6) the ARD loans mature on their respective anticipated repayment dates,
(7) all mortgage loans accrue interest under the method as specified in
Annex A,
(8) neither the servicer nor the depositor exercises its right of
optional termination described in this prospectus supplement,
(9) no mortgage loan is required to be repurchased by the depositor,
(10) no prepayment interest shortfalls are incurred and no prepayment
premiums are collected,
S-83
<PAGE>
(11) there are no additional trust expenses,
(12) distributions on the certificates are made on the 15th day of each
month, beginning in July 1999,
(13) no prepayments are received on any mortgage loan during that mortgage
loan's prepayment lock-out period or defeasance period ("LOP"),
(14) the prepayment provisions for each mortgage loan are as set forth on
Annex A,
(15) the requirements to release earnout amounts are satisfied for each
earnout loan, and
(16) the delivery date is June 9, 1999.
To the extent that the mortgage loans have characteristics or experience
performance that differs from those assumed in preparing the tables set forth
below, the Class A-1, Class A-2, Class B, Class C, Class D, Class E, Class F
and Class G certificates may mature and the Class X certificates may no
longer be entitled to receive distributions on a date earlier or later than
indicated by the tables. It is highly unlikely that the mortgage loans will
prepay or perform 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 or at the same rate. In particular, certain of
the mortgage loans may not permit voluntary partial prepayments. In addition,
variations in the actual prepayment experience and the balance of the
specific mortgage loans that prepay may increase or decrease the percentages
of initial certificate balances or notional amounts (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. In addition, the actual pre-tax yields on, or any
other payment characteristics of, any class of offered certificates may not
correspond to any of the information shown in the yield tables in this
prospectus supplement, and the aggregate purchase prices of the offered
certificates may not be as assumed. Investors must make their own decisions
as to the appropriate assumptions (including prepayment assumptions) to be
used in deciding whether to purchase the offered certificates.
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-2, Class B, Class
C, Class D, Class E, Class F, Class G and Class X certificates and the
percentage of the initial certificate balance or notional amount of each such
class of certificates that would be outstanding after the closing date and
each of the distribution dates shown under the applicable assumptions at the
indicated CPR percentages.
S-84
<PAGE>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF
THE CLASS A-1 CERTIFICATES AT 0% CPR DURING LOCKOUT AND
DEFEASANCE AND OTHERWISE AT INDICATED CPR
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION (CPR)
-------------------------------------------------------------------
DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% PP*
- -------------------------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Closing Date .................... 100 100 100 100 100
June 15, 2000.................... 94 94 94 94 94
June 15, 2001.................... 87 87 87 87 87
June 15, 2002.................... 79 79 79 79 79
June 15, 2003.................... 70 70 70 70 70
June 15, 2004.................... 60 60 60 60 60
June 15, 2005.................... 50 50 50 50 50
June 15, 2006.................... 38 38 38 38 38
June 15, 2007.................... 26 26 26 26 26
June 15, 2008.................... 12 12 12 12 12
June 15, 2009.................... 0 0 0 0 0
------------ ------------ ------------ ------------ ------------
Weighted Average Life (in
years).......................... 5.7 5.7 5.7 5.7 5.7
First Principal Payment Date .... 07/15/1999 07/15/1999 07/15/1999 07/15/1999 07/15/1999
Last Principal Payment Date ..... 12/15/2008 11/15/2008 10/15/2008 09/15/2008 08/15/2008
</TABLE>
* "100% PP" means 100% of each loan prepays when it becomes freely
prepayable.
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF
THE CLASS A-2 CERTIFICATES AT 0% CPR DURING LOCKOUT AND
DEFEASANCE AND OTHERWISE AT INDICATED CPR
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION (CPR)
-------------------------------------------------------------------
DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% PP*
- -------------------------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Closing Date .................... 100 100 100 100 100
June 15, 2000.................... 100 100 100 100 100
June 15, 2001.................... 100 100 100 100 100
June 15, 2002.................... 100 100 100 100 100
June 15, 2003.................... 100 100 100 100 100
June 15, 2004.................... 100 100 100 100 100
June 15, 2005.................... 100 100 100 100 100
June 15, 2006.................... 100 100 100 100 100
June 15, 2007.................... 100 100 100 100 100
June 15, 2008.................... 100 100 100 100 100
June 15, 2009.................... 0 0 0 0 0
------------ ------------ ------------ ------------ ------------
Weighted Average Life (in
years).......................... 9.7 9.7 9.7 9.7 9.6
First Principal Payment Date .... 12/15/2008 11/15/2008 10/15/2008 09/15/2008 08/15/2008
Last Principal Payment Date ..... 05/15/2009 05/15/2009 05/15/2009 05/15/2009 03/15/2009
</TABLE>
* "100% PP" means 100% of each loan prepays when it becomes freely
prepayable.
S-85
<PAGE>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF
THE CLASS B CERTIFICATES AT 0% CPR DURING LOCKOUT AND
DEFEASANCE AND OTHERWISE AT INDICATED CPR
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION (CPR)
-------------------------------------------------------------------
DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% PP*
- -------------------------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Closing Date .................... 100 100 100 100 100
June 15, 2000.................... 100 100 100 100 100
June 15, 2001.................... 100 100 100 100 100
June 15, 2002.................... 100 100 100 100 100
June 15, 2003.................... 100 100 100 100 100
June 15, 2004.................... 100 100 100 100 100
June 15, 2005.................... 100 100 100 100 100
June 15, 2006.................... 100 100 100 100 100
June 15, 2007.................... 100 100 100 100 100
June 15, 2008.................... 100 100 100 100 100
June 15, 2009.................... 0 0 0 0 0
------------ ------------ ------------ ------------ ------------
Weighted Average Life (in
years).......................... 9.9 9.9 9.9 9.9 9.8
First Principal Payment Date .... 05/15/2009 05/15/2009 05/15/2009 05/15/2009 03/15/2009
Last Principal Payment Date ..... 05/15/2009 05/15/2009 05/15/2009 05/15/2009 04/15/2009
</TABLE>
* "100% PP" means 100% of each loan prepays when it becomes freely
prepayable.
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF
THE CLASS C CERTIFICATES AT 0% CPR DURING LOCKOUT AND
DEFEASANCE AND OTHERWISE AT INDICATED CPR
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION (CPR)
-------------------------------------------------------------------
DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% PP*
- -------------------------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Closing Date .................... 100 100 100 100 100
June 15, 2000.................... 100 100 100 100 100
June 15, 2001.................... 100 100 100 100 100
June 15, 2002.................... 100 100 100 100 100
June 15, 2003.................... 100 100 100 100 100
June 15, 2004.................... 100 100 100 100 100
June 15, 2005.................... 100 100 100 100 100
June 15, 2006.................... 100 100 100 100 100
June 15, 2007.................... 100 100 100 100 100
June 15, 2008.................... 100 100 100 100 100
June 15, 2009.................... 0 0 0 0 0
------------ ------------ ------------ ------------ ------------
Weighted Average Life (in
years).......................... 9.9 9.9 9.9 9.9 9.9
First Principal Payment Date .... 05/15/2009 05/15/2009 05/15/2009 05/15/2009 04/15/2009
Last Principal Payment Date ..... 05/15/2009 05/15/2009 05/15/2009 05/15/2009 05/15/2009
</TABLE>
* "100% PP" means 100% of each loan prepays when it becomes freely
prepayable.
S-86
<PAGE>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF
THE CLASS D CERTIFICATES AT 0% CPR DURING LOCKOUT AND
DEFEASANCE AND OTHERWISE AT INDICATED CPR
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION (CPR)
-------------------------------------------------------------------
DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% PP*
- -------------------------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Closing Date .................... 100 100 100 100 100
June 15, 2000.................... 100 100 100 100 100
June 15, 2001.................... 100 100 100 100 100
June 15, 2002.................... 100 100 100 100 100
June 15, 2003.................... 100 100 100 100 100
June 15, 2004.................... 100 100 100 100 100
June 15, 2005.................... 100 100 100 100 100
June 15, 2006.................... 100 100 100 100 100
June 15, 2007.................... 100 100 100 100 100
June 15, 2008.................... 100 100 100 100 100
June 15, 2009.................... 0 0 0 0 0
------------ ------------ ------------ ------------ ------------
Weighted Average Life (in
years).......................... 10.0 10.0 10.0 10.0 10.0
First Principal Payment Date .... 05/15/2009 05/15/2009 05/15/2009 05/15/2009 05/15/2009
Last Principal Payment Date ..... 06/15/2009 06/15/2009 06/15/2009 06/15/2009 06/15/2009
</TABLE>
* "100% PP" means 100% of each loan prepays when it becomes freely
prepayable.
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF
THE CLASS E CERTIFICATES AT 0% CPR DURING LOCKOUT AND
DEFEASANCE AND OTHERWISE AT INDICATED CPR
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION (CPR)
-------------------------------------------------------------------
DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% PP*
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Closing Date .................... 100 100 100 100 100
June 15, 2000.................... 100 100 100 100 100
June 15, 2001.................... 100 100 100 100 100
June 15, 2002.................... 100 100 100 100 100
June 15, 2003.................... 100 100 100 100 100
June 15, 2004.................... 100 100 100 100 100
June 15, 2005.................... 100 100 100 100 100
June 15, 2006.................... 100 100 100 100 100
June 15, 2007.................... 100 100 100 100 100
June 15, 2008.................... 100 100 100 100 100
June 15, 2009.................... 68 68 68 68 68
June 15, 2010.................... 42 42 42 42 42
June 15, 2011.................... 2 2 2 2 2
June 15, 2012.................... 0 0 0 0 0
------------ ------------ ------------ ------------ ------------
Weighted Average Life (in
years).......................... 10.9 10.9 10.9 10.9 10.9
First Principal Payment Date .... 06/15/2009 06/15/2009 06/15/2009 06/15/2009 06/15/2009
Last Principal Payment Date ..... 08/15/2011 08/15/2011 08/15/2011 08/15/2011 08/15/2011
</TABLE>
* "100% PP" means 100% of each loan prepays when it becomes freely
prepayable.
S-87
<PAGE>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF
THE CLASS F CERTIFICATES AT 0% CPR DURING LOCKOUT AND
DEFEASANCE AND OTHERWISE AT INDICATED CPR
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION (CPR)
-------------------------------------------------------------------
DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% PP*
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Closing Date .................... 100 100 100 100 100
June 15, 2000.................... 100 100 100 100 100
June 15, 2001.................... 100 100 100 100 100
June 15, 2002.................... 100 100 100 100 100
June 15, 2003.................... 100 100 100 100 100
June 15, 2004.................... 100 100 100 100 100
June 15, 2005.................... 100 100 100 100 100
June 15, 2006.................... 100 100 100 100 100
June 15, 2007.................... 100 100 100 100 100
June 15, 2008.................... 100 100 100 100 100
June 15, 2009.................... 100 100 100 100 100
June 15, 2010.................... 100 100 100 100 100
June 15, 2011.................... 100 100 100 100 100
June 15, 2012.................... 30 30 30 30 30
June 15, 2013.................... 0 0 0 0 0
------------ ------------ ------------ ------------ ------------
Weighted Average Life (in
years).......................... 12.8 12.8 12.8 12.8 12.8
First Principal Payment Date .... 08/15/2011 08/15/2011 08/15/2011 08/15/2011 08/15/2011
Last Principal Payment Date ..... 11/15/2012 11/15/2012 11/15/2012 11/15/2012 11/15/2012
</TABLE>
* "100% PP" means 100% of each loan prepays when it becomes freely
prepayable.
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF
THE CLASS G CERTIFICATES AT 0% CPR DURING LOCKOUT AND
DEFEASANCE AND OTHERWISE AT INDICATED CPR
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION (CPR)
-------------------------------------------------------------------
DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% PP*
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Closing Date .................... 100 100 100 100 100
June 15, 2000.................... 100 100 100 100 100
June 15, 2001.................... 100 100 100 100 100
June 15, 2002.................... 100 100 100 100 100
June 15, 2003.................... 100 100 100 100 100
June 15, 2004.................... 100 100 100 100 100
June 15, 2005.................... 100 100 100 100 100
June 15, 2006.................... 100 100 100 100 100
June 15, 2007.................... 100 100 100 100 100
June 15, 2008.................... 100 100 100 100 100
June 15, 2009.................... 100 100 100 100 100
June 15, 2010.................... 100 100 100 100 100
June 15, 2011.................... 100 100 100 100 100
June 15, 2012.................... 100 100 100 100 100
June 15, 2013.................... 46 46 46 46 46
June 15, 2014.................... 0 0 0 0 0
------------ ------------ ------------ ------------ ------------
Weighted Average Life (in
years).......................... 14.0 14.0 14.0 14.0 14.0
First Principal Payment Date .... 11/15/2012 11/15/2012 11/15/2012 11/15/2012 11/15/2012
Last Principal Payment Date ..... 01/15/2014 01/15/2014 01/15/2014 01/15/2014 12/15/2013
</TABLE>
* "100% PP" means 100% of each loan prepays when it becomes freely
prepayable.
S-88
<PAGE>
PERCENTAGES OF THE INITIAL NOTIONAL AMOUNT OF
THE CLASS X CERTIFICATES AT 0% CPR DURING LOCKOUT AND
DEFEASANCE AND OTHERWISE AT INDICATED CPR
<TABLE>
<CAPTION>
PREPAYMENT ASSUMPTION (CPR)
-------------------------------------------------------------------
DATE 0% CPR 25% CPR 50% CPR 75% CPR 100% PP*
- -------------------------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Closing Date .................... 100 100 100 100 100
June 15, 2000.................... 99 99 99 99 99
June 15, 2001.................... 98 98 98 98 98
June 15, 2002.................... 97 97 97 97 97
June 15, 2003.................... 95 95 95 95 95
June 15, 2004.................... 94 94 94 94 94
June 15, 2005.................... 92 92 92 92 92
June 15, 2006.................... 90 90 90 90 90
June 15, 2007.................... 89 89 89 89 89
June 15, 2008.................... 86 86 86 86 86
June 15, 2009.................... 15 15 15 15 15
June 15, 2010.................... 14 14 14 14 14
June 15, 2011.................... 12 12 12 12 12
June 15, 2012.................... 11 11 11 11 11
June 15, 2013.................... 10 10 10 10 10
June 15, 2014.................... 9 9 9 9 9
June 15, 2015.................... 8 7 7 7 4
June 15, 2016.................... 4 4 4 4 4
June 15, 2017.................... 3 3 3 3 3
June 15, 2018.................... 3 3 3 3 3
June 15, 2019.................... 2 2 2 2 2
June 15, 2020.................... 1 1 1 1 1
June 15, 2021.................... * * * * *
June 15, 2022.................... * * * * *
June 15, 2023.................... * * * * *
June 15, 2024.................... 0 0 0 0 0
------------ ------------ ------------ ------------ ------------
Weighted Average Life (in
years).......................... 10.0 10.0 10.0 10.0 9.9
First Principal Payment Date .... 07/15/1999 07/15/1999 07/15/1999 07/15/1999 07/15/1999
Last Principal Payment Date ..... 01/15/2024 01/15/2024 01/15/2024 01/15/2024 08/15/2023
</TABLE>
* "100% PP" means 100% of each loan prepays when it becomes freely
prepayable.
"*" Indicates an outstanding notional amount greater than 0.0% and less than
0.5% of the original notional amount.
PRICE/YIELD TABLES
The tables set forth below show the corporate bond equivalent ("CBE")
yield and weighted average life in years for each class of offered
certificates (other than the Class X certificates) under the maturity
assumptions.
The yields provided 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 June 9, 1999 to equal the assumed purchase prices,
plus accrued interest at the applicable pass-through rate as stated on the
cover hereof from and including June 1, 1999 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 classes
of offered certificates and consequently does not purport to reflect the
return on any investment in those classes of offered certificates when
reinvestment rates are considered. Purchase prices are expressed in 32nds and
interpreted as a percentage of the initial certificate balance of the
specified class (i.e., 99-16 means 99 16/32%) and are exclusive of accrued
interest.
S-89
<PAGE>
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE,
FIRST PRINCIPAL PAYMENT DATE AND LAST PRINCIPAL PAYMENT DATE
FOR THE CLASS A-1 CERTIFICATES AT THE SPECIFIED CPRS
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT AND DEFEASANCE
OTHERWISE AT INDICATED CPR
-------------------------------------------------------------------
ASSUMED PRICE (32NDS) 0% CPR 25% CPR 50% CPR 75% CPR 100% PP*
- --------------------------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
100-00............................ 6.60% 6.60% 6.60% 6.60% 6.60%
100-02............................ 6.59% 6.59% 6.59% 6.59% 6.59%
100-04............................ 6.58% 6.58% 6.58% 6.58% 6.58%
100-06............................ 6.56% 6.56% 6.56% 6.56% 6.56%
100-08............................ 6.55% 6.55% 6.55% 6.55% 6.55%
100-10............................ 6.53% 6.53% 6.53% 6.53% 6.53%
100-12............................ 6.52% 6.52% 6.52% 6.52% 6.52%
100-14............................ 6.51% 6.51% 6.51% 6.51% 6.51%
100-16............................ 6.49% 6.49% 6.49% 6.49% 6.49%
100-18............................ 6.48% 6.48% 6.48% 6.48% 6.48%
100-20............................ 6.46% 6.46% 6.46% 6.46% 6.46%
100-22............................ 6.45% 6.45% 6.45% 6.45% 6.45%
100-24............................ 6.44% 6.44% 6.44% 6.44% 6.44%
100-26............................ 6.42% 6.42% 6.42% 6.42% 6.42%
100-28............................ 6.41% 6.41% 6.41% 6.41% 6.41%
100-30............................ 6.39% 6.39% 6.39% 6.39% 6.39%
101-00............................ 6.38% 6.38% 6.38% 6.38% 6.38%
Weighted Average Life (yrs.) .... 5.7 5.7 5.7 5.7 5.7
First Principal Payment Date .... Jul-1999 Jul-1999 Jul-1999 Jul-1999 Jul-1999
Last Principal Payment Date ..... Dec-2008 Nov-2008 Oct-2008 Sep-2008 Aug-2008
</TABLE>
* "100% PP" means 100% of each loan prepays when it becomes freely
prepayable.
S-90
<PAGE>
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE,
FIRST PRINCIPAL PAYMENT DATE AND LAST PRINCIPAL PAYMENT DATE
FOR THE CLASS A-2 CERTIFICATES AT THE SPECIFIED CPRS
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT AND DEFEASANCE
OTHERWISE AT INDICATED CPR
-------------------------------------------------------------------
ASSUMED PRICE (32NDS) 0% CPR 25% CPR 50% CPR 75% CPR 100% PP*
- --------------------------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
101-00............................ 6.86% 6.86% 6.86% 6.86% 6.86%
101-02............................ 6.85% 6.85% 6.85% 6.85% 6.85%
100-04............................ 6.84% 6.84% 6.84% 6.84% 6.84%
100-06............................ 6.84% 6.84% 6.84% 6.84% 6.83%
101-08............................ 6.83% 6.83% 6.83% 6.83% 6.82%
100-10............................ 6.82% 6.82% 6.82% 6.82% 6.81%
101-12............................ 6.81% 6.81% 6.81% 6.81% 6.81%
101-14............................ 6.80% 6.80% 6.80% 6.80% 6.80%
101-16............................ 6.79% 6.79% 6.79% 6.79% 6.79%
101-18............................ 6.78% 6.78% 6.78% 6.78% 6.78%
101-20............................ 6.77% 6.77% 6.77% 6.77% 6.77%
101-22............................ 6.76% 6.76% 6.76% 6.76% 6.76%
101-24............................ 6.76% 6.76% 6.76% 6.75% 6.75%
101-26............................ 6.75% 6.75% 6.75% 6.75% 6.74%
101-28............................ 6.74% 6.74% 6.74% 6.74% 6.73%
101-30............................ 6.73% 6.73% 6.73% 6.73% 6.72%
102-00............................ 6.72% 6.72% 6.72% 6.72% 6.72%
Weighted Average Life (yrs.) .... 9.7 9.7 9.7 9.7 9.6
First Principal Payment Date .... Dec-2008 Nov-2008 Oct-2008 Sep-2008 Aug-2008
Last Principal Payment Date ..... May-2009 May-2009 May-2009 May-2009 Mar-2009
</TABLE>
* "100% PP" means 100% of each loan prepays when it becomes freely
prepayable.
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE,
FIRST PRINCIPAL PAYMENT DATE AND LAST PRINCIPAL PAYMENT DATE
FOR THE CLASS B CERTIFICATES AT THE SPECIFIED CPRS
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT AND DEFEASANCE
OTHERWISE AT INDICATED CPR
-------------------------------------------------------------------
ASSUMED PRICE (32NDS) 0% CPR 25% CPR 50% CPR 75% CPR 100% PP*
- --------------------------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
101-00............................ 7.06% 7.06% 7.06% 7.06% 7.06%
101-02............................ 7.05% 7.05% 7.05% 7.05% 7.05%
101-04............................ 7.05% 7.05% 7.05% 7.05% 7.04%
101-06............................ 7.04% 7.04% 7.04% 7.04% 7.03%
101-08............................ 7.03% 7.03% 7.03% 7.03% 7.03%
101-10............................ 7.02% 7.02% 7.02% 7.02% 7.02%
101-12............................ 7.01% 7.01% 7.01% 7.01% 7.01%
101-14............................ 7.00% 7.00% 7.00% 7.00% 7.00%
101-16............................ 6.99% 6.99% 6.99% 6.99% 6.99%
101-18............................ 6.98% 6.98% 6.98% 6.98% 6.98%
101-20............................ 6.97% 6.97% 6.97% 6.97% 6.97%
101-22............................ 6.97% 6.97% 6.97% 6.97% 6.96%
101-24............................ 6.96% 6.96% 6.96% 6.96% 6.95%
101-26............................ 6.95% 6.95% 6.95% 6.95% 6.94%
101-28............................ 6.94% 6.94% 6.94% 6.94% 6.94%
101-30............................ 6.93% 6.93% 6.93% 6.93% 6.93%
102-00............................ 6.92% 6.92% 6.92% 6.92% 6.92%
Weighted Average Life (yrs.) .... 9.9 9.9 9.9 9.9 9.8
First Principal Payment Date .... May-2009 May-2009 May-2009 May-2009 Mar-2009
Last Principal Payment Date ..... May-2009 May-2009 May-2009 May-2009 Apr-2009
</TABLE>
* "100% PP" means 100% of each loan prepays when it becomes freely
prepayable.
S-91
<PAGE>
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE,
FIRST PRINCIPAL PAYMENT DATE AND LAST PRINCIPAL PAYMENT DATE
FOR THE CLASS C CERTIFICATES AT THE SPECIFIED CPRS
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT AND DEFEASANCE
OTHERWISE AT INDICATED CPR
-------------------------------------------------------------------
ASSUMED PRICE (32NDS) 0% CPR 25% CPR 50% CPR 75% CPR 100% PP*
- --------------------------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
101-00............................ 7.16% 7.16% 7.16% 7.16% 7.16%
101-02............................ 7.16% 7.16% 7.16% 7.16% 7.16%
101-04............................ 7.15% 7.15% 7.15% 7.15% 7.15%
101-06............................ 7.14% 7.14% 7.14% 7.14% 7.14%
101-08............................ 7.13% 7.13% 7.13% 7.13% 7.13%
101-10............................ 7.12% 7.12% 7.12% 7.12% 7.12%
101-12............................ 7.11% 7.11% 7.11% 7.11% 7.11%
101-14............................ 7.10% 7.10% 7.10% 7.10% 7.10%
101-16............................ 7.09% 7.09% 7.09% 7.09% 7.09%
101-18............................ 7.08% 7.08% 7.08% 7.08% 7.08%
101-20............................ 7.08% 7.08% 7.08% 7.08% 7.07%
101-22............................ 7.07% 7.07% 7.07% 7.07% 7.07%
101-24............................ 7.06% 7.06% 7.06% 7.06% 7.06%
101-26............................ 7.05% 7.05% 7.05% 7.05% 7.05%
101-28............................ 7.04% 7.04% 7.04% 7.04% 7.04%
101-30............................ 7.03% 7.03% 7.03% 7.03% 7.03%
102-00............................ 7.02% 7.02% 7.02% 7.02% 7.02%
Weighted Average Life (yrs.) .... 9.9 9.9 9.9 9.9 9.9
First Principal Payment Date .... May-2009 May-2009 May-2009 May-2009 Apr-2009
Last Principal Payment Date ..... May-2009 May-2009 May-2009 May-2009 May-2009
</TABLE>
* "100% PP" means 100% of each loan prepays when it becomes freely
prepayable.
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE,
FIRST PRINCIPAL PAYMENT DATE AND LAST PRINCIPAL PAYMENT DATE
FOR THE CLASS D CERTIFICATES AT THE SPECIFIED CPRS
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT AND DEFEASANCE
OTHERWISE AT INDICATED CPR
-------------------------------------------------------------------
ASSUMED PRICE (32NDS) 0% CPR 25% CPR 50% CPR 75% CPR 100% PP*
- --------------------------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
101-00............................ 7.27% 7.27% 7.27% 7.27% 7.27%
101-02............................ 7.26% 7.26% 7.26% 7.26% 7.26%
101-04............................ 7.25% 7.25% 7.25% 7.25% 7.25%
101-06............................ 7.24% 7.24% 7.24% 7.24% 7.24%
101-08............................ 7.23% 7.23% 7.23% 7.23% 7.23%
101-10............................ 7.22% 7.22% 7.22% 7.22% 7.22%
101-12............................ 7.21% 7.21% 7.21% 7.21% 7.21%
101-14............................ 7.20% 7.20% 7.20% 7.20% 7.20%
101-16............................ 7.19% 7.19% 7.19% 7.20% 7.20%
101-18............................ 7.19% 7.19% 7.19% 7.19% 7.19%
101-20............................ 7.18% 7.18% 7.18% 7.18% 7.18%
101-22............................ 7.17% 7.17% 7.17% 7.17% 7.17%
101-24............................ 7.16% 7.16% 7.16% 7.16% 7.16%
101-26............................ 7.15% 7.15% 7.15% 7.15% 7.15%
101-28............................ 7.14% 7.14% 7.14% 7.14% 7.14%
101-30............................ 7.13% 7.13% 7.13% 7.13% 7.13%
102-00............................ 7.12% 7.12% 7.12% 7.12% 7.12%
Weighted Average Life (yrs.) .... 10.0 10.0 10.0 10.0 10.0
First Principal Payment Date .... May-2009 May-2009 May-2009 May-2009 May-2009
Last Principal Payment Date ..... Jun-2009 Jun-2009 Jun-2009 Jun-2009 Jun-2009
</TABLE>
* "100% PP" means 100% of each loan prepays when it becomes freely
prepayable.
S-92
<PAGE>
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE,
FIRST PRINCIPAL PAYMENT DATE AND LAST PRINCIPAL PAYMENT DATE
FOR THE CLASS E CERTIFICATES AT THE SPECIFIED CPRS
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT AND DEFEASANCE
OTHERWISE AT INDICATED CPR
-------------------------------------------------------------------
ASSUMED PRICE (32NDS) 0% CPR 25% CPR 50% CPR 75% CPR 100% PP*
- --------------------------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
98-28............................. 7.65% 7.65% 7.65% 7.65% 7.65%
98-30............................. 7.64% 7.64% 7.64% 7.64% 7.65%
99-00............................. 7.63% 7.63% 7.63% 7.63% 7.64%
99-02............................. 7.63% 7.63% 7.63% 7.63% 7.63%
99-04............................. 7.62% 7.62% 7.62% 7.62% 7.62%
99-06............................. 7.61% 7.61% 7.61% 7.61% 7.61%
99-08............................. 7.60% 7.60% 7.60% 7.60% 7.60%
99-10............................. 7.59% 7.59% 7.59% 7.59% 7.59%
99-12............................. 7.58% 7.58% 7.58% 7.58% 7.58%
99-14............................. 7.57% 7.57% 7.57% 7.57% 7.58%
99-16............................. 7.56% 7.56% 7.56% 7.56% 7.57%
99-18............................. 7.56% 7.56% 7.56% 7.56% 7.56%
99-20............................. 7.55% 7.55% 7.55% 7.55% 7.55%
99-22............................. 7.54% 7.54% 7.54% 7.54% 7.54%
99-24............................. 7.53% 7.53% 7.53% 7.53% 7.53%
99-26............................. 7.52% 7.52% 7.52% 7.52% 7.52%
99-28 ............................ 7.51% 7.51% 7.51% 7.51% 7.51%
Weighted Average Life (yrs.) .... 10.9 10.9 10.9 10.9 10.9
First Principal Payment Date .... Jun-2009 Jun-2009 Jun-2009 Jun-2009 Jun-2009
Last Principal Payment Date ..... Aug-2011 Aug-2011 Aug-2011 Aug-2011 Aug-2011
</TABLE>
* "100% PP" means 100% of each loan prepays when it becomes freely
prepayable.
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE,
FIRST PRINCIPAL PAYMENT DATE AND LAST PRINCIPAL PAYMENT DATE
FOR THE CLASS F CERTIFICATES AT THE SPECIFIED CPRS
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT AND DEFEASANCE
OTHERWISE AT INDICATED CPR
-------------------------------------------------------------------
ASSUMED PRICE (32NDS) 0% CPR 25% CPR 50% CPR 75% CPR 100% PP*
- --------------------------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
91-06............................. 8.68% 8.68% 8.68% 8.68% 8.69%
91-08............................. 8.67% 8.67% 8.67% 8.67% 8.68%
91-10............................. 8.67% 8.67% 8.67% 8.67% 8.67%
91-12............................. 8.66% 8.66% 8.66% 8.66% 8.66%
91-14............................. 8.65% 8.65% 8.65% 8.65% 8.65%
91-16............................. 8.64% 8.64% 8.64% 8.64% 8.64%
91-18............................. 8.63% 8.63% 8.63% 8.63% 8.63%
91-20............................. 8.62% 8.62% 8.62% 8.62% 8.62%
91-22............................. 8.61% 8.61% 8.61% 8.61% 8.62%
91-24............................. 8.60% 8.60% 8.60% 8.60% 8.61%
91-26............................. 8.60% 8.60% 8.60% 8.60% 8.60%
91-28............................. 8.59% 8.59% 8.59% 8.59% 8.59%
91-30............................. 8.58% 8.58% 8.58% 8.58% 8.58%
92-00............................. 8.57% 8.57% 8.57% 8.57% 8.57%
92-02............................. 8.56% 8.56% 8.56% 8.56% 8.56%
92-04............................. 8.55% 8.55% 8.55% 8.55% 8.55%
92-06............................. 8.54% 8.54% 8.54% 8.54% 8.55%
Weighted Average Life (yrs.) .... 12.8 12.8 12.8 12.8 12.8
First Principal Payment Date .... Aug-2011 Aug-2011 Aug-2011 Aug-2011 Aug-2011
Last Principal Payment Date ..... Nov-2012 Nov-2012 Nov-2012 Nov-2012 Nov-2012
</TABLE>
* "100% PP" means 100% of each loan prepays when it becomes freely
prepayable.
S-93
<PAGE>
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE,
FIRST PRINCIPAL PAYMENT DATE AND LAST PRINCIPAL PAYMENT DATE
FOR THE CLASS G CERTIFICATES AT THE SPECIFIED CPRS
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT AND DEFEASANCE
OTHERWISE AT INDICATED CPR
-------------------------------------------------------------------
ASSUMED PRICE (32NDS) 0% CPR 25% CPR 50% CPR 75% CPR 100% PP*
- --------------------------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
84-18............................. 9.57% 9.57% 9.57% 9.57% 9.58%
84-20............................. 9.56% 9.56% 9.56% 9.56% 9.57%
84-22............................. 9.55% 9.56% 9.56% 9.56% 9.56%
84-24............................. 9.55% 9.55% 9.55% 9.55% 9.55%
84-26............................. 9.54% 9.54% 9.54% 9.54% 9.54%
84-28............................. 9.53% 9.53% 9.53% 9.53% 9.53%
84-30............................. 9.52% 9.52% 9.52% 9.52% 9.52%
85-00............................. 9.51% 9.51% 9.51% 9.51% 9.51%
85-02............................. 9.50% 9.50% 9.50% 9.50% 9.50%
85-04............................. 9.49% 9.49% 9.49% 9.49% 9.49%
85-06............................. 9.48% 9.48% 9.48% 9.48% 9.48%
85-08............................. 9.47% 9.47% 9.47% 9.47% 9.47%
85-10............................. 9.46% 9.46% 9.46% 9.46% 9.47%
85-12............................. 9.45% 9.45% 9.45% 9.45% 9.46%
85-14............................. 9.44% 9.44% 9.44% 9.44% 9.45%
85-16............................. 9.43% 9.43% 9.43% 9.43% 9.44%
85-18............................. 9.43% 9.43% 9.43% 9.43% 9.43%
Weighted Average Life (yrs.) .... 14.0 14.0 14.0 14.0 14.0
First Principal Payment Date .... Nov-2012 Nov-2012 Nov-2012 Nov-2012 Nov-2012
Last Principal Payment Date ..... Jan-2014 Jan-2014 Jan-2014 Jan-2014 Dec-2013
</TABLE>
* "100% PP" means 100% of each loan prepays when it becomes freely
prepayable.
YIELD SENSITIVITY OF THE CLASS X CERTIFICATES
The yield to maturity of the Class X certificates will be especially
sensitive to the prepayment, repurchase and default experience on the
mortgage 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 the Class X
certificates. The mortgage loans may prepay at a different rate. In addition,
the pass-through rate for any Class X component relating to a class of
principal balance certificates having a pass-through rate equal to the
weighted average net mortgage rate will be zero. 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 table indicates the sensitivity of the pre-tax yield to
maturity on the Class X certificates to various CPR percentages 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. It was further assumed that the aggregate purchase price of the
Class X certificates are as specified below, in each case expressed in 32nds
and interpreted as a percentage (i.e., 4-16 is 4 16/32%) of the initial
notional amount (without accrued interest). Any differences between these
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 provided in the following table were calculated by
determining the monthly discount rates that, when applied to the assumed
streams of cash flows to be paid on the Class X certificates, would cause the
discounted present value of such assumed stream of cash flows as of June 9,
1999 to equal the assumed aggregate purchase price plus accrued interest at
the initial pass-through rate
S-94
<PAGE>
for the Class X certificates from and including June 1, 1999 to but
excluding the delivery date, and by converting these monthly rates to
semi-annual corporate bond equivalent rates. The calculation does not take
into account shortfalls in the 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).
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 the Class
X certificates is likely to differ from those shown in the following table,
even if all of the mortgage loans prepay at the indicated CPR percentages
over any given time period or over the entire life of the certificates.
The mortgage loans may not prepay in accordance with the maturity
assumptions at any particular rate and the yield on the Class X certificates
may not conform to the yields described in this prospectus supplement.
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.
In addition, holders of the Class X certificates generally have rights to
relatively larger portions of interest payments on mortgage loans with higher
mortgage rates. As a result, the yield on the Class X certificates will be
materially and adversely affected if the mortgage loans with higher mortgage
rates prepay faster than the mortgage loans with lower mortgage rates.
PRE-TAX YIELD TO MATURITY (CBE), WEIGHTED AVERAGE LIFE,
FIRST PAYMENT DATE AND LAST PAYMENT DATE
FOR THE CLASS X CERTIFICATES AT THE SPECIFIED CPRS
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT AND DEFEASANCE
OTHERWISE AT INDICATED CPR
---------------------------------------------------------
ASSUMED PRICE (32NDS) 0% CPR 25% CPR 50% CPR 75% CPR 100% PP*
- ------------------------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
2-20............................ 14.00% 13.99% 13.98% 13.97% 13.86%
2-22............................ 13.41% 13.40% 13.39% 13.37% 13.27%
2-24............................ 12.84% 12.83% 12.82% 12.80% 12.70%
2-26............................ 12.29% 12.28% 12.27% 12.25% 12.15%
2-28............................ 11.77% 11.75% 11.74% 11.73% 11.62%
2-30............................ 11.26% 11.25% 11.24% 11.22% 11.11%
3-00............................ 10.77% 10.76% 10.75% 10.73% 10.62%
3-02............................ 10.30% 10.29% 10.28% 10.26% 10.15%
3-04............................ 9.85% 9.83% 9.82% 9.81% 9.69%
3-06............................ 9.41% 9.40% 9.38% 9.37% 9.25%
3-08............................ 8.98% 8.97% 8.96% 8.94% 8.83%
3-10............................ 8.57% 8.56% 8.55% 8.53% 8.41%
3-12............................ 8.18% 8.16% 8.15% 8.13% 8.02%
3-14............................ 7.79% 7.78% 7.77% 7.75% 7.63%
3-16............................ 7.42% 7.41% 7.39% 7.38% 7.26%
3-18............................ 7.06% 7.04% 7.03% 7.01% 6.89%
3-20............................ 6.71% 6.69% 6.68% 6.66% 6.54%
Weighted Average Life (yrs.)** 10.0 10.0 10.0 10.0 9.9
First Payment Date ............. Jul-1999 Jul-1999 Jul-1999 Jul-1999 Jul-1999
Last Payment Date .............. Jan-2024 Jan-2024 Jan-2024 Jan-2024 Aug-2023
</TABLE>
* "100% PP" means 100% of each loan prepays when it becomes freely
prepayable.
** Based on reduction in the notional amount of the Class X certificates.
S-95
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
The following summary of the anticipated material federal income tax
consequences of the purchase, ownership and disposition of offered
certificates is based on laws, regulations, including the REMIC regulations
promulgated by the Treasury Department (the "REMIC regulations"), rulings and
decisions now in effect or, with respect to regulations, proposed, all of
which are subject to change, possibly retroactively. To the extent that the
following summary relates to matters of law or legal conclusions with respect
thereto, the summary represents the opinion of Mayer, Brown & Platt, special
United States federal tax counsel for the depositor. This summary does not
address the federal income tax consequences of an investment in offered
certificates applicable to all categories of investors. For example, it does
not discuss the federal income tax consequences of the purchase, ownership
and disposition of offered certificates by investors that are subject to
special treatment under the federal income tax laws, including banks and
thrifts, insurance companies, regulated investment companies, dealers in
securities, holders that will hold the offered certificates as a position in
a "straddle" for tax purposes or as part of a "synthetic security" or
"conversion transaction" or other integrated investment comprised of the
offered certificates and one or more other investments, foreign investors,
trusts and estates and pass-through entities, the equity holders of which are
any of the foregoing. Prospective investors should consult their tax advisors
regarding the federal, state, local and any other tax consequences to them of
the purchase, ownership and disposition of offered certificates.
For federal income tax purposes, three separate REMIC elections will be
made with respect to segregated asset pools which make up the trust, other
than any excess interest collected on the ARD loans. The resulting REMICs
will be referred to in this prospectus supplement as "REMIC I", "REMIC II"
and "REMIC III", respectively. Upon the issuance of the offered certificates,
Mayer, Brown & Platt, 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 Internal
Revenue Code of 1986, as amended, called 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; except to the
extent representing the right to excess interest on the ARD loans, the
certificates (other than the REMIC residual 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 "Federal Income Tax Consequences--REMICs" in the
prospectus.
ORIGINAL ISSUE DISCOUNT AND PREMIUM
The Class X certificates will be, and other offered certificates may be,
treated as having been issued with original issue discount for federal income
tax reporting purposes. For purposes of computing the rate of accrual of
original issue discount, market discount and premium, if any, for federal
income tax purposes it will be assumed that there are no prepayments on the
mortgage loans, except that it is assumed that the ARD loans will pay their
respective outstanding principal balances on their related anticipated
repayment dates. No representation is made as to the actual expected rate of
prepayment of any mortgage loan. See "Federal Income Tax
Consequences--REMICs--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount" in the prospectus. The Class N
certificates, in addition to evidencing REMIC regular interests, will also
evidence undivided beneficial interests in the portion of the trust
consisting of any excess interest collected on ARD loans. Such beneficial
interests will constitute interests in a grantor trust for federal income tax
purposes.
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 issues relevant to, or are not applicable to, securities such as the
certificates. For example, because certain classes of certificates bear
interest at the lesser of a fixed rate or a rate based on the weighted
average mortgage rate, it is not entirely clear that the method intended to
be used by the trust fund in reporting such interest (i.e., as "qualified
stated interest") would be recognized by the IRS. In addition, there is
S-96
<PAGE>
considerable uncertainty concerning the application of Section 1272(a)(6) of
the Code and the OID Regulations to REMIC certificates such as the Class X
certificates. The IRS could assert that income derived from a Class X
certificate should be calculated as if the Class X certificate were a
certificate purchased at a premium equal to the price paid by the holder for
the Class X certificate. Under this approach, a holder would be entitled to
amortize such premium only if it has in effect an election under Section 171
of the Code with respect to all taxable debt instruments held by such holder,
as described in the prospectus under "Federal Income Tax
Consequences--REMICs--Taxation of Owners of REMIC Regular
Certificates--Premium." Alternatively, the IRS could assert that the Class X
certificates should be taxable under regulations governing debt instruments
having one or more contingent payments. Prospective purchasers of the offered
certificates are advised to consult their tax advisors concerning the tax
treatment of the certificates.
Assuming the Class X certificates are treated as having been issued with
original issue discount, it appears that a reasonable method of reporting
original issue discount on the Class X certificates generally would be to
report all income for such certificates as original issue discount for each
period, computing the original issue discount
o 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, the certificates, thereby
treating the certificates as fixed rate instruments to which the
original issue discount computation rules described in the prospectus
can be applied, and
o 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 for such period.
See "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 to a holder of a Class X certificate
for any period, the amount of original issue discount allocable to such
period would be zero and the certificateholder will be permitted to offset
the negative amount only against future original issue discount (if any) on
the 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 remaining basis in the certificate exceeds the maximum amount of
future payments to which the 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
certificates may be able to select a method for recognizing original issue
discount that differs from that used by the trustee in preparing reports to
certificateholders and the IRS. Prospective investors are advised to consult
their tax advisors concerning the treatment of any original issue discount on
purchased certificates.
Prepayment premiums collected on the mortgage loans will be distributed to
the holders of each class of certificates entitled to the prepayment premiums
as described in this prospectus supplement. It is not 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 that the class of
certificates is entitled to 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 clear and certificateholders should consult their tax
advisors concerning the treatment of prepayment premiums.
Certain classes of certificates may be treated for federal income tax
purposes as having been issued at a premium. Whether any holder of a class of
certificates will be treated as holding a certificate with amortizable bond
premium will depend on the certificateholder's purchase price and the
distributions
S-97
<PAGE>
remaining to be made on the certificate at the time of its acquisition by
the 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 "Federal Income Tax Consequences--REMICs--Taxation
of Owners of REMIC Regular Certificates--Premium" in the prospectus.
NEW WITHHOLDING REGULATIONS
The Treasury Department has issued new regulations which make
modifications to the withholding, backup withholding, and information
reporting rules described in the prospectus. The new regulations attempt to
unify certification requirements and to modify reliance standards. The new
regulations will be generally effective for payments made after December 31,
2000. Prospective investors are urged to consult their tax advisors regarding
the new regulations.
CHARACTERIZATION OF INVESTMENTS IN OFFERED CERTIFICATES
Class N certificateholders' right to receive excess interest will be
treated as "stripped coupons" under Section 1286 of the Code. Because excess
interest will arise on the ARD loans only if (contrary to the prepayment
assumption utilized in determining the rate of accrual of original issue
discount, as described above) they do not prepay on their related anticipated
repayment dates, for federal income tax information reporting purposes it
will initially be assumed that no such excess interest will be paid.
Consequently, excess interest will not be reported as income in federal
income tax information reports sent to certificateholders entitled thereto
until such excess interest actually accrues. Similarly, no portion of such
holders' purchase price of their certificates will be treated as allocable to
their right to receive possible distributions of excess interest. However,
the Internal Revenue Service might conceivably disagree with this treatment
and assert that additional income should be accrued with respect to projected
possible payments of excess interest in advance of its actual accrual, that
additional original issue discount income should be accrued with respect to
the affected certificates, or both. Class N certificateholders should consult
with their tax advisors regarding the overall tax consequences of their right
to receive excess interest.
The offered certificates will be "real estate assets" within the meaning
of Section 856(c)(4)(A) of the Code generally in the same proportion that the
assets of the trust would be so treated. In addition, interest (including
original issue discount, if any) on the offered certificates will be interest
described in Section 856(c)(3)(B) of the Code generally to the extent that
such certificates are treated as "real estate assets" within the meaning of
Section 856(c)(4)(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 of the
portion of the mortgage loans secured by multifamily mortgaged properties.
See "Description of the Mortgage Pool" in this prospectus supplement.
For further information regarding the federal income tax consequences of
investing in the offered certificates, see "Federal Income Tax
Consequences--REMICs" in the prospectus.
S-98
<PAGE>
METHOD OF DISTRIBUTION
The depositor has agreed to sell, and Donaldson, Lufkin & Jenrette
Securities Corporation, Deutsche Bank Securities Inc. and Goldman, Sachs &
Co. have each agreed to purchase, the portion of the certificates of each
class listed opposite its name in the table below. The terms of these
purchases are governed by an underwriting agreement, dated May 25, 1999,
among the depositor, the seller, and each of the underwriters.
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,
Cedelbank and Euroclear on or about June 9, 1999, against payment therefor in
immediately available funds.
ALLOCATION TABLE
<TABLE>
<CAPTION>
UNDERWRITER CLASS X CLASS A-1 CLASS A-2 CLASS B CLASS C CLASS D CLASS E CLASS F CLASS G
- ------------------------ ------- --------- --------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
<C>
DONALDSON, LUFKIN &
JENRETTE SECURITIES
CORPORATION 50% 50% 50% 50% 50% 50% 50% 50% 50%
DEUTSCHE BANK SECURITIES
INC. 25% 25% 25% 25% 25% 25% 25% 25% 25%
GOLDMAN, SACHS & CO. 25% 25% 25% 25% 25% 25% 25% 25% 25%
------- --------- --------- ------- ------- ------- ------- ------- -------
TOTAL 100% 100% 100% 100% 100% 100% 100% 100% 100%
======= ========= ========= ======= ======= ======= ======= ======= =======
</TABLE>
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. If any underwriter defaults, the
underwriting agreement provides that, in certain circumstances, the purchase
commitment of the nondefaulting underwriter 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 any underwriter 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 the sale.
Proceeds to the depositor from the sale of the offered certificates, before
deducting expenses payable by the depositor to the underwriters, will be
approximately 104.32% 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.
The depositor will indemnify the underwriters, and under limited
circumstances the underwriters will indemnify the depositor, against certain
civil liabilities under the Securities Act of 1933 or contribute to payments
to be made in respect thereof.
A secondary market for the offered certificates may not develop and, if it
does develop, it may not continue. The primary source of ongoing information
available to investors concerning the offered certificates will be the
trustee reports discussed in this prospectus supplement under "Description of
the Certificates--Reports to Certificateholders; Available Information."
Except as described in this prospectus supplement under "Description of the
Certificates--Reports to Certificateholders; Available Information," any
additional information regarding the offered certificates may not be
available through any
S-99
<PAGE>
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 Mayer,
Brown & Platt and for the underwriters by Brown & Wood LLP.
RATINGS
The offered certificates are required to receive ratings from Moody's, S&P
and Fitch that are not lower than those indicated under "Transaction
Overview."
The ratings of the offered certificates address the likelihood of the
timely receipt by holders thereof of all payments of interest (other than
excess interest) to which they are entitled on each distribution date and the
ultimate receipt by holders thereof of all payments of principal to which
they are entitled, if any, by the September, 2033 distribution date. The
ratings take into consideration the credit quality of the mortgage pool,
structural and legal aspects associated with the certificates, and the extent
to which the payment stream from the mortgage pool is adequate to make
payments of principal and interest required under the offered certificates.
The ratings of the offered certificates do not, however, address any of
the following:
o the likelihood or frequency of voluntary or involuntary principal
prepayments on the mortgage loans,
o the degree to which prepayments might differ from those originally
anticipated,
o whether and to what extent prepayment premiums will be collected with
prepayments or the corresponding effect on yield to investors,
o whether and to what extent excess interest will be collected on any
ARD loan,
o whether and to what extent default interest will be collected on the
mortgage loans, and
o the tax treatment of payments on the offered certificates. Generally,
the ratings address credit risk and not prepayment risk.
As described in this prospectus supplement, the amounts payable on the
Class X certificates do not include principal. If all the mortgage loans were
to prepay in the initial month, the Class X certificates would receive only a
single month's interest (without regard to any prepayment premiums that may
be collected). As a result, the Class X certificateholders would suffer a
nearly complete loss of their investment. However, all amounts "due" to such
certificateholders have been paid, and this result would be consistent with
the ratings assigned by the rating agencies to the Class X certificates. The
ratings of the Class X certificates by the rating agencies do not address the
timing or magnitude of reductions of the notional amount of the Class X
certificates, but only the obligation to pay interest timely on the notional
amount of the Class X certificates, as such may be reduced from time to time
as described in this prospectus supplement. 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
investment if rapid prepayments of the mortgage loans (including both
voluntary and involuntary prepayments) occur. The notional amount upon which
interest is calculated for the Class X certificates is reduced by the
allocation of realized losses and prepayments, whether voluntary or
involuntary. The rating does not address the timing or magnitude of
reductions of such notional amount, but only the obligation to pay interest
timely on the notional amount as reduced from time to time. As a result, the
ratings of the Class X certificates should be evaluated independently from
similar ratings on other types of securities.
S&P assigns the additional symbol of "r" to highlight classes of
securities that S&P believes may experience high volatility or high
variability in expected returns due to non-credit risks; however, the absence
of an "r" symbol should not be taken as an indication that a class will
exhibit no volatility or variability in total return.
S-100
<PAGE>
Any rating agency not requested to rate the offered certificates may
nonetheless issue any rating to any class thereof. 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
any rating agency rating such class.
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 a security and is subject to change or
withdrawal at any time by the assigning rating agency.
LEGAL INVESTMENT
As of the date of their issuance, any offered certificates rated in the
category of "AAA" or "AA" (or the equivalent) by at least one rating agency
will constitute "mortgage related securities" for the purposes of the
Secondary Mortgage Market Enhancement Act of 1984 ("SMMEA"). All other
offered certificates (the "Non-SMMEA certificates") will not constitute
"mortgage related securities" for purposes of SMMEA. As a result, the
appropriate characterization of the Non-SMMEA certificates under various
legal investment restrictions, and thus the ability of investors subject to
these restrictions to purchase the Non-SMMEA certificates of any class, may
be subject to significant interpretative uncertainties. In addition,
institutions whose investment activities are subject to review by federal or
state regulatory authorities may be or may become subject to restrictions in
certain forms of mortgage related securities. The depositor makes no
representation 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
If you are a fiduciary of any employee benefit plan or other retirement
plan or arrangement, 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 is subject to ERISA and/or Section 4975 of
the Code (each, a "Plan"), you should review with your counsel whether your
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 to such "prohibited transactions."
If you purchase or hold the Class A and Class X certificates by, on behalf
of or with "plan assets" of a Plan, your purchase may qualify for exemptive
relief under the Exemption, as described under "ERISA
Considerations--Prohibited Transaction Exemption" in the prospectus and
similar exemptions granted to each of the Underwriters (see Prohibited
Transaction Exemption "PTE" 89-88, 54 Fed. Reg. 42581 (1989), PTE 90-83, 55
Fed. Reg. 50250 (1990), PTE 94-29, 59 Fed. Reg. 14675 (1994) and FAN 97-03-E
(December 9, 1996) (unpublished), each as amended by Prohibited Transaction
Exemption 97-34, 62 Fed. Reg. 39021 (1997)). To qualify for the exemption,
however, the Plan must meet a number of conditions, including the requirement
that it 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, and that at the time of acquisition, the certificates are rated
in one of the top three rating categories by at least one rating agency. When
it issued the exemption, the DOL did not consider mortgages containing
defeasance provisions as described in this prospectus supplement.
Accordingly, it is not clear what the impact on the exemption would be if
such defeasance provisions were exercised. In addition, neither the exemption
nor any similar exemption issued to the underwriters will apply to the Class
B, Class C, Class D, Class E, Class F or Class G certificates. As a result,
if you purchase a Class B, Class C, Class D, Class E, Class F or Class G
certificate or any interest therein, you will be deemed to have represented
by such purchase that either: (a) you are not a Plan and you are not
purchasing such certificates by or on behalf of, or with "plan assets" of,
any Plan or (b) your purchase of any such certificate by or on behalf of, or
with "plan assets" of, any
S-101
<PAGE>
Plan is permissible under applicable law, will not result in any non-exempt
prohibited transaction under ERISA or Section 4975 of the Code, and will not
subject the depositor, the trustee or the servicer to any obligation in
addition to those undertaken in the pooling and servicing agreement, and the
following conditions are met: (1) the source of funds that you used to
purchase such certificate is an "insurance company general account" (as such
term is defined in PTCE 95-60) and (2) the conditions set forth in Sections I
and III of PTCE 95-60 have been satisfied as of the date of the acquisition
of such certificates. See "ERISA Considerations--Representation From
Investing Plans" in the prospectus.
If you are an insurance company and you would like to invest your general
account assets in the offered certificates, you should consult with your
legal advisors about whether Section 401(c) of ERISA, as described under
"ERISA Considerations--Insurance Company General Accounts" in the prospectus,
may apply to you. The DOL issued proposed regulations under Section 401(c) on
December 22, 1997, but the required final regulations have not been issued as
of the date of this prospectus supplement.
If you are a Plan fiduciary or other person considering whether to
purchase an offered Certificate on behalf of or with "plan assets" of a Plan,
you should consult with your counsel about whether the fiduciary
responsibility provisions of ERISA and the prohibited transaction provisions
of ERISA and Section 4975 of the Code may apply to such investment, and
whether the Exemption or any other prohibited transaction exemption may be
available in connection with your purchase. See "ERISA Considerations" in the
prospectus.
S-102
<PAGE>
INDEX OF SIGNIFICANT DEFINITIONS
<TABLE>
<CAPTION>
<S> <C>
729 Seventh Avenue loan ................. S-46
accredited investor ..................... S-101
accrued certificate interest ............ S-69
Additional trust expenses ............... S-72
advances ................................ S-58
ALCOA ................................... S-44
Annual debt service ..................... A-2
appraisal reduction amount .............. S-74
Appraised value ......................... A-2
ARD loans ............................... S-16
ARD LTV ................................. A-3
assumed monthly payment ................. S-70
available distribution amount ........... S-67
balloon loans ........................... S-30
Balloon or ARD balance .................. A-3
balloon payment interest excess ........ S-57
balloon payment interest shortfall ..... S-57
CBE ..................................... S-89
Cedelbank participants .................. S-63
Class X components ...................... S-65
clearance cooperative ................... S-64
CLTV .................................... A-2
Code .................................... S-96
comparative financial status report .... S-76
controlling class ....................... S-55
corporate trust office .................. S-79
corrected mortgage loan ................. S-54
CPR ..................................... S-83
credit lease loans ...................... S-35
cross-collateralized mortgage loans .... S-32
CSSA loan file .......................... S-77
CTL loans ............................... S-35
current LTV ............................. A-2
Cut-off date loan-to-value ratio ....... A-2
cut-off date LTV ........................ A-2
debt service coverage ratio ............. A-2
defeasance .............................. A-3
defeasance collateral ................... S-31
defeasance option ....................... S-31
defeasance period ....................... S-83
delinquent loan status report ........... S-76
depositories ............................ S-63
determination date ...................... S-66
discount rate ........................... S-70
discount rate fraction .................. S-70
distributable certificate interest ..... S-68
distribution date statement ............. S-75
DSC Ratio ............................... A-2
DSCR .................................... A-2
due date ................................ S-31
due-on-encumbrance ...................... S-33
due-on-sale ............................. S-33
Euroclear operator ...................... S-64
Euroclear participants .................. S-64
excess interest ......................... S-30
Excess liquidation proceeds ............. S-71
extraordinary prepayment interest
shortfall .............................. S-57
Fairfield Towers loan ................... S-46
Fitch ................................... S-10
foreclosure property .................... S-26
GLA ..................................... S-38
global securities ....................... D-1
HHFI .................................... S-45
historical loan modification report .... S-76
historical loss estimate report ........ S-76
Holiday Inn Mart Plaza borrower ........ S-45
Holiday Inn Mart Plaza loan ............. S-45
Ingram loan borrowers ................... S-40
Ingram loans ............................ S-40
Ingram Place One loan ................... S-40
Ingram Place One properties ............. S-40
Ingram Place Two loan ................... S-40
Ingram Place Two property ............... S-40
insured amount .......................... S-36
insured value ........................... S-36
interest reserve account ................ S-71
interest reserve loans .................. S-71
liquidation fee ......................... S-56
loan-to-value ratio ..................... A-2
lock .................................... A-3
lock-up ................................. D-1
LOP ..................................... S-84
master servicer ......................... S-53
master servicing fee rate ............... S-57
mezzanine debt .......................... S-34
S-103
<PAGE>
modified mortgage loan .................. S-75
monthly payments ........................ S-31
Moody's ................................. S-10
Mortgage rate ........................... A-3
net aggregate prepayment interest
shortfall .............................. S-69
net mortgage rate ....................... S-66
NOI adjustment worksheet ................ S-77
Non-SMMEA certificates .................. S-101
Occupancy ............................... A-3
occupancy as of date .................... A-3
operating statement analysis ............ S-77
Palmer Center loan ...................... S-41
pass-through rate ....................... S-65
P&I advances ............................ S-73
Plan .................................... S-101
PREIT ................................... S-36
PREIT loan borrowers .................... S-36
PREIT loans ............................. S-36
prepayment interest excess .............. S-57
prepayment interest shortfall ........... S-57
prepayment premium ...................... S-31
Prepayment provisions ................... A-3
principal allocation fraction ........... S-70
principal balance certificates .......... S-65
principal distribution amount ........... S-69
PTE ..................................... S-101
purchase price .......................... S-50
qualified mortgage ...................... S-59
qualified mortgages ..................... S-98
Queens Center Mall loan ................. S-37
rated final distribution date ........... S-59
real estate assets ...................... S-98
Realized losses ......................... S-72
Red Rose Commons loan ................... S-43
reimbursement rate ...................... S-74
related proceeds ........................ S-58
REMIC I ................................. S-96
REMIC II ................................ S-96
REMIC III ............................... S-96
REMIC regulations ....................... S-96
REMIC Residual certificates ............. S-7
REO property ............................ S-62
REO status report ....................... S-76
REO tax ................................. S-60
replacement mortgage loan ............... S-50
replacement special servicer ............ S-55
required appraisal loan ................. S-74
Scheduled maturity date LTV ............. A-3
servicer watch list ..................... S-76
Servicing advances ...................... S-58
servicing fee ........................... S-56
Servicing fee rate ...................... A-3
servicing standard ...................... S-53
SF ...................................... S-38
SMMEA ................................... S-101
S&P ..................................... S-10
special servicer ........................ S-53
special servicing events ................ S-53
special servicing fee ................... S-56
specially serviced mortgage loan ....... S-53
sq. ft. ................................. A-3
Square feet ............................. A-3
Squaw Peak loan ......................... S-42
stated principal balance ................ S-66
step amortization ....................... S-31
Term to maturity ........................ A-3
terms and conditions .................... S-64
trustee reports ......................... S-75
underwritten NCF ........................ A-1
underwritten NCF DSCR ................... A-2
Underwritten net cash flow .............. A-1
Units ................................... A-3
University of Nevada loan ............... S-44
U.S. person ............................. D-3
UW NCF .................................. A-1
UW NCF DSCR, ............................ A-2
voting rights ........................... S-78
weighted average net mortgage rate ..... S-66
withheld amounts ........................ S-71
workout fee ............................. S-56
</TABLE>
S-104
<PAGE>
ANNEX A
CHARACTERISTICS OF THE MORTGAGE LOANS
The schedule and tables appearing in this Annex A set forth certain
information for the mortgage loans and mortgaged properties. The information
is presented, where applicable, as of the cut-off date for each mortgage loan
and the related mortgaged properties. 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. The 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.
Net income for a mortgaged property as determined in accordance with
generally accepted accounting principles would not be the same as the stated
underwritten net cash flow for such mortgaged property as provided in the
following schedule or tables. In addition, underwritten net cash flow is not
a substitute for or comparable to operating income as determined in
accordance with generally accepted accounting principals 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 underwritten net cash flow provided in this
prospectus supplement for any mortgaged property intended to represent such
future net cash flow.
In the schedule and tables provided in this Annex A, for mortgage loans
evidenced by one mortgage note, but secured by multiple mortgaged properties,
for some purposes, separate amounts for each such related mortgaged property
are shown.
DEFINITIONS
For purposes of the prospectus supplement, including the schedule and
tables in this Annex A, the indicated terms have the following meanings, as
modified, by reference to the "Certain Loan Payment Terms" below and
footnotes to the schedules that follow:
1. "Underwritten net cash flow," "underwritten NCF" or "UW NCF" for any
mortgaged property, means an estimate of cash flow available for debt service
in a typical year of stable, normal operations. Generally, it is the
estimated revenue derived from the use and operation of such mortgaged
property less the sum of estimated (a) operating expenses (such as utilities,
administrative expenses, repairs and maintenance, management and franchise
fees and advertising), (b) fixed expenses (such as insurance, real estate
taxes and, if applicable, ground lease payments), (c) with the exception of
multifamily and hospitality properties, capital expenditures and reserves for
capital expenditures, including tenant improvement costs and leasing
commissions, as applicable, and (d) allowance for vacancies and losses.
Underwritten net cash flow generally does not reflect interest expense and
non-cash items such as depreciation and amortization. The underwritten net
cash flow for each mortgaged property is calculated on the basis of numerous
assumptions and subjective judgments, which, if ultimately proven erroneous,
could cause the actual net cash flow for such mortgaged property to differ
materially from the underwritten net cash flow for any mortgaged property.
Some assumptions and subjective judgments relate to future events, conditions
and circumstances, including future expense levels, the re-leasing of vacant
space and the continued leasing of occupied space, that will be affected by a
variety of complex factors over which none of the depositor, the seller or
the servicer have control. In some cases, the underwritten net cash flow for
any mortgaged property is higher, and may be materially higher, than the
annual net cash flow for that mortgaged property, based on historical
operating statements.
In determining underwritten net cash flow for a mortgaged property, the
seller generally relied on rent rolls and/or other generally unaudited
financial information provided by the respective borrowers. In some cases the
appraisal and/or local market information was the primary basis for the
determination. From that information, the seller calculated stabilized
estimates of cash flow that took into consideration historical financial
statements (where available), material changes in the operating position of a
mortgaged property of which the applicable seller was aware (e.g., newly
signed leases, expirations of
A-1
<PAGE>
"free rent" periods and market rent and market vacancy data), and estimated
capital expenditures, leasing commission and tenant improvement reserves. In
some cases, the applicable seller's estimate of underwritten net cash flow
reflected differences from the information contained in the operating
statements obtained from the respective borrowers (resulting in either an
increase or decrease in the estimate of underwritten net cash flow derived
therefrom) based upon the seller's own analysis of those operating statements
and the assumptions applied by the respective borrowers in preparing those
statements and information. In some instances, for example, property
management fees and other expenses may have been taken into account in the
calculation of underwritten net cash flow even though these expenses may not
have been reflected in actual historic operating statements. In most of those
cases, the information was annualized, with adjustments for items deemed not
appropriate to be annualized, before using it as a basis for the
determination of underwritten net cash flow. No assurance can be given with
respect to the accuracy of the information provided by any borrowers, or the
adequacy of the procedures used by any seller in determining the presented
operating information.
2. "Annual debt service" generally means, for any mortgage loan, 12 times
the monthly payment in effect as of the cut-off date for such mortgage loan
or, for some mortgage loans that pay interest for only a period of time, 12
times the monthly payment in effect at the end of such period.
3. "UW NCF DSCR," "underwritten NCF DSCR," "debt service coverage ratio,"
"DSC Ratio" or "DSCR" means, for any mortgage loan, (a) the underwritten net
cash flow for the mortgaged property, divided by (b) the annual debt service
for such mortgage loan, assuming for the purposes of this Annex A, except as
otherwise indicated, in the case of the mortgage loans providing for earn-out
reserves (which, if the conditions for release are not met by a certain date,
would be used to partially prepay or defease the mortgage loan), that the
principal balance of the mortgage loan is reduced by the amount of the
earn-out.
Generally, debt service coverage ratios are used by income property
lenders to measure the ratio of (a) cash currently generated by a property
that is available for debt service to (b) required debt service payments.
However, debt service coverage ratios measure only the current, or recent,
ability of a property to service mortgage debt. If a property does not
possess a stable operating expectancy (for instance, if it is subject to
material leases that are scheduled to expire during the loan term and that
provide for above-market rents and/or that may be difficult to replace), a
debt service coverage ratio may not be a reliable indicator of a property's
ability to service the mortgage debt over the entire remaining loan term. The
underwritten NCF DSCRs are presented in this prospectus supplement for
illustrative purposes only and, as discussed above, are limited in their
usefulness in assessing the current, or predicting the future, ability of a
mortgaged property to generate sufficient cash flow to repay the related
mortgage loan. As a result, no assurance can be given, and no representation
is made, that the underwritten NCF DSCRs accurately reflect that ability. The
underwritten NCF DSCR for the interest-only mortgage loans is based on the
payment due after the interest-only period, and for the step amortization
mortgage loans is based on the payment due as of the cut-off date or the
payment due after the interest-only period, as applicable.
4. "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. In some cases, the appraiser's adjusted value takes into
account certain repairs or stabilization of operations. In some cases in
which the appraiser assumed the completion of repairs, such repairs were,
generally, either completed before the delivery date or the seller has taken
reserves sufficient to complete such repairs. 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.
5. "Cut-off date loan-to-value ratio," "loan-to-value ratio," "cut-off
date LTV," "current LTV," or "CLTV" means, with respect to any mortgage loan,
(a) the cut-off date balance of that mortgage loan (generally net of earn-out
reserves or additional collateral, if applicable) divided by (b) the
appraised value of the mortgaged property or mortgaged properties. For
mortgage loans for which earn-out reserves have been established, cut-off
date loan-to-value ratio is shown assuming that the earn-out is not achieved,
except as otherwise indicated.
A-2
<PAGE>
6. "Square feet" or "sq. ft." means, in the case of a mortgaged property
operated as a retail center, office or medical office complex,
industrial/warehouse facility, combination retail office facility or other
special purpose property, the square footage of the net rentable or leasable
area.
7. "Units" means: (1) 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 the apartment and (2) in the case of a mortgaged property
operated as a hospitality property, the number of guest rooms. For purposes
of this Annex A, the total number of units shown for certain multifamily
properties may be greater than the total number of multifamily units shown in
the multifamily schedule because certain of the multifamily properties have
commercial units in addition to multifamily units.
8. "Occupancy" means the percentage of square feet or units, as the case
may be, of the mortgaged property that was occupied or leased or, in the case
of certain properties, average units so occupied over a specified period, as
of a specified date (identified on this Annex A as the "occupancy as of
date") or as specified by the borrower or as derived from the mortgaged
property's rent rolls, operating statements or appraisals or as determined by
a site inspection of the mortgaged property. Information in this Annex A
concerning the "largest tenant" is presented as of the same date as of which
the occupancy percentage is specified.
9. "Balloon or ARD balance" means, for any balloon loan or ARD loan, the
principal amount that will be due at maturity or on the anticipated repayment
date for that balloon loan or ARD loan.
10. "Scheduled maturity date LTV" or "ARD LTV" means, for any balloon loan
or ARD loan, the Balloon or ARD Balance for that mortgage loan divided by the
appraised value of the related mortgaged property.
11. "Mortgage rate" means, for any mortgage loan, the mortgage rate in
effect as of the cut-off date for that mortgage loan.
12. "Servicing fee rate" for each mortgage loan is the percentage rate per
annum provided in Annex A for such mortgage loan at which compensation is
payable for the servicing of that mortgage loan (which includes the master
servicing fee rate) and at which compensation is also payable to the trustee.
13. "Prepayment provisions" for each mortgage loan are: "lock," which
means the duration of lockout period, and "defeasance," which means the
duration of any defeasance period. The number following the "/" is the number
of months for which the related call protection provision is in effect,
exclusive of the maturity date for calculation purposes only.
14. "Term to maturity" means, for any mortgage loan, the remaining term,
in months, from the cut-off date for that mortgage loan to the earlier of the
related maturity date or anticipated repayment date.
15. In those instances where the same tenant leases space under multiple
leases, the date shown as the "Largest Tenant Lease Expiration" is the
earliest termination date of any of such leases.
INTEREST ONLY LOANS
Loan Number GMAC4060. The mortgage loan requires monthly payments of
interest only (calculated using an actual/360 interest accrual method) from
March 10, 1999 through August 10, 2000. Commencing on September 10, 2000 and
through maturity, monthly payments of principal and interest in the amount of
$137,564.29 are required.
Loan Number GMAC4520. The mortgage loan requires monthly payments of
interest only (calculated using an actual/360 interest accrual method) from
January 10, 1999 through December 10, 2000. Commencing on January 10, 2001
and through maturity, monthly payments of principal and interest in the
amount of $26,936.01 are required.
Loan Number GMAC4950. The mortgage loan requires monthly payments of
interest only (calculated using an actual/360 interest accrual method) from
April 1, 1999 through March 1, 2000. Commencing on April 1, 2000 and through
maturity, monthly payments of principal and interest in the amount of
$632,921.01 are required.
A-3
<PAGE>
Loan Number GMAC5500. The mortgage loan requires monthly payments of
interest only (calculated using an actual/360 interest accrual method) from
June 10, 1999 through May 10, 2001. Commencing on June 10, 2001 and through
maturity, monthly payments of principal and interest in the amount of
$203,341.41 are required.
STEP AMORTIZATION LOANS
Loan Number GMAC3820. The mortgage loan requires monthly payments due
beginning February 10, 1999 in the amount of $80,864.27 per month and
continuing at this level through December 10, 2008. Beginning January 10,
2009, and continuing through January 10, 2019, monthly payments increase to
$96,954.70. Beginning February 10, 2019 through January 10, 2024, monthly
payments increase to $98,007.58.
Loan Number GMAC5010. The mortgage loan requires monthly payments due
beginning February 10, 1999 in the amount of $337,500 per month and
continuing at this level through January 10, 2004. Beginning February 10,
2004, and continuing through January 10, 2009, monthly payments increase to
$388,125. Beginning February 10, 2009 through January 10, 2014, monthly
payments increase to $446,344. Beginning February 10, 2014 through July 10,
2015, monthly payments increase to $513,295.
Loan Number GMAC5020. The mortgage loan requires monthly payments due
beginning February 10, 1999 in the amount of $145,833 per month and
continuing at this level through January 10, 2004. Beginning February 10,
2004, and continuing through January 10, 2009, monthly payments increase to
$167,708. Beginning February 10, 2009 through January 10, 2014, monthly
payments increase to $192,864. Beginning February 10, 2014 through July 10,
2015, monthly payments increase to $221,794.
CERTAIN REPLACEMENT RESERVES AND TENANT IMPROVEMENT AND LEASING COMMISSION
RESERVES
Loan Number GMAC4660. The mortgage loan requires monthly reserve payments
in the amount of $9,000 beginning on the first day of the fourth month after
the origination date. Beginning on March 1, 2000, the reserve deposits will
become 4% of gross revenues from the previous calendar year. Every March 1
thereafter, the reserve deposits will reset based upon the percentage of
gross revenue from the prior calendar year. Beginning March 1, 2011 and
thereafter, until the loan is paid in full, the reserve deposits will become
4.5% of gross revenues.
Loan Number GMAC4670. The mortgage loan requires monthly reserve payments
in the amount of $4,800 beginning on the first day of the fourth month after
the origination date. Beginning on March 1, 2000, the reserve deposits will
become 4% of gross revenues from the previous calendar year. Every March 1
thereafter, the reserve deposits will reset based upon the percentage of
gross revenue from the prior calendar year. Beginning March 1, 2003 and
thereafter, until the loan is paid in full, the reserve deposits will become
4.5% of gross revenues.
Loan Number GMAC5220. The mortgage loan requires monthly reserve payments
in an amount equal to one-twelfth of five percent of the total gross revenues
of the property during the immediately preceding calendar year for
replacements and capital improvements.
Loan Number GMAC5230. The mortgage loan requires monthly reserve payments
in the amount of $11,340 for the first loan year. The monthly deposit for the
remaining loan term shall be one twelfth of 4.5% of the total gross revenues
derived from the operation of the property during the immediately preceding
calendar year.
Loan Number GMAC5330. The mortgage loan requires monthly reserve payments
in the amount of $77,107.23 into a replacement reserve, which represents 4%
of gross revenues during the first loan year. Thereafter, the monthly deposit
shall be one twelfth of 5% of gross revenues from the operator of the
property during the immediately preceding calendar year.
Loan Number GMAC1150. The mortgage loan requires monthly tenant
improvement/leasing commission reserve payments in the amount of $1,684.08
until the balance reaches $40,418. The borrower is required to maintain a
balance of $40,418 thereafter.
A-4
<PAGE>
Loan Number GMAC3450. The mortgage loan requires monthly tenant
improvement/leasing commission reserve payments in the amount of $4,807 until
the balance reaches $114,000. The borrower is required to maintain a balance
of $114,000 thereafter.
Loan Number GMAC4130. After an initial deposit at origination of $50,000,
the mortgage loan requires monthly replacement reserve payments in the amount
of $4,041.67 during loan months 1 through 72 and $2,410.42 per month
thereafter.
Loan Number GMAC4610. The mortgage loan requires monthly tenant
improvement/leasing commission reserve payments in the amount of $2,571.17
until the balance reaches $61,708.08. The borrower is required to maintain a
balance of $61,708.08 thereafter.
Loan Number GMAC4620. The mortgage loan requires monthly tenant
improvement/leasing commission reserve payments in the amount of $4,166.66
during loan months 1 through 24 and $8,333.33 per month during loan months 25
through 48. No payments are required during loan months 49 through 72.
Monthly payments of $10,416.66 are required for loan months 73 through 84,
$12,500 for loan months 85 through 108, and $16,666.66 for loan months 109
through 120.
Loan Number GMAC4950. The mortgage loan requires monthly tenant
improvement/leasing commission reserve payments in the amount of $22,974.25
if the debt service coverage ratio, on a six-month trailing basis, falls
below 1.35 to 1.00. The borrower is required to make monthly payments into
the reserve account for so long as the debt service coverage ratio is below
1.35 to 1.00 on a six-month trailing basis.
Loan Number GMAC5140. The mortgage loan requires monthly tenant
improvement/leasing commission reserve payments in the amount of $4,761.92
during loan months 1 through 84, $33,652.96 per month during loan months 85
through 95, and $29,817.44 in loan month 96 (at which time, $800,000 is
required to be on deposit). Additionally, during the eighth loan year, all
lease payments received by a specified tenant of the property will be swept
into this reserve.
Loan Number GMAC5140. The mortgage loan requires monthly replacement
reserve payments in the amount of $1,338.75 during loan months 1 through 48
and $11,583.12 per month during loan months 49 through 120.
A-5
<PAGE>
EARNOUT LOANS
"Earnout loans" are mortgage loans that require the related borrower to
deposit a portion of the original loan amount in a reserve fund pending
satisfaction of certain conditions, including without limitation, achievement
of certain DSCRs, CLTVs or satisfaction of certain occupancy tests. Each
earnout loan except GMAC 4790, provides that in the event the conditions are
not met by a certain date, the servicer may apply amounts held in the
reserves to prepay or partially defease the related mortgage loan. For each
of these earnout loans, the underwritten NCF DSCRs and CLTVs shown in this
prospectus supplement and on the foldout pages in this Annex A are calculated
based on the principal balance of those mortgage loans net of the related
earnout amount. With respect to GMAC 4790, the CLTV shown in this prospectus
supplement and on the foldout pages in this Annex A is calculated based on
the principal balance of such mortgage loan net of the related earnout
amount. The following table sets forth certain information regarding the
earnout loans:
<TABLE>
<CAPTION>
NET OF
EARNOUT
FULL BALANCE UNDERWRITTEN
CUT-OFF DATE FULL BALANCE NET OF CUT-OFF DATE NCF
CONTROL NO. LOAN NO. EARNOUT AMOUNT BALANCE CUT-OFF DATE LTV EARNOUT LTV NCF DSCR DSCR
- ------------- ---------- -------------- -------------- ---------------- ------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
28 GMAC3800 $ 550,000.00 $ 8,530,378 76.85% 71.90% 1.205x 1.288x
2 GMAC4000 3,500,000.00 53,769,239 79.66 74.47 1.158 1.238
39 GMAC4620 200,000.00 5,978,286 77.14 74.56 1.312 1.357
56 GMAC4810 500,000.00 4,483,267 94.38 83.86 1.155 1.299
43 GMAC4900 1,000,000.00 5,692,708 74.90 61.75 1.270 1.541
66 GMAC4920 460,000.00 3,841,713 79.21 69.73 1.379 1.566
48 GMAC4970 142,000.00 5,290,019 75.57 73.54 1.289 1.325
74 GMAC5050 558,000.00 3,393,772 69.26 57.87 1.086 1.299
79 GMAC5051 115,000.00 3,094,322 70.33 67.71 1.202 1.248
114 GMAC5052 198,000.00 1,422,390 56.90 48.98 0.919 1.068
122 GMAC5053 128,000.00 638,828 69.06 55.22 0.999 1.249
112 GMAC5055 49,000.00 1,572,115 74.86 72.53 1.209 1.248
31 GMAC5120 180,000.00 7,490,240 74.90 73.10 1.229 1.259
85 GMAC5150 580,000.00 2,896,452 74.65 59.70 1.079 1.348
64 GMAC5460 800,000.00 3,897,725 72.18 57.37 1.203 1.514
83 GMAC5600 600,000.00 2,996,427 88.13 70.48 1.162 1.453
46 GMAC5980 400,000.00 5,346,781 73.75 68.23 1.156 1.249
9 GMAC4790 600,000.00 23,412,934 63.28 61.66 1.240 1.240
</TABLE>
A-6
<PAGE>
<TABLE>
<CAPTION>
CONTROL
NUMBER LOAN NUMBER PROPERTY NAME PROPERTY TYPE ADDRESS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 GMAC4950 Queens Center Mall Anchored Retail 90-15 Queens Boulevard
2 GMAC4000 Palmer Center Office Complex Office 90 South, 2 North, 2 South Cascade Ave.
3 GMAC5010 Ingram Micro Corporate Headquarters Office 1600 & 1610 East St. Andrews Place
4 GMAC4520 Pointe - Squaw Peak Office Portfolio Office 7600 N. 15th St., 7600 N. 16th St. &
7500 N. Dreamy Draw Dr.
5 GMAC5500 Red Rose Commons Anchored Retail US Route 30 & Fruitville Pike
- ------------------------------------------------------------------------------------------------------------------------------------
6 GMAC4210 University of Nevada Property Special Purpose Interstate 80 and Frontage Road
7 GMAC5330 Holiday Inn Mart Plaza Lodging 350 North Orleans Avenue
8 GMAC5060 Fairfield Towers Condominium Apartments Multifamily 148-444 Cozine Ave, 1019 Van Siclen
Avenue, et.al.
9 GMAC4790 729 7th Avenue Office Office 729 Seventh Avenue
10 GMAC5900 Boca Palms Apartments Multifamily 9860 Southwest Third Street
- ------------------------------------------------------------------------------------------------------------------------------------
11 GMAC5020 Ingram Micro Corporate Headquarters Office 1700 E. St. Andrew Place
12 GMAC4060 489 Fifth Avenue Office 489 Fifth Avenue - 12 East 42nd Street
13 GMAC5660 CarMax - The Auto Superstore Special Purpose 101 North Wolf Road
14 GMAC5940 Lakewood Hills Apartments Multifamily 821 Sequoia Drive
15 GMAC4700 MIDCON Apartment Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
15a GMAC4700-A Hamden Ridge Apartments Multifamily 745-795 Mix Avenue
15b GMAC4700-B Hampton House Apartments Multifamily 480 Main Street
15c GMAC4700-C Evergreen Apartments Multifamily 3 & 19 Evergreen Avenue
15d GMAC4700-D Ridgefield Apartments Multifamily 1-262 Ridgefield Drive
15e GMAC4700-E Holiday Apartments Multifamily 724 Savin Avenue
- ------------------------------------------------------------------------------------------------------------------------------------
15f GMAC4700-F Jefferson Arms Apartments Multifamily 2420 Whitney Avenue
16 GMAC5970 Palms of Pembroke Apartments Multifamily 9450 Palm Circle North
17 GMAC5220 Fairfield Inn by Marriott (Anaheim) Lodging 1460 South Harbor Boulevard
18 GMAC5690 Huntington Westminster Apartments Multifamily 13920 Hoover Street
19 GMAC5910 Cobblestone Apartment Homes Multifamily 1275 Southwest 46th Avenue
- ------------------------------------------------------------------------------------------------------------------------------------
20 GMAC5960 The Marylander Apartments Multifamily 3501 St. Paul Street
21 GMAC3820 Costco (Newport News) Land 12129-12135 Jefferson Avenue
22 GMAC4770 1200 South Avenue Office 1200 South Avenue
23 GMAC5920 Hidden Lakes Apartments Multifamily 2480 Foxhill Drive
24 GMAC5840 The Prather Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
24a GMAC5840-A The Village Apartments Multifamily 1600-1723 Telluride and 1600-1719
Steamboat Lanes
24b GMAC5840-B Providence Hill Apartments Multifamily 2501 South Providence Road
24c GMAC5840-C Lakeside I & II Duplexes Multifamily 1017-1043 Cooper Drive and 4001 Hyde
Park Avenue
25 GMAC3770 Bal Seal Engineering Industrial 19650 Pauling Drive
27 GMAC5380 Briarcliff Summit Apartments Multifamily 1050 Ponce De Leon Avenue
- ------------------------------------------------------------------------------------------------------------------------------------
28 GMAC3800 College Square Center Anchored Retail 119-125 East College Avenue
29 GMAC2100 Mt Laurel Office Center Office 530, 532, 534 Fellowship Road
30 GMAC4260 Center City Apartment Portfolio
30a GMAC4260-A 2304-08 Locust Street Apartments Multifamily 2304-08 Locust Street
- ------------------------------------------------------------------------------------------------------------------------------------
30b GMAC4260-B 2321 Spruce Street Multifamily 2321 Spruce Street
30c GMAC4260-C 128 S. 22nd Street Multifamily 128 S. 22nd Street
30d GMAC4260-D 280 S. 23rd Street Multifamily 280 S. 23rd Street
30e GMAC4260-E 2015-17 Locust Street Multifamily 2015-17 Locust Street
30f GMAC4260-F 2019 Spruce Street Multifamily 2019 Spruce Street
- ------------------------------------------------------------------------------------------------------------------------------------
30g GMAC4260-G 2034-36 Pine Street Multifamily 2034-36 Pine Street
30h GMAC4260-H 2122 Pine Street Multifamily 2122 Pine Street
30i GMAC4260-I 2131-33 Pine Street Multifamily 2131-33 Pine Street
30j GMAC4260-J 420 S. 15th Street Multifamily 420 S. 15th Street
30k GMAC4260-K 330 S. 17th Street Multifamily 330 S. 17th Street
- ------------------------------------------------------------------------------------------------------------------------------------
30l GMAC4260-L 735 Spruce Street Multifamily 735 Spruce Street
30m GMAC4260-M 1009-11 Spruce Street Multifamily 1009-11 Spruce Street
30n GMAC4260-N 1127 Spruce Street Multifamily 1127 Spruce Street
30o GMAC4260-O 614 Pine Street Multifamily 614 Pine Street
30p GMAC4260-P 623-25 Pine Street Multifamily 623-25 Pine Street
- ------------------------------------------------------------------------------------------------------------------------------------
30q GMAC4260-Q 920 Clinton Street Multifamily 920 Clinton Street
30r GMAC4260-R 2009 Mt. Vernon Street Multifamily 2009 Mt. Vernon Street
30s GMAC4260-S 2219-21 Spring Garden Multifamily 2219-21 Spring Garden
30t GMAC4260-T 325 Pine Street Multifamily 325 Pine Street
30u GMAC4260-U 532-34 Pine Street Multifamily 532-34 Pine Street
- ------------------------------------------------------------------------------------------------------------------------------------
30v GMAC4260-V 607-09 South 3rd Street Multifamily 607-09 South 3rd Street
30w GMAC4260-W 614 S. 3rd Street Multifamily 614 S. 3rd Street
30x GMAC4260-X 718-22 S. 7th Street Multifamily 718-22 S. 7th Street
31 GMAC5120 Cambridge Mall Anchored Retail 23011-23231 John R. Road/30-40 W. Nine
Mile Road
32 GMAC5720 Anchorage Business Park Retail 401, 501, and 549 West International
Airport Rd
- ------------------------------------------------------------------------------------------------------------------------------------
33 GMAC5590 Claremont Auto Center Special Purpose 620/660,625/645 & 667 Auto Center Drive
34 GMAC3990 Pacific Plaza Shopping Center Retail 18409 - 18463 Colima Road
35 GMAC5930 Kenwood Gardens Apartments Multifamily 2629 Alisdale Drive
36 GMAC4930 Pismo Coast Shopping Center Anchored Retail 501-581 Five Cities Drive
37 GMAC5230 Hampton Inn & Suites Lodging 1989 Eastwood Road
- ------------------------------------------------------------------------------------------------------------------------------------
38 GMAC5140 Chippenham Square Shopping Center Anchored Retail 7415 Midlothian Turnpike (Route 60)
39 GMAC4620 WorldGate Communications Building Office 3190 Tremont Avenue
40 GMAC4120 National Enterprises San Diego Portfolio
40a GMAC4120-A Retail Center, Balboa & Mercury Retail 8101 & 8111 Balboa Avenue & 4465 &
75 Mercury St.
40b GMAC4120-B RFA and TCG Buildings Office 5440 & 5464 Morehouse Drive
- ------------------------------------------------------------------------------------------------------------------------------------
41 GMAC5950 2031 Locust Street Apartments Multifamily 2027-35 Locust Street
42 GMAC4090 Cheviot Hills Shopping Center Anchored Retail 9824-9930 National Blvd.
43 GMAC4900 Chimney Hill Retail Center Retail 701 E. University Drive
44 GMAC4940 Portsmouth Plaza Shopping Center Anchored Retail 1465 Woodbury Avenue
45 GMAC5360 Ashdale Plaza Retail 2876-2984 Dale Boulevard
- ------------------------------------------------------------------------------------------------------------------------------------
46 GMAC5980 Bemis Building Office 1050 Sansome Street
47 GMAC5610 Westpark Plaza Office 6300-6400 Westpark Drive
48 GMAC4970 Wappingers Falls Shopping Center Retail 1271 Route 9
49 GMAC4610 Santee Garment Center Retail 1121-31 1/2 Santee Street
50 GMAC4660 Tage Inn - Andover Lodging 131 River Road
- ------------------------------------------------------------------------------------------------------------------------------------
51 GMAC5450 Hillcrest Colonnade Shopping Center Retail 1240-1294 University Avenue
52 GMAC5240 West Trenton Industrial Building Industrial 400 Sullivan Way
53 GMAC4590 1900 Bryant Street Mixed Use 1960 Bryant St./2727 Mariposa St./
535 Florida St.
54 GMAC3890 Downing Place Townhouses Multifamily 3395 Spangler Drive
55 GMAC4840 Arrowhead Festival Shopping Center Retail 7500 & 7600 West Bell Road
- ------------------------------------------------------------------------------------------------------------------------------------
56 GMAC4810 Twin Bridge Apartments Multifamily 605 Del Paso Street
57 GMAC5190 Preferred Freezer Services Cold Storage Facility Industrial 12855 NW 113th Court
58 GMAC4720 Pacific Coast Center Retail 75-81 Higuera Street
59 GMAC5650 Solomon's Court and Esther's Garden Apartments Multifamily 1005 & 919 West Wheatland Road
60 GMAC2060 Sheafe St./ Lewis St./ Milk St.
- ------------------------------------------------------------------------------------------------------------------------------------
60a GMAC2060-A Sheafe Condominiums Multifamily 37 Sheafe Street
60b GMAC2060-B 36-38 Lewis St. Apt. Building Multifamily 36-38 Lewis Street
60c GMAC2060-C 120 Milk Street Building Mixed Use 120 Milk Street
61 GMAC5090 Ravenwood Highlander Apartments Multifamily 2071 NW 86th Street & 8415 Franklin
Avenue
62 GMAC3680 195 Raritan Center Parkway Industrial 195 Raritan Center Parkway
- ------------------------------------------------------------------------------------------------------------------------------------
63 GMAC5420 Fountain Valley Office Building Office 10101 Slater Avenue
64 GMAC5460 Kings Canyon Shopping Center Anchored Retail 4951-4995 East Kings Canyon Road
65 GMAC4400 Crossroads Office Park Industrial 45-105 Sockanossett Crossroads
66 GMAC4920 Oaks Apartments Multifamily 4614 Pioneer Road
67 GMAC4670 Tage Inn - Milford Lodging 24 Beaver Street
- ------------------------------------------------------------------------------------------------------------------------------------
68 GMAC3470 Cataldo-Pane Multifamily Portfolio
68a GMAC3470-A 957 67th Street Multifamily 957 67th Street
68b GMAC3470-B 88 Van Sicklen Street Multifamily 88 Van Sicklen Street
68c GMAC3470-C 8785 Bay 16th Street Multifamily 8785 Bay 16th Street
68d GMAC3470-D 7311 4th Avenue Multifamily 7311 4th Avenue
- ------------------------------------------------------------------------------------------------------------------------------------
68e GMAC3470-E 805 Avenue O Multifamily 805 Aveneue O
68f GMAC3470-F 1946 70th Street Multifamily 1946 70th Street
68g GMAC3470-G 7301 4th Avenue Multifamily 7301 4th Avenue
69 GMAC5180 Newporter Apartments Multifamily 6050-6080 N. Marks Ave. & 2760 W.
Bullard Ave.
70 GMAC5430 Timber Line Apartments Multifamily 616 NE 38th Street
- ------------------------------------------------------------------------------------------------------------------------------------
71 GMAC5510 Santa Monica Office Building Office 1632 5th Street
72 GMAC5630 Woodland Grove Apartments Multifamily 12933 Laurel Bowie Road
73 GMAC5680 Country Place Apartments Multifamily 1000 Justice Way
74 GMAC5050 Sharpstown Industrial Park Industrial 5202-28 Parkersburg Dr, 6908 Harwin
Dr, 5701-5650 Savoy Dr
75 GMAC4830 425 Commerce Drive Office Office 425 Commerce Drive
- ------------------------------------------------------------------------------------------------------------------------------------
76 GMAC5440 Harte-Hanks Building Industrial 393 Manley Street
77 GMAC5040 Dendrite Office Building Office 175 Morristown Road
78 GMAC4800 Port Jefferson Commons Retail 4747 Nesconset Highway
79 GMAC5051 Mykawa Warehouse Industrial 7200-7260 Mykawa Road
80 GMAC3970 Marketplace Shopping Center Anchored Retail 4100 NW 16th Boulevard
- ------------------------------------------------------------------------------------------------------------------------------------
81 GMAC4760 Riverine Apartments Multifamily 505 Riverine Drive
82 GMAC5740 Bayou Walk II Retail 6590 & 6596 Youree Drive (Route 1)
83 GMAC5600 Merritt Square Financial Center (FL) Office 775 East Merritt Island Causeway
84 GMAC1880 Lock Mill Plaza Multifamily One Buffalo Avenue
85 GMAC5150 For Eyes Building Retail 1355 West Sand Lake Road
- ------------------------------------------------------------------------------------------------------------------------------------
86 GMAC5390 Bryarwood 85 Office Park Office 1587, 1593, & 1597 Northeast Expressway
87 GMAC6000 Rite Aid (Schenectady, NY) Retail 1102-1120 State Street; 2327 Brandywine
Ave; 1103-1127 Albam
88 GMAC5030 30 Executive Avenue Industrial 30 Executive Avenue
89 GMAC5130 Camelot Square Apartments (CA) Multifamily 5400 Planz Road
90 GMAC4530 Polk Street Apartments Multifamily 743 Polk Street
- ------------------------------------------------------------------------------------------------------------------------------------
91 GMAC4470 Rue Versailles Apartments Multifamily 25054,71,100 Rue Versailles Dr &
25301-321 Montmarte Ct S.
92 GMAC5800 Garden Center Apartments Multifamily 62 & 70 Garden Center Drive
93 GMAC4710 Office Max (Abilene, TX) Retail 3366 John Knox Drive
94 GMAC3450 Canterbury Commons Office
94a GMAC3450-A Canterbury & Springfield Commons Office 3651, 3653 & 3655 Canton Highway
- ------------------------------------------------------------------------------------------------------------------------------------
94b GMAC3450-B Springfield Commons Office 102, 103 & 104 Springfield Drive
95 GMAC4220 Walgreens (West Palm Beach, FL) Retail 2050 45th St.
96 GMAC4540 Hart Plaza Shopping Center Retail 100 Oxford Valley Road
97 GMAC4270 547-557 Flatbush Avenue Multifamily 547-557 Flatbush Avenue
98 GMAC4450 Brewery Office-Retail Office 703 McKinney Avenue
- ------------------------------------------------------------------------------------------------------------------------------------
99 GMAC3080 Wendy's, Taco Bell & Bertucci's Retail 2160 Centreville Road
100 GMAC5170 Mark Court Apartments Multifamily 1922 & 1932 Tenth Ave. and 1105 &
1125 Mark Ct.
101 GMAC5370 Brendenwood Apartments Multifamily 3012 East Edison Road
102 GMAC5070 La Marquesa Apartments Multifamily 6600 Hayvenhurst Avenue
103 GMAC5054 South X Southwest Industrial Park Industrial 700 Industrial Boulevard
- ------------------------------------------------------------------------------------------------------------------------------------
104 GMAC3830 The Courtyard Office Center Retail/Office 431 West Franklin Street
105 GMAC3330 William Realty Portfolio Multifamily 1-5-7-9 South Maple Avenue
106 GMAC4850 Bestway-Security Self Storage
106a GMAC4850-A Security Self Storage Self-Storage 25 James Street
106b GMAC4850-B Bestway Self Storage Self-Storage 29 Flint Road
- ------------------------------------------------------------------------------------------------------------------------------------
107 GMAC4130 Randy's Sports Mall Anchored Retail 7288 Greenwood Road
108 GMAC3960 Mariner Plaza Anchored Retail 625 Highway 231
109 GMAC5160 Highland Village Apartments Multifamily 100 Bridgewood Drive
110 GMAC1150 Advance Medical Office Building Office 1811 South Rainbow Boulevard
111 GMAC5520 Willits Street/Ethan Allen Anchored Retail 275 North Woodward Avenue
- ------------------------------------------------------------------------------------------------------------------------------------
112 GMAC5055 Corporate Center Industrial 10700 Corporate Drive & 12600
Exchange Drive
113 GMAC3740 CVS/Arbor Drugs Store Retail West Chicago Blvd.
114 GMAC5052 Wynnwood #1-3 Industrial 7230-7250 Wynnwood Lane
115 GMAC4730 Kearney Mesa Toyota Special Purpose 4990 Kearney Mesa Road
116 GMAC5480 Pomona Civic Plaza Office 435 West Mission Boulevard
- ------------------------------------------------------------------------------------------------------------------------------------
117 GMAC5100 Lincoln Plaza Retail 701-715 Lincoln Boulevard
118 GMAC3900 Fountain Ridge Apartments Multifamily 1101-1107 North Cleveland Avenue
119 GMAC5110 2330 North Alma School Road Retail 2330 North Alma School Road
120 GMAC4860 Bingle Crossing Shopping Center Retail 2915 Bingle Road
121 GMAC1120 Claremont South Retail 513-515 Hudson Street
- ------------------------------------------------------------------------------------------------------------------------------------
122 GMAC5053 Larimer Street Warehouse Industrial 6714 Larimer Street
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CROSS CUT-OFF
COLLATER- ORIGINAL DATE
CONTROL ALIZED RELATED BALANCE BALANCE
NUMBER CITY STATE ZIP CODE GROUPS GROUPS ($) ($)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 Elmhurst New York 11373 100,000,000 100,000,000
2 Colorado Springs Colorado 80903 54,000,000 53,769,239
3 Santa Ana California 92705 50,890,000 50,722,972
4 Phoenix Arizona 85020 36,000,000 36,000,000
5 Lancaster Pennsylvania 17603 Group 6 28,320,000 28,320,000
- ----------------------------------------------------------------------------------------------------------------------
6 Carlin Nevada 89822 27,000,000 26,856,137
7 Chicago Illinois 60611 26,500,000 26,476,006
8 Brooklyn New York 11207 25,258,000 25,177,781
9 New York New York 10036 23,500,000 23,412,934
10 Boca Raton Florida 33428 Group 6 22,600,000 22,583,360
- ----------------------------------------------------------------------------------------------------------------------
11 Santa Ana California 92705 21,990,000 21,917,844
12 New York New York 10017 20,000,000 20,000,000
13 Hillside Illinois 60162 19,700,000 19,656,135
14 Harrisburg Pennsylvania 17109 Group 6 18,750,000 18,736,195
15 17,500,000 17,443,028
- ----------------------------------------------------------------------------------------------------------------------
15a Hamden Connecticut 06514
15b West Haven Connecticut 06516
15c Hamden Connecticut 06518
15d Middletown Connecticut 06457
15e West Haven Connecticut 06516
- ----------------------------------------------------------------------------------------------------------------------
15f Hamden Connecticut 06518
16 Pembroke Pines Florida 33025 Group 6 16,600,000 16,587,778
17 Anaheim California 92802 15,500,000 15,485,915
18 Westminster California 92683 14,000,000 13,992,012
19 Pompano Beach Florida 33069 Group 6 13,850,000 13,839,803
- ----------------------------------------------------------------------------------------------------------------------
20 Baltimore Maryland 21218 Group 6 12,300,000 12,290,944
21 Newport News Virginia 23602 12,200,000 12,173,039
22 Staten Island New York 10314 10,800,000 10,763,630
23 Miamisburg Ohio 45342 Group 6 10,700,000 10,692,122
24 10,575,000 10,568,731
- ----------------------------------------------------------------------------------------------------------------------
24a Columbia Missouri 65201
24b Columbia Missouri 65201
24c Columbia Missouri 65201
25 Foothill Ranch California 92610 9,200,000 9,132,449
27 Atlanta Georgia 30306 8,900,000 8,894,345
- ----------------------------------------------------------------------------------------------------------------------
28 Salisbury Maryland 21804 8,550,000 8,530,378
29 Mt. Laurel New Jersey 08054 7,750,000 7,712,944
30 7,640,000 7,608,624
30a Philadelphia Pennsylvania 19103
- ----------------------------------------------------------------------------------------------------------------------
30b Philadelphia Pennsylvania 19103
30c Philadelphia Pennsylvania 19103
30d Philadelphia Pennsylvania 19103
30e Philadelphia Pennsylvania 19103
30f Philadelphia Pennsylvania 19103
- ----------------------------------------------------------------------------------------------------------------------
30g Philadelphia Pennsylvania 19103
30h Philadelphia Pennsylvania 19103
30i Philadelphia Pennsylvania 19103
30j Philadelphia Pennsylvania 19146
30k Philadelphia Pennsylvania 19103
- ----------------------------------------------------------------------------------------------------------------------
30l Philadelphia Pennsylvania 19106
30m Philadelphia Pennsylvania 19107
30n Philadelphia Pennsylvania 19107
30o Philadelphia Pennsylvania 19106
30p Philadelphia Pennsylvania 19106
- ----------------------------------------------------------------------------------------------------------------------
30q Philadelphia Pennsylvania 19107
30r Philadelphia Pennsylvania 19130
30s Philadelphia Pennsylvania 19130
30t Philadelphia Pennsylvania 19106
30u Philadelphia Pennsylvania 19106
- ----------------------------------------------------------------------------------------------------------------------
30v Philadelphia Pennsylvania 19147
30w Philadelphia Pennsylvania 19147
30x Philadelphia Pennsylvania 19147
31 Hazel Park Michigan 48030 7,500,000 7,490,240
32 Anchorage Alaska 99503 7,500,000 7,488,235
- ----------------------------------------------------------------------------------------------------------------------
33 Claremont California 91711 7,300,000 7,292,233
34 Rowland Heights California 91748 7,275,000 7,245,711
35 Toledo Ohio 43623 Group 6 7,250,000 7,244,662
36 Pismo Beach California 93449 7,100,000 7,077,000
37 Wilmington North Carolina 28406 6,900,000 6,886,177
- ----------------------------------------------------------------------------------------------------------------------
38 Richmond Virginia 23236 6,750,000 6,740,837
39 Bensalem Township Pennsylvania 19020 6,000,000 5,978,286
40 Group A Group 1 5,980,000 5,956,526
40a San Diego California 92111
40b San Diego California 92121
- ----------------------------------------------------------------------------------------------------------------------
41 Philadelphia Pennsylvania 19103 Group 6 5,950,000 5,945,619
42 Cheviot Hills California 90064 5,800,000 5,774,164
43 College Station Texas 78840 5,700,000 5,692,708
44 Portsmouth New Hampshire 03801 Group 4 5,600,000 5,589,454
45 Dale City Virginia 22193 5,435,000 5,423,288
- ----------------------------------------------------------------------------------------------------------------------
46 San Francisco California 94111 5,350,000 5,346,781
47 Houston Texas 77057 5,335,000 5,332,311
48 Wappinger Falls New York 12590 Group 4 5,300,000 5,290,019
49 Los Angeles California 90015 5,000,000 4,993,576
50 Andover Massachusetts 01810 Group B Group 2 4,800,000 4,791,571
- ----------------------------------------------------------------------------------------------------------------------
51 San Diego California 92103 4,685,000 4,678,865
52 West Trenton (Ewing Township) New Jersey 08628 4,665,000 4,656,691
53 San Francisco California 94110 4,600,000 4,594,190
54 Lexington Kentucky 40517 4,600,000 4,562,409
55 Glendale Arizona 85382 4,500,000 4,491,676
- ----------------------------------------------------------------------------------------------------------------------
56 Euless Texas 76053 4,500,000 4,483,267
57 Medley Florida 33178 4,500,000 4,473,453
58 San Luis Obispo California 93401 4,400,000 4,379,512
59 Dallas Texas 75232 4,300,000 4,294,076
60 4,130,000 4,113,492
- ----------------------------------------------------------------------------------------------------------------------
60a Boston Massachusetts 02109
60b Boston Massachusetts 02109
60c Boston Massachusetts 02109
61 Clive Iowa 50325 4,120,000 4,112,079
62 Edison Township New Jersey 08837 4,050,000 4,025,915
- ----------------------------------------------------------------------------------------------------------------------
63 Fountain Valley California 92708 3,950,000 3,944,827
64 Fresno California 93727 3,900,000 3,897,725
65 Cranston Rhode Island 02920 3,900,000 3,897,657
66 Balch Springs Texas 75180 3,850,000 3,841,713
67 Milford Massachusetts 01757 Group B Group 2 3,800,000 3,793,327
- ----------------------------------------------------------------------------------------------------------------------
68 3,800,000 3,778,745
68a Brooklyn New York 11219
68b Brooklyn New York 11223
68c Brooklyn New York 11214
68d Brooklyn New York 11209
- ----------------------------------------------------------------------------------------------------------------------
68e Brooklyn New York 11204
68f Brooklyn New York 11204
68g Brooklyn New York 11209
69 Fresno California 93711 Group 5 3,765,000 3,759,878
70 Kansas City Missouri 64116 3,700,000 3,697,729
- ----------------------------------------------------------------------------------------------------------------------
71 Santa Monica California 90401 3,650,000 3,646,615
72 Laurel Maryland 20708 3,600,000 3,597,701
73 Abilene Texas 79602 3,400,000 3,395,557
74 Houston Texas 77036 Group C Group 3 3,400,000 3,393,772
75 Fort Washington Pennsylvania 19034 3,400,000 3,389,582
- ----------------------------------------------------------------------------------------------------------------------
76 West Bridgewater Massachusetts 02379 3,300,000 3,298,244
77 Basking Ridge New Jersey 07302 3,220,000 3,210,439
78 Port Jefferson Station New York 11776 3,100,000 3,097,183
79 Houston Texas 77033 Group C Group 3 3,100,000 3,094,322
80 Gainesville Florida 32605 3,100,000 3,084,754
- ----------------------------------------------------------------------------------------------------------------------
81 Traverse City Michigan 49684 3,050,000 3,038,295
82 Shreveport Louisiana 71105 3,000,000 2,998,321
83 Merritt Island Florida 32952 3,000,000 2,996,427
84 Concord North Carolina 28025 3,000,000 2,994,005
85 Orlando Florida 32809 2,900,000 2,896,452
- ----------------------------------------------------------------------------------------------------------------------
86 Atlanta Georgia 30360 2,900,000 2,896,234
87 Schenectady New York 12305 2,725,000 2,714,045
88 Edison Township New Jersey 08817 2,700,000 2,691,983
89 Bakersfield California 93309 Group 5 2,525,000 2,521,637
90 San Francisco California 94109 2,500,000 2,490,222
- ----------------------------------------------------------------------------------------------------------------------
91 Royal Oak Township Michigan 48220 2,475,000 2,466,561
92 Broomfield Colorado 80038 2,400,000 2,398,519
93 Abilene Texas 79606 2,400,000 2,392,794
94 2,400,000 2,390,995
94a Marietta Georgia 30066
- ----------------------------------------------------------------------------------------------------------------------
94b Woodstock Georgia 30188
95 West Palm Beach Florida 33407 2,400,000 2,386,967
96 Falls Township Pennsylvania 19363 2,300,000 2,291,676
97 Brooklyn New York 11225 2,250,000 2,246,690
98 Dallas Texas 75202 2,200,000 2,184,089
- ----------------------------------------------------------------------------------------------------------------------
99 Herndon Virginia 20170 2,175,000 2,170,633
100 Newport Minnesota 55055 2,131,500 2,128,514
101 South Bend Indiana 46615 2,000,000 1,998,830
102 Van Nuys California 91406 2,000,000 1,996,119
103 Sugarland Texas 77478 Group C Group 3 1,987,500 1,983,859
- ----------------------------------------------------------------------------------------------------------------------
104 Chapel Hill North Carolina 27514 1,940,000 1,936,236
105 East Orange New Jersey 07018 1,900,000 1,892,055
106 1,850,000 1,842,020
106a South Toms River New Jersey 08753
106b Toms River New Jersey 08757
- ----------------------------------------------------------------------------------------------------------------------
107 Shreveport Louisiana 71119 1,800,000 1,795,091
108 Panama City Florida 32405 1,725,000 1,717,787
109 LaGrange Georgia 30240 1,700,000 1,696,886
110 Las Vegas Nevada 89102 1,650,000 1,641,645
111 Birmingham Michigan 48009 1,600,000 1,596,721
- ----------------------------------------------------------------------------------------------------------------------
112 Stafford Texas 77478 Group C Group 3 1,575,000 1,572,115
113 Tecumseh Michigan 49286 1,451,000 1,448,750
114 Houston Texas 77008 Group C Group 3 1,425,000 1,422,390
115 San Diego California 92111 Group A Group 1 1,400,000 1,391,712
116 Pomona California 91766 1,390,000 1,386,164
- ----------------------------------------------------------------------------------------------------------------------
117 Venice California 90291 1,300,000 1,297,501
118 Sioux Falls South Dakota 57103 1,200,000 1,193,708
119 Chandler Arizona 85224 1,100,000 1,098,611
120 Houston Texas 77055 1,087,500 1,082,626
121 New York New York 10014 970,000 968,387
- ----------------------------------------------------------------------------------------------------------------------
122 Houston Texas 77020 Group C Group 3 640,000 638,828
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
% OF CUMULATIVE ORIGINAL
AGGREGATE % OF INTEREST-
INITIAL INITIAL SERVICING INTEREST ONLY
CONTROL POOL POOL INTEREST FEE RATE ACCRUAL AMORTIZATION PERIOD
NUMBER BALANCE BALANCE RATE (%) (%) METHOD TYPE (MOS.)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10.26 10.26 6.56000 0.0325 Actual / 360 Interest Only, Then Hyperamortizing 12
2 5.52 15.78 7.03000 0.0375 Actual / 360 Balloon
3 5.21 20.98 7.18000 0.0325 30 / 360 Balloon
4 3.69 24.68 7.80000 0.1275 Actual / 360 Interest Only, Then Amortizing 24
5 2.91 27.58 7.66000 0.1275 Actual / 360 Interest Only, Then Amortizing 24
- -----------------------------------------------------------------------------------------------------------------------
6 2.76 30.34 7.37500 0.0625 Actual / 360 Fully Amortizing
7 2.72 33.06 7.62500 0.1275 Actual / 360 Hyper Amortizing
8 2.58 35.64 7.62000 0.1275 Actual / 360 Balloon
9 2.40 38.04 7.82000 0.1275 Actual / 360 Balloon
10 2.32 40.36 6.77300 0.0525 Actual / 360 Balloon
- -----------------------------------------------------------------------------------------------------------------------
11 2.25 42.61 7.18000 0.0325 30 / 360 Balloon
12 2.05 44.66 7.23000 0.1275 Actual / 360 Interest Only, Then Amortizing 18
13 2.02 46.68 9.03000 0.0525 Actual / 360 Balloon
14 1.92 48.60 6.77300 0.0525 Actual / 360 Balloon
15 1.79 50.39 7.58000 0.1275 Actual / 360 Balloon
- -----------------------------------------------------------------------------------------------------------------------
15a
15b
15c
15d
15e
- -----------------------------------------------------------------------------------------------------------------------
15f
16 1.70 52.09 6.77300 0.0525 Actual / 360 Balloon
17 1.59 53.68 8.00000 0.1275 Actual / 360 Hyper Amortizing
18 1.44 55.12 7.75000 0.1275 Actual / 360 Balloon
19 1.42 56.54 6.77300 0.0525 Actual / 360 Balloon
- -----------------------------------------------------------------------------------------------------------------------
20 1.26 57.80 6.77300 0.0525 Actual / 360 Balloon
21 1.25 59.05 7.43000 0.1275 30 / 360 Balloon
22 1.10 60.15 7.37500 0.1275 Actual / 360 Balloon
23 1.10 61.25 6.77300 0.0525 Actual / 360 Balloon
24 1.08 62.34 7.61000 0.1275 Actual / 360 Balloon
- -----------------------------------------------------------------------------------------------------------------------
24a
24b
24c
25 0.94 63.27 7.25000 0.1275 Actual / 360 Balloon
27 0.91 64.19 7.35000 0.1275 Actual / 360 Balloon
- -----------------------------------------------------------------------------------------------------------------------
28 0.88 65.06 7.00000 0.1275 Actual / 360 Balloon
29 0.79 65.85 7.25000 0.1275 Actual / 360 Balloon
30 0.78 66.63 7.25000 0.1275 Actual / 360 Balloon
30a
- -----------------------------------------------------------------------------------------------------------------------
30b
30c
30d
30e
30f
- -----------------------------------------------------------------------------------------------------------------------
30g
30h
30i
30j
30k
- -----------------------------------------------------------------------------------------------------------------------
30l
30m
30n
30o
30p
- -----------------------------------------------------------------------------------------------------------------------
30q
30r
30s
30t
30u
- -----------------------------------------------------------------------------------------------------------------------
30v
30w
30x
31 0.77 67.40 7.96000 0.1275 Actual / 360 Balloon
32 0.77 68.17 7.92000 0.1275 Actual / 360 Balloon
- -----------------------------------------------------------------------------------------------------------------------
33 0.75 68.92 8.30000 0.1275 Actual / 360 Balloon
34 0.74 69.66 7.36000 0.1275 Actual / 360 Balloon
35 0.74 70.41 6.77300 0.0525 Actual / 360 Balloon
36 0.73 71.13 7.61000 0.1275 Actual / 360 Balloon
37 0.71 71.84 8.12500 0.1275 Actual / 360 Hyper Amortizing
- -----------------------------------------------------------------------------------------------------------------------
38 0.69 72.53 7.76000 0.1275 Actual / 360 Balloon
39 0.61 73.14 7.95000 0.1275 Actual / 360 Balloon
40 0.61 73.76 7.50000 0.1275 Actual / 360 Balloon
40a
40b
- -----------------------------------------------------------------------------------------------------------------------
41 0.61 74.37 6.77300 0.0525 Actual / 360 Balloon
42 0.59 74.96 6.80000 0.1275 Actual / 360 Balloon
43 0.58 75.54 8.04000 0.1275 Actual / 360 Balloon
44 0.57 76.12 7.88000 0.1275 Actual / 360 Balloon
45 0.56 76.67 7.69000 0.1275 Actual / 360 Balloon
- -----------------------------------------------------------------------------------------------------------------------
46 0.55 77.22 7.55510 0.1275 Actual / 360 Balloon
47 0.55 77.77 8.19000 0.1275 Actual / 360 Balloon
48 0.54 78.31 7.88000 0.1275 Actual / 360 Balloon
49 0.51 78.82 8.02000 0.1275 Actual / 360 Balloon
50 0.49 79.31 8.75000 0.1275 Actual / 360 Fully Amortizing
- -----------------------------------------------------------------------------------------------------------------------
51 0.48 79.79 7.93000 0.1275 Actual / 360 Balloon
52 0.48 80.27 8.12000 0.1275 Actual / 360 Balloon
53 0.47 80.74 8.10000 0.1275 Actual / 360 Balloon
54 0.47 81.21 6.80000 0.1275 Actual / 360 Balloon
55 0.46 81.67 6.25000 0.1275 Actual / 360 Balloon
- -----------------------------------------------------------------------------------------------------------------------
56 0.46 82.13 7.80000 0.1275 Actual / 360 Balloon
57 0.46 82.59 7.65000 0.1275 Actual / 360 Fully Amortizing
58 0.45 83.04 7.85000 0.1275 Actual / 360 Balloon
59 0.44 83.48 7.69000 0.1275 Actual / 360 Balloon
60 0.42 83.90 7.40000 0.1275 Actual / 360 Balloon
- -----------------------------------------------------------------------------------------------------------------------
60a
60b
60c
61 0.42 84.33 7.79000 0.1275 Actual / 360 Balloon
62 0.41 84.74 7.47000 0.1275 Actual / 360 Balloon
- -----------------------------------------------------------------------------------------------------------------------
63 0.40 85.14 7.93000 0.1275 Actual / 360 Balloon
64 0.40 85.54 7.67000 0.1275 Actual / 360 Balloon
65 0.40 85.94 7.56000 0.1275 Actual / 360 Balloon
66 0.39 86.34 7.29000 0.1275 Actual / 360 Balloon
67 0.39 86.73 8.75000 0.1275 Actual / 360 Fully Amortizing
- -----------------------------------------------------------------------------------------------------------------------
68 0.39 87.12 7.00000 0.1275 Actual / 360 Fully Amortizing
68a
68b
68c
68d
- -----------------------------------------------------------------------------------------------------------------------
68e
68f
68g
69 0.39 87.50 7.75000 0.1275 Actual / 360 Balloon
70 0.38 87.88 7.48000 0.1275 Actual / 360 Balloon
- -----------------------------------------------------------------------------------------------------------------------
71 0.37 88.26 7.90000 0.1275 Actual / 360 Balloon
72 0.37 88.62 7.33000 0.1275 Actual / 360 Balloon
73 0.35 88.97 7.94000 0.1275 Actual / 360 Balloon
74 0.35 89.32 8.00000 0.1275 Actual / 360 Balloon
75 0.35 89.67 7.95000 0.1275 Actual / 360 Balloon
- -----------------------------------------------------------------------------------------------------------------------
76 0.34 90.01 8.00000 0.1275 Actual / 360 Balloon
77 0.33 90.34 8.00000 0.1275 Actual / 360 Balloon
78 0.32 90.65 8.00000 0.1275 Actual / 360 Balloon
79 0.32 90.97 8.00000 0.1275 Actual / 360 Balloon
80 0.32 91.29 6.25000 0.1275 Actual / 360 Balloon
- -----------------------------------------------------------------------------------------------------------------------
81 0.31 91.60 7.62500 0.1275 Actual / 360 Balloon
82 0.31 91.91 7.82000 0.1275 Actual / 360 Balloon
83 0.31 92.22 8.37500 0.1275 Actual / 360 Balloon
84 0.31 92.52 8.14000 0.1275 Actual / 360 Balloon
85 0.30 92.82 8.25000 0.1275 Actual / 360 Balloon
- -----------------------------------------------------------------------------------------------------------------------
86 0.30 93.12 7.97000 0.1275 Actual / 360 Balloon
87 0.28 93.40 7.80000 0.1275 Actual / 360 Balloon
88 0.28 93.67 8.00000 0.1275 Actual / 360 Balloon
89 0.26 93.93 7.85000 0.1275 Actual / 360 Balloon
90 0.26 94.19 7.52000 0.1275 Actual / 360 Balloon
- -----------------------------------------------------------------------------------------------------------------------
91 0.25 94.44 7.30000 0.1275 Actual / 360 Balloon
92 0.25 94.69 7.46000 0.1275 Actual / 360 Balloon
93 0.25 94.93 7.50000 0.1275 Actual / 360 Balloon
94 0.25 95.18 7.75000 0.1275 Actual / 360 Balloon
94a
- -----------------------------------------------------------------------------------------------------------------------
94b
95 0.24 95.42 6.75000 0.1275 Actual / 360 Balloon
96 0.24 95.66 7.95000 0.1275 Actual / 360 Balloon
97 0.23 95.89 7.37500 0.1275 Actual / 360 Balloon
98 0.22 96.11 7.90000 0.1275 Actual / 360 Fully Amortizing
- -----------------------------------------------------------------------------------------------------------------------
99 0.22 96.33 7.60000 0.1275 Actual / 360 Balloon
100 0.22 96.55 7.61000 0.1275 Actual / 360 Balloon
101 0.21 96.76 7.66000 0.1275 Actual / 360 Balloon
102 0.20 96.96 7.75000 0.1275 Actual / 360 Balloon
103 0.20 97.17 8.00000 0.1275 Actual / 360 Balloon
- -----------------------------------------------------------------------------------------------------------------------
104 0.20 97.36 7.75000 0.1275 Actual / 360 Balloon
105 0.19 97.56 7.15000 0.1275 Actual / 360 Balloon
106 0.19 97.75 8.40000 0.1275 Actual / 360 Balloon
106a
106b
- -----------------------------------------------------------------------------------------------------------------------
107 0.18 97.93 8.47000 0.1275 Actual / 360 Balloon
108 0.18 98.11 7.15000 0.1275 Actual / 360 Balloon
109 0.17 98.28 8.00000 0.1275 Actual / 360 Balloon
110 0.17 98.45 7.25000 0.1275 Actual / 360 Balloon
111 0.16 98.61 7.99000 0.1275 Actual / 360 Balloon
- -----------------------------------------------------------------------------------------------------------------------
112 0.16 98.78 8.00000 0.1275 Actual / 360 Balloon
113 0.15 98.92 8.00000 0.1275 Actual / 360 Fully Amortizing
114 0.15 99.07 8.00000 0.1275 Actual / 360 Balloon
115 0.14 99.21 7.50000 0.1275 Actual / 360 Balloon
116 0.14 99.36 7.92000 0.1275 Actual / 360 Fully Amortizing
- -----------------------------------------------------------------------------------------------------------------------
117 0.13 99.49 7.79000 0.1275 Actual / 360 Balloon
118 0.12 99.61 7.00000 0.1275 Actual / 360 Balloon
119 0.11 99.72 8.10000 0.1275 Actual / 360 Balloon
120 0.11 99.84 8.12500 0.1275 Actual / 360 Balloon
121 0.10 99.93 8.41000 0.1275 Actual / 360 Balloon
- -----------------------------------------------------------------------------------------------------------------------
122 0.07 100.00 8.00000 0.1275 Actual / 360 Balloon
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
REMAINING
INTEREST- ORIGINAL REMAINING
ONLY TERM TO TERM TO ORIGINAL REMAINING MATURITY BALLOON
CONTROL PERIOD MATURITY MATURITY AMORTIZATION AMORTIZATION ORIGINATION DATE OR OR ARD
NUMBER (MOS.) (MOS.) (MOS.) TERM (MOS.) TERM (MOS.) DATE ARD BALANCE ($)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 9 120 117 378 378 2/4/99 3/1/09 88,470,357
2 120 115 360 355 12/23/98 1/10/09 46,486,582
3 198 193 243 238 12/30/98 7/10/15 20,586,659
4 18 120 114 360 360 12/11/98 12/10/08 32,725,460
5 23 120 119 360 360 4/28/99 5/10/09 25,682,231
- -------------------------------------------------------------------------------------------------------------------------------
6 240 237 240 237 3/8/99 3/10/19
7 121 120 309 308 4/26/99 6/1/09 21,560,272
8 120 117 300 297 2/22/99 3/10/09 20,260,522
9 120 115 360 355 12/29/98 1/10/09 20,589,379
10 120 119 360 359 4/13/99 5/10/09 19,336,533
- -------------------------------------------------------------------------------------------------------------------------------
11 198 193 243 238 12/30/98 7/10/15 8,897,176
12 14 120 116 360 360 1/25/99 2/10/09 17,845,735
13 266 263 311 308 2/26/99 5/1/21 6,302,471
14 120 119 360 359 4/13/99 5/10/09 16,042,478
15 120 116 360 356 2/8/99 2/10/09 15,253,793
- -------------------------------------------------------------------------------------------------------------------------------
15a
15b
15c
15d
15e
- -------------------------------------------------------------------------------------------------------------------------------
15f
16 120 119 360 359 4/13/99 5/10/09 14,202,940
17 120 119 300 299 4/30/99 5/1/09 12,556,703
18 120 119 360 359 5/6/99 5/10/09 12,247,859
19 120 119 360 359 4/13/99 5/10/09 11,850,044
- -------------------------------------------------------------------------------------------------------------------------------
20 120 119 360 359 4/13/99 5/10/09 10,523,866
21 300 295 324 319 12/30/98 1/10/24 2,159,661
22 120 116 360 356 1/26/99 2/10/09 9,371,201
23 120 119 360 359 4/13/99 5/10/09 9,154,908
24 120 119 360 359 4/30/99 5/10/09 9,223,689
- -------------------------------------------------------------------------------------------------------------------------------
24a
24b
24c
25 240 235 275 270 12/23/98 1/10/19 2,177,085
27 144 143 360 359 4/14/99 5/10/11 7,356,026
- -------------------------------------------------------------------------------------------------------------------------------
28 120 117 360 357 2/10/99 3/10/09 7,355,194
29 120 114 360 354 12/8/98 12/10/08 6,705,719
30 120 115 360 355 12/31/98 1/10/09 6,610,546
30a
- -------------------------------------------------------------------------------------------------------------------------------
30b
30c
30d
30e
30f
- -------------------------------------------------------------------------------------------------------------------------------
30g
30h
30i
30j
30k
- -------------------------------------------------------------------------------------------------------------------------------
30l
30m
30n
30o
30p
- -------------------------------------------------------------------------------------------------------------------------------
30q
30r
30s
30t
30u
- -------------------------------------------------------------------------------------------------------------------------------
30v
30w
30x
31 120 118 360 358 4/9/99 4/10/09 6,590,350
32 180 179 240 239 4/30/99 5/10/14 3,099,669
- -------------------------------------------------------------------------------------------------------------------------------
33 120 119 276 275 4/21/99 5/10/09 5,671,576
34 120 115 360 355 12/29/98 1/10/09 6,310,415
35 120 119 360 359 4/13/99 5/10/09 6,203,091
36 120 116 360 356 1/22/99 2/10/09 6,192,723
37 120 118 300 298 3/10/99 4/1/09 5,607,489
- -------------------------------------------------------------------------------------------------------------------------------
38 120 118 360 358 3/29/99 4/10/09 5,906,471
39 120 115 360 355 12/29/98 1/10/09 5,271,175
40 120 115 360 355 12/22/98 1/10/09 5,203,301
40a
40b
- -------------------------------------------------------------------------------------------------------------------------------
41 120 119 360 359 4/13/99 5/10/09 5,090,813
42 120 115 360 355 12/29/98 1/10/09 4,965,709
43 120 118 360 358 3/29/99 4/10/09 5,016,921
44 120 117 360 357 2/23/99 3/10/09 4,912,604
45 120 118 300 298 4/7/99 4/10/09 4,367,717
- -------------------------------------------------------------------------------------------------------------------------------
46 120 119 360 359 4/22/99 5/10/09 4,660,778
47 120 119 360 359 4/30/99 5/10/09 4,709,960
48 120 117 360 357 2/23/99 3/10/09 4,649,428
49 119 117 360 358 3/29/99 3/10/09 4,405,751
50 216 215 216 215 4/29/99 5/1/17
- -------------------------------------------------------------------------------------------------------------------------------
51 120 118 360 358 3/29/99 4/10/09 4,114,210
52 120 117 360 357 3/4/99 3/10/09 4,112,643
53 120 118 360 358 3/30/99 4/10/09 4,053,700
54 120 116 240 236 1/28/99 2/10/09 3,061,626
55 120 118 360 358 3/29/99 4/10/09 3,799,932
- -------------------------------------------------------------------------------------------------------------------------------
56 120 115 360 355 12/31/98 1/10/09 3,940,981
57 180 178 180 178 4/8/99 4/10/14
58 120 116 300 296 1/15/99 2/10/09 3,550,760
59 120 118 360 358 4/6/99 4/10/09 3,757,013
60 120 115 360 355 12/31/98 1/10/09 3,585,618
- -------------------------------------------------------------------------------------------------------------------------------
60a
60b
60c
61 120 117 360 357 3/4/99 3/10/09 3,607,429
62 120 115 300 295 12/30/98 1/10/09 3,235,683
- -------------------------------------------------------------------------------------------------------------------------------
63 120 118 360 358 4/7/99 4/10/09 3,468,758
64 120 119 360 359 4/30/99 5/10/09 3,406,061
65 120 119 360 359 4/27/99 5/10/09 3,397,940
66 120 117 360 357 2/22/99 3/1/09 3,334,267
67 216 215 216 215 4/29/99 5/1/17
- -------------------------------------------------------------------------------------------------------------------------------
68 240 237 240 237 2/23/99 3/10/19
68a
68b
68c
68d
- -------------------------------------------------------------------------------------------------------------------------------
68e
68f
68g
69 120 118 360 358 4/5/99 4/10/09 3,293,797
70 120 119 360 359 4/29/99 5/10/09 3,218,023
- -------------------------------------------------------------------------------------------------------------------------------
71 120 119 300 299 4/30/99 5/10/09 2,949,330
72 120 119 360 359 4/29/99 5/10/09 3,120,582
73 120 118 360 358 3/30/99 4/10/09 2,986,387
74 120 117 360 357 2/23/99 3/10/09 2,990,091
75 120 116 360 356 1/25/99 2/10/09 2,987,002
- -------------------------------------------------------------------------------------------------------------------------------
76 120 119 360 359 4/30/99 5/10/09 2,902,152
77 240 237 300 297 3/4/99 3/10/19 1,234,594
78 120 119 300 299 4/30/99 5/10/09 2,511,341
79 120 117 360 357 2/23/99 3/10/09 2,726,259
80 120 115 360 355 12/23/98 1/10/09 2,617,726
- -------------------------------------------------------------------------------------------------------------------------------
81 120 115 360 355 12/23/98 1/10/09 2,661,118
82 132 131 360 359 4/20/99 5/10/10 2,572,308
83 120 118 360 358 3/30/99 4/10/09 2,658,240
84 120 118 300 298 3/23/99 4/10/09 2,438,959
85 120 118 360 358 3/29/99 4/10/09 2,563,308
- -------------------------------------------------------------------------------------------------------------------------------
86 120 118 360 358 3/25/99 4/10/09 2,548,796
87 237 234 267 264 2/26/99 12/10/18 589,806
88 240 237 300 297 3/4/99 3/10/19 1,035,218
89 120 118 360 358 4/5/99 4/10/09 2,213,666
90 120 115 360 355 12/17/98 1/10/09 2,176,252
- -------------------------------------------------------------------------------------------------------------------------------
91 120 116 360 356 1/15/99 2/10/09 2,143,942
92 120 119 360 359 4/29/99 5/10/09 2,086,442
93 120 116 375 371 1/15/99 2/10/09 2,119,806
94 120 115 360 355 1/5/99 1/10/09 2,099,627
94a
- -------------------------------------------------------------------------------------------------------------------------------
94b
95 240 236 300 296 1/29/99 2/10/19 848,036
96 120 115 360 355 12/21/98 1/10/09 2,020,617
97 120 118 360 358 4/6/99 4/10/09 1,952,336
98 240 236 240 236 1/14/99 2/10/19
- -------------------------------------------------------------------------------------------------------------------------------
99 120 117 360 357 2/16/99 3/10/09 1,896,657
100 120 118 360 358 3/16/99 4/10/09 1,859,128
101 120 119 360 359 4/30/99 5/10/09 1,746,321
102 120 117 360 357 2/22/99 3/10/09 1,749,692
103 120 117 360 357 2/23/99 3/10/09 1,747,883
- -------------------------------------------------------------------------------------------------------------------------------
104 120 117 360 357 3/12/99 3/10/09 1,697,200
105 120 115 360 355 1/7/99 1/10/09 1,640,216
106 120 116 300 296 2/8/99 2/10/09 1,513,755
106a
106b
- -------------------------------------------------------------------------------------------------------------------------------
107 120 117 300 297 2/24/99 3/10/09 1,475,360
108 120 115 360 355 12/14/98 1/10/09 1,489,144
109 120 117 360 357 3/3/99 3/10/09 1,495,045
110 120 116 300 296 1/27/99 2/10/09 1,310,375
111 120 118 300 298 4/9/99 4/10/09 1,295,845
- -------------------------------------------------------------------------------------------------------------------------------
112 120 117 360 357 2/23/99 3/10/09 1,385,115
113 240 239 240 239 4/30/99 5/10/19
114 120 117 360 357 2/23/99 3/10/09 1,253,200
115 120 115 300 295 12/22/98 1/10/09 1,119,410
116 180 179 180 179 4/30/99 5/10/14
- -------------------------------------------------------------------------------------------------------------------------------
117 120 117 360 357 2/18/99 3/10/09 1,138,265
118 120 116 300 296 1/15/99 2/10/09 946,386
119 120 118 360 358 4/7/99 4/10/09 969,364
120 120 116 300 296 2/8/99 2/10/09 883,788
121 120 117 360 357 3/5/99 3/10/09 860,083
- -------------------------------------------------------------------------------------------------------------------------------
122 120 117 360 357 2/23/99 3/10/09 562,842
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MONTHLY UNDERWRITTEN CROSS - CUT-OFF
CONTROL PAYMENT NET CASH UNDERWRITTEN COLLATERALIZED APPRAISED APPRAISAL DATE LTV
NUMBER PREPAYMENT PROVISION ($) FLOW ($) NCF DSCR (X) DSCR (X) VALUE ($) DATE (%)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 Lock/28_Defeasance/89_0%/3 632,921 12,209,304 1.61 160,000,000 12/30/98 62.50
2 Lock/29_Defeasance/85_0%/6 364,040 5,058,498 1.24 67,500,000 10/5/98 74.47
3 Lock/29_Defeasance/166_0%/3 337,500 4,050,000 1.00 51,600,000 12/8/98 98.30
4 Lock/30_Defeasance/87_0%/3 261,936 3,775,426 1.20 54,500,000 10/28/98 66.06
5 Lock/25_Defeasance/92_0%/3 203,341 3,034,867 1.24 35,400,000 5/1/99 80.00
- ------------------------------------------------------------------------------------------------------------------------------
6 Lock/27_Defeasance/213 217,279 3,000,000 1.15 30,000,000 7/1/99 89.52
7 Lock/48_Defeasance/72_0%/1 197,992 4,949,874 2.08 55,900,000 3/19/99 47.36
8 Lock/27_Defeasance/90_0%/3 190,519 2,805,678 1.23 33,804,200 9/11/98 74.48
9 Lock/29_Defeasance/85_0%/6 171,333 2,548,823 1.24 37,000,000 11/12/98 61.66
10 Lock/25_Defeasance/92_0%/3 148,450 2,733,048 1.53 37,700,000 3/19/99 59.90
- ------------------------------------------------------------------------------------------------------------------------------
11 Lock/29_Defeasance/166_0%/3 145,833 1,750,000 1.00 22,300,000 12/8/98 98.29
12 Lock/28_Defeasance/89_0%/3 137,564 2,055,880 1.25 36,200,000 10/8/98 55.25
13 Lock/28_Defeasance/235_0%/3 166,046 1,995,280 1.00 21,600,000 2/20/99 91.00
14 Lock/25_Defeasance/92_0%/3 123,161 2,328,181 1.58 26,500,000 3/22/99 70.70
15 Lock/28_Defeasance/89_0%/3 124,624 1,848,143 1.24 22,655,000 76.99
- ------------------------------------------------------------------------------------------------------------------------------
15a 522,598 6,000,000 11/16/98
15b 114,906 1,145,000 11/16/98
15c 52,714 600,000 11/16/98
15d 946,197 12,500,000 11/16/98
15e 78,861 860,000 11/16/98
- ------------------------------------------------------------------------------------------------------------------------------
15f 132,867 1,550,000 11/16/98
16 Lock/25_Defeasance/92_0%/3 109,038 2,039,155 1.56 24,450,000 3/19/99 67.84
17 Lock/47_Defeasance/72_0%/1 120,863 2,188,516 1.51 31,000,000 1/1/99 49.95
18 Lock/25_Defeasance/92_0%/3 101,419 1,438,140 1.18 18,000,000 2/22/99 77.73
19 Lock/25_Defeasance/92_0%/3 90,975 1,702,538 1.56 22,300,000 3/24/99 62.06
- ------------------------------------------------------------------------------------------------------------------------------
20 Lock/25_Defeasance/92_0%/3 80,793 1,547,489 1.60 17,000,000 3/23/99 72.30
21 Lock/29_Defeasance/265_0%/6 80,864 980,075 1.01 12,300,000 12/1/98 98.97
22 Lock/28_Defeasance/92 75,368 1,317,888 1.46 16,000,000 11/19/98 67.27
23 Lock/25_Defeasance/92_0%/3 70,284 1,327,218 1.57 14,500,000 3/25/99 73.74
24 Lock/25_Defeasance/92_0%/3 75,567 1,144,030 1.26 14,350,000 73.65
- ------------------------------------------------------------------------------------------------------------------------------
24a 317,289 4,100,000 2/19/99
24b 632,886 7,800,000 2/19/99
24c 193,855 2,450,000 2/19/99
25 Lock/29_Defeasance/205_0%/6 69,295 1,063,326 1.28 13,300,000 10/16/98 68.67
27 Lock/25_Defeasance/116_0%/3 61,984 975,000 1.31 11,250,000 9/22/98 79.06
- ------------------------------------------------------------------------------------------------------------------------------
28 Lock/27_Defeasance/93 57,485 831,398 1.29 11,100,000 1/11/99 71.90
29 Lock/30_Defeasance/84_0%/6 53,425 824,739 1.29 10,400,000 8/21/98 74.16
30 Lock/29_Defeasance/88_0%/3 52,661 943,094 1.49 9,550,000 79.67
30a 68,184 702,000 10/15/98
- ------------------------------------------------------------------------------------------------------------------------------
30b 34,592 344,000 10/15/98
30c 30,750 305,000 10/15/98
30d 23,766 264,000 10/15/98
30e 70,837 761,000 10/15/98
30f 43,491 455,000 10/15/98
- ------------------------------------------------------------------------------------------------------------------------------
30g 30,973 308,000 10/15/98
30h 33,928 373,000 10/15/98
30i 53,996 518,000 10/15/98
30j 22,094 212,000 10/15/98
30k 22,731 231,000 10/15/98
- ------------------------------------------------------------------------------------------------------------------------------
30l 26,247 256,000 10/15/98
30m 46,645 452,000 10/15/98
30n 33,521 318,000 10/15/98
30o 24,333 271,000 10/15/98
30p 64,570 631,000 10/15/98
- ------------------------------------------------------------------------------------------------------------------------------
30q 41,687 418,000 10/15/98
30r 24,707 236,000 10/15/98
30s 46,852 451,000 10/15/98
30t 30,950 342,000 10/15/98
30u 64,990 633,000 10/15/98
- ------------------------------------------------------------------------------------------------------------------------------
30v 28,980 387,000 10/15/98
30w 38,028 308,000 10/15/98
30x 36,242 353,000 10/15/98
31 Lock/26_Defeasance/91_0%/3 55,440 817,316 1.26 10,000,000 1/15/99 73.10
32 Lock/25_Defeasance/152_0%/3 62,915 962,167 1.27 10,500,000 3/16/99 71.32
- ------------------------------------------------------------------------------------------------------------------------------
33 Lock/25_Defeasance/94_0%/1 59,942 899,280 1.25 12,210,000 10/22/98 59.72
34 Lock/29_Defeasance/91 50,699 879,423 1.45 10,100,000 10/5/98 71.74
35 Lock/25_Defeasance/92_0%/3 47,622 914,746 1.60 10,100,000 3/24/99 71.73
36 Lock/28_Defeasance/89_0%/3 50,711 755,591 1.24 9,600,000 10/19/98 73.72
37 Lock/48_Defeasance/71_0%/1 54,382 1,052,710 1.61 10,350,000 1/1/99 66.53
- ------------------------------------------------------------------------------------------------------------------------------
38 Lock/26_Defeasance/91_0%/3 48,941 749,502 1.28 9,000,000 2/9/99 74.90
39 Lock/29_Defeasance/88_0%/3 44,296 697,300 1.36 7,750,000 11/10/98 74.56
40 Lock/29_Defeasance/85_0%/6 42,257 684,925 1.35 1.53 8,400,000 70.91
40a 322,331 4,000,000 6/1/98
40b 362,594 4,400,000 6/1/98
- ------------------------------------------------------------------------------------------------------------------------------
41 Lock/25_Defeasance/92_0%/3 39,083 740,540 1.58 8,400,000 3/23/99 70.78
42 Lock/29_Defeasance/85_0%/6 38,191 646,826 1.41 8,450,000 10/22/98 68.33
43 Lock/26_Defeasance/94 42,458 647,239 1.54 7,600,000 1/1/99 61.75
44 Lock/27_Defeasance/90_0%/3 41,082 618,958 1.26 7,600,000 7/23/98 73.55
45 Lock/26_Defeasance/94 41,245 672,883 1.36 7,250,000 1/19/99 74.80
- ------------------------------------------------------------------------------------------------------------------------------
46 Lock/25_Defeasance/92_0%/3 38,025 527,453 1.25 7,250,000 2/2/99 68.23
47 Lock/25_Defeasance/92_0%/3 40,314 617,307 1.28 7,700,000 2/25/99 69.25
48 Lock/27_Defeasance/90_0%/3 38,882 601,430 1.33 7,000,000 7/23/98 73.54
49 Lock/26_Defeasance/87_0%/6 37,173 560,177 1.26 6,630,000 4/1/98 75.32
50 Lock/48_Defeasance/132_0%/36 44,596 707,421 1.32 1.35 8,800,000 8/1/98 54.45
- ------------------------------------------------------------------------------------------------------------------------------
51 Lock/26_Defeasance/91_0%/3 34,532 540,491 1.30 6,400,000 1/27/99 73.11
52 Lock/27_Defeasance/90_0%/3 35,019 523,615 1.25 6,275,000 2/1/99 74.21
53 Lock/26_Defeasance/91_0%/3 34,461 541,892 1.31 7,400,000 12/2/98 62.08
54 Lock/28_Defeasance/92 35,378 511,019 1.20 5,750,000 9/9/98 79.35
55 Lock/26_Defeasance/94 27,978 478,657 1.43 5,990,000 2/28/99 74.99
- ------------------------------------------------------------------------------------------------------------------------------
56 Lock/29_Defeasance/88_0%/3 32,745 453,735 1.30 4,750,000 12/1/98 83.86
57 Lock/26_Defeasance/148_0%/6 42,394 657,550 1.29 9,500,000 2/12/99 47.09
58 Lock/28_Defeasance/89_0%/3 33,848 528,839 1.30 6,700,000 7/1/98 65.37
59 Lock/26_Defeasance/91_0%/3 30,966 469,484 1.26 5,450,000 3/31/99 78.79
60 Lock/29_Defeasance/88_0%/3 28,896 432,519 1.25 5,445,000 75.55
- ------------------------------------------------------------------------------------------------------------------------------
60a 96,051 1,220,000 12/4/98
60b 64,675 725,000 12/4/98
60c 271,793 3,500,000 12/4/98
61 Lock/27_Defeasance/93_0%/0 29,963 441,741 1.23 5,170,000 1/5/99 79.54
62 Lock/29_Defeasance/85_0%/6 30,134 455,371 1.26 5,400,000 7/17/98 74.55
- ------------------------------------------------------------------------------------------------------------------------------
63 Lock/26_Defeasance/94 29,114 454,631 1.30 5,550,000 1/20/99 71.08
64 Lock/25_Defeasance/92_0%/3 28,033 404,798 1.51 5,400,000 2/4/99 57.37
65 Lock/25_Defeasance/95 27,732 487,585 1.47 5,570,000 8/26/98 69.98
66 Lock/28_Defeasance/92 26,654 441,150 1.57 4,850,000 12/22/98 69.73
67 Lock/48_Defeasance/132_0%/36 35,305 591,405 1.40 1.35 6,400,000 8/1/98 59.27
- ------------------------------------------------------------------------------------------------------------------------------
68 Lock/27_Defeasance/207_0%/6 29,702 530,937 1.49 5,850,000 64.59
68a 97,742 1,100,000 9/2/98
68b 44,936 500,000 9/2/98
68c 108,779 1,200,000 9/2/98
68d 108,952 1,200,000 9/2/98
- ------------------------------------------------------------------------------------------------------------------------------
68e 43,242 600,000 9/2/98
68f 39,062 350,000 9/2/98
68g 88,224 900,000 9/2/98
69 Lock/26_Defeasance/94 27,272 391,037 1.19 4,750,000 1/26/99 79.16
70 Lock/25_Defeasance/92_0%/3 26,103 428,811 1.37 4,700,000 1/26/99 78.68
- ------------------------------------------------------------------------------------------------------------------------------
71 Lock/25_Defeasance/95 28,215 437,833 1.29 5,150,000 1/25/99 70.81
72 Lock/25_Defeasance/92_0%/3 25,022 361,465 1.20 4,550,000 3/18/99 79.07
73 Lock/26_Defeasance/94 25,084 375,669 1.25 4,250,000 2/17/99 79.90
74 Lock/27_Defeasance/90_0%/3 25,232 328,832 1.30 1.24 4,900,000 1/31/99 57.87
75 Lock/28_Defeasance/89_0%/3 25,098 391,684 1.30 4,550,000 12/3/98 74.50
- ------------------------------------------------------------------------------------------------------------------------------
76 Lock/25_Defeasance/92_0%/3 24,489 373,505 1.27 4,800,000 3/6/99 68.71
77 Lock/27_Defeasance/210_0%/3 25,109 389,911 1.29 4,700,000 11/12/98 68.31
78 Lock/25_Defeasance/95 24,173 361,964 1.25 4,400,000 11/20/98 70.39
79 Lock/27_Defeasance/90_0%/3 23,006 331,776 1.25 1.24 4,400,000 2/1/99 67.71
80 Lock/29_Defeasance/85_0%/6 19,269 474,622 2.05 5,500,000 8/24/98 56.09
- ------------------------------------------------------------------------------------------------------------------------------
81 Lock/29_Defeasance/85_0%/6 21,819 329,619 1.26 4,000,000 10/14/98 75.96
82 Lock/25_Defeasance/104_0%/3 21,881 328,079 1.25 4,000,000 1/26/99 74.96
83 Lock/26_Defeasance/91_0%/3 23,065 321,732 1.45 3,400,000 2/24/99 70.48
84 Lock/26_Defeasance/88_0%/6 23,675 347,344 1.22 4,000,000 3/22/99 74.85
85 Lock/26_Defeasance/91_0%/3 22,036 285,198 1.35 3,880,000 1/25/99 59.70
- ------------------------------------------------------------------------------------------------------------------------------
86 Lock/26_Defeasance/91_0%/3 21,457 322,775 1.25 4,000,000 2/1/99 72.41
87 Lock/27_Defeasance/207_0%/3 21,734 263,776 1.01 2,775,000 12/1/98 97.80
88 Lock/27_Defeasance/210_0%/3 21,054 318,921 1.26 3,600,000 11/18/98 74.78
89 Lock/26_Defeasance/94 18,468 269,257 1.22 3,200,000 1/29/99 78.80
90 Lock/29_Defeasance/85_0%/6 17,701 290,970 1.37 3,700,000 9/15/98 67.30
- ------------------------------------------------------------------------------------------------------------------------------
91 Lock/28_Defeasance/92 17,143 279,043 1.36 3,160,000 9/24/98 78.06
92 Lock/25_Defeasance/92_0%/3 16,898 290,015 1.43 3,100,000 3/11/99 77.37
93 Lock/28_Defeasance/89_0%/3 16,781 242,859 1.21 3,150,000 9/29/98 75.96
94 Lock/29_Defeasance/85_0%/6 17,380 270,159 1.30 3,035,000 78.78
94a 1,610,000 10/21/98
- ------------------------------------------------------------------------------------------------------------------------------
94b 1,425,000 10/21/98
95 Lock/28_Defeasance/206_0%/6 16,728 277,557 1.38 3,275,000 12/31/98 72.88
96 Lock/29_Defeasance/88_0%/3 16,980 254,291 1.25 3,100,000 11/9/98 73.93
97 Lock/26_Defeasance/91_0%/3 15,708 291,179 1.55 3,000,000 10/27/98 74.89
98 Lock/28_Defeasance/209_0%/3 18,418 385,666 1.75 6,400,000 12/9/98 34.13
- ------------------------------------------------------------------------------------------------------------------------------
99 Lock/27_Defeasance/93 15,527 281,157 1.51 2,900,000 7/10/98 74.85
100 Lock/26_Defeasance/94 15,230 222,627 1.22 3,000,000 1/5/99 70.95
101 Lock/25_Defeasance/95 14,362 217,166 1.26 2,900,000 2/9/99 68.93
102 Lock/27_Defeasance/90_0%/3 14,489 216,504 1.25 2,525,000 1/9/99 79.05
103 Lock/27_Defeasance/90_0%/3 14,750 224,786 1.27 1.24 2,650,000 1/31/99 74.86
- ------------------------------------------------------------------------------------------------------------------------------
104 Lock/27_Defeasance/90_0%/3 14,054 218,779 1.30 2,800,000 10/15/98 69.15
105 Lock/29_Defeasance/91 12,965 243,779 1.57 2,780,000 8/18/98 68.06
106 Lock/28_Defeasance/89_0%/3 14,921 234,549 1.31 2,800,000 65.79
106a 127,803 1,700,000 12/21/98
106b 106,746 1,100,000 12/21/98
- ------------------------------------------------------------------------------------------------------------------------------
107 Lock/27_Defeasance/90_0%/3 14,612 218,412 1.25 2,480,000 11/17/98 72.38
108 Lock/29_Defeasance/85_0%/6 11,771 176,142 1.25 2,300,000 10/21/98 74.69
109 Lock/27_Defeasance/90_0%/3 12,616 185,091 1.22 2,300,000 12/10/98 73.78
110 Lock/28_Defeasance/92 12,036 202,129 1.40 2,750,000 10/19/98 59.70
111 Lock/26_Defeasance/91_0%/3 12,464 190,794 1.28 2,420,000 2/8/99 65.98
- ------------------------------------------------------------------------------------------------------------------------------
112 Lock/27_Defeasance/90_0%/3 11,688 169,601 1.25 1.24 2,100,000 1/31/99 72.53
113 Lock/25_Defeasance/212_0%/3 12,245 147,025 1.00 1,750,000 12/1/98 82.79
114 Lock/27_Defeasance/90_0%/3 10,575 116,666 1.07 1.24 2,500,000 2/1/99 48.98
115 Lock/29_Defeasance/85_0%/6 10,444 285,563 2.28 1.53 3,200,000 6/1/98 43.49
116 Lock/25_Defeasance/154_0%/1 13,316 200,498 1.26 2,000,000 12/4/98 69.31
- ------------------------------------------------------------------------------------------------------------------------------
117 Lock/27_Defeasance/90_0%/3 9,454 146,730 1.29 1,850,000 1/13/99 70.14
118 Lock/28_Defeasance/89_0%/3 8,558 135,955 1.32 1,750,000 9/28/98 68.21
119 Lock/26_Defeasance/94 8,241 134,297 1.36 1,625,000 1/13/99 67.61
120 Lock/28_Defeasance/89_0%/3 8,567 135,728 1.32 1,450,000 12/16/98 74.66
121 Lock/27_Defeasance/87_0%/6 7,483 113,159 1.26 1,465,000 12/1/98 66.10
- ------------------------------------------------------------------------------------------------------------------------------
122 Lock/27_Defeasance/90_0%/3 4,750 56,927 1.25 1.24 925,000 2/1/99 55.22
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CUT-OFF
DATE
SCHEDULED BALANCE
MATURITY UNITS, PER SQ.
OR ARD CROSS - BEDS, FT. UNIT,
CONTROL DATE LTV COLLATERALIZED YEAR YEAR ROOMS, UNIT BED, PAD
NUMBER (%) LTV RATIO (%) BUILT RENOVATED SQFT DESCRIPTION OR ROOM ($) OCCUPANCY %
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 55.29 1973 1990 156,194 Sq Ft 640 100
2 68.87 1968/1990 1990/1998 458,430 Sq Ft 117 97
3 39.90 1992/1996/1998 396,460 Sq Ft 128 100
4 60.05 1985-1987 422,385 Sq Ft 85 98
5 72.55 1997-1998 263,452 Sq Ft 108 100
- -------------------------------------------------------------------------------------------------------------------------------
6 1998-1999 75,709 Sq Ft 355 100
7 38.57 1977 1997-1998 528 Rooms 50,189 70
8 59.93 1964 -1966 977 Units 25,771 94
9 55.65 1916 1984 163,400 Sq Ft 143 99
10 51.29 1967/1989/1990 522 Units 43,263 94
- -------------------------------------------------------------------------------------------------------------------------------
11 39.90 1991 1995 171,330 Sq Ft 128 100
12 49.30 1972 149,872 Sq Ft 133 96
13 29.18 1998 92,035 Sq Ft 214 100
14 60.54 1970/1972/1981 562 Units 33,338 93
15 67.33 528 Units 33,036
- -------------------------------------------------------------------------------------------------------------------------------
15a 1968 135 Units 99
15b 1960 39 Units 95
15c 1970 15 Units 100
15d 1977 262 Units 98
15e 1967 30 Units 100
- -------------------------------------------------------------------------------------------------------------------------------
15f Early 1960's 47 Units 100
16 58.09 1989 348 Units 47,666 95
17 40.51 1987-1988 1998 467 Rooms 33,160 74
18 68.04 1986 311 Units 44,990 100
19 53.14 1986 384 Units 36,041 96
- -------------------------------------------------------------------------------------------------------------------------------
20 61.91 1951 1996 507 Units 24,242 96
21 17.56 453,024 Sq Ft 27 100
22 58.57 1997 76,077 Sq Ft 141 100
23 63.14 1986 360 Units 29,700 89
24 64.28 245 Units 43,138
- -------------------------------------------------------------------------------------------------------------------------------
24a 1989-1991 64 Units 98
24b 1994-1996 1998 143 Units 99
24c 1987-1991 38 Units 97
25 16.37 1998 125,225 Sq Ft 73 100
27 65.39 1925 1995 201 Units 44,250 100
- -------------------------------------------------------------------------------------------------------------------------------
28 66.26 1998-99 86,424 Sq Ft 99 91
29 64.48 1984 1997 86,331 Sq Ft 89 100
30 69.22 199 Units 38,234
30a Circa 1880 1997-1998 15 Units 100
- -------------------------------------------------------------------------------------------------------------------------------
30b Circa 1880 1990/1997 6 Units 100
30c Circa 1880 1991 8 Units 100
30d Circa 1880 1988 6 Units 100
30e Circa 1880 1986/1989/1997 17 Units 100
30f Circa 1880 1990 8 Units 100
- -------------------------------------------------------------------------------------------------------------------------------
30g Circa 1880 1986/1997 6 Units 100
30h Circa 1880 1989/1997 5 Units 100
30i Circa 1880 1987/1997 10 Units 100
30j Circa 1880 1988/1990 6 Units 100
30k Circa 1880 1986/1990/1997 6 Units 100
- -------------------------------------------------------------------------------------------------------------------------------
30l Circa 1880 1997 6 Units 100
30m Circa 1880 1988/1997 12 Units 100
30n Circa 1880 1997 8 Units 100
30o Circa 1880 1993/1995 6 Units 100
30p Circa 1880 1989 11 Units 100
- -------------------------------------------------------------------------------------------------------------------------------
30q Circa 1880 1992 8 Units 100
30r Circa 1880 1990 5 Units 100
30s Circa 1880 1996-1997 12 Units 100
30t Circa 1880 1993 6 Units 100
30u Circa 1880 1998 11 Units 100
- -------------------------------------------------------------------------------------------------------------------------------
30v Circa 1880 1997 6 Units 100
30w Circa 1880 1993 6 Units 100
30x Circa 1880 1992/1997 9 Units 100
31 65.90 1970 1992-1993 97,869 Sq Ft 77 88
32 29.52 1975/1984 188,385 Sq Ft 40 97
- -------------------------------------------------------------------------------------------------------------------------------
33 46.45 1986/1992 108,533 Sq Ft 67 100
34 62.48 1995 42,149 Sq Ft 172 100
35 61.42 1952 1996 504 Units 14,374 96
36 64.51 1989 112,762 Sq Ft 63 94
37 54.18 1995-1996 120 Rooms 57,385 73
- -------------------------------------------------------------------------------------------------------------------------------
38 65.63 1982 184,894 Sq Ft 36 87
39 68.02 1975 1996 72,000 Sq Ft 83 100
40 61.94 65.72 81,609 Sq Ft 73
40a Circa 1977 29,848 Sq Ft 100
40b Circa 1984 51,761 Sq Ft 100
- -------------------------------------------------------------------------------------------------------------------------------
41 60.60 1928 1996 88 Units 67,564 97
42 58.77 1968 51,244 Sq Ft 113 88
43 66.01 1973/1982/1986 72,553 Sq Ft 78 100
44 64.64 1853/1978/1995 179,864 Sq Ft 31 100
45 60.24 1968 1998 90,651 Sq Ft 60 95
- -------------------------------------------------------------------------------------------------------------------------------
46 64.29 1906 1961-62 / 1981-84 31,537 Sq Ft 170 97
47 61.17 1970 208,736 Sq Ft 26 89
48 66.42 1983 106,079 Sq Ft 50 93
49 66.45 1920's 1990 17,760 Sq Ft 281 100
50 56.58 1981 1988/1991 180 Rooms 26,620 78
- -------------------------------------------------------------------------------------------------------------------------------
51 64.28 1987 27,975 Sq Ft 167 100
52 65.54 1952/1970's 1995/1998 154,098 Sq Ft 30 100
53 54.78 1920's -1940's 1997-1999 55,559 Sq Ft 83 100
54 53.25 1984 1994/1995/1998 193 Units 23,639 90
55 63.44 1998 32,493 Sq Ft 138 100
- -------------------------------------------------------------------------------------------------------------------------------
56 82.97 1967 235 Units 19,078 96
57 1999 96,000 Sq Ft 47 100
58 53.00 1989-90 49,704 Sq Ft 88 98
59 68.94 1965 1998/1999 220 Units 19,519 95
60 65.85 24 Units 171,396
- -------------------------------------------------------------------------------------------------------------------------------
60a 1897 1990 8 Units 100
60b 1903 1990 4 Units 100
60c 1894/1909 1994 12 Units 100
61 69.78 1968/1971 154 Units 26,702 100
62 59.92 1970/1987 114,268 Sq Ft 35 100
- -------------------------------------------------------------------------------------------------------------------------------
63 62.50 1979 58,562 Sq Ft 67 98
64 63.08 1991 154,647 Sq Ft 25 86
65 61.00 1950's/1983-1987 1995 92,737 Sq Ft 42 95
66 68.75 1981-1986 1995 147 Units 26,134 95
67 56.58 1989 93 Rooms 40,788 85
- -------------------------------------------------------------------------------------------------------------------------------
68 187 Units 20,207
68a 1925 1988 32 Units 100
68b 1922 1988 20 Units 95
68c 1925 1988 32 Units 94
68d 1925 1988 35 Units 100
- -------------------------------------------------------------------------------------------------------------------------------
68e 1925 1988 20 Units 85
68f 1925 1988 16 Units 100
68g 1925 1988 32 Units 97
69 69.34 1978 90 Units 41,776 97
70 68.47 1974 1998 144 Units 25,679 95
- -------------------------------------------------------------------------------------------------------------------------------
71 57.27 1988 1998 17,107 Sq Ft 213 100
72 68.58 1965 1986/1988 120 Units 29,981 91
73 70.27 1982 172 Units 19,742 100
74 61.02 63.89 1965/1966/1968/1969 163,512 Sq Ft 21 90
75 65.65 60s/70s 1998 33,700 Sq Ft 101 100
- -------------------------------------------------------------------------------------------------------------------------------
76 60.46 1974 126,952 Sq Ft 26 100
77 26.27 1987 26,280 Sq Ft 122 100
78 57.08 1986 46,346 Sq Ft 67 100
79 61.96 63.89 1971/1974 239,223 Sq Ft 13 100
80 47.60 1982 46,038 Sq Ft 67 100
- -------------------------------------------------------------------------------------------------------------------------------
81 66.53 1989 80 Units 37,979 98
82 64.31 1998-99 29,000 Sq Ft 103 100
83 78.18 1988 35,564 Sq Ft 84 82
84 60.97 1839 1988 102 Units 29,353 90
85 66.06 1999 18,000 Sq Ft 161 78
- -------------------------------------------------------------------------------------------------------------------------------
86 63.72 1968-1969 1997-1998 51,388 Sq Ft 56 100
87 21.25 1998 12,240 Sq Ft 222 100
88 28.76 1974 1991-1992 89,178 Sq Ft 30 100
89 69.18 1988 62 Units 40,672 95
90 58.82 1908 1996 61 Units 40,823 100
- -------------------------------------------------------------------------------------------------------------------------------
91 67.85 Mid 60s 84 Units 29,364 98
92 67.30 1971 1994 79 Units 30,361 100
93 67.30 1998 23,500 Sq Ft 102 100
94 69.18 35,798 Sq Ft 67
94a 1988-1990 1995 18,118 Sq Ft 93
- -------------------------------------------------------------------------------------------------------------------------------
94b 1987/1989/1991 17,680 Sq Ft 96
95 25.89 1998 15,120 Sq Ft 158 100
96 65.18 1988 24,832 Sq Ft 92 94
97 65.08 1930 62 Units 36,237 100
98 1896 1982 119,473 Sq Ft 18 94
- -------------------------------------------------------------------------------------------------------------------------------
99 65.40 1993-1994 13,074 Sq Ft 166 100
100 61.97 1970-1971 1991/1994/1998 96 Units 22,172 100
101 60.22 1972 1997 142 Units 14,076 86
102 69.29 1965/1996 62 Units 32,195 98
103 65.96 63.89 1979 90,400 Sq Ft 22 100
- -------------------------------------------------------------------------------------------------------------------------------
104 60.61 1945/1980/1981 1979 27,158 Sq Ft 71 100
105 59.00 Early-mid 20s 99 Units 19,112 99
106 54.06 48,122 Sq Ft 38
106a 1982 26,922 Sq Ft 96
106b 1981 21,200 Sq Ft 96
- -------------------------------------------------------------------------------------------------------------------------------
107 59.49 1984 1995 137,736 Sq Ft 13 100
108 64.75 1968 1975 52,363 Sq Ft 33 100
109 65.00 1982 81 Units 20,949 97
110 47.65 1993 15,352 Sq Ft 107 96
111 53.55 1930's 1996-1997 11,409 Sq Ft 140 100
- -------------------------------------------------------------------------------------------------------------------------------
112 65.96 63.89 1978 66,700 Sq Ft 24 100
113 1998 10,972 Sq Ft 132 100
114 50.13 63.89 1972 84,872 Sq Ft 17 87
115 34.98 65.72 1979-1981 12,956 Sq Ft 107 100
116 1958 25,096 Sq Ft 55 94
- -------------------------------------------------------------------------------------------------------------------------------
117 61.53 1985 10,981 Sq Ft 118 100
118 54.08 1979 72 Units 16,579 92
119 59.65 1987 21,030 Sq Ft 52 95
120 60.95 1980 28,077 Sq Ft 39 90
121 58.71 1987 2,600 Sq Ft 372 100
- -------------------------------------------------------------------------------------------------------------------------------
122 60.85 63.89 1972 46,893 Sq Ft 14 100
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LARGEST
ANNUAL ANNUAL LARGEST TENANT
CONTROL OCCUPANCY OWNERSHIP REQUIRED REQUIRED LARGEST TENANT LEASE
NUMBER DATE INTEREST LOCKBOX RESERVES TI/LC TENANT SQ FT EXPIRATION
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 11/30/98 Fee Simple Modified, In-Place 23,429 Modell's Sporting 20,095 1/31/10
2 12/9/98 Fee Simple Modified, In-Place 67,508 781,425 Oracle Corporation 91,701 7/31/00
3 12/1/98 Fee Simple Hard, In-Place Ingram Micro, Inc. 396,460 7/10/15
4 11/9/98 Fee Simple Modified, Springing 506,105 Anasazi, Inc. 70,434 6/24/03
5 2/15/99 Fee Simple 30,654 10,680 Sports Authority 43,091 11/30/13
- ------------------------------------------------------------------------------------------------------------------------------------
6 4/7/98 Fee Simple Hard, In-Place University of Nevada 75,709 1/31/19
7 3/19/99 Leasehold Hard, Springing 925,287
8 12/1/98 Fee Simple 421,087
9 11/1/98 Fee Simple 19,608 265,380 Magno Sound, Inc. 85,434 12/31/01
10 2/28/99 Fee Simple 145,116
- ------------------------------------------------------------------------------------------------------------------------------------
11 12/1/98 Fee Simple Hard, In-Place Ingram Micro, Inc. 171,330 7/10/15
12 11/1/98 Fee Simple Hard, In-Place 44,962 295,706 Watkins, Schreer, Stein & Co. 8,194 1/31/03
13 2/20/99 Fee Simple Hard, In-Place CarMax Auto Superstores, Inc. 92,035 4/30/21
14 3/31/99 Fee Simple 140,500
15 Fee Simple Modified, In-Place 118,800
- ------------------------------------------------------------------------------------------------------------------------------------
15a 10/23/98
15b 10/23/98
15c 10/23/98
15d 10/23/98
15e 10/23/98
- ------------------------------------------------------------------------------------------------------------------------------------
15f 10/23/98
16 2/28/99 Fee Simple 95,004
17 1/1/99 Fee Simple Hard, Springing
18 2/28/99 Leasehold Modified, In-Place 66,864
19 2/28/99 Fee Simple 96,000
- ------------------------------------------------------------------------------------------------------------------------------------
20 1/31/99 Fee Simple 123,756
21 2/25/99 Fee Simple Hard, In-Place Costco Wholesale Corporation 453,024 2/25/23
22 12/2/98 Fee Simple 11,412 111,912 State Farm Insurance Company 15,009 4/30/02
23 2/28/99 Fee Simple 90,000
24 Fee Simple 61,630
- ------------------------------------------------------------------------------------------------------------------------------------
24a 3/1/99
24b 3/1/99
24c 3/1/99
25 12/23/98 Fee Simple 12,525 90,000 Bal Seal Engineering Co., Inc. 125,225 1/16/19
27 12/31/98 Fee Simple 50,250
- ------------------------------------------------------------------------------------------------------------------------------------
28 2/1/99 Fee Simple 8,642 24,000 Super Fresh Food Markets, Inc. 53,979 11/1/18
29 12/7/98 Fee Simple Hard, In-Place 17,266 125,000 Lockheed Martin Corp. 86,331 11/30/02
30 Fee Simple 49,750
30a 11/1/98
- ------------------------------------------------------------------------------------------------------------------------------------
30b 11/1/98
30c 11/1/98
30d 11/1/98
30e 11/1/98
30f 11/1/98
- ------------------------------------------------------------------------------------------------------------------------------------
30g 11/1/98
30h 11/1/98
30i 11/1/98
30j 11/1/98
30k 11/1/98
- ------------------------------------------------------------------------------------------------------------------------------------
30l 11/1/98
30m 11/1/98
30n 11/1/98
30o 11/1/98
30p 11/1/98
- ------------------------------------------------------------------------------------------------------------------------------------
30q 11/1/98
30r 11/1/98
30s 11/1/98
30t 11/1/98
30u 11/1/98
- ------------------------------------------------------------------------------------------------------------------------------------
30v 11/1/98
30w 11/1/98
30x 11/1/98
31 2/1/99 Fee Simple 9,787 Farmer Jack/A&P 51,107 5/31/13
32 3/29/99 Fee Simple 54,000 39,000 Geneva Woods Pharmacy 18,000 5/31/05
- ------------------------------------------------------------------------------------------------------------------------------------
33 2/10/99 Fee Simple Hogan Automotive Group 108,533 10/31/00
34 10/1/98 Both Fee Simple Modified, In-Place 6,324 159,000 Happy Family 5,000 9/7/05
and Leasehold
35 2/28/99 Fee Simple 141,120
36 11/30/98 Fee Simple Modified, In-Place 18,042 35,004 Vons Market/Scolari's Market 39,498 6/30/13
37 11/30/98 Fee Simple Hard, Springing 136,026
- ------------------------------------------------------------------------------------------------------------------------------------
38 1/27/99 Fee Simple 16,065 57,143 Burlington Coat Factory 85,018 8/31/07
39 6/30/98 Fee Simple 18,720 50,000 Worldgate Communications 72,000 6/30/09
40 Fee Simple Modified, In-Place 60,535
40a 11/1/98 Boot Barn 10,156 9/30/99
40b 11/1/98 TCG, Inc. 10,240 7/1/04
- ------------------------------------------------------------------------------------------------------------------------------------
41 2/28/99 Fee Simple 24,464
42 9/30/98 Fee Simple Modified, Springing 12,811 39,378 Von's Grocery Co. 27,070 1/31/03
43 2/1/99 Fee Simple Modified, In-Place 9,432 21,545 Epicenter Club 41,321 5/31/03
44 11/12/98 Fee Simple 17,986 411,384 K-Mart 68,337 8/31/03
45 2/1/99 Fee Simple 16,320 28,831 CMC Virginia Club 24,500 12/1/13
- ------------------------------------------------------------------------------------------------------------------------------------
46 3/1/99 Fee Simple DPR Construction 9,281 3/31/07
47 1/31/99 Fee Simple 41,747 137,856 Sabel TV Services, Inc. 14,095 11/30/02
48 2/9/99 Fee Simple 19,094 53,301 Hannaford Brother's 33,000 4/30/06
49 12/8/98 Fee Simple 3,552 30,854 Tommorrow 1,480 2/28/01
50 11/30/98 Fee Simple 108,000
- ------------------------------------------------------------------------------------------------------------------------------------
51 3/1/99 Both Fee Simple 7,648 26,796 Blockbuster Video 4,950 12/31/02
and Leasehold
52 2/5/99 Fee Simple 33,148 Roller Bearing Co. of America 90,921 12/31/08
53 2/1/99 Fee Simple Hard, Springing 8,340 24,672 Protozoa 11,900 12/1/01
54 10/14/98 Fee Simple 40,140
55 3/12/99 Fee Simple Hard, In-Place 3,252 4,164 Disney Regional Entertainment 19,993 1/15/14
- ------------------------------------------------------------------------------------------------------------------------------------
56 10/30/98 Fee Simple 47,000
57 2/19/99 Fee Simple 6,318 Preferred Freezer Services 96,000 1/30/14
58 12/15/98 Fee Simple 7,452 20,245 State Water Quality Control 20,631 6/30/03
59 2/22/99 Fee Simple 55,000
60 Fee Simple Modified, In-Place 18,701
- ------------------------------------------------------------------------------------------------------------------------------------
60a 11/11/98
60b 11/11/98
60c 10/30/98 AAA Corporate Rentals, Inc. 14,000 6/30/10
61 1/1/99 Fee Simple
62 11/19/98 Fee Simple 11,427 Bamboo Abbott, Inc. 114,268 10/31/13
- ------------------------------------------------------------------------------------------------------------------------------------
63 3/1/99 Fee Simple 11,127 44,085 The Bank of Orange County 7,493 12/31/00
64 2/19/99 Fee Simple 9,962 6,160 K-Mart (Ground Lease) 104,835 2/1/16
65 12/1/98 Fee Simple 18,547 86,754 J&J Hardware 9,920 10/30/01
66 2/8/99 Fee Simple 36,750
67 11/1/98 Fee Simple 57,600
- ------------------------------------------------------------------------------------------------------------------------------------
68 Fee Simple 51,482
68a 11/1/98
68b 11/1/98
68c 11/1/98
68d 11/1/98
- ------------------------------------------------------------------------------------------------------------------------------------
68e 11/1/98
68f 11/1/98
68g 11/1/98
69 2/2/99 Fee Simple 25,920
70 2/12/99 Fee Simple 38,016
- ------------------------------------------------------------------------------------------------------------------------------------
71 11/1/98 Fee Simple 1,882 525 Post Production, Inc. 17,107 4/30/06
72 2/28/99 Fee Simple 38,880
73 3/14/99 Fee Simple 42,312
74 10/23/98 Fee Simple 32,700 Horng Chien, Inc. 16,326 3/31/99
75 12/18/98 Fee Simple 6,768 30,000 Temple University 11,248 10/31/03
- ------------------------------------------------------------------------------------------------------------------------------------
76 3/6/99 Fee Simple Modified, In-Place 75,000 Harte-Hanks Response Mgt. 126,952 7/31/03
77 1/1/99 Fee Simple 4,205 46,000 Dendrite International, Inc. 26,280 10/31/03
78 2/17/99 Fee Simple 6,952 26,127 Entenmanns 4,800 3/31/99
79 10/23/98 Fee Simple 23,928 International Distribution 197,811 12/31/01
80 10/14/98 Fee Simple 20,257 42,349 Renaissance Printing 10,069 7/31/08
- ------------------------------------------------------------------------------------------------------------------------------------
81 11/11/98 Fee Simple 20,004
82 2/17/99 Fee Simple 2,900 20,756 Petco Animal Supplies, Inc. 18,000 1/31/14
83 12/16/98 Fee Simple Modified, In-Place 7,113 27,222 Merrill Lynch 7,826 6/30/03
84 12/1/98 Fee Simple 17,486
85 2/1/99 Fee Simple 1,620 17,709 Gateway 2000 Country Stores 8,000 11/30/03
- ------------------------------------------------------------------------------------------------------------------------------------
86 1/1/99 Fee Simple 12,852 75,000 BellSouth Communication 44,974 6/30/03
87 12/1/98 Fee Simple Hard, In-Place 1,213 Rite Aid of New York, Inc. 12,240 11/1/18
88 2/1/99 Fee Simple 13,377 44,600 OMG Fidelity, Inc. 89,178 12/31/03
89 1/4/99 Fee Simple
90 11/1/98 Fee Simple 15,250 Frame Masters 1,197 1/1/03
- ------------------------------------------------------------------------------------------------------------------------------------
91 10/23/98 Fee Simple 23,184
92 3/25/99 Fee Simple
93 9/29/98 Fee Simple 1,175 14,693 Office Max, Inc. 23,500 10/31/13
94 Fee Simple 11,813 57,684
94a 10/1/98 McBurnett & Szabolcsi 3,015 4/1/01
- ------------------------------------------------------------------------------------------------------------------------------------
94b 10/1/98 Mahoney Brewer 2,473 5/31/01
95 1/29/99 Fee Simple Hard, In-Place 2,268 Walgreen's 15,120 3/25/19
96 12/21/98 Fee Simple 3,720 24,600 Nova Care 7,935 11/30/00
97 2/24/99 Fee Simple Modified, In-Place 15,792 Quick Check 800 4/30/00
98 12/1/98 Fee Simple 22,704 Starck Concepts 26,090 7/31/01
- ------------------------------------------------------------------------------------------------------------------------------------
99 7/10/98 Fee Simple Bertucci's 7,200 6/7/13
100 1/31/99 Fee Simple 28,896
101 3/11/99 Fee Simple 35,500
102 12/30/98 Fee Simple 16,033
103 10/23/98 Fee Simple 9,036 GHA Plastic (LNP Engineering) 40,590 6/30/00
- ------------------------------------------------------------------------------------------------------------------------------------
104 12/8/98 Fee Simple Hard, In-Place 8,419 29,020 Pyewacket Restaurant 6,752 12/31/04
105 11/1/98 Fee Simple 24,750
106 Fee Simple 8,853
106a 1/11/99
106b 1/11/99
- ------------------------------------------------------------------------------------------------------------------------------------
107 12/10/98 Fee Simple Hard, In-Place 48,500 27,766 Randy's Travel Town 86,999 12/31/13
108 11/23/98 Fee Simple 7,854 33,849 Home Accents 32,000 12/31/04
109 12/23/98 Fee Simple 25,353
110 10/19/98 Fee Simple Modified, In-Place 2,111 20,209 Dr. Waggoner, DDS 3,200 12/31/00
111 2/24/99 Fee Simple 1,711 Ethan Allen, Inc. 8,357 12/28/05
- ------------------------------------------------------------------------------------------------------------------------------------
112 10/23/98 Fee Simple 15,336 Atec, Inc. 11,220 11/30/98
113 11/25/98 Fee Simple Hard, In-Place Arbor Drug Store/CVS 10,972 11/15/18
114 10/23/98 Fee Simple 19,524 The Houston File Room II, Inc. 26,565 1/31/03
115 12/1/98 Fee Simple Modified, Springing 2,203 11,749 Kearney Mesa Toyota 12,956 5/31/07
116 3/1/99 Fee Simple 3,764 28,826 Dept of General Services 15,735 12/4/06
- ------------------------------------------------------------------------------------------------------------------------------------
117 1/1/99 Fee Simple 2,640 5,568 Bekhor Laundry 2,304 8/31/04
118 11/12/98 Fee Simple 18,504
119 1/13/99 Fee Simple 5,047 15,676 Cigna Dental 4,850 12/31/03
120 12/15/98 Fee Simple Modified, In-Place 6,456 15,228 Big Video 4,788 8/31/01
121 2/1/99 Fee Simple Modified, In-Place 7,348 Gomer Inc dba Action Discount 1,910 5/28/05
- ------------------------------------------------------------------------------------------------------------------------------------
122 10/23/98 Fee Simple 12,192 United DC, Inc. (Van Lines) 46,893 5/31/01
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Control
Number Loan Number Property Name City Property County
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
8 GMAC5060 Fairfield Towers Condominium Apartments Brooklyn Kings
10 GMAC5900 Boca Palms Apartments Boca Raton Palm Beach
14 GMAC5940 Lakewood Hills Apartments Harrisburg Dauphin
15 GMAC4700 MIDCON Apartment Portfolio
15a GMAC4700-A Hamden Ridge Apartments Hamden New Haven
- ------------------------------------------------------------------------------------------------------------------------------------
15b GMAC4700-B Hampton House Apartments West Haven New Haven
15c GMAC4700-C Evergreen Apartments Hamden New Haven
15d GMAC4700-D Ridgefield Apartments Middletown Middlesex
15e GMAC4700-E Holiday Apartments West Haven New Haven
15f GMAC4700-F Jefferson Arms Apartments Hamden New Haven
- ------------------------------------------------------------------------------------------------------------------------------------
16 GMAC5970 Palms of Pembroke Apartments Pembroke Pines Broward
18 GMAC5690 Huntington Westminster Apartments Westminster Orange
19 GMAC5910 Cobblestone Apartment Homes Pompano Beach Broward
20 GMAC5960 The Marylander Apartments Baltimore Baltimore
23 GMAC5920 Hidden Lakes Apartments Miamisburg Montgomery
- ------------------------------------------------------------------------------------------------------------------------------------
24 GMAC5840 The Prather Portfolio
24a GMAC5840-A The Village Apartments Columbia Boone
24b GMAC5840-B Providence Hill Apartments Columbia Boone
24c GMAC5840-C Lakeside I & II Duplexes Columbia Boone
27 GMAC5380 Briarcliff Summit Apartments Atlanta Fulton
- ------------------------------------------------------------------------------------------------------------------------------------
28 GMAC4260 Center City Apartment Portfolio
30a GMAC4260-A 2304-08 Locust Street Apartments Philadelphia Philadelphia
30b GMAC4260-B 2321 Spruce Street Philadelphia Philadelphia
30c GMAC4260-C 128 S. 22nd Street Philadelphia Philadelphia
30d GMAC4260-D 280 S. 23rd Street Philadelphia Philadelphia
- ------------------------------------------------------------------------------------------------------------------------------------
30e GMAC4260-E 2015-17 Locust Street Philadelphia Philadelphia
30f GMAC4260-F 2019 Spruce Street Philadelphia Philadelphia
30g GMAC4260-G 2034-36 Pine Street Philadelphia Philadelphia
30h GMAC4260-H 2122 Pine Street Philadelphia Philadelphia
30i GMAC4260-I 2131-33 Pine Street Philadelphia Philadelphia
- ------------------------------------------------------------------------------------------------------------------------------------
30j GMAC4260-J 420 S. 15th Street Philadelphia Philadelphia
30k GMAC4260-K 330 S. 17th Street Philadelphia Philadelphia
30l GMAC4260-L 735 Spruce Street Philadelphia Philadelphia
30m GMAC4260-M 1009-11 Spruce Street Philadelphia Philadelphia
30n GMAC4260-N 1127 Spruce Street Philadelphia Philadelphia
- ------------------------------------------------------------------------------------------------------------------------------------
30o GMAC4260-O 614 Pine Street Philadelphia Philadelphia
30p GMAC4260-P 623-25 Pine Street Philadelphia Philadelphia
30q GMAC4260-Q 920 Clinton Street Philadelphia Philadelphia
30r GMAC4260-R 2009 Mt. Vernon Street Philadelphia Philadelphia
30s GMAC4260-S 2219-21 Spring Garden Philadelphia Philadelphia
- ------------------------------------------------------------------------------------------------------------------------------------
30t GMAC4260-T 325 Pine Street Philadelphia Philadelphia
30u GMAC4260-U 532-34 Pine Street Philadelphia Philadelphia
30v GMAC4260-V 607-09 South 3rd Street Philadelphia Philadelphia
30w GMAC4260-W 614 S. 3rd Street Philadelphia Philadelphia
30x GMAC4260-X 718-22 S. 7th Street Philadelphia Philadelphia
- ------------------------------------------------------------------------------------------------------------------------------------
35 GMAC5930 Kenwood Gardens Apartments Toledo Lucas
41 GMAC5950 2031 Locust Street Apartments Philadelphia Philadelphia
54 GMAC3890 Downing Place Townhouses Lexington Fayette
56 GMAC4810 Twin Bridge Apartments Euless Tarrant
59 GMAC5650 Solomon's Court and Esther's Garden Apartments Dallas Dallas
- ------------------------------------------------------------------------------------------------------------------------------------
60 GMAC2060 Sheafe St./ Lewis St./ Milk St.
60a GMAC2060-A Sheafe Condominiums Boston Suffolk
60b GMAC2060-B 36-38 Lewis St. Apt. Building Boston Suffolk
61 GMAC5090 Ravenwood Highlander Apartments Clive Polk
66 GMAC4920 Oaks Apartments Balch Springs Dallas
- ------------------------------------------------------------------------------------------------------------------------------------
68 GMAC3470 Cataldo-Pane Multifamily Portfolio
68a GMAC3470-A 957 67th Street Brooklyn Kings
68b GMAC3470-B 88 Van Sicklen Street Brooklyn Kings
68c GMAC3470-C 8785 Bay 16th Street Brooklyn Kings
68d GMAC3470-D 7311 4th Avenue Brooklyn Kings
- ------------------------------------------------------------------------------------------------------------------------------------
68e GMAC3470-E 805 Avenue O Brooklyn Kings
68f GMAC3470-F 1946 70th Street Brooklyn Kings
68g GMAC3470-G 7301 4th Avenue Brooklyn Kings
69 GMAC5180 Newporter Apartments Fresno Fresno County
70 GMAC5430 Timber Line Apartments Kansas City Clay
- ------------------------------------------------------------------------------------------------------------------------------------
72 GMAC5630 Woodland Grove Apartments Laurel Prince Georges County
73 GMAC5680 Country Place Apartments Abilene Taylor
81 GMAC4760 Riverine Apartments Traverse City Grand Traverse
84 GMAC1880 Lock Mill Plaza Concord Cabarrus
89 GMAC5130 Camelot Square Apartments (CA) Bakersfield Kern
- ------------------------------------------------------------------------------------------------------------------------------------
90 GMAC4530 Polk Street Apartments San Francisco San Francisco
91 GMAC4470 Rue Versailles Apartments Royal Oak Township Oakland
92 GMAC5800 Garden Center Apartments Broomfield Boulder
97 GMAC4270 547-557 Flatbush Avenue Brooklyn Kings
100 GMAC5170 Mark Court Apartments Newport Washington
- ------------------------------------------------------------------------------------------------------------------------------------
101 GMAC5370 Brendenwood Apartments South Bend St. Joseph
102 GMAC5070 La Marquesa Apartments Van Nuys Los Angeles
105 GMAC3330 William Realty Portfolio East Orange Essex
109 GMAC5160 Highland Village Apartments LaGrange Troup
118 GMAC3900 Fountain Ridge Apartments Sioux Falls Minnehaha
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Studios
Initial Initial Pool Utilities Avg
Control Pool Balance Per Paid by Rent Per
Number State Zip Code Balance ($) Unit ($) Tenant # Units Mos. ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
8 New York 11207 25,177,781 25,771 Gas/Electricity/Cable 85 550
10 Florida 33428 22,583,360 43,263 Gas/Electricity/Cable
14 Pennsylvania 17109 18,736,195 33,338 Gas/Electricity/Cable
15 17,443,028 33,036
15a Connecticut 06514 Electricity/Cable
- ------------------------------------------------------------------------------------------------------------------------------------
15b Connecticut 06516 Electricity/Cable 5 450
15c Connecticut 06518 Electricity/Cable
15d Connecticut 06457 Gas/Electricity/Cable 100 502
15e Connecticut 06516 Electricity/Cable
15f Connecticut 06518 Electricity/Cable
- ------------------------------------------------------------------------------------------------------------------------------------
16 Florida 33025 16,587,778 47,666 Electricity/Cable
18 California 92683 13,992,012 44,990 Gas/Electricity/Cable 31 550
19 Florida 33069 13,839,803 36,041 Electricity/Cable
20 Maryland 21218 12,290,944 24,242 Electricity/Cable 326 483
23 Ohio 45342 10,692,122 29,700 Gas/Electricity/Cable 5 495
- ------------------------------------------------------------------------------------------------------------------------------------
24 10,568,731 43,138
24a Missouri 65201 Gas/Electricity/Cable
24b Missouri 65201 Gas/Electricity
24c Missouri 65201 Gas/Electricity/Cable
27 Georgia 30306 8,894,345 44,250 89 648
- ------------------------------------------------------------------------------------------------------------------------------------
28 7,608,624 38,234
30a Pennsylvania 19103 Electricity/Cable 12 533
30b Pennsylvania 19103 Cable 2 550
30c Pennsylvania 19103 Gas/Electricity/Cable 3 533
30d Pennsylvania 19103 Gas/Electricity/Cable 1 500
- ------------------------------------------------------------------------------------------------------------------------------------
30e Pennsylvania 19103 Gas/Electricity/Cable 9 492
30f Pennsylvania 19103 Gas/Electricity/Cable 3 548
30g Pennsylvania 19103 Electricity/Cable 2 400
30h Pennsylvania 19103 Electricity/Cable
30i Pennsylvania 19103 Gas/Electricity/Cable 2 470
- ------------------------------------------------------------------------------------------------------------------------------------
30j Pennsylvania 19146 Gas/Electricity/Cable 1 410
30k Pennsylvania 19103 Gas/Electricity/Cable 4 513
30l Pennsylvania 19106 Gas/Electricity/Cable 2 500
30m Pennsylvania 19107 Gas/Electricity/Cable 8 470
30n Pennsylvania 19107 Gas/Electricity/Cable 4 459
- ------------------------------------------------------------------------------------------------------------------------------------
30o Pennsylvania 19106 Gas/Electricity/Cable 1 450
30p Pennsylvania 19106 Electricity/Cable
30q Pennsylvania 19107 Gas/Electricity/Cable 1 450
30r Pennsylvania 19130 Electricity/Cable 2 550
30s Pennsylvania 19130 Gas/Electricity/Cable 7 529
- ------------------------------------------------------------------------------------------------------------------------------------
30t Pennsylvania 19106 Gas/Electricity/Cable 1 500
30u Pennsylvania 19106 Gas/Electricity/Cable
30v Pennsylvania 19147 Gas/Electricity/Cable
30w Pennsylvania 19147 Gas/Electricity/Cable
30x Pennsylvania 19147 Gas/Electricity/Cable 6 492
- ------------------------------------------------------------------------------------------------------------------------------------
35 Ohio 43623 7,244,662 14,374 Gas/Electricity/Cable
41 Pennsylvania 19103 5,945,619 67,564 Electricity/Cable 1 505
54 Kentucky 40517 4,562,409 23,639 Electricity/Cable
56 Texas 76053 4,483,267 19,078 Electricity
59 Texas 75232 4,294,076 19,519 Cable
- ------------------------------------------------------------------------------------------------------------------------------------
60 4,113,492 171,396
60a Massachusetts 02109
60b Massachusetts 02109
61 Iowa 50325 4,112,079 26,702 Gas/Electricity/Cable 4 385
66 Texas 75180 3,841,713 26,134 Gas/Electricity/Cable
- ------------------------------------------------------------------------------------------------------------------------------------
68 3,778,745 20,207
68a New York 11219 Electricity/Cable
68b New York 11223 Electricity
68c New York 11214 Electricity
68d New York 11209 Electricity
- ------------------------------------------------------------------------------------------------------------------------------------
68e New York 11204 Electricity/Cable
68f New York 11204 Electricity
68g New York 11209 Electricity/Cable
69 California 93711 3,759,878 41,776 Electricity/Cable
70 Missouri 64116 3,697,729 25,679
- ------------------------------------------------------------------------------------------------------------------------------------
72 Maryland 20708 3,597,701 29,981 Gas/Electricity/Cable
73 Texas 79602 3,395,557 19,742 Electricity 72 280
81 Michigan 49684 3,038,295 37,979 Gas/Electricity/Cable/Trash
84 North Carolina 28025 2,994,005 29,353 Electricity/Cable
89 California 93309 2,521,637 40,672 Gas/Electricity/Cable
- ------------------------------------------------------------------------------------------------------------------------------------
90 California 94109 2,490,222 40,823 Cable 45 560
91 Michigan 48220 2,466,561 29,364 Electricity/Cable
92 Colorado 80038 2,398,519 30,361 Electricity
97 New York 11225 2,246,690 36,237 Gas/Electricity/Cable 12 505
100 Minnesota 55055 2,128,514 22,172 Gas/Electricity/Cable 3 390
- ------------------------------------------------------------------------------------------------------------------------------------
101 Indiana 46615 1,998,830 14,076 Gas/Electricity/Cable
102 California 91406 1,996,119 32,195 Electricity/Cable 12 431
105 New Jersey 07018 1,892,055 19,112 Gas/Electricity/Cable 17 550
109 Georgia 30240 1,696,886 20,949 Gas/Electricity/Cable
118 South Dakota 57103 1,193,708 16,579 Electricity/Cable
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1 Bedroom 2 Bedroom 3 bedroom 4 bedroom 5 Bedroom
Avg Avg Avg Avg Avg Number
Control Rent Per Rent Per Rent Per Rent Per Rent Per of
Number # Units Mos. ($) # Units Mos. ($) # Units Mos. ($) # Units Mos. ($) # Units Mos. ($) Elevators
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
8 290 712 518 797 84 1000 22
10 180 804 212 931 130 1148 6
14 168 612 375 698 19 900
15
15a 46 670 89 770
- ------------------------------------------------------------------------------------------------------------------------------------
15b 34 550 1
15c 7 550 8 700
15d 84 663 78 730
15e 30 515 1
15f 40 555 7 665 1
- ------------------------------------------------------------------------------------------------------------------------------------
16 72 761 254 919 22 1130
18 210 650 70 756 5
19 256 695 128 785
20 100 592 67 736 2 1120 6
23 211 591 139 697 5 810
- ------------------------------------------------------------------------------------------------------------------------------------
24
24a 64 625
24b 46 480 97 681
24c 38 623
27 86 712 26 790 2
- ------------------------------------------------------------------------------------------------------------------------------------
28
30a 3 817
30b 3 633 1 1200
30c 4 554
30d 5 623
- ------------------------------------------------------------------------------------------------------------------------------------
30e 7 682
30f 5 865
30g 4 756
30h 2 663 2 988 1 1200
30i 6 617
- ------------------------------------------------------------------------------------------------------------------------------------
30j 4 485 1 800
30k 2 613
30l 4 663
30m 3 608 1 725
30n 3 608 1 1000
- ------------------------------------------------------------------------------------------------------------------------------------
30o 3 650 2 675
30p 8 706 3 783
30q 6 710 1 805
30r 2 650 1 850
30s 5 550
- ------------------------------------------------------------------------------------------------------------------------------------
30t 3 670 2 963
30u 6 643 4 780 1 1200
30v 2 598 3 700
30w 1 650 4 838
30x 3 592
- ------------------------------------------------------------------------------------------------------------------------------------
35 140 404 338 459 26 640
41 28 950 49 1484 5 3175 2
54 77 418 113 547
56 140 453 75 527 20 685
59 43 410 177 499
- ------------------------------------------------------------------------------------------------------------------------------------
60
60a 8 1544
60b 4 1850
61 31 450 119 496
66 65 381 74 510 8 531
- ------------------------------------------------------------------------------------------------------------------------------------
68
68a 24 549 8 619
68b 18 541 2 339
68c 24 585 8 655
68d 19 522 16 631
- ------------------------------------------------------------------------------------------------------------------------------------
68e 17 561 2 419
68f 13 490 2 577
68g 19 529 13 573
69 30 549 30 651 30 744
70 18 433 92 514 34 725
- ------------------------------------------------------------------------------------------------------------------------------------
72 40 633 80 725
73 64 361 36 437
81 20 576 60 645
84 31 477 54 575 17 680
89 50 643 12 740
- ------------------------------------------------------------------------------------------------------------------------------------
90 6 810 2 935 1
91 24 525 60 570
92 66 533 13 675
97 28 609 11 653 5 668 1
100 45 450 48 565
- ------------------------------------------------------------------------------------------------------------------------------------
101 51 385 56 477 35 595
102 29 542 19 635 2 900
105 41 606 27 682 7 755 6 829
109 63 420 18 516
118 39 400 33 515
</TABLE>
<PAGE>
DISTRIBUTION OF CUT-OFF DATE BALANCES
<TABLE>
<CAPTION>
PERCENTAGE
OF
AGGREGATE MINIMUM MAXIMUM AVERAGE
CUT-OFF DATE NUMBER OF CUT-OFF CUT-OFF CUT-OFF CUT-OFF CUT-OFF
BALANCE MORTGAGE DATE DATE DATE DATE DATE
DISTRIBUTION LOANS BALANCE BALANCE BALANCE BALANCE BALANCE
- ----------------------------- ----------- --------------- ------------ --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
$ 638,827 - $ 999,999 2 $ 1,607,214 0.16% $ 638,828 $ 968,387 $ 803,607
1,000,000 - 1,999,999 20 31,990,825 3.28 1,082,626 1,998,830 1,599,541
2,000,000 - 2,999,999 19 48,256,765 4.95 2,128,514 2,998,321 2,539,830
3,000,000 - 3,999,999 19 66,858,065 6.86 3,038,295 3,944,827 3,518,846
4,000,000 - 4,999,999 14 62,650,771 6.43 4,025,915 4,993,576 4,475,055
5,000,000 - 5,999,999 10 56,329,155 5.78 5,290,019 5,978,286 5,632,916
6,000,000 - 6,999,999 2 13,627,015 1.40 6,740,837 6,886,177 6,813,507
7,000,000 - 7,999,999 8 59,159,649 6.07 7,077,000 7,712,944 7,394,956
8,000,000 - 8,999,999 2 17,424,724 1.79 8,530,378 8,894,345 8,712,362
9,000,000 - 9,999,999 1 9,132,449 0.94 9,132,449 9,132,449 9,132,449
10,000,000 - 13,999,999 7 84,320,280 8.65 10,568,731 13,992,012 12,045,754
14,000,000 - 16,999,999 2 32,073,693 3.29 15,485,915 16,587,778 16,036,846
17,000,000 - 19,999,999 3 55,835,359 5.73 17,443,028 19,656,135 18,611,786
20,000,000 - 24,999,999 4 87,914,138 9.02 20,000,000 23,412,934 21,978,535
25,000,000 - 29,999,999 4 106,829,924 10.96 25,177,781 28,320,000 26,707,481
30,000,000 - 39,999,999 1 36,000,000 3.69 36,000,000 36,000,000 36,000,000
40,000,000 - 59,999,999 2 104,492,212 10.72 50,722,972 53,769,239 52,246,106
60,000,000 - 100,000,000 1 100,000,000 10.26 100,000,000 100,000,000 100,000,000
-- ------------ ------
Total/Avg./Wtd. Avg./
Min/Max: 121 $974,502,237 100.00% $ 638,828 $100,000,000 $ 8,053,737
=== ============ ======
<CAPTION>
WEIGHTED WEIGHTED
MINIMUM MAXIMUM AVERAGE AVERAGE WEIGHTED
DEBT DEBT DEBT WEIGHTED REMAINING MINIMUM MAXIMUM AVERAGE
CUT-OFF DATE SERVICE SERVICE SERVICE AVERAGE TERM TO CUT-OFF CUT-OFF CUT-OFF
BALANCE COVERAGE COVERAGE COVERAGE MORTGAGE MATURITY DATE DATE DATE
DISTRIBUTION RATIO RATIO RATIO RATE (MOS) LTV LTV LTV
- ----------------------------- ---------- ---------- ---------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 638,827 - $ 999,999 1.25x 1.26x 1.26x 8.247% 117.0 55.22% 66.10% 61.78%
1,000,000 - 1,999,999 1.07 2.28 1.33 7.799 124.9 43.49 79.05 68.19
2,000,000 - 2,999,999 1.21 1.75 1.34 7.757 142.5 34.13 78.80 71.47
3,000,000 - 3,999,999 1.20 2.05 1.37 7.709 135.8 56.09 79.90 69.43
4,000,000 - 4,999,999 1.20 1.43 1.28 7.699 128.6 47.09 83.86 71.15
5,000,000 - 5,999,999 1.25 1.58 1.37 7.616 117.2 61.75 74.80 70.57
6,000,000 - 6,999,999 1.28 1.61 1.45 7.944 118.0 66.53 74.90 70.67
7,000,000 - 7,999,999 1.24 1.60 1.36 7.552 124.5 59.72 79.67 71.95
8,000,000 - 8,999,999 1.29 1.31 1.30 7.179 130.3 71.90 79.06 75.55
9,000,000 - 9,999,999 1.28 1.28 1.28 7.250 235.0 68.67 68.67 68.67
10,000,000 - 13,999,999 1.18 1.60 1.44 7.212 144.0 62.06 77.73 71.05
14,000,000 - 16,999,999 1.51 1.56 1.53 7.365 119.0 49.95 67.84 59.21
17,000,000 - 19,999,999 1.24 1.58 1.41 7.820 168.8 70.70 76.99 73.74
20,000,000 - 24,999,999 1.24 1.53 1.34 7.257 135.7 55.25 61.66 59.11
25,000,000 - 29,999,999 1.23 2.08 1.52 7.570 148.4 47.36 80.00 67.46
30,000,000 - 39,999,999 1.20 1.20 1.20 7.800 114.0 66.06 66.06 66.06
40,000,000 - 59,999,999 1.24 1.24 1.24 7.103 152.9 74.47 74.47 74.47
60,000,000 - 100,000,000 1.61 1.61 1.61 6.560 117.0 62.50 62.50 62.50
Total/Avg./Wtd. Avg./
Min/Max: 1.07x 2.28x 1.40x 7.406% 136.6 34.13% 83.86% 68.28%
</TABLE>
DISTRIBUTION OF PROPERTY TYPES
<TABLE>
<CAPTION>
PERCENTAGE
OF
AGGREGATE MINIMUM MAXIMUM AVERAGE
NUMBER OF CUT-OFF CUT-OFF CUT-OFF CUT-OFF CUT-OFF
MORTGAGED DATE DATE DATE DATE DATE
PROPERTY TYPE PROPERTIES BALANCE BALANCE BALANCE BALANCE BALANCE
- ---------------- ------------ --------------- ------------ ------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Office 23 $271,764,046 27.89% $1,122,625 $ 53,769,239 $11,815,828
Multifamily 75 261,659,573 26.85 169,276 25,177,781 3,488,794
Retail 36 260,978,125 26.78 968,387 100,000,000 7,249,392
Other 7 69,211,276 7.10 723,651 26,856,137 9,887,325
Hospitality 5 57,432,996 5.89 3,793,327 26,476,006 11,486,599
Industrial 13 44,281,677 4.54 638,828 9,132,449 3,406,283
Mixed Use 3 9,174,543 0.94 1,936,236 4,594,190 3,058,181
-- ------------ ------
Total/Avg./Wtd.
Avg./Min/Max: 162 $974,502,237 100.00% $ 169,276 $100,000,000 $ 6,015,446
=== ============ ======
<CAPTION>
WEIGHTED WEIGHTED
MINIMUM MAXIMUM AVERAGE AVERAGE WEIGHTED
DEBT DEBT DEBT WEIGHTED REMAINING MINIMUM MAXIMUM AVERAGE
SERVICE SERVICE SERVICE AVERAGE TERM TO CUT-OFF CUT-OFF CUT-OFF
COVERAGE COVERAGE COVERAGE MORTGAGE MATURITY DATE DATE DATE
PROPERTY TYPE RATIO RATIO RATIO RATE (MOS) LTV LTV LTV
- ---------------- ---------- ---------- ---------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Office 1.20x 1.75x 1.27x 7.425% 138.9 34.13% 78.78% 67.88%
Multifamily 1.18 1.60 1.40 7.230 120.5 59.90 83.86 72.59
Retail 1.21 2.05 1.44 7.217 122.1 56.09 80.00 68.59
Other 1.25 2.28 1.40 7.982 236.5 43.49 65.79 58.64
Hospitality 1.32 2.08 1.76 7.954 133.7 47.36 66.53 51.74
Industrial 1.07 1.47 1.28 7.736 154.9 47.09 74.86 66.79
Mixed Use 1.25 1.31 1.29 7.824 116.9 62.08 75.55 67.46
Total/Avg./Wtd.
Avg./Min/Max: 1.07x 2.28x 1.40x 7.406% 136.6 34.13% 83.86% 68.28%
</TABLE>
A-11
<PAGE>
RANGE OF DEBT SERVICE COVERAGE RATIOS
<TABLE>
<CAPTION>
PERCENTAGE
OF
AGGREGATE MINIMUM MAXIMUM AVERAGE
RANGE OF DEBT NUMBER OF CUT-OFF CUT-OFF CUT-OFF CUT-OFF
SERVICE COVERAGE MORTGAGE CUT-OFF DATE DATE DATE DATE DATE
RATIOS LOANS BALANCE BALANCE BALANCE BALANCE BALANCE
- ------------------ ----------- -------------- ------------ ------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
CTL 8 $137,875,890 14.15% $ 1,448,750 $ 50,722,972 $17,234,486
1.00 - 1.09x 1 1,422,390 0.15 1,422,390 1,422,390 1,422,390
1.10 - 1.19 1 13,992,012 1.44 13,992,012 13,992,012 13,992,012
1.20 - 1.24 14 183,568,885 18.84 1,696,886 53,769,239 13,112,063
1.25 - 1.29 38 201,161,060 20.64 638,828 28,320,000 5,293,712
1.30 - 1.34 19 68,913,542 7.07 1,082,626 8,894,345 3,627,029
1.35 - 1.39 8 30,007,674 3.08 1,098,611 5,978,286 3,750,959
1.40 - 1.49 10 46,781,501 4.80 1,641,645 10,763,630 4,678,150
1.50 - 1.59 14 131,220,939 13.47 1,892,055 22,583,360 9,372,924
1.60 - 1.79 5 128,605,873 13.20 2,184,089 100,000,000 25,721,175
1.90 - 2.19 2 29,560,760 3.03 3,084,754 26,476,006 14,780,380
2.20 - 2.29 1 1,391,712 0.14 1,391,712 1,391,712 1,391,712
-- ------------ ------
Total/Avg./Wtd.
Avg./Min/Max: 121 $974,502,237 100.00% $ 638,828 $100,000,000 $ 8,053,737
=== ============ ======
<CAPTION>
WEIGHTED WEIGHTED
MINIMUM MAXIMUM AVERAGE AVERAGE WEIGHTED
DEBT DEBT DEBT WEIGHTED REMAINING MINIMUM MAXIMUM AVERAGE
RANGE OF DEBT SERVICE SERVICE SERVICE AVERAGE TERM TO CUT-OFF CUT-OFF CUT-OFF
SERVICE COVERAGE COVERAGE COVERAGE COVERAGE MORTGAGE MATURITY DATE DATE DATE
RATIOS RATIO RATIO RATIO RATE (MOS) LTV LTV LTV
- ------------------ ---------- ---------- ---------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CTL NAP NAP NAP 7.517% 222.6 NAP NAP NAP
1.00 - 1.09x 1.07x 1.07x 1.07x 8.000 117.0 48.98% 48.98% 48.98%
1.10 - 1.19 1.18 1.18 1.18 7.750 119.0 77.73 77.73 77.73
1.20 - 1.24 1.20 1.24 1.23 7.498 115.5 61.66 79.54 71.89
1.25 - 1.29 1.24 1.29 1.26 7.680 127.3 55.22 80.00 71.58
1.30 - 1.34 1.29 1.33 1.31 7.880 136.6 47.09 83.86 69.03
1.35 - 1.39 1.35 1.37 1.36 7.701 116.5 59.70 78.68 72.38
1.40 - 1.49 1.40 1.49 1.44 7.354 134.2 59.27 77.37 68.65
1.50 - 1.59 1.49 1.58 1.55 7.072 118.6 49.95 79.67 65.18
1.60 - 1.79 1.60 1.75 1.61 6.699 119.4 34.13 72.30 63.69
1.90 - 2.19 2.05 2.08 2.08 7.482 119.5 47.36 56.09 48.27
2.20 - 2.29 2.28 2.28 2.28 7.500 115.0 43.49 43.49 43.49
Total/Avg./Wtd.
Avg./Min/Max: 1.07x 2.28x 1.40x 7.406% 136.6 34.13% 83.86% 68.28%
</TABLE>
RANGE OF MORTGAGE RATES
<TABLE>
<CAPTION>
PERCENTAGE
OF
AGGREGATE MINIMUM MAXIMUM AVERAGE
NUMBER OF CUT-OFF CUT-OFF CUT-OFF CUT-OFF CUT-OFF
RANGE OF MORTGAGE DATE DATE DATE DATE DATE
MORTGAGE RATES LOANS BALANCE BALANCE BALANCE BALANCE BALANCE
- ----------------- ----------- --------------- ------------ ------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
6.001 - 6.250% 2 $ 7,576,430 0.78% $ 3,084,754 $ 4,491,676 $ 3,788,215
6.501 - 6.750 2 102,386,967 10.51 2,386,967 100,000,000 51,193,483
6.751 - 7.000 13 131,759,887 13.52 1,193,708 22,583,360 10,135,376
7.001 - 7.250 10 176,115,559 18.07 1,641,645 53,769,239 17,611,556
7.251 - 7.500 16 102,062,213 10.47 1,391,712 26,856,137 6,378,888
7.501 - 7.750 22 178,297,261 18.30 1,936,236 28,320,000 8,104,421
7.751 - 8.000 38 192,941,383 19.80 638,828 36,000,000 5,077,405
8.001 - 9.000 17 63,706,402 6.54 968,387 7,292,233 3,747,435
9.001 - 10.000 1 19,656,135 2.02 19,656,135 19,656,135 19,656,135
-- ------------ ------
Total/Avg./Wtd.
Avg./Min/Max: 121 $974,502,237 100.00% $ 638,828 $100,000,000 $ 8,053,737
=== ============ ======
<CAPTION>
WEIGHTED WEIGHTED
MAXIMUM AVERAGE AVERAGE WEIGHTED
MINIMUM DEBT DEBT WEIGHTED REMAINING MINIMUM MAXIMUM AVERAGE
DEBT SERVICE SERVICE SERVICE AVERAGE TERM TO CUT-OFF CUT-OFF CUT-OFF
RANGE OF COVERAGE COVERAGE COVERAGE MORTGAGE MATURITY DATE DATE DATE
MORTGAGE RATES RATIO RATIO RATIO RATE (MOS) LTV LTV LTV
- ----------------- -------------- ---------- ---------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6.001 - 6.250% 1.43x 2.05x 1.68x 6.250% 116.8 56.09% 74.99% 67.29%
6.501 - 6.750 1.61 1.61 1.61 6.564 119.8 62.50 62.50 62.50
6.751 - 7.000 1.20 1.60 1.52 6.798 121.9 59.90 79.35 68.11
7.001 - 7.250 1.24 1.57 1.27 7.150 153.5 55.25 79.67 70.26
7.251 - 7.500 1.20 2.28 1.39 7.394 171.7 43.49 79.07 73.17
7.501 - 7.750 1.18 2.08 1.38 7.641 119.6 47.09 80.00 70.49
7.751 - 8.000 1.07 1.75 1.28 7.888 127.1 34.13 83.86 67.56
8.001 - 9.000 1.22 1.61 1.35 8.256 131.0 54.45 75.32 65.70
9.001 - 10.000 NAP NAP NAP 9.030 263.0 NAP NAP NAP
Total/Avg./Wtd.
Avg./Min/Max: 1.07x 2.28x 1.40x 7.406% 136.6 34.13% 83.86% 68.28%
</TABLE>
A-12
<PAGE>
RANGE OF AMORTIZATION TYPES
<TABLE>
<CAPTION>
PERCENTAGE
OF
AGGREGATE MINIMUM MAXIMUM AVERAGE
NUMBER OF CUT-OFF CUT-OFF CUT-OFF CUT-OFF CUT-OFF
AMORTIZATION MORTGAGE DATE DATE DATE DATE DATE
TYPE LOANS BALANCE BALANCE BALANCE BALANCE BALANCE
- ------------------ ----------- --------------- ------------ ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balloon 109 $776,941,901 79.73% $ 638,828 $ 53,769,239 $ 7,127,907
Fully Amortizing 8 48,712,238 5.00 1,386,164 26,856,137 6,089,030
Hyperamortizing 4 148,848,098 15.27 6,886,177 100,000,000 37,212,025
--- ------------ ------
Total /Avg./Wtd.
Avg./Min/Max: 121 $974,502,237 100.00% $ 638,828 $100,000,000 $ 8,053,737
=== ============ ======
<CAPTION>
WEIGHTED WEIGHTED
MINIMUM MAXIMUM AVERAGE AVERAGE WEIGHTED
DEBT DEBT DEBT WEIGHTED REMAINING MINIMUM MAXIMUM AVERAGE
SERVICE SERVICE SERVICE AVERAGE TERM TO CUT-OFF CUT-OFF CUT-OFF
AMORTIZATION COVERAGE COVERAGE COVERAGE MORTGAGE MATURITY DATE DATE DATE
TYPE RATIO RATIO RATIO RATE (MOS) LTV LTV LTV
- ------------------ ---------- ---------- ---------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balloon 1.07x 2.28x 1.33x 7.472% 134.6 43.49% 83.86% 70.84%
Fully Amortizing 1.26 1.75 1.40 7.671 226.1 34.13 69.31 54.44
Hyperamortizing 1.51 2.08 1.68 6.972 117.8 47.36 66.53 58.69
Total /Avg./Wtd.
Avg./Min/Max: 1.07x 2.28x 1.40x 7.406% 136.6 34.13% 83.86% 68.28%
</TABLE>
RANGES OF CUT-OFF DATE LOAN-TO-VALUE RATIOS
<TABLE>
<CAPTION>
PERCENTAGE
OF
RANGE OF AGGREGATE MINIMUM MAXIMUM AVERAGE
CUT-OFF DATE NUMBER OF CUT-OFF CUT-OFF CUT-OFF CUT-OFF
LOAN-TO-VALUE MORTGAGE CUT-OFF DATE DATE DATE DATE DATE
RATIOS LOANS BALANCE BALANCE BALANCE BALANCE BALANCE
- ---------------- ----------- -------------- ------------ ------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
CTL 8 $137,875,890 14.15% $1,448,750 $ 50,722,972 $17,234,486
30.1 - 50.0% 6 51,433,564 5.28 1,391,712 26,476,006 8,572,261
50.1 - 60.0 11 74,013,669 7.60 638,828 22,583,360 6,728,515
60.1 - 65.0 6 151,318,379 15.53 3,778,745 100,000,000 25,219,730
65.1 - 70.0 24 133,948,129 13.75 968,387 36,000,000 5,581,172
70.1 - 75.0 44 291,439,913 29.91 1,082,626 53,769,239 6,623,634
75.1 - 80.0 21 129,989,426 13.34 1,996,119 28,320,000 6,189,973
80.1 - 85.0 1 4,483,267 0.46 4,483,267 4,483,267 4,483,267
-- ------------ ------
Total/Avg./Wtd.
Avg./Min/Max: 121 $974,502,237 100.00% $ 638,828 $100,000,000 $ 8,053,737
=== ============ ======
<CAPTION>
WEIGHTED WEIGHTED
MINIMUM MAXIMUM AVERAGE AVERAGE WEIGHTED
RANGE OF DEBT DEBT DEBT WEIGHTED REMAINING MINIMUM MAXIMUM AVERAGE
CUT-OFF DATE SERVICE SERVICE SERVICE AVERAGE TERM TO CUT-OFF CUT-OFF CUT-OFF
LOAN-TO-VALUE COVERAGE COVERAGE COVERAGE MORTGAGE MATURITY DATE DATE DATE
RATIOS RATIO RATIO RATIO RATE (MOS) LTV LTV LTV
- ---------------- ---------- ---------- ---------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CTL NAP NAP NAP 7.517% 222.6 NAP NAP NAP
30.1 - 50.0% 1.07x 2.28x 1.80x 7.759 129.5 34.13% 49.95% 47.50%
50.1 - 60.0 1.25 2.05 1.40 7.437 128.9 54.45 59.90 57.80
60.1 - 65.0 1.24 1.61 1.53 6.888 119.9 61.66 64.59 62.34
65.1 - 70.0 1.20 1.61 1.35 7.569 128.1 65.37 69.98 67.44
70.1 - 75.0 1.22 1.60 1.34 7.392 119.8 70.14 74.99 73.30
75.1 - 80.0 1.18 1.49 1.26 7.582 119.2 75.32 80.00 78.47
80.1 - 85.0 1.30 1.30 1.30 7.800 115.0 83.86 83.86 83.86
Total/Avg./Wtd.
Avg./Min/Max: 1.07x 2.28x 1.40x 7.406% 136.6 34.13% 83.86% 68.28%
</TABLE>
A-13
<PAGE>
DISTRIBUTION OF MORTGAGED PROPERTIES BY STATE
<TABLE>
<CAPTION>
PERCENTAGE
OF
AGGREGATE MINIMUM MAXIMUM AVERAGE
NUMBER OF CUT-OFF CUT-OFF CUT-OFF CUT-OFF
MORTGAGED CUT-OFF DATE DATE DATE DATE DATE
STATE PROPERTIES BALANCE BALANCE BALANCE BALANCE BALANCE
- ---------------- ------------ -------------- ------------ -------------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
New York 17 $197,449,412 20.26% $ 243,630 $100,000,000 $11,614,671
California 26 194,922,148 20.00 1,297,501 50,722,972 7,497,006
Pennsylvania 30 72,269,982 7.42 169,276 28,320,000 2,408,999
Florida 9 70,566,782 7.24 1,717,787 22,583,360 7,840,754
Colorado 2 56,167,758 5.76 2,398,519 53,769,239 28,083,879
Illinois 2 46,132,141 4.73 19,656,135 26,476,006 23,066,071
Texas 15 44,804,427 4.60 638,828 5,692,708 2,986,962
Arizona 3 41,590,286 4.27 1,098,611 36,000,000 13,863,429
Nevada 2 28,497,783 2.92 1,641,645 26,856,137 14,248,891
Virginia 4 26,507,797 2.72 2,170,633 12,173,039 6,626,949
New Jersey 8 26,032,047 2.67 723,651 7,712,944 3,254,006
Maryland 3 24,419,023 2.51 3,597,701 12,290,944 8,139,674
Ohio 2 17,936,784 1.84 7,244,662 10,692,122 8,968,392
Connecticut 6 17,443,028 1.79 461,965 9,624,271 2,907,171
Michigan 5 16,040,567 1.65 1,448,750 7,490,240 3,208,113
Massachusetts 6 15,996,634 1.64 547,710 4,791,571 2,666,106
Georgia 5 15,878,461 1.63 1,122,625 8,894,345 3,175,692
Missouri 4 14,266,460 1.46 1,804,418 5,744,676 3,566,615
North Carolina 3 11,816,419 1.21 1,936,236 6,886,177 3,938,806
Alaska 1 7,488,235 0.77 7,488,235 7,488,235 7,488,235
New Hampshire 1 5,589,454 0.57 5,589,454 5,589,454 5,589,454
Louisiana 2 4,793,411 0.49 1,795,091 2,998,321 2,396,706
Kentucky 1 4,562,409 0.47 4,562,409 4,562,409 4,562,409
Iowa 1 4,112,079 0.42 4,112,079 4,112,079 4,112,079
Rhode Island 1 3,897,657 0.40 3,897,657 3,897,657 3,897,657
Minnesota 1 2,128,514 0.22 2,128,514 2,128,514 2,128,514
Indiana 1 1,998,830 0.21 1,998,830 1,998,830 1,998,830
South Dakota 1 1,193,708 0.12 1,193,708 1,193,708 1,193,708
-- ------------ ------
Total/Avg./Wtd.
Avg./Min/Max: 162 $974,502,237 100.00% $ 169,276 $100,000,000 $ 6,015,446
=== ============ ======
<CAPTION>
WEIGHTED WEIGHTED
MINIMUM MAXIMUM AVERAGE AVERAGE WEIGHTED
DEBT DEBT DEBT WEIGHTED REMAINING MINIMUM MAXIMUM AVERAGE
SERVICE SERVICE SERVICE AVERAGE TERM TO CUT-OFF CUT-OFF CUT-OFF
COVERAGE COVERAGE COVERAGE MORTGAGE MATURITY DATE DATE DATE
STATE RATIO RATIO RATIO RATE (MOS) LTV LTV LTV
- ---------------- ---------- ---------- ---------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
New York 1.23x 1.61x 1.45x 7.059% 120.6 55.25% 74.89% 64.09%
California 1.18 2.28 1.33 7.519 151.6 43.49 79.16 67.62
Pennsylvania 1.24 1.58 1.40 7.361 118.0 70.70 80.00 75.90
Florida 1.25 2.05 1.53 6.943 126.3 47.09 74.69 62.09
Colorado 1.24 1.43 1.25 7.048 115.2 74.47 77.37 74.60
Illinois 2.08 2.08 2.08 8.224 180.9 47.36 47.36 47.36
Texas 1.07 1.75 1.35 7.884 123.1 34.13 83.86 68.85
Arizona 1.20 1.43 1.23 7.641 114.5 66.06 74.99 67.06
Nevada 1.40 1.40 1.40 7.368 230.0 59.70 59.70 59.70
Virginia 1.28 1.51 1.34 7.581 199.2 74.80 74.90 74.86
New Jersey 1.25 1.57 1.30 7.684 142.8 65.79 74.78 72.54
Maryland 1.20 1.60 1.43 6.934 118.3 71.90 79.07 73.16
Ohio 1.57 1.60 1.58 6.773 119.0 71.73 73.74 72.93
Connecticut 1.24 1.24 1.24 7.580 116.0 76.99 76.99 76.99
Michigan 1.26 1.36 1.28 7.802 128.1 65.98 78.06 73.75
Massachusetts 1.25 1.40 1.31 8.248 169.5 54.45 75.55 63.96
Georgia 1.22 1.31 1.29 7.593 131.4 72.41 79.06 77.24
Missouri 1.26 1.37 1.29 7.576 119.0 73.65 78.68 74.95
North Carolina 1.22 1.61 1.46 8.067 117.8 66.53 74.85 69.07
Alaska 1.27 1.27 1.27 7.920 179.0 71.32 71.32 71.32
New Hampshire 1.26 1.26 1.26 7.880 117.0 73.55 73.55 73.55
Louisiana 1.25 1.25 1.25 8.063 125.8 72.38 74.96 73.99
Kentucky 1.20 1.20 1.20 6.800 116.0 79.35 79.35 79.35
Iowa 1.23 1.23 1.23 7.790 117.0 79.54 79.54 79.54
Rhode Island 1.47 1.47 1.47 7.560 119.0 69.98 69.98 69.98
Minnesota 1.22 1.22 1.22 7.610 118.0 70.95 70.95 70.95
Indiana 1.26 1.26 1.26 7.660 119.0 68.93 68.93 68.93
South Dakota 1.32 1.32 1.32 7.000 116.0 68.21 68.21 68.21
Total/Avg./Wtd.
Avg./Min/Max: 1.07x 2.28x 1.40x 7.406% 136.6 34.13% 83.86% 68.28%
</TABLE>
A-14
<PAGE>
DISTRIBUTION OF PREPAYMENT PROVISIONS
<TABLE>
<CAPTION>
PERCENTAGE
OF
AGGREGATE MINIMUM MAXIMUM AVERAGE
NUMBER OF CUT-OFF CUT-OFF CUT-OFF CUT-OFF
PREPAYMENT MORTGAGE CUT-OFF DATE DATE DATE DATE DATE
PROVISION LOANS BALANCE BALANCE BALANCE BALANCE BALANCE
- -------------------- ----------- -------------- ------------ ----------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Lockout/Defeasance 121 $974,502,237 100.00% $638,828 $100,000,000 $8,053,737
--- ------------ ------
Total/Avg./Wtd.
Avg./Min/Max: 121 $974,502,237 100.00% $638,828 $100,000,000 $8,053,737
=== ============ ======
<CAPTION>
WEIGHTED WEIGHTED
MINIMUM MAXIMUM AVERAGE AVERAGE WEIGHTED
DEBT DEBT DEBT WEIGHTED REMAINING MINIMUM MAXIMUM AVERAGE
SERVICE SERVICE SERVICE AVERAGE TERM TO CUT-OFF CUT-OFF CUT-OFF
PREPAYMENT COVERAGE COVERAGE COVERAGE MORTGAGE MATURITY DATE DATE DATE
PROVISION RATIO RATIO RATIO RATE (MOS) LTV LTV LTV
- -------------------- ---------- ---------- ---------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Lockout/Defeasance 1.07x 2.28x 1.40x 7.406% 136.6 34.13% 83.86% 68.28%
Total/Avg./Wtd.
Avg./Min/Max: 1.07x 2.28x 1.40x 7.406% 136.6 34.13% 83.86% 68.28%
</TABLE>
DISTRIBUTION OF MORTGAGED PROPERTIES BY TOP FIVE STATES
<TABLE>
<CAPTION>
PERCENTAGE
OF
AGGREGATE MINIMUM MAXIMUM AVERAGE
NUMBER OF CUT-OFF CUT-OFF CUT-OFF CUT-OFF
TOP FIVE STATE MORTGAGED CUT-OFF DATE DATE DATE DATE DATE
DISTRIBUTION PROPERTIES BALANCE BALANCE BALANCE BALANCE BALANCE
- ---------------- ------------ -------------- ------------ ------------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
New York 17 $197,449,412 20.26% $ 243,630 $100,000,000 $11,614,671
California 26 194,922,148 20.00 1,297,501 50,722,972 7,497,006
Pennsylvania 30 72,269,982 7.42 169,276 28,320,000 2,408,999
Florida 9 70,566,782 7.24 1,717,787 22,583,360 7,840,754
Colorado 2 56,167,758 5.76 2,398,519 53,769,239 28,083,879
Other 78 383,126,154 39.32 461,965 36,000,000 4,911,874
-- ------------ ------
Total/Avg./Wtd.
Avg./Min/Max: 162 $974,502,237 100.00% $ 169,276 $100,000,000 $ 6,015,446
=== ============ ======
<CAPTION>
WEIGHTED WEIGHTED
MINIMUM MAXIMUM AVERAGE AVERAGE WEIGHTED
DEBT DEBT DEBT WEIGHTED REMAINING MINIMUM MAXIMUM AVERAGE
SERVICE SERVICE SERVICE AVERAGE TERM TO CUT-OFF CUT-OFF CUT-OFF
TOP FIVE STATE COVERAGE COVERAGE COVERAGE MORTGAGE MATURITY DATE DATE DATE
DISTRIBUTION RATIO RATIO RATIO RATE (MOS) LTV LTV LTV
- ---------------- ---------- ---------- ---------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
New York 1.23x 1.61x 1.45x 7.059% 120.6 55.25% 74.89% 64.09%
California 1.18 2.28 1.33 7.519 151.6 43.49 79.16 67.62
Pennsylvania 1.24 1.58 1.40 7.361 118.0 70.70 80.00 75.90
Florida 1.25 2.05 1.53 6.943 126.3 47.09 74.69 62.09
Colorado 1.24 1.43 1.25 7.048 115.2 74.47 77.37 74.60
Other 1.07 2.08 1.39 7.673 145.8 34.13 83.86 69.56
Total/Avg./Wtd.
Avg./Min/Max: 1.07x 2.28x 1.40x 7.406% 136.6 34.13% 83.86% 68.28%
</TABLE>
RANGE OF REMAINING AMORTIZATION TERMS
<TABLE>
<CAPTION>
PERCENTAGE
OF
RANGE OF AGGREGATE MINIMUM MAXIMUM AVERAGE
REMAINING NUMBER OF CUT-OFF CUT-OFF CUT-OFF CUT-OFF
AMORTIZATION MORTGAGE CUT-OFF DATE DATE DATE DATE DATE
TERMS (MOS.) LOANS BALANCE BALANCE BALANCE BALANCE BALANCE
- ---------------- ----------- -------------- ------------ ------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
121 - 180 2 $ 5,859,618 0.60% $1,386,164 $ 4,473,453 $ 2,929,809
181 - 240 10 127,544,080 13.09 1,448,750 50,722,972 12,754,408
241 - 300 22 109,088,029 11.19 1,082,626 25,177,781 4,958,547
301 - 360 85 629,617,716 64.61 638,828 53,769,239 7,407,267
361 - 380 2 102,392,794 10.51 2,392,794 100,000,000 51,196,397
-- ------------ ------
Total/Avg./Wtd.
Avg./Min/Max: 121 $974,502,237 100.00% $ 638,828 $100,000,000 $ 8,053,737
=== ============ ======
<CAPTION>
WEIGHTED WEIGHTED
MINIMUM MAXIMUM AVERAGE AVERAGE WEIGHTED
RANGE OF DEBT DEBT DEBT WEIGHTED REMAINING MINIMUM MAXIMUM AVERAGE
REMAINING SERVICE SERVICE SERVICE AVERAGE TERM TO CUT-OFF CUT-OFF CUT-OFF
AMORTIZATION COVERAGE COVERAGE COVERAGE MORTGAGE MATURITY DATE DATE DATE
TERMS (MOS.) RATIO RATIO RATIO RATE (MOS) LTV LTV LTV
- ---------------- ---------- ---------- ---------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
121 - 180 1.26x 1.29x 1.28x 7.714% 178.2 47.09% 69.31% 52.35%
181 - 240 1.20 1.75 1.36 7.373 202.7 34.13 79.35 63.93
241 - 300 1.22 2.28 1.34 7.792 139.4 43.49 74.85 66.93
301 - 360 1.07 2.08 1.38 7.477 125.5 47.36 83.86 69.80
361 - 380 1.21 1.61 1.60 6.582 117.0 62.50 75.96 62.81
Total/Avg./Wtd.
Avg./Min/Max: 1.07x 2.28x 1.40x 7.406% 136.6 34.13% 83.86% 68.28%
</TABLE>
A-15
<PAGE>
RANGE OF REMAINING TERMS TO MATURITY
<TABLE>
<CAPTION>
PERCENTAGE
OF
AGGREGATE MINIMUM MAXIMUM AVERAGE
RANGE OF NUMBER OF CUT-OFF CUT-OFF CUT-OFF CUT-OFF
REMAINING TERMS MORTGAGE CUT-OFF DATE DATE DATE DATE DATE
TO MATURITY (MOS.) LOANS BALANCE BALANCE BALANCE BALANCE BALANCE
- -------------------- ----------- -------------- ------------ -------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
101 - 120 101 $781,803,224 80.23% $ 638,828 $100,000,000 $ 7,740,626
121 - 140 1 2,998,321 0.31 2,998,321 2,998,321 2,998,321
141 - 180 4 22,242,198 2.28 1,386,164 8,894,345 5,560,550
181 - 240 13 135,629,320 13.92 1,448,750 50,722,972 10,433,025
241 - 360 2 31,829,174 3.27 12,173,039 19,656,135 15,914,587
--- ------------ ------
Total/Avg./Wtd.
Avg./Min/Max: 121 $974,502,237 100.00% $ 638,828 $100,000,000 $ 8,053,737
=== ============ ======
<CAPTION>
WEIGHTED WEIGHTED
MINIMUM MAXIMUM AVERAGE AVERAGE WEIGHTED
DEBT DEBT DEBT WEIGHTED REMAINING MINIMUM MAXIMUM AVERAGE
RANGE OF SERVICE SERVICE SERVICE AVERAGE TERM TO CUT-OFF CUT-OFF CUT-OFF
REMAINING TERMS COVERAGE COVERAGE COVERAGE MORTGAGE MATURITY DATE DATE DATE
TO MATURITY (MOS.) RATIO RATIO RATIO RATE (MOS) LTV LTV LTV
- -------------------- ---------- ---------- ---------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
101 - 120 1.07x 2.28x 1.40x 7.361% 117.2 43.49% 83.86% 68.44%
121 - 140 1.25 1.25 1.25 7.820 131.0 74.96 74.96 74.96
141 - 180 1.26 1.31 1.29 7.638 164.4 47.09 79.06 69.42
181 - 240 1.26 1.75 1.36 7.379 211.8 34.13 74.78 62.61
241 - 360 NAP NAP NAP 8.418 275.2 NAP NAP NAP
Total/Avg./Wtd.
Avg./Min/Max: 1.07x 2.28x 1.40x 7.406% 136.6 34.13% 83.86% 68.28%
</TABLE>
RANGE OF ORIGINAL TERMS TO MATURITY
<TABLE>
<CAPTION>
PERCENTAGE
OF
AGGREGATE MINIMUM MAXIMUM AVERAGE
RANGE OF NUMBER OF CUT-OFF CUT-OFF CUT-OFF CUT-OFF
ORIGINAL TERMS MORTGAGE CUT-OFF DATE DATE DATE DATE DATE
TO MATURITY (MOS.) LOANS BALANCE BALANCE BALANCE BALANCE BALANCE
- -------------------- ----------- -------------- ------------ -------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
101 - 120 100 $755,327,218 77.51% $ 638,828 $100,000,000 $ 7,553,272
121 - 140 2 29,474,327 3.02 2,998,321 26,476,006 14,737,163
141 - 180 4 22,242,198 2.28 1,386,164 8,894,345 5,560,550
181 - 240 13 135,629,320 13.92 1,448,750 50,722,972 10,433,025
241 - 360 2 31,829,174 3.27 12,173,039 19,656,135 15,914,587
--- ------------ ------
Total/Avg./Wtd.
Avg./Min/Max: 121 $974,502,237 100.00% $ 638,828 $100,000,000 $ 8,053,737
=== ============ ======
<CAPTION>
WEIGHTED WEIGHTED
MINIMUM MAXIMUM AVERAGE AVERAGE WEIGHTED
DEBT DEBT DEBT WEIGHTED REMAINING MINIMUM MAXIMUM AVERAGE
RANGE OF SERVICE SERVICE SERVICE AVERAGE TERM TO CUT-OFF CUT-OFF CUT-OFF
ORIGINAL TERMS COVERAGE COVERAGE COVERAGE MORTGAGE MATURITY DATE DATE DATE
TO MATURITY (MOS.) RATIO RATIO RATIO RATE (MOS) LTV LTV LTV
- -------------------- ---------- ---------- ---------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
101 - 120 1.07x 2.28x 1.38x 7.352% 117.1 43.49% 83.86% 69.18%
121 - 140 1.25 2.08 2.00 7.645 121.1 47.36 74.96 50.17
141 - 180 1.26 1.31 1.29 7.638 164.4 47.09 79.06 69.42
181 - 240 1.26 1.75 1.36 7.379 211.8 34.13 74.78 62.61
241 - 360 NAP NAP NAP 8.418 275.2 NAP NAP NAP
Total/Avg./Wtd.
Avg./Min/Max: 1.07x 2.28x 1.40x 7.406% 136.6 34.13% 83.86% 68.28%
</TABLE>
A-16
<PAGE>
ANNEX B
<TABLE>
<CAPTION>
<S> <C> <C>
ABN AMRO GMAC COMMERCIAL MORTGAGE SECURITIES, INC. Statement Date:
LaSalle Bank N.A. GMAC COMMERCIAL MORTGAGE CORPORATION AS MASTER SERVICER Payment Date:
GMAC COMMERCIAL MORTGAGE CORPORATION AS SPECIAL SERVICER Prior Payment:
Administrator: MORTGAGE PASS-THROUGH CERTIFICATES Record Date:
Ann Kelly (800) 246-5761 SERIES 1999-C2
135 S. LaSalle Street Suite 1625 ABN AMRO ACCT: 99-9999-99-9 WAC:
Chicago, IL 60674-4107 WAMM:
===================================================================================================================================
Number Of Pages
Table Of Contents
REMIC Certificate Report
Other Related Information
Asset Backed Facts Sheets
Delinquency Loan Detail
Mortgage Loan Characteristics
Loan Level Listing
TOTAL PAGES INCLUDED IN THIS PACKAGE
Specially Serviced Loan Detail Appendix A
Modified Loan Detail Appendix B
Realized Loss Detail Appendix C
-----------------------------------------------------------------------------------------
INFORMATION IS AVAILABLE FOR THIS ISSUE FROM THE FOLLOWING SOURCES
-----------------------------------------------------------------------------------------
LaSalle Web Site www.Inbabs.com
LaSalle Bulletin Board (714) 282-3990
LaSalle ASAP Fax System (714) 282-5518
ASAP #: 999
Monthly Data File Name: 0999MMYY.EXE
=========================================================================================
===================================================================================================================================
</TABLE>
(Copyright) 1999 LaSalle Bank N.A.
B-1
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
ABN AMRO GMAC COMMERCIAL MORTGAGE SECURITIES, INC. Statement Date:
LaSalle Bank N.A. GMAC COMMERCIAL MORTGAGE CORPORATION AS MASTER SERVICER Payment Date:
GMAC COMMERCIAL MORTGAGE CORPORATION AS SPECIAL SERVICER Prior Payment:
Administrator: MORTGAGE PASS-THROUGH CERTIFICATES Record Date:
Ann Kelly (800) 246-5761 SERIES 1999-C2
135 S. LaSalle Street Suite 1625 ABN AMRO ACCT: 99-9999-99-9 WAC:
Chicago, IL 60674-4107 WAMM:
===================================================================================================================================
Original Opening Principal Principal Negative Closing Interest Interest Pass-Through
Class Face Value (1) Balance Payment Adj. or Loss Amortization Balance Payment Adjustment Rate (2)
CUSIP Per $1,000 Per $1,000 Per $1,000 Per $1,000 Per $1,000 Per $1,000 Per $1,000 Per $1,000 Next Rate (3)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
===================================================================================================================================
Total P&I
===============================
</TABLE>
Notes: (1) N denotes notional balance not included in total
(2) Interest Paid minus Interest Adjustment minus Deferred Interest
equals Accrual
(3) Estimated
(Copyright) 1999 LaSalle Bank N.A.
B-2
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
ABN AMRO GMAC COMMERCIAL MORTGAGE SECURITIES, INC. Statement Date:
LaSalle Bank N.A. GMAC COMMERCIAL MORTGAGE CORPORATION AS MASTER SERVICER Payment Date:
GMAC COMMERCIAL MORTGAGE CORPORATION AS SPECIAL SERVICER Prior Payment:
Administrator: MORTGAGE PASS-THROUGH CERTIFICATES Record Date:
Ann Kelly (800) 246-5761 SERIES 1999-C2
135 S. LaSalle Street Suite 1625 ABN AMRO ACCT: 99-9999-99-9
Chicago, IL 60674-4107 OTHER RELATED INFORMATION
===================================================================================================================================
-------------------------------------------------------------------------------------------------------------------------------
ACCRUED EXCESS BEGINNING PAYMENT OF ENDING YIELD
CERTIFICATE PREPAY INTEREST UNPAID PRIOR UNPAID UNPAID MAINTENANCE PREPAYMENT
CLASS INTEREST SHORTFALL INTEREST INTEREST INTEREST PREMIUM PREMIUMS
===============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------------------------
TOTAL 0.00 0.00 0.00 0.00 0.00 0.00 0.00
===============================================================================================================================
-------------------------------------------------------------------------------------------------------------------------------
ADVANCES
PRIOR OUTSTANDING CURRENT PERIOD RECOVERED OUTSTANDING
Principal Interest Principal Interest Principal Interest Principal Interest
===============================================================================================================================
Servicer 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Trustee: 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Fiscal Agent: 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
---------------------------------------------------------------------------------------------------------------------------------
=================================================================================================================================
===================================================================================================================================
</TABLE>
(Copyright) 1999 LaSalle Bank N.A.
B-3
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
ABN AMRO GMAC COMMERCIAL MORTGAGE SECURITIES, INC. Statement Date:
LaSalle Bank N.A. GMAC COMMERCIAL MORTGAGE CORPORATION AS MASTER SERVICER Payment Date:
GMAC COMMERCIAL MORTGAGE CORPORATION AS SPECIAL SERVICER Prior Payment:
Administrator: MORTGAGE PASS-THROUGH CERTIFICATES Record Date:
Ann Kelly (800) 246-5761 SERIES 1999-C2
135 S. LaSalle Street Suite 1625 ABN AMRO ACCT: 99-9999-99-9
Chicago, IL 60674-4107 OTHER RELATED INFORMATION
===================================================================================================================================
-----------------------------------------------------------------------------------------------------
SERVICING COMPENSATION
=====================================================================================================
<S> <C>
Current Period Master Servicing Fees Paid: 0.00
Current Period Surveillance Fees Paid: 0.00
Current Period Primary Fees Paid: 0.00
Current Period Sub Servicer Fees Paid: 0.00
Additional Master Servicing Compensation: 0.00
Current Period Special Servicing Fees Paid: 0.00
Current Period Workout Fees Paid: 0.00
Current Period Liquidation Fees Paid: 0.00
-------
0.00
=======
-----------------------------------------------------------------------------------------------------
MORTGAGE POOL INFORMATION
=====================================================================================================
Number of Outstanding Mortgage Loans in Pool: 0
Aggregate Stated Principal Balance before Distribution Date: 0.00
Aggregate Stated Principal Balance after Distribution Date: 0.00
Percentage of Remaining Cut-off Date Principal Balance: 0.00%
------------------------------------------------------------------------------------------------------
SUMMARY OF REO PROPERTIES
------------------------------------------------------------------------------------------------------
ENDING
PRIN. DATE OF FINAL AMOUNT AGG. OTHER
# PROPERTY NAME DATE OF REO BALANCE BOOK VALUE RECOVERY OF PROCEEDS REVENUE COLL.
======================================================================================================
1.
2.
3.
4.
5.
===================================================================================================================================
</TABLE>
(Copyright) 1999 LaSalle Bank N.A.
B-4
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
ABN AMRO GMAC COMMERCIAL MORTGAGE SECURITIES, INC. Statement Date:
LaSalle Bank N.A. GMAC COMMERCIAL MORTGAGE CORPORATION AS MASTER SERVICER Payment Date:
GMAC COMMERCIAL MORTGAGE CORPORATION AS SPECIAL SERVICER Prior Payment:
Administrator: MORTGAGE PASS-THROUGH CERTIFICATES Record Date:
Ann Kelly (800) 246-5761 SERIES 1999-C2
135 S. LaSalle Street Suite 1625 ABN AMRO ACCT: 99-9999-99-9
Chicago, IL 60674-4107 OTHER RELATED INFORMATION
===================================================================================================================================
-----------------------------------------------------------------------------------------------------------------
SUMMARY OF APPRAISAL REDUCTIONS
-----------------------------------------------------------------------------------------------------------------
BEGINNING ENDING
PRIN. PRIN. APPRAISAL APPRAISAL DATE OF
# PROPERTY NAME LOAN NUMBER BALANCE BALANCE REDUCTION AMT. DATE REDUCTION
=================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
1.
2.
3.
4.
5.
-----------------------------------------------------------------------------------------------------------------
SUMMARY OF REPURCHASED, LIQUIDATED OR DISPOSED LOANS
-----------------------------------------------------------------------------------------------------------------
PRINCIPAL DATE OF FINAL AMOUNT AGGREGATE OTHER
# PROPERTY NAME LOAN NUMBER BALANCE BOOK VALUE LIQUIDATION OF PROCEEDS REV. COLLECTED
=================================================================================================================
1.
2.
3.
4.
5.
===================================================================================================================================
</TABLE>
(Copyright) 1999 LaSalle Bank N.A.
B-5
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
ABN AMRO GMAC COMMERCIAL MORTGAGE SECURITIES, INC. Statement Date:
LaSalle Bank N.A. GMAC COMMERCIAL MORTGAGE CORPORATION AS MASTER SERVICER Payment Date:
GMAC COMMERCIAL MORTGAGE CORPORATION AS SPECIAL SERVICER Prior Payment:
Administrator: MORTGAGE PASS-THROUGH CERTIFICATES Record Date:
Ann Kelly (800) 246-5761 SERIES 1999-C2
135 S. LaSalle Street Suite 1625 ABN AMRO ACCT: 99-9999-99-9
Chicago, IL 60674-4107 OTHER RELATED INFORMATION
===================================================================================================================================
<S> <C>
Number of loans which have had their maturity dates extended: 0
Stated principal balance outstanding of loans which have had their maturity dates extended: 0.00
Weighted average extension period (in months) of loans which have had their maturity dates extended: 0
Number of loans in the process of having their maturity dates extended: 0
Stated principal balance of loans in the process of having their maturity dates extended: 0.00
Weighted average anticipated extension period of loans in the process of being extended: 0
Cut-off principal balance of paid off loans that never experienced maturity date extensions: 0.00
Cut-off principal balance of paid off loans that experienced maturity date extensions: 0.00
Weighted average extension period of paid off loans that experienced maturity date extensions: 0
Number of loans in the process of having their maturity dates further extended: 0
Cut-off principal balance of loans in the process of having their maturity dates further extended: 0.00
Weighted average extension period of loans in the process of having their maturity date further extended: 0
===================================================================================================================================
</TABLE>
(Copyright) 1999 LaSalle Bank N.A.
B-6
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
ABN AMRO GMAC COMMERCIAL MORTGAGE SECURITIES, INC. Statement Date:
LaSalle Bank N.A. GMAC COMMERCIAL MORTGAGE CORPORATION AS MASTER SERVICER Payment Date:
GMAC COMMERCIAL MORTGAGE CORPORATION AS SPECIAL SERVICER Prior Payment:
Administrator: MORTGAGE PASS-THROUGH CERTIFICATES Record Date:
Ann Kelly (800) 246-5761 SERIES 1999-C2
135 S. LaSalle Street Suite 1625 ABN AMRO ACCT: 99-9999-99-9
Chicago, IL 60674-4107
<CAPTION>
DISTRIBUTION DELINQ 1 MONTH DELINQ 2 MONTHS DELINQ 3+ MONTHS FORECLOSURE/BANKRUPTCY REO
DATE # BALANCE # BALANCE # BALANCE # BALANCE # BALANCE
====================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
<CAPTION>
MODIFICATIONS PREPAYMENTS CURR WEIGHTED AVG.
# BALANCE # BALANCE COUPON REMIT
=====================================================
<C> <C> <C> <C> <C> <C>
</TABLE>
Note: Foreclosure and REO Totals are Included in the Appropriate Delinquency
Aging Category
(Copyright) 1999 LaSalle Bank N.A.
B-7
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
ABN AMRO GMAC COMMERCIAL MORTGAGE SECURITIES, INC. Statement Date:
LaSalle Bank N.A. GMAC COMMERCIAL MORTGAGE CORPORATION AS MASTER SERVICER Payment Date:
GMAC COMMERCIAL MORTGAGE CORPORATION AS SPECIAL SERVICER Prior Payment:
Administrator: MORTGAGE PASS-THROUGH CERTIFICATES Record Date:
Ann Kelly (800) 246-5761 SERIES 1999-C2
135 S. LaSalle Street Suite 1625 ABN AMRO ACCT: 99-9999-99-9
Chicago, IL 60674-4107
DELINQUENT LOAN DETAIL
</TABLE>
<TABLE>
<CAPTION>
PAID OUTSTANDING OUT. PROPERTY SPECIAL
DISCLOSURE DOC THRU CURRENT P&I P&I PROTECTION ADVANCE SERVICER FORECLOSURE
CONTROL # DATE ADVANCE ADVANCES** ADVANCES DESCRIPTION(1) TRANSFER DATE DATE
=================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
<CAPTION>
BANKRUPTCY REO
DATE DATE
====================
<C> <C>
</TABLE>
A. P&I Advance - Loan in Grace Period
B. P&I Advance - Late Payment but (less than) one month delinq
1. P&I Advance - Loan delinquent 1 month
2. P&I Advance - Loan delinquent 2 months
3. P&I Advance - Loan delinquent 3 months or More
4. Matured Balloon / Assumed Scheduled Payment
7. P&I Advance - Loan in Foreclosure
8. P&I Advance - Loan in Bankruptcy
9. P&I Advance - REO Loan
(Copyright) 1999 LaSalle Bank N.A.
B-8
<PAGE>
<TABLE>
<CAPTION>
ABN AMRO GMAC COMMERCIAL MORTGAGE SECURITIES, INC. Statement Date:
LaSalle Bank N.A. GMAC COMMERCIAL MORTGAGE CORPORATION AS MASTER SERVICER Payment Date:
GMAC COMMERCIAL MORTGAGE CORPORATION AS SPECIAL SERVICER Prior Payment:
Administrator: MORTGAGE PASS-THROUGH CERTIFICATES Record Date:
Ann Kelly (800) 246-5761 SERIES 1999-C2
135 S. LaSalle Street Suite 1625 ABN AMRO ACCT: 99-9999-99-9
Chicago, IL 60674-4107 POOL TOTAL
DISTRIBUTION OF PRINCIPAL BALANCES DISTRIBUTION OF PROPERTY TYPES
- ---------------------------------------------------------- ---------------------------------------------------
Current Scheduled Number Scheduled Based on Number Scheduled Based on
Balances of Loans Balance Balance Property Types of Loans Balance Balance
========================================================== ===================================================
<S> <C> <C> <C> <C> <C> <C> <C>
$0 to $2,000,000 Multifamily
$2,000,000 to $4,000,000 Retail
$4,000,000 to $6,000,000 Office
$6,000,000 to $8,000,000 Other
$8,000,000 to $10,000,000 Lodging
$10,000,000 to $12,000,000 Health Care
$12,000,000 to $14,000,000 Industrial
$14,000,000 to $16,000,000 Self Storage
$16,000,000 to $18,000,000 Mixed Use
$18,000,000 to $20,000,000
$20,000,000 to $22,000,000 ===================================================
$22,000,000 to $24,000,000 Total
$24,000,000 to $26,000,000 ---------------------------------------------------
$26,000,000 to $28,000,000 DISTRIBUTION OF MORTGAGE INTEREST RATES
$28,000,000 to $30,000,000 ---------------------------------------------------
$30,000,000 to $38,000,000 Current Mortgage Number Scheduled Based on
$38,000,000 to $46,000,000 Interest Rate of Loans Balance Balance
$46,000,000 to $64,000,000 ===================================================
$64,000,000 to $130,000,000 6.250% or less
$130,000,000 & Above 6.250% to 6.500%
========================================================== 6.500% to 6.750%
Total 6.750% to 7.000%
- ---------------------------------------------------------- 7.000% to 7.250%
Average Scheduled Balance is 7.250% to 7.500%
Maximum Scheduled Balance is 7.500% to 7.750%
Minimum Scheduled Balance is 7.750% to 8.000%
8.000% to 8.250%
8.250% to 8.500%
8.500% to 8.750%
8.750% to 9.000%
9.000% to 9.250%
9.250% to 9.500%
9.500% & Above
===================================================
Total
---------------------------------------------------
W/Avg Mortgage Interest Rate is
Minimum Mortgage Interest Rate is
Maximum Mortgage Interest Rate is
</TABLE>
<PAGE>
GEOGRAPHIC DISTRIBUTION
- ----------------------------------------------------------
Number Scheduled Based on
Geographic Location of Loans Balance Balance
==========================================================
California
New Jersey
Texas
Florida
Pennsylvania
New York
Nevada
Michigan
Utah
Virginia
Georgia
Ohio
Arizona
Washington
Massachusetts
Maryland
Illinois
Iowa
Tennessee
Colorado
Oklahoma
Orgeon
District of Columbia
Connecticut
South Carolina
New Hampshire
Wisconsin
Alabama
Delaware
Various
- ----------------------------------------------------------
Total
- ----------------------------------------------------------
(Copyright) 1999 LaSalle Bank N.A.
B-9
<PAGE>
<TABLE>
<CAPTION>
ABN AMRO GMAC COMMERCIAL MORTGAGE SECURITIES, INC. Statement Date:
LaSalle Bank N.A. GMAC COMMERCIAL MORTGAGE CORPORATION AS MASTER SERVICER Payment Date:
GMAC COMMERCIAL MORTGAGE CORPORATION AS SPECIAL SERVICER Prior Payment:
Administrator: MORTGAGE PASS-THROUGH CERTIFICATES Record Date:
Ann Kelly (800) 246-5761 SERIES 1999-C2
135 S. LaSalle Street Suite 1625 ABN AMRO ACCT: 99-9999-99-9
Chicago, IL 60674-4107 POOL TOTAL
LOAN SEASONING DISTRIBUTION OF REMAINING TERM
- ---------------------------------------------------------- FULLY AMORTIZING
Number Scheduled Based on ---------------------------------------------------
Number of Years of Loans Balance Balance Fully Amortizing Number Scheduled Based on
========================================================== Mortgage Loans of Loans Balance Balance
<S> <C> <C> <C> ===================================================
1 year or less <S> <C> <C> <C>
1+ to 2 years 60 months or less
2+ to 3 years 61 to 120 months
3+ to 4 years 121 to 180 months
4+ to 5 years 181 to 240 months
5+ to 6 years 241 to 360 months
6+ to 7 years ---------------------------------------------------
7+ to 8 years Total
8+ to 9 years ---------------------------------------------------
9+ to 10 years Weighted Average Months to Maturity is
10 years or more
- ----------------------------------------------------------
Total
- ----------------------------------------------------------
Weighted Average Seasoning is
DISTRIBUTION OF AMORTIZATION TYPE
- ----------------------------------------------------------
Number Scheduled Based on DISTRIBUTION OF REMAINING TERM
Amortization Type of Loans Balance Balance BALLOON LOANS
========================================================== ---------------------------------------------------
Fully Amortizing Balloon Number Scheduled Based on
Interest Only / Balloon Mortgage Loans of Loans Balance Balance
Interest Only / Amortizing ===================================================
Interest Only / Amortizing / Balloon 12 months or less
13 to 24 months
25 to 36 months
37 to 48 months
49 to 60 months
61 to 120 months
121 to 180 months
181 to 240 months
========================================================== ===================================================
Total Total
- ---------------------------------------------------------- ---------------------------------------------------
Weighted Average Months to Maturity is
</TABLE>
<PAGE>
DISTRIBUTION OF DSCR
- ------------------------------------------------------------
Debt Service Number Scheduled Based on
Coverage Ratio (1) of Loans Balance Balance
============================================================
1.100 or less
1.100 to 1.250
1.250 to 1.400
1.400 to 1.550
1.550 to 1.700
1.700 to 1.850
1.850 to 2.000
2.000 to 2.150
2.150 to 2.300
2.300 to 2.450
2.450 to 2.600
2.600 to 2.750
2.750 to 2.900
2.900 to 3.050
3.050 & above
Unknown
============================================================
Total
- ------------------------------------------------------------
Weighted Average Debt Service Coverage Ratio is
NOI AGING
- ------------------------------------------------------------
Number Scheduled Based on
NOI Date of Loans Balance Balance
============================================================
1 year or less
1 to 2 years
2 Years or More
Unknown
============================================================
Total
- ------------------------------------------------------------
(1) Debt Service Coverage Ratios are calculated as described in the
prospectus, values are updated periodically as new NOI figures became
available from borrowers on an asset level. Neither the Trustee, Servicer,
Special Servicer or Underwriter makes any representation as to the
accuracy of the data provided by the borrower for this calculation.
(Copyright) 1999 LaSalle Bank N.A.
B-10
<PAGE>
<TABLE>
<CAPTION>
ABN AMRO GMAC COMMERCIAL MORTGAGE SECURITIES, INC. Statement Date:
LaSalle Bank N.A. GMAC COMMERCIAL MORTGAGE CORPORATION AS MASTER SERVICER Payment Date:
GMAC COMMERCIAL MORTGAGE CORPORATION AS SPECIAL SERVICER Prior Payment:
Administrator: MORTGAGE PASS-THROUGH CERTIFICATES Record Date:
Ann Kelly (800) 246-5761 SERIES 1999-C2
135 S. LaSalle Street Suite 1625 ABN AMRO ACCT: 99-9999-99-9
Chicago, IL 60674-4107
LOAN LEVEL DETAIL
============================================================================================================================
Property Operating Ending
Disclosure Type Maturity Statement Principal Note Scheduled
Control # Group Code Date DSCR* Date State Balance Rate P&I
============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
============================================================================================================================
<CAPTION>
======================================
Other Loan
Principal Prepayment Status
Adjustment Date Code (1)
======================================
<C> <C> <C>
======================================
</TABLE>
* NOI and DSCR, if available and reportable under the terms of the trust
agreement, are based on information obtained from the related borrower,
and no other party to the agreement shall be held liable for the accuracy
or methodology used to determine such figures.
- --------------------------------------------------------------------------------
(1) Legend: A. P&I Adv - in Grace Period 1. P&I Adv - delinquent 1 month
B. P&I Adv - (less than) one month 2. P&I Adv - delinquent 2 months
delinq.
================================================================================
- --------------------------------------------------------------------------------
3. P&I Adv - delinquent 3+ months 5. Prepaid in Full 7. Foreclosure
4. Mat. Balloon/Assumed P&I 6. Specially Serviced 8. Bankruptcy
================================================================================
- --------------------------
9. REO 11. Modification
10. DPO
==========================
(Copyright) 1999 LaSalle Bank N.A.
B-11
<PAGE>
<TABLE>
<CAPTION>
ABN AMRO GMAC COMMERCIAL MORTGAGE SECURITIES, INC. Statement Date: 04/15/99
LaSalle Bank N.A. GMAC COMMERCIAL MORTGAGE CORPORATION AS MASTER SERVICER Payment Date: 04/15/99
GMAC COMMERCIAL MORTGAGE CORPORATION AS SPECIAL SERVICER Prior Payment: 03/15/99
Administrator: MORTGAGE PASS-THROUGH CERTIFICATES Record Date: 03/31/99
Ann Kelly (800) 246-5761 SERIES 1999-C2
135 S. LaSalle Street Suite 1625 ABN AMRO ACCT: 67-7997-10-8
Chicago, IL 60674-4107
SPECIALLY SERVICED LOAN DETAIL
====================================================================================================================================
Beginning Specially
Disclosure Scheduled Interest Maturity Property Serviced
Control # Balance Rate Date Type Status Code(1) Comments
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
====================================================================================================================================
(1) Legend:
1) Request for waiver of Prepayment Penalty 4) Loan with Borrower Bankruptcy 7) Loans Paid Off
2) Payment default 5) Loan in Process of Foreclosure 8) Loans Returned to Master Servicer
3) Request for Loan Modification or Workout 6) Loan now REO Property
====================================================================================================================================
APPENDIX A
</TABLE>
(Copyright) 1999 LaSalle Bank N.A.
B-12
<PAGE>
<TABLE>
<CAPTION>
ABN AMRO GMAC COMMERCIAL MORTGAGE SECURITIES, INC. Statement Date: 04/15/99
LaSalle Bank N.A. GMAC COMMERCIAL MORTGAGE CORPORATION AS MASTER SERVICER Payment Date: 04/15/99
GMAC COMMERCIAL MORTGAGE CORPORATION AS SPECIAL SERVICER Prior Payment: 03/15/99
Administrator: MORTGAGE PASS-THROUGH CERTIFICATES Record Date: 03/31/99
Ann Kelly (800) 246-5761 SERIES 1999-C2
135 S. LaSalle Street Suite 1625 ABN AMRO ACCT: 67-7997-10-8
Chicago, IL 60674-4107
MODIFIED LOAN DETAIL
====================================================================================================================================
Disclosure Modification Modification
Control # Date Description
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
====================================================================================================================================
APPENDIX B
</TABLE>
(Copyright) 1999 LaSalle Bank N.A.
B-13
<PAGE>
<TABLE>
<CAPTION>
ABN AMRO GMAC COMMERCIAL MORTGAGE SECURITIES, INC. Statement Date: 04/15/99
LaSalle Bank N.A. GMAC COMMERCIAL MORTGAGE CORPORATION AS MASTER SERVICER Payment Date: 04/15/99
GMAC COMMERCIAL MORTGAGE CORPORATION AS SPECIAL SERVICER Prior Payment: 03/15/99
Administrator: MORTGAGE PASS-THROUGH CERTIFICATES Record Date: 03/31/99
Ann Kelly (800) 246-5761 SERIES 1999-C2
135 S. LaSalle Street Suite 1625 ABN AMRO ACCT: 67-7997-10-8
Chicago, IL 60674-4107
REALIZED LOSS DETAIL
====================================================================================================================================
Beginning Gross Proceeds Aggregate Net Net Proceeds
Dist. Disclosure Appraisal Appraisal Scheduled Gross as a % of Liquidation Liquidation as a % of Realized
Date Control # Date Value Balance Proceeds Sched Principal Expenses* Proceeds Sched. Balance Loss
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Current Total 0.00 0.00 0.00 0.00 0.00
Cumulative 0.00 0.00 0.00 0.00 0.00
====================================================================================================================================
APPENDIX C
* Aggregate liquidation expenses also include outstanding P&I advances and unpaid servicing fees, unpaid trustee fees, etc.
</TABLE>
(Copyright) 1999 LaSalle Bank N.A.
B-14
<PAGE>
GMAC Commercial Mortgage Securites, Inc.
Series 1999-C2
DELINQUENT LOAN STATUS REPORT
as of _______________
<TABLE>
<CAPTION>
VALUATION APPRAISAL LOSS USING ESTIMATED TOTAL PROSPECTUS
DATE BPO OR 90% APPR. RECOVERY APPRAISAL ID
INTERNAL OR BPO (f) % REDUCTION
VALUE** REALIZED
<S> <C> <C> <C> <C> <C>
<CAPTION>
SHORT NAME PROPERTY CITY STATE TRANSFER RESOLUTION FCL EXPECTED WORKOUT COMMENTS
(WHEN TYPE DATE DATE START FCL SALE STRATEGY
APPROPRIATE) DATE DATE
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
(Copyright) LaSalle Bank N.A.
B-15
<PAGE>
GMAC Commercial Mortgage Securites, Inc.
Series 1999-C2
HISTORICAL LOAN MODIFICATION REPORT
as of _________________
<TABLE>
<CAPTION>
PROSPECTUS CITY STATE MOD / EFFECT BALANCE BALANCE OLD # MTHS NEW OLD NEW OLD
ID EXTENSION DATE WHEN AT THE RATE FOR RATE RATE P&I P&I MATURITY
FLAG SENT TO EFFECTIVE CHANGE
SPECIAL DATE OF
SERVICER REHABILITATION
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
THIS REPORT IS HISTORICAL
Information is as of modification. Each line it should not change in the future. Only new modifications should be added.
- ------------------------------------------------------------------------------------------------------------------------
TOTAL FOR ALL LOANS:
TOTAL FOR LOANS IN CURRENT MONTH:
# OF LOANS $ BALANCE
MODIFICATIONS:
MATURITY DATE EXTENTIONS:
- ------------------------------------------------------------------
TOTAL:
<CAPTION>
NEW TOTAL # (1) (2) EST. COMMENT
MATURITY MTHS REALIZED FUTURE
FOR LOSS TO INTEREST
CHANGE TRUST $ LOSS TO
OF TRUST $
MOD (RATE
REDUCTION)
- --------------------------------------------------------------
<C> <C> <C> <C> <C>
</TABLE>
* The information in these columns is from a particular point in time and
should not change on this report once assigned.
(1) Actual principal loss taken by bonds
(2) Expected future loss due to a rate reduction. This is just an estimate
calculated at the time of the modification.
(Copyright) LaSalle Bank N.A.
B-16
<PAGE>
GMAC Commericial Mortgage Securites, Inc.
Series 1999-C2
HISTORICAL LOSS ESTIMATE REPORT (REO-SOLD OR DISCOUNTED PAYOFF)
as of ___________________
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
PROSPECTUS SHORT PROPERTY CITY STATE % LATEST EFFECT DATE SALES NET AMT
ID NAME TYPE RECEIVED APPRAISAL OF SALE PRICE RECEIVED
(WHEN FROM SALE OR BROKERS FROM SALE
APPROPRIATE) OPINION
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
THIS REPORT IS HISTORICAL
All information is from the liquidation date and does not need to be updated.
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL ALL LOANS:
CURRENT MONTH ONLY:
- ----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
SCHEDULED TOTAL P&I TOTAL SERVICING NET ACTUAL DATE LOSS MINOR ADJ DATE TOTAL LOSS LOSS % OF
BALANCE ADVANCED EXPENSES FEES PROCEEDS LOSSES PASSED TO TRUST MINOR ADJ WITH SCHEDULED
EXPENSE PASSED THRU PASSED THRU ADJUSTMENT BALANCE
THRU
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
(Copyright) LaSalle Bank N.A.
B-17
<PAGE>
<TABLE>
<CAPTION>
GMAC Commercial Mortgage Securites, Inc.
Series 1999-C2
REO STATUS REPORT
as of_____________
- ------------------------------------------------------------------------------------------------------------------------------------
Other
Pro- Short Name Paid Scheduled Total P&I Total Advances
spectus (When Property Sq Ft Thru Loan Advances Expenses (Taxes Total
ID Appropriate) Type City State or Units Date Balance To Date To Date & Escrow) Exposure
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Current LTM LTM Cap Value using Appraisal BPO Loss using
Monthly Maturity NOI NOI/ Rate Valuation NOI & Cap or Internal 92% Appr. Estimated
P&I Date Date DSC Assign *** Date Rate Value** or BPO (f) Recovery %
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
Total Appraisal Transfer REO Pending
Reduction Realized Date Acquisition Date Resolution Date Comments
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
(1) Use the following codes; App. - Appraisal, BPO - Brokers Opinion,
Int - Internal Value
*** How to determine the cap rate is agreed upon by Underwriter and servicers -
to be provided by a third party.
B-18
<PAGE>
GMAC Commercial Mortgage Securities, Inc.
Series 1999-C2
SERVICER WATCH LIST
as of ___________
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
S4 S55 S61 S57 S58 P7 P8 P11 P54
- --------------------------------------------------------------------------------------------------------------------------------
Prospectus Short Name Property City State Scheduled Paid Maturity LTM* Comment / Reason on Watch List
ID (When Type Loan Thru Date DSCR
Appropriate) Balance Date
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
List all loans on watch list and reason sorted in descending balance order.
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
Total: $
- --------------------------------------------------------------------------------------------------------------------------------
*LTM - Last 12 months either trailing or last annual
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-19
<PAGE>
GMAC Commercial Mortgage Securities, Inc.
Series 1999-C2
COMPARATIVE FINANCIAL STATUS REPORT
as of _______
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Prospectus City State Last Property Scheduled Paid Thru Date Annual
ID Inspect Date Loan Balance Debt Service
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
yy/mm
- ------------------------------------------------------------------------------------------------------------------------------------
List all loans currently in deal with or with out information largest to smallest loan
Total: $ $
Financial Information:
Current Full Year:
Current Full Yr. received with DSC (less than) 1:
Prior Full Year:
Prior Full Yr. received with DSC (less than) 1:
Quarterly Financials:
(1) DSC calculated using NOI / Debt Service
(2) Net change should compare the latest year to the underwriting year
</TABLE>
<TABLE>
<CAPTION>
Original Underwriting Information 2nd Preceding Annual Operating Information
- ------------------------------------------------------------------------------------------------------------------------------------
Basis Year as of _______ Normalized
- ------------------------------------------------------------------------------------------------------------------------------------
Financial % Total $ Financial % Total $
Info as of Date Occ Revenue NOI DSCR Info as of Date Occ Revenue NOI DSCR
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
yy/mm yy/mm
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
WA $ $ WA WA $ $ WA
- ------------------------------------------------------------------------------------------------------------------------------------
Received Required
- ------------------------------------------------------------------------------------------------------------------------------------
Loans Balance Loans Balance
- ------------------------------------------------------------------------------------------------------------------------------------
# % $ % # % $ %
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Preceding Annual Operating Inform YTD or Trailing Financial Informati Net Change
- ------------------------------------------------------------------------------------------------------------------------------------
as of _______ Normalized Month Reported "Actual" Preceding & Basis
- ------------------------------------------------------------------------------------------------------------------------------------
Financial Info % Total $ FS FS Total $ % % %
as of Date Occ Revenue NOI DSCR Start Date End Date Revenue NOI DSC Occ Total Rev DSC
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
yy/mm yy/mm yy/mm
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
WA $ $ WA WA $ $ WA WA $ WA
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-20
<PAGE>
GMAC Commercial Mortgage Securites, Inc.
Series 1999-C2
OPERATING STATEMENT ANALYSIS REPORT
as of ____________
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
PROPERTY OVERVIEW
Control Number
Current Balance/Paid to Date
Property Name
Property Type
Property Address, City, State
Net Rentable Square Feet
Year Built/Year Renovated
Year of Operations Underwriting 199 199 199 YTD
Occupancy Rate *
Average Rental Rate
* Occupancy rates are year end or the ending date of the financial statement for the period.
INCOME: No. of Mos.
Number of Mos. Annualized Prior Year Current Yr.
Period Ended Underwriting 199 199 199 199 YTD** 199 -Base 199 -199
Statement Classification Base Line Normalized Normalized Normalized as of / /96 Variance Variance
Rental Income (Category 1)
Rental Income (Category 2)
Rental Income (Category 3)
Pass Through/Escalations
Other Income
Effective Gross Income $0.00 $0.00 $0.00 $0.00 $0.00 % %
Normalized - Full year Financial statements that have been reviewed by the underwriter or
Servicer
** Servicer will not be expected to "Normalize" these YTD numbers.
OPERATING EXPENSES:
Real Estate Taxes
Property Insurance
Utilities
Repairs and Maintenance
Management Fees
Payroll & Benefits Expense
Advertising & Marketing
Professional Fees
Other Expenses
Ground Rent
TOTAL OPERATING EXPENSES $0.00 $0.00 $0.00 $0.00 $0.00 % %
OPERATING EXPENSE RATIO
NET OPERATING INCOME $0.00 $0.00 $0.00 $0.00 $0.00
Leasing Commissions
Tenant Improvements
Replacement Reserve
TOTAL CAPITAL ITEMS $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
N.O.I. AFTER CAPITAL ITEMS $0.00 $0.00 $0.00 $0.00 $0.00
DEBT SERVICE (PER SERVICER) $0.00 $0.00 $0.00 $0.00 $0.00
CASH FLOW AFTER DEBT SERVICE $0.00 $0.00 $0.00 $0.00 $0.00
(1) DSCR: (NOI/DEBT SERVICE)
DSCR: (AFTER RESERVES\CAP EXP.)
SOURCE OF FINANCIAL DATA:
(ie. operating statements, financial statements, tax return, other)
NOTES AND ASSUMPTIONS:
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The years shown above will roll always showing a three year history.
This report may vary depending on the property type and because of the way
information may vary in each borrowers statement.
Rental Income need to be broken down whenever possible differently for each
property type as follows: Retail: 1) Base Rent 2)Percentage rents on cashflow
Hotel: 1)Room Revenue 2)Food/Beverage Nursing Home: 1)Private 2) Medicaid 3)
Medicare
INCOME: COMMENT
EXPENSE: COMMENT
CAPITAL ITEMS: COMMENT
(1) Used in the Comparative Financial Status Report
B-21
<PAGE>
GMAC Commercial Mortgage Securites, Inc.
Series 1999-C2
NOI ADJUSTMENT WORKSHEET FOR "YEAR"
as of _______
<TABLE>
<CAPTION>
PROPERTY OVERVIEW
<S> <C> <C> <C> <C> <C> <C>
Control Number
Current Balance/Paid to Date
Property Name
Property Type
Property Address, City, State
Net Rentable Square Feet
Year Built/Year Renovated
Year of Operations Borrower Adjustment Normalized
Occupancy Rate *
Average Rental Rate
* Occupancy rates are year end or the ending date of the financial statement for the period.
INCOME:
Number of Mos.Annualized "Year"
Period Ended Borrower Adjustment Normalized
Statement Classification Actual
Rental Income (Category 1)
Rental Income (Category 2)
Rental Income (Category 3)
Pass Throughs/Escalations
Other Income
EFFECTIVE GROSS INCOME $0.00 $0.00 $0.00
Normalized - Full year Financial statements that have been reviewed by the underwriter or
Servicer
OPERATING EXPENSES:
Real Estate Taxes
Property Insurance
Utilities
Repairs and Maintenance
Management Fees
Payroll & Benefits Expense
Advertising & Marketing
Professional Fees
Other Expenses
Ground Rent
TOTAL OPERATING EXPENSES $0.00 $0.00 $0.00
OPERATING EXPENSE RATIO
NET OPERATING INCOME $0.00 $0.00 $0.00
Leasing Commissions
Tenant Improvements
Replacement Reserve
TOTAL CAPITAL ITEMS $0.00 $0.00 $0.00
N.O.I. AFTER CAPITAL ITEMS $0.00 $0.00 $0.00
DEBT SERVICE (PER SERVICER) $0.00 $0.00 $0.00
CASH FLOW AFTER DEBT SERVICE $0.00 $0.00 $0.00
(1)DSCR: (NOI/DEBT SERVICE)
DSCR: (AFTER RESERVES\CAP EXP.)
SOURCE OF FINANCIAL DATA:
(ie. operating statements, financial statements, tax return, other)
</TABLE>
NOTES AND ASSUMPTIONS:
- --------------------------------------------------------------------------------
This report should be completed by the Servicer for any "Normalization" of the
Borrowers numbers.
The "Normalized" column is used in the Operating Statement Analysis Report.
This report may vary depending on the property type and because of the way
information may vary in each borrowers statement.
INCOME: COMMENTS
EXPENSE: COMMENTS
CAPITAL ITEMS: COMMENTS
(1) Used in the Comparative Financial Status Report
B-22
<PAGE>
<TABLE>
STRUCTURAL AND COLLATERAL TERM SHEET
$ 974,502,237 (APPROXIMATE COLLATERAL BALANCE) MAY 25, 1999
GMAC COMMERCIAL MORTGAGE SECURITIES, INC.
MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1999-C2
APPROXIMATE SECURITIES STRUCTURE:
- ---------------------------------
<CAPTION>
APPROXIMATE EXPECTED CREDIT EXPECTED EXPECTED
EXPECTED RATING FACE/NOTIONAL SUPPORT WEIGHTED AVERAGE PAYMENT
CLASS (A) MDY'S/S&P/FITCH AMOUNT (MM) (% OF UPB) LIFE (YEARS) (B) WINDOW
- ------------------------------------------------------------------------------------------------------
PUBLICLY OFFERED CLASSES
<S> <C> <C> <C> <C> <C>
X Aaa/AAAr/AAA $974.5 (c) N/A 10.0 7/99-1/24
A1 Aaa/AAA/AAA 150.3 28.25 5.7 7/99-12/08
A2 Aaa/AAA/AAA 549.0 28.25 9.7 12/08-5/09
B Aa2/AA/AA 51.2 23.00 9.9 5/09-5/09
C A2/A/A 48.7 18.00 9.9 5/09-5/09
D A3/A-/A- 14.6 16.50 10.0 5/09-6/09
E Baa2/BBB/BBB 41.4 12.25 10.9 6/09-8/11
F Baa3/BBB-/BBB- 12.2 11.00 12.8 8/11-11/12
G Baa3/NR/NR 12.2 9.75 14.0 11/12-1/14
PRIVATELY OFFERED CLASSES (D)
- ------------------------------------------------------------------------------------------------------
H - - - - -
J - - - - -
K - - - - -
L - - - - -
M - - - - -
N - - - - -
TOTAL SECURITIES: $974.5
- ------------------------------------------------------------------------------------------------------
(a) Class A1 is expected to have a fixed pass-through rate. Classes A2, B, C and D are expected to
have a fixed pass-through rate subject to a cap equal to the weighted average Net Mortgage
Pass-Through Rate. Classes E, F and G are expected to have a pass-through rate equal to the
weighted average Net Mortgage Pass-Through Rate.
(b) Calculated at 0% CPR, assuming no balloon payment extension and that ARD Loans pay in full on
Anticipated Repayment Dates.
(c) Notional amount on interest only class.
(d) Not offered hereby.
KEY FEATURES:
- -------------
Lead Manager: Donaldson, Lufkin & Jenrette Securities Corporation
Co-Managers: Deutsche Bank Securities Goldman, Sachs & Co.
Mortgage Loan Seller: GMAC Commercial Mortgage Corporation
Master Servicer: GMAC Commercial Mortgage Corporation
Special Servicer: GMAC Commercial Mortgage Corporation
Trustee: LaSalle Bank National Association
Launch: May 12, 1999
Pricing: May 25, 1999
Closing: June 9, 1999
Cut-Off Date: June 1and 10, 1999
Distribution Date: 15th of each month, or following business day (commencing
July 1999)
Payment Delay: 14 days
ERISA Eligible: Classes A1, A2, and X are expected to be ERISA eligible
subject to certain conditions for eligibility.
SMMEA Eligible: Classes A1, A2, X and B are expected to be SMMEA securities
upon issuance.
Structure: Sequential pay
Day Count: 30/360
Tax Treatment: REMIC
Rated Final Distribution Date: September 2033
Clean up Call: 1.0%
Minimum Denominations: Publicly Offered Classes except Class X: $25,000 & $1
Class X: $1,000,000 Notional Amount & $1
Delivery: DTC
- ------------------------------------------------------------------------------------------------------
COLLATERAL FACTS:
- -----------------
Initial Pool Balance: $974,502,237
Number of Mortgage Loans: 121
Number of Mortgaged Properties: 162
Average Cut-Off Date Balance: $8,053,737
Weighted Average Current Mortgage Rate: 7.406%
Weighted Average U/W DSCR (a) (b): 1.40x
Weighted Average Cut-Off Date LTV Ratio (a) (b): 68.28%
Weighted Average Remaining Term to Maturity (months): 136.6
Weighted Average Remaining Amortization Term (months): 332.7
Weighted Average Seasoning (months): 3.0
CTL Loans as a % of Total 14.15%
Balloon Loans as % of Total (c): 95.0%
Single Largest Loan as % of Total: 10.26%
Five Largest Loans as % of Total: 27.58%
Ten Largest Loans as % of Total: 40.36%
(a) All DSCR and LTV information presented herein is generally calculated as though any related
earnout reserve had been applied to reduce or defease the primary balance of the mortgage loan.
(b) The DSCR and LTV information does not reflect the 8 CTL loans representing 14.15% of the
Aggregate Cut-Off Date Balance.
(c) Includes 4 ARD loans totaling $148.8 mm and 15.27% of the pool Cut-Off date balance.
TEN LARGEST LOANS OR SPONSORS
- -----------------------------
ORIGINAL
LOAN BALANCE % BY UPB LTV DSCR PROPERTY TYPE
- ------------------------------------------------------------------------------------------------------
PREIT Portfolio (a) $108,000,000 11.07% 67.45% 1.57x Multifamily
Queens Center Retail 100,000,000 10.26 62.50 1.61 Retail
Ingram Micro Headquarters (b) 72,880,000 7.45 98.30 1.00 Office - CTL
The Palmer Center 54,000,000 5.52 74.47 1.24 Office
The Squaw Peak Loan (c) 36,000,000 3.69 66.06 1.20 Office
Red Rose Commons 28,320,000 2.91 80.00 1.24 Retail
University of Nevada Property 27,000,000 2.76 89.52 1.15 Other - CTL
Holiday Inn Mart Plaza 26,500,000 2.72 47.41 2.06 Full Service Hotel
Fairfield Towers 25,258,000 2.58 74.48 1.23 Multifamily
729 Seventh Avenue 23,500,000 2.40 61.66 1.24 Office
- ------------------------------------------------------------------------------------------------------
(a) 8 loans with affiliated borrowers make up this group of loans. Not cross-collateralized.
(b) 2 loans with affiliated borrowers make up this group of loans on 3 properties. Not
cross-collateralized.
(c) 1 loan on 3 properties.
SELECTED LOAN DATA:
- -------------------
NUMBER OF CUT-OFF DATE BALANCE
MORTGAGED -------------------------------------------------------
GEOGRAPHIC DISTRIBUTION PROPERTIES (MM) % BY UPB WTD. AVG. DSCR (A)
- ------------------------------------------------------------------------------------------------------
New York 17 $197.4 20.3% 1.45x
California 26 194.9 20.0 1.33
Pennsylvania 30 72.3 7.4 1.40
Florida 9 70.6 7.2 1.53
Colorado 2 56.2 5.8 1.25
Other (b) 78 383.1 39.3 1.39
--- ------ ----- -----
TOTAL/WTD. AVG. 162 $974.5 100.0% 1.40x
- ------------------------------------------------------------------------------------------------------
PROPERTY TYPE
- ------------------------------------------------------------------------------------------------------
Office 23 $271.8 27.9% 1.27x
Multifamily 75 261.7 26.9 1.40
Retail 36 261.0 26.8 1.44
Other 7 69.2 7.1 1.40
Hospitality 5 57.4 5.9 1.76
Industrial 13 44.3 4.5 1.28
Mixed Use 3 9.2 0.9 1.29
--- ------ ----- -----
TOTAL/WTD. AVG. 162 $974.5 100.0% 1.40x
- ------------------------------------------------------------------------------------------------------
PREPAYMENT RESTRICTIONS
- ------------------------------------------------------------------------------------------------------
Lockout/Defeasance 121 $974.5 100% 1.40x
--- ------ ---- -----
TOTAL/WTD. AVG. 121 $974.5 100% 1.40x
- ------------------------------------------------------------------------------------------------------
(a) The DSCR information does not reflect the 8 CTL loans representing 14.15% of the Aggregate
Cut-Off Date Balance.
(b) Includes 23 states.
</TABLE>
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets.
This material is furnished to you by Donaldson, Lufkin & Jenrette Securities
Corporation, Deutsche Bank Securities, and Goldman, Sachs & Co. and not by the
issuer of the securities. Donaldson, Lufkin & Jenrette Securities Corporation is
acting as the lead manager and Deutsche Bank Securities and Goldman, Sachs Co.
are acting as the co-managers and none of these parties are acting as agent for
the issuer or its affiliates in connection with the proposed transaction.
Neither the issuer nor any of its affiliates has prepared or taken part in the
preparation of these materials and neither makes any representation as to the
accuracy of these materials.
C-1
<PAGE>
STRUCTURAL AND COLLATERAL TERM SHEET
- --------------------------------------------------------------------------------
STRUCTURAL OVERVIEW
- --------------------------------------------------------------------------------
O For purposes of calculating principal distributions of the Certificates:
-- Available principal will be allocated sequentially to the Class A1, A2,
B, C, D, E, F, G, H, J, K, L, M, N certificates.
O Realized losses will be allocated to the principal balance of Class N, M, L,
K, J, H, G, F, E, D, C, B until reduced to zero and then to the class A1 and
A2 pro rata.
O Class X will be entitled to receive payments of interest only and will not
receive any payments of principal. Class X will be entitled to payments of
interest pro rata (based on interest entitlements) with the Class A1 and A2
Certificates each month.
O Each class will be subordinate to the Class A1, A2, and X and to each class
with an earlier alphabetic designation than such class.
O All classes will pay interest on a 30/360 basis.
O The Master Servicer will cover net prepayment interest shortfalls, provided
that with respect to any loans with due dates on or preceding the related
determination date the Master Servicer will only cover net prepayment
interest shortfalls up to the Master Servicing fee equal to 2 basis points
per annum on the principal balance of such loans. Net prepayment interest
shortfalls (after application of prepayment interest excesses and other
Servicer coverage from the Master Servicing Fee) will be allocated pro-rata
(based on interest entitlements) to all Certificates.
O Interest shortfalls resulting from Master Servicer and Special Servicer
modifications, Special Servicer compensation or other extraordinary trust
fund expenses will be allocated in reverse alphabetical order to classes of
outstanding regular Certificates with the Class X considered most senior.
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets.
This material is furnished to you by Donaldson, Lufkin & Jenrette Securities
Corporation, Deutsche Bank Securities, and Goldman, Sachs & Co. and not by the
issuer of the securities. Donaldson, Lufkin & Jenrette Securities Corporation is
acting as the lead manager and Deutsche Bank Securities and Goldman, Sachs Co.
are acting as the co-managers and none of these parties are acting as agent for
the issuer or its affiliates in connection with the proposed transaction.
Neither the issuer nor any of its affiliates has prepared or taken part in the
preparation of these materials and neither makes any representation as to the
accuracy of these materials.
C-2
<PAGE>
STRUCTURAL AND COLLATERAL TERM SHEET
- --------------------------------------------------------------------------------
DISTRIBUTION OF CUT-OFF DATE BALANCES (A)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE WEIGHTED
PERCENTAGE WEIGHTED REMAINING AVERAGE
RANGE OF NUMBER OF CUT-OFF OF AGGREGATE AVERAGE WEIGHTED AVERAGE TERM TO CUT-OFF
CUT-OFF DATE MORTGAGE DATE CUT-OFF CUT-OFF DATE AVERAGE MORTGAGE MATURITY DATE LTV
BALANCES LOANS BALANCE DATE BALANCE BALANCE DSCR RATE (MOS) RATIO
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$638,827 - 999,999 2 $ 1,607,214 0.16% $ 803,607 1.26x 8.247% 117.0 61.78%
1,000,000 - 1,999,999 20 31,990,825 3.28 1,599,541 1.33 7.799 124.9 68.19
2,000,000 - 2,999,999 19 48,256,765 4.95 2,539,830 1.34 7.757 142.5 71.47
3,000,000 - 3,999,999 19 66,858,065 6.86 3,518,846 1.37 7.709 135.8 69.43
4,000,000 - 4,999,999 14 62,650,771 6.43 4,475,055 1.28 7.699 128.6 71.15
5,000,000 - 5,999,999 10 56,329,155 5.78 5,632,916 1.37 7.616 117.2 70.57
6,000,000 - 6,999,999 2 13,627,015 1.40 6,813,507 1.45 7.944 118.0 70.67
7,000,000 - 7,999,999 8 59,159,649 6.07 7,394,956 1.36 7.552 124.5 71.95
8,000,000 - 8,999,999 2 17,424,724 1.79 8,712,362 1.30 7.179 130.3 75.55
9,000,000 - 9,999,999 1 9,132,449 0.94 9,132,449 1.28 7.250 235.0 68.67
10,000,000 - 13,999,999 7 84,320,280 8.65 12,045,754 1.44 7.212 144.0 71.05
14,000,000 - 16,999,999 2 32,073,693 3.29 16,036,846 1.53 7.365 119.0 59.21
17,000,000 - 19,999,999 3 55,835,359 5.73 18,611,786 1.41 7.820 168.8 73.74
20,000,000 - 24,999,999 4 87,914,138 9.02 21,978,535 1.34 7.257 135.7 59.11
25,000,000 - 29,999,999 4 106,829,924 10.96 26,707,481 1.52 7.570 148.4 67.46
30,000,000 - 39,999,999 1 36,000,000 3.69 36,000,000 1.20 7.800 114.0 66.06
40,000,000 - 59,999,999 2 104,492,212 10.72 52,246,106 1.24 7.103 152.9 74.47
60,000,000 - Over 1 100,000,000 10.26 100,000,000 1.61 6.560 117.0 62.50
- ----------- ----- ----------- ---- ----- ----- -----
TOTAL/WTD. AVG. 121 $974,502,237 100.00% $ 8,053,737 1.40x 7.406% 136.6 68.28%
=== ============ ======= ============ ===== ====== ===== ======
- -----------------------------------------------------------------------------------------------------------------------------------
(a) The DSCR and LTV information does not reflect the 8 CTL loans representing 14.15% of the Aggregate Cut-Off Date Balance.
</TABLE>
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets.
This material is furnished to you by Donaldson, Lufkin & Jenrette Securities
Corporation, Deutsche Bank Securities, and Goldman, Sachs & Co. and not by the
issuer of the securities. Donaldson, Lufkin & Jenrette Securities Corporation is
acting as the lead manager and Deutsche Bank Securities and Goldman, Sachs Co.
are acting as the co-managers and none of these parties are acting as agent for
the issuer or its affiliates in connection with the proposed transaction.
Neither the issuer nor any of its affiliates has prepared or taken part in the
preparation of these materials and neither makes any representation as to the
accuracy of these materials.
C-3
<PAGE>
STRUCTURAL AND COLLATERAL TERM SHEET
- --------------------------------------------------------------------------------
DISTRIBUTION OF MORTGAGED PROPERTIES BY STATE (A)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE WEIGHTED
PERCENTAGE OF WEIGHTED REMAINING AVERAGE
NUMBER OF CUT-OFF AGGREGATE AVERAGE WEIGHTED AVERAGE TERM TO CUT-OFF
MORTGAGED DATE CUT-OFF DATE CUT-OFF DATE AVERAGE MORTGAGE MATURITY DATE LTV
STATE PROPERTIES BALANCE BALANCE BALANCE DSCR RATE (MOS) RATIO
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
New York 17 $197,449,412 20.26% $11,614,671 1.45x 7.059% 120.6 64.09%
California 26 194,922,148 20.00 7,497,006 1.33 7.519 151.6 67.62
Pennsylvania 30 72,269,982 7.42 2,408,999 1.40 7.361 118.0 75.90
Florida 9 70,566,782 7.24 7,840,754 1.53 6.943 126.3 62.09
Colorado 2 56,167,758 5.76 28,083,879 1.25 7.048 115.2 74.60
Illinois 2 46,132,141 4.73 23,066,071 2.08 8.224 180.9 47.36
Texas 15 44,804,427 4.60 2,986,962 1.35 7.884 123.1 68.85
Arizona 3 41,590,286 4.27 13,863,429 1.23 7.641 114.5 67.06
Nevada 2 28,497,783 2.92 14,248,891 1.40 7.368 230.0 59.70
Virginia 4 26,507,797 2.72 6,626,949 1.34 7.581 199.2 74.86
New Jersey 8 26,032,047 2.67 3,254,006 1.30 7.684 142.8 72.54
Maryland 3 24,419,023 2.51 8,139,674 1.43 6.934 118.3 73.16
Ohio 2 17,936,784 1.84 8,968,392 1.58 6.773 119.0 72.93
Connecticut 6 17,443,028 1.79 2,907,171 1.24 7.580 116.0 76.99
Michigan 5 16,040,567 1.65 3,208,113 1.28 7.802 128.1 73.75
Massachusetts 6 15,996,634 1.64 2,666,106 1.31 8.248 169.5 63.96
Georgia 5 15,878,461 1.63 3,175,692 1.29 7.593 131.4 77.24
Missouri 4 14,266,460 1.46 3,566,615 1.29 7.576 119.0 74.95
North Carolina 3 11,816,419 1.21 3,938,806 1.46 8.067 117.8 69.07
Alaska 1 7,488,235 0.77 7,488,235 1.27 7.920 179.0 71.32
New Hampshire 1 5,589,454 0.57 5,589,454 1.26 7.880 117.0 73.55
Louisiana 2 4,793,411 0.49 2,396,706 1.25 8.063 125.8 73.99
Kentucky 1 4,562,409 0.47 4,562,409 1.20 6.800 116.0 79.35
Iowa 1 4,112,079 0.42 4,112,079 1.23 7.790 117.0 79.54
Rhode Island 1 3,897,657 0.40 3,897,657 1.47 7.560 119.0 69.98
Minnesota 1 2,128,514 0.22 2,128,514 1.22 7.610 118.0 70.95
Indiana 1 1,998,830 0.21 1,998,830 1.26 7.660 119.0 68.93
South Dakota 1 1,193,708 0.12 1,193,708 1.32 7.000 116.0 68.21
- --------- ---- --------- ---- ----- ----- -----
TOTAL/WTD. AVG. 162 $974,502,237 100.00% $6,015,446 1.40x 7.406% 136.6 68.28%
=== ============ ======= ========== ===== ====== ===== ======
- ---------------------------------------------------------------------------------------------------------------------------
(a) The DSCR and LTV information does not reflect the 8 CTL loans representing 14.15% of the Aggregate Cut-Off Date
Balance.
</TABLE>
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets.
This material is furnished to you by Donaldson, Lufkin & Jenrette Securities
Corporation, Deutsche Bank Securities, and Goldman, Sachs & Co. and not by the
issuer of the securities. Donaldson, Lufkin & Jenrette Securities Corporation is
acting as the lead manager and Deutsche Bank Securities and Goldman, Sachs Co.
are acting as the co-managers and none of these parties are acting as agent for
the issuer or its affiliates in connection with the proposed transaction.
Neither the issuer nor any of its affiliates has prepared or taken part in the
preparation of these materials and neither makes any representation as to the
accuracy of these materials.
C-4
<PAGE>
STRUCTURAL AND COLLATERAL TERM SHEET
- --------------------------------------------------------------------------------
DISTRIBUTION OF MORTGAGED PROPERTIES BY STATE
- --------------------------------------------------------------------------------
[UNITED STATES MAP]
AK SD LA KY NC CT
0.77% 0.12% 0.49% 0.47% 1.21% 1.79%
CA TX IL NH GA NJ
20.00% 4.60% 4.73% 0.57% 1.63% 2.67%
NV MN MI NY FL MD
2.92% 0.22% 1.65% 20.26% 7.24% 2.51%
AZ IA IN PA MA
4.27% 0.42% 0.21% 7.42% 1.64%
CO MO OH VA RI
5.76% 1.46% 1.84% 2.72% 0.40%
[PIE CHART]
Other (a) 29.99%
New York 20.26%
California 20.00%
Pennsylvania 7.42%
Florida 7.24%
Colorado 5.76%
Illinois 4.73%
Texas 4.60%
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets.
This material is furnished to you by Donaldson, Lufkin & Jenrette Securities
Corporation, Deutsche Bank Securities, and Goldman, Sachs & Co. and not by the
issuer of the securities. Donaldson, Lufkin & Jenrette Securities Corporation is
acting as the lead manager and Deutsche Bank Securities and Goldman, Sachs Co.
are acting as the co-managers and none of these parties are acting as agent for
the issuer or its affiliates in connection with the proposed transaction.
Neither the issuer nor any of its affiliates has prepared or taken part in the
preparation of these materials and neither makes any representation as to the
accuracy of these materials.
C-5
<PAGE>
STRUCTURAL AND COLLATERAL TERM SHEET
- --------------------------------------------------------------------------------
DISTRIBUTION OF PROPERTY TYPES (A)
- --------------------------------------------------------------------------------
[PIE CHART]
Office 27.89%
Multi-family 26.85%
Retail 26.78%
Other 7.10%
Mixed Use 0.94%
Hospitality 5.89%
Industrial 4.54%
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE WEIGHTED
PERCENTAGE WEIGHTED REMAINING AVERAGE
NUMBER OF CUT-OFF OF AGGREGATE AVERAGE WEIGHTED AVERAGE TERM TO CUT-OFF
MORTGAGED DATE CUT-OFF DATE CUT-OFF DATE AVERAGE MORTGAGE MATURITY DATE LTV
PROPERTY TYPE PROPERTIES BALANCE BALANCE BALANCE DSCR RATE (MOS) RATIO
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Office 23 $271,764,046 27.89% $11,815,828 1.27x 7.425% 138.9 67.88
Multifamily 75 261,659,573 26.85 3,488,794 1.40 7.230 120.5 72.59
Retail 36 260,978,125 26.78 7,249,392 1.44 7.217 122.1 68.59
Other 7 69,211,276 7.10 9,887,325 1.40 7.982 236.5 58.64
Hospitality 5 57,432,996 5.89 11,486,599 1.76 7.954 133.7 51.74
Industrial 13 44,281,677 4.54 3,406,283 1.28 7.736 154.9 66.79
Mixed Use 3 9,174,543 0.94 3,058,181 1.29 7.824 116.9 67.46
- --------- ---- --------- ---- ----- ----- -----
TOTAL/WTD. AVG. 162 $974,502,237 100.00% $6,015,446 1.40x 7.406% 136.6 68.28
=== ============ ======= ========== ===== ====== ===== =====
- ---------------------------------------------------------------------------------------------------------------------------
(a) The DSCR and LTV information does not reflect the 8 CTL loans representing 14.15% of the Aggregate Cut-Off Date
Balance.
</TABLE>
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets.
This material is furnished to you by Donaldson, Lufkin & Jenrette Securities
Corporation, Deutsche Bank Securities, and Goldman, Sachs & Co. and not by the
issuer of the securities. Donaldson, Lufkin & Jenrette Securities Corporation is
acting as the lead manager and Deutsche Bank Securities and Goldman, Sachs Co.
are acting as the co-managers and none of these parties are acting as agent for
the issuer or its affiliates in connection with the proposed transaction.
Neither the issuer nor any of its affiliates has prepared or taken part in the
preparation of these materials and neither makes any representation as to the
accuracy of these materials.
C-6
<PAGE>
STRUCTURAL AND COLLATERAL TERM SHEET
- --------------------------------------------------------------------------------
DISTRIBUTION OF UNDERWRITTEN NCF DEBT SERVICE COVERAGE RATIOS (A)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE WEIGHTED
PERCENTAGE OF AVERAGE REMAINING AVERAGE
RANGE OF DEBT NUMBER OF CUT-OFF AGGREGATE CUT-OFF WEIGHTED WEIGHTED TERM TO CUT-OFF
SERVICE COVERAGE MORTGAGE DATE CUT-OFF DATE AVERAGE AVERAGE MATURITY DATE LTV
RATIOS LOANS BALANCE DATE BALANCE BALANCE DSCR MORTGAGE RATE (MOS) RATIO
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CTL 8 $137,875,890 14.15% $17,234,486 NAP 7.517% 222.6 NAP
1.00 - 1.09 1 1,422,390 0.15 1,422,390 1.07x 8.000 117.0 48.98%
1.10 - 1.19 1 13,992,012 1.44 13,992,012 1.18 7.750 119.0 77.73
1.20 - 1.24 14 183,568,885 18.84 13,112,063 1.23 7.498 115.5 71.89
1.25 - 1.29 38 201,161,060 20.64 5,293,712 1.26 7.680 127.3 71.58
1.30 - 1.34 19 68,913,542 7.07 3,627,029 1.31 7.880 136.6 69.03
1.35 - 1.39 8 30,007,674 3.08 3,750,959 1.36 7.701 116.5 72.38
1.40 - 1.49 10 46,781,501 4.80 4,678,150 1.44 7.354 134.2 68.65
1.50 - 1.59 14 131,220,939 13.47 9,372,924 1.55 7.072 118.6 65.18
1.60 - 1.79 5 128,605,873 13.20 25,721,175 1.61 6.699 119.4 63.69
1.90 - 2.19 2 29,560,760 3.03 14,780,380 2.08 7.482 119.5 48.27
2.20 - 2.29 1 1,391,712 0.14 1,391,712 2.28 7.500 115.0 43.49
- --------- ---- --------- ---- ----- ----- -----
TOTAL/WTD. AVG. 121 $974,502,237 100.00% $8,053,737 1.40x 7.406% 136.6 68.28%
=== ============ ======= ========== ===== ====== ===== ======
- ------------------------------------------------------------------------------------------------------------------------------------
(a) The DSCR and LTV information does not reflect the 8 CTL loans representing 14.15% of the Aggregate Cut-Off Date Balance.
</TABLE>
- --------------------------------------------------------------------------------
DISTRIBUTION OF CUT-OFF DATE LOAN TO VALUE AT ORIGINATION RATIOS (A)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE WEIGHTED
PERCENTAGE OF AVERAGE REMAINING AVERAGE
RANGE OF CUT-OFF NUMBER OF CUT-OFF AGGREGATE CUT-OFF WEIGHTED WEIGHTED TERM TO CUT-OFF
DATE LOAN TO MORTGAGE DATE CUT-OFF DATE AVERAGE AVERAGE MATURITY DATE LTV
VALUE RATIOS LOANS BALANCE DATE BALANCE BALANCE DSCR MORTGAGE RATE (MOS) RATIO
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CTL 8 $137,875,890 14.15% $17,234,486 NAP 7.517% 222.6 NAP
30.1 - 50.0 6 51,433,564 5.28 8,572,261 1.80 7.759 129.5 47.50%
50.1 - 60.0 11 74,013,669 7.60 6,728,515 1.40 7.437 128.9 57.80
60.1 - 65.0 6 151,318,379 15.53 25,219,730 1.53 6.888 119.9 62.34
65.1 - 70.0 24 133,948,129 13.75 5,581,172 1.35 7.569 128.1 67.44
70.1 - 75.0 44 291,439,913 29.91 6,623,634 1.34 7.392 119.8 73.30
75.1 - 80.0 21 129,989,426 13.34 6,189,973 1.26 7.582 119.2 78.47
80.1 - 85.0 1 4,483,267 0.46 4,483,267 1.30 7.800 115.0 83.86
- --------- ---- --------- ---- ----- ----- -----
TOTAL/WTD. AVG. 121 $974,502,237 100.00% $8,053,737 1.40x 7.406% 136.6 68.28%
=== ============ ======= ========== ===== ====== ===== ======
- ------------------------------------------------------------------------------------------------------------------------------------
(a) The DSCR and LTV information does not reflect the 8 CTL loans representing 14.15% of the Aggregate Cut-Off Date Balance.
</TABLE>
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets.
This material is furnished to you by Donaldson, Lufkin & Jenrette Securities
Corporation, Deutsche Bank Securities, and Goldman, Sachs & Co. and not by the
issuer of the securities. Donaldson, Lufkin & Jenrette Securities Corporation is
acting as the lead manager and Deutsche Bank Securities and Goldman, Sachs Co.
are acting as the co-managers and none of these parties are acting as agent for
the issuer or its affiliates in connection with the proposed transaction.
Neither the issuer nor any of its affiliates has prepared or taken part in the
preparation of these materials and neither makes any representation as to the
accuracy of these materials.
C-7
<PAGE>
STRUCTURAL AND COLLATERAL TERM SHEET
- --------------------------------------------------------------------------------
DISTRIBUTION OF MORTGAGE INTEREST RATES (A)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE WEIGHTED
PERCENTAGE WEIGHTED REMAINING AVERAGE
NUMBER OF CUT-OFF OF AGGREGATE AVERAGE WEIGHTED AVERAGE TERM TO CUT-OFF
RANGE OF MORTGAGE DATE CUT-OFF CUT-OFF DATE AVERAGE MORTGAGE MATURITY DATE LTV
MORTGAGE RATES LOANS BALANCE DATE BALANCE BALANCE DSCR RATE (MOS) RATIO
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6.001 - 6.250 2 $7,576,430 0.78% $3,788,215 1.68x 6.250% 116.8 67.29%
6.501 - 6.750 2 102,386,967 10.51 51,193,483 1.61 6.564 119.8 62.50
6.751 - 7.000 13 131,759,887 13.52 10,135,376 1.52 6.798 121.9 68.11
7.001 - 7.250 10 176,115,559 18.07 17,611,556 1.27 7.150 153.5 70.26
7.251 - 7.500 16 102,062,213 10.47 6,378,888 1.39 7.394 171.7 73.17
7.501 - 7.750 22 178,297,261 18.30 8,104,421 1.38 7.641 119.6 70.49
7.751 - 8.000 38 192,941,383 19.80 5,077,405 1.28 7.888 127.1 67.56
8.001 - 9.000 17 63,706,402 6.54 3,747,435 1.35 8.256 131.0 65.70
9.001 or greater 1 19,656,135 2.02 19,656,135 NAP 9.030 263.0 NAP
- ---------- ---- ---------- --- ----- ----- ---
TOTAL/WTD. AVG. 121 $974,502,237 100.00% $8,053,737 1.40x 7.406% 136.6 68.28%
=== ============ ====== ========== ===== ====== ===== ======
- -----------------------------------------------------------------------------------------------------------------------------
(a) The DSCR and LTV information does not reflect the 8 CTL loans representing 14.15% of the Aggregate Cut-Off Date Balance.
</TABLE>
- --------------------------------------------------------------------------------
DISTRIBUTION OF REMAINING AMORTIZATION TERMS (A)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE WEIGHTED
PERCENTAGE AVERAGE REMAINING AVERAGE
RANGE OF REMAINING NUMBER OF CUT-OFF OF AGGREGATE CUT-OFF WEIGHTED WEIGHTED TERM TO CUT-OFF
AMORTIZATION MORTGAGE DATE CUT-OFF DATE AVERAGE AVERAGE MATURITY DATE LTV
TERMS (MONTHS) LOANS BALANCE DATE BALANCE BALANCE DSCR MORTGAGE RATE (MOS) RATIO
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
121 - 180 2 $5,859,618 0.60% $2,929,809 1.28x 7.714% 178.2 52.35%
181 - 240 10 127,544,080 13.09 12,754,408 1.36 7.373 202.7 63.93
241 - 300 22 109,088,029 11.19 4,958,547 1.34 7.792 139.4 66.93
301 - 360 85 629,617,716 64.61 7,407,267 1.38 7.477 125.5 69.80
361 - 380 2 102,392,794 10.51 51,196,397 1.60 6.582 117.0 62.81
- ----------- ----- ---------- ---- ----- ----- -----
TOTAL/WTD. AVG. 121 $974,502,237 100.00% $8,053,737 1.40x 7.406% 136.6 68.28%
=== ============ ======= ========== ===== ====== ===== ======
- ----------------------------------------------------------------------------------------------------------------------------------
(a) The DSCR and LTV information does not reflect the 8 CTL loans representing 14.15% of the Aggregate Cut-Off Date Balance.
</TABLE>
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets.
This material is furnished to you by Donaldson, Lufkin & Jenrette Securities
Corporation, Deutsche Bank Securities, and Goldman, Sachs & Co. and not by the
issuer of the securities. Donaldson, Lufkin & Jenrette Securities Corporation is
acting as the lead manager and Deutsche Bank Securities and Goldman, Sachs Co.
are acting as the co-managers and none of these parties are acting as agent for
the issuer or its affiliates in connection with the proposed transaction.
Neither the issuer nor any of its affiliates has prepared or taken part in the
preparation of these materials and neither makes any representation as to the
accuracy of these materials.
C-8
<PAGE>
STRUCTURAL AND COLLATERAL TERM SHEET
- --------------------------------------------------------------------------------
DISTRIBUTION OF ORIGINAL TERMS TO MATURITY (A)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE WEIGHTED
PERCENTAGE AVERAGE REMAINING AVERAGE
RANGE OF ORIGINAL NUMBER OF CUT-OFF OF AGGREGATE CUT-OFF WEIGHTED WEIGHTED TERM TO CUT-OFF
TERMS TO MATURITY MORTGAGE DATE CUT-OFF DATE AVERAGE AVERAGE MATURITY DATE LTV
(MONTHS) LOANS BALANCE DATE BALANCE BALANCE DSCR MORTGAGE RATE (MOS) RATIO
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
101 - 120 100 $755,327,218 77.51% $7,553,272 1.38x 7.352% 117.1 69.18%
121 - 140 2 29,474,327 3.02 14,737,163 2.00 7.645 121.1 50.17
141 - 180 4 22,242,198 2.28 5,560,550 1.29 7.638 164.4 69.42
181 - 240 13 135,629,320 13.92 10,433,025 1.36 7.379 211.8 62.61
241 - 360 2 31,829,174 3.27 15,914,587 NAP 8.418 275.2 NAP
- ---------- ---- ---------- --- ----- ----- ---
TOTAL/WTD. AVG. 121 $974,502,237 100.00% $8,053,737 1.40x 7.406% 136.6 68.28%
=== ============ ======= ========== ===== ====== ===== ======
- -----------------------------------------------------------------------------------------------------------------------------------
(a) The DSCR and LTV information does not reflect the 8 CTL loans representing 14.15% of the Aggregate Cut-Off Date Balance.
</TABLE>
- --------------------------------------------------------------------------------
DISTRIBUTION OF REMAINING TERMS TO MATURITY (A)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE WEIGHTED
PERCENTAGE AVERAGE REMAINING AVERAGE
RANGE OF REMAINING NUMBER OF CUT-OFF OF AGGREGATE CUT-OFF WEIGHTED WEIGHTED TERM TO CUT-OFF
TERMS TO MATURITY MORTGAGE DATE CUT-OFF DATE AVERAGE AVERAGE MATURITY DATE LTV
(MONTHS) LOANS BALANCE DATE BALANCE BALANCE DSCR MORTGAGE RATE (MOS) RATIO
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
101 - 120 101 $781,803,224 80.23% $7,740,626 1.40x 7.361% 117.2 68.44%
121 - 140 1 2,998,321 0.31 2,998,321 1.25 7.820 131.0 74.96
141 - 180 4 22,242,198 2.28 5,560,550 1.29 7.638 164.4 69.42
181 - 240 13 135,629,320 13.92 10,433,025 1.36 7.379 211.8 62.61
241 - 360 2 31,829,174 3.27 15,914,587 NAP 8.418 275.2 NAP
- ---------- ---- ---------- --- ----- ----- ----
TOTAL/WTD. AVG. 121 $974,502,237 100.00% $8,053,737 1.40x 7.406% 136.6 68.28%
=== ============ ======= ========== ===== ====== ===== ======
- -----------------------------------------------------------------------------------------------------------------------------------
(a) The DSCR and LTV information does not reflect the 8 CTL loans representing 14.15% of the Aggregate Cut-Off Date Balance.
</TABLE>
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets.
This material is furnished to you by Donaldson, Lufkin & Jenrette Securities
Corporation, Deutsche Bank Securities, and Goldman, Sachs & Co. and not by the
issuer of the securities. Donaldson, Lufkin & Jenrette Securities Corporation is
acting as the lead manager and Deutsche Bank Securities and Goldman, Sachs Co.
are acting as the co-managers and none of these parties are acting as agent for
the issuer or its affiliates in connection with the proposed transaction.
Neither the issuer nor any of its affiliates has prepared or taken part in the
preparation of these materials and neither makes any representation as to the
accuracy of these materials.
C-9
<PAGE>
STRUCTURAL AND COLLATERAL TERM SHEET
- --------------------------------------------------------------------------------
DISTRIBUTION OF AMORTIZATION TYPES (A)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE WEIGHTED
PERCENTAGE AVERAGE REMAINING AVERAGE
NUMBER OF CUT-OFF OF AGGREGATE CUT-OFF WEIGHTED WEIGHTED TERM TO CUT-OFF
MORTGAGE DATE CUT-OFF DATE AVERAGE AVERAGE MATURITY DATE LTV
AMORTIZATION TYPE LOANS BALANCE DATE BALANCE BALANCE DSCR MORTGAGE RATE (MOS) RATIO
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balloon 109 $776,941,901 79.73% $7,127,907 1.33x 7.472% 134.6 70.84%
Fully Amortizing 8 48,712,238 5.00 6,089,030 1.40 7.671 226.1 54.44
Hyperamortizing 4 148,848,098 15.27 37,212,025 1.68 6.972 117.8 58.69
- ----------- ----- ---------- ---- ----- ----- -----
TOTAL/WTD. AVG. 121 $974,502,237 100.00% $8,053,737 1.40x 7.406% 136.6 68.28%
=== ============ ======= ========== ===== ====== ===== ======
- -----------------------------------------------------------------------------------------------------------------------------------
(a) The DSCR and LTV information does not reflect the 8 CTL loans representing 14.15% of the Aggregate Cut-Off Date Balance.
</TABLE>
- --------------------------------------------------------------------------------
DISTRIBUTION OF PREPAYMENT PROVISIONS (A)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE WEIGHTED
PERCENTAGE AVERAGE REMAINING AVERAGE
NUMBER OF CUT-OFF OF AGGREGATE CUT-OFF WEIGHTED WEIGHTED TERM TO CUT-OFF
MORTGAGE DATE CUT-OFF DATE AVERAGE AVERAGE MATURITY DATE LTV
PREPAYMENT PROVISION LOANS BALANCE DATE BALANCE BALANCE DSCR MORTGAGE RATE (MOS) RATIO
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Lockout/Defeasance 121 $974,502,237 100.00% $8,053,737 1.40x 7.406% 136.6 68.28%
--- ------------ ------- ---------- ----- ------ ----- ------
TOTAL/WTD. AVG. 121 $974,502,237 100.00% $8,053,737 1.40x 7.406% 136.6 68.28%
=== ============ ======= ========== ===== ====== ===== ======
- -----------------------------------------------------------------------------------------------------------------------------------
(a) The DSCR and LTV information does not reflect the 8 CTL loans representing 14.15% of the Aggregate Cut-Off Date Balance.
</TABLE>
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets.
This material is furnished to you by Donaldson, Lufkin & Jenrette Securities
Corporation, Deutsche Bank Securities, and Goldman, Sachs & Co. and not by the
issuer of the securities. Donaldson, Lufkin & Jenrette Securities Corporation is
acting as the lead manager and Deutsche Bank Securities and Goldman, Sachs Co.
are acting as the co-managers and none of these parties are acting as agent for
the issuer or its affiliates in connection with the proposed transaction.
Neither the issuer nor any of its affiliates has prepared or taken part in the
preparation of these materials and neither makes any representation as to the
accuracy of these materials.
C-10
<PAGE>
STRUCTURAL AND COLLATERAL TERM SHEET
- --------------------------------------------------------------------------------
PREPAYMENT PROFILE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
PREPAYMENT RESTRICTION ASSUMING NO PREPAYMENT OF PRINCIPAL (A) (B)
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
PREPAYMENT JUNE JUNE JUNE JUNE JUNE JUNE JUNE JUNE JUNE JUNE
RESTRICTIONS 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Locked out 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
- -----------------------------------------------------------------------------------------------------------------------
Open 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
- -----------------------------------------------------------------------------------------------------------------------
TOTAL 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Number of Loans 121 121 121 121 121 121 121 121 121 121
UPB ($MM) 974.5 965.5 954.6 942.4 929.3 915.0 898.8 881.4 862.6 842.6
% OF INITIAL UPB 100.00% 99.08% 97.96% 96.71% 95.36% 93.89% 92.23% 90.45% 88.52% 86.46%
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
PREPAYMENT JUNE JUNE JUNE JUNE JUNE JUNE JUNE JUNE JUNE JUNE
RESTRICTIONS 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
- -----------------------------------------------------------------------------------------------------------------------
Locked out 100.00% 100.00% 100.00% 100.00% 100.00% 97.15% 57.24% 97.80% 100.00% 100.00%
- -----------------------------------------------------------------------------------------------------------------------
Open 0.00% 0.00% 0.00% 0.00% 0.00% 2.85% 42.76% 2.20% 0.00% 0.00%
- -----------------------------------------------------------------------------------------------------------------------
TOTAL 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Number of Loans 20 19 18 18 18 15 15 13 11 11
UPB ($MM) 147.6 136.7 120.3 110.8 100.6 86.1 74.2 38.2 31.8 25.9
% OF INITIAL UPB 15.15% 14.02% 12.35% 11.37% 10.32% 8.84% 7.61% 3.92% 3.27% 2.65%
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Table calculated using modeling assumptions.
(b) Differences in totals may exist due to rounding.
- --------------------------------------------------------------------------------
PREPAYMENT PROVISION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RANGE OF
REMAINING TERMS TO NUMBER OF CUT-OFF PERCENTAGE OF AVERAGE WEIGHTED AVERAGE WEIGHTED AVERAGE
STATED MATURITY MORTGAGE DATE AGGREGATE CUT-OFF CUT-OFF DATE REMAINING LOCKOUT REMAINING TERM TO
(YEARS) (A) LOANS BALANCE DATE BALANCE BALANCE PERIOD (YEARS) MATURITY (YEARS)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
9.0 - 9.9 100 $755,327,218 77.5% $7,553,272 9.5 9.8
10.0 - 10.9 2 29,474,327 3.0 14,737,163 10.0 10.1
11.0 - 11.9 1 8,894,345 0.9 8,894,345 11.7 11.9
14.0 - 14.9 3 13,347,853 1.4 4,449,284 14.6 14.9
16.0 - 16.9 2 72,640,817 7.5 36,320,408 15.8 16.1
17.0 - 17.9 2 8,584,898 0.9 4,292,449 14.9 17.9
19.0 - 19.9 9 54,403,605 5.6 6,044,845 19.5 19.7
21.0 - 21.9 1 19,656,135 2.0 19,656,135 21.7 21.9
24.0 - 24.9 1 12,173,039 1.2 12,173,039 24.1 24.6
- ---------- --- ---------- ---- ----
TOTAL / WEIGHTED AVERAGE: 121 $974,502,237 100.0% $8,053,737 11.1 11.4
=== ============ ====== ========== ==== ====
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) In the case of the ARD Loans, the Anticipated Repayment Date is assumed to
be the maturity date for the purposes of this calculation.
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets.
This material is furnished to you by Donaldson, Lufkin & Jenrette Securities
Corporation, Deutsche Bank Securities, and Goldman, Sachs & Co. and not by the
issuer of the securities. Donaldson, Lufkin & Jenrette Securities Corporation is
acting as the lead manager and Deutsche Bank Securities and Goldman, Sachs Co.
are acting as the co-managers and none of these parties are acting as agent for
the issuer or its affiliates in connection with the proposed transaction.
Neither the issuer nor any of its affiliates has prepared or taken part in the
preparation of these materials and neither makes any representation as to the
accuracy of these materials.
C-11
<PAGE>
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET
PREIT PORTFOLIO
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
ORIGINAL CUT-OFF DATE
PRINCIPAL BALANCE (A): $108,000,000 $107,920,483
% OF POOL BY UPB: 11.07%
NOTE DATE: April 13, 1999
INTEREST RATE: All at 6.77%
AMORTIZATION: 30 years
MATURITY DATE: May 10, 2009
PRINCIPAL/SPONSOR: 6 separate special purpose entities and
2 other borrowing entities affiliated
with the Pennsylvania Real Estate
Investment Trust (PREIT) and Ronald
Rubin.
CALL PROTECTION: Prepayment lockout; U.S. Treasury
defeasance permitted as of the 2 year
anniversary of REMIC securitization.
CROSS-COLLATERALIZATION/ DEFAULT: No/No
ADDITIONAL FINANCING: None.
- --------------------------------------------------------------------------------
(a) 8 loans with affiliated borrowers make up this group of loans.
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
SINGLE ASSET/PORTFOLIO: Portfolio of 8 assets
PROPERTY TYPE: Multifamily
LOCATION: Florida, Maryland, Ohio and
Pennsylvania.
YEARS BUILT: 1928 to 1990
THE COLLATERAL: 8 multifamily complexes located in
various states.
PROPERTY MANAGEMENT: An affiliate of the borrower.
CURRENT OCCUPANCY (RANGE OF RENT Varies from 89% to 97%
ROLLS 1/31/99 - 3/31/99):
UNDERWRITTEN NET CASH FLOW: $13,332,915
APPRAISED VALUE: $160,950,000
APPRAISAL DATE: All completed in March 1999
CUT-OFF DATE LOAN/UNIT: $32,953
CUT-OFF DATE LTV: 67.45%
BALLOON LTV: 57.75%
UWNCF DSCR: 1.57x
- --------------------------------------------------------------------------------
LOAN DETAILS
<TABLE>
<CAPTION>
CUT-OFF DATE UWNCF
LOAN # PROPERTY NAME LOCATION PRINCIPAL BALANCE CUT-OFF DATE LTV DSCR
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
GMAC5900 Boca Palms Apartments Boca Raton, FL $22,583,360 59.90% 1.53x
GMAC5910 Cobblestone Apartments Apartments Pompano Beach, FL 13,839,803 62.06 1.56
GMAC5920 Hidden Lakes Apartments Miamisburg, OH 10,692,122 73.74 1.57
GMAC5930 Kenwood Gardens Apartments Toledo, OH 7,244,662 71.73 1.60
GMAC5940 Lakewood Hills Apartments Harrisburg, PA 18,736,195 70.70 1.58
GMAC5950 2031 Locust Street Apts. Apartments Philadelphia, PA 5,945,612 70.78 1.58
GMAC5960 The Marylander Apartments Baltimore, MD 12,290,944 72.30 1.60
GMAC5970 Palms of Pembroke Apts. Pembroke Pines, FL 16,587,778 67.84 1.56
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets.
This material is furnished to you by Donaldson, Lufkin & Jenrette Securities
Corporation, Deutsche Bank Securities, and Goldman, Sachs & Co. and not by the
issuer of the securities. Donaldson, Lufkin & Jenrette Securities Corporation is
acting as the lead manager and Deutsche Bank Securities and Goldman, Sachs Co.
are acting as the co-managers and none of these parties are acting as agent for
the issuer or its affiliates in connection with the proposed transaction.
Neither the issuer nor any of its affiliates has prepared or taken part in the
preparation of these materials and neither makes any representation as to the
accuracy of these materials.
C-12
<PAGE>
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET
QUEENS CENTER RETAIL
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
ORIGINAL CUT-OFF DATE
PRINCIPAL BALANCE: $100,000,000 $100,000,000
% OF POOL BY UPB 10.26%
NOTE DATE: February 4,1999
INTEREST RATE: 6.56%
AMORTIZATION: 378 months
ARD DATE: March 1, 2009
PRINCIPAL/SPONSOR: Macerich Queen Limited Partnership, a
special purpose entity affiliated with
the Macerich Company (REIT).
CALL PROTECTION: Prepayment lockout; U.S. Treasury
defeasance permitted as of the 2 year
anniversary of REMIC securitization.
CROSS-COLLATERALIZATION/ DEFAULT: No/No
ADDITIONAL FINANCING: Up to $2 Million permitted in the form
of subordinate financing subject to
certain conditions
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
SINGLE ASSET/PORTFOLIO: Single Asset
PROPERTY TYPE: Retail
LOCATION: Elmhurst, New York
YEARS BUILT/RENOVATED: 1973 / 1990
THE COLLATERAL: An urban shopping mall of approximately
73 in-line stores, food court and
kiosks containing 156,194 square feet
and a parking garage. The mall is
located in the Elmhurst section of the
Borough of Queens, New York. The mall
is anchored by Macy's and JC Penney who
own and maintain their own buildings.
The Macy's and JC Penney's buildings
are not part of the collateral.
PROPERTY MANAGEMENT: An affiliate of the borrower.
OCCUPANCY (11/30/98): 100%
UNDERWRITTEN NET CASH FLOW: $12,209,304
APPRAISAL VALUE: $160,000,000
APPRAISAL DATE: December 30, 1998
CUT-OFF DATE LOAN/SF: $640
CUT-OFF DATE LTV: 62.50%
ARD BALLOON LTV: 55.29%
UWNCF DSCR: 1.61x
- --------------------------------------------------------------------------------
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets.
This material is furnished to you by Donaldson, Lufkin & Jenrette Securities
Corporation, Deutsche Bank Securities, and Goldman, Sachs & Co. and not by the
issuer of the securities. Donaldson, Lufkin & Jenrette Securities Corporation is
acting as the lead manager and Deutsche Bank Securities and Goldman, Sachs Co.
are acting as the co-managers and none of these parties are acting as agent for
the issuer or its affiliates in connection with the proposed transaction.
Neither the issuer nor any of its affiliates has prepared or taken part in the
preparation of these materials and neither makes any representation as to the
accuracy of these materials.
C-13
<PAGE>
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET
INGRAM MICRO HEADQUARTERS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
ORIGINAL CUT-OFF DATE
PRINCIPAL BALANCE: $72,880,000 $72,640,816
% OF POOL BY UPB 7.45%
NOTE DATE: December 30, 1998 for both loans
INTEREST RATE: 7.18% for both loans
AMORTIZATION: 243 months
MATURITY DATE: July 10, 2015
PRINCIPAL/SPONSOR: 2 separate special purpose entities.
CALL PROTECTION: Prepayment lockout; U.S. Treasury
defeasance permitted as of the 2 year
anniversary of REMIC securitization.
CROSS-COLLATERALIZATION/ DEFAULT: No/No
ADDITIONAL FINANCING: None
TENANT RATING INFORMATION: The tenant has a senior debt rating of
BBB by S&P and BBB+ by Fitch. Moody's
senior implied rating is Baa3.
LEASE AND RVI INFORMATION: The Property is NNN leased to Ingram
Micro, Inc. expiring July 10, 2015. The
lease expiration is co-terminus with
the maturity date of each loan. The
terms of the loan require a complete
cash sweep with rent remitted directly
to the servicer, GMACCM. Residual value
insurance has been obtained from R.V.I.
in the aggregate amount of $29,483,835
which is equal to the unamortized
principal balance at maturity and 40%
of the original balance.
R.V.I.: R.V.I. has a claims- paying ability
rated A by S&P, and AA- by Duff &
Phelps.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
SINGLE ASSET/PORTFOLIO: Portfolio of 3 office buildings
PROPERTY TYPE: Office
LOCATION: Santa Ana, California
YEARS BUILT: From 1991 to 1998
THE COLLATERAL: The Ingram Micro Headquarters complex
consists of three office buildings
totaling 567,790 square feet. 1600 East
St. Andrews Place consists of a total
of 191,890 square feet built over
stages from 1992 until 1998. 1610 East
St. Andrews Place consists of a total
of 204,570 square feet also built over
stages from 1992 until 1998. These two
properties are the collateral for the
loan of $50,890,000. 1700 East St.
Andrews Place was built in 1991 but
renovated in 1995 and consists of
171,330 square feet. This property is
the collateral for the $21,990,000
loan.
PROPERTY MANAGEMENT: An affiliate of the borrower.
OCCUPANCY (12/1/98): 100%
UNDERWRITTEN NET CASH FLOW: $5,800,000
APPRAISED VALUE: $73,900,000
APPRAISAL DATE: December 8, 1998 for both properties
CUT-OFF DATE LOAN/SF: $128
CUT-OFF DATE LTV: 98.30%
BALLOON LTV: 39.90%
UWNCF DSCR: 1.00x
- --------------------------------------------------------------------------------
LOAN DETAILS
<TABLE>
<CAPTION>
CUT-OFF DATE UWNCF
LOAN # PROPERTY NAME LOCATION PRINCIPAL BALANCE CUT-OFF DATE LTV DSCR
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
GMAC5010 1600/1610 E. St. Andrews Pl. Santa Ana, CA $50,722,972 98.30% 1.00x
GMAC5020 1700 East St. Andrews Place Santa Ana, CA 21,917,844 98.29 1.00
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets.
This material is furnished to you by Donaldson, Lufkin & Jenrette Securities
Corporation, Deutsche Bank Securities, and Goldman, Sachs & Co. and not by the
issuer of the securities. Donaldson, Lufkin & Jenrette Securities Corporation is
acting as the lead manager and Deutsche Bank Securities and Goldman, Sachs Co.
are acting as the co-managers and none of these parties are acting as agent for
the issuer or its affiliates in connection with the proposed transaction.
Neither the issuer nor any of its affiliates has prepared or taken part in the
preparation of these materials and neither makes any representation as to the
accuracy of these materials.
C-14
<PAGE>
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET
THE PALMER CENTER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
ORIGINAL CUT-OFF DATE
PRINCIPAL BALANCE: $54,000,000 $53,769,239
% OF POOL BY UPB 5.52%
NOTE DATE: December 23, 1998
INTEREST RATE: 7.03%
AMORTIZATION: 30 years
MATURITY DATE: January 10, 2009
PRINCIPAL/SPONSOR: Palmer Center, Ltd., a single purpose
entity.
CALL PROTECTION: Prepayment lockout; U.S. Treasury
defeasance permitted as of the 2 year
anniversary of REMIC securitization.
CROSS-COLLATERALIZATION/ DEFAULT: No/No
ADDITIONAL FINANCING: None
EARNOUT: Borrower has provided to Lender
unconditional letters of credit in the
aggregate amount of $3,500,000 that
will be reduced or eliminated when
certain spaces are renewed/released
and/or when a 1.25x DSCR is achieved.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
SINGLE ASSET/PORTFOLIO: Single Asset
PROPERTY TYPE: Office
LOCATION: Colorado Springs, Colorado
YEARS BUILT/RENOVATED: 1968 / 1990
THE COLLATERAL: Three office buildings, a retail
arcade, and a parking garage located
within the Palmer Center. There are a
total of 450,275 net rentable square
feet of office space and 8,155 net
rentable square feet of retail space
and a three and a four story
subterranean 1,600-space parking garage
located beneath the buildings. In
addition to the earnout provision,
approximately $2 million in the form of
cash escrows and/or personal guarantees
were provided to renew or re-tenant the
rolling space.
PROPERTY MANAGEMENT: An affiliate of the borrower.
OCCUPANCY (12/9/98): 97%
UNDERWRITTEN NET CASH FLOW: $5,058,498
APPRAISED VALUE: $67,500,000
APPRAISAL DATE: October 5, 1998
CUT-OFF DATE LOAN/SF: $117
CUT-OFF DATE LTV: 74.47%
BALLOON LTV: 68.87%
UWNCF DSCR: 1.24x
- --------------------------------------------------------------------------------
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets.
This material is furnished to you by Donaldson, Lufkin & Jenrette Securities
Corporation, Deutsche Bank Securities, and Goldman, Sachs & Co. and not by the
issuer of the securities. Donaldson, Lufkin & Jenrette Securities Corporation is
acting as the lead manager and Deutsche Bank Securities and Goldman, Sachs Co.
are acting as the co-managers and none of these parties are acting as agent for
the issuer or its affiliates in connection with the proposed transaction.
Neither the issuer nor any of its affiliates has prepared or taken part in the
preparation of these materials and neither makes any representation as to the
accuracy of these materials.
C-15
<PAGE>
- --------------------------------------------------------------------------------
COLLATERAL TERM SHEET
THE SQUAW PEAK LOAN
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
LOAN INFORMATION
- --------------------------------------------------------------------------------
ORIGINAL CUT-OFF DATE
PRINCIPAL BALANCE: $36,000,000 $36,000,000
% OF POOL BY UPB 3.69%
NOTE DATE: December 11, 1998
INTEREST RATE: 7.80%
AMORTIZATION: 30 years
MATURITY DATE: December 10, 2008
PRINCIPAL/SPONSOR: A single purpose entity.
CALL PROTECTION: Prepayment lockout; U.S. Treasury
defeasance permitted as of the 2 year
anniversary of REMIC securitization.
CROSS-COLLATERALIZATION/ DEFAULT: No/No
ADDITIONAL FINANCING: None
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROPERTY INFORMATION
- --------------------------------------------------------------------------------
SINGLE ASSET/PORTFOLIO: Portfolio of 3 adjacent office
buildings
PROPERTY TYPE: Office
LOCATION: Phoenix, Arizona
YEARS BUILT: 1985 / 1986 / 1987
THE COLLATERAL: 3 adjacent office buildings containing
422,385 rentable square feet. Pointe
Corridor 1, constructed in 1986 at 7600
North 16th Street, contains 158,197
rentable square feet. Pointe Corridor
2, constructed in 1985 at 7600 North
15th Street, contains 110,146 rentable
square feet. Pointe Corporate Center,
constructed in 1987 at 7500 North
Dreamy Draw Drive, contains 154,042
rentable square feet.
PROPERTY MANAGEMENT: Grubb & Ellis Management Services Inc.
OCCUPANCY (11/9/1998): 98%
UNDERWRITTEN NET CASH FLOW: $3,775,426
APPRAISAL VALUE: $54,500,000
APPRAISAL DATE: October 28, 1998
CUT-OFF DATE LOAN/SF: $85
CUT-OFF DATE LTV: 66.06%
BALLOON LTV: 60.05%
UWNCF DSCR: 1.20x
- --------------------------------------------------------------------------------
This material is for your private information and we are not soliciting any
action based upon it. This material is not to be construed as an offer to sell
or the solicitation of any offer to buy any security in any jurisdiction where
such an offer or solicitation would be illegal. This material is based on
information that we consider reliable, but we do not represent that it is
accurate or complete and it should not be relied upon as such. By accepting this
material the recipient agrees that it will not distribute or provide the
material to any other person. The information contained in this material may be
based on assumptions regarding market conditions and other matters as reflected
therein. We make no representations regarding the reasonableness of such
assumptions or the likelihood that any of such assumptions will coincide with
actual market conditions or events, and this material should not be relied upon
for such purposes. We and our affiliates, officers, directors, partners and
employees, including persons involved in the preparation or issuance of this
material may, from time to time, have long or short positions in, and buy and
sell, the securities mentioned therein or derivatives thereof (including
options). This material may be filed with the Securities and Exchange Commission
(the "SEC") and incorporated by reference into an effective registration
statement previously filed with the SEC under Rule 415 of the Securities Act of
1933, including in cases where the material does not pertain to securities that
are ultimately offered for sale pursuant to such registration statement.
Information contained in this material is current as of the date appearing on
this material only. Information in this material regarding any assets backing
any securities discussed herein supersedes all prior information regarding such
assets.
This material is furnished to you by Donaldson, Lufkin & Jenrette Securities
Corporation, Deutsche Bank Securities, and Goldman, Sachs & Co. and not by the
issuer of the securities. Donaldson, Lufkin & Jenrette Securities Corporation is
acting as the lead manager and Deutsche Bank Securities and Goldman, Sachs Co.
are acting as the co-managers and none of these parties are acting as agent for
the issuer or its affiliates in connection with the proposed transaction.
Neither the issuer nor any of its affiliates has prepared or taken part in the
preparation of these materials and neither makes any representation as to the
accuracy of these materials.
C-16
<PAGE>
ANNEX D
GLOBAL CLEARANCE, SETTLEMENT AND TAX
DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered GMAC
Commercial Mortgage Securities, Inc. Mortgage Pass-Through Certificates,
Series 1999-C2 (the "global securities") will be available only in book-entry
form. Investors in the global securities may hold such global securities
through any of DTC, Cedelbank or Euroclear. The global securities will be
tradeable as home market instruments in both the European and U.S. domestic
markets. Initial settlement and all secondary trades will settle in same day
funds. Terms used but not defined in this Annex D have the meanings assigned
to them in the prospectus supplement and the prospectus.
Secondary market trading between investors holding global securities
through Cedelbank and Euroclear will be conducted in the ordinary way in
accordance with their normal rules and operating procedures and in accordance
with conventional eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding global securities
through DTC will be conducted according to the rules and procedures
applicable to U.S. corporate debt obligations.
Secondary cross-market trading between Cedelbank or Euroclear and DTC
participants holding certificates will be effected on a
delivery-against-payment basis through the respective depositaries of
Cedelbank and Euroclear (in such capacity) and as DTC participants.
Non-U.S. holders (as described below) of global securities will be subject
to U.S. withholding taxes unless such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing
organizations or their participants.
INITIAL SETTLEMENT
All global securities will be held in book-entry form by DTC in the name
of Cede & Co. as nominee of DTC. Investors' interests in the global
securities will be represented through financial institutions acting on their
behalf as direct and indirect participants in DTC. As a result, Cedelbank and
Euroclear will hold positions on behalf of their participants through their
respective depositaries, which in turn will hold such positions in accounts
as DTC participants.
Investors electing to hold their global securities through DTC will follow
the settlement practices applicable to similar issues of pass-through
certificates. Investors' securities custody accounts will be credited with
their holdings against payment in same-day funds on the settlement date.
Investors electing to hold their global securities through Cedelbank or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global
security and no "lock-up" or restricted period. global securities will be
credited to the securities custody accounts on the settlement date against
payments in same-day funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired
value date.
Trading between DTC Participants. Secondary market trading between DTC
participants will be settled using the procedures applicable to similar
issues of pass-through certificates in same-day funds.
Trading between Cedelbank and/or Euroclear Participants. Secondary market
trading between Cedelbank participants or Euroclear participants will be
settled using the procedures applicable to conventional eurobonds in same-day
funds.
Trading between DTC seller and Cedelbank or Euroclear purchaser. When
global securities are to be transferred from the account of a DTC participant
to the account of a Cedelbank participant or a Euroclear participant, the
purchaser will send instructions to Cedelbank or Euroclear through a
D-1
<PAGE>
Cedelbank participant or Euroclear participant at least one business day
before settlement. Cedelbank or Euroclear will instruct the respective
depositary, as the case may be, to receive the global securities against
payment. Payment will include interest accrued on the global securities from
and including the last coupon payment date to and excluding the settlement
date. Payment will then be made by the respective depositary to the DTC
participant's account against delivery of the global securities. After
settlement has been completed, the global securities will be credited to the
respective clearing system and by the clearing system, in accordance with its
usual procedures, to the Cedelbank participant's or Euroclear participant's
account. The global securities credit will appear the next day (European
time) and the cash debit will be back-valued to, and the interest on the
Global Securities will accrue from, the value date (which would be the
preceding day when settlement occurred in New York). If settlement is not
completed on the intended value date (i.e., the trade fails), the Cedelbank
or Euroclear cash debit will be valued instead as of the actual settlement
date.
Cedelbank participants and Euroclear participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to
pre-position funds for settlement, either from cash on hand or existing lines
of credit, as they would for any settlement occurring within Cedelbank or
Euroclear. Under this approach, they may take on credit exposure to Cedelbank
or Euroclear until the global securities are credited to their accounts one
day later.
As an alternative, if Cedelbank or Euroclear has extended a line of credit
to them, Cedelbank participants or Euroclear participants can elect not to
pre-position funds and allow that credit line to be drawn upon the finance
settlement. Under this procedure, Cedelbank participants or Euroclear
participants purchasing global securities would incur overdraft charges for
one day, assuming they cleared the overdraft when the global securities were
credited to their accounts. However, interest on the global securities would
accrue from the value date. Therefore, in many cases the investment income on
the global securities earned during that one day period may substantially
reduce or offset the amount of such overdraft charges, although this result
will depend on each Cedelbank participant's or Euroclear participant's
particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
participants can employ their usual procedures for sending global securities
to the respective depositary for the benefit of Cedelbank participants or
Euroclear participants. The sale proceeds will be available to the DTC seller
on the settlement date. Thus, to the DTC participant a cross-market
transaction will settle no differently than a trade between two DTC
participants.
Trading between Cedelbank or Euroclear seller and DTC purchaser. Due to
time zone differences in their favor, Cedelbank participants and Euroclear
participants may employ their customary procedures for transactions in which
global securities are to be transferred by the respective clearing system,
through the respective depositary, to a DTC participant. The seller will send
instructions to Cedelbank or Euroclear through a Cedelbank participant or
Euroclear participant at least one business day before settlement. In these
cases, Cedelbank or Euroclear will instruct the respective depositary, as
appropriate, to deliver the bonds to the DTC participant's account against
payment. Payment will include interest accrued on the global securities from
and including the last coupon payment date to and excluding the settlement
date. The payment will then be reflected in the account of the Cedelbank
participant or Euroclear participant the following day, and receipt of the
cash proceeds in the Cedelbank participant's or Euroclear participant's
account would be back-valued to the value date (which would be the preceding
day, when settlement occurred in New York). Should the Cedelbank participant
or Euroclear participant have a line of credit with its respective clearing
system and elect to be in debit in anticipation of receipt of the sale
proceeds in its account, the back-valuation will extinguish any overdraft
charges incurred over that one-day period. If settlement is not completed on
the intended value date (i.e., the trade fails), receipt of the cash proceeds
in the Cedelbank participant's or Euroclear participant's account would
instead be valued as of the actual settlement date. Finally, day traders that
use Cedelbank or Euroclear and that purchase global securities from DTC
participants for delivery to Cedelbank participants or Euroclear participants
should note that these trades would automatically fail on the sale side
unless affirmative action were taken. At least three techniques should be
readily available to eliminate this potential problem:
D-2
<PAGE>
(a) borrowing through Cedelbank or Euroclear for one day (until the
purchase side of the day trade is reflected in their Cedelbank or
Euroclear accounts) in accordance with the clearing system's customary
procedures;
(b) borrowing the global securities in the U.S. from a DTC participant no
later than one day before settlement, which would give the global
securities sufficient time to be reflected in their Cedelbank or Euroclear
account to settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of the trade so
that the value date for the purchase from the DTC participant is at least
one day before the value date for the sale to the Cedelbank participant or
Euroclear participant.
U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of global securities holding securities through
Cedelbank or Euroclear (or through DTC if the holder has an address outside
the U.S.) will be subject to the 30% U.S. withholding tax that generally
applies to payments of interest (including original issue discount) on
registered debt issued by U.S. persons, unless (1) each clearing system, bank
or other financial institution that holds customers' securities in the
ordinary course of its trade or business in the chain of intermediaries
between such beneficial owner and the U.S. entity required to withhold tax
complies with applicable certification requirements and (2) such beneficial
owner takes one of the following steps to obtain an exemption or reduced tax
rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial owners of
certificates that are non-U.S. persons can obtain a complete exemption from
the withholding tax by filing a signed Form W-8 (Certificate of Foreign
Status). If the information shown on Form W-8 changes, a new Form W-8 must be
filed within 30 days of such change.
Exemption for non-U.S. Persons with effectively connected income (Form
4224). A non-U.S. person, including a non-U.S. corporation or bank with a
U.S. branch, for which the interest income is effectively connected with its
conduct of a trade or business in the United States can obtain an exemption
from the withholding tax by filing Form 4224 (Exemption from Withholding of
Tax on Income Effectively Connected with the Conduct of a Trade or Business
in the United States).
Exemption or reduced rate for non-U.S. Persons resident in treaty
countries (Form 1001). Non-U.S. Persons that are beneficial owners residing
in a country that has a tax treaty with the United States can obtain an
exemption or reduced tax rate (depending on the treaty terms) by filing Form
1001 (Ownership, Exemption or Reduced Rate Certificate). If the treaty
provides only for a reduced rate, withholding tax will be imposed at that
rate unless the filer alternatively files Form W-8. Form 1001 may be filed by
the Beneficial Owner or his agent.
Exemption for U.S. Persons (Form W-9). U.S. persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Payer's Request for
Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The beneficial owner of a
global security or, in the case of a Form 1001 or a Form 4224 filer, his
agent, files by submitting the appropriate form to the person through whom it
holds (the clearing agency, in the case of persons holding directly on the
books of the clearing agency). Form W-8 and Form 1001 are effective for three
calendar years and Form 4224 is effective for one calendar year.
The term "U.S. person" means (1) a citizen or resident of the United
States, (2) a corporation or partnership organized in or under the laws of
the United States or any political subdivision thereof or (3) an estate the
income of which is includable in gross income for United States tax purposes,
regardless of its source or a trust if a court within the United States is
able to exercise primary supervision of the administration of the trust and
one or more United States fiduciaries have the authority to control all
substantial decisions of the trust. This summary does not deal with all
aspects of U.S. federal income tax withholding that may be relevant to
foreign holders of the global securities. Investors are advised to consult
their own tax advisors for specific tax advice concerning their holding and
disposing of the global securities.
D-3
<PAGE>
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 11
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 November 5, 1998
<PAGE>
(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".
2
<PAGE>
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 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.
3
<PAGE>
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) 328-3164.
4
<PAGE>
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.,
an indirect 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
5
<PAGE>
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
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.
6
<PAGE>
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"); (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".
7
<PAGE>
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 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".
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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 "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.
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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 "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").
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
accounts (and, as applicable, insurance
company general 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 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.
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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.
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
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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 Property and obtain a judicial
appointment of a receiver before becoming
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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 related Senior Liens to
satisfy fully both the Senior Liens and the Mortgage Loan. In
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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," "Underwritten Debt
Service Coverage Ratio" or "Underwritten DSCR" means, with respect to any
Mortgage Loan, or with respect to a Mortgage Loan evidenced by one Mortgage
Note, but secured by multiple Mortgaged Properties, (a) the Underwritten Cash
flow for the Mortgaged Property, divided by (b) the Annual Debt Service for
such Mortgage Loan. "Underwritten Cash Flow" with respect to any Mortgaged
Property, means an estimate of cash flow available for debt service in a
typical year of stable, normal operations. In general, it is the estimated
revenue derived from the use and operation of such Mortgaged Property less
the sum of (a) estimated operating expenses (such as utilities,
administrative expenses, repairs and maintenance, management and franchise
fees and advertising), (b) fixed expenses (such as insurance, real estate
taxes and, if applicable, ground lease payments) and (c) capital expenditures
and reserves for capital expenditures, including tenant improvement costs and
leasing commissions. Underwritten Cash Flow generally does not reflect
interest expense and non-cash items such as depreciation and amortization.
"Annual Debt Service" means for any Mortgage Loan 12 times the monthly
payment in effect as of the Cut-off Date or, for any Mortgage Loans that pay
interest only for a period of time, 12 times the monthly payment in effect at
the end of such period. The Underwritten Cash Flow of a Mortgaged
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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
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 Underwritten Cash Flow 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 Underwritten Cash Flow 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.
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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
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
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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 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
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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".
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
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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 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.
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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 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
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(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.
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
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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 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
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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 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. Unless otherwise provided in the related
Prospectus Supplement, 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 an indirect wholly-owned
subsidiary of GMACCM which is a wholly-owned subsidiary of GMAC Mortgage
Group, Inc., 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) 328-3164. 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) 328-4622. 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.
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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 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 Unless otherwise
provided in the related Prospectus Supplement, 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.
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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 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
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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 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)
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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".
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, the Fiscal Agent (if any), 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, Fiscal Agent or Trustee if, in the judgment of the Master
Servicer, Special Servicer, Fiscal Agent 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,
Fiscal Agent 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, Fiscal
Agent, Trustee or other entity from excess funds in a Certificate Account,
such Master Servicer, Special Servicer, Fiscal Agent, 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, Fiscal Agent, 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
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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;
(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. 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.
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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 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.
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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.
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
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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
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Prospectus Supplement. The Depositor will provide a copy of the Pooling and
Servicing Agreement (without exhibits) that relates to any series of
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
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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 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
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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 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.
Representations and warranties may be 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. 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 or Special
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
or Special 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 Property in lieu of foreclosure)
on behalf of the Certificateholders of the related series may vary
considerably depending on the particular
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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; provided, however, that the
Master Servicer will not approve such a request if a REMIC election has been
made and such request would not (in the opinion of independent counsel)
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. 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
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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 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:
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(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;
(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;
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(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 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
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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 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 three full years after
the taxable year 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 longer than such period 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.
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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 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.
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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 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
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basis of an examination by such firm conducted substantially in compliance
with the Uniform Single Attestation Program for Mortgage Bankers established
by the Mortgage Bankers Association of America with respect to the servicing
of commercial and multifamily mortgage loans 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 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.
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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 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
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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 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 or desirable 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.
Unless otherwise specified in the Prospectus Supplement, 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
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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 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
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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.
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.
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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.
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.
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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 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
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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 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
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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.
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
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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 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.
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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 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.
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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
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
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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 of those statutes provide for a secured creditor
exemption. In addition, under federal law, there is potential liability
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.
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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 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
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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.
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.
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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. The following summary is based on the Code as well as Treasury
regulations and administrative and judicial rulings and practice.
Legislative, judicial and administrative changes may occur, possibly with
retroactive effect, that could alter or modify the continued validity of the
statements and conclusions set forth herein. This summary does not purport to
address all federal income tax matters that may be relevant to particular
holders. For example, it generally is addressed only to original purchasers
of the Certificates that are United States investors, deals only with
Certificates held as capital assets within the meaning of Section 1221 of the
Code, and does not address tax consequences to holders that may be relevant
to investors subject to special rules, such as non-U.S. investors, banks,
insurance companies, tax-exempt organizations, electing large partnerships,
dealers in securities or currencies, mutual funds, REITs, S corporations,
estates and trusts, investors that hold the Certificates as part of a hedge,
straddle, integrated or conversion transaction, or holders whose "functional
currency" is not the United States dollar. Further, it does not address
alternative minimum tax consequences or the indirect effects on the holders
of equity interests in an entity that is a beneficial owner of the
Certificates. Further, this discussion does not address the state or local
tax consequences of the purchase, ownership and disposition of such
Certificates. Investors should consult their tax advisers in determining the
federal, state, local, or other tax consequences to them of the purchase,
ownership and disposition of the Certificates offered hereunder. See "State
and Other Tax Consequences".
The following discussion addresses 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. 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. If a REMIC election will not be made for a
Trust Fund, the federal income tax consequences of the purchase, ownership
and disposition of the related Certificates will be set forth in the related
Prospectus Supplement. 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
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.
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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.
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.
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.
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
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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
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.
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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
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
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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 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.
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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 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".
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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.
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
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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 of the REMIC
Residual Certificateholder and decreased (but not below zero) by
distributions made, and by net losses allocated, to such REMIC Residual
Certificateholder.
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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 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."
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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 REMIC
Certificates--REMIC Residual Certificates" below for additional restrictions
applicable to transfers of certain REMIC Residual Certificates to foreign
persons.
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Mark-to-Market Rules. On December 23, 1996, the IRS released final
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 REMIC Residual Certificate
is not treated as a security and thus may not be marked to market.
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 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
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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.
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.
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
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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 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
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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 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
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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.
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
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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.
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
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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 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
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"--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 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 1.1286-1(b), 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
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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.
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
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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.
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 likely 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
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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 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
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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. Treasury
regulations were promulgated on June 11, 1996 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 "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 "comparable yield"
(as described below) of the Grantor Trust Strip Certificate. The projected
amount of each payment is determined so that the payment schedule reflects
the "comparable 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 in the manner prescribed by the
regulations. The "comparable yield" referred to above is generally the yield
at which the issuer would issue a fixed rate debt instrument with terms and
conditions similar to those of the Grantor Trust Strip Certificates,
including the level of subordination, term, timing of payments and general
market conditions. 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
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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 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.
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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/or 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 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 or result in 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. Section 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,
the Special Servicer, any Sub-Servicer, the 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 of ERISA and the prohibited transaction provisions
of ERISA and Section 4975 of 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, on behalf of or
with assets of a Plan, as well as the operation of the Trust Fund, may
constitute or involve a prohibited transaction under ERISA or the Code.
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PROHIBITED TRANSACTION EXEMPTION
On March 29, 1994, the DOL issued 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 Sections 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 issued by 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 or with assets of 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 evidenced by the other Certificates
of the same trust. Third, the Offered Certificates at the time of acquisition
by or with assets of 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 Credit Rating Co. or Fitch IBCA, Inc. 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 or Plan asset investor 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 acquisition of Certificates by or with assets of a Plan;
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
acquisition of Certificates by or with assets of a Plan.
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
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including Cash Flow Agreements, or (v) subordinated Classes of Certificates
(collectively, "Non-Exempt 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 and persons investing assets of Plans
should not purchase Non-Exempt Certificates based solely upon the Exemption.
A fiduciary or other investor of Plan assets 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, and 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 or with assets of 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 Sections 4975(a) and
(b) of the Code by reason of 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 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 or with assets of a Plan and (3) the holding of Certificates
by or with assets of 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, 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 Sections
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 or other investor of
Plan assets 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 or other Plan investor should consider its general
fiduciary obligations under ERISA in determining whether to purchase any
Offered Certificates
83
<PAGE>
with assets of a Plan. Such fiduciary or other Plan investor should consider
the availability of other class exemptions granted by the DOL, which provide
relief from certain of the prohibited transaction provisions of ERISA and the
related excise tax provisions of Section 4975 of the Code, including Sections
I and III of Prohibited Transaction Class Exemption ("PTCE") 95-60, regarding
transactions by insurance company general accounts. The Prospectus Supplement
with respect to a series of Certificates may contain additional information
regarding the application of the Exemption, PTCE 95-60 or any other DOL
exemption, with respect to the Certificates offered thereby.
Any fiduciary or other Plan investor that 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. There can be no assurance that
any of these exemptions will apply with respect to any particular Plan's or
other Plan asset investor's investment in the Certificates or, even if an
exemption were deemed to apply, that any exemption would apply to all
prohibited transactions that may occur in connection with such an investment.
INSURANCE COMPANY GENERAL ACCOUNTS
In addition to any exemption that may be available under PTCE 95-60 for
the purchase and holding of the Certificates by an insurance company general
account, the Small Business Job Protection Act of 1996 added a new Section
401(c) to ERISA, which provides certain exemptive relief from the provisions
of Part 4 of Title I of ERISA and Section 4975 of the Code, including the
prohibited transaction restrictions imposed by ERISA and the related excise
taxes imposed by Section 4975 of the Code, for transactions involving an
insurance company general account. Pursuant to Section 401(c) of ERISA, the
DOL is required to issue final regulations (the "401(c) Regulations") no
later than December 31, 1997 which are to provide guidance for the purpose of
determining, in cases where insurance policies and annuity contracts
supported by an insurer's general account are issued to or for the benefit of
a Plan on or before December 31, 1998, which general account assets
constitute Plan assets. Section 401(c) of ERISA generally provides that,
until the date which is 18 months after the 401(c) Regulations become final,
no person shall be subject to liability under Part 4 of Title I of ERISA and
Section 4975 of the Code on the basis of a claim that the assets of an
insurance company general account constitute Plan assets, unless (I) as
otherwise provided by the Secretary of labor in the 401(c) Regulations to
prevent avoidance of the regulations or (ii) an action is brought by the
Secretary of labor for certain breaches of fiduciary duty which would also
constitute a violation of federal or state criminal law. Any assets of an
insurance company general account which support insurance policies or annuity
contracts issued to a Plan after December 31, 1998 or issued to Plans on or
before December 31, 1998 for which the insurance company does not comply with
the 401(c) Regulations may be treated as Plan assets. In addition, because
Section 401(c) does not relate to insurance company accounts, separate
account assets are still treated as Plan assets of any Plan invested in such
separate account. Insurance companies contemplating the investment of general
account assets in the Certificates should consult with their legal counsel
with respect to the applicability of Sections I and III of PTCE 95-60 and
Section 401(c) of ERISA, including the general account's ability to continue
to hold the Certificates after the date which is 18 months after the date the
401(c) Regulations become final.
REPRESENTATION FROM INVESTING PLANS
It is not clear whether the exemptive relief afforded by the Exemption
will be applicable to the purchase, sale or holding of any class of
Non-Exempt Certificates. To the extent that Offered Certificates are
Non-Exempt Certificates, transfers of such Certificates to a Plan, to a
trustee or other person acting on behalf of any Plan, or to any other person
using Plan assets to effect such acquisition will not be registered by the
Trustee unless the transferee provides the Depositor, the Trustee and the
Master Servicer with an opinion of counsel satisfactory to the Depositor, the
Trustee and the Master Servicer, which opinion will not be at the expense of
the Depositor, the Trustee or the Master Servicer, that the purchase of such
Certificates by or on behalf of, or with asset of, any Plan is permissible
under applicable law, will not constitute or result in any non-exempt
prohibited transaction under ERISA or Section 4975
84
<PAGE>
of the Code and will not subject the Depositor, the Trustee or the Master
Servicer to any obligation in addition to those undertaken in the Pooling and
Servicing Agreement. In lieu of such opinion of counsel, the prospective
transferee of any class of Non-Exempt Certificates may provide a
certification of facts substantially to the effect that the purchase of such
Certificates by or on behalf of, or with asset of, any Plan is permissible
under applicable law, will not constitute or result in a non-exempt
prohibited transaction under ERISA or Section 4975 of the Code, will not
subject the Depositor, the Trustee or the Master Servicer to any obligation
in addition to those undertaken in the Pooling and Servicing Agreement, and
the following conditions are met: (a) the source of funds used to purchase
such Certificates is an "insurance company general account" (as such term is
defined in PTCE 95-60 and (b) the conditions set forth in Sections I and III
of PTCE 95-60 have been satisfied as of the date of the acquisition of such
Certificates.
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."
Such fiduciary or other Plan investor should consider the availability of
other class exemptions granted by the DOL, which provide relief from certain
of the prohibited transaction provisions of ERISA and the related excise tax
provisions of Section 4975 of the Code, including Sections I and III of
Prohibited Transaction Class Exemption ("PTCE") 95-60, regarding transactions
by insurance company general accounts. The Prospectus Supplement with respect
to a series of Certificates may contain additional information regarding the
application of the Exemption, PTCE 95-60 or any other DOL exemption, with
respect to the Certificates offered thereby.
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 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
85
<PAGE>
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.
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.
86
<PAGE>
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 Depositor or the underwriters may sell
certain of the Certificates to affiliates of the Depositor. In any such case,
the related Prospectus Supplement will identify any such affiliate and the
method or methods by which such affiliate may resell such Certificates. 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 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.
87
<PAGE>
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, Thacher Proffitt &
Wood, New York, New York or Orrick, Herrington & Sutcliffe LLP, 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.
88
<PAGE>
INDEX OF PRINCIPAL TERMS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
401(c) Regulations ................................ 84
Accrual Certificates .............................. 8
Accrued Certificate Interest ...................... 26
Act ............................................... 54
Annual Debt Service ............................... 15
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 ................................. 31
Certificates ...................................... 1
Closing Date ...................................... 60
Code .............................................. 10
Commercial Properties ............................. 14
Commission ........................................ 3
Committee Report .................................. 59
Companion Class ................................... 27
Condemnation Proceeds ............................. 38
Contributions Tax ................................. 69
Controlled Amortization Class ..................... 27
Cooperatives ...................................... 14
CPR ............................................... 21
Credit Support .................................... 9
Cut-Off Date ...................................... 27
Debt Service Coverage Ratio ....................... 15
Definitive Certificates ........................... 25
Depositor ......................................... 1
Determination Date ................................ 20
Direct Participants ............................... 31
Distribution Date ................................. 8
Distribution Date Statement ....................... 29
DOL ............................................... 81
DTC ............................................... 25
Due Dates ......................................... 17
Due Period ........................................ 20
Equity Participation .............................. 17
ERISA ............................................. 10
Excess Funds ...................................... 23
Excluded Plan ..................................... 83
Exemption ......................................... 82
FAMC .............................................. 18
FHLMC ............................................. 18
FNMA .............................................. 18
Garn Act .......................................... 56
GMACCM ............................................ 5
Grantor Trust Fractional Interest Certificate .... 72
Grantor Trust Strip Certificate ................... 73
Indirect Participants ............................. 31
89
<PAGE>
PAGE
--------
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
Non-Exempt Certificates ........................... 83
Nonrecoverable Advance ............................ 28
Notional Amount ................................... 7
Offered Certificates .............................. 1
OID Regulations ................................... 58
Originator ........................................ 14
OTS ............................................... 86
Participants ...................................... 31
Parties in Interest ............................... 81
Pass-Through Rate ................................. 7
Percentage Interest ............................... 26
Permitted Investments ............................. 37
Plans ............................................. 81
Policy Statement .................................. 86
Pooling And Servicing Agreement ................... 6
Prepayment Assumption ............................. 59
Prepayment Interest Shortfall ..................... 20
Prepayment Premium ................................ 17
Prohibited Transactions Tax ....................... 69
Prospectus Supplement ............................. 1
PTCE .............................................. 84
Purchase Price .................................... 34
Rating Agency ..................................... 10
RCRA .............................................. 55
Record Date ....................................... 26
Related Proceeds .................................. 28
Relief Act ........................................ 57
REMIC ............................................. 2
90
<PAGE>
PAGE
--------
REMIC Certificates ................................ 58
REMIC Provisions .................................. 58
REMIC Regular Certificates ........................ 10
REMIC Regulations ................................. 58
REMIC Residual Certificates ....................... 10
REO Property ...................................... 36
Restricted Group .................................. 82
Senior Certificates ............................... 7
Senior Liens ...................................... 14
Servicer .......................................... 5
SMMEA ............................................. 10
SPA ............................................... 21
Special Servicer .................................. 5
Stripped Interest Certificates .................... 7
Stripped Principal Certificates ................... 7
Subordinate Certificates .......................... 7
Sub-Servicer ...................................... 36
Sub-Servicing Agreement ........................... 37
Tax Exempt Investor ............................... 85
Tiered REMICs ..................................... 59
Title V ........................................... 56
Trust Assets ...................................... 3
Trust Fund ........................................ 1
Trustee ........................................... 5
UBTI .............................................. 85
UCC ............................................... 50
Underwriter ....................................... 82
Underwritten Cash Flow ............................ 15
Underwritten Debt Service Coverage Ratio ......... 15
Underwritten DSCR ................................. 15
United States Person .............................. 72
Value ............................................. 16
Warranting Party .................................. 34
</TABLE>
91
<PAGE>
"GMAC99C2.xls" is a Microsoft Excel*, Version 5.0 spreadsheet that
provides in electronic format certain information shown in Annex A in the
Prospectus Supplement. In addition, the spreadsheet provides certain
information detailing the changes in the amount of monthly payments with
regard to certain mortgage loans.
Open the file as you would normally open a spreadsheet in Microsoft Excel.
After the file is opened, a screen will appear requesting a password. Please
"click" the "read only" option. At that point, a securities law legend will
be displayed. READ THE LEGEND CAREFULLY. To view the data, see the worksheets
labeled "Characteristics," "MF Schedule," and "Step" respectively.
*Microsoft Excel is a registered trademark of Microsoft Corporation.
<PAGE>
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 in this prospectus supplement or therein is correct as of any
time since the date of this prospectus.
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Summary .............................................. S-6
Risk Factors ......................................... S-12
Description of the Mortgage Pool ..................... S-30
Servicing of the Mortgage Loans ...................... S-53
Description of the Certificates ...................... S-62
Yield and Maturity Considerations .................... S-80
Federal Income Tax Consequences ...................... S-96
Method of Distribution ............................... S-99
Legal Matters ........................................ S-100
Ratings .............................................. S-100
Legal Investment ..................................... S-101
ERISA Considerations ................................. S-101
Index of Significant Definitions ..................... S-103
Annex A--Characteristics of the Mortgage Loans ...... A-1
Annex B--Form of Statement to Certificateholders and
Servicer Reports ............................ B-1
Annex C--Structural and Collateral Term Sheet ....... C-1
Annex D--Global Clearance, Settlement and Tax
Documentation Procedures .................... D-1
PROSPECTUS
Prospectus Supplement ................................ 3
Available Information ................................ 3
Incorporation of Information by Reference ............ 4
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 ...................... 25
The Pooling and Servicing Agreements ................. 32
Description of Credit Support ........................ 47
Certain Legal Aspects of Mortgage Loans .............. 49
Certain Federal Income Tax Consequences .............. 58
State and Other Tax Consequences ..................... 80
ERISA Considerations ................................. 81
Legal Investment ..................................... 85
Use of Proceeds ...................................... 86
Method of Distribution ............................... 87
Legal Matters ........................................ 88
Financial Information ................................ 88
Rating ............................................... 88
Index of Principal Terms ............................. 89
</TABLE>
$879,488,000
(Approximate)
GMAC COMMERCIAL
MORTGAGE SECURITIES, INC.
MORTGAGE PASS-THROUGH
CERTIFICATES, SERIES 1999-C2
PROSPECTUS SUPPLEMENT
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
DEUTSCHE BANK SECURITIES
GOLDMAN, SACHS & CO.
May 25, 1999
