<PAGE>
Filed Pursuant to Rule 424(b)(5)
Registration File No.: 333-64963
THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
IS NOT COMPLETE AND MAY BE CHANGED. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME A FINAL PROSPECTUS SUPPLEMENT AND
THE RELATED PROSPECTUS IS DELIVERED. THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR
SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED MAY 12, 1999
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED NOVEMBER 5, 1998
$887,578,000 (APPROXIMATE)
GMAC COMMERCIAL MORTGAGE SECURITIES, INC.
Depositor
GMAC COMMERCIAL MORTGAGE CORPORATION
Servicer
SERIES 1999-C2 MORTGAGE PASS-THROUGH CERTIFICATES
[sidebar]
YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE S-12 IN THIS
PROSPECTUS 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 Corporation or any of their affiliates.
This prospectus supplement may be used to offer certificates only if accompanied
by the prospectus.
[end sidebar]
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 9 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 122 fixed rate, monthly pay mortgage loans secured by first
priority liens on 163 commercial and multifamily residential properties.
The mortgage pool will have an initial pool balance of approximately
$983,466,908.
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 % 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 those
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 , 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
0.76% of total 1.82% of total 2.48% of total 5.71% 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 7.35% of total 2.70% of total 4.23% 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
1.45% of total 0.57% of total 0.46% of total 2.90% 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 1.63% of total 1.20% of total 19.82% of total
MINNESOTA CONNECTICUT GEORGIA
1 property 6 properties 5 properties
$2,128,514 $17,443,028 $15,878,461
0.22% of total 1.77% of total 1.61% of total
ILLINOIS RHODE ISLAND FLORIDA
2 properties 1 property 9 properties
$46,132,141 $3,897,657 $70,566,782
4.69% of total 0.40% of total 7.18% of total
MICHIGAN NEW YORK LOUISIANA
5 properties 18 properties 2 properties
$16,040,567 $206,414,083 $4,793,411
1.63% of total 20.99% 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
0.20% of total 2.65% of total 4.56% of total
</TABLE>
DISTRIBUTION OF PROPERTY TYPES
Mixed Use 0.93%
Self Storage 0.19%
Office 27.63%
Retail 27.45%
Multifamily 26.61%
Other 6.85%
Hospitality 5.84%
Industrial 4.50%
[ ] (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
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
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
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-54
The Servicer ......................... S-54
Servicing Standard ................... S-54
Specially Serviced Mortgage Loans .... S-54
</TABLE>
S-2
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Termination of the Servicer with
Respect to Specially Serviced
Mortgage Loans and REO
Properties ............................ S-55
Servicing and Other Compensation
and Payment of Expenses ............... S-56
Modifications, Waivers, Amendments
and Consents .......................... S-59
Enforcement of ARD Loans ................. S-60
Sale of Defaulted Mortgage Loans ......... S-60
REO Properties ........................... S-61
Inspections; Collection of Operating
Information ........................... S-62
DESCRIPTION OF THE
CERTIFICATES ............................... S-62
Denominations ............................ S-63
Book-Entry Registration of the
Offered Certificates .................. S-63
Certificate Balances and Notional
Amounts ............................... S-65
Pass-Through Rates ....................... S-66
Distributions ............................ S-67
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-72
Subordination; Allocation of Losses
and Expenses .......................... S-72
P&I Advances ............................. S-73
Appraisal Reductions ..................... S-74
Reports to Certificateholders;
Available Information ................. S-76
Information Available Electronically ..... S-77
Other Information ........................ S-78
Voting Rights ............................ S-79
Termination; Retirement of
Certificates .......................... S-79
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
The Trustee .............................. S-79
YIELD AND MATURITY
CONSIDERATIONS ............................. S-80
Yield Considerations ..................... S-80
Rate and Timing of Payments on the
Mortgage Loans ........................ 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-93
FEDERAL INCOME TAX
CONSEQUENCES ............................... S-95
Original Issue Discount and Premium....... S-95
New Withholding Regulations .............. S-97
Characterization of Investments in
Offered Certificates .................. S-97
METHOD OF DISTRIBUTION ...................... S-97
LEGAL MATTERS ............................... S-98
RATINGS ..................................... S-99
LEGAL INVESTMENT ............................ S-100
ERISA CONSIDERATIONS ........................ S-100
INDEX OF SIGNIFICANT
DEFINITIONS ........................... S-102
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 APROXIMATE
ORIGINAL PRINCIPAL PERCENT OF PASS- WEIGHTED AVG. PRINCIPAL
RATINGS OR NOTIONAL CREDIT THROUGH LIFE (5) WINDOW (6)
CLASS MOODY'S/S&P/FITCH AMOUNT (1) SUPPORT (4) RATE (IN YEARS) (MONTH/YEAR)
- ----- ----------------- ---------- ----------- ---- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
X Aaa/AAAr/AAA $ 983,466,907(3) N/A 10.0 7/99-1/24
A-1 Aaa/AAA/AAA 151,465,000 28.25% 5.7 7/99-12/08
A-2 Aaa/AAA/AAA 554,172,000 28.25% 9.7 12/08-5/09
B Aa2/AA/AA 51,632,000 23.00% 9.9 5/09-5/09
C A2/A/A 49,173,000 18.00% 9.9 5/09-5/09
D A3/A-/A- 14,752,000 16.50% 10.0 5/09-6/09
E Baa2/BBB/BBB 41,798,000 12.25% 10.8 6/09-6/11
F Baa3/BBB-/BBB- 12,293,000 11.00% 12.7 6/11-10/12
G Baa3/NR/NR 12,293,000 9.75% 13.9 10/12-12/13
H(2)
J(2)
K(2)
L(2)
M(2)
N(2)
</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) This class is not offered by this prospectus supplement.
(3) 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.
(4) 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.
(5) 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.
(6) 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.
(7) Lesser of fixed rate or weighted average net mortgage rate.
(8) Weighted average net mortgage rate.
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 .................................. $983,466,908
Number of mortgage loans .............................. 122
Number of mortgaged properties ........................ 163
Average balance as of the cut-off date ................ $8,061,204
Range of mortgage rates
as of the cut-off date ............................... 6.25% to 9.03%
Weighted average mortgage rate ........................ 7.407%
Weighted average remaining term to maturity or
anticipated repayment date ........................... 136.4 months
Weighted average debt service coverage ratio .......... 1.40
Weighted average loan-to-value ratio .................. 68.31%
</TABLE>
The calculation of "loan-to-value ratio" and "debt service coverage ratio"
is described in Annex A to this prospectus supplement and the calculation does
not include 8 credit lease loans which constitute 14.02% 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>
- ---------------------------------------------------------------------------------------------------------
RELEVANT PARTIES AND IMPORTANT DATES
<S> <C> <C>
TITLE OF SERIES: Series 1999-C2 Mortgage CUT-OFF DATES: June 1 and June 10, 1999
Pass-Through Certificates
DISTRIBUTION DATE: The 15th day of each
THE ISSUER: GMAC Commercial Mortgage month or, if the 15th day is not a
Securities Inc. Series 1999-C2 Trust business day, the immediately
formed to issue the mortgage succeeding business day, beginning in
pass-through certificates and to acquire July, 1999.
the mortgage pool.
CLOSING DATE: On or about June , 1999.
DEPOSITOR: GMAC Commercial Mortgage
Securities, Inc. DETERMINATION DATE: The 5th day of
650 Dresher Road each month or, if the 5th day is not a
Horsham, Pennsylvania 19044-8015 business day, the immediately
(215) 328-4622 succeeding business day.
COLLECTION PERIOD: For any distribution
SELLER: GMAC Commercial Mortgage date, the period that begins immediately
Corporation following the determination date in the
prior calendar month and continues
SERVICER: GMAC Commercial Mortgage through and includes the determination
Corporation date in the calendar month in which
that distribution date occurs, except that
TRUSTEE: LaSalle Bank National Association the first collection period begins
immediately following the cut-off date.
FISCAL AGENT: ABN AMRO Bank N.V.
- ---------------------------------------------------------------------------------------------------------
</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.
GEOGRAPHIC CONCENTRATIONS
The mortgaged properties are located in 28 states. The following table lists the
number and
S-6
<PAGE>
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 ............. 18 20.99%
California ........... 26 19.82
Pennsylvania ......... 30 7.35
Florida .............. 9 7.18
Colorado ............. 2 5.71
</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 27.63%
Retail .............. 37 27.45
Multifamily ......... 75 26.61
Other ............... 7 7.04
Hospitality ......... 5 5.84
Industrial .......... 13 4.50
Mixed Use ........... 3 0.93
</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 .
CERTIFICATE DESIGNATIONS
We refer to the certificates by the following designations:
- ------------------------------------------------------------------
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 Classes B, C, D, E, F, G, H, J, K, L,
certificates M and N
- ------------------------------------------------------------------
Residual certificates Classes R-I, R-II and R-III
- ------------------------------------------------------------------
REMIC regular Classes X, A-1, A-2, B, C, D, E, F,
certificates G, H, J, K, L, M and N
- ------------------------------------------------------------------
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 $983,466,907, 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.
The pass-through rate for each class of certificates is specified on page S-4.
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.
ALLOCATIONS OF LOSSES ON THE If losses on the mortgage loans are allocated to
MORTGAGE LOANS WOULD REDUCE your class of certificates, the amount payable
YOUR PAYMENTS AND to you will be reduced by the amount of these
YIELD ON YOUR CERTIFICATES 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 The yield to maturity on the certificates
PREPAYMENTS ON THE will depend significantly on the rate and timing
MORTGAGE LOANS of payments of principal and interest on the
WILL AFFECT THE certificates. The rate and timing of principal
YIELD ON and interest payments on the mortgage loans,
THE CERTIFICATES 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 None of the mortgages are insured or guaranteed
ARE NOT INSURED 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 An affiliate of the servicer expects to acquire
MAY OCCUR WHEN some of the subordinate certificates including a
CERTIFICATEHOLDERS OF portion of the Class N certificates. The
VARIOUS CLASSES HAVE affiliate's ownership of certificates could
DIFFERING INTERESTS 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 The trust could become liable for a material
CONDITIONS MAY adverse environmental condition at a mortgaged
REDUCE OR DELAY YOUR PAYMENTS 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 The 5 states with the highest concentration of
MAY INCREASE REALIZED mortgage loans secured by mortgaged properties
LOSSES ON THE MORTGAGE LOANS 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 All of the mortgage loans are non-recourse
NON-RECOURSE loans. If a borrower LOANS 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.
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SELLER IS THE ONLY PERSON The seller will be the only person making
MAKING REPRESENTATIONS AND representations and warranties on the mortgage
WARRANTIES ON MORTGAGE LOANS loans sold to the depositor. Neither the
depositor nor any of its affiliates will be
obligated to 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 110 mortgage loans, which represent 79.91% of
LOSSES ON THE MORTGAGE LOANS the initial pool balance, require balloon
AND EXTEND THE WEIGHTED payments at their stated maturity. These
AVERAGE LIFE OF YOUR mortgage loans involve a greater degree of risk
CERTIFICATE 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 4 of the mortgage loans, which represent 15.14%
PAYMENTS, THE WEIGHTED AVERAGE of the initial pool balance, are ARD loans.
LIFE OF YOUR CLASS OF "ARD loans" have anticipated repayment dates
CERTIFICATES MAY BE EXTENDED 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 23 mortgaged properties, securing mortgage
BUSINESSES OR CHANGES IN loans that represent 27.63% of the initial pool
DEMOGRAPHIC CONDITIONS COULD balance, are office properties.
ADVERSELY AFFECT THE VALUE AND
CASH FLOW FROM OFFICE Economic decline in the businesses operated
PROPERTIES 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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<CAPTION>
<S> <C>
particular business or industry. 5 of the mortgage
loans representing 8.69% 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 37 mortgaged properties, securing mortgage loans
AT A RETAIL PROPERTY COULD ADVERSELY that represent 27.45% of the initial pool balance,
AFFECT ITS VALUE AND CASH FLOW are 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:
</TABLE>
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<CAPTION>
<S> <C>
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
ON MULTIFAMILY PROPERTIES COULD that represent 26.61% of the initial pool balance,
ADVERSELY AFFECT THEIR VALUE AND CASH are 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
PROPERTIES BY GOVERNMENT PROGRAMS COULD credit, and city, state and federal housing
ALSO ADVERSELY AFFECT THEIR VALUE AND subsidies or similar programs. The limitations and
CASH FLOW restrictions imposed by these programs could
</TABLE>
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<CAPTION>
<S> <C>
result in realized losses on the mortgage loans.
The limitations 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
PROPERTY TYPES COULD ADVERSELY AFFECT that represent approximately 7.97% of the initial
THEIR VALUE AND CASH FLOW pool 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 5.97% of the initial
pool balance. These credit lease loans are the
loans identified on Annex A as the University of
Nevada loan, the Carmax loan and the Costco 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
AT A HOSPITALITY PROPERTY COULD that represent 5.84% of the initial pool balance,
ADVERSELY AFFECT ITS VALUE AND CASH are hospitality properties. A decrease in room
FLOW rates or 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.
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
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
CONDITIONS COULD ADVERSELY AFFECT THE that represent 4.50% of the initial pool balance,
VALUE AND CASH FLOW FROM INDUSTRIAL are 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 2.47%
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
ENVIRONMENTAL RISKS COULD ALSO losses on the mortgage loans. Site characteristics
ADVERSELY AFFECT THE VALUE AND CASH which affect the value of an industrial property
FLOW FROM INDUSTRIAL PROPERTIES include:
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.
</TABLE>
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<TABLE>
<S> <C>
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
RISK ON THE MORTGAGE LOANS of 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
18.92% 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 14.02% of
HIGHLY DEPENDENT UPON THE the initial pool balance, are credit lease loans
CREDITWORTHINESS OF THE CREDIT TENANT that have been made on mortgaged properties leased
to credit tenants 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 required payments under the credit
lease loan until the property
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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 the maturity date that is materially
in excess of its 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 an amount
equal to the amount of any deficiency between the
proceeds of the sale of the mortgaged property and
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. 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
EXCLUSIONS TO COVERAGE certain 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 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
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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
LOSSES of 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,
also may 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 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.
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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 4.71% 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.
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
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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 2.85% of the
ENFORCEABILITY OF initial pool balance, are cross-collateralized with
CROSS-COLLATERALIZATION one or 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.
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
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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 MAY REDUCE PAYMENTS TO "foreclosure property" acquired by the trust will
CERTIFICATEHOLDERS reduce the net 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
servicers 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,
PROPERTIES MAY CAUSE LOSSES which represent 4.11% 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 1.21% of the
initial pool balance, are subject to the lien of
either a mortgage on both the 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
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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
LENDER TO ENFORCE REMEDIES related 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 1.42% 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
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after a lease default, the leasehold mortgagee
would lose its security.
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 cashflow delays
NONCOMPLIANCE ON THE MORTGAGED and shortfalls that would reduce or delay the
PROPERTIES amount of 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 cashflow 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
CAUSE LOSSES ON THE MORTGAGE LOANS proceeds and the repurchase prices for any mortgage
loans repurchased due to breaches of
representations or warranties or defaults, will
cause changes in
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the relative concentrations of properties, property
characteristics, number of borrowers and affiliated
borrowers and geographic location.
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
CERTIFICATEHOLDERS Act 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,
o 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.
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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 8.62% 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. 119 of the mortgage loans, which represent
91.38% 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 18.74% 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
110 of the mortgage loans, which represent approximately 79.91% 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 4.95% of the initial pool balance, are fully
amortizing.
ARD LOANS
4 of the mortgage loans, which represent approximately 15.14% 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;
(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 4.95% of the
initial pool balance. 3 mortgage loans, which represent 8.62% 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. 8 of the mortgage loans, which represent 18.40% 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. 114 of the mortgage loans, which represent 81.60%
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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<PAGE>
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 2.85% 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 5.46% 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 122, while the total number of mortgaged
properties in the mortgage pool is 163. 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 13.85% 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 4.71% 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 2.86% 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.
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<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 2.03 $1,500,000
15 GMAC4700 Midcon Apartment Portfolio 17,443,028 1.77 900,000
27 GMAC5380 Briarcliff Summit Apartments 8,894,345 0.90 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 2.86% 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 4.11% 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 1.21% 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.
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<PAGE>
CREDIT LEASE LOANS
8 of the mortgage loans, which represent 14.02% 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
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
OF CUT-OFF DATE CREDIT 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)
Ingram Micro Corp .................. 2 72,640,817 Office Baa3(4)/BBB
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) 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 is either fully amortizing or is a balloon loan
with a residual value insurance policy. In order to minimize the risks
associated with the related balloon payments, each of the borrowers 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. The residual value insurance policies issued by R.V.I. America
indemnify the insureds against any loss incurred as a result of a decline in
the value of the related
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<PAGE>
credit lease properties upon the sale of the property as a result of changes in
market conditions. 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 with
affiliated borrowers representing in the aggregate 10.97% 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 "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 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:
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<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
properties 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 10.17% 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 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
Factors--A significant
S-38
<PAGE>
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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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 7.39% 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 borrowers can terminate the leases upon
the occurrence of specified condemnation events. However, the Ingram 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 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 5.47% 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 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 3.66% 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.
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.
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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 Squaw Peak
debt service reserve triggers.
The Red Rose Commons Loan
The Loan. The "Red Rose Commons loan," representing 2.88% 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 affiliated with Kenneth Goldenberg and PREIT. 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 2.73% 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, bankruptcy remote, 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 2.69% 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 2.56% 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 2.38% 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 an earnout reserve amount of
$600,000 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
4.28% 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 0.97% 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.
Generally, the mortgage loans conformed to the appraisal guidelines set forth
in Title XI of the Federal Financial Institutions Reform, Recovery and
Enforcement Act of 1989. 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.
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
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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 , 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 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
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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.
(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
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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.
(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.
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(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.
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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;
(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;
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(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 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.
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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.
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
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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 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
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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 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 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
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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, 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,
o 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
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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.
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
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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 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,
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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 and the mortgaged property 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.
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.
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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.
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 depositor, 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
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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 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
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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 securityholders, book-entry deliveries, and
settlement of trades within DTC, continue to function appropriately.
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
principal balance certificates will be reduced by any distributions of
principal actually made on such class of certificates on such distribution
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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 $983,466,907 (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 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
certificates for any distribution date will be equal to the lesser of the
specified fixed rate shown 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 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 % 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 certificates for any 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,
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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 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;
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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.
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
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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.
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;
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(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.
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
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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 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.
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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.
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
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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:
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
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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.
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.
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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
(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.
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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 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.
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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):
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
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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.
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.
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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 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,
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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.
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 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
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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 applicable to the Class
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 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 certificates and, to the
extent that the weighted average net mortgage rate is reduced below the
specified fixed rate with respect to the Class 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.
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Because the rate of principal payments on the mortgage loans will depend on
future events and a variety of factors (as described below), no assurance can
be given as to such rate or the rate of principal prepayments in particular.
The depositor is not aware of any relevant publicly available or authoritative
statistics 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 principal balance certificate refers to the
average amount of time that will elapse from the date of its issuance until
each dollar allocable to principal of that certificate is distributed to the
investor. For purposes of this prospectus supplement, the weighted average life
of a principal balance certificate is determined by
o multiplying the amount of each principal distribution 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 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 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 of each class of offered certificates (other than the Class X
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 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 (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 and Class G certificates and the percentage of the
initial certificate balance 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>
Initial .................................. 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 ............. July-1999 July-1999 July-1999 July-1999 July-1999
Last Principal Payment Date .............. Dec-2008 Nov-2008 Oct-2008 Sept-2008 Aug-2008
</TABLE>
* "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>
Initial .................................. 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 9.5
First Principal Payment Date ............. Dec-2008 Nov-2008 Oct-2008 Sept-2008 Aug-2008
Last Principal Payment Date .............. May-2009 May-2009 May-2009 May-2009 Mar-2009
</TABLE>
* "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>
Initial .................................. 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 ............. 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>
* "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>
Initial .................................. 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 ............. 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>
* "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>
Initial .................................. 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 ............. May-2009 May-2009 May-2009 May-2009 May-2009
Last Principal Payment Date .............. June-2009 June-2009 June-2009 June-2009 June-2009
</TABLE>
* "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>
Initial .................................. 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 ............................ 65 65 65 65 65
June 15, 2010 ............................ 39 39 39 39 39
June 15, 2011 ............................ 0 0 0 0 0
Weighted Average Life (in years) ......... 10.8 10.8 10.8 10.8 10.8
First Principal Payment Date ............. June-2009 June-2009 June-2009 June-2009 June-2009
Last Principal Payment Date .............. June-2011 June-2011 June-2011 June-2011 June-2011
</TABLE>
* "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>
Initial .................................. 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 ............................ 99 99 99 99 99
June 15, 2012 ............................ 22 22 22 22 22
June 15, 2013 ............................ 0 0 0 0 0
Weighted Average Life (in years) ......... 12.7 12.7 12.7 12.7 12.7
First Principal Payment Date ............. June-2011 June-2011 June-2011 June-2011 June-2011
Last Principal Payment Date .............. Oct-2012 Oct-2012 Oct-2012 Oct-2012 Oct-2012
</TABLE>
* "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>
Initial .................................. 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 ............................ 38 38 38 38 38
June 15, 2014 ............................ 0 0 0 0 0
Weighted Average Life (in years) ......... 13.9 13.9 13.9 13.9 13.9
First Principal Payment Date ............. Oct-2012 Oct-2012 Oct-2012 Oct-2012 Oct-2012
Last Principal Payment Date .............. Dec-2013 Dec-2013 Dec-2013 Dec-2013 Dec-2013
</TABLE>
* "PP" means 100% of each loan prepays when it becomes freely prepayable.
S-88
<PAGE>
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 9916/32%) and are exclusive of accrued interest.
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>
Weighted Average Life (yrs.) .........
First Principal Payment Date .........
Last Principal Payment Date ..........
</TABLE>
* "PP" means 100% of each loan prepays when it becomes freely prepayable.
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-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>
Weighted Average Life (yrs.) .........
First Principal Payment Date .........
Last Principal Payment Date ..........
</TABLE>
* "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>
Weighted Average Life (yrs.) .........
First Principal Payment Date .........
Last Principal Payment Date ..........
</TABLE>
* "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 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>
Weighted Average Life (yrs.) .........
First Principal Payment Date .........
Last Principal Payment Date ..........
</TABLE>
* "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>
Weighted Average Life (yrs.) .........
First Principal Payment Date .........
Last Principal Payment Date ..........
</TABLE>
* "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 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>
Weighted Average Life (yrs.) .........
First Principal Payment Date .........
Last Principal Payment Date ..........
</TABLE>
* "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>
Weighted Average Life (yrs.) .........
First Principal Payment Date .........
Last Principal Payment Date ..........
</TABLE>
* "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 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>
Weighted Average Life (yrs.) .........
First Principal Payment Date .........
Last Principal Payment Date ..........
</TABLE>
* "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 416/32%) 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 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).
S-93
<PAGE>
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>
Weighted Average Life (yrs.)** .........
First Payment Date .....................
Last Payment Date ......................
</TABLE>
* "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-94
<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-95
<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-96
<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.
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 , 1999, between the
depositor and Donaldson, Lufkin & Jenrette Securities Corporation as
representative of all 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 , 1999, against payment therefor in
immediately available funds.
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<PAGE>
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>
Donaldson, Lufkin &
Jenrette
Securities Corporation
Deutsche Bank Securities
Inc.
Goldman, Sachs & Co.
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 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 %
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
underwritten 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.
The depositor will indemnify the underwriters, and under limited
circumstances the underwriters will indemnify the depositor, against certain
civil liabilities under the Securities Act 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 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.
S-98
<PAGE>
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.
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.
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<PAGE>
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 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.
S-100
<PAGE>
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-101
<PAGE>
INDEX OF SIGNIFICANT DEFINITIONS
<TABLE>
<CAPTION>
<S> <C>
729 Seventh Avenue loan ..................... S-46
accredited investor ......................... S-100
accrued certificate interest ................ S-69
ALCOA ....................................... S-44
Annual debt service ......................... A-2
appraisal reduction amount .................. S-75
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-58
balloon payment interest shortfall .......... S-58
CBE ......................................... S-89
Cedelbank participants ...................... S-64
clearance cooperative ....................... S-64
CLTV ........................................ A-2
comparative financial status report ......... S-77
controlling class ........................... S-55
corporate trust office ...................... S-80
corrected mortgage loan ..................... S-55
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-64
discount rate ............................... S-71
discount rate fraction ...................... S-71
distributable certificate interest .......... S-69
DSC Ratio ................................... A-2
DSCR ........................................ A-2
due date .................................... S-31
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
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-58
Fairfield Towers loan ....................... S-46
Fitch ....................................... S-10
foreclosure property ........................ S-26
GLA ......................................... S-38
HHFI ........................................ S-45
historical loan modification report ......... S-76
historical loss estimate report ............. S-76
Holiday Inn Mart Plaza loan ................. S-45
Ingram loan borrowers ....................... S-40
Ingram loans ................................ 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-72
interest reserve loans ...................... S-72
liquidation fee ............................. S-57
loan-to-value ratio, ........................ A-2
lock, ....................................... A-3
LOP ......................................... S-84
mezzanine debt .............................. S-34
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-100
Occupancy ................................... A-3
occupancy as of date ........................ A-3
operating statement analysis ................ S-77
Palmer Center loan .......................... S-41
pass-through rate ........................... S-66
</TABLE>
S-102
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
P&I advances ........................... S-73
Plan ................................... S-100
PREIT loan borrowers ................... S-36
PREIT loans ............................ S-36
prepayment interest excess ............. S-58
prepayment interest shortfall .......... S-58
Prepayment provisions .................. A-3
principal allocation fraction .......... S-71
principal distribution amount .......... S-69
PTE .................................... S-100
purchase price ......................... S-50
qualified mortgage ..................... S-60
qualified mortgages .................... S-97
Queens Center Mall loan ................ S-37
rated final distribution date .......... S-60
real estate assets ..................... S-97
Realized losses ........................ S-73
Red Rose Commons loan .................. S-43
REMIC regulations ...................... S-95
REO property ........................... S-62
REO status report ...................... S-76
REO tax ................................ S-61
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-59
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
servicing fee .......................... S-56
Servicing fee rate ..................... A-3
servicing standard ..................... S-54
SF ..................................... S-38
SMMEA .................................. S-100
S&P .................................... S-10
special servicing events ............... S-54
special servicing fee .................. S-57
specially serviced mortgage loan ....... S-54
sq. ft. ................................ A-3
Square feet ............................ A-3
Squaw Peak loan ........................ S-42
stated principal balance ............... S-67
Term to maturity ....................... A-3
terms and conditions ................... S-64
trustee reports ........................ S-76
underwritten NCF ....................... A-1
underwritten NCF DSCR, ................. A-2
Underwritten net cash flow ............. A-1
Units .................................. A-3
University of Nevada loan .............. S-44
UW NCF ................................. A-1
UW NCF DSCR, ........................... A-2
voting rights .......................... S-79
weighted average net mortgage rate ..... S-66
withheld amounts ....................... S-72
workout fee ............................ S-57
</TABLE>
S-103
<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, 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) an 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 (b) by 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. EARNOUTAMOUNT BALANCE CUT-0FF 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 LOAN
NUMBER NUMBER PROPERTY NAME PROPERTY TYPE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 GMAC4950 Queens Center Mall Anchored Retail
2 GMAC4000 Palmer Center Office Complex Office
3 GMAC5010 Ingram Micro Corporate Headquarters Office
4 GMAC4520 Pointe - Squaw Peak Office Portfolio Office
5 GMAC5500 Red Rose Commons Anchored Retail
- -------------------------------------------------------------------------------------------------------------------
6 GMAC4210 University of Nevada Property Special Purpose
7 GMAC5330 Holiday Inn Mart Plaza Lodging
8 GMAC5060 Fairfield Towers Condominium Apartments Multifamily
9 GMAC4790 729 7th Avenue Office Office
10 GMAC5900 Boca Palms Apartments Multifamily
- -------------------------------------------------------------------------------------------------------------------
11 GMAC5020 Ingram Micro Corporate Headquarters Office
12 GMAC4060 489 Fifth Avenue Office
13 GMAC5660 CarMax - The Auto Superstore Special Purpose
14 GMAC5940 Lakewood Hills Apartments Multifamily
15 GMAC4700 MIDCON Apartment Portfolio
- -------------------------------------------------------------------------------------------------------------------
15a GMAC4700-A Hamden Ridge Apartments Multifamily
15b GMAC4700-B Hampton House Apartments Multifamily
15c GMAC4700-C Evergreen Apartments Multifamily
15d GMAC4700-D Ridgefield Apartments Multifamily
15e GMAC4700-E Holiday Apartments Multifamily
- -------------------------------------------------------------------------------------------------------------------
15f GMAC4700-F Jefferson Arms Apartments Multifamily
16 GMAC5970 Palms of Pembroke Apartments Multifamily
17 GMAC5220 Fairfield Inn by Marriott (Anaheim) Lodging
18 GMAC5690 Huntington Westminster Apartments Multifamily
19 GMAC5910 Cobblestone Apartment Homes Multifamily
- -------------------------------------------------------------------------------------------------------------------
20 GMAC5960 The Marylander Apartments Multifamily
21 GMAC3820 Costco (Newport News) Land
22 GMAC4770 1200 South Avenue Office
23 GMAC5920 Hidden Lakes Apartments Multifamily
24 GMAC5840 The Prather Portfolio
- -------------------------------------------------------------------------------------------------------------------
24a GMAC5840-A The Village Apartments Multifamily
24b GMAC5840-B Providence Hill Apartments Multifamily
24c GMAC5840-C Lakeside I & II Duplexes Multifamily
25 GMAC3770 Bal Seal Engineering Industrial
26 GMAC4110 Loehmann's Seaport Plaza Anchored Retail
- -------------------------------------------------------------------------------------------------------------------
27 GMAC5380 Briarcliff Summit Apartments Multifamily
28 GMAC3800 College Square Center Anchored Retail
29 GMAC2100 Mt Laurel Office Center Office
30 GMAC4260 Center City Apartment Portfolio
30a GMAC4260-A 2304-08 Locust Street Apartments Multifamily
- -------------------------------------------------------------------------------------------------------------------
30b GMAC4260-B 2321 Spruce Street Multifamily
30c GMAC4260-C 128 S. 22nd Street Multifamily
30d GMAC4260-D 280 S. 23rd Street Multifamily
30e GMAC4260-E 2015-17 Locust Street Multifamily
30f GMAC4260-F 2019 Spruce Street Multifamily
- -------------------------------------------------------------------------------------------------------------------
30g GMAC4260-G 2034-36 Pine Street Multifamily
30h GMAC4260-H 2122 Pine Street Multifamily
30i GMAC4260-I 2131-33 Pine Street Multifamily
30j GMAC4260-J 420 S. 15th Street Multifamily
30k GMAC4260-K 330 S. 17th Street Multifamily
- -------------------------------------------------------------------------------------------------------------------
30l GMAC4260-L 735 Spruce Street Multifamily
30m GMAC4260-M 1009-11 Spruce Street Multifamily
30n GMAC4260-N 1127 Spruce Street Multifamily
30o GMAC4260-O 614 Pine Street Multifamily
30p GMAC4260-P 623-25 Pine Street Multifamily
- -------------------------------------------------------------------------------------------------------------------
30q GMAC4260-Q 920 Clinton Street Multifamily
30r GMAC4260-R 2009 Mt. Vernon Street Multifamily
30s GMAC4260-S 2219-21 Spring Garden Multifamily
30t GMAC4260-T 325 Pine Street Multifamily
30u GMAC4260-U 532-34 Pine Street Multifamily
- -------------------------------------------------------------------------------------------------------------------
30v GMAC4260-V 607-09 South 3rd Street Multifamily
30w GMAC4260-W 614 S. 3rd Street Multifamily
30x GMAC4260-X 718-22 S. 7th Street Multifamily
31 GMAC5120 Cambridge Mall Anchored Retail
32 GMAC5720 Anchorage Business Park Retail
- -------------------------------------------------------------------------------------------------------------------
33 GMAC5590 Claremont Auto Center Special Purpose
34 GMAC3990 Pacific Plaza Shopping Center Retail
35 GMAC5930 Kenwood Gardens Apartments Multifamily
36 GMAC4930 Pismo Coast Shopping Center Anchored Retail
37 GMAC5230 Hampton Inn & Suites Lodging
- -------------------------------------------------------------------------------------------------------------------
38 GMAC5140 Chippenham Square Shopping Center Anchored Retail
39 GMAC4620 WorldGate Communications Building Office
40 GMAC4120 National Enterprises San Diego Portfolio
40a GMAC4120-A Retail Center, Balboa & Mercury Retail
40b GMAC4120-B RFA and TCG Buildings Office
- -------------------------------------------------------------------------------------------------------------------
41 GMAC5950 2031 Locust Street Apartments Multifamily
42 GMAC4090 Cheviot Hills Shopping Center Anchored Retail
43 GMAC4900 Chimney Hill Retail Center Retail
44 GMAC4940 Portsmouth Plaza Shopping Center Anchored Retail
45 GMAC5360 Ashdale Plaza Retail
- -------------------------------------------------------------------------------------------------------------------
46 GMAC5980 Bemis Building Office
47 GMAC5610 Westpark Plaza Office
48 GMAC4970 Wappingers Falls Shopping Center Retail
49 GMAC4610 Santee Garment Center Retail
50 GMAC4660 Tage Inn - Andover Lodging
- -------------------------------------------------------------------------------------------------------------------
51 GMAC5450 Hillcrest Colonnade Shopping Center Retail
52 GMAC5240 West Trenton Industrial Building Industrial
53 GMAC4590 1900 Bryant Street Mixed Use
54 GMAC3890 Downing Place Townhouses Multifamily
55 GMAC4840 Arrowhead Festival Shopping Center Retail
- -------------------------------------------------------------------------------------------------------------------
56 GMAC4810 Twin Bridge Apartments Multifamily
57 GMAC5190 Preferred Freezer Services Cold Storage Facility Industrial
58 GMAC4720 Pacific Coast Center Retail
59 GMAC5650 Solomon's Court and Esther's Garden Apartments Multifamily
60 GMAC2060 Sheafe St./ Lewis St./ Milk St.
- -------------------------------------------------------------------------------------------------------------------
60a GMAC2060-A Sheafe Condominiums Multifamily
60b GMAC2060-B 36-38 Lewis St. Apt. Building Multifamily
60c GMAC2060-C 120 Milk Street Building Mixed Use
61 GMAC5090 Ravenwood Highlander Apartments Multifamily
62 GMAC3680 195 Raritan Center Parkway Industrial
- -------------------------------------------------------------------------------------------------------------------
63 GMAC5420 Fountain Valley Office Building Office
64 GMAC5460 Kings Canyon Shopping Center Anchored Retail
65 GMAC4400 Crossroads Office Park Industrial
66 GMAC4920 Oaks Apartments Multifamily
67 GMAC4670 Tage Inn - Milford Lodging
- -------------------------------------------------------------------------------------------------------------------
68 GMAC3470 Cataldo-Pane Multifamily Portfolio
68a GMAC3470-A 957 67th Street Multifamily
68b GMAC3470-B 88 Van Sicklen Street Multifamily
68c GMAC3470-C 8785 Bay 16th Street Multifamily
68d GMAC3470-D 7311 4th Avenue Multifamily
- -------------------------------------------------------------------------------------------------------------------
68e GMAC3470-E 805 Avenue O Multifamily
68f GMAC3470-F 1946 70th Street Multifamily
68g GMAC3470-G 7301 4th Avenue Multifamily
69 GMAC5180 Newporter Apartments Multifamily
70 GMAC5430 Timber Line Apartments Multifamily
- -------------------------------------------------------------------------------------------------------------------
71 GMAC5510 Santa Monica Office Building Office
72 GMAC5630 Woodland Grove Apartments Multifamily
73 GMAC5680 Country Place Apartments Multifamily
74 GMAC5050 Sharpstown Industrial Park Industrial
75 GMAC4830 425 Commerce Drive Office Office
- -------------------------------------------------------------------------------------------------------------------
76 GMAC5440 Harte-Hanks Building Industrial
77 GMAC5040 Dendrite Office Building Office
78 GMAC4800 Port Jefferson Commons Retail
79 GMAC5051 Mykawa Warehouse Industrial
80 GMAC3970 Marketplace Shopping Center Anchored Retail
- -------------------------------------------------------------------------------------------------------------------
81 GMAC4760 Riverine Apartments Multifamily
82 GMAC5740 Bayou Walk II Retail
83 GMAC5600 Merritt Square Financial Center (FL) Office
84 GMAC1880 Lock Mill Plaza Multifamily
85 GMAC5150 For Eyes Building Retail
- -------------------------------------------------------------------------------------------------------------------
86 GMAC5390 Bryarwood 85 Office Park Office
87 GMAC6000 Rite Aid (Schenectady, NY) Retail
88 GMAC5030 30 Executive Avenue Industrial
89 GMAC5130 Camelot Square Apartments (CA) Multifamily
90 GMAC4530 Polk Street Apartments Multifamily
- -------------------------------------------------------------------------------------------------------------------
91 GMAC4470 Rue Versailles Apartments Multifamily
92 GMAC5800 Garden Center Apartments Multifamily
93 GMAC4710 Office Max (Abilene, TX) Retail
94 GMAC3450 Canterbury Commons Office
94a GMAC3450-A Canterbury & Springfield Commons Office
- -------------------------------------------------------------------------------------------------------------------
94b GMAC3450-B Springfield Commons Office
95 GMAC4220 Walgreens (West Palm Beach, FL) Retail
96 GMAC4540 Hart Plaza Shopping Center Retail
97 GMAC4270 547-557 Flatbush Avenue Multifamily
98 GMAC4450 Brewery Office-Retail Office
- -------------------------------------------------------------------------------------------------------------------
99 GMAC3080 Wendy's, Taco Bell & Bertucci's Retail
100 GMAC5170 Mark Court Apartments Multifamily
101 GMAC5370 Brendenwood Apartments Multifamily
102 GMAC5070 La Marquesa Apartments Multifamily
103 GMAC5054 South X Southwest Industrial Park Industrial
- -------------------------------------------------------------------------------------------------------------------
104 GMAC3830 The Courtyard Office Center Retail/Office
105 GMAC3330 William Realty Portfolio Multifamily
106 GMAC4850 Bestway-Security Self Storage
106a GMAC4850-A Security Self Storage Self-Storage
106b GMAC4850-B Bestway Self Storage Self-Storage
- -------------------------------------------------------------------------------------------------------------------
107 GMAC4130 Randy's Sports Mall Anchored Retail
108 GMAC3960 Mariner Plaza Anchored Retail
109 GMAC5160 Highland Village Apartments Multifamily
110 GMAC1150 Advance Medical Office Building Office
111 GMAC5520 Willits Street/Ethan Allen Anchored Retail
- -------------------------------------------------------------------------------------------------------------------
112 GMAC5055 Corporate Center Industrial
113 GMAC3740 CVS/Arbor Drugs Store Retail
114 GMAC5052 Wynnwood #1-3 Industrial
115 GMAC4730 Kearney Mesa Toyota Special Purpose
116 GMAC5480 Pomona Civic Plaza Office
- -------------------------------------------------------------------------------------------------------------------
117 GMAC5100 Lincoln Plaza Retail
118 GMAC3900 Fountain Ridge Apartments Multifamily
119 GMAC5110 2330 North Alma School Road Retail
120 GMAC4860 Bingle Crossing Shopping Center Retail
121 GMAC1120 Claremont South Retail
- -------------------------------------------------------------------------------------------------------------------
122 GMAC5053 Larimer Street Warehouse Industrial
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONTROL
NUMBER ADDRESS CITY STATE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 90-15 Queens Boulevard Elmhurst New York
2 90 South, 2 North, 2 South Cascade Ave. Colorado Springs Colorado
3 1600 & 1610 East St. Andrews Place Santa Ana California
4 7600 N. 15th St., 7600 N. 16th St. & 7500 N. Dreamy Draw Dr. Phoenix Arizona
5 US Route 30 & Fruitville Pike Lancaster Pennsylvania
- ------------------------------------------------------------------------------------------------------------------------------------
6 Interstate 80 and Frontage Road Carlin Nevada
7 350 North Orleans Avenue Chicago Illinois
8 148-444 Cozine Ave, 1019 Van Siclen Avenue, et.al. Brooklyn New York
9 729 Seventh Avenue New York New York
10 9860 Southwest Third Street Boca Raton Florida
- ------------------------------------------------------------------------------------------------------------------------------------
11 1700 E. St. Andrew Place Santa Ana California
12 489 Fifth Avenue - 12 East 42nd Street New York New York
13 101 North Wolf Road Hillside Illinois
14 821 Sequoia Drive Harrisburg Pennsylvania
15
- ------------------------------------------------------------------------------------------------------------------------------------
15a 745-795 Mix Avenue Hamden Connecticut
15b 480 Main Street West Haven Connecticut
15c 3 & 19 Evergreen Avenue Hamden Connecticut
15d 1-262 Ridgefield Drive Middletown Connecticut
15e 724 Savin Avenue West Haven Connecticut
- ------------------------------------------------------------------------------------------------------------------------------------
15f 2420 Whitney Avenue Hamden Connecticut
16 9450 Palm Circle North Pembroke Pines Florida
17 1460 South Harbor Boulevard Anaheim California
18 13920 Hoover Street Westminster California
19 1275 Southwest 46th Avenue Pompano Beach Florida
- ------------------------------------------------------------------------------------------------------------------------------------
20 3501 St. Paul Street Baltimore Maryland
21 12129-12135 Jefferson Avenue Newport News Virginia
22 1200 South Avenue Staten Island New York
23 2480 Foxhill Drive Miamisburg Ohio
24
- ------------------------------------------------------------------------------------------------------------------------------------
24a 1600-1723 Telluride and 1600-1719 Steamboat Lanes Columbia Missouri
24b 2501 South Providence Road Columbia Missouri
24c 1017-1043 Cooper Drive and 4001 Hyde Park Avenue Columbia Missouri
25 19650 Pauling Drive Foothill Ranch California
26 2027 Emmons Avenue Brooklyn New York
- ------------------------------------------------------------------------------------------------------------------------------------
27 1050 Ponce De Leon Avenue Atlanta Georgia
28 119-125 East College Avenue Salisbury Maryland
29 530, 532, 534 Fellowship Road Mt. Laurel New Jersey
30
30a 2304-08 Locust Street Philadelphia Pennsylvania
- ------------------------------------------------------------------------------------------------------------------------------------
30b 2321 Spruce Street Philadelphia Pennsylvania
30c 128 S. 22nd Street Philadelphia Pennsylvania
30d 280 S. 23rd Street Philadelphia Pennsylvania
30e 2015-17 Locust Street Philadelphia Pennsylvania
30f 2019 Spruce Street Philadelphia Pennsylvania
- ------------------------------------------------------------------------------------------------------------------------------------
30g 2034-36 Pine Street Philadelphia Pennsylvania
30h 2122 Pine Street Philadelphia Pennsylvania
30i 2131-33 Pine Street Philadelphia Pennsylvania
30j 420 S. 15th Street Philadelphia Pennsylvania
30k 330 S. 17th Street Philadelphia Pennsylvania
- ------------------------------------------------------------------------------------------------------------------------------------
30l 735 Spruce Street Philadelphia Pennsylvania
30m 1009-11 Spruce Street Philadelphia Pennsylvania
30n 1127 Spruce Street Philadelphia Pennsylvania
30o 614 Pine Street Philadelphia Pennsylvania
30p 623-25 Pine Street Philadelphia Pennsylvania
- ------------------------------------------------------------------------------------------------------------------------------------
30q 920 Clinton Street Philadelphia Pennsylvania
30r 2009 Mt. Vernon Street Philadelphia Pennsylvania
30s 2219-21 Spring Garden Philadelphia Pennsylvania
30t 325 Pine Street Philadelphia Pennsylvania
30u 532-34 Pine Street Philadelphia Pennsylvania
- ------------------------------------------------------------------------------------------------------------------------------------
30v 607-09 South 3rd Street Philadelphia Pennsylvania
30w 614 S. 3rd Street Philadelphia Pennsylvania
30x 718-22 S. 7th Street Philadelphia Pennsylvania
31 23011-23231 John R. Road/30-40 W. Nine Mile Road Hazel Park Michigan
32 401, 501, and 549 West International Airport Rd Anchorage Alaska
- ------------------------------------------------------------------------------------------------------------------------------------
33 620/660,625/645 & 667 Auto Center Drive Claremont California
34 18409 - 18463 Colima Road Rowland Heights California
35 2629 Alisdale Drive Toledo Ohio
36 501-581 Five Cities Drive Pismo Beach California
37 1989 Eastwood Road Wilmington North Carolina
- ------------------------------------------------------------------------------------------------------------------------------------
38 7415 Midlothian Turnpike (Route 60) Richmond Virginia
39 3190 Tremont Avenue Bensalem Township Pennsylvania
40
40a 8101 & 8111 Balboa Avenue & 4465 & 75 Mercury St. San Diego California
40b 5440 & 5464 Morehouse Drive San Diego California
- ------------------------------------------------------------------------------------------------------------------------------------
41 2027-35 Locust Street Philadelphia Pennsylvania
42 9824-9930 National Blvd. Cheviot Hills California
43 701 E. University Drive College Station Texas
44 1465 Woodbury Avenue Portsmouth New Hampshire
45 2876-2984 Dale Boulevard Dale City Virginia
- ------------------------------------------------------------------------------------------------------------------------------------
46 1050 Sansome Street San Francisco California
47 6300-6400 Westpark Drive Houston Texas
48 1271 Route 9 Wappinger Falls New York
49 1121-31 1/2 Santee Street Los Angeles California
50 131 River Road Andover Massachusetts
- ------------------------------------------------------------------------------------------------------------------------------------
51 1240-1294 University Avenue San Diego California
52 400 Sullivan Way West Trenton (Ewing Township) New Jersey
53 1960 Bryant St./2727 Mariposa St./535 Florida St. San Francisco California
54 3395 Spangler Drive Lexington Kentucky
55 7500 & 7600 West Bell Road Glendale Arizona
- ------------------------------------------------------------------------------------------------------------------------------------
56 605 Del Paso Street Euless Texas
57 12855 NW 113th Court Medley Florida
58 75-81 Higuera Street San Luis Obispo California
59 1005 & 919 West Wheatland Road Dallas Texas
60
- ------------------------------------------------------------------------------------------------------------------------------------
60a 37 Sheafe Street Boston Massachusetts
60b 36-38 Lewis Street Boston Massachusetts
60c 120 Milk Street Boston Massachusetts
61 2071 NW 86th Street & 8415 Franklin Avenue Clive Iowa
62 195 Raritan Center Parkway Edison Township New Jersey
- ------------------------------------------------------------------------------------------------------------------------------------
63 10101 Slater Avenue Fountain Valley California
64 4951-4995 East Kings Canyon Road Fresno California
65 45-105 Sockanossett Crossroads Cranston Rhode Island
66 4614 Pioneer Road Balch Springs Texas
67 24 Beaver Street Milford Massachusetts
- ------------------------------------------------------------------------------------------------------------------------------------
68
68a 957 67th Street Brooklyn New York
68b 88 Van Sicklen Street Brooklyn New York
68c 8785 Bay 16th Street Brooklyn New York
68d 7311 4th Avenue Brooklyn New York
- ------------------------------------------------------------------------------------------------------------------------------------
68e 805 Aveneue O Brooklyn New York
68f 1946 70th Street Brooklyn New York
68g 7301 4th Avenue Brooklyn New York
69 6050-6080 N. Marks Ave. & 2760 W. Bullard Ave. Fresno California
70 616 NE 38th Street Kansas City Missouri
- ------------------------------------------------------------------------------------------------------------------------------------
71 1632 5th Street Santa Monica California
72 12933 Laurel Bowie Road Laurel Maryland
73 1000 Justice Way Abilene Texas
74 5202-28 Parkersburg Dr, 6908 Harwin Dr, 5701-5650 Savoy Dr Houston Texas
75 425 Commerce Drive Fort Washington Pennsylvania
- ------------------------------------------------------------------------------------------------------------------------------------
76 393 Manley Street West Bridgewater Massachusetts
77 175 Morristown Road Basking Ridge New Jersey
78 4747 Nesconset Highway Port Jefferson Station New York
79 7200-7260 Mykawa Road Houston Texas
80 4100 NW 16th Boulevard Gainesville Florida
- ------------------------------------------------------------------------------------------------------------------------------------
81 505 Riverine Drive Traverse City Michigan
82 6590 & 6596 Youree Drive (Route 1) Shreveport Louisiana
83 775 East Merritt Island Causeway Merritt Island Florida
84 One Buffalo Avenue Concord North Carolina
85 1355 West Sand Lake Road Orlando Florida
- ------------------------------------------------------------------------------------------------------------------------------------
86 1587, 1593, & 1597 Northeast Expressway Atlanta Georgia
87 1102-1120 State Street; 2327 Brandywine Ave; 1103-1127 Albam Schenectady New York
88 30 Executive Avenue Edison Township New Jersey
89 5400 Planz Road Bakersfield California
90 743 Polk Street San Francisco California
- ------------------------------------------------------------------------------------------------------------------------------------
91 25054,71,100 Rue Versailles Dr & 25301-321 Montmarte Ct S. Royal Oak Township Michigan
92 62 & 70 Garden Center Drive Broomfield Colorado
93 3366 John Knox Drive Abilene Texas
94
94a 3651, 3653 & 3655 Canton Highway Marietta Georgia
- ------------------------------------------------------------------------------------------------------------------------------------
94b 102, 103 & 104 Springfield Drive Woodstock Georgia
95 2050 45th St. West Palm Beach Florida
96 100 Oxford Valley Road Falls Township Pennsylvania
97 547-557 Flatbush Avenue Brooklyn New York
98 703 McKinney Avenue Dallas Texas
- ------------------------------------------------------------------------------------------------------------------------------------
99 2160 Centreville Road Herndon Virginia
100 1922 & 1932 Tenth Ave. and 1105 & 1125 Mark Ct. Newport Minnesota
101 3012 East Edison Road South Bend Indiana
102 6600 Hayvenhurst Avenue Van Nuys California
103 700 Industrial Boulevard Sugarland Texas
- ------------------------------------------------------------------------------------------------------------------------------------
104 431 West Franklin Street Chapel Hill North Carolina
105 1-5-7-9 South Maple Avenue East Orange New Jersey
106
106a 25 James Street South Toms River New Jersey
106b 29 Flint Road Toms River New Jersey
- ------------------------------------------------------------------------------------------------------------------------------------
107 7288 Greenwood Road Shreveport Louisiana
108 625 Highway 231 Panama City Florida
109 100 Bridgewood Drive LaGrange Georgia
110 1811 South Rainbow Boulevard Las Vegas Nevada
111 275 North Woodward Avenue Birmingham Michigan
- ------------------------------------------------------------------------------------------------------------------------------------
112 10700 Corporate Drive & 12600 Exchange Drive Stafford Texas
113 West Chicago Blvd. Tecumseh Michigan
114 7230-7250 Wynnwood Lane Houston Texas
115 4990 Kearney Mesa Road San Diego California
116 435 West Mission Boulevard Pomona California
- ------------------------------------------------------------------------------------------------------------------------------------
117 701-715 Lincoln Boulevard Venice California
118 1101-1107 North Cleveland Avenue Sioux Falls South Dakota
119 2330 North Alma School Road Chandler Arizona
120 2915 Bingle Road Houston Texas
121 513-515 Hudson Street New York New York
- ------------------------------------------------------------------------------------------------------------------------------------
122 6714 Larimer Street Houston Texas
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
% OF
CROSS CUT-OFF AGGREGATE
CONTROL ZIP COLLATERALIZED RELATED ORIGINAL DATE INITIAL
NUMBER CODE GROUPS GROUPS BALANCE ($) BALANCE ($) POOL BALANCE
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 11373 100,000,000 100,000,000 10.17
2 80903 54,000,000 53,769,239 5.47
3 92705 50,890,000 50,722,972 5.16
4 85020 36,000,000 36,000,000 3.66
5 17603 Group 6 28,320,000 28,320,000 2.88
- -----------------------------------------------------------------------------------------------------------
6 89822 27,000,000 26,856,137 2.73
7 60611 26,500,000 26,476,006 2.69
8 11207 25,258,000 25,177,781 2.56
9 10036 23,500,000 23,412,934 2.38
10 33428 Group 6 22,600,000 22,583,360 2.30
- -----------------------------------------------------------------------------------------------------------
11 92705 21,990,000 21,917,844 2.23
12 10017 20,000,000 20,000,000 2.03
13 60162 19,700,000 19,656,135 2.00
14 17109 Group 6 18,750,000 18,736,195 1.91
15 17,500,000 17,443,028 1.77
- -----------------------------------------------------------------------------------------------------------
15a 06514
15b 06516
15c 06518
15d 06457
15e 06516
- -----------------------------------------------------------------------------------------------------------
15f 06518
16 33025 Group 6 16,600,000 16,587,778 1.69
17 92802 15,500,000 15,485,915 1.57
18 92683 14,000,000 13,992,012 1.42
19 33069 Group 6 13,850,000 13,839,803 1.41
- -----------------------------------------------------------------------------------------------------------
20 21218 Group 6 12,300,000 12,290,944 1.25
21 23602 12,200,000 12,173,039 1.24
22 10314 10,800,000 10,763,630 1.09
23 45342 Group 6 10,700,000 10,692,122 1.09
24 10,575,000 10,568,731 1.07
- -----------------------------------------------------------------------------------------------------------
24a 65201
24b 65201
24c 65201
25 92610 9,200,000 9,132,449 0.93
26 11235 9,000,000 8,964,671 0.91
- -----------------------------------------------------------------------------------------------------------
27 30306 8,900,000 8,894,345 0.90
28 21804 8,550,000 8,530,378 0.87
29 08054 7,750,000 7,712,944 0.78
30 7,640,000 7,608,624 0.77
30a 19103
- -----------------------------------------------------------------------------------------------------------
30b 19103
30c 19103
30d 19103
30e 19103
30f 19103
- -----------------------------------------------------------------------------------------------------------
30g 19103
30h 19103
30i 19103
30j 19146
30k 19103
- -----------------------------------------------------------------------------------------------------------
30l 19106
30m 19107
30n 19107
30o 19106
30p 19106
- -----------------------------------------------------------------------------------------------------------
30q 19107
30r 19130
30s 19130
30t 19106
30u 19106
- -----------------------------------------------------------------------------------------------------------
30v 19147
30w 19147
30x 19147
31 48030 7,500,000 7,490,240 0.76
32 99503 7,500,000 7,488,235 0.76
- -----------------------------------------------------------------------------------------------------------
33 91711 7,300,000 7,292,233 0.74
34 91748 7,275,000 7,245,711 0.74
35 43623 Group 6 7,250,000 7,244,662 0.74
36 93449 7,100,000 7,077,000 0.72
37 28406 6,900,000 6,886,177 0.70
- -----------------------------------------------------------------------------------------------------------
38 23236 6,750,000 6,740,837 0.69
39 19020 6,000,000 5,978,286 0.61
40 Group A Group 1 5,980,000 5,956,526 0.61
40a 92111
40b 92121
- -----------------------------------------------------------------------------------------------------------
41 19103 Group 6 5,950,000 5,945,619 0.60
42 90064 5,800,000 5,774,164 0.59
43 78840 5,700,000 5,692,708 0.58
44 03801 Group 4 5,600,000 5,589,454 0.57
45 22193 5,435,000 5,423,288 0.55
- -----------------------------------------------------------------------------------------------------------
46 94111 5,350,000 5,346,781 0.54
47 77057 5,335,000 5,332,311 0.54
48 12590 Group 4 5,300,000 5,290,019 0.54
49 90015 5,000,000 4,993,576 0.51
50 01810 Group B Group 2 4,800,000 4,791,571 0.49
- -----------------------------------------------------------------------------------------------------------
51 92103 4,685,000 4,678,865 0.48
52 08628 4,665,000 4,656,691 0.47
53 94110 4,600,000 4,594,190 0.47
54 40517 4,600,000 4,562,409 0.46
55 85382 4,500,000 4,491,676 0.46
- -----------------------------------------------------------------------------------------------------------
56 76053 4,500,000 4,483,267 0.46
57 33178 4,500,000 4,473,453 0.45
58 93401 4,400,000 4,379,512 0.45
59 75232 4,300,000 4,294,076 0.44
60 4,130,000 4,113,492 0.42
- -----------------------------------------------------------------------------------------------------------
60a 02109
60b 02109
60c 02109
61 50325 4,120,000 4,112,079 0.42
62 08837 4,050,000 4,025,915 0.41
- -----------------------------------------------------------------------------------------------------------
63 92708 3,950,000 3,944,827 0.40
64 93727 3,900,000 3,897,725 0.40
65 02920 3,900,000 3,897,657 0.40
66 75180 3,850,000 3,841,713 0.39
67 01757 Group B Group 2 3,800,000 3,793,327 0.39
- -----------------------------------------------------------------------------------------------------------
68 3,800,000 3,778,745 0.38
68a 11219
68b 11223
68c 11214
68d 11209
- -----------------------------------------------------------------------------------------------------------
68e 11204
68f 11204
68g 11209
69 93711 Group 5 3,765,000 3,759,878 0.38
70 64116 3,700,000 3,697,729 0.38
- -----------------------------------------------------------------------------------------------------------
71 90401 3,650,000 3,646,615 0.37
72 20708 3,600,000 3,597,701 0.37
73 79602 3,400,000 3,395,557 0.35
74 77036 Group C Group 3 3,400,000 3,393,772 0.35
75 19034 3,400,000 3,389,582 0.34
- -----------------------------------------------------------------------------------------------------------
76 02379 3,300,000 3,298,244 0.34
77 07302 3,220,000 3,210,439 0.33
78 11776 3,100,000 3,097,183 0.31
79 77033 Group C Group 3 3,100,000 3,094,322 0.31
80 32605 3,100,000 3,084,754 0.31
- -----------------------------------------------------------------------------------------------------------
81 49684 3,050,000 3,038,295 0.31
82 71105 3,000,000 2,998,321 0.30
83 32952 3,000,000 2,996,427 0.30
84 28025 3,000,000 2,994,005 0.30
85 32809 2,900,000 2,896,452 0.29
- -----------------------------------------------------------------------------------------------------------
86 30360 2,900,000 2,896,234 0.29
87 12305 2,725,000 2,714,045 0.28
88 08817 2,700,000 2,691,983 0.27
89 93309 Group 5 2,525,000 2,521,637 0.26
90 94109 2,500,000 2,490,222 0.25
- -----------------------------------------------------------------------------------------------------------
91 48220 2,475,000 2,466,561 0.25
92 80038 2,400,000 2,398,519 0.24
93 79606 2,400,000 2,392,794 0.24
94 2,400,000 2,390,995 0.24
94a 30066
- -----------------------------------------------------------------------------------------------------------
94b 30188
95 33407 2,400,000 2,386,967 0.24
96 19363 2,300,000 2,291,676 0.23
97 11225 2,250,000 2,246,690 0.23
98 75202 2,200,000 2,184,089 0.22
- -----------------------------------------------------------------------------------------------------------
99 20170 2,175,000 2,170,633 0.22
100 55055 2,131,500 2,128,514 0.22
101 46615 2,000,000 1,998,830 0.20
102 91406 2,000,000 1,996,119 0.20
103 77478 Group C Group 3 1,987,500 1,983,859 0.20
- -----------------------------------------------------------------------------------------------------------
104 27514 1,940,000 1,936,236 0.20
105 07018 1,900,000 1,892,055 0.19
106 1,850,000 1,842,020 0.19
106a 08753
106b 08757
- -----------------------------------------------------------------------------------------------------------
107 71119 1,800,000 1,795,091 0.18
108 32405 1,725,000 1,717,787 0.17
109 30240 1,700,000 1,696,886 0.17
110 89102 1,650,000 1,641,645 0.17
111 48009 1,600,000 1,596,721 0.16
- -----------------------------------------------------------------------------------------------------------
112 77478 Group C Group 3 1,575,000 1,572,115 0.16
113 49286 1,451,000 1,448,750 0.15
114 77008 Group C Group 3 1,425,000 1,422,390 0.14
115 92111 Group A Group 1 1,400,000 1,391,712 0.14
116 91766 1,390,000 1,386,164 0.14
- -----------------------------------------------------------------------------------------------------------
117 90291 1,300,000 1,297,501 0.13
118 57103 1,200,000 1,193,708 0.12
119 85224 1,100,000 1,098,611 0.11
120 77055 1,087,500 1,082,626 0.11
121 10014 970,000 968,387 0.10
- -----------------------------------------------------------------------------------------------------------
122 77020 Group C Group 3 640,000 638,828 0.06
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CUMULATIVE
% OF
INITIAL SERVICING INTEREST ORIGINAL
CONTROL POOL INTEREST FEE ACCRUAL AMORTIZATION INTEREST-ONLY
NUMBER BALANCE RATE (%) RATE (%) METHOD TYPE PERIOD (MOS.)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 10.17 6.56000 0.0325 Actual / 360 Interest Only, Then Hyperamortizing 12
2 15.64 7.03000 0.0375 Actual / 360 Balloon
3 20.79 7.18000 0.0325 30 / 360 Balloon
4 24.45 7.80000 0.1275 Actual / 360 Interest Only, Then Amortizing 24
5 27.33 7.66000 0.1275 Actual / 360 Interest Only, Then Amortizing 24
- -------------------------------------------------------------------------------------------------------------------------
6 30.06 7.37500 0.0625 Actual / 360 Fully Amortizing
7 32.76 7.62500 0.1275 Actual / 360 Hyper Amortizing
8 35.32 7.62000 0.1275 Actual / 360 Balloon
9 37.70 7.82000 0.1275 Actual / 360 Balloon
10 39.99 6.77300 0.0525 Actual / 360 Balloon
- -------------------------------------------------------------------------------------------------------------------------
11 42.22 7.18000 0.0325 30 / 360 Balloon
12 44.26 7.23000 0.1275 Actual / 360 Interest Only, Then Amortizing 18
13 46.25 9.03000 0.0525 Actual / 360 Balloon
14 48.16 6.77300 0.0525 Actual / 360 Balloon
15 49.93 7.58000 0.1275 Actual / 360 Balloon
- -------------------------------------------------------------------------------------------------------------------------
15a
15b
15c
15d
15e
- -------------------------------------------------------------------------------------------------------------------------
15f
16 51.62 6.77300 0.0525 Actual / 360 Balloon
17 53.19 8.00000 0.1275 Actual / 360 Hyper Amortizing
18 54.62 7.75000 0.1275 Actual / 360 Balloon
19 56.02 6.77300 0.0525 Actual / 360 Balloon
- -------------------------------------------------------------------------------------------------------------------------
20 57.27 6.77300 0.0525 Actual / 360 Balloon
21 58.51 7.43000 0.1275 30 / 360 Balloon
22 59.61 7.37500 0.1275 Actual / 360 Balloon
23 60.69 6.77300 0.0525 Actual / 360 Balloon
24 61.77 7.61000 0.1275 Actual / 360 Balloon
- -------------------------------------------------------------------------------------------------------------------------
24a
24b
24c
25 62.70 7.25000 0.1275 Actual / 360 Balloon
26 63.61 7.50000 0.1275 Actual / 360 Balloon
- -------------------------------------------------------------------------------------------------------------------------
27 64.51 7.35000 0.1275 Actual / 360 Balloon
28 65.38 7.00000 0.1275 Actual / 360 Balloon
29 66.16 7.25000 0.1275 Actual / 360 Balloon
30 66.94 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 67.70 7.96000 0.1275 Actual / 360 Balloon
32 68.46 7.92000 0.1275 Actual / 360 Balloon
- -------------------------------------------------------------------------------------------------------------------------
33 69.20 8.30000 0.1275 Actual / 360 Balloon
34 69.94 7.36000 0.1275 Actual / 360 Balloon
35 70.68 6.77300 0.0525 Actual / 360 Balloon
36 71.40 7.61000 0.1275 Actual / 360 Balloon
37 72.10 8.12500 0.1275 Actual / 360 Hyper Amortizing
- -------------------------------------------------------------------------------------------------------------------------
38 72.78 7.76000 0.1275 Actual / 360 Balloon
39 73.39 7.95000 0.1275 Actual / 360 Balloon
40 73.99 7.50000 0.1275 Actual / 360 Balloon
40a
40b
- -------------------------------------------------------------------------------------------------------------------------
41 74.60 6.77300 0.0525 Actual / 360 Balloon
42 75.19 6.80000 0.1275 Actual / 360 Balloon
43 75.76 8.04000 0.1275 Actual / 360 Balloon
44 76.33 7.88000 0.1275 Actual / 360 Balloon
45 76.88 7.69000 0.1275 Actual / 360 Balloon
- -------------------------------------------------------------------------------------------------------------------------
46 77.43 7.55510 0.1275 Actual / 360 Balloon
47 77.97 8.19000 0.1275 Actual / 360 Balloon
48 78.51 7.88000 0.1275 Actual / 360 Balloon
49 79.02 8.02000 0.1275 Actual / 360 Balloon
50 79.50 8.75000 0.1275 Actual / 360 Fully Amortizing
- -------------------------------------------------------------------------------------------------------------------------
51 79.98 7.93000 0.1275 Actual / 360 Balloon
52 80.45 8.12000 0.1275 Actual / 360 Balloon
53 80.92 8.10000 0.1275 Actual / 360 Balloon
54 81.38 6.80000 0.1275 Actual / 360 Balloon
55 81.84 6.25000 0.1275 Actual / 360 Balloon
- -------------------------------------------------------------------------------------------------------------------------
56 82.30 7.80000 0.1275 Actual / 360 Balloon
57 82.75 7.65000 0.1275 Actual / 360 Fully Amortizing
58 83.20 7.85000 0.1275 Actual / 360 Balloon
59 83.63 7.69000 0.1275 Actual / 360 Balloon
60 84.05 7.40000 0.1275 Actual / 360 Balloon
- -------------------------------------------------------------------------------------------------------------------------
60a
60b
60c
61 84.47 7.79000 0.1275 Actual / 360 Balloon
62 84.88 7.47000 0.1275 Actual / 360 Balloon
- -------------------------------------------------------------------------------------------------------------------------
63 85.28 7.93000 0.1275 Actual / 360 Balloon
64 85.68 7.67000 0.1275 Actual / 360 Balloon
65 86.07 7.56000 0.1275 Actual / 360 Balloon
66 86.46 7.29000 0.1275 Actual / 360 Balloon
67 86.85 8.75000 0.1275 Actual / 360 Fully Amortizing
- -------------------------------------------------------------------------------------------------------------------------
68 87.23 7.00000 0.1275 Actual / 360 Fully Amortizing
68a
68b
68c
68d
- -------------------------------------------------------------------------------------------------------------------------
68e
68f
68g
69 87.62 7.75000 0.1275 Actual / 360 Balloon
70 87.99 7.48000 0.1275 Actual / 360 Balloon
- -------------------------------------------------------------------------------------------------------------------------
71 88.36 7.90000 0.1275 Actual / 360 Balloon
72 88.73 7.33000 0.1275 Actual / 360 Balloon
73 89.07 7.94000 0.1275 Actual / 360 Balloon
74 89.42 8.00000 0.1275 Actual / 360 Balloon
75 89.76 7.95000 0.1275 Actual / 360 Balloon
- -------------------------------------------------------------------------------------------------------------------------
76 90.10 8.00000 0.1275 Actual / 360 Balloon
77 90.42 8.00000 0.1275 Actual / 360 Balloon
78 90.74 8.00000 0.1275 Actual / 360 Balloon
79 91.05 8.00000 0.1275 Actual / 360 Balloon
80 91.37 6.25000 0.1275 Actual / 360 Balloon
- -------------------------------------------------------------------------------------------------------------------------
81 91.68 7.62500 0.1275 Actual / 360 Balloon
82 91.98 7.82000 0.1275 Actual / 360 Balloon
83 92.29 8.37500 0.1275 Actual / 360 Balloon
84 92.59 8.14000 0.1275 Actual / 360 Balloon
85 92.89 8.25000 0.1275 Actual / 360 Balloon
- -------------------------------------------------------------------------------------------------------------------------
86 93.18 7.97000 0.1275 Actual / 360 Balloon
87 93.46 7.80000 0.1275 Actual / 360 Balloon
88 93.73 8.00000 0.1275 Actual / 360 Balloon
89 93.99 7.85000 0.1275 Actual / 360 Balloon
90 94.24 7.52000 0.1275 Actual / 360 Balloon
- -------------------------------------------------------------------------------------------------------------------------
91 94.49 7.30000 0.1275 Actual / 360 Balloon
92 94.73 7.46000 0.1275 Actual / 360 Balloon
93 94.98 7.50000 0.1275 Actual / 360 Balloon
94 95.22 7.75000 0.1275 Actual / 360 Balloon
94a
- -------------------------------------------------------------------------------------------------------------------------
94b
95 95.46 6.75000 0.1275 Actual / 360 Balloon
96 95.70 7.95000 0.1275 Actual / 360 Balloon
97 95.92 7.37500 0.1275 Actual / 360 Balloon
98 96.15 7.90000 0.1275 Actual / 360 Fully Amortizing
- -------------------------------------------------------------------------------------------------------------------------
99 96.37 7.60000 0.1275 Actual / 360 Balloon
100 96.58 7.61000 0.1275 Actual / 360 Balloon
101 96.79 7.66000 0.1275 Actual / 360 Balloon
102 96.99 7.75000 0.1275 Actual / 360 Balloon
103 97.19 8.00000 0.1275 Actual / 360 Balloon
- -------------------------------------------------------------------------------------------------------------------------
104 97.39 7.75000 0.1275 Actual / 360 Balloon
105 97.58 7.15000 0.1275 Actual / 360 Balloon
106 97.77 8.40000 0.1275 Actual / 360 Balloon
106a
106b
- -------------------------------------------------------------------------------------------------------------------------
107 97.95 8.47000 0.1275 Actual / 360 Balloon
108 98.13 7.15000 0.1275 Actual / 360 Balloon
109 98.30 8.00000 0.1275 Actual / 360 Balloon
110 98.46 7.25000 0.1275 Actual / 360 Balloon
111 98.63 7.99000 0.1275 Actual / 360 Balloon
- -------------------------------------------------------------------------------------------------------------------------
112 98.79 8.00000 0.1275 Actual / 360 Balloon
113 98.93 8.00000 0.1275 Actual / 360 Fully Amortizing
114 99.08 8.00000 0.1275 Actual / 360 Balloon
115 99.22 7.50000 0.1275 Actual / 360 Balloon
116 99.36 7.92000 0.1275 Actual / 360 Fully Amortizing
- -------------------------------------------------------------------------------------------------------------------------
117 99.49 7.79000 0.1275 Actual / 360 Balloon
118 99.61 7.00000 0.1275 Actual / 360 Balloon
119 99.73 8.10000 0.1275 Actual / 360 Balloon
120 99.84 8.12500 0.1275 Actual / 360 Balloon
121 99.94 8.41000 0.1275 Actual / 360 Balloon
- -------------------------------------------------------------------------------------------------------------------------
122 100.00 8.00000 0.1275 Actual / 360 Balloon
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ORIGINAL REMAINING
REMAINING TERM TO TERM TO ORIGINAL REMAINING MATURITY
CONTROL INTEREST-ONLY MATURITY MATURITY AMORTIZATION AMORTIZATION ORIGINATION DATE OR
NUMBER PERIOD (MOS.) (MOS.) (MOS.) TERM (MOS.) TERM (MOS.) DATE ARD
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 9 120 117 378 378 2/4/99 3/1/09
2 120 115 360 355 12/23/98 1/10/09
3 198 193 243 238 12/30/98 7/10/15
4 18 120 114 360 360 12/11/98 12/10/08
5 23 120 119 360 360 4/28/99 5/10/09
- ------------------------------------------------------------------------------------------------------------------
6 240 237 240 237 3/8/99 3/10/19
7 121 120 309 308 4/26/99 6/1/09
8 120 117 300 297 2/22/99 3/10/09
9 120 115 360 355 12/29/98 1/10/09
10 120 119 360 359 4/13/99 5/10/09
- ------------------------------------------------------------------------------------------------------------------
11 198 193 243 238 12/30/98 7/10/15
12 14 120 116 360 360 1/25/99 2/10/09
13 266 263 311 308 2/26/99 5/1/21
14 120 119 360 359 4/13/99 5/10/09
15 120 116 360 356 2/8/99 2/10/09
- ------------------------------------------------------------------------------------------------------------------
15a
15b
15c
15d
15e
- ------------------------------------------------------------------------------------------------------------------
15f
16 120 119 360 359 4/13/99 5/10/09
17 120 119 300 299 4/30/99 5/1/09
18 120 119 360 359 5/6/99 5/10/09
19 120 119 360 359 4/13/99 5/10/09
- ------------------------------------------------------------------------------------------------------------------
20 120 119 360 359 4/13/99 5/10/09
21 300 295 324 319 12/30/98 1/10/24
22 120 116 360 356 1/26/99 2/10/09
23 120 119 360 359 4/13/99 5/10/09
24 120 119 360 359 4/30/99 5/10/09
- ------------------------------------------------------------------------------------------------------------------
24a
24b
24c
25 240 235 275 270 12/23/98 1/10/19
26 120 115 360 355 12/30/98 1/10/09
- ------------------------------------------------------------------------------------------------------------------
27 144 143 360 359 4/14/99 5/10/11
28 120 117 360 357 2/10/99 3/10/09
29 120 114 360 354 12/8/98 12/10/08
30 120 115 360 355 12/31/98 1/10/09
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
32 180 179 240 239 4/30/99 5/10/14
- ------------------------------------------------------------------------------------------------------------------
33 120 119 276 275 4/21/99 5/10/09
34 120 115 360 355 12/29/98 1/10/09
35 120 119 360 359 4/13/99 5/10/09
36 120 116 360 356 1/22/99 2/10/09
37 120 118 300 298 3/10/99 4/1/09
- ------------------------------------------------------------------------------------------------------------------
38 120 118 360 358 3/29/99 4/10/09
39 120 115 360 355 12/29/98 1/10/09
40 120 115 360 355 12/22/98 1/10/09
40a
40b
- ------------------------------------------------------------------------------------------------------------------
41 120 119 360 359 4/13/99 5/10/09
42 120 115 360 355 12/29/98 1/10/09
43 120 118 360 358 3/29/99 4/10/09
44 120 117 360 357 2/23/99 3/10/09
45 120 118 300 298 4/7/99 4/10/09
- ------------------------------------------------------------------------------------------------------------------
46 120 119 360 359 4/22/99 5/10/09
47 120 119 360 359 4/30/99 5/10/09
48 120 117 360 357 2/23/99 3/10/09
49 119 117 360 358 3/29/99 3/10/09
50 216 215 216 215 4/29/99 5/1/17
- ------------------------------------------------------------------------------------------------------------------
51 120 118 360 358 3/29/99 4/10/09
52 120 117 360 357 3/4/99 3/10/09
53 120 118 360 358 3/30/99 4/10/09
54 120 116 240 236 1/28/99 2/10/09
55 120 118 360 358 3/29/99 4/10/09
- ------------------------------------------------------------------------------------------------------------------
56 120 115 360 355 12/31/98 1/10/09
57 180 178 180 178 4/8/99 4/10/14
58 120 116 300 296 1/15/99 2/10/09
59 120 118 360 358 4/6/99 4/10/09
60 120 115 360 355 12/31/98 1/10/09
- ------------------------------------------------------------------------------------------------------------------
60a
60b
60c
61 120 117 360 357 3/4/99 3/10/09
62 120 115 300 295 12/30/98 1/10/09
- ------------------------------------------------------------------------------------------------------------------
63 120 118 360 358 4/7/99 4/10/09
64 120 119 360 359 4/30/99 5/10/09
65 120 119 360 359 4/27/99 5/10/09
66 120 117 360 357 2/22/99 3/1/09
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
70 120 119 360 359 4/29/99 5/10/09
- ------------------------------------------------------------------------------------------------------------------
71 120 119 300 299 4/30/99 5/10/09
72 120 119 360 359 4/29/99 5/10/09
73 120 118 360 358 3/30/99 4/10/09
74 120 117 360 357 2/23/99 3/10/09
75 120 116 360 356 1/25/99 2/10/09
- ------------------------------------------------------------------------------------------------------------------
76 120 119 360 359 4/30/99 5/10/09
77 240 237 300 297 3/4/99 3/10/19
78 120 119 300 299 4/30/99 5/10/09
79 120 117 360 357 2/23/99 3/10/09
80 120 115 360 355 12/23/98 1/10/09
- ------------------------------------------------------------------------------------------------------------------
81 120 115 360 355 12/23/98 1/10/09
82 132 131 360 359 4/20/99 5/10/10
83 120 118 360 358 3/30/99 4/10/09
84 120 118 300 298 3/23/99 4/10/09
85 120 118 360 358 3/29/99 4/10/09
- ------------------------------------------------------------------------------------------------------------------
86 120 118 360 358 3/25/99 4/10/09
87 237 234 267 264 2/26/99 12/10/18
88 240 237 300 297 3/4/99 3/10/19
89 120 118 360 358 4/5/99 4/10/09
90 120 115 360 355 12/17/98 1/10/09
- ------------------------------------------------------------------------------------------------------------------
91 120 116 360 356 1/15/99 2/10/09
92 120 119 360 359 4/29/99 5/10/09
93 120 116 375 371 1/15/99 2/10/09
94 120 115 360 355 1/5/99 1/10/09
94a
- ------------------------------------------------------------------------------------------------------------------
94b
95 240 236 300 296 1/29/99 2/10/19
96 120 115 360 355 12/21/98 1/10/09
97 120 118 360 358 4/6/99 4/10/09
98 240 236 240 236 1/14/99 2/10/19
- ------------------------------------------------------------------------------------------------------------------
99 120 117 360 357 2/16/99 3/10/09
100 120 118 360 358 3/16/99 4/10/09
101 120 119 360 359 4/30/99 5/10/09
102 120 117 360 357 2/22/99 3/10/09
103 120 117 360 357 2/23/99 3/10/09
- ------------------------------------------------------------------------------------------------------------------
104 120 117 360 357 3/12/99 3/10/09
105 120 115 360 355 1/7/99 1/10/09
106 120 116 300 296 2/8/99 2/10/09
106a
106b
- ------------------------------------------------------------------------------------------------------------------
107 120 117 300 297 2/24/99 3/10/09
108 120 115 360 355 12/14/98 1/10/09
109 120 117 360 357 3/3/99 3/10/09
110 120 116 300 296 1/27/99 2/10/09
111 120 118 300 298 4/9/99 4/10/09
- ------------------------------------------------------------------------------------------------------------------
112 120 117 360 357 2/23/99 3/10/09
113 240 239 240 239 4/30/99 5/10/19
114 120 117 360 357 2/23/99 3/10/09
115 120 115 300 295 12/22/98 1/10/09
116 180 179 180 179 4/30/99 5/10/14
- ------------------------------------------------------------------------------------------------------------------
117 120 117 360 357 2/18/99 3/10/09
118 120 116 300 296 1/15/99 2/10/09
119 120 118 360 358 4/7/99 4/10/09
120 120 116 300 296 2/8/99 2/10/09
121 120 117 360 357 3/5/99 3/10/09
- ------------------------------------------------------------------------------------------------------------------
122 120 117 360 357 2/23/99 3/10/09
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BALLOON UNDERWRITTEN CROSS -
CONTROL OR ARD PREPAYMENT MONTHLY NET CASH UNDERWRITTEN COLLATERALIZED
NUMBER BALANCE ($) PROVISION PAYMENT ($) FLOW ($) NCF DSCR (X) DSCR (X)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 88,470,357 Lock/28_Defeasance/89_0%/3 632,921 12,209,304 1.61
2 46,486,582 Lock/29_Defeasance/85_0%/6 364,040 5,058,498 1.24
3 20,586,659 Lock/29_Defeasance/166_0%/3 337,500 4,050,000 1.00
4 32,725,460 Lock/30_Defeasance/87_0%/3 261,936 3,775,426 1.20
5 25,682,231 Lock/25_Defeasance/92_0%/3 203,341 3,034,867 1.24
- -----------------------------------------------------------------------------------------------------------------------------------
6 Lock/27_Defeasance/213 217,279 3,000,000 1.15
7 21,560,272 Lock/48_Defeasance/72_0%/1 197,992 4,949,874 2.08
8 20,260,522 Lock/27_Defeasance/90_0%/3 190,519 2,805,678 1.23
9 20,589,379 Lock/29_Defeasance/85_0%/6 171,333 2,548,823 1.24
10 19,336,533 Lock/25_Defeasance/92_0%/3 148,450 2,733,048 1.53
- -----------------------------------------------------------------------------------------------------------------------------------
11 8,897,176 Lock/29_Defeasance/166_0%/3 145,833 1,750,000 1.00
12 17,845,735 Lock/28_Defeasance/89_0%/3 137,564 2,055,880 1.25
13 6,302,471 Lock/28_Defeasance/235_0%/3 166,046 1,995,280 1.00
14 16,042,478 Lock/25_Defeasance/92_0%/3 123,161 2,328,181 1.58
15 15,253,793 Lock/28_Defeasance/89_0%/3 124,624 1,848,143 1.24
- -----------------------------------------------------------------------------------------------------------------------------------
15a 522,598
15b 114,906
15c 52,714
15d 946,197
15e 78,861
- -----------------------------------------------------------------------------------------------------------------------------------
15f 132,867
16 14,202,940 Lock/25_Defeasance/92_0%/3 109,038 2,039,155 1.56
17 12,556,703 Lock/47_Defeasance/72_0%/1 120,863 2,188,516 1.51
18 12,247,859 Lock/25_Defeasance/92_0%/3 101,419 1,438,140 1.18
19 11,850,044 Lock/25_Defeasance/92_0%/3 90,975 1,702,538 1.56
- -----------------------------------------------------------------------------------------------------------------------------------
20 10,523,866 Lock/25_Defeasance/92_0%/3 80,793 1,547,489 1.60
21 2,159,661 Lock/29_Defeasance/265_0%/6 80,864 980,075 1.01
22 9,371,201 Lock/28_Defeasance/92 75,368 1,317,888 1.46
23 9,154,908 Lock/25_Defeasance/92_0%/3 70,284 1,327,218 1.57
24 9,223,689 Lock/25_Defeasance/92_0%/3 75,567 1,144,030 1.26
- -----------------------------------------------------------------------------------------------------------------------------------
24a 317,289
24b 632,886
24c 193,855
25 2,177,085 Lock/29_Defeasance/205_0%/6 69,295 1,063,326 1.28
26 7,831,056 Lock/29_Defeasance/88_0%/3 63,597 1,060,958 1.39
- -----------------------------------------------------------------------------------------------------------------------------------
27 7,356,026 Lock/25_Defeasance/116_0%/3 61,984 975,000 1.31
28 7,355,194 Lock/27_Defeasance/93 57,485 831,398 1.29
29 6,705,719 Lock/30_Defeasance/84_0%/6 53,425 824,739 1.29
30 6,610,546 Lock/29_Defeasance/88_0%/3 52,661 943,094 1.49
30a 68,184
- -----------------------------------------------------------------------------------------------------------------------------------
30b 34,592
30c 30,750
30d 23,766
30e 70,837
30f 43,491
- -----------------------------------------------------------------------------------------------------------------------------------
30g 30,973
30h 33,928
30i 53,996
30j 22,094
30k 22,731
- -----------------------------------------------------------------------------------------------------------------------------------
30l 26,247
30m 46,645
30n 33,521
30o 24,333
30p 64,570
- -----------------------------------------------------------------------------------------------------------------------------------
30q 41,687
30r 24,707
30s 46,852
30t 30,950
30u 64,990
- -----------------------------------------------------------------------------------------------------------------------------------
30v 28,980
30w 38,028
30x 36,242
31 6,590,350 Lock/26_Defeasance/91_0%/3 55,440 817,316 1.26
32 3,099,669 Lock/25_Defeasance/152_0%/3 62,915 962,167 1.27
- -----------------------------------------------------------------------------------------------------------------------------------
33 5,671,576 Lock/25_Defeasance/94_0%/1 59,942 899,280 1.25
34 6,310,415 Lock/29_Defeasance/91 50,699 879,423 1.45
35 6,203,091 Lock/25_Defeasance/92_0%/3 47,622 914,746 1.60
36 6,192,723 Lock/28_Defeasance/89_0%/3 50,711 755,591 1.24
37 5,607,489 Lock/48_Defeasance/71_0%/1 54,382 1,052,710 1.61
- -----------------------------------------------------------------------------------------------------------------------------------
38 5,906,471 Lock/26_Defeasance/91_0%/3 48,941 749,502 1.28
39 5,271,175 Lock/29_Defeasance/88_0%/3 44,296 697,300 1.36
40 5,203,301 Lock/29_Defeasance/85_0%/6 42,257 684,925 1.35 1.53
40a 322,331
40b 362,594
- -----------------------------------------------------------------------------------------------------------------------------------
41 5,090,813 Lock/25_Defeasance/92_0%/3 39,083 740,540 1.58
42 4,965,709 Lock/29_Defeasance/85_0%/6 38,191 646,826 1.41
43 5,016,921 Lock/26_Defeasance/94 42,458 647,239 1.54
44 4,912,604 Lock/27_Defeasance/90_0%/3 41,082 618,958 1.26
45 4,367,717 Lock/26_Defeasance/94 41,245 672,883 1.36
- -----------------------------------------------------------------------------------------------------------------------------------
46 4,660,778 Lock/25_Defeasance/92_0%/3 38,025 527,453 1.25
47 4,709,960 Lock/25_Defeasance/92_0%/3 40,314 617,307 1.28
48 4,649,428 Lock/27_Defeasance/90_0%/3 38,882 601,430 1.33
49 4,405,751 Lock/26_Defeasance/87_0%/6 37,173 560,177 1.26
50 Lock/48_Defeasance/132_0%/36 44,596 707,421 1.32 1.35
- -----------------------------------------------------------------------------------------------------------------------------------
51 4,114,210 Lock/26_Defeasance/91_0%/3 34,532 540,491 1.30
52 4,112,643 Lock/27_Defeasance/90_0%/3 35,019 523,615 1.25
53 4,053,700 Lock/26_Defeasance/91_0%/3 34,461 541,892 1.31
54 3,061,626 Lock/28_Defeasance/92 35,378 511,019 1.20
55 3,799,932 Lock/26_Defeasance/94 27,978 478,657 1.43
- -----------------------------------------------------------------------------------------------------------------------------------
56 3,940,981 Lock/29_Defeasance/88_0%/3 32,745 453,735 1.30
57 Lock/26_Defeasance/148_0%/6 42,394 657,550 1.29
58 3,550,760 Lock/28_Defeasance/89_0%/3 33,848 528,839 1.30
59 3,757,013 Lock/26_Defeasance/91_0%/3 30,966 469,484 1.26
60 3,585,618 Lock/29_Defeasance/88_0%/3 28,896 432,519 1.25
- -----------------------------------------------------------------------------------------------------------------------------------
60a 96,051
60b 64,675
60c 271,793
61 3,607,429 Lock/27_Defeasance/93_0%/0 29,963 441,741 1.23
62 3,235,683 Lock/29_Defeasance/85_0%/6 30,134 455,371 1.26
- -----------------------------------------------------------------------------------------------------------------------------------
63 3,468,758 Lock/26_Defeasance/94 29,114 454,631 1.30
64 3,406,061 Lock/25_Defeasance/92_0%/3 28,033 404,798 1.51
65 3,397,940 Lock/25_Defeasance/95 27,732 487,585 1.47
66 3,334,267 Lock/28_Defeasance/92 26,654 441,150 1.57
67 Lock/48_Defeasance/132_0%/36 35,305 591,405 1.40 1.35
- -----------------------------------------------------------------------------------------------------------------------------------
68 Lock/27_Defeasance/207_0%/6 29,702 530,937 1.49
68a 97,742
68b 44,936
68c 108,779
68d 108,952
- -----------------------------------------------------------------------------------------------------------------------------------
68e 43,242
68f 39,062
68g 88,224
69 3,293,797 Lock/26_Defeasance/94 27,272 391,037 1.20
70 3,218,023 Lock/25_Defeasance/92_0%/3 26,103 428,811 1.37
- -----------------------------------------------------------------------------------------------------------------------------------
71 2,949,330 Lock/25_Defeasance/95 28,215 437,833 1.29
72 3,120,582 Lock/25_Defeasance/92_0%/3 25,022 361,465 1.20
73 2,986,387 Lock/26_Defeasance/94 25,084 375,669 1.25
74 2,990,091 Lock/27_Defeasance/90_0%/3 25,232 328,832 1.30 1.24
75 2,987,002 Lock/28_Defeasance/89_0%/3 25,098 391,684 1.30
- -----------------------------------------------------------------------------------------------------------------------------------
76 2,902,152 Lock/25_Defeasance/92_0%/3 24,489 373,505 1.27
77 1,234,594 Lock/27_Defeasance/210_0%/3 25,109 389,911 1.29
78 2,511,341 Lock/25_Defeasance/95 24,173 361,964 1.25
79 2,726,259 Lock/27_Defeasance/90_0%/3 23,006 331,776 1.25 1.24
80 2,617,726 Lock/29_Defeasance/85_0%/6 19,269 474,622 2.05
- -----------------------------------------------------------------------------------------------------------------------------------
81 2,661,118 Lock/29_Defeasance/85_0%/6 21,819 329,619 1.26
82 2,572,308 Lock/25_Defeasance/104_0%/3 21,881 328,079 1.25
83 2,658,240 Lock/26_Defeasance/91_0%/3 23,065 321,732 1.45
84 2,438,959 Lock/26_Defeasance/88_0%/6 23,675 347,344 1.22
85 2,563,308 Lock/26_Defeasance/91_0%/3 22,036 285,198 1.35
- -----------------------------------------------------------------------------------------------------------------------------------
86 2,548,796 Lock/26_Defeasance/91_0%/3 21,457 322,775 1.25
87 589,806 Lock/27_Defeasance/207_0%/3 21,734 263,776 1.01
88 1,035,218 Lock/27_Defeasance/210_0%/3 21,054 318,921 1.26
89 2,213,666 Lock/26_Defeasance/94 18,468 269,257 1.22
90 2,176,252 Lock/29_Defeasance/85_0%/6 17,701 290,970 1.37
- -----------------------------------------------------------------------------------------------------------------------------------
91 2,143,942 Lock/28_Defeasance/92 17,143 279,043 1.36
92 2,086,442 Lock/25_Defeasance/92_0%/3 16,898 290,015 1.43
93 2,119,806 Lock/28_Defeasance/89_0%/3 16,781 242,859 1.21
94 2,099,627 Lock/29_Defeasance/85_0%/6 17,380 270,159 1.30
94a 270,159
- -----------------------------------------------------------------------------------------------------------------------------------
94b
95 848,036 Lock/28_Defeasance/206_0%/6 16,728 277,557 1.38
96 2,020,617 Lock/29_Defeasance/88_0%/3 16,980 254,291 1.25
97 1,952,336 Lock/26_Defeasance/91_0%/3 15,708 291,179 1.55
98 Lock/28_Defeasance/209_0%/3 18,418 385,666 1.75
- -----------------------------------------------------------------------------------------------------------------------------------
99 1,896,657 Lock/27_Defeasance/93 15,527 281,157 1.51
100 1,859,128 Lock/26_Defeasance/94 15,230 222,627 1.22
101 1,746,321 Lock/25_Defeasance/95 14,362 217,166 1.26
102 1,749,692 Lock/27_Defeasance/90_0%/3 14,489 216,504 1.25
103 1,747,883 Lock/27_Defeasance/90_0%/3 14,750 224,786 1.27 1.24
- -----------------------------------------------------------------------------------------------------------------------------------
104 1,697,200 Lock/27_Defeasance/90_0%/3 14,054 218,779 1.30
105 1,640,216 Lock/29_Defeasance/91 12,965 243,779 1.57
106 1,513,755 Lock/28_Defeasance/89_0%/3 14,921 234,549 1.31
106a 127,803
106b 106,746
- -----------------------------------------------------------------------------------------------------------------------------------
107 1,475,360 Lock/27_Defeasance/90_0%/3 14,612 218,412 1.25
108 1,489,144 Lock/29_Defeasance/85_0%/6 11,771 176,142 1.25
109 1,495,045 Lock/27_Defeasance/90_0%/3 12,616 185,091 1.22
110 1,310,375 Lock/28_Defeasance/92 12,036 202,129 1.40
111 1,295,845 Lock/26_Defeasance/91_0%/3 12,464 190,794 1.28
- -----------------------------------------------------------------------------------------------------------------------------------
112 1,385,115 Lock/27_Defeasance/90_0%/3 11,688 169,601 1.25 1.24
113 Lock/25_Defeasance/212_0%/3 12,245 147,025 1.00
114 1,253,200 Lock/27_Defeasance/90_0%/3 10,575 116,666 1.07 1.24
115 1,119,410 Lock/29_Defeasance/85_0%/6 10,444 285,563 2.28 1.53
116 Lock/25_Defeasance/154_0%/1 13,316 200,498 1.26
- -----------------------------------------------------------------------------------------------------------------------------------
117 1,138,265 Lock/27_Defeasance/90_0%/3 9,454 146,730 1.29
118 946,386 Lock/28_Defeasance/89_0%/3 8,558 135,955 1.32
119 969,364 Lock/26_Defeasance/94 8,241 134,297 1.36
120 883,788 Lock/28_Defeasance/89_0%/3 8,567 135,728 1.32
121 860,083 Lock/27_Defeasance/87_0%/6 7,483 113,159 1.26
- -----------------------------------------------------------------------------------------------------------------------------------
122 562,842 Lock/27_Defeasance/90_0%/3 4,750 56,927 1.25 1.24
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULED
CUT-OFF MATURITY CROSS -
CONTROL APPRAISED APPRAISAL DATE LTV OR ARD DATE COLLATERALIZED
NUMBER VALUE ($) DATE (%) LTV (%) LTV RATIO (%) YEAR BUILT
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 160,000,000 12/30/98 62.50 55.29 1973
2 67,500,000 10/5/98 74.47 68.87 1968/1990
3 51,600,000 12/8/98 98.30 39.90 1992/1996/1998
4 54,500,000 10/28/98 66.06 60.05 1985-1987
5 35,400,000 5/1/99 80.00 72.55 1997-1998
- ----------------------------------------------------------------------------------------------------------
6 30,000,000 7/1/99 89.52 1998-1999
7 55,900,000 3/19/99 47.36 37.92 1977
8 33,804,200 9/11/98 74.48 59.93 1964 -1966
9 37,000,000 11/12/98 61.66 55.65 1916
10 37,700,000 3/19/99 59.90 51.29 1967/1989/1990
- ----------------------------------------------------------------------------------------------------------
11 22,300,000 12/8/98 98.29 39.90 1991
12 36,200,000 10/8/98 55.25 49.30 1972
13 21,600,000 2/20/99 91.00 29.18 1998
14 26,500,000 3/22/99 70.70 60.54 1970/1972/1981
15 22,655,000 76.99 67.33
- ----------------------------------------------------------------------------------------------------------
15a 6,000,000 11/16/98 1968
15b 1,145,000 11/16/98 1960
15c 600,000 11/16/98 1970
15d 12,500,000 11/16/98 1977
15e 860,000 11/16/98 1967
- ----------------------------------------------------------------------------------------------------------
15f 1,550,000 11/16/98 Early 1960's
16 24,450,000 3/19/99 67.84 58.09 1989
17 31,000,000 1/1/99 49.95 40.51 1987-1988
18 18,000,000 2/22/99 77.73 68.04 1986
19 22,300,000 3/24/99 62.06 53.14 1986
- ----------------------------------------------------------------------------------------------------------
20 17,000,000 3/23/99 72.30 61.91 1951
21 12,300,000 12/1/98 98.97 41.40
22 16,000,000 11/19/98 67.27 58.57 1997
23 14,500,000 3/25/99 73.74 63.14 1986
24 14,350,000 73.65 64.28
- ----------------------------------------------------------------------------------------------------------
24a 4,100,000 2/19/99 1989-1991
24b 7,800,000 2/19/99 1994-1996
24c 2,450,000 2/19/99 1987-1991
25 13,300,000 10/16/98 68.67 16.37 1998
26 12,700,000 10/7/98 70.59 61.66 1996-1997
- ----------------------------------------------------------------------------------------------------------
27 11,250,000 9/22/98 79.06 65.39 1925
28 11,100,000 1/11/99 71.90 66.26 1998-99
29 10,400,000 8/21/98 74.16 64.48 1984
30 9,550,000 79.67 69.22
30a 702,000 10/15/98 Circa 1880
- ----------------------------------------------------------------------------------------------------------
30b 344,000 10/15/98 Circa 1880
30c 305,000 10/15/98 Circa 1880
30d 264,000 10/15/98 Circa 1880
30e 761,000 10/15/98 Circa 1880
30f 455,000 10/15/98 Circa 1880
- ----------------------------------------------------------------------------------------------------------
30g 308,000 10/15/98 Circa 1880
30h 373,000 10/15/98 Circa 1880
30i 518,000 10/15/98 Circa 1880
30j 212,000 10/15/98 Circa 1880
30k 231,000 10/15/98 Circa 1880
- ----------------------------------------------------------------------------------------------------------
30l 256,000 10/15/98 Circa 1880
30m 452,000 10/15/98 Circa 1880
30n 318,000 10/15/98 Circa 1880
30o 271,000 10/15/98 Circa 1880
30p 631,000 10/15/98 Circa 1880
- ----------------------------------------------------------------------------------------------------------
30q 418,000 10/15/98 Circa 1880
30r 236,000 10/15/98 Circa 1880
30s 451,000 10/15/98 Circa 1880
30t 342,000 10/15/98 Circa 1880
30u 633,000 10/15/98 Circa 1880
- ----------------------------------------------------------------------------------------------------------
30v 387,000 10/15/98 Circa 1880
30w 308,000 10/15/98 Circa 1880
30x 353,000 10/15/98 Circa 1880
31 10,000,000 1/15/99 73.10 65.90 1970
32 10,500,000 3/16/99 71.32 29.52 1975/1984
- ----------------------------------------------------------------------------------------------------------
33 12,210,000 10/22/98 59.72 46.45 1986/1992
34 10,100,000 10/5/98 71.74 62.48 1995
35 10,100,000 3/24/99 71.73 61.42 1952
36 9,600,000 10/19/98 73.72 64.51 1989
37 10,350,000 1/1/99 66.53 54.18 1995-1996
- ----------------------------------------------------------------------------------------------------------
38 9,000,000 2/9/99 74.90 65.63 1982
39 7,750,000 11/10/98 74.56 68.02 1975
40 8,400,000 70.91 61.94 65.72
40a 4,000,000 6/1/98 Circa 1977
40b 4,400,000 6/1/98 Circa 1984
- ----------------------------------------------------------------------------------------------------------
41 8,400,000 3/23/99 70.78 60.60 1928
42 8,450,000 10/22/98 68.33 58.77 1968
43 7,600,000 1/1/99 61.75 66.01 1973/1982/1986
44 7,600,000 7/23/98 73.55 64.64 1853/1978/1995
45 7,250,000 1/19/99 74.80 60.24 1968
- ----------------------------------------------------------------------------------------------------------
46 7,250,000 2/2/99 68.23 64.29 1906
47 7,700,000 2/25/99 69.25 66.03 1970
48 7,000,000 7/23/98 73.54 66.42 1983
49 6,630,000 4/1/98 75.32 66.45 1920's
50 8,800,000 8/1/98 54.45 56.58 1981
- ----------------------------------------------------------------------------------------------------------
51 6,400,000 1/27/99 73.11 64.28 1987
52 6,275,000 2/1/99 74.21 65.54 1952/1970's
53 7,400,000 12/2/98 62.08 54.78 1920's -1940's
54 5,750,000 9/9/98 79.35 53.25 1984
55 5,990,000 2/28/99 74.99 63.44 1998
- ----------------------------------------------------------------------------------------------------------
56 4,750,000 12/1/98 83.86 82.97 1967
57 9,500,000 2/12/99 47.09 1999
58 6,700,000 7/1/98 65.37 53.00 1989-90
59 5,450,000 3/31/99 78.79 68.94 1965
60 5,445,000 75.55 65.85
- ----------------------------------------------------------------------------------------------------------
60a 1,220,000 12/4/98 1897
60b 725,000 12/4/98 1903
60c 3,500,000 12/4/98 1894/1909
61 5,170,000 1/5/99 79.54 69.78 1968/1971
62 5,400,000 7/17/98 74.55 59.92 1970/1987
- ----------------------------------------------------------------------------------------------------------
63 5,550,000 1/20/99 71.08 62.50 1979
64 5,400,000 2/4/99 57.37 63.08 1991
65 5,570,000 8/26/98 69.98 61.00 1950's/1983-1987
66 4,850,000 12/22/98 69.73 68.75 1981-1986
67 6,400,000 8/1/98 59.27 56.58 1989
- ----------------------------------------------------------------------------------------------------------
68 5,850,000 64.59
68a 1,100,000 9/2/98 1925
68b 500,000 9/2/98 1922
68c 1,200,000 9/2/98 1925
68d 1,200,000 9/2/98 1925
- ----------------------------------------------------------------------------------------------------------
68e 600,000 9/2/98 1925
68f 350,000 9/2/98 1925
68g 900,000 9/2/98 1925
69 4,750,000 1/26/99 79.16 69.34 1978
70 4,700,000 1/26/99 78.68 68.47 1974
- ----------------------------------------------------------------------------------------------------------
71 5,150,000 1/25/99 70.81 57.27 1988
72 4,550,000 3/18/99 79.07 68.58 1965
73 4,250,000 2/17/99 79.90 70.27 1982
74 4,900,000 1/31/99 57.87 61.02 63.89 1965/1966/1968/1969
75 4,550,000 12/3/98 74.50 65.65 60s/70s
- ----------------------------------------------------------------------------------------------------------
76 4,800,000 3/6/99 68.71 60.46 1974
77 4,700,000 11/12/98 68.31 26.27 1987
78 4,400,000 11/20/98 70.39 57.08 1986
79 4,400,000 2/1/99 67.71 61.96 63.89 1971/1974
80 5,500,000 8/24/98 56.09 47.60 1982
- ----------------------------------------------------------------------------------------------------------
81 4,000,000 10/14/98 75.96 66.53 1989
82 4,000,000 1/26/99 74.96 64.31 1998-99
83 3,400,000 2/24/99 70.48 78.18 1988
84 4,000,000 3/22/99 74.85 60.97 1839
85 3,880,000 1/25/99 59.70 66.06 1999
- ----------------------------------------------------------------------------------------------------------
86 4,000,000 2/1/99 72.41 63.72 1968-1969
87 2,775,000 12/1/98 97.80 21.25 1998
88 3,600,000 11/18/98 74.78 28.76 1974
89 3,200,000 1/29/99 78.80 69.18 1988
90 3,700,000 9/15/98 67.30 58.82 1908
- ----------------------------------------------------------------------------------------------------------
91 3,160,000 9/24/98 78.06 67.85 Mid 60s
92 3,100,000 3/11/99 77.37 67.30 1971
93 3,150,000 9/29/98 75.96 67.30 1998
94 3,035,000 78.78 69.18
94a 1,610,000 10/21/98 1988-1990
- ----------------------------------------------------------------------------------------------------------
94b 1,425,000 10/21/98 1987/1989/1991
95 3,275,000 12/31/98 72.88 25.89 1998
96 3,100,000 11/9/98 73.93 65.18 1988
97 3,000,000 10/27/98 74.89 65.08 1930
98 6,400,000 12/9/98 34.13 1896
- ----------------------------------------------------------------------------------------------------------
99 2,900,000 7/10/98 74.85 65.40 1993-1994
100 3,000,000 1/5/99 70.95 61.97 1970-1971
101 2,900,000 2/9/99 68.93 60.22 1972
102 2,525,000 1/9/99 79.05 69.29 1965/1996
103 2,650,000 1/31/99 74.86 65.96 63.89 1979
- ----------------------------------------------------------------------------------------------------------
104 2,800,000 10/15/98 69.15 60.61 1945/1980/1981
105 2,780,000 8/18/98 68.06 59.00 Early-mid 20s
106 2,800,000 65.79 54.06
106a 1,700,000 12/21/98 1982
106b 1,100,000 12/21/98 1981
- ----------------------------------------------------------------------------------------------------------
107 2,480,000 11/17/98 72.38 59.49 1984
108 2,300,000 10/21/98 74.69 64.75 1968
109 2,300,000 12/10/98 73.78 65.00 1982
110 2,750,000 10/19/98 59.70 47.65 1993
111 2,420,000 2/8/99 65.98 53.55 1930's
- ----------------------------------------------------------------------------------------------------------
112 2,100,000 1/31/99 72.53 65.96 63.89 1978
113 1,750,000 12/1/98 82.79 1998
114 2,500,000 2/1/99 48.98 50.13 63.89 1972
115 3,200,000 6/1/98 43.49 34.98 65.72 1979-1981
116 2,000,000 12/4/98 69.31 1958
- ----------------------------------------------------------------------------------------------------------
117 1,850,000 1/13/99 70.14 61.53 1985
118 1,750,000 9/28/98 68.21 54.08 1979
119 1,625,000 1/13/99 67.61 59.65 1987
120 1,450,000 12/16/98 74.66 60.95 1980
121 1,465,000 12/1/98 66.10 58.71 1987
- ----------------------------------------------------------------------------------------------------------
122 925,000 2/1/99 55.22 60.85 63.89 1972
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CUT-OFF DATE
UNITS, BALANCE PER
BEDS, SQ. FT. UNIT,
CONTROL YEAR ROOMS, UNIT BED, PAD OR OCCUPANCY OWNERSHIP
NUMBER RENOVATED SQFT DESCRIPTION ROOM ($) OCCUPANCY % DATE INTEREST
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 1990 156,194 Sq Ft 640 100 11/30/98 Fee Simple
2 1990/1998 458,430 Sq Ft 117 97 12/9/98 Fee Simple
3 396,460 Sq Ft 128 100 12/1/98 Fee Simple
4 422,385 Sq Ft 85 98 11/9/98 Fee Simple
5 263,452 Sq Ft 108 100 2/15/99 Fee Simple
- ------------------------------------------------------------------------------------------------------------------------------------
6 75,709 Sq Ft 355 100 4/7/98 Fee Simple
7 1997-1998 528 Rooms 50,189 70 3/19/99 Leasehold
8 977 Units 25,771 94 12/1/98 Fee Simple
9 1984 163,400 Sq Ft 143 99 11/1/98 Fee Simple
10 522 Units 43,263 94 2/28/99 Fee Simple
- ------------------------------------------------------------------------------------------------------------------------------------
11 1995 171,330 Sq Ft 128 100 12/1/98 Fee Simple
12 149,872 Sq Ft 133 96 11/1/98 Fee Simple
13 92,035 Sq Ft 214 100 2/20/99 Fee Simple
14 562 Units 33,338 93 3/31/99 Fee Simple
15 528 Units 33,036 Fee Simple
- ------------------------------------------------------------------------------------------------------------------------------------
15a 135 Units 99 10/23/98
15b 39 Units 95 10/23/98
15c 15 Units 100 10/23/98
15d 262 Units 98 10/23/98
15e 30 Units 100 10/23/98
- ------------------------------------------------------------------------------------------------------------------------------------
15f 47 Units 100 10/23/98
16 348 Units 47,666 95 2/28/99 Fee Simple
17 1998 467 Rooms 33,160 74 1/1/99 Fee Simple
18 311 Units 44,990 100 2/28/99 Leasehold
19 384 Units 36,041 96 2/28/99 Fee Simple
- ------------------------------------------------------------------------------------------------------------------------------------
20 1996 507 Units 24,242 96 1/31/99 Fee Simple
21 453,024 Sq Ft 27 100 2/25/99 Fee Simple
22 76,077 Sq Ft 141 100 12/2/98 Fee Simple
23 360 Units 29,700 89 2/28/99 Fee Simple
24 245 Units 43,138 Fee Simple
- ------------------------------------------------------------------------------------------------------------------------------------
24a 64 Units 98 3/1/99
24b 1998 143 Units 99 3/1/99
24c 38 Units 97 3/1/99
25 125,225 Sq Ft 73 100 12/23/98 Fee Simple
26 53,886 Sq Ft 166 100 11/20/98 Fee Simple
- ------------------------------------------------------------------------------------------------------------------------------------
27 1995 201 Units 44,250 100 12/31/98 Fee Simple
28 86,424 Sq Ft 99 91 2/1/99 Fee Simple
29 1997 86,331 Sq Ft 89 100 12/7/98 Fee Simple
30 199 Units 38,234 Fee Simple
30a 1997-1998 15 Units 100 11/1/98
- ------------------------------------------------------------------------------------------------------------------------------------
30b 1990/1997 6 Units 100 11/1/98
30c 1991 8 Units 100 11/1/98
30d 1988 6 Units 100 11/1/98
30e 1986/1989/1997 17 Units 100 11/1/98
30f 1990 8 Units 100 11/1/98
- ------------------------------------------------------------------------------------------------------------------------------------
30g 1986/1997 6 Units 100 11/1/98
30h 1989/1997 5 Units 100 11/1/98
30i 1987/1997 10 Units 100 11/1/98
30j 1988/1990 6 Units 100 11/1/98
30k 1986/1990/1997 6 Units 100 11/1/98
- ------------------------------------------------------------------------------------------------------------------------------------
30l 1997 6 Units 100 11/1/98
30m 1988/1997 12 Units 100 11/1/98
30n 1997 8 Units 100 11/1/98
30o 1993/1995 6 Units 100 11/1/98
30p 1989 11 Units 100 11/1/98
- ------------------------------------------------------------------------------------------------------------------------------------
30q 1992 8 Units 100 11/1/98
30r 1990 5 Units 100 11/1/98
30s 1996-1997 12 Units 100 11/1/98
30t 1993 6 Units 100 11/1/98
30u 1998 11 Units 100 11/1/98
- ------------------------------------------------------------------------------------------------------------------------------------
30v 1997 6 Units 100 11/1/98
30w 1993 6 Units 100 11/1/98
30x 1992/1997 9 Units 100 11/1/98
31 1992-1993 97,869 Sq Ft 77 88 2/1/99 Fee Simple
32 188,385 Sq Ft 40 97 3/29/99 Fee Simple
- ------------------------------------------------------------------------------------------------------------------------------------
33 108,533 Sq Ft 67 100 2/10/99 Fee Simple
34 42,149 Sq Ft 172 100 10/1/98 Both Fee Simple and Leasehold
35 1996 504 Units 14,374 96 2/28/99 Fee Simple
36 112,762 Sq Ft 63 94 11/30/98 Fee Simple
37 120 Rooms 57,385 73 11/30/98 Fee Simple
- ------------------------------------------------------------------------------------------------------------------------------------
38 184,894 Sq Ft 36 87 1/27/99 Fee Simple
39 1996 72,000 Sq Ft 83 100 6/30/98 Fee Simple
40 81,609 Sq Ft 73 Fee Simple
40a 29,848 Sq Ft 100 11/1/98
40b 51,761 Sq Ft 100 11/1/98
- ------------------------------------------------------------------------------------------------------------------------------------
41 1996 88 Units 67,564 97 2/28/99 Fee Simple
42 51,244 Sq Ft 113 88 9/30/98 Fee Simple
43 72,553 Sq Ft 78 100 2/1/99 Fee Simple
44 179,864 Sq Ft 31 100 11/12/98 Fee Simple
45 1998 90,651 Sq Ft 60 95 2/1/99 Fee Simple
- ------------------------------------------------------------------------------------------------------------------------------------
46 1961-62 / 1981-84 31,537 Sq Ft 170 97 3/1/99 Fee Simple
47 208,736 Sq Ft 26 89 1/31/99 Fee Simple
48 106,079 Sq Ft 50 93 2/9/99 Fee Simple
49 1990 17,760 Sq Ft 281 100 12/8/98 Fee Simple
50 1988/1991 180 Rooms 26,620 78 11/30/98 Fee Simple
- ------------------------------------------------------------------------------------------------------------------------------------
51 27,975 Sq Ft 167 100 3/1/99 Both Fee Simple and Leasehold
52 1995/1998 154,098 Sq Ft 30 100 2/5/99 Fee Simple
53 1997-1999 55,559 Sq Ft 83 100 2/1/99 Fee Simple
54 1994/1995/1998 193 Units 23,639 90 10/14/98 Fee Simple
55 32,493 Sq Ft 138 100 3/12/99 Fee Simple
- ------------------------------------------------------------------------------------------------------------------------------------
56 235 Units 19,078 96 10/30/98 Fee Simple
57 96,000 Sq Ft 47 100 2/19/99 Fee Simple
58 49,704 Sq Ft 88 98 12/15/98 Fee Simple
59 1998/1999 220 Units 19,519 95 2/22/99 Fee Simple
60 24 Units 171,396 Fee Simple
- ------------------------------------------------------------------------------------------------------------------------------------
60a 1990 8 Units 100 11/11/98
60b 1990 4 Units 100 11/11/98
60c 1994 12 Units 100 10/30/98
61 154 Units 26,702 100 1/1/99 Fee Simple
62 114,268 Sq Ft 35 100 11/19/98 Fee Simple
- ------------------------------------------------------------------------------------------------------------------------------------
63 58,562 Sq Ft 67 98 3/1/99 Fee Simple
64 154,647 Sq Ft 25 86 2/19/99 Fee Simple
65 1995 92,737 Sq Ft 42 95 12/1/98 Fee Simple
66 1995 147 Units 26,134 95 2/8/99 Fee Simple
67 93 Rooms 40,788 85 11/1/98 Fee Simple
- ------------------------------------------------------------------------------------------------------------------------------------
68 187 Units 20,207 Fee Simple
68a 1988 32 Units 100 11/1/98
68b 1988 20 Units 95 11/1/98
68c 1988 32 Units 94 11/1/98
68d 1988 35 Units 100 11/1/98
- ------------------------------------------------------------------------------------------------------------------------------------
68e 1988 20 Units 85 11/1/98
68f 1988 16 Units 100 11/1/98
68g 1988 32 Units 97 11/1/98
69 90 Units 41,776 97 2/2/99 Fee Simple
70 1998 144 Units 25,679 95 2/12/99 Fee Simple
- ------------------------------------------------------------------------------------------------------------------------------------
71 1998 17,107 Sq Ft 213 100 11/1/98 Fee Simple
72 1986/1988 120 Units 29,981 91 2/28/99 Fee Simple
73 172 Units 19,742 100 3/14/99 Fee Simple
74 163,512 Sq Ft 21 90 10/23/98 Fee Simple
75 1998 33,700 Sq Ft 101 100 12/18/98 Fee Simple
- ------------------------------------------------------------------------------------------------------------------------------------
76 126,952 Sq Ft 26 100 3/6/99 Fee Simple
77 26,280 Sq Ft 122 100 1/1/99 Fee Simple
78 46,346 Sq Ft 67 100 2/17/99 Fee Simple
79 239,223 Sq Ft 13 100 10/23/98 Fee Simple
80 46,038 Sq Ft 67 100 10/14/98 Fee Simple
- ------------------------------------------------------------------------------------------------------------------------------------
81 80 Units 37,979 98 11/11/98 Fee Simple
82 29,000 Sq Ft 103 100 2/17/99 Fee Simple
83 35,564 Sq Ft 84 82 12/16/98 Fee Simple
84 1988 102 Units 29,353 90 12/1/98 Fee Simple
85 18,000 Sq Ft 161 78 2/1/99 Fee Simple
- ------------------------------------------------------------------------------------------------------------------------------------
86 1997-1998 51,388 Sq Ft 56 100 1/1/99 Fee Simple
87 12,240 Sq Ft 222 100 12/1/98 Fee Simple
88 1991-1992 89,178 Sq Ft 30 100 2/1/99 Fee Simple
89 62 Units 40,672 95 1/4/99 Fee Simple
90 1996 61 Units 40,823 100 11/1/98 Fee Simple
- ------------------------------------------------------------------------------------------------------------------------------------
91 84 Units 29,364 98 10/23/98 Fee Simple
92 1994 79 Units 30,361 100 3/25/99 Fee Simple
93 23,500 Sq Ft 102 100 9/29/98 Fee Simple
94 35,798 Sq Ft 67 Fee Simple
94a 1995 18,118 Sq Ft 93 10/1/98
- ------------------------------------------------------------------------------------------------------------------------------------
94b 17,680 Sq Ft 96 10/1/98
95 15,120 Sq Ft 158 100 1/29/99 Fee Simple
96 24,832 Sq Ft 92 94 12/21/98 Fee Simple
97 62 Units 36,237 100 2/24/99 Fee Simple
98 1982 119,473 Sq Ft 18 94 12/1/98 Fee Simple
- ------------------------------------------------------------------------------------------------------------------------------------
99 13,074 Sq Ft 166 100 7/10/98 Fee Simple
100 1991/1994/1998 96 Units 22,172 100 1/31/99 Fee Simple
101 1997 142 Units 14,076 86 3/11/99 Fee Simple
102 62 Units 32,195 98 12/30/98 Fee Simple
103 90,400 Sq Ft 22 100 10/23/98 Fee Simple
- ------------------------------------------------------------------------------------------------------------------------------------
104 1979 27,158 Sq Ft 71 100 12/8/98 Fee Simple
105 99 Units 19,112 99 11/1/98 Fee Simple
106 48,122 Sq Ft 38 Fee Simple
106a 26,922 Sq Ft 96 1/11/99
106b 21,200 Sq Ft 96 1/11/99
- ------------------------------------------------------------------------------------------------------------------------------------
107 1995 137,736 Sq Ft 13 100 12/10/98 Fee Simple
108 1975 52,363 Sq Ft 33 100 11/23/98 Fee Simple
109 81 Units 20,949 97 12/23/98 Fee Simple
110 15,352 Sq Ft 107 96 10/19/98 Fee Simple
111 1996-1997 11,409 Sq Ft 140 100 2/24/99 Fee Simple
- ------------------------------------------------------------------------------------------------------------------------------------
112 66,700 Sq Ft 24 100 10/23/98 Fee Simple
113 10,972 Sq Ft 132 100 11/25/98 Fee Simple
114 84,872 Sq Ft 17 87 10/23/98 Fee Simple
115 12,956 Sq Ft 107 100 12/1/98 Fee Simple
116 25,096 Sq Ft 55 94 3/1/99 Fee Simple
- ------------------------------------------------------------------------------------------------------------------------------------
117 10,981 Sq Ft 118 100 1/1/99 Fee Simple
118 72 Units 16,579 92 11/12/98 Fee Simple
119 21,030 Sq Ft 52 95 1/13/99 Fee Simple
120 28,077 Sq Ft 39 90 12/15/98 Fee Simple
121 2,600 Sq Ft 372 100 2/1/99 Fee Simple
- ------------------------------------------------------------------------------------------------------------------------------------
122 46,893 Sq Ft 14 100 10/23/98 Fee Simple
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LARGEST
ANNUAL ANNUAL LARGEST TENANT
CONTROL REQUIRED REQUIRED LARGEST TENANT LEASE
NUMBER LOCKBOX RESERVES TI/LC TENANT SQ FT EXPIRATION
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 Modified, In-Place 23,429 Modell's Sporting 20,095 1/31/10
2 Modified, In-Place 67,508 781,425 Oracle Corporation 91,701 7/31/00
3 Hard, In-Place Ingram Micro, Inc. 396,460 7/10/15
4 Modified, Springing 506,105 Anasazi, Inc. 70,434 6/24/03
5 30,654 10,680 Sports Authority 43,091 11/30/13
- ----------------------------------------------------------------------------------------------------------------------------
6 Hard, In-Place University of Nevada 75,709 1/31/19
7 Hard, Springing 925,287
8 421,087
9 19,608 265,380 Magno Sound, Inc. 85,434 12/31/01
10 145,116
- ----------------------------------------------------------------------------------------------------------------------------
11 Hard, In-Place Ingram Micro, Inc. 171,330 7/10/15
12 Hard, In-Place 44,962 295,706 Watkins, Schreer, Stein & Co. 8,194 1/31/03
13 Hard, In-Place CarMax Auto Superstores, Inc. 92,035 4/30/21
14 140,500
15 Modified, In-Place 118,800
- ----------------------------------------------------------------------------------------------------------------------------
15a
15b
15c
15d
15e
- ----------------------------------------------------------------------------------------------------------------------------
15f
16 95,004
17 Hard, Springing
18 Modified, In-Place 66,864
19 96,000
- ----------------------------------------------------------------------------------------------------------------------------
20 123,756
21 Hard, In-Place Costco Wholesale Corporation 453,024 2/25/23
22 11,412 111,912 State Farm Insurance Company 15,009 4/30/02
23 90,000
24 61,630
- ----------------------------------------------------------------------------------------------------------------------------
24a
24b
24c
25 12,525 90,000 Bal Seal Engineering Co., Inc. 125,225 1/16/19
26 8,400 21,577 Loehmann's 28,500 10/31/16
- ----------------------------------------------------------------------------------------------------------------------------
27 50,250
28 8,642 24,000 Super Fresh Food Markets, Inc. 53,979 11/1/18
29 Hard, In-Place 17,266 125,000 Lockheed Martin Corp. 86,331 11/30/02
30 49,750
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 9,787 Farmer Jack/A&P 51,107 5/31/13
32 54,000 39,000 Geneva Woods Pharmacy 18,000 5/31/05
- ----------------------------------------------------------------------------------------------------------------------------
33 Hogan Automotive Group 108,533 10/31/00
34 Modified, In-Place 6,324 159,000 Happy Family 5,000 9/7/05
35 141,120
36 Modified, In-Place 18,042 35,004 Vons Market/Scolari's Market 39,498 6/30/13
37 Hard, Springing 136,026
- ----------------------------------------------------------------------------------------------------------------------------
38 16,065 57,143 Burlington Coat Factory 85,018 8/31/07
39 18,720 50,000 Worldgate Communications 72,000 6/30/09
40 Modified, In-Place 60,535
40a Boot Barn 10,156 9/30/99
40b TCG, Inc. 10,240 7/1/04
- ----------------------------------------------------------------------------------------------------------------------------
41 24,464
42 Modified, Springing 12,811 39,378 Von's Grocery Co. 27,070 1/31/03
43 Modified, In-Place 9,432 21,545 Epicenter Club 41,321 5/31/03
44 17,986 411,384 K-Mart 68,337 8/31/03
45 16,320 28,831 CMC Virginia Club 24,500 12/1/13
- ----------------------------------------------------------------------------------------------------------------------------
46 DPR Construction 9,281 3/31/07
47 41,747 137,856 Sabel TV Services, Inc. 14,095 11/30/02
48 19,094 53,301 Hannaford Brother's 33,000 4/30/06
49 3,552 30,854 Tommorrow 1,480 2/28/01
50 108,000
- ----------------------------------------------------------------------------------------------------------------------------
51 7,648 26,796 Blockbuster Video 4,950 12/31/02
52 33,148 Roller Bearing Co. of America 90,921 12/31/08
53 Hard, Springing 8,340 24,672 Protozoa 11,900 12/1/01
54 40,140
55 Hard, In-Place 3,252 4,164 Disney Regional Entertainment 19,993 1/15/14
- ----------------------------------------------------------------------------------------------------------------------------
56 47,000
57 6,318 Preferred Freezer Services 96,000 1/30/14
58 7,452 20,245 State Water Quality Control 20,631 6/30/03
59 55,000
60 Modified, In-Place 18,701
- ----------------------------------------------------------------------------------------------------------------------------
60a
60b
60c AAA Corporate Rentals, Inc. 14,000 6/30/10
61
62 11,427 Bamboo Abbott, Inc. 114,268 10/31/13
- ----------------------------------------------------------------------------------------------------------------------------
63 11,127 44,085 The Bank of Orange County 7,493 12/31/00
64 9,962 6,160 K-Mart (Ground Lease) 104,835 2/1/16
65 18,547 86,754 J&J Hardware 9,920 10/30/01
66 36,750
67 57,600
- ----------------------------------------------------------------------------------------------------------------------------
68 51,482
68a
68b
68c
68d
- ----------------------------------------------------------------------------------------------------------------------------
68e
68f
68g
69 25,920
70 38,016
- ----------------------------------------------------------------------------------------------------------------------------
71 1,882 525 Post Production, Inc. 17,107 4/30/06
72 38,880
73 42,312
74 32,700 Horng Chien, Inc. 16,326 3/31/99
75 6,768 30,000 Temple University 11,248 10/31/03
- ----------------------------------------------------------------------------------------------------------------------------
76 Modified, In-Place 75,000 Harte-Hanks Response Mgt. 126,952 7/31/03
77 4,205 46,000 Dendrite International, Inc. 26,280 10/31/03
78 6,952 26,127 Entenmanns 4,800 3/31/99
79 23,928 International Distribution 197,811 12/31/01
80 20,257 42,349 Renaissance Printing 10,069 7/31/08
- ----------------------------------------------------------------------------------------------------------------------------
81 20,004
82 2,900 20,756 Petco Animal Supplies, Inc. 18,000 1/31/14
83 Modified, In-Place 7,113 27,222 Merrill Lynch 7,826 6/30/03
84 17,486
85 1,620 17,709 Gateway 2000 Country Stores 8,000 11/30/03
- ----------------------------------------------------------------------------------------------------------------------------
86 12,852 75,000 BellSouth Communication 44,974 6/30/03
87 Hard, In-Place 1,213 Rite Aid of New York, Inc. 12,240 11/1/18
88 13,377 44,600 OMG Fidelity, Inc. 89,178 12/31/03
89
90 15,250 Frame Masters 1,197 1/1/03
- ----------------------------------------------------------------------------------------------------------------------------
91 23,184
92
93 1,175 14,693 Office Max, Inc. 23,500 10/31/13
94 11,813 57,684
94a McBurnett & Szabolcsi 3,015 4/1/01
- ----------------------------------------------------------------------------------------------------------------------------
94b Mahoney Brewer 2,473 5/31/01
95 Hard, In-Place 2,268 Walgreen's 15,120 3/25/19
96 3,720 24,600 Nova Care 7,935 11/30/00
97 Modified, In-Place 15,792 Quick Check 800 4/30/00
98 22,704 Starck Concepts 26,090 7/31/01
- ----------------------------------------------------------------------------------------------------------------------------
99 Bertucci's 7,200 6/7/13
100 28,896
101 35,500
102 16,033
103 9,036 GHA Plastic (LNP Engineering) 40,590 6/30/00
- ----------------------------------------------------------------------------------------------------------------------------
104 Hard, In-Place 8,419 29,020 Pyewacket Restaurant 6,752 12/31/04
105 24,750
106 8,853
106a
106b
- ----------------------------------------------------------------------------------------------------------------------------
107 Hard, In-Place 48,500 27,766 Randy's Travel Town 86,999 12/31/13
108 7,854 33,849 Home Accents 32,000 12/31/04
109 25,353
110 Modified, In-Place 2,111 20,209 Dr. Waggoner, DDS 3,200 12/31/00
111 1,711 Ethan Allen, Inc. 8,357 12/28/05
- ----------------------------------------------------------------------------------------------------------------------------
112 15,336 Atec, Inc. 11,220 11/30/98
113 Hard, In-Place Arbor Drug Store/CVS 10,972 11/15/18
114 19,524 The Houston File Room II, Inc. 26,565 1/31/03
115 Modified, Springing 2,203 11,749 Kearney Mesa Toyota 12,956 5/31/07
116 3,764 28,826 Dept of General Services 15,735 12/4/06
- ----------------------------------------------------------------------------------------------------------------------------
117 2,640 5,568 Bekhor Laundry 2,304 8/31/04
118 18,504
119 5,047 15,676 Cigna Dental 4,850 12/31/03
120 Modified, In-Place 6,456 15,228 Big Video 4,788 8/31/01
121 Modified, In-Place 7,348 Gomer Inc dba Action Discount 1,910 5/28/05
- ----------------------------------------------------------------------------------------------------------------------------
122 12,192 United DC, Inc. (Van Lines) 46,893 5/31/01
</TABLE>
<PAGE>
CERTAIN CHARACTERISTICS OF THE MULTIFAMILY LOANS
<TABLE>
<CAPTION>
Control
Number Loan Number Property Name City
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
8 GMAC5060 Fairfield Towers Condominium Apartments Brooklyn
10 GMAC5900 Boca Palms Apartments Boca Raton
14 GMAC5940 Lakewood Hills Apartments Harrisburg
15 GMAC4700 MIDCON Apartment Portfolio
15a GMAC4700-A Hamden Ridge Apartments Hamden
- -----------------------------------------------------------------------------------------------------------------------------------
15b GMAC4700-B Hampton House Apartments West Haven
15c GMAC4700-C Evergreen Apartments Hamden
15d GMAC4700-D Ridgefield Apartments Middletown
15e GMAC4700-E Holiday Apartments West Haven
15f GMAC4700-F Jefferson Arms Apartments Hamden
- -----------------------------------------------------------------------------------------------------------------------------------
16 GMAC5970 Palms of Pembroke Apartments Pembroke Pines
18 GMAC5690 Huntington Westminster Apartments Westminster
19 GMAC5910 Cobblestone Apartment Homes Pompano Beach
20 GMAC5960 The Marylander Apartments Baltimore
23 GMAC5920 Hidden Lakes Apartments Miamisburg
- -----------------------------------------------------------------------------------------------------------------------------------
24 GMAC5840 The Prather Portfolio
24a GMAC5840-A The Village Apartments Columbia
24b GMAC5840-B Providence Hill Apartments Columbia
24c GMAC5840-C Lakeside I & II Duplexes Columbia
27 GMAC5380 Briarcliff Summit Apartments Atlanta
- -----------------------------------------------------------------------------------------------------------------------------------
28 GMAC4260 Center City Apartment Portfolio
30a GMAC4260-A 2304-08 Locust Street Apartments Philadelphia
30b GMAC4260-B 2321 Spruce Street Philadelphia
30c GMAC4260-C 128 S. 22nd Street Philadelphia
30d GMAC4260-D 280 S. 23rd Street Philadelphia
- -----------------------------------------------------------------------------------------------------------------------------------
30e GMAC4260-E 2015-17 Locust Street Philadelphia
30f GMAC4260-F 2019 Spruce Street Philadelphia
30g GMAC4260-G 2034-36 Pine Street Philadelphia
30h GMAC4260-H 2122 Pine Street Philadelphia
30i GMAC4260-I 2131-33 Pine Street Philadelphia
- -----------------------------------------------------------------------------------------------------------------------------------
30j GMAC4260-J 420 S. 15th Street Philadelphia
30k GMAC4260-K 330 S. 17th Street Philadelphia
30l GMAC4260-L 735 Spruce Street Philadelphia
30m GMAC4260-M 1009-11 Spruce Street Philadelphia
30n GMAC4260-N 1127 Spruce Street Philadelphia
- -----------------------------------------------------------------------------------------------------------------------------------
30o GMAC4260-O 614 Pine Street Philadelphia
30p GMAC4260-P 623-25 Pine Street Philadelphia
30q GMAC4260-Q 920 Clinton Street Philadelphia
30r GMAC4260-R 2009 Mt. Vernon Street Philadelphia
30s GMAC4260-S 2219-21 Spring Garden Philadelphia
- -----------------------------------------------------------------------------------------------------------------------------------
30t GMAC4260-T 325 Pine Street Philadelphia
30u GMAC4260-U 532-34 Pine Street Philadelphia
30v GMAC4260-V 607-09 South 3rd Street Philadelphia
30w GMAC4260-W 614 S. 3rd Street Philadelphia
30x GMAC4260-X 718-22 S. 7th Street Philadelphia
- -----------------------------------------------------------------------------------------------------------------------------------
35 GMAC5930 Kenwood Gardens Apartments Toledo
41 GMAC5950 2031 Locust Street Apartments Philadelphia
54 GMAC3890 Downing Place Townhouses Lexington
56 GMAC4810 Twin Bridge Apartments Euless
59 GMAC5650 Solomon's Court and Esther's Garden Apartments Dallas
- -----------------------------------------------------------------------------------------------------------------------------------
60 GMAC2060 Sheafe St./ Lewis St./ Milk St.
60a GMAC2060-A Sheafe Condominiums Boston
60b GMAC2060-B 36-38 Lewis St. Apt. Building Boston
61 GMAC5090 Ravenwood Highlander Apartments Clive
66 GMAC4920 Oaks Apartments Balch Springs
- -----------------------------------------------------------------------------------------------------------------------------------
68 GMAC3470 Cataldo-Pane Multifamily Portfolio
68a GMAC3470-A 957 67th Street Brooklyn
68b GMAC3470-B 88 Van Sicklen Street Brooklyn
68c GMAC3470-C 8785 Bay 16th Street Brooklyn
68d GMAC3470-D 7311 4th Avenue Brooklyn
- -----------------------------------------------------------------------------------------------------------------------------------
68e GMAC3470-E 805 Avenue O Brooklyn
68f GMAC3470-F 1946 70th Street Brooklyn
68g GMAC3470-G 7301 4th Avenue Brooklyn
69 GMAC5180 Newporter Apartments Fresno
70 GMAC5430 Timber Line Apartments Kansas City
- -----------------------------------------------------------------------------------------------------------------------------------
72 GMAC5630 Woodland Grove Apartments Laurel
73 GMAC5680 Country Place Apartments Abilene
81 GMAC4760 Riverine Apartments Traverse City
84 GMAC1880 Lock Mill Plaza Concord
89 GMAC5130 Camelot Square Apartments (CA) Bakersfield
- -----------------------------------------------------------------------------------------------------------------------------------
90 GMAC4530 Polk Street Apartments San Francisco
91 GMAC4470 Rue Versailles Apartments Royal Oak Township
92 GMAC5800 Garden Center Apartments Broomfield
97 GMAC4270 547-557 Flatbush Avenue Brooklyn
100 GMAC5170 Mark Court Apartments Newport
- -----------------------------------------------------------------------------------------------------------------------------------
101 GMAC5370 Brendenwood Apartments South Bend
102 GMAC5070 La Marquesa Apartments Van Nuys
105 GMAC3330 William Realty Portfolio East Orange
109 GMAC5160 Highland Village Apartments LaGrange
118 GMAC3900 Fountain Ridge Apartments Sioux Falls
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Initial Initial Pool Utilities
Control Pool Balance Per Paid by
Number Property County State Zip Code Balance ($) Unit ($) Tenant
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
8 Kings New York 11207 25,177,781 25,771 Gas/Electricity/Cable
10 Palm Beach Florida 33428 22,583,360 43,263 Gas/Electricity/Cable
14 Dauphin Pennsylvania 17109 18,736,195 33,338 Gas/Electricity/Cable
15 17,443,028 33,036
15a New Haven Connecticut 06514 Electricity/Cable
- ------------------------------------------------------------------------------------------------------------------------------------
15b New Haven Connecticut 06516 Electricity/Cable
15c New Haven Connecticut 06518 Electricity/Cable
15d Middlesex Connecticut 06457 Gas/Electricity/Cable
15e New Haven Connecticut 06516 Electricity/Cable
15f New Haven Connecticut 06518 Electricity/Cable
- ------------------------------------------------------------------------------------------------------------------------------------
16 Broward Florida 33025 16,587,778 47,666 Electricity/Cable
18 Orange California 92683 13,992,012 44,990 Gas/Electricity/Cable
19 Broward Florida 33069 13,839,803 36,041 Electricity/Cable
20 Baltimore Maryland 21218 12,290,944 24,242 Electricity/Cable
23 Montgomery Ohio 45342 10,692,122 29,700 Gas/Electricity/Cable
- ------------------------------------------------------------------------------------------------------------------------------------
24 10,568,731 43,138
24a Boone Missouri 65201 Gas/Electricity/Cable
24b Boone Missouri 65201 Gas/Electricity
24c Boone Missouri 65201 Gas/Electricity/Cable
27 Fulton Georgia 30306 8,894,345 44,250
- ------------------------------------------------------------------------------------------------------------------------------------
28 7,608,624 38,234
30a Philadelphia Pennsylvania 19103 Electricity/Cable
30b Philadelphia Pennsylvania 19103 Cable
30c Philadelphia Pennsylvania 19103 Gas/Electricity/Cable
30d Philadelphia Pennsylvania 19103 Gas/Electricity/Cable
- ------------------------------------------------------------------------------------------------------------------------------------
30e Philadelphia Pennsylvania 19103 Gas/Electricity/Cable
30f Philadelphia Pennsylvania 19103 Gas/Electricity/Cable
30g Philadelphia Pennsylvania 19103 Electricity/Cable
30h Philadelphia Pennsylvania 19103 Electricity/Cable
30i Philadelphia Pennsylvania 19103 Gas/Electricity/Cable
- ------------------------------------------------------------------------------------------------------------------------------------
30j Philadelphia Pennsylvania 19146 Gas/Electricity/Cable
30k Philadelphia Pennsylvania 19103 Gas/Electricity/Cable
30l Philadelphia Pennsylvania 19106 Gas/Electricity/Cable
30m Philadelphia Pennsylvania 19107 Gas/Electricity/Cable
30n Philadelphia Pennsylvania 19107 Gas/Electricity/Cable
- ------------------------------------------------------------------------------------------------------------------------------------
30o Philadelphia Pennsylvania 19106 Gas/Electricity/Cable
30p Philadelphia Pennsylvania 19106 Electricity/Cable
30q Philadelphia Pennsylvania 19107 Gas/Electricity/Cable
30r Philadelphia Pennsylvania 19130 Electricity/Cable
30s Philadelphia Pennsylvania 19130 Gas/Electricity/Cable
- ------------------------------------------------------------------------------------------------------------------------------------
30t Philadelphia Pennsylvania 19106 Gas/Electricity/Cable
30u Philadelphia Pennsylvania 19106 Gas/Electricity/Cable
30v Philadelphia Pennsylvania 19147 Gas/Electricity/Cable
30w Philadelphia Pennsylvania 19147 Gas/Electricity/Cable
30x Philadelphia Pennsylvania 19147 Gas/Electricity/Cable
- ------------------------------------------------------------------------------------------------------------------------------------
35 Lucas Ohio 43623 7,244,662 14,374 Gas/Electricity/Cable
41 Philadelphia Pennsylvania 19103 5,945,619 67,564 Electricity/Cable
54 Fayette Kentucky 40517 4,562,409 23,639 Electricity/Cable
56 Tarrant Texas 76053 4,483,267 19,078 Electricity
59 Dallas Texas 75232 4,294,076 19,519 Cable
- ------------------------------------------------------------------------------------------------------------------------------------
60 4,113,492 171,396
60a Suffolk Massachusetts 02109
60b Suffolk Massachusetts 02109
61 Polk Iowa 50325 4,112,079 26,702 Gas/Electricity/Cable
66 Dallas Texas 75180 3,841,713 26,134 Gas/Electricity/Cable
- ------------------------------------------------------------------------------------------------------------------------------------
68 3,778,745 20,207
68a Kings New York 11219 Electricity/Cable
68b Kings New York 11223 Electricity
68c Kings New York 11214 Electricity
68d Kings New York 11209 Electricity
- ------------------------------------------------------------------------------------------------------------------------------------
68e Kings New York 11204 Electricity/Cable
68f Kings New York 11204 Electricity
68g Kings New York 11209 Electricity/Cable
69 Fresno County California 93711 3,759,878 41,776 Electricity/Cable
70 Clay Missouri 64116 3,697,729 25,679
- ------------------------------------------------------------------------------------------------------------------------------------
72 Prince Georges County Maryland 20708 3,597,701 29,981 Gas/Electricity/Cable
73 Taylor Texas 79602 3,395,557 19,742 Electricity
81 Grand Traverse Michigan 49684 3,038,295 37,979 Gas/Electricity/Cable/Trash
84 Cabarrus North Carolina 28025 2,994,005 29,353 Electricity/Cable
89 Kern California 93309 2,521,637 40,672 Gas/Electricity/Cable
- ------------------------------------------------------------------------------------------------------------------------------------
90 San Francisco California 94109 2,490,222 40,823 Cable
91 Oakland Michigan 48220 2,466,561 29,364 Electricity/Cable
92 Boulder Colorado 80038 2,398,519 30,361 Electricity
97 Kings New York 11225 2,246,690 36,237 Gas/Electricity/Cable
100 Washington Minnesota 55055 2,128,514 22,172 Gas/Electricity/Cable
- ------------------------------------------------------------------------------------------------------------------------------------
101 St. Joseph Indiana 46615 1,998,830 14,076 Gas/Electricity/Cable
102 Los Angeles California 91406 1,996,119 32,195 Electricity/Cable
105 Essex New Jersey 07018 1,892,055 19,112 Gas/Electricity/Cable
109 Troup Georgia 30240 1,696,886 20,949 Gas/Electricity/Cable
118 Minnehaha South Dakota 57103 1,193,708 16,579 Electricity/Cable
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Studios 1 Bedroom 2 Bedroom 3 bedroom 4 bedroom 5 Bedroom
Avg Avg Avg Avg Avg Avg Number
Control # Rent Per # Rent Per # Rent Per # Rent Per # Rent Per # Rent Per of
Number Units Mos. ($) Units Mos. ($) Units Mos. ($) Units Mos. ($) Units Mos. ($) Units Mos. ($) Elevators
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
8 85 550 290 712 518 797 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 5 450 34 550 1
15c 7 550 8 700
15d 100 502 84 663 78 730
15e 30 515 1
15f 40 555 7 665 1
- ------------------------------------------------------------------------------------------------------------------------------------
16 72 761 254 919 22 1130
18 31 550 210 650 70 756 5
19 256 695 128 785
20 326 483 100 592 67 736 2 1120 6
23 5 495 211 591 139 697 5 810
- ------------------------------------------------------------------------------------------------------------------------------------
24
24a 64 625
24b 46 480 97 681
24c 38 623
27 89 648 86 712 26 790 2
- ------------------------------------------------------------------------------------------------------------------------------------
28
30a 12 533 3 817
30b 2 550 3 633 1 1200
30c 3 533 4 554
30d 1 500 5 623
- ------------------------------------------------------------------------------------------------------------------------------------
30e 9 492 7 682
30f 3 548 5 865
30g 2 400 4 756
30h 2 663 2 988 1 1200
30i 2 470 6 617
- ------------------------------------------------------------------------------------------------------------------------------------
30j 1 410 4 485 1 800
30k 4 513 2 613
30l 2 500 4 663
30m 8 470 3 608 1 725
30n 4 459 3 608 1 1000
- ------------------------------------------------------------------------------------------------------------------------------------
30o 1 450 3 650 2 675
30p 8 706 3 783
30q 1 450 6 710 1 805
30r 2 550 2 650 1 850
30s 7 529 5 550
- ------------------------------------------------------------------------------------------------------------------------------------
30t 1 500 3 670 2 963
30u 6 643 4 780 1 1200
30v 2 598 3 700
30w 1 650 4 838
30x 6 492 3 592
- ------------------------------------------------------------------------------------------------------------------------------------
35 140 404 338 459 26 640
41 1 505 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 4 385 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 72 280 64 361 36 437
81 20 576 60 645
84 31 477 54 575 17 680
89 50 643 12 740
- ------------------------------------------------------------------------------------------------------------------------------------
90 45 560 6 810 2 935 1
91 24 525 60 570
92 66 533 13 675
97 12 505 28 609 11 653 5 668 1
100 3 390 45 450 48 565
- ------------------------------------------------------------------------------------------------------------------------------------
101 51 385 56 477 35 595
102 12 431 29 542 19 635 2 900
105 17 550 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 3.25 1,082,626 1,998,830 1,599,541
2,000,000 - 2,999,999 19 48,256,765 4.91 2,128,514 2,998,321 2,539,830
3,000,000 - 3,999,999 19 66,858,065 6.80 3,038,295 3,944,827 3,518,846
4,000,000 - 4,999,999 14 62,650,771 6.37 4,025,915 4,993,576 4,475,055
5,000,000 - 5,999,999 10 56,329,155 5.73 5,290,019 5,978,286 5,632,916
6,000,000 - 6,999,999 2 13,627,015 1.39 6,740,837 6,886,177 6,813,507
7,000,000 - 7,999,999 8 59,159,649 6.02 7,077,000 7,712,944 7,394,956
8,000,000 - 8,999,999 3 26,389,395 2.68 8,530,378 8,964,671 8,796,465
9,000,000 - 9,999,999 1 9,132,449 0.93 9,132,449 9,132,449 9,132,449
10,000,000 - 13,999,999 7 84,320,280 8.57 10,568,731 13,992,012 12,045,754
14,000,000 - 16,999,999 2 32,073,693 3.26 15,485,915 16,587,778 16,036,846
17,000,000 - 19,999,999 3 55,835,359 5.68 17,443,028 19,656,135 18,611,786
20,000,000 - 24,999,999 4 87,914,138 8.94 20,000,000 23,412,934 21,978,535
25,000,000 - 29,999,999 4 106,829,924 10.86 25,177,781 28,320,000 26,707,481
30,000,000 - 39,999,999 1 36,000,000 3.66 36,000,000 36,000,000 36,000,000
40,000,000 - 59,999,999 2 104,492,212 10.62 50,722,972 53,769,239 52,246,106
60,000,000 - 100,000,000 1 100,000,000 10.17 100,000,000 100,000,000 100,000,000
-- ------------ ------
Total/Avg./Wtd. Avg./
Min/Max: 122 $983,466,908 100.00% $ 638,828 $100,000,000 $ 8,061,204
=== ============ ======
<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 1.39 1.33 7.288 125.1 70.59 79.06 73.87
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 7.407% 136.4 34.13% 83.86% 68.31%
</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 27.63% $1,122,625 $ 53,769,239 $11,815,828
Retail 37 269,942,796 27.45 968,387 100,000,000 7,295,751
Multifamily 75 261,659,573 26.61 169,276 25,177,781 3,488,794
Other 7 69,211,276 7.04 723,651 26,856,137 9,887,325
Hospitality 5 57,432,996 5.84 3,793,327 26,476,006 11,486,599
Industrial 13 44,281,677 4.50 638,828 9,132,449 3,406,283
Mixed Use 3 9,174,543 0.93 1,936,236 4,594,190 3,058,181
-- ------------ ------
Total/Avg./Wtd.
Avg./Min/Max: 163 $983,466,908 100.00% $ 169,276 $100,000,000 $ 6,033,539
=== ============ ======
<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%
Retail 1.21 2.05 1.43 7.226 121.9 56.09 80.00 68.66
Multifamily 1.18 1.60 1.40 7.230 120.5 59.90 83.86 72.59
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 7.407% 136.4 34.13% 83.86% 68.31%
</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 14.02% $ 1,448,750 $ 50,722,972 $17,234,486
1.00 - 1.09x 1 1,422,390 0.14 1,422,390 1,422,390 1,422,390
1.10 - 1.19 1 13,992,012 1.42 13,992,012 13,992,012 13,992,012
1.20 - 1.24 14 183,568,885 18.67 1,696,886 53,769,239 13,112,063
1.25 - 1.29 38 201,161,060 20.45 638,828 28,320,000 5,293,712
1.30 - 1.34 19 68,913,542 7.01 1,082,626 8,894,345 3,627,029
1.35 - 1.39 9 38,972,345 3.96 1,098,611 8,964,671 4,330,261
1.40 - 1.49 10 46,781,501 4.76 1,641,645 10,763,630 4,678,150
1.50 - 1.59 14 131,220,939 13.34 1,892,055 22,583,360 9,372,924
1.60 - 1.79 5 128,605,873 13.08 2,184,089 100,000,000 25,721,175
1.90 - 2.19 2 29,560,760 3.01 3,084,754 26,476,006 14,780,380
2.20 - 3.00 1 1,391,712 0.14 1,391,712 1,391,712 1,391,712
-- ------------ ------
Total/Avg./Wtd.
Avg./Min/Max: 122 $983,466,908 100.00% $ 638,828 $100,000,000 $ 8,061,204
=== ============ ======
<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 1.39 1.37 7.655 116.2 59.70 78.68 71.97
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 - 3.00 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 7.407% 136.4 34.13% 83.86% 68.31%
</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 0.77% $ 3,084,754 $ 4,491,676 $ 3,788,215
6.501 - 6.750 2 102,386,967 10.41 2,386,967 100,000,000 51,193,483
6.751 - 7.000 13 131,759,887 13.40 1,193,708 22,583,360 10,135,376
7.001 - 7.250 10 176,115,559 17.91 1,641,645 53,769,239 17,611,556
7.251 - 7.500 17 111,026,884 11.29 1,391,712 26,856,137 6,530,993
7.501 - 7.750 22 178,297,261 18.13 1,936,236 28,320,000 8,104,421
7.751 - 8.000 38 192,941,383 19.62 638,828 36,000,000 5,077,405
8.001 - 9.000 17 63,706,402 6.48 968,387 7,292,233 3,747,435
9.001 - 10.000 1 19,656,135 2.00 19,656,135 19,656,135 19,656,135
-- ------------ ------
Total/Avg./Wtd.
Avg./Min/Max: 122 $983,466,908 100.00% $ 638,828 $100,000,000 $ 8,061,204
=== ============ ======
<PAGE>
<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 7.403 167.1 43.49 79.07 72.85
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 7.407% 136.4 34.13% 83.86% 68.31%
</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 110 $785,906,572 79.91% $ 638,828 $ 53,769,239 $ 7,144,605
Fully Amortizing 8 48,712,238 4.95 1,386,164 26,856,137 6,089,030
Hyperamortizing 4 148,848,098 15.14 6,886,177 100,000,000 37,212,025
--- ------------ ------
Total /Avg./Wtd.
Avg./Min/Max: 122 $983,466,908 100.00% $ 638,828 $100,000,000 $ 8,061,204
=== ============ ======
<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% 134.4 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 1.40 7.407% 136.4 34.13% 83.86% 68.31%
</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 14.02% $1,448,750 $ 50,722,972 $17,234,486
30.1 - 50.0% 6 51,433,564 5.23 1,391,712 26,476,006 8,572,261
50.1 - 60.0 11 74,013,669 7.53 638,828 22,583,360 6,728,515
60.1 - 65.0 6 151,318,379 15.39 3,778,745 100,000,000 25,219,730
65.1 - 70.0 24 133,948,129 13.62 968,387 36,000,000 5,581,172
70.1 - 75.0 45 300,404,584 30.55 1,082,626 53,769,239 6,675,657
75.1 - 80.0 21 129,989,426 13.22 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: 122 $983,466,908 100.00% $ 638,828 $100,000,000 $ 8,061,204
=== ============ ======
<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 7.395 119.7 70.14 74.99 73.21
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 7.407% 136.4 34.13% 83.86% 68.31%
</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 18 $206,414,083 20.99% $ 243,630 $100,000,000 $11,467,449
California 26 194,922,148 19.82 1,297,501 50,722,972 7,497,006
Pennsylvania 30 72,269,982 7.35 169,276 28,320,000 2,408,999
Florida 9 70,566,782 7.18 1,717,787 22,583,360 7,840,754
Colorado 2 56,167,758 5.71 2,398,519 53,769,239 28,083,879
Illinois 2 46,132,141 4.69 19,656,135 26,476,006 23,066,071
Texas 15 44,804,427 4.56 638,828 5,692,708 2,986,962
Arizona 3 41,590,286 4.23 1,098,611 36,000,000 13,863,429
Nevada 2 28,497,783 2.90 1,641,645 26,856,137 14,248,891
Virginia 4 26,507,797 2.70 2,170,633 12,173,039 6,626,949
New Jersey 8 26,032,047 2.65 723,651 7,712,944 3,254,006
Maryland 3 24,419,023 2.48 3,597,701 12,290,944 8,139,674
Ohio 2 17,936,784 1.82 7,244,662 10,692,122 8,968,392
Connecticut 6 17,443,028 1.77 461,965 9,624,271 2,907,171
Michigan 5 16,040,567 1.63 1,448,750 7,490,240 3,208,113
Massachusetts 6 15,996,634 1.63 547,710 4,791,571 2,666,106
Georgia 5 15,878,461 1.61 1,122,625 8,894,345 3,175,692
Missouri 4 14,266,460 1.45 1,804,418 5,744,676 3,566,615
North Carolina 3 11,816,419 1.20 1,936,236 6,886,177 3,938,806
Alaska 1 7,488,235 0.76 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 0.46 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 0.20 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: 163 $983,466,908 100.00% $ 169,276 $100,000,000 $ 6,033,539
=== ============ ======
<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 7.078% 120.3 55.25% 74.89% 64.38%
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 7.407% 136.4 34.13% 83.86% 68.31%
</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 122 $983,466,908 100.00% $638,828 $100,000,000 $8,061,204
--- ------------ ------
Total/Avg./Wtd.
Avg./Min/Max: 122 $983,466,908 100.00% $638,828 $100,000,000 $8,061,204
=== ============ ======
<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 7.407% 136.4 34.13% 83.86% 68.31%
Total/Avg./Wtd.
Avg./Min/Max: 1.07x 2.28x 1.40x 7.407% 136.4 34.13% 83.86% 68.31%
</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 18 $206,414,083 20.99% $ 243,630 $100,000,000 $11,467,449
California 26 194,922,148 19.82 1,297,501 50,722,972 7,497,006
Pennsylvania 30 72,269,982 7.35 169,276 28,320,000 2,408,999
Florida 9 70,566,782 7.18 1,717,787 22,583,360 7,840,754
Colorado 2 56,167,758 5.71 2,398,519 53,769,239 28,083,879
Other 78 383,126,154 38.96 461,965 36,000,000 4,911,874
-- ------------ ------
Total/Avg./Wtd.
Avg./Min/Max: 163 $983,466,908 100.00% $ 169,276 $100,000,000 $ 6,033,539
=== ============ ======
<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 7.078% 120.3 55.25% 74.89% 64.38%
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 7.407% 136.4 34.13% 83.86% 68.31%
</TABLE>
<PAGE>
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 12.97 1,448,750 50,722,972 12,754,408
241 - 300 22 109,088,029 11.09 1,082,626 25,177,781 4,958,547
301 - 360 86 638,582,387 64.93 638,828 53,769,239 7,425,377
361 - 380 2 102,392,794 10.41 2,392,794 100,000,000 51,196,397
-- ------------ ------
Total/Avg./Wtd.
Avg./Min/Max: 122 $983,466,908 100.00% $ 638,828 $100,000,000 $ 8,061,204
=== ============ ======
<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 7.477 125.4 47.36 83.86 69.81
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 7.407% 136.4 34.13% 83.86% 68.31%
</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 - 120 102 $790,767,895 80.41% $ 638,828 $100,000,000 $ 7,752,626
121 - 140 1 2,998,321 0.30 2,998,321 2,998,321 2,998,321
141 - 180 4 22,242,198 2.26 1,386,164 8,894,345 5,560,550
181 - 240 13 135,629,320 13.79 1,448,750 50,722,972 10,433,025
241 - 360 2 31,829,174 3.24 12,173,039 19,656,135 15,914,587
--- ------------ ------
Total/Avg./Wtd.
Avg./Min/Max: 122 $983,466,908 100.00% $ 638,828 $100,000,000 $ 8,061,204
=== ============ ======
<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 7.363% 117.1 43.49% 83.86% 68.46%
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 7.407% 136.4 34.13% 83.86% 68.31%
</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 - 120 101 $764,291,889 77.71% $ 638,828 $100,000,000 $ 7,567,246
121 - 140 2 29,474,327 3.00 2,998,321 26,476,006 14,737,163
141 - 180 4 22,242,198 2.26 1,386,164 8,894,345 5,560,550
181 - 240 13 135,629,320 13.79 1,448,750 50,722,972 10,433,025
241 - 360 2 31,829,174 3.24 12,173,039 19,656,135 15,914,587
--- ------------ ------
Total/Avg./Wtd.
Avg./Min/Max: 122 $983,466,908 100.00% $ 638,828 $100,000,000 $ 8,061,204
=== ============ ======
<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 7.353% 117.0 43.49% 83.86% 69.19%
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 7.407% 136.4 34.13% 83.86% 68.31%
</TABLE>
A-16
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
ANNEX B
<TABLE>
<CAPTION>
<S> <C> <C>
ABN AMRO GMAC COMMERCIAL MORTGAGE SECURITIES, INC. Statement Date:
LaSalle National Bank 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 Geraghty (800) 246-5761 SERIES 1999-C2
135 S. LaSalle Street Suite 1625 ABN AMRO ACCT: WAC:
Chicago, IL 60674-4107 WAMM:
===================================================================================================================================
Number Of Pages
Table Of Contents
REMIC Certificate Report
Other Related Information
Mortgage Loan Characteristics
Loan Level Detail
Delinquent Loan Status Report
Historical Loan Modification Report
Historical Loss Estimate Report
REO Status Report
TOTAL PAGES INCLUDED IN THIS PACKAGE
-----------------------------------------------------------------------------------------
INFORMATION IS AVAILABLE FOR THIS ISSUE FROM THE FOLLOWING SOURCES
-----------------------------------------------------------------------------------------
LaSalle Web Site www.lnbabs.com
LaSalle Bulletin Board (714) 282-3990
LaSalle ASAP Fax System (312) 904-2200
ASAP #: 354
Monthly Data File Name: 0354MMYY.EXE
=========================================================================================
===================================================================================================================================
</TABLE>
B-1
<PAGE>
<TABLE>
<CAPTION>
ABN AMRO GMAC COMMERCIAL MORTGAGE SECURITIES, INC. Statement Date:
LaSalle National Bank 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 Geraghty (800) 246-5761 SERIES 1999-C2
135 S. LaSalle Street Suite 1625 ABN AMRO ACCT: 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 Payment
===============================
</TABLE>
Notes: (1) N denotes notional balance not included in total
(2) Interest Paid minus Interest Adjustment minus Deferred Interest
equals Accrual
(3) Estimated
B-2
<PAGE>
<TABLE>
<CAPTION>
ABN AMRO GMAC COMMERCIAL MORTGAGE SECURITIES, INC. Statement Date:
LaSalle National Bank 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 Geraghty (800) 246-5761 SERIES 1999-C2
135 S. LaSalle Street Suite 1625 ABN AMRO ACCT:
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>
X
A-1
A-2
A-3
B
C
D
E
F
G
H
J
K
-------------------------------------------------------------------------------------------------------------------------------
===============================================================================================================================
-------------------------------------------------------------------------------------------------------------------------------
ADVANCES
PRIOR OUTSTANDING CURRENT PERIOD RECOVERED OUTSTANDING
Principal Interest Principal Interest Principal Interest Principal Interest
===============================================================================================================================
Servicer
Trustee:
Fiscal Agent:
-------------------------------------------------------------------------------------------------------------------------------
===============================================================================================================================
===================================================================================================================================
</TABLE>
B-3
<PAGE>
<TABLE>
<CAPTION>
ABN AMRO GMAC COMMERCIAL MORTGAGE SECURITIES, INC. Statement Date:
LaSalle National Bank 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 Geraghty (800) 246-5761 SERIES 1999-C2
135 S. LaSalle Street Suite 1625 ABN AMRO ACCT:
Chicago, IL 60674-4107 OTHER RELATED INFORMATION
===================================================================================================================================
-----------------------------------------------------------------------------------------------------
SERVICING COMPENSATION
=====================================================================================================
<S> <C>
Current Period Master Servicing Fees Paid:
Current Period Surveillance Fees Paid:
Current Period Primary Fees Paid:
Current Period Sub Servicer Fees Paid:
Additional Master Servicing Compensation:
Current Period Special Servicing Fees Paid:
Current Period Workout Fees Paid:
Current Period Liquidation Fees Paid:
-------------
=============
-----------------------------------------------------------------------------------------------------
OUTSTANDING MORTGAGE LOANS IN POOL
=====================================================================================================
Number of Outstanding Mortgage Loans in Pool:
Aggregate Stated Principal Balance before Distribution Date:
Aggregate Stated Principal Balance after Distribution Date:
Percentage of Remaining Cut-off Date Principal Balance:
------------------------------------------------------------------------------------------------------
SUMMARY OF REO PROPERTIES
PRINCIPAL DATE OF FINAL AMOUNT AGGREGATE OTHER
# PROPERTY NAME DATE OF REO BALANCE BOOK VALUE RECOVERY OF PROCEEDS REVENUE COLLECTED
======================================================================================================
1.
2.
3.
4.
5.
===================================================================================================================================
</TABLE>
B-4
<PAGE>
<TABLE>
<CAPTION>
ABN AMRO GMAC COMMERCIAL MORTGAGE SECURITIES, INC. Statement Date:
LaSalle National Bank 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 Geraghty (800) 246-5761 SERIES 1999-C2
135 S. LaSalle Street Suite 1625 ABN AMRO ACCT:
Chicago, IL 60674-4107 OTHER RELATED INFORMATION
===================================================================================================================================
-----------------------------------------------------------------------------------------------------------------
SUMMARY OF APPRAISAL REDUCTIONS
PRINCIPAL APPRAISAL APPRAISAL DATE OF
# PROPERTY NAME LOAN NUMBER BALANCE REDUCTION AMT. DATE REDUCTION
=================================================================================================================
<S> <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>
B-5
<PAGE>
<TABLE>
<CAPTION>
ABN AMRO GMAC COMMERCIAL MORTGAGE SECURITIES, INC. Statement Date:
LaSalle National Bank GMAC COMMERCIAL MORTGAGE CORPORATION AS MASTER SERVICE Payment Date:
GMAC COMMERCIAL MORTGAGE CORPORATION AS SPECIAL SERVICER Prior Payment:
Administrator: MORTGAGE PASS-THROUGH CERTIFICATES Record Date:
Ann Geraghty (800) 246-5761 SERIES 1999-C2
135 S. LaSalle Street Suite 1625 ABN AMRO ACCT:
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>
B-6
<PAGE>
<TABLE>
<CAPTION>
ABN AMRO GMAC COMMERCIAL MORTGAGE SECURITIES, INC. Statement Date:
LaSalle National Bank GMAC COMMERCIAL MORTGAGE CORPORATION AS MASTER SERVICER Payment Date:
GMAC COMMERCIAL MORTGAGE CORPORATION AS SPECIAL SERVICE Prior Payment:
Administrator: MORTGAGE PASS-THROUGH CERTIFICATES Record Date:
Ann Geraghty (800) 246-5761 SERIES 1999-C2
135 S. LaSalle Street Suite 1625 ABN AMRO ACCT:
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 $100,000 Retail
$100,000 to $250,000 Multifamily
$250,000 to $500,000 Office
$500,000 to $750,000 Industrial
$750,000 to $1,000,000 Lodging
$1,000,000 to $2,000,000 Health Care
$2,000,000 to $3,000,000 Mixed Use
$3,000,000 to $4,000,000 Self Storage
$4,000,000 to $5,000,000 Mobile Home
$5,000,000 to $6,000,000 Other
$6,000,000 to $7,000,000
$7,000,000 to $8,000,000 ===================================================
$8,000,000 to $9,000,000 Total
$9,000,000 to $10,000,000 ---------------------------------------------------
$10,000,000 to $11,000,000 DISTRIBUTION OF MORTGAGE INTEREST RATES
$11,000,000 to $12,000,000 ---------------------------------------------------
$12,000,000 to $13,000,000 Current Mortgage Number Scheduled Based on
$13,000,000 to $14,000,000 Interest Rate of Loans Balance Balance
$14,000,000 to $15,000,000 ===================================================
$15,000,000 & Above 7.500% or less
========================================================== 7.500% to 7.750%
Total 7.750% to 8.000%
- ---------------------------------------------------------- 8.000% to 8.250%
Average Scheduled Balance is 8.250% to 8.500%
Maximum Scheduled Balance is 8.500% to 8.750%
Minimum Scheduled Balance is 8.750% to 9.000%
9.000% to 9.250%
9.250% to 9.500%
9.500% to 9.750%
9.750% to 10.000%
10.000% to 10.250%
10.250% to 10.500%
10.500% to 10.750%
10.750% & 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
==========================================================
- ----------------------------------------------------------
Total
- ----------------------------------------------------------
B-7
<PAGE>
<TABLE>
<CAPTION>
ABN AMRO GMAC COMMERCIAL MORTGAGE SECURITIES, INC. Statement Date:
LaSalle National Bank GMAC COMMERCIAL MORTGAGE CORPORATION AS MASTER SERVICER Payment Date:
GMAC COMMERCIAL MORTGAGE CORPORATION AS SPECIAL SERVICE Prior Payment:
Administrator: MORTGAGE PASS-THROUGH CERTIFICATES Record Date:
Ann Geraghty (800) 246-5761 SERIES 1999-C2
135 S. LaSalle Street Suite 1625 ABN AMRO ACCT:
Chicago, IL 60674-4107 POOL TOTAL
<S> <C> <C> <C> <C> <C> <C> <C>
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
1 year or less ===================================================
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
Amortizing Balloon Mortgage Loans of Loans Balance Balance
Interest Only / 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
============================================================
0.500 or less
0.500 to 0.625
0.625 to 0.750
0.750 to 0.875
0.875 to 1.000
1.000 to 1.125
1.125 to 1.250
1.250 to 1.375
1.375 to 1.500
1.500 to 1.625
1.625 to 1.750
1.750 to 1.875
1.875 to 2.000
2.000 to 2.125
2.125 & 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.
B-8
<PAGE>
<TABLE>
<CAPTION>
ABN AMRO GMAC COMMERCIAL MORTGAGE SECURITIES, INC. Statement Date:
LaSalle National Bank 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 Geraghty (800) 246-5761 SERIES 1999-C2
135 S. LaSalle Street Suite 1625 ABN AMRO ACCT:
Chicago, IL 60674-4107 POOL TOTAL
DISTRIBUTION OF MAXIMUM RATES DISTRIBUTION OF INDICES OF MORTGAGE LOANS
- ---------------------------------------------------------- ---------------------------------------------------
Number Scheduled Based on Number Scheduled Based on
Maximum Rates of Loans Balance Balance Indices of Loans Balance Balance
========================================================== ===================================================
<S> <C> <C> <C> <C> <C> <C> <C>
No Maximum 3 Month LIBOR
0.01% to 6.50% 6 Month LIBOR
6.51% to 7.00%
7.01% to 7.50%
7.51% to 8.00%
8.01% to 8.50%
8.51% to 9.00%
9.01% to 9.50%
9.51% to 10.00%
10.01% to 10.50%
10.51% to 11.00%
11.01% to 11.50%
11.51% to 12.00%
12.01% & above
Fixed Rate Mortgage Fixed Rate Mortgage
========================================================== ===================================================
Total Total
- ---------------------------------------------------------- ---------------------------------------------------
Weighted Average for Mtge with a Maximum Rate is
DISTRIBUTION OF PAYMENT ADJUSTMENT DISTRIBUTION OF MORTGAGE LOAN MARGINS
- ---------------------------------------------------------- ---------------------------------------------------
Payment Adjustment Number Scheduled Based on Number Scheduled Based on
Frequency Loans Balance Balance Mortgage Loan Margins Loans Balance Balance
========================================================== ===================================================
Three Month No Margin
Six Month 0.010% to 2.500%
2.510% to 2.625%
2.635% to 2.750%
2.760% to 2.875%
2.885% to 3.000%
3.010% to 3.125%
Fixed Rate Mortgage 3.135% to 3.250%
- ---------------------------------------------------------- 3.260% to 3.375%
Total 3.385% to 99.000%
- ----------------------------------------------------------
Fixed Rate Mortgage
---------------------------------------------------
Total
---------------------------------------------------
Weighted Average for Mtge with a Margin is
</TABLE>
<PAGE>
DISTRIBUTION OF MINIMUM RATES
- ------------------------------------------------------------
Number Scheduled Based on
Minimum Rates (1) of Loans Balance Balance
============================================================
No Minimum
0.010% to 2.000%
2.010% to 2.125%
2.135% to 2.250%
2.260% to 2.375%
2.385% to 2.500%
2.510% to 2.625%
2.635% to 2.750%
2.760% to 2.875%
2.885% to 3.000%
3.010% to 3.125%
3.135% to 3.250%
3.260% to 3.375%
3.385% & Above
Fixed Rate Mortgage
- ------------------------------------------------------------
Total
- ------------------------------------------------------------
Weighted Average for Mtge with a Minimum Rate is
DISTRIBUTION OF INTEREST ADJUSTMENT
- ------------------------------------------------------------
Interest Adjustment Number Scheduled Based on
Frequency Loans Balance Balance
============================================================
Three Month
Six Month
Fixed Rate Mortgage
============================================================
Total
- ------------------------------------------------------------
(1) For adjustable mortgage loans where a minimum rate does
not exist the gross margin was used.
B-9
<PAGE>
<TABLE>
<CAPTION>
ABN AMRO GMAC COMMERCIAL MORTGAGE SECURITIES, INC. Statement Date:
LaSalle National Bank 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 Geraghty (800) 246-5761 SERIES 1999-C2
135 S. LaSalle Street Suite 1625 ABN AMRO ACCT:
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>
======================================
Loan
Prepayment Status
Prepayment 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 - < one month delinq. 2. P&IAdv - delinquent 2 months
================================================================================
- --------------------------------------------------------------------------------
3. P&IAdv - 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
==========================
B-10
<PAGE>
GMAC Commercial Mortgage Securities, Inc.
Series 1999-C2
DELINQUENT LOAN STATUS REPORT
AS OF _______________
<TABLE>
<CAPTION>
PROSPECTUS SHORT NAME PROPERTY CITY STATE SQ FT PAID SCHEDULED TOTAL P&I TOTAL OTHER TOTAL CURRENT
ID (WHEN TYPE OR THRU LOAN ADVANCES EXPENSES ADVANCES EXPOSURE MONTHLY
APPROPRIATE) UNITS DATE BALANCE TO DATE TO DATE (TAXES & P&I
ESCROW)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
90 + DAYS DELINQUENT
60 DAYS DELINQUENT
30 DAYS DELINQUENT
Current & at Special Servicer
<CAPTION>
CURRENT MATURITY LTM LTM LTM ***CAP VALUE
INTEREST DATE NOI NOI DSCR RATE USING
RATE DATE ASSIGNED NOI &
CAP RATE
<C> <C> <C> <C> <C> <C> <C>
</TABLE>
FCL - Foreclosure
LTM - Latest 12 Months either Last Annual or Trailing 12 months
* Workout Strategy should match the CSSA Loan file using abreviated words in
place of a code number such as (FCL - In Foreclosure, MOD - Modification,
DPO - Discount Payoff, NS - Note Sale, BK - Bankrupcy, PP - Payment Plan)
It is possible to combine the status codes if the loan is going in more
than one direction. (i.e. FCL/Mod, BK/Mod, BK/FCL/DPO)
** App - Appraisal, BPO - Broker 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-11
<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>
B-12
<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.
B-13
<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>
B-14
<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-15
<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 decending balance order.
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
Total: $
- --------------------------------------------------------------------------------------------------------------------------------
*LTM - Last 12 months either trailing or last annual
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-16
<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 <1:
Prior Full Year:
Prior Full Yr. received with DSC <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>
<PAGE>
<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-17
<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-18
<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-19
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
ANNEX C
All information in this Term Sheet, whether regarding the assets backing any
securities discussed herein or otherwise, will be superseded by the information
contained in any final prospectus for any securities actually sold to you.
STRUCTURAL AND COLLATERAL TERM SHEET
ANNEX C
May 12, 1999
$ 983,466,908 (Approximate Collateral Balance)
GMAC Commercial Mortgage Securities, Inc.
Mortgage Pass-Through Certificates
Series 1999-C2
Approximate Securities Structure:
- ---------------------------------
<TABLE>
<CAPTION>
Expected Expected
Approximate Credit Weighted Expected
Expected Rating Face/Notional Support Average Life Payment
Class (a) Mdy's/S&P/Fitch Amount(MM) (% of UPB) (years) (b) Window
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Publicly Offered Classes
X Aaa/AAAr/AAA $983.5(c) N/A 10.0 7/99-1/24
A1 Aaa/AAA/AAA 151.5 28.25 5.7 7/99-12/08
A2 Aaa/AAA/AAA 554.2 28.25 9.7 12/08-5/09
B Aa2/AA/AA 51.6 23.00 9.9 5/09-5/09
C A2/A/A 49.2 18.00 9.9 5/09-5/09
D A3/A-/A- 14.8 16.50 10.0 5/09-6/09
E Baa2/BBB/BBB 41.8 12.25 10.8 6/09-6/11
F Baa3/BBB-/BBB- 12.3 11.00 12.7 6/11-10/12
G Baa3/NR/NR 12.3 9.75 13.9 10/12-12/13
Privately Offered Classes (d)
- -----------------------------------------------------------------------------------
H - - - - -
J - - - - -
K - - - - -
L - - - - -
M - - - - -
N - - - - -
Total Securities: $983.5
- -----------------------------------------------------------------------------------
</TABLE>
(a) Classes ___ are expected to have a fixed pass-through rate. Classes ___ are
expected to have a fixed pass-through rate subject to a cap equal to the
weighted average Net Mortgage Pass-Through Rate. Classes ___ 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: Mid May
Pricing: Late May
Closing: Early June
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 TBD
Date:
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: $983,466,908
Number of Mortgage Loans: 122
Number of Mortgaged Properties: 163
Average Cut-Off Date Balance: $8,061,204
Weighted Average Current Mortgage Rate: 7.407%
Weighted Average U/W DSCR (a) (b): 1.40x
Weighted Average Cut-Off Date LTV Ratio (a) (b): 68.31%
Weighted Average Remaining Term to Maturity (months): 136.4
Weighted Average Remaining Amortization Term (months): 332.6
Weighted Average Seasoning (months): 3.0
CTL Loans as a % of Total 14.0%
Balloon Loans as % of Total (c): 95.0%
Single Largest Loan as % of Total: 10.17%
Five Largest Loans as % of Total: 27.33%
Ten Largest Loans as % of Total: 39.99%
(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
14.02% of the Aggregate Cut-Off Date Balance.
(c) Includes 4 ARD loans totaling $148.8 mm and 15.14% 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 10.97% 67.45% 1.57x Multifamily
Queens Center Retail 100,000,000 10.17 62.50 1.61 Retail
Ingram Micro 72,880,000 7.39 98.30 1.00 Office - CTL
Headquarters (b)
The Palmer Center 54,000,000 5.47 74.47 1.24 Office
The Squaw Peak Loan (c) 36,000,000 3.66 66.06 1.20 Office
Red Rose Commons 28,320,000 2.88 80.00 1.24 Retail
University of Nevada 27,000,000 2.73 89.52 1.15 Other - CTL
Property
Holiday Inn Mart 26,500,000 2.69 47.41 2.06 Full Service
Plaza Hotel
Fairfield Towers 25,258,000 2.56 74.48 1.23 Multifamily
729 Seventh Avenue 23,500,000 2.38 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
Geographic Mortgaged --------------------------------------
Distribution Properties (MM) % by UPB Wtd. Avg. DSCR(a)
- -------------------------------------------------------------------
New York 18 $206.4 21.0% 1.45x
California 26 194.9 19.8 1.33
Pennsylvania 30 72.3 7.3 1.40
Florida 9 70.6 7.2 1.53
Colorado 2 56.2 5.7 1.25
Other (b) 78 383.1 39.0 1.39
--- ------ ----- ----
Total/Wtd. Avg. 163 $983.5 100.0% 1.40x
=== ====== ===== ====
- -----------------------------------------------------------------
Property Type
- -----------------------------------------------------------------
Office 23 $271.8 27.6% 1.27x
Retail 37 269.9 27.5 1.43
Multifamily 75 261.7 26.6 1.40
Other 5 67.4 6.9 1.41
Hospitality 5 57.4 5.8 1.76
Industrial 13 44.3 4.5 1.28
Mixed Use 3 9.2 0.9 1.29
Self Storage 2 1.8 0.2 1.31
--- ------ ----- ----
Total/Wtd. Avg. 163 $983.5 100.0% 1.40x
=== ====== ===== ====
- -----------------------------------------------------------------
Prepayment
Restrictions
- -----------------------------------------------------------------
Lockout/Defeasance 122 $983.5 100% 1.40x
--- ------ --- ----
Total/Wtd. Avg. 122 $983.5 100% 1.40x
- -----------------------------------------------------------------
(a) The DSCR information does not reflect the 8 CTL loans representing 14.02%
of the Aggregate Cut-Off Date Balance.
(b) Includes 23 states.
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. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you.
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>
All information in this Term Sheet, whether regarding the assets backing any
securities discussed herein or otherwise, will be superseded by the information
contained in any final prospectus for any securities actually sold to you.
STRUCTURAL AND COLLATERAL TERM SHEET
- --------------------------------------------------------------------------------
STRUCTURAL OVERVIEW
- --------------------------------------------------------------------------------
[ ] 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.
[ ] 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.
[ ] 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.
[ ] Each class will be subordinate to the Class A1, A2, and X and to each
class with an earlier alphabetic designation than such class.
[ ] All classes will pay interest on a 30/360 basis.
[ ] 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.
[ ] 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. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you.
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>
All information in this Term Sheet, whether regarding the assets backing any
securities discussed herein or otherwise, will be superseded by the information
contained in any final prospectus for any securities actually sold to you.
STRUCTURAL AND COLLATERAL TERM SHEET
- --------------------------------------------------------------------------------
DISTRIBUTION OF CUT-OFF DATE BALANCES (a)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Weighted
Percentage Average Weighted
of Weighted Remaining Average
Number of Aggregate Average Weighted Average Term to Cut-Off
Range of Cut-Off Date Mortgage Cut-Off 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 3.25 1,599,541 1.33 7.799 124.9 68.19
2,000,000 - 2,999,999 19 48,256,765 4.91 2,539,830 1.34 7.757 142.5 71.47
3,000,000 - 3,999,999 19 66,858,065 6.80 3,518,846 1.37 7.709 135.8 69.43
4,000,000 - 4,999,999 14 62,650,771 6.37 4,475,055 1.28 7.699 128.6 71.15
5,000,000 - 5,999,999 10 56,329,155 5.73 5,632,916 1.37 7.616 117.2 70.57
6,000,000 - 6,999,999 2 13,627,015 1.39 6,813,507 1.45 7.944 118.0 70.67
7,000,000 - 7,999,999 8 59,159,649 6.02 7,394,956 1.36 7.552 124.5 71.95
8,000,000 - 8,999,999 3 26,389,395 2.68 8,796,465 1.33 7.288 125.1 73.87
9,000,000 - 9,999,999 1 9,132,449 0.93 9,132,449 1.28 7.250 235.0 68.67
10,000,000 - 13,999,999 7 84,320,280 8.57 12,045,754 1.44 7.212 144.0 71.05
14,000,000 - 16,999,999 2 32,073,693 3.26 16,036,846 1.53 7.365 119.0 59.21
17,000,000 - 19,999,999 3 55,835,359 5.68 18,611,786 1.41 7.820 168.8 73.74
20,000,000 - 24,999,999 4 87,914,138 8.94 21,978,535 1.34 7.257 135.7 59.11
25,000,000 - 29,999,999 4 106,829,924 10.86 26,707,481 1.52 7.570 148.4 67.46
30,000,000 - 39,999,999 1 36,000,000 3.66 36,000,000 1.20 7.800 114.0 66.06
40,000,000 - 59,999,999 2 104,492,212 10.62 52,246,106 1.24 7.103 152.9 74.47
60,000,000 - Over 1 100,000,000 10.17 100,000,000 1.61 6.560 117.0 62.50
--- ------------ ------ ------------ ---- ----- ----- -----
Total/Wtd. Avg. 122 $983,466,908 100.00% $ 8,061,204 1.40x 7.407% 136.4 68.31%
=== ============ ====== ============ ==== ===== ===== =====
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The DSCR and LTV information does not reflect the 8 CTL loans representing
14.02% of the Aggregate Cut-Off Date Balance.
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. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you.
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>
All information in this Term Sheet, whether regarding the assets backing any
securities discussed herein or otherwise, will be superseded by the information
contained in any final prospectus for any securities actually sold to you.
STRUCTURAL AND COLLATERAL TERM SHEET
- --------------------------------------------------------------------------------
DISTRIBUTION OF MORTGAGED PROPERTIES BY STATE (a)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Weighted
Average Weighted
Percentage Weighted Remaining Average
Number of of Aggregate Weighted Average Term to Cut-Off
Mortgaged Cut-Off Date Cut-Off Date Average Cut-Off Average Mortgage Maturity Date LTV
State Properties Balance Balance Date Balance DSCR Rate (mos) Ratio
- ------------------- ----------- -------------- -------------- ------------------------------ ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
New York 18 $206,414,083 20.99% $11,467,449 1.45x 7.078% 120.3 64.38%
California 26 194,922,148 19.82 7,497,006 1.33 7.519 151.6 67.62
Pennsylvania 30 72,269,982 7.35 2,408,999 1.40 7.361 118.0 75.90
Florida 9 70,566,782 7.18 7,840,754 1.53 6.943 126.3 62.09
Colorado 2 56,167,758 5.71 28,083,879 1.25 7.048 115.2 74.59
Illinois 2 46,132,141 4.69 23,066,071 2.08 8.224 180.9 47.36
Texas 15 44,804,427 4.56 2,986,962 1.35 7.884 123.1 68.85
Arizona 3 41,590,286 4.23 13,863,429 1.23 7.641 114.5 67.06
Nevada 2 28,497,783 2.90 14,248,891 1.40 7.368 230.0 59.70
Virginia 4 26,507,797 2.70 6,626,949 1.34 7.581 199.2 74.86
New Jersey 8 26,032,047 2.65 3,254,006 1.30 7.684 142.8 72.54
Maryland 3 24,419,023 2.48 8,139,674 1.43 6.934 118.3 73.16
Ohio 2 17,936,784 1.82 8,968,392 1.58 6.773 119.0 72.93
Connecticut 6 17,443,028 1.77 2,907,171 1.24 7.580 116.0 76.99
Michigan 5 16,040,567 1.63 3,208,113 1.28 7.802 128.1 73.75
Massachusetts 6 15,996,634 1.63 2,666,106 1.31 8.248 169.5 63.96
Georgia 5 15,878,461 1.61 3,175,692 1.29 7.593 131.4 77.24
Missouri 4 14,266,460 1.45 3,566,615 1.29 7.576 119.0 74.95
North Carolina 3 11,816,419 1.20 3,938,806 1.46 8.067 117.8 69.07
Alaska 1 7,488,235 0.76 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 0.46 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 0.20 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. 163 $983,466,908 100.00% $6,033,539 1.40x 7.407% 136.4 68.31%
=== ============ ====== ========== ==== ===== ===== =====
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The DSCR and LTV information does not reflect the 8 CTL loans representing
14.02% of the Aggregate Cut-Off Date Balance.
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. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you.
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>
All information in this Term Sheet, whether regarding the assets backing any
securities discussed herein or otherwise, will be superseded by the information
contained in any final prospectus for any securities actually sold to you.
STRUCTURAL AND COLLATERAL TERM SHEET
- --------------------------------------------------------------------------------
DISTRIBUTION OF MORTGAGED PROPERTIES BY STATE
- --------------------------------------------------------------------------------
AK 0.76% FL 7.18% NY 20.99%
CA 19.82% MI 1.63% MA 1.63%
NV 2.90% IL 4.69% RI 0.40%
AZ 4.23% IN 0.20% CT 1.77%
CO 5.71% OH 1.82% NJ 2.65%
SD 0.12% KY 0.46% MD 2.48%
TX 4.56% GA 1.61%
MN 0.22% PA 7.35%
IA 0.42% VA 2.70%
MO 1.45% NC 1.20%
LA 0.49% NH 0.57%
New York 20.99% Colorado 5.71%
California 19.82% Illinois 4.69%
Pennsylvania 7.35% Texas 4.56%
Florida 7.18% Other 29.70%
(a) Includes 21 states.
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. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you.
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>
All information in this Term Sheet, whether regarding the assets backing any
securities discussed herein or otherwise, will be superseded by the information
contained in any final prospectus for any securities actually sold to you.
STRUCTURAL AND COLLATERAL TERM SHEET
- --------------------------------------------------------------------------------
DISTRIBUTION OF PROPERTY TYPES (a)
- --------------------------------------------------------------------------------
Mixed Use 0.93%
Hospitality 5.84%
Industrial 4.50%
Office 27.63%
Retail 27.45%
Self Storage 0.19%
Multifamily 26.61%
Other 6.85%
<TABLE>
<CAPTION>
Weighted
Average Weighted
Percentage Weighted Remaining Average
Number of of Aggregate Weighted Average Term to Cut-Off
Mortgaged Cut-Off Date Cut-Off Date Average Cut-Off Average Mortgage Maturity Date LTV
Property Type Properties Balance Balance Date Balance DSCR Rate (mos) Ratio
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Office 23 $271,764,046 27.63% $11,815,828 1.27x 7.425% 138.9 67.88
Retail 37 269,942,796 27.45 7,295,751 1.43 7.226 121.9 68.66
Multifamily 75 261,659,573 26.61 3,488,794 1.40 7.230 120.5 72.59
Other 5 67,369,256 6.85 13,473,851 1.41 7.971 239.8 57.12
Hospitality 5 57,432,996 5.84 11,486,599 1.76 7.954 133.7 51.74
Industrial 13 44,281,677 4.50 3,406,283 1.28 7.736 154.9 66.79
Mixed Use 3 9,174,543 0.93 3,058,181 1.29 7.824 116.9 67.46
Self Storage 2 1,842,020 0.19 921,010 1.31 8.400 116.0 65.79
--- ------------ ------ ---------- ---- ----- ----- -----
Total/Wtd. Avg. 163 $983,466,908 100.00% $6,033,539 1.40x 7.407% 136.4 68.31
=== ============ ====== ========== ==== ===== ===== =====
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The DSCR and LTV information does not reflect the 8 CTL loans representing
14.02% of the Aggregate Cut-Off Date Balance.
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. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you.
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>
All information in this Term Sheet, whether regarding the assets backing any
securities discussed herein or otherwise, will be superseded by the information
contained in any final prospectus for any securities actually sold to you.
STRUCTURAL AND COLLATERAL TERM SHEET
- --------------------------------------------------------------------------------
DISTRIBUTION OF UNDERWRITTEN NCF DEBT SERVICE COVERAGE RATIOS (a)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Weighted
Average Weighted
Percentage of Weighted Remaining Average
Range of Debt Number of Aggregate Weighted Average Term to Cut-Off
Service Coverage Mortgage Cut-Off Date Cut-Off Date Average Cut-Off Average DSCR Mortgage Maturity Date LTV
Ratios Loans Balance Balance Date Balance Rate (mos) Ratio
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CTL 8 $137,875,890 14.02% $17,234,486 NAP 7.517% 222.6 NAP
1.00 - 1.09 1 1,422,390 0.14 1,422,390 1.07x 8.000 117.0 48.98%
1.10 - 1.19 1 13,992,012 1.42 13,992,012 1.18 7.750 119.0 77.73
1.20 - 1.24 14 183,568,885 18.67 13,112,063 1.23 7.498 115.5 71.89
1.25 - 1.29 38 201,161,060 20.45 5,293,712 1.26 7.680 127.3 71.58
1.30 - 1.34 19 68,913,542 7.01 3,627,029 1.31 7.880 136.6 69.03
1.35 - 1.39 9 38,972,345 3.96 4,330,261 1.37 7.655 116.2 71.97
1.40 - 1.49 10 46,781,501 4.76 4,678,150 1.44 7.354 134.2 68.65
1.50 - 1.59 14 131,220,939 13.34 9,372,924 1.55 7.072 118.6 65.18
1.60 - 1.79 5 128,605,873 13.08 25,721,175 1.61 6.699 119.4 63.69
1.90 - 2.19 2 29,560,760 3.01 14,780,380 2.08 7.482 119.5 48.27
2.20 - 3.00 1 1,391,712 0.14 1,391,712 2.28 7.500 115.0 43.49
--- ------------ ------ ---------- ---- ----- ----- -----
Total/Wtd. Avg. 122 $983,466,908 100.00% $8,061,204 1.40x 7.407% 136.4 68.31%
=== ============ ====== ========== ==== ===== ===== =====
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The DSCR and LTV information does not reflect the 8 CTL loans representing
14.02% of the Aggregate Cut-Off Date Balance.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
DISTRIBUTION OF CUT-OFF DATE LOAN TO VALUE AT ORIGINATION RATIOS (a)
- -------------------------------------------------------------------------------------------------------------------
Weighted
Average Weighted
Percentage Weighted Remaining Average
Number of of Aggregate Weighted Average Term to Cut-Off
Range of Cut-Off Date Mortgage Cut-Off Date Cut-Off Date Average Average Mortgage Maturity Date LTV
Loan to Value Ratios Loans Balance Balance Cut-Off Date DSCR Rate (mos) Ratio
Balance
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CTL 8 $137,875,890 14.02% $17,234,486 NAP 7.517% 222.6 NAP
30.1 - 50.0 6 51,433,564 5.23 8,572,261 1.80 7.759 129.5 47.50%
50.1 - 60.0 11 74,013,669 7.53 6,728,515 1.40 7.437 128.9 57.80
60.1 - 65.0 6 151,318,379 15.39 25,219,730 1.53 6.888 119.9 62.34
65.1 - 70.0 24 133,948,129 13.62 5,581,172 1.35 7.569 128.1 67.44
70.1 - 75.0 45 300,404,584 30.55 6,675,657 1.34 7.395 119.7 73.21
75.1 - 80.0 21 129,989,426 13.22 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. 122 $983,466,908 100.00% $8,061,204 1.40x 7.407% 136.4 68.31%
=== ============ ====== ========== ==== ===== ===== =====
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The DSCR and LTV information does not reflect the 8 CTL loans representing
14.02% of the Aggregate Cut-Off Date Balance.
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. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you.
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>
All information in this Term Sheet, whether regarding the assets backing any
securities discussed herein or otherwise, will be superseded by the information
contained in any final prospectus for any securities actually sold to you.
STRUCTURAL AND COLLATERAL TERM SHEET
- --------------------------------------------------------------------------------
DISTRIBUTION OF MORTGAGE INTEREST RATES (a)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Weighted
Average Weighted
Percentage of Weighted Remaining Average
Number of Aggregate Weighted Average Term to Cut-Off
Range of Mortgage Cut-Off Date Cut-Off Date Average Average Mortgage Maturity Date LTV
Mortgage Rates Loans Balance Balance Cut-Off Date DSCR Rate (mos) Ratio
Balance
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6.001 - 6.250 2 $7,576,430 0.77% $3,788,215 1.68x 6.250% 116.8 67.29%
6.501 - 6.750 2 102,386,967 10.41 51,193,483 1.61 6.564 119.8 62.50
6.751 - 7.000 13 131,759,887 13.40 10,135,376 1.52 6.798 121.9 68.11
7.001 - 7.250 10 176,115,559 17.91 17,611,556 1.27 7.150 153.5 70.26
7.251 - 7.500 17 111,026,884 11.29 6,530,993 1.39 7.403 167.1 72.85
7.501 - 7.750 22 178,297,261 18.13 8,104,421 1.38 7.641 119.6 70.49
7.751 - 8.000 38 192,941,383 19.62 5,077,405 1.28 7.888 127.1 67.56
8.001 - 9.000 17 63,706,402 6.48 3,747,435 1.35 8.256 131.0 65.70
9.001 or greater 1 19,656,135 2.00 19,656,135 NAP 9.030 263.0 NAP
--- ------------ ------ ---------- ---- ----- ----- -----
Total/Wtd. Avg. 122 $983,466,908 100.00% $8,061,204 1.40x 7.407% 136.4 68.31%
=== ============ ====== ========== ==== ===== ===== =====
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The DSCR and LTV information does not reflect the 8 CTL loans representing
14.02% of the Aggregate Cut-Off Date Balance.
- ------------------------------------------------------------------------------
DISTRIBUTION OF REMAINING AMORTIZATION TERMS (a)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Weighted
Average Weighted
Percentage of Weighted Remaining Average
Range of Remaining Number of Aggregate Weighted Average Term to Cut-Off
Amortization Terms Mortgage Cut-Off Date Cut-Off Date Average Average Mortgage Maturity Date LTV
(months) Loans Balance Balance Cut-Off Date DSCR Rate (mos) Ratio
Balance
- ------------------------------------------------------------------------------------------------------------------------------------
<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 12.97 12,754,408 1.36 7.373 202.7 63.93
241 - 300 22 109,088,029 11.09 4,958,547 1.34 7.792 139.4 66.93
301 - 360 86 638,582,387 64.93 7,425,377 1.38 7.477 125.4 69.81
361 - 380 2 102,392,794 10.41 51,196,397 1.60 6.582 117.0 62.81
--- ------------ ------ ---------- ---- ----- ----- -----
Total/Wtd. Avg. 122 $983,466,908 100.00% $8,061,204 1.40x 7.407% 136.4 68.31%
=== ============ ====== ========== ==== ===== ===== =====
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The DSCR and LTV information does not reflect the 8 CTL loans representing
14.02% of the Aggregate Cut-Off Date Balance.
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. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you.
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>
All information in this Term Sheet, whether regarding the assets backing any
securities discussed herein or otherwise, will be superseded by the information
contained in any final prospectus for any securities actually sold to you.
STRUCTURAL AND COLLATERAL TERM SHEET
- --------------------------------------------------------------------------------
DISTRIBUTION OF ORIGINAL TERMS TO MATURITY (a)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Weighted
Average Weighted
Percentage Weighted Remaining Average
Number of of Weighted Average Term to Cut-Off
Range of Original Terms Mortgage Cut-Off Date Aggregate Average Average DSCR Mortgage Maturity Date LTV
to Maturity (months) Loans Balance Cut-Off Cut-Off Date Rate (mos) Ratio
Date Balance Balance
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
101 - 120 101 $764,291,889 77.71% $7,567,246 1.38x 7.353% 117.0 69.19%
121 - 140 2 29,474,327 3.00 14,737,163 2.00 7.645 121.1 50.17
141 - 180 4 22,242,198 2.26 5,560,550 1.29 7.638 164.4 69.42
181 - 240 13 135,629,320 13.79 10,433,025 1.36 7.379 211.8 62.61
241 - 360 2 31,829,174 3.24 15,914,587 NAP 8.418 275.2 NAP
--- ------------ ------ ---------- ---- ----- ----- -----
Total/Wtd. Avg. 122 $983,466,908 100.00% $8,061,204 1.40x 7.407% 136.4 68.31%
=== ============ ====== ========== ==== ===== ===== =====
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The DSCR and LTV information does not reflect the 8 CTL loans representing
14.02% of the Aggregate Cut-Off Date Balance.
- -------------------------------------------------------------------------------
DISTRIBUTION OF REMAINING TERMS TO MATURITY (a)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Weighted
Average Weighted
Percentage Weighted Remaining Average
Range of Remaining Terms Number of of Weighted Average Term to Cut-Off
to Maturity (months) Mortgage Cut-Off Date Aggregate Average Average DSCR Mortgage Maturity Date LTV
Loans Balance Cut-Off Cut-Off Date Rate (mos) Ratio
Date Balance Balance
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
101 - 120 102 $790,767,895 80.41% $7,752,626 1.40x 7.363% 117.1 68.46%
121 - 140 1 2,998,321 0.30 2,998,321 1.25 7.820 131.0 74.96
141 - 180 4 22,242,198 2.26 5,560,550 1.29 7.638 164.4 69.42
181 - 240 13 135,629,320 13.79 10,433,025 1.36 7.379 211.8 62.61
241 - 360 2 31,829,174 3.24 15,914,587 NAP 8.418 275.2 NAP
--- ------------ ------ ---------- ---- ----- ----- -----
Total/Wtd. Avg. 122 $983,466,908 100.00% $8,061,204 1.40x 7.407% 136.4 68.31%
=== ============ ====== ========== ==== ===== ===== =====
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The DSCR and LTV information does not reflect the 8 CTL loans representing
14.02% of the Aggregate Cut-Off Date Balance.
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. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you.
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>
All information in this Term Sheet, whether regarding the assets backing any
securities discussed herein or otherwise, will be superseded by the information
contained in any final prospectus for any securities actually sold to you.
STRUCTURAL AND COLLATERAL TERM SHEET
- -------------------------------------------------------------------------------
DISTRIBUTION OF AMORTIZATION TYPES (a)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Weighted
Percentage Average Weighted
of Weighted Remaining Average
Number of Aggregate Average Average Term to Cut-Off
Mortgage Cut-Off Date Cut-Off Cut-Off Date Weighted Mortgage Maturity Date LTV
Amortization Type Loans Balance Date Balance Balance Average DSCR Rate (mos) Ratio
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balloon 110 $785,906,572 79.91% $7,144,605 1.33x 7.472% 134.4 70.86%
Fully Amortizing 8 48,712,238 4.95 6,089,030 1.40 7.671 226.1 54.44
Hyperamortizing 4 148,848,098 15.14 37,212,025 1.68 6.972 117.8 58.69
--- ------------ ------ ---------- ---- ----- ----- -----
Total/Wtd. Avg. 122 $983,466,908 100.00% $8,061,204 1.40x 7.407% 136.4 68.31
=== ============ ====== ========== ==== ===== ===== =====
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The DSCR and LTV information does not reflect the 8 CTL loans representing
14.02% of the Aggregate Cut-Off Date Balance.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
DISTRIBUTION OF PREPAYMENT PROVISIONS (a)
- -------------------------------------------------------------------------------
Weighted
Average Weighted
Percentage Weighted Remaining Average
Number of of Aggregate Weighted Average Term to Cut-Off
Mortgage Cut-Off Date Cut-Off Date Average Cut-Off Average Mortgage Maturity Date LTV
Prepayment Provision Loans Balance Balance Date Balance DSCR Rate (mos) Ratio
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Lockout/Defeasance 122 $983,466,908 100.00% $8,061,204 1.40x 7.407% 136.4 68.31%
--- ------------ ------ ---------- ---- ----- ----- -----
Total/Wtd. Avg. 122 $983,466,908 100.00% $8,061,204 1.40x 7.407% 136.4 68.31%
=== ============ ====== ========== ==== ===== ===== =====
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The DSCR and LTV information does not reflect the 8 CTL loans representing
14.02% of the Aggregate Cut-Off Date Balance.
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. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you.
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>
All information in this Term Sheet, whether regarding the assets backing any
securities discussed herein or otherwise, will be superseded by the information
contained in any final prospectus for any securities actually sold to you.
<TABLE>
<CAPTION>
STRUCTURAL AND COLLATERAL TERM SHEET
- ------------------------------------------------------------------------------------------------------------------------------------
PREPAYMENT PROFILE
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
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 122 122 122 122 122 122 122 122 122 122
UPB ($MM) 983.5 974.4 963.4 951.1 937.9 923.5 907.2 889.6 870.7 850.5
% of Initial UPB 100.00% 99.08% 97.96% 96.71% 95.37% 93.90% 92.24% 90.46% 88.54% 86.48%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
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 15.01% 13.90% 12.23% 11.27% 10.23% 8.75% 7.54% 3.88% 3.24% 2.63%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Table calculated using modeling assumptions.
(b) Differences in totals may exist due to rounding.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
PREPAYMENT PROVISION
- ---------------------------------------------------------------------------------------------------------------
Weighted Weighted
Average Average
Percentage of Remaining Remaining
Range of Number of Aggregate Lockout Term to
Remaining Terms to Mortgage Cut-Off Date Cut-Off Date Average Period Maturity
Stated Maturity (Years) Loans Balance Balance Cut-Off Date (Years) (Years)
(a) Balance
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
9.0 - 9.9 101 $764,291,889 77.7% $7,567,246 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 7.4 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 5.5 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: 122 $983,466,908 100.0% $8,061,204 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. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you.
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>
All information in this Term Sheet, whether regarding the assets backing any
securities discussed herein or otherwise, will be superseded by the information
contained in any final prospectus for any securities actually sold to you.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
COLLATERAL TERM SHEET
PREIT PORTFOLIO
- -----------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------ --------------------------------------------------------------
Loan Information Property Information
- ------------------------------------------------------------------ --------------------------------------------------------------
Original Cut-Off Date Single Asset/Portfolio: Portfolio of 8 assets
-------- ------------
<S> <C> <C> <C> <C>
Principal Balance (a): $108,000,000 $107,920,483 Property Type: Multifamily
% of Pool by UPB 10.97% Location: Florida, Maryland, Ohio and
Pennsylvania.
Note Date: April 13, 1999
Years Built: 1928 to 1990
Interest Rate: All at 6.77%
8 multifamily complexes located
The Collateral: in various states.
Amortization: 30 years
Maturity Date: May 10, 2009 Property Management: An affiliate of the borrower.
Principal/Sponsor: 6 separate special purpose entities Current Occupancy (range of
and 2 other borrowing entities rent rolls 1/31/99 -
affiliated with the Pennsylvania Real 3/31/99): Varies from 89% to 97%
Estate Investment Trust (PREIT) and
Ronald Rubin. Underwritten Net Cash Flow: $13,332,915
Call Protection: Prepayment lockout; U.S. Treasury Appraised Value: $160,950,000
defeasance permitted as of the 2 year
anniversary of REMIC securitization. Appraisal Date: All completed in March 1999
Cross-Collateralization/
Default: No/No Cut-Off Date Loan/Unit: $32,953
Cut-Off Date LTV: 67.45%
Additional Financing: None.
Balloon LTV: 57.75%
UWNCF DSCR: 1.57x
----------------------------------------------------------------- --------------------------------------------------------------
</TABLE>
(a) 8 loans with affiliated borrowers make up this group of loans.
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 Pompano Beach, FL 13,839,803 62.06 1.56
Apartments
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. Philadelphia, PA 5,945,612 70.78 1.58
Apartments
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. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you.
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>
All information in this Term Sheet, whether regarding the assets backing any
securities discussed herein or otherwise, will be superseded by the information
contained in any final prospectus for any securities actually sold to you.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
COLLATERAL TERM SHEET
QUEENS CENTER RETAIL
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------ --------------------------------------------------------------
Loan Information Property Information
- ------------------------------------------------------------------ --------------------------------------------------------------
Single Asset/Portfolio: Single Asset
Original Cut-Off Date
-------- ------------
<S> <C> <C> <C> <C>
Principal Balance: $100,000,000 $100,000,000 Property Type: Retail
% of Pool by UPB 10.17% Location: Elmhurst, New York
Note Date: February 4,1999 Years Built/Renovated: 1973 / 1990
Interest Rate: 6.56% The Collateral: An urban shopping mall of
approximately 73 in-line stores,
Amortization: 378 months food court and kiosks containing
156,194 square feet and a
ARD Date: March 1, 2009 parking garage. The mall is
located in the Elmhurst section
Principal/Sponsor: Macerich Queen Limited Partnership, of the Borough of Queens, New
a special purpose entity affiliated York. The mall is anchored by
with the Macerich Company (REIT). Macy's and JC Penney who own and
maintain their own buildings.
Call Protection: Prepayment lockout; U.S. Treasury The Macy's and JC Penney's
defeasance permitted as of the 2 year buildings are not part of the
anniversary of REMIC securitization. collateral.
Property Management: An affiliate of the borrower.
Cross-Collateralization/
Default: No/No Occupancy (11/30/98): 100%
Additional Financing: Up to $2 Million permitted in the form Underwritten Net Cash Flow: $12,209,304
of subordinate financing subject to
certain conditions 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
- ------------------------------------------------------------------ --------------------------------------------------------------
</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. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you.
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>
All information in this Term Sheet, whether regarding the assets backing any
securities discussed herein or otherwise, will be superseded by the information
contained in any final prospectus for any securities actually sold to you.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
COLLATERAL TERM SHEET
INGRAM MICRO HEADQUARTERS
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------ --------------------------------------------------------------
Loan Information Property Information
- ------------------------------------------------------------------ ----------------------------------------------------------------
Original Cut-Off Date
-------- ------------ Single Asset/Portfolio: Portfolio of 3 office buildings
<S> <C> <C> <C> <C>
Principal Balance: $72,880,000 $72,640,816
Property Type: Office
% of Pool by UPB 7.39%
Location: Santa Ana, California
Note Date: December 30, 1998 for both loans
Years Built: From 1991 to 1998
Interest Rate: 7.18% for both loans
The Collateral: The Ingram Micro Headquarters
Amortization: 243 months complex consists of three office
buildings totaling 567,790 square
Maturity Date: July 10, 2015 feet. 1600 East St. Andrews Place
consists of a total of 191,890
Principal/Sponsor: 2 separate special purpose entities. square feet built over stages from
1992 until 1998. 1610 East St.
Call Protection: Prepayment lockout; U.S. Treasury Andrews Place consists of a total
defeasance permitted as of the 2 year of 204,570 square feet also built
anniversary of REMIC securitization. over stages from 1992 until 1998.
These two properties are the
Cross-Collateralization/ collateral for the loan of
Default: No/No $50,890,000. 1700 East St.
Andrews Place was built in 1991
Additional Financing: None but renovated in 1995 and consists
of 171,330 square feet. This
Tenant Rating property is the collateral for the
Information: The tenant has a senior debt rating of $21,990,000 loan.
BBB by S&P and BBB+ by Fitch. Moody's
senior implied rating is Baa3. Property Management: An affiliate of the borrower.
Lease and RVI Occupancy (12/1/98): 100%
Information: The Property is NNN leased to Ingram
Micro, Inc. expiring July 10, 2015. Underwritten Net Cash Flow: $5,800,000
The lease expiration is co-terminus with
the maturity date of each loan. The Appraised Value: $73,900,000
terms of the loan require a complete
cash sweep with rent remitted directly Appraisal Date: December 8, 1998 for both
to the servicer, GMACCM. Residual value properties
insurance has been obtained from R.V.I.
in the aggregate amount of $29,483,835 Cut-Off Date Loan/sf: $128
which is equal to the unamortized
principal balance at maturity and 40% Cut-Off Date LTV: 98.30%
of the original balance.
Balloon LTV: 39.90%
R.V.I.: R.V.I. has a claims-paying ability
rated A by S&P, and AA- by Duff & UWNCF DSCR: 1.00x
Phelps.
- ------------------------------------------------------------------ ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
LOAN DETAILS
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. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you.
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>
All information in this Term Sheet, whether regarding the assets backing any
securities discussed herein or otherwise, will be superseded by the information
contained in any final prospectus for any securities actually sold to you.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
COLLATERAL TERM SHEET
THE PALMER CENTER
- -----------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------ ----------------------------------------------------------------
Loan Information Property Information
- ------------------------------------------------------------------ ----------------------------------------------------------------
Original Cut-Off Date
-------- ------------ Single Asset/Portfolio: Single Asset
<S> <C> <C> <C> <C>
Principal Balance: $54,000,000 $53,769,239
Property Type: Office
Location: Colorado Springs, Colorado
% of Pool by UPB 5.47%
Years Built/Renovated: 1968 / 1990
Note Date: December 23, 1998
The Collateral: Three office buildings, a retail
Interest Rate: 7.03% arcade, and a parking garage
located within the Palmer
Amortization: 30 years Center. There are a total of
450,275 net rentable square feet
Maturity Date: January 10, 2009 of office space and 8,155 net
rentable square feet of retail
Principal/Sponsor: Palmer Center, Ltd., a single purpose space and a three and a four
entity. story subterranean 1,600-space
parking garage located beneath
Call Protection: Prepayment lockout; U.S. Treasury the buildings. In addition to
defeasance permitted as of the 2 year the earnout provision,
anniversary of REMIC securitization. approximately $2 million in the
form of cash escrows and/or
Cross-Collateralization/ No/No personal guarantees were
Default: provided to renew or re-tenant
the rolling space.
Additional Financing: None
Property Management: An affiliate of the borrower.
Earnout: Borrower has provided to Lender
unconditional letters of credit in Occupancy (12/9/98): 97%
the aggregate amount of $3,500,000
that will be reduced or eliminated Underwritten Net Cash Flow: $5,058,498
when certain spaces are
renewed/released and/or when a 1.25x Appraised Value: $67,500,000
DSCR is achieved.
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
- ------------------------------------------------------------------ ----------------------------------------------------------------
</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. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you.
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>
All information in this Term Sheet, whether regarding the assets backing any
securities discussed herein or otherwise, will be superseded by the information
contained in any final prospectus for any securities actually sold to you.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
COLLATERAL TERM SHEET
THE SQUAW PEAK LOAN
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------ ----------------------------------------------------------------
Loan Information Property Information
- ------------------------------------------------------------------ ----------------------------------------------------------------
Original Cut-Off Date Single Asset/Portfolio: Portfolio of 3 adjacent office
-------- ------------ buildings
<S> <C> <C> <C> <C>
Principal Balance: $36,000,000 $36,000,000
Property Type: Office
% of Pool by UPB 3.66%
Location: Phoenix, Arizona
Note Date: December 11, 1998
Years Built: 1985 / 1986 / 1987
Interest Rate: 7.80%
The Collateral: 3 adjacent office buildings
Amortization: 30 years containing 422,385 rentable square
feet. Pointe Corridor 1,
Maturity Date: December 10, 2008 constructed in 1986 at 7600 North
16th Street, contains 158,197
Principal/Sponsor: A single purpose entity. rentable square feet. Pointe
Corridor 2, constructed in 1985 at
Call Protection: Prepayment lockout; U.S. Treasury 7600 North 15th Street, contains
defeasance permitted as of the 2 year 110,146 rentable square feet.
anniversary of REMIC securitization. Pointe Corporate Center,
constructed in 1987 at 7500 North
Cross-Collateralization/ No/No Dreamy Draw Drive, contains
Default: 154,042 rentable square feet.
Additional Financing: None 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
- ------------------------------------------------------------------ ----------------------------------------------------------------
</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. All information in this Term Sheet, whether regarding the assets backing
any securities discussed herein or otherwise, will be superseded by the
information contained in any final prospectus for any securities actually sold
to you.
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>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
GMAC COMMERCIAL MORTGAGE SECU RITIES, 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.
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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
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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.
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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".
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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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<PAGE>
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
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significant governmental regulation of the ownership, operation, maintenance
and financing of health care institutions. Hotel and motel properties are often
operated pursuant to franchise, management or operating agreements that may be
terminable by the franchisor or operator, and the transferability of a hotel's
operating, liquor and other licenses upon a transfer of the hotel, whether
through purchase or foreclosure, is subject to local law requirements.
It is anticipated that some or all of the Mortgage Loans included in any
Trust Fund will be nonrecourse loans or loans for which recourse may be
restricted or unenforceable. As to any such Mortgage Loan, recourse in the
event of borrower default will be limited to the specific real property and
other assets, if any, that were pledged to secure the Mortgage Loan. However,
even with respect to those Mortgage Loans that provide for recourse against the
borrower and its assets generally, there can be no assurance that enforcement
of such recourse provisions will be practicable, or that the assets of the
borrower will be sufficient to permit a recovery in respect of a defaulted
Mortgage Loan in excess of the liquidation value of the related Mortgaged
Property. See "Certain Legal Aspects of Mortgage Loans--
Foreclosure--Anti-Deficiency Legislation".
Further, the concentration of default, foreclosure and loss risks in
individual Mortgage Loans in a particular Trust Fund will generally be greater
than for pools of single-family loans because Mortgage Loans in a Trust Fund
will generally consist of a smaller number of higher balance loans than would a
pool of single-family loans of comparable aggregate unpaid principal balance.
BALLOON PAYMENTS; BORROWER DEFAULT
Certain of the Mortgage Loans included in a Trust Fund may be
non-amortizing or only partially amortizing over their terms to maturity and,
thus, will require substantial payments of principal and interest (that is,
balloon payments) at their stated maturity. Mortgage Loans of this type involve
a greater likelihood of default than self-amortizing loans because the ability
of a borrower to make a balloon payment typically will depend upon its ability
either to refinance the loan or to sell the related Mortgaged Property. The
ability of a borrower to accomplish either of these goals will be affected by a
number of factors, including the value of the related Mortgaged Property, the
level of available mortgage rates at the time of sale or refinancing, the
borrower's equity in the related Mortgaged Property, the financial condition
and operating history of the borrower and the related Mortgaged Property, tax
laws, rent control laws (with respect to certain residential properties),
Medicaid and Medicare reimbursement rates (with respect to hospitals and
nursing homes), prevailing general economic conditions and the availability of
credit for loans secured by multifamily or commercial, as the case may be, real
properties generally. Neither the Depositor nor any of its affiliates will be
required to refinance any Mortgage Loan.
If and to the extent described herein and in the related Prospectus
Supplement, in order to maximize recoveries on defaulted Mortgage Loans, the
Master Servicer or a Special Servicer will be permitted (within prescribed
limits) to extend and modify Mortgage Loans that are in default or as to which
a payment default is imminent. See "The Pooling and Servicing
Agreements--Realization upon Defaulted Mortgage Loans". While a Master Servicer
or a Special Servicer generally will be required to determine that any such
extension or modification is reasonably likely to produce a greater recovery
than liquidation, taking into account the time value of money, there can be no
assurance that any such extension or modification will in fact increase the
present value of receipts from or proceeds of the affected Mortgage Loans.
LEASES AND RENTS
Each Mortgage Loan included in any Trust Fund secured by Mortgaged
Property that is subject to leases typically will be secured by an assignment
of leases and rents pursuant to which the borrower assigns to the lender its
right, title and interest as landlord under the leases of the related Mortgaged
Property, and the income derived therefrom, as further security for the related
Mortgage Loan, while retaining a license to collect rents for so long as there
is no default. If the borrower defaults, the license terminates and the lender
is entitled to collect rents. Some state laws may require that the lender take
possession of the Mortgaged 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
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a foreclosure of the related Senior Liens to satisfy fully both the Senior
Liens and the Mortgage Loan. In the event that a holder of a Senior Lien
forecloses on a Mortgaged Property, the proceeds of the foreclosure or similar
sale will be applied first to the payment of court costs and fees in connection
with the foreclosure, second to real estate taxes, third in satisfaction of all
principal, interest, prepayment or acceleration penalties, if any, and any
other sums due and owing to the holder of the Senior Liens. The claims of the
holders of the Senior Liens will be satisfied in full out of proceeds of the
liquidation of the related Mortgage Property, if such proceeds are sufficient,
before the Trust Fund as holder of the junior lien receives any payments in
respect of the Mortgage Loan. If the Master Servicer were to foreclose on any
Mortgage Loan, it would do so subject to any related Senior Liens. In order for
the debt related to such Mortgage Loan to be paid in full at such sale, a
bidder at the foreclosure sale of such Mortgage Loan would have to bid an
amount sufficient to pay off all sums due under the Mortgage Loan and any
Senior Liens or purchase the Mortgaged Property subject to such Senior Liens.
In the event that such proceeds from a foreclosure or similar sale of the
related Mortgaged Property are insufficient to satisfy all Senior Liens and the
Mortgage Loan in the aggregate, the Trust Fund, as the holder of the junior
lien, and, accordingly, holders of one or more classes of the Certificates of
the related series bear (i) the risk of delay in distributions while a
deficiency judgment against the borrower is obtained and (ii) the risk of loss
if the deficiency judgment is not realized upon. Moreover, deficiency judgments
may not be available in certain jurisdictions or the Mortgage Loan may be
nonrecourse.
If so specified in the related Prospectus Supplement, Mortgage Assets for
a series of Certificates may include Mortgage Loans made on the security of
real estate projects under construction. In that case, the related Prospectus
Supplement will describe the procedures and timing for making disbursements
from construction reserve funds as portions of the related real estate project
are completed. In addition, the Mortgage Assets for a particular series of
Certificates may include Mortgage Loans that are delinquent or non-performing
as of the date such Certificates are issued. In that case, the related
Prospectus Supplement will set forth, as to each such Mortgage Loan, available
information as to the period of such delinquency or non-performance, any
forbearance arrangement then in effect, the condition of the related Mortgaged
Property and the ability of the Mortgaged Property to generate income to
service the mortgage debt.
Default and Loss Considerations with Respect to the Mortgage
Loans. Mortgage loans secured by liens on income-producing properties are
substantially different from loans made on the security of owner-occupied
single-family homes. The repayment of a loan secured by a lien on an
income-producing property is typically dependent upon the successful operation
of such property (that is, its ability to generate income). Moreover, some or
all of the Mortgage Loans included in a particular Trust Fund may be
non-recourse loans, which means that, absent special facts, recourse in the
case of default will be limited to the Mortgaged Property and such other
assets, if any, that were pledged to secure repayment of the Mortgage Loan.
Lenders typically look to the Debt Service Coverage Ratio of a loan
secured by income-producing property as an important factor in evaluating the
likelihood of default on such a loan. Unless otherwise defined in the related
Prospectus Supplement, the "Debt Service Coverage Ratio," "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,
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12 times the monthly payment in effect at the end of such period. The
Underwritten Cash Flow of a Mortgaged Property will generally fluctuate over
time and may or may not be sufficient to cover debt service on the related
Mortgage Loan at any given time. As the primary source of the operating
revenues of a non-owner occupied, income-producing property, rental income
(and, with respect to a Mortgage Loan secured by a Cooperative apartment
building, maintenance payments from tenant-stockholders of a Cooperative) may
be affected by the condition of the applicable real estate market and/or area
economy. In addition, properties typically leased, occupied or used on a
short-term basis, such as certain health care-related facilities, hotels and
motels, and mini-warehouse and self-storage facilities, tend to be affected
more rapidly by changes in 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.
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Although there may be multiple methods for determining the value of a
Mortgaged Property, value will in all cases be affected by property
performance. As a result, if a Mortgage Loan defaults because the income
generated by the related Mortgaged Property is insufficient to cover operating
costs and expenses and pay debt service, then the value of the Mortgaged
Property will reflect such and a liquidation loss may occur.
While the Depositor believes that the foregoing considerations are
important factors that generally distinguish loans secured by liens on
income-producing real estate from single-family mortgage loans, there can be no
assurance that all of such factors will in fact have been prudently considered
by the Originators of the Mortgage Loans, or that, for a particular Mortgage
Loan, they are complete or relevant. See "Risk 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
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of the nature described above will be provided in the related Prospectus
Supplement, and specific information will be set forth in a report which will
be available to purchasers of those Certificates at or before the initial
issuance thereof and will be filed as part of a Current Report on Form 8-K with
the Commission within fifteen days following such issuance.
MBS
MBS may include (i) private-label (that is, not guaranteed or insured by
the United States or any agency or instrumentality thereof) mortgage
participations, mortgage pass-through certificates or other mortgage-backed
securities or (ii) certificates insured or guaranteed by the Federal Home Loan
Mortgage Corporation ("FHLMC"), the Federal National Mortgage Association
("FNMA"), the Governmental National 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".
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CREDIT SUPPORT
If so provided in the Prospectus Supplement for a series of Certificates,
partial or full protection against certain defaults and losses on the Mortgage
Assets in the related Trust Fund may be provided to one or more classes of
Certificates of such series in the form of subordination of one or more other
classes of Certificates of such series or by one or more other types of credit
support, such as a letter of credit, insurance policy, guarantee or reserve
fund, among others, or a combination thereof. The amount and types of Credit
Support, the identification of the entity providing it (if applicable) and
related information with respect to each type of Credit Support, if any, will
be set forth in the Prospectus Supplement for a series of Certificates. See
"Risk Factors--Credit Support Limitations" and "Description of Credit Support".
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.
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CERTAIN SHORTFALLS IN COLLECTIONS OF INTEREST
When a principal prepayment in full or in part is made on a Mortgage Loan,
the borrower is generally charged interest on the amount of such prepayment
only through the date of such prepayment, instead of through the Due Date for
the next succeeding scheduled payment. However, interest accrued on any series
of Certificates and distributable thereon on any Distribution Date will
generally correspond to interest accrued on the Mortgage Loans to their
respective Due Dates during the related Due Period. Unless otherwise specified
in the Prospectus Supplement for a series of Certificates, a "Due Period" will
be a specified time period (generally running from the second day of one month
to the first day of the next month, inclusive) and all scheduled payments on
the Mortgage Loans in the related Trust Fund that are due during a given Due
Period 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,
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the yield on such Stripped Interest Certificates will be inversely related to
the rate at which payments and other collections of principal are received on
such Mortgage Assets or distributions are made in reduction of the Certificate
Balances of such classes of Certificates, as the case may be.
Consistent with the foregoing, if a class of Certificates of any series
consists of Stripped Interest Certificates or Stripped Principal Certificates,
a lower than anticipated rate of principal prepayments on the Mortgage Loans in
the related Trust Fund will negatively affect the yield to investors in
Stripped Principal Certificates, and a higher than anticipated rate of
principal prepayments on such Mortgage Loans will negatively affect the yield
to investors in Stripped Interest Certificates. If the Offered Certificates of
a series include any such Certificates, the related Prospectus Supplement will
include a table showing the effect of 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
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due to default and purchases of Mortgage Loans out of the related Trust Fund),
is paid to such class. Prepayment rates on loans are commonly measured relative
to a prepayment standard or model, such as the Constant Prepayment Rate ("CPR")
prepayment model or the Standard Prepayment Assumption ("SPA") prepayment
model. CPR represents an assumed constant rate of prepayment each month
(expressed as an annual percentage) relative to the then outstanding principal
balance of a pool of loans for the life of such loans. SPA represents an
assumed variable rate of prepayment each month (expressed as an annual
percentage) relative to the then outstanding principal balance of a pool of
loans, with different prepayment assumptions often expressed as percentages of
SPA. For example, a prepayment assumption of 100% of SPA assumes prepayment
rates of 0.2% per annum of the then outstanding principal balance of such loans
in the first month of the life of the loans and an additional 0.2% per annum in
each month thereafter until the thirtieth month. 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
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respective classes of Certificates of the related series. The portion of any
Mortgage Loan negative amortization allocated to a class of Certificates may
result in a deferral of some or all of the interest payable thereon, which
deferred interest may be added to the Certificate Balance thereof. Accordingly,
the weighted average lives of Mortgage Loans that permit negative amortization
(and that of the classes of Certificates to which any such negative
amortization would be allocated or that would bear the effects of a slower rate
of amortization on such Mortgage Loans) may increase as a result of such
feature.
Negative amortization also may occur in respect of an ARM Loan that (i)
limits the amount by which its scheduled payment may adjust in response to a
change in its Mortgage Rate, (ii) provides that its scheduled payment will
adjust less frequently than its Mortgage Rate or (iii) provides for constant
scheduled payments 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
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classes of Accrual Certificates, (ii) Excess Funds or (iii) any other amounts
described in the related Prospectus Supplement. Unless otherwise specified in
the related Prospectus Supplement, "Excess Funds" will, in general, represent
that portion of the amounts distributable in respect of the Certificates of any
series on any Distribution Date that represent (i) interest received or
advanced on the Mortgage Assets in the related Trust Fund that is in excess of
the interest currently accrued on the Certificates of such series, or (ii)
Prepayment Premiums, payments from Equity Participations or any other amounts
received on the Mortgage Assets in the related Trust Fund that do not
constitute interest thereon or principal thereof.
The amortization of any class of Certificates out of the sources described
in the preceding paragraph would shorten the weighted average life of such
Certificates and, if such Certificates were purchased at a 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
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that any Prepayment Interest Shortfalls, as described under "Yield and Maturity
Considerations--Certain Shortfalls in Collections of Interest", exceed the
amount of any sums that are applied to offset the amount of such shortfalls.
The particular manner in which such shortfalls will be allocated among some or
all of the classes of Certificates of that series will be specified in the
related Prospectus Supplement. The related Prospectus Supplement will also
describe the extent to which the amount of Accrued Certificate Interest that is
otherwise distributable on (or, in the case of Accrual Certificates, that may
otherwise be added to the Certificate Balance of) a class of Offered
Certificates may be reduced as a result of any other contingencies, including
delinquencies, losses and deferred interest on or in respect of the Mortgage
Assets in the related Trust Fund. Unless otherwise provided in the related
Prospectus Supplement, any reduction in the amount of Accrued Certificate
Interest otherwise distributable on a class of Certificates by reason of the
allocation to such class of a portion of any deferred interest on or in respect
of the Mortgage Assets in the related Trust Fund will result 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.
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REPORTS TO CERTIFICATEHOLDERS
On each Distribution Date, together with the distribution to the holders
of each class of the Offered Certificates of a series, a Master Servicer,
Manager or Trustee, as provided in the related Prospectus Supplement, will
forward to each such holder, a statement (a "Distribution Date Statement")
that, unless otherwise provided in the related Prospectus Supplement, will set
forth, among other things, in each case to the extent applicable:
(i) the amount of such distribution to holders of such class of Offered
Certificates that was applied to reduce the Certificate Balance thereof;
(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
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(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.
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
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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.
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
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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 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
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be issued. The Prospectus Supplement for a series of Certificates will describe
any provision of the related Pooling and Servicing Agreement that materially
differs from the description thereof contained in this Prospectus and, if the
related Trust Fund includes MBS, will summarize all of the material provisions
of the related Pooling and Servicing Agreement. The summaries herein do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all of the provisions of the Pooling and Servicing Agreement
for each series of Certificates and the description of such provisions in the
related Prospectus Supplement. The Depositor will provide a copy of the Pooling
and Servicing Agreement (without exhibits) that relates to any series of
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
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recording office, except in states where, in the opinion of counsel acceptable
to the Trustee, such recording is not required to protect the Trustee's
interests in the Mortgage Loan against the claim of any subsequent transferee
or any successor to or creditor of the Depositor or the originator of such
Mortgage Loan.
The Trustee (or a custodian appointed by the Trustee) for a series of
Certificates will be required to review the Mortgage Loan documents delivered
to it within a specified period of days after receipt thereof, and the Trustee
(or such custodian) will hold such documents in trust for the benefit of the
Certificateholders of such series. Unless otherwise specified in the related
Prospectus Supplement, if any such document is found to be missing or
defective, and such omission or defect, as the case may be, materially and
adversely affects the 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
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the Certificateholders of the related series. If such Warranting Party cannot
cure such breach within a specified period following the date on which it was
notified of such breach, then, unless otherwise provided in the related
Prospectus Supplement, it will be obligated to repurchase such Mortgage Loan
from the Trustee at the applicable Purchase Price. If so provided in the
Prospectus Supplement for a series of Certificates, a Warranting Party, in lieu
of repurchasing a Mortgage Loan as to which a breach has occurred, will have
the option, exercisable upon certain conditions and/or within a specified
period after initial issuance of such series of Certificates, to replace such
Mortgage Loan with one or more other mortgage loans, in accordance with
standards that will be described in the Prospectus Supplement. Unless otherwise
specified in the related Prospectus Supplement, this repurchase or substitution
obligation will constitute the sole remedy available to holders of the
Certificates of any series or to the related Trustee on their behalf for a
breach of representation and warranty by a 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
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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 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
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payments; supervising foreclosures; negotiating modifications; conducting
property inspections on a periodic or other basis; managing (or overseeing the
management of) Mortgaged Properties acquired on behalf of such Trust Fund
through foreclosure, deed-in-lieu of foreclosure or otherwise (each, an "REO
Property"); and maintaining servicing records relating to such Mortgage Loans.
Unless otherwise specified in the related Prospectus Supplement, the Master
Servicer will be responsible for filing and settling claims in respect of
particular Mortgage Loans under any applicable instrument of Credit Support.
See "Description of Credit Support".
SUB-SERVICERS
A Master Servicer may delegate its servicing obligations in respect of the
Mortgage Loans serviced thereby to one or more third-party servicers (each, a
"Sub-Servicer"); provided that, unless otherwise specified in the related
Prospectus Supplement, such Master Servicer will remain obligated under the
related Pooling and Servicing Agreement. A Sub-Servicer for any series of
Certificates may be an affiliate of the Depositor or Master Servicer. Unless
otherwise provided in the related Prospectus Supplement, each sub-servicing
agreement between a Master Servicer and a Sub-Servicer (a "Sub-Servicing
Agreement") will 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
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Servicer or Mortgage Asset Seller or with a depository institution that is an
affiliate of any of the foregoing or of the Depositor, provided that it
complies with applicable Rating Agency standards. If permitted by the
applicable Rating Agency or Agencies, a Certificate Account may contain funds
relating to more than one series of mortgage pass-through certificates and may
contain other funds representing payments on mortgage loans owned by the
related Master Servicer or Special Servicer (if any) or serviced by either on
behalf of others.
Deposits. Unless otherwise provided in the related Pooling and Servicing
Agreement and described in the related Prospectus Supplement, the following
payments and collections received or made by the Master Servicer, the Trustee
or any Special Servicer subsequent to the Cut-off Date (other than payments due
on or before the Cut-off Date) are to be deposited in the Certificate Account
for each Trust Fund that includes Mortgage Loans, within a certain period
following receipt (in the case of collections on or in respect of the Mortgage
Loans) or otherwise as provided in the related Pooling and Servicing Agreement:
(i) all payments on account of principal, including principal
prepayments, on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans, including
any default interest collected, in each case net of any portion thereof
retained by the Master Servicer or any Special Servicer as its servicing
compensation or as compensation to the Trustee;
(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
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(xi) any other amounts required to be deposited in the Certificate
Account as provided in the related Pooling and Servicing Agreement and
described in the related Prospectus Supplement.
Withdrawals. Unless otherwise provided in the related Pooling and
Servicing Agreement and described in the related Prospectus Supplement, a
Master Servicer, Trustee or Special Servicer may make withdrawals from the
Certificate Account for each Trust Fund that includes Mortgage Loans for any of
the following purposes:
(i) to make distributions to the Certificateholders on each Distribution
Date;
(ii) to pay the Master Servicer or a Special Servicer any servicing fees
not previously retained thereby, such payment to be made out of payments
and other collections of interest on the particular Mortgage Loans as to
which such fees were earned;
(iii) to reimburse the Master Servicer, a Special Servicer or any other
specified person for unreimbursed advances of delinquent scheduled payments
of principal and interest made by it, and certain unreimbursed servicing
expenses incurred by it, with respect to Mortgage Loans in the Trust Fund
and properties acquired in respect thereof, such reimbursement to be made
out of amounts that represent late payments collected on the particular
Mortgage Loans, Liquidation Proceeds, Condemnation Proceeds and Insurance
Proceeds collected on the particular Mortgage Loans and properties, and net
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;
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(xi) if one or more elections have been made to treat the Trust Fund or
designated portions thereof as a REMIC, to pay any federal, state or local
taxes imposed on the Trust Fund or its assets or transactions, as and to
the extent described under "Certain Federal Income Tax Consequences--
REMICs--Prohibited Transactions Tax and Other Taxes";
(xii) to pay for the cost of various opinions of counsel obtained
pursuant to the related Pooling and Servicing Agreement for the benefit of
Certificateholders;
(xiii) to make any other withdrawals permitted by the related Pooling and
Servicing Agreement and described in the related Prospectus Supplement; and
(xiv) to clear and terminate the Certificate Account upon the termination
of the Trust Fund.
REALIZATION UPON DEFAULTED MORTGAGE LOANS
If a default on a Mortgage Loan has occurred or, in the Master Servicer's
judgment, a payment default is imminent, the Master Servicer, on behalf of the
Trustee, may at any time institute foreclosure proceedings, exercise any power
of sale contained in the related Mortgage, obtain a deed in lieu of
foreclosure, or otherwise acquire title to the related Mortgaged Property, by
operation of law or otherwise. Unless otherwise specified in the related
Prospectus Supplement, the Master Servicer may not, however, acquire title to
any Mortgaged Property, have a receiver of rents appointed with respect to any
Mortgaged Property or take any other action with respect to any Mortgaged
Property that would cause the Trustee, for the benefit of the related series of
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
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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.
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
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Account. The Pooling and Servicing Agreement may provide that the Master
Servicer may satisfy its obligation to cause each borrower to maintain such a
hazard insurance policy by maintaining a blanket policy insuring against hazard
losses on all of the Mortgage Loans in a Trust Fund. If such blanket policy
contains a deductible clause, the Master Servicer will be required, in the
event of a casualty covered by such blanket policy, to deposit in the related
Certificate Account all additional sums that would have been deposited therein
under an individual policy but were not because of such deductible clause.
In general, the standard form of fire and extended coverage policy covers
physical damage to or destruction of the improvements of the property by fire,
lightning, explosion, smoke, windstorm and hail, and riot, strike and civil
commotion, subject to the conditions and exclusions specified in each policy.
Although the policies covering the Mortgaged Properties will be underwritten by
different insurers under different state laws in accordance with different
applicable state forms, and therefore will not contain identical terms and
conditions, most such policies typically do not cover any physical damage
resulting from war, revolution, governmental actions, floods and other
water-related causes, earth movement (including earthquakes, landslides and
mudflows), wet or dry rot, vermin and domestic animals. Accordingly, a
Mortgaged Property may not be insured for losses arising from any such cause
unless the related Mortgage specifically requires, or permits the holder
thereof to require, such coverage.
The hazard insurance policies covering the Mortgaged Properties will
typically contain co-insurance clauses that in effect require an insured at all
times to carry insurance of a specified percentage (generally 80% to 90%) of
the full replacement value of the improvements on the property in order to
recover the full amount 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
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interest or other income that may be earned on funds held in the Certificate
Account. Any Sub-Servicer will receive a portion of the Master Servicer's
compensation as its sub-servicing compensation.
In addition to amounts payable to any Sub-Servicer, a Master Servicer may
be required, to the extent provided in the related Prospectus Supplement, to
pay from amounts that represent its servicing compensation certain expenses
incurred in connection with the administration of the related Trust Fund,
including, without limitation, payment of the fees and disbursements of
independent accountants, payment of fees and disbursements of the Trustee and
any custodians appointed thereby and payment of expenses incurred in connection
with distributions and reports to Certificateholders. Certain other expenses,
including certain expenses related to Mortgage Loan defaults and liquidations
and, to the extent so provided in the related Prospectus Supplement, interest
on such expenses at the rate specified therein, and the fees of any Special
Servicer, may be required to be borne by the Trust Fund.
EVIDENCE AS TO COMPLIANCE
Each Pooling and Servicing Agreement will provide that on or before a
specified date in each year, beginning the first such date that is at least a
specified number of months after the Cut-off Date, a firm of independent public
accountants will furnish a statement to the related Trustee to the effect that,
on the basis of an examination by such firm conducted substantially in
compliance with the Uniform Single 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.
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Unless otherwise specified in the related Prospectus Supplement, each
Pooling and Servicing Agreement will also provide that, except as set forth
below, neither the Master Servicer, the Depositor, nor any director, officer,
employee or agent of the Master Servicer or the Depositor will be under any
liability to the Trust Fund or the Certificateholders for any action taken or
for refraining from the taking of any action in good faith pursuant to the
Pooling and Servicing Agreement, or for errors in judgment; provided, however,
that neither the Master Servicer, the Depositor, nor any such person will be
protected against any liability which would otherwise be imposed by reason of
willful misfeasance, bad faith or negligence in the performance of duties or by
reason of reckless disregard of obligations and duties thereunder. Unless
otherwise specified in the related Prospectus Supplement, each Pooling and
Servicing Agreement will further provide that the Master Servicer, the
Depositor, and any director, officer, employee or agent of the Master Servicer
or the Depositor is entitled to indemnification by the Trust Fund and will be
held harmless against any loss, liability or expense incurred in connection
with any legal action relating to the Pooling and Servicing Agreement or the
related series of Certificates, other than any loss, liability or expense
related to any specific Mortgage Loan or Mortgage Loans (except any such loss,
liability or expense otherwise reimbursable pursuant to the Pooling and
Servicing Agreement) and any loss, liability or expense incurred by reason of
willful misfeasance, bad faith or negligence in the performance of duties
thereunder or by reason of reckless disregard of obligations and duties
thereunder. In addition, each Pooling and Servicing Agreement will provide that
neither the Master Servicer nor the Depositor will be under any obligation to
appear in, prosecute or defend any legal or administrative action that is not
incidental to its respective duties under the Pooling and Servicing Agreement
and which in its opinion may involve it in any expense or liability. The Master
Servicer or the Depositor may, however, in its discretion undertake any such
action which it may deem necessary or desirable with respect to the Pooling and
Servicing Agreement and the rights and duties of the parties thereto and the
interests of the Certificateholders thereunder. In such event, the legal
expenses and costs of such action and any liability resulting therefrom will 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
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than 25% of the aggregate Percentage Interests constituting such class; and
(iii) certain events of insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings regarding the Master Servicer and
certain actions by the Master Servicer indicating its insolvency or inability
to pay its obligations. Material variations to the foregoing Events of Default
(other than to add thereto or to make them more restrictive) will be specified
in the related Prospectus Supplement. A default pursuant to the terms of any
MBS included in any Trust Fund will not constitute an Event of Default under
the related Pooling and Servicing Agreement.
RIGHTS UPON EVENT OF DEFAULT
So long as an Event of Default remains unremedied, either the Depositor or
the Trustee may, and at the direction of the holders of Certificates evidencing
not less than 51% of the aggregate undivided interests (or, if so specified in
the related Prospectus Supplement, voting rights) in the related Trust Fund the
Trustee shall, by written notification to the Master Servicer and to the
Depositor or the Trustee, as applicable, terminate all of the rights and
obligations of the Master Servicer under the Pooling and Servicing Agreement
covering such Trust Fund and in and to the related Mortgage Loans and the
proceeds thereof (other than any rights of the Master Servicer as
Certificateholder and other than any rights of the Master Servicer to payment
and/or reimbursement for previously earned servicing fees and outstanding
advances), whereupon the Trustee or, upon notice to the Depositor and with the
Depositor's consent, its designee will succeed to all responsibilities, duties
and liabilities of the Master Servicer under such Pooling and Servicing
Agreement (other than the obligation to purchase Mortgage Loans under certain
circumstances) and will be entitled to similar compensation arrangements. In
the event that the Trustee would be obligated to succeed the Master Servicer
but is unwilling so to act, it may appoint (or if it is unable so to act, it
shall appoint) or petition a court of competent jurisdiction for the
appointment of, a FNMA- or FHLMC-approved mortgage servicing institution with a
net worth of at least $10,000,000 to act as successor to the Master Servicer
under the Pooling and Servicing Agreement (unless otherwise set forth in the
Pooling and Servicing Agreement). Pending such appointment, the Trustee is
obligated to act in such capacity. The Trustee and such successor may agree
upon 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
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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 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.
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Unless otherwise specified in the related Prospectus Supplement, the
Trustee for each series of Certificates will be entitled to indemnification,
from amounts held in the Certificate Account for such series, for any loss,
liability or expense incurred by the Trustee in connection with the Trustee's
acceptance or administration of its trusts under the related Pooling and
Servicing Agreement; provided, however, that such indemnification will not
extend to any loss liability or expense incurred by reason of willful
misfeasance, bad faith or negligence on the part of the Trustee in the
performance of its obligations and duties thereunder, or by reason of its
reckless disregard of such obligations or duties.
Unless otherwise specified in the related Prospectus Supplement, the
Trustee for each series of Certificates will be entitled to execute any of its
trusts or powers under the related Pooling and Servicing Agreement or perform
any of this duties thereunder either directly or by or through agents or
attorneys.
RESIGNATION AND REMOVAL OF THE TRUSTEE
The Trustee may resign at any time, in which event the Depositor will be
obligated to appoint a successor Trustee. The Depositor may also remove the
Trustee if the Trustee ceases to be eligible to continue as such under the
Pooling and Servicing Agreement or if the Trustee becomes insolvent. Upon
becoming aware of such circumstances, the Depositor will be obligated to
appoint a successor Trustee. The Trustee may also be removed at any time by the
holders of Certificates evidencing not less than 51% of the aggregate undivided
interests (or, if so specified in the related Prospectus Supplement, voting
rights) in the related Trust Fund. Any resignation or removal of the Trustee
and appointment of a successor Trustee will not become effective until
acceptance of the appointment by the successor Trustee.
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".
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SUBORDINATE CERTIFICATES
If so specified in the related Prospectus Supplement, one or more classes
of Certificates of a series may be Subordinate Certificates. To the extent
specified in the related Prospectus Supplement, the rights of the holders of
Subordinate Certificates to receive distributions from the Certificate Account
on any Distribution Date will be subordinated to the corresponding rights of
the holders of Senior Certificates. If so provided in the related Prospectus
Supplement, the subordination of a class may apply only in the event of certain
types of losses or shortfalls. The related Prospectus Supplement will set forth
information concerning the method and amount of subordination provided by a
class or classes of Subordinate Certificates in a series and the circumstances
under which such subordination will be available.
If the Mortgage Assets in any Trust Fund are divided into separate groups,
each supporting a separate class or classes of Certificates of the related
series, Credit Support may be provided by cross-support provisions requiring
that distributions be made on Senior Certificates evidencing interests in one
group of Mortgage Assets prior to distributions on Subordinate Certificates
evidencing interests in a different group of Mortgage Assets within the Trust
Fund. The Prospectus Supplement for a series that includes a cross-support
provision will describe the manner and conditions for applying such provisions.
INSURANCE OR GUARANTEES WITH RESPECT TO MORTGAGE LOANS
If so provided in the Prospectus Supplement for a series of Certificates,
Mortgage Loans included in the related Trust Fund will be covered for certain
default risks by insurance policies or guarantees. The related Prospectus
Supplement will describe the nature of such default risks and the extent of
such coverage.
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,
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a demand note or a combination thereof will be deposited, in the amounts
specified in such Prospectus Supplement. If so specified in the related
Prospectus Supplement, the reserve fund for a series may also be funded over
time by a specified amount of certain collections received on the related
Mortgage Assets.
Amounts on deposit in any reserve fund for a series will be applied for
the purposes, in the manner, and to the extent specified in the related
Prospectus Supplement. If so specified in the related Prospectus Supplement,
reserve funds may be established to provide protection only against certain
types of losses and shortfalls. Following each Distribution Date, amounts in a
reserve fund in excess of any amount required to be maintained therein may be
released from the reserve fund under the conditions and to the extent specified
in the related Prospectus Supplement.
If so specified in the related Prospectus Supplement, amounts deposited in
any reserve fund will be invested in Permitted Investments. Unless otherwise
specified in the related Prospectus Supplement, any reinvestment income or
other gain from such investments will be credited to the related reserve fund
for such series, and any loss resulting from such investments will be charged
to such reserve fund. However, such income may be payable to any related Master
Servicer or another service provider as additional compensation for its
services. The reserve fund, if any, for a series will not be a part of the
Trust Fund unless otherwise specified in the related Prospectus Supplement.
CREDIT SUPPORT WITH RESPECT TO MBS
If so provided in the Prospectus Supplement for a series of Certificates,
any MBS included in the related Trust Fund and/or the related underlying
mortgage loans may be covered by one or more of the types of Credit Support
described herein. The related Prospectus Supplement will specify, as to each
such form of 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
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a trustor (the equivalent of a borrower), a trustee to whom the real property
is conveyed, and a beneficiary (the lender) for whose benefit the conveyance is
made. Under a deed of trust, the trustor grants the property, irrevocably until
the debt is paid, in trust and generally with a power of sale, to the trustee
to secure repayment of the indebtedness evidenced by the related note. A deed
to secure debt typically has two parties, pursuant to which the borrower, or
grantor, conveys title to the real property to the grantee, or lender,
generally with a power of sale, until such time as the debt is repaid. In a
case where the borrower is a land trust, there would be an additional party
because legal title to the property is held by a land trustee under a land
trust agreement for the benefit of the borrower. At origination of a mortgage
loan involving a land trust, the borrower may execute a separate undertaking to
make payments on the mortgage note. In no event is the land trustee personally
liable for the mortgage note obligation. The mortgagee's authority under a
mortgage, the trustee's authority under a deed of trust and the grantee's
authority under a deed to secure debt are governed by the express provisions of
the related instrument, the law of the state in which the real property is
located, certain federal laws and, in some deed of trust transactions, the
directions of the beneficiary.
LEASES AND RENTS
Mortgages that encumber income-producing property often contain an
assignment of rents and leases and/or may be accompanied by a separate
assignment of rents and leases, pursuant to which the borrower assigns to the
lender the borrower's right, title and interest as landlord under each lease
and the income derived therefrom, while (unless rents are to be paid directly
to the lender) retaining a revocable license to collect the rents for so long
as there is no default. If the borrower defaults, the license terminates and
the 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.
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FORECLOSURE
General. Foreclosure is a legal procedure that allows the lender to
recover its mortgage debt by enforcing its rights and available legal remedies
under the mortgage. If the borrower defaults in payment or performance of its
obligations under the note or mortgage, the lender has the right to institute
foreclosure proceedings to sell the real property at public auction to satisfy
the indebtedness.
Foreclosure procedures vary from state to state. Two primary methods of
foreclosing a mortgage are judicial foreclosure, involving court proceedings,
and non-judicial foreclosure pursuant to a power of sale granted in the
mortgage instrument. Other foreclosure procedures are available in some states,
but they are either infrequently used or available only in limited
circumstances.
A foreclosure action is subject to most of the delays and expenses of
other lawsuits if defenses are raised or counterclaims are interposed, and
sometimes requires several years to complete.
Judicial Foreclosure. A judicial foreclosure proceeding is conducted in a
court having jurisdiction over the mortgaged property. Generally, the action is
initiated by the service of legal pleadings upon all parties having a
subordinate interest of record in the real property and all parties in
possession of the property, under leases or otherwise, whose interests are
subordinate to the mortgage. Delays in completion of the foreclosure may
occasionally result from difficulties in locating defendants. When the lender's
right to foreclose is contested, the legal proceedings can be time-consuming.
Upon successful completion of a judicial foreclosure proceeding, the court
generally issues a judgment of foreclosure and appoints a referee or other
officer to conduct a public sale of the mortgaged property, the proceeds of
which are used to satisfy the judgment. Such sales are made in accordance with
procedures that vary from state to state.
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
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in the real property, including junior lienholders. A notice of sale must be
posted in a public place and, in most states, published for a specified period
of time in one or more newspapers. The borrower or junior lienholder may then
have the right, during a reinstatement period required in some states, to cure
the default by paying the entire actual amount in arrears (without regard to
the acceleration of the indebtedness), plus the lender's expenses incurred in
enforcing the obligation. In other states, the borrower or the junior
lienholder is not provided a period to reinstate the loan, but has only the
right to pay off the entire debt to prevent the foreclosure sale. Generally,
state law governs the procedure for public sale, the parties entitled to
notice, the method of giving notice and the applicable time periods.
Public Sale. A third party may be unwilling to purchase a mortgaged
property at a public sale because of the difficulty in determining the exact
status of title to the property (due to, among other things, redemption rights
that may exist) and because of the possibility that physical deterioration of
the property may have occurred during the foreclosure proceedings. Therefore,
it is common for the lender to purchase the mortgaged property for an amount
equal to the secured indebtedness and accrued and unpaid interest plus the
expenses of foreclosure, in which event the borrower's debt will be
extinguished, or for a lesser amount in order to preserve its right to seek a
deficiency judgment if such is available under state law and under the terms of
the Mortgage Loan documents. (The Mortgage Loans, however, are generally
expected to be non-recourse. See "Risk Factors--Investment in Commercial and
Multifamily Mortgage Loans".) Thereafter, subject to the borrower's right in
some states to remain in possession during a redemption period, the lender will
become the owner of the property and have both the benefits and burdens of
ownership, including the obligation to pay debt service on any senior
mortgages, to pay taxes, to obtain casualty insurance and to make such repairs
as are necessary to render the property suitable for sale. The costs of
operating and maintaining a commercial or multifamily residential property may
be significant and may be greater than the income derived from that property.
The lender also will commonly obtain the services of a real estate broker and
pay the broker's commission in connection with the sale or lease of the
property. Depending upon market conditions, the 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
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lender to maintain the property and pay the expenses of ownership until the
redemption period has expired. In some states, a post-sale statutory right of
redemption may exist following a judicial foreclosure, but not following a
trustee's sale under a deed of trust.
Anti-Deficiency Legislation. Some or all of the Mortgage Loans may be
nonrecourse loans, as to which recourse in the case of default will be limited
to the Mortgaged Property and such other assets, if any, that were pledged to
secure the Mortgage Loan. However, even if a mortgage loan by its terms
provides for recourse to the borrower's other assets, a lender's ability to
realize upon those assets may be limited by state law. For example, in some
states a lender cannot obtain a deficiency judgment against the borrower
following foreclosure or sale under a deed of trust. A deficiency judgment is a
personal judgment against the former borrower equal to the difference between
the net amount realized upon the public sale of the real property and the
amount due to the lender. Other statutes may require the lender to exhaust the
security afforded under a mortgage before bringing a personal action against
the borrower. In certain other states, the lender has the option of bringing a
personal action against the borrower on the debt without first exhausting such
security; however, in some of those states, the lender, following judgment on
such personal action, may be deemed to have elected a remedy and thus may be
precluded from foreclosing upon the security. Consequently, lenders in those
states where such an election of remedy provision exists will usually proceed
first against the security. Finally, other statutory provisions, designed to
protect borrowers from exposure to large deficiency judgments that might result
from bidding at below-market values at the foreclosure sale, limit any
deficiency judgment to the excess of the outstanding debt over the fair market
value of the property at the time of the sale.
Leasehold Considerations. Mortgage Loans may be secured by a mortgage on
the borrower's leasehold interest in a ground lease. Leasehold mortgage loans
are subject to certain risks not associated with mortgage loans secured by a
lien on the fee estate of the borrower. The most significant of these risks is
that if the borrower's leasehold were to be terminated upon a lease default,
the leasehold mortgagee would lose its security. This risk may be lessened if
the ground lease requires the lessor to give the leasehold mortgagee 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
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lender a general unsecured creditor for the difference between such value and
the outstanding balance of the loan. Other modifications may include the
reduction in the amount of each scheduled payment, by means of a reduction in
the rate of interest and/or an alteration of the repayment schedule (with or
without affecting the unpaid principal balance of the loan), and/or by an
extension (or shortening) of the term to maturity. Some bankruptcy courts have
approved plans, based on the particular facts of the reorganization case, that
effected the cure of a mortgage loan default by paying arrearages over a number
of years. Also, a bankruptcy court may permit a debtor, through its
rehabilitative plan, to reinstate a loan mortgage payment schedule even if the
lender has obtained a final judgment of foreclosure prior to the filing of the
debtor's petition.
Federal bankruptcy law may also have the effect of interfering with or
affecting the ability of a secured lender to enforce the borrower's assignment
of rents and leases related to the mortgaged property. Under the Bankruptcy
Code, a lender may be stayed from enforcing the assignment, and the legal
proceedings necessary to resolve the issue could be time-consuming, with
resulting delays in the lender's receipt of the rents. Recent amendments to the
Bankruptcy code, however, may minimize the impairment of the lender's ability
to enforce the borrower's assignment of rents and leases. In addition to the
inclusion of hotel revenues within the definition of "cash collateral" as noted
previously in the section entitled "--Leases and Rents", the amendments provide
that a pre-petition security interest in rents or hotel revenues is designed to
overcome those cases holding that a security interest in rents is unperfected
under the laws of certain states until the lender has taken some further
action, such as commencing foreclosure or obtaining a receiver prior to
activation of the assignment of rents.
If a borrower's ability to make payment on a mortgage loan is dependent on
its receipt of rent payments under a lease of the related property, that
ability may be impaired by the commencement of a bankruptcy case relating to a
lessee under such lease. Under the Bankruptcy Code, the filing of a petition in
bankruptcy by or on behalf of a lessee results in a stay in bankruptcy against
the commencement or continuation of any state court proceeding for past due
rent, for accelerated rent, for damages or for a summary eviction order with
respect to a default under the lease that occurred prior to the filing of the
lessee's petition. In addition, the 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"
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or "operator" of a contaminated mortgaged property if agents or employees of
the lender have participated in the management of such mortgaged property or
the operations of the borrower. Such liability may exist even if the lender did
not cause or contribute to the contamination and regardless of whether the
lender has actually taken possession of a mortgaged property through
foreclosure, deed in lieu of foreclosure or otherwise. Moreover, such liability
is not limited to the original or unamortized principal balance of a loan or to
the value of the property securing a loan. Excluded from CERCLA's definition of
"owner" or "operator", however, is a person "who without participating in the
management of the facility, holds indicia of ownership primarily to protect his
security interest". This is the so called "secured creditor exemption".
The Asset Conservation, Lender Liability and Deposit Insurance Act of 1996
(the "Act") amended, among other things, the provisions of CERCLA with respect
to lender liability and the secured creditor exemption. The Act offers
substantial protection to lenders by defining the activities in which a lender
can engage and still have the benefit of the secured creditor exemption. In
order for a lender to be deemed to have participated in the management of a
mortgaged property, the lender must actually participate in the operational
affairs of the property of the borrower. The Act provides that "merely having
the capacity to influence, or unexercised right to control" operations does not
constitute participation in management. A lender will lose the protection of
the secured creditor exemption only if it exercises decision-making control
over the borrower's environmental compliance and hazardous substance handling
and disposal practices, or assumes day-to-day management of all operational
functions of the mortgaged property. The Act also provides that a lender will
continue to have the benefit of the secured creditor exemption even if it
forecloses on a mortgaged property, purchases it at a foreclosure sale or
accepts a deed-in-lieu of foreclosure provided that the lender seeks to sell
the mortgaged property at the earliest practicable commercially reasonable time
on commercially reasonable terms.
Certain Other Federal and State Laws. Many states have statutes similar to
CERCLA, and not all 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
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Servicer, based solely (as to environmental matters) on a report prepared by a
person who regularly conducts environmental audits, has made the determination
that it is appropriate to do so, as described under "The Pooling and Servicing
Agreements-Realization Upon Defaulted Mortgage Loans".
If a lender forecloses on a mortgage secured by a property, the operations
on which are subject to environmental laws and regulations, the lender will be
required to operate the property in accordance with those laws and regulations.
Such compliance may entail substantial expense, especially in the case of
industrial or manufacturing properties.
In addition, a lender may be obligated to disclose environmental
conditions on a property to government entities and/or to prospective buyers
(including prospective buyers at a foreclosure sale or following foreclosure).
Such disclosure may decrease the amount that prospective buyers are willing to
pay for the affected property, sometimes substantially, and thereby decrease
the ability of the lender to recoup its investment in a loan upon foreclosure.
Environmental Site Assessments. In most cases, an environmental site
assessment of each Mortgaged Property will have been performed in connection
with the origination of the related Mortgage Loan or at some time prior to the
issuance of the related Certificates. Environmental site assessments, however,
vary considerably in their content, quality and cost. Even when adhering to
good professional practices, environmental consultants will sometimes not
detect significant environmental problems because to do an exhaustive
environmental assessment would be far too costly and time-consuming to be
practical.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE
Certain of the Mortgage Loans may contain "due-on-sale" and
"due-on-encumbrance" clauses that purport to permit the lender to accelerate
the maturity of the loan if the borrower transfers or encumbers the related
Mortgaged Property. In recent years, court decisions and legislative actions
placed substantial restrictions on the right of lenders to enforce such clauses
in many states. However, the Garn-St Germain 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.
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DEFAULT INTEREST AND LIMITATIONS ON PREPAYMENTS
Notes and mortgages may contain provisions that obligate the borrower to
pay a late charge or additional interest if payments are not timely made, and
in some circumstances, may prohibit prepayments for a specified period and/or
condition prepayments upon the borrower's payment of prepayment fees or yield
maintenance penalties. In certain states, there are or may be specific
limitations upon the late charges which a lender may collect from a borrower
for delinquent payments. Certain states also limit the amounts that a lender
may collect from a borrower as an additional charge if the loan is prepaid. In
addition, the enforceability of provisions that provide for prepayment fees or
penalties upon an involuntary prepayment is unclear under the laws of many
states.
APPLICABILITY OF USURY LAWS
Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980 ("Title V") provides that state usury limitations shall not apply
to certain types of residential (including multifamily) first mortgage loans
originated by certain lenders after March 31, 1980. Title V authorized any
state to reimpose interest rate limits by adopting, before April 1, 1983, a law
or constitutional provision that expressly rejects application of the federal
law. In addition, even where Title V is not so rejected, any state is
authorized by the law to adopt a provision limiting discount points or other
charges on mortgage loans covered by Title V. Certain states have taken action
to reimpose interest rate limits and/or to limit discount points or other
charges.
No Mortgage Loan originated in any state in which application of Title V
has been expressly rejected or a provision limiting discount points or other
charges has been adopted, will (if originated after that rejection or adoption)
be eligible for inclusion in a Trust Fund unless (i) such Mortgage Loan
provides for such interest rate, discount points and charges as are permitted
in such state or (ii) such Mortgage Loan provides that the terms thereof are to
be construed in accordance with the laws of another state under which such
interest rate, discount points and charges would not be usurious and the
borrower's counsel has rendered an opinion that such choice of law provision
would be given effect.
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
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the related Pooling and Servicing Agreement, the related Trust Fund (or each
applicable portion thereof) will qualify as a REMIC and the REMIC Certificates
offered with respect thereto will be considered to evidence ownership of REMIC
Regular Certificates or REMIC Residual Certificates in that REMIC within the
meaning of the REMIC Provisions.
If an entity electing to be treated as a REMIC fails to comply with one or
more of the ongoing requirements of the Code for such status during any taxable
year, the Code provides that the entity will not be treated as a REMIC for such
year and thereafter. In that event, such entity may be taxable as a corporation
under Treasury regulations, and the related REMIC Certificates may not be
accorded the status or given the tax treatment described below. Although the
Code authorizes the Treasury Department to issue regulations providing relief
in the event of an inadvertent termination of REMIC status, no such regulations
have been issued. Any such relief, moreover, may be accompanied by sanctions,
such as the imposition of a corporate tax on all or a portion of the Trust
Fund's income for the period in which the requirements for such status are not
satisfied. The Pooling and Servicing Agreement with respect to each REMIC will
include provisions designed to maintain the Trust Fund's status as a REMIC
under the REMIC Provisions. It is not anticipated that the status of any Trust
Fund as a REMIC will be inadvertently terminated.
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.
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The original issue discount, if any, on a REMIC Regular Certificate will
be the excess of its stated redemption price at maturity over its issue price.
The issue price of a particular class of REMIC Regular Certificates will be the
first cash price at which a substantial amount of REMIC Regular Certificates of
that class is sold (excluding sales to bond houses, brokers and underwriters).
If less than a substantial amount of a particular class of REMIC Regular
Certificates is sold for cash on or prior to the date of their initial issuance
(the "Closing Date"), the issue price for such class will be the fair market
value of such class on the Closing Date. Under the OID Regulations, the stated
redemption price of a REMIC Regular Certificate is equal to the total of all
payments to be made on such Certificate other than "qualified stated interest".
"Qualified stated interest" is interest that is unconditionally payable at
least annually at a single fixed rate, or at a "qualified floating rate", an
"objective rate", a combination of a single fixed rate and one or more
"qualified floating rates" or one "qualified inverse floating rate", or a
combination of "qualified floating rates" that does not operate in a manner
that accelerates or defers interest payments on such REMIC Regular Certificate.
In the case of REMIC Regular Certificates bearing adjustable interest
rates, the determination of the total amount of original issue discount and the
timing of the inclusion thereof will vary according to the characteristics of
such REMIC Regular Certificates. If the original issue discount rules apply to
such Certificates, the related Prospectus Supplement will describe the manner
in which such rules will be applied with respect to those Certificates in
preparing information returns to the Certificateholders and the IRS.
Certain classes of the REMIC Regular Certificates may provide for the
first interest payment with respect to such Certificates to be made more than
one month after the date of issuance, a period which is longer than the
subsequent monthly intervals between interest payments. Assuming the "accrual
period" (as defined below) for original issue discount is each monthly period
that ends on a Distribution Date, in some cases, as a consequence of this "long
first accrual period", some or all interest payments may be required to be
included in the stated redemption price of the REMIC Regular Certificate and
accounted for as original issue discount. Because interest on REMIC Regular
Certificates must in any event be accounted for under an accrual method,
applying this analysis would result in only a slight difference in the timing
of the inclusion in income of the yield on the REMIC Regular Certificates.
In addition, if the accrued interest to be paid on the first Distribution
Date is computed with respect to a period that begins prior to the Closing
Date, a portion of the purchase price paid for a REMIC Regular Certificate will
reflect such accrued interest. In such cases, information returns provided to
the Certificateholders and the IRS will be based on the position that the
portion of the purchase price paid for the interest accrued with respect to
periods prior to the Closing Date is treated as part of the overall cost of
such REMIC Regular Certificate (and not as a separate asset the cost of which
is recovered entirely out of interest received on the next Distribution Date)
and that portion of the interest paid on the first Distribution Date in excess
of interest accrued for a number of days corresponding to the number of days
from the Closing Date to the first Distribution Date should be included in the
stated redemption price of such REMIC Regular Certificate. However, the OID
Regulations state that all or some portion of such accrued interest may be
treated as a separate asset the cost of which is recovered entirely out of
interest paid on the first Distribution Date. It is unclear how an election to
do so would be made under the OID Regulations and whether such an election
could be made unilaterally by a Certificateholder.
Notwithstanding the general definition of original issue discount,
original issue discount on a REMIC Regular Certificate will be considered to be
de minimis if it is less than 0.25% of the stated redemption price of the REMIC
Regular Certificate multiplied by its weighted average life. For this purpose,
the weighted average life of the REMIC Regular Certificate is computed as the
sum of the amounts determined, as to each payment included in the stated
redemption price of such REMIC Regular Certificate, by multiplying (i) the
number of complete years (rounding down for partial years) from the issue date
until such payment is expected to be made (presumably taking into account the
Prepayment Assumption) by (ii) a fraction, the numerator of which is the amount
of the payment, and the denominator of which is the stated redemption price at
maturity of such REMIC Regular Certificate. Under the OID Regulations, original
issue discount of only a de minimis amount (other than de minimis original
issue discount attributable to a so-called "teaser" interest rate or an initial
interest holiday) will be included in
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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.
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
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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 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.
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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.
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
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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".
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
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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 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,
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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.
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
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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."
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.
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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.
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
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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 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.
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Unless otherwise stated in the related Prospectus Supplement, and to the
extent permitted by then applicable laws, any Prohibited Transactions Tax,
Contributions Tax, tax on "net income from foreclosure property" or state or
local income or franchise tax that may be imposed on the REMIC will be borne by
the related Master Servicer, Special Servicer, Manager or Trustee in any case
out of its own funds, provided that such person has sufficient assets to do so,
and provided further that such tax arises out of a breach of such person's
obligations under the related Pooling and Servicing Agreement and in respect of
compliance with applicable laws and regulations. Any such tax not borne by a
Master Servicer, Special Servicer, Manager or Trustee will be charged against
the related Trust Fund resulting in a reduction in amounts payable to holders
of the related REMIC Certificates.
Tax and Restrictions on Transfers of REMIC Residual Certificates to
Certain Organizations. If a REMIC Residual Certificate is transferred to a
"disqualified organization" (as defined below), a tax would be imposed in an
amount (determined under the REMIC Regulations) equal to the product of (i) the
present value (discounted using the "applicable Federal rate" for obligations
whose term ends on the close of the last quarter in which excess inclusions are
expected to accrue with respect to the REMIC Residual Certificate, which rate
is computed and published monthly by the IRS) of the total anticipated excess
inclusions with respect to such REMIC Residual Certificate for periods after
the transfer and (ii) the highest marginal federal income tax rate applicable
to corporations. The anticipated excess inclusions must be determined as of the
date that the REMIC Residual Certificate is transferred and must be based on
events that have occurred up to the time of such transfer, the Prepayment
Assumption and any required or permitted clean up calls or required liquidation
provided for in the REMIC's organizational documents. Such a tax generally
would be imposed on the transferor of the REMIC Residual Certificate, except
that where such transfer is through an agent for a disqualified organization,
the tax would instead be imposed on such agent. However, a transferor of a
REMIC Residual Certificate would in no event be liable for such tax with
respect to a transfer if the transferee furnishes to the transferor an
affidavit that the transferee is not a disqualified organization and, as of the
time of the transfer, the transferor does not have actual knowledge that such
affidavit is false. Moreover, an entity will not qualify as a REMIC unless
there are reasonable arrangements designed to ensure that (i) residual
interests in such entity are not held by disqualified organizations and (ii)
information necessary for the application of the tax described herein will be
made available. Restrictions on the transfer of REMIC Residual Certificates and
certain other provisions that are intended to meet this requirement will be
included in each Pooling and Servicing Agreement, and will be discussed in any
Prospectus Supplement relating to the offering of any REMIC Residual
Certificate.
In addition, if a "pass-through entity" (as defined below) includes in
income excess inclusions with respect to a REMIC Residual Certificate, and a
disqualified organization is the record holder of an interest in such entity,
then a tax will be imposed on such entity equal to the product of (i) the
amount of excess inclusions on the REMIC Residual Certificate that are
allocable to the interest in the pass-through entity held by such disqualified
organization and (ii) the highest marginal federal income tax rate imposed on
corporations. A pass-through entity will not be subject to this tax for any
period, however, if each record 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.
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Termination. A REMIC will terminate immediately after the Distribution
Date following receipt by the REMIC of the final payment in respect of the
Mortgage Loans or upon a sale of the REMIC's assets following the adoption by
the REMIC of a plan of complete liquidation. The last distribution on a REMIC
Regular Certificate will be treated as a payment in retirement of a debt
instrument. In the case of a REMIC Residual Certificate, if the last
distribution on such REMIC Residual Certificate is less than the REMIC Residual
Certificateholder's adjusted basis in such Certificate, such REMIC Residual
Certificateholder should (but may not) be treated as realizing a loss equal to
the amount of such difference, and such loss may be treated as a capital loss.
Reporting and Other Administrative Matters. Solely for purposes of the
administrative provisions of the Code, the REMIC will be treated as a
partnership and REMIC Residual Certificateholders will be treated as partners.
Unless otherwise stated in the related Prospectus Supplement, the Trustee or
the Master Servicer, which generally will hold at least a nominal amount of
REMIC Residual Certificates, will file REMIC federal income tax returns on
behalf of the related REMIC, and will be designated as and will act as the "tax
matters person" with respect to the REMIC in all respects.
As the tax matters person, the Trustee or the Master Servicer, as the case
may be, subject to certain notice requirements and various restrictions and
limitations, generally will have the authority to act on behalf of the REMIC
and the REMIC Residual Certificateholders in connection with the administrative
and judicial review of items of income, deduction, gain or loss of the REMIC,
as well as the REMIC's classification. REMIC Residual Certificateholders
generally will be required to report such REMIC items consistently with their
treatment on the related REMIC's tax return and may in some circumstances be
bound by a settlement agreement between the Trustee or the Master Servicer, as
the case may be, as tax matters person, and the IRS concerning any such REMIC
item. Adjustments made to the REMIC tax return may require a REMIC Residual
Certificateholder to make corresponding adjustments on its return, and an audit
of the REMIC's tax return, or the adjustments resulting from such an audit,
could result in an audit of a REMIC Residual Certificateholder's return. No
REMIC will be registered as a tax shelter pursuant to Section 6111 of the Code
because it is not anticipated that any REMIC will have a net loss for any of
the first five taxable years of its existence. Any person that holds a REMIC
Residual Certificate as a nominee for another person may be required to furnish
to the related REMIC, in a manner to be provided in Treasury regulations, the
name and address of such person and other information.
Reporting of interest income, including any original issue discount, with
respect to REMIC Regular Certificates is required annually, and may be required
more frequently under Treasury regulations. These information reports generally
are required to be sent to individual holders of REMIC Regular Interests and
the IRS; holders of REMIC Regular Certificates that are corporations, trusts,
securities dealers and certain other non-individuals will be provided interest
and original issue discount income information and the information set forth in
the following paragraph upon request in accordance with the requirements of the
applicable regulations. The information must be provided by the later of 30
days after the end of the quarter 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".
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Unless otherwise specified in the related Prospectus Supplement, the
responsibility for complying with the foregoing reporting rules will be borne
by either the Trustee or the Master Servicer.
Backup Withholding with Respect to REMIC Certificates. Payments of
interest and principal, as well as payments of proceeds from the sale of REMIC
Certificates, may be subject to the "backup withholding tax" under Section 3406
of the Code at a rate of 31% if recipients of such payments fail to furnish to
the payor certain information, including their taxpayer identification numbers,
or otherwise fail to establish an exemption from such tax. Any amounts deducted
and withheld from a distribution to a recipient would be allowed as a credit
against such recipient's federal income tax. Furthermore, certain penalties may
be imposed by the IRS on a recipient of payments that is required to supply
information but that does not do so in the proper manner.
Foreign Investors in REMIC Certificates. A REMIC Regular Certificateholder
that is not a "United States Person" (as defined below) and is not subject to
federal income tax as a result of any direct or indirect connection to the
United States in addition to its ownership of a REMIC Regular Certificate will
not, unless otherwise disclosed in the related Prospectus Supplement, be
subject to United States federal income or withholding tax in respect of a
distribution on a REMIC Regular Certificate, provided that the holder complies
to the extent necessary with certain identification requirements (including
delivery of a statement, signed by the Certificateholder under penalties of
perjury, certifying that such Certificateholder is not a United States Person
and providing the name and address of such Certificateholder). For these
purposes, "United States Person" means a citizen or resident of the United
States, a corporation, partnership or other entity created or organized in, or
under the laws of, the United States or any political subdivision thereof, or
an estate whose income is subject to United States income tax regardless of its
source, or a trust if a court within the United States is able to exercise
primary supervision over the administration of the trust and one or more United
States fiduciaries have the authority to control all substantial decisions of
the trust. It is possible that the IRS may assert that the foregoing tax
exemption should not apply with respect to a REMIC Regular Certificate held by
a REMIC Residual Certificateholder that owns directly or indirectly a 10% or
greater interest in the REMIC Residual Certificates. If the holder does not
qualify for exemption, distributions of interest, including distributions in
respect of accrued original issue discount, to such holder may be subject to a
tax rate of 30%, subject to reduction under any applicable tax treaty.
In addition, the foregoing rules will not apply to exempt a United States
shareholder of a controlled foreign corporation from taxation on such United
States shareholder's allocable portion of the interest income received by such
controlled foreign corporation.
Further, it appears that a REMIC Regular Certificate would not be included
in the estate of a non-resident alien individual and would not be subject to
United States estate taxes. However, Certificateholders who are non-resident
alien individuals should consult their tax advisors concerning this question.
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
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difference between interest paid on the Mortgage Loans constituting the related
Grantor Trust Fund (net of normal administration fees) and interest paid to the
holders of Grantor Trust Fractional Interest Certificates issued with respect
to such Grantor Trust Fund will be referred to as a "Grantor Trust Strip
Certificate". A Grantor Trust Strip Certificate may also evidence a nominal
ownership interest in the principal of the Mortgage Loans constituting the
related Grantor Trust Fund.
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
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(whether a cash or accrual method taxpayer) will be required to report interest
income from its Grantor Trust Fractional Interest Certificate for each month in
an amount equal to the income that accrues on such Certificate in that month
calculated under a constant yield method, in accordance with the rules of the
Code relating to original issue discount.
The original issue discount on a Grantor Trust Fractional Interest
Certificate will be the excess of such Certificate's stated redemption price
over its issue price. The issue price of a Grantor Trust Fractional Interest
Certificate as to any purchaser will be equal to the price paid by such
purchaser of the Grantor Trust 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
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similar to that described for taking account of original issue discount on
REMIC Regular Certificates. See "--REMICs--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount". It is unclear whether any other
adjustments would be required to reflect differences between an assumed
prepayment rate and the actual rate of prepayments.
In the absence of statutory or administrative clarification, it is
currently intended to base information reports or returns to the IRS and
Certificateholders in transactions subject to the stripped bond rules on a
prepayment assumption that will be disclosed in the related Prospectus
Supplement and on a constant yield computed using a representative initial
offering price for each class of Certificates. However, neither the Depositor
nor any other person will make any representation that the Mortgage Loans will
in fact prepay at a rate conforming to such prepayment assumption or any other
rate and Certificateholders should bear in mind 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
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constant yield. The OID Regulations suggest that no prepayment assumption is
appropriate in computing the yield on prepayable obligations issued with
original issue discount. In the absence of statutory or administrative
clarification, it currently is not intended to base information reports or
returns to the IRS and Certificateholders on the use of a prepayment assumption
in transactions not subject to the stripped bond rules. However, Section
1272(a)(6) of the Code may require that a prepayment assumption be made in
computing yield with respect to all mortgage-backed securities.
Certificateholders are advised to consult their own tax advisors concerning
whether a prepayment assumption should be used in reporting original issue
discount with respect to Grantor Trust Fractional Interest Certificates.
Certificateholders should refer to the related Prospectus Supplement with
respect to each series to determine whether and in what manner the original
issue discount rules will apply to Mortgage Loans in such series.
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
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method, (ii) in the case of a Mortgage Loan issued without original issue
discount, in an amount that bears the same ratio to the total remaining market
discount as the stated interest paid in the accrual period bears to the total
stated interest remaining to be paid on the Mortgage Loan as of the beginning
of the accrual period, or (iii) in the case of a Mortgage Loan issued with
original issue discount, in an amount that bears the same ratio to the total
remaining market discount as the original issue discount accrued in the accrual
period bears to the total original issue discount remaining at the beginning of
the accrual period. The prepayment assumption, if any, used in calculating the
accrual of original issue discount is to be used in calculating the accrual of
market discount. The effect of using a prepayment assumption could be to
accelerate the reporting of such discount income. Because the regulations
referred to in this paragraph have not been issued, it is not possible to
predict what effect such regulations might have on the tax treatment of a
Mortgage Loan purchased at a discount in the secondary market.
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
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regulations or published rulings under Section 1286 of the Code have been
issued and some uncertainty exists as to how it will be applied to securities
such as the Grantor Trust Strip Certificates. Accordingly, holders of Grantor
Trust Strip Certificates should consult their tax advisors concerning the
method to be used in reporting income or loss with respect to such
Certificates.
The OID Regulations do not apply to "stripped coupons", although they
provide general guidance as to how the original issue discount sections of the
Code will be applied. In addition, the discussion below is subject to the
discussion under "--Possible Application of Proposed Contingent Payment Rules"
below and assumes that the holder of a Grantor Trust Strip Certificate will not
own any Grantor Trust Fractional Interest Certificates.
Under the stripped coupon rules, it appears that original issue discount
will be required to be accrued in each month on the Grantor Trust Strip
Certificates based on a constant yield method. In effect, each holder of
Grantor Trust Strip Certificates would include as interest income in each month
an amount equal to the product of such holder's adjusted basis in such Grantor
Trust Strip Certificate at the beginning of such month and the yield of such
Grantor Trust Strip Certificate to such holder. Such yield would be calculated
based on 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.
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Possible Application of Proposed Contingent Payment Rules. The coupon
stripping rules' general treatment of stripped coupons is to regard them as
newly issued debt instruments in the hands of each purchaser. To the extent
that payments on the Grantor Trust Strip Certificates would cease if the
Mortgage Loans were prepaid in full, the Grantor Trust Strip Certificates could
be considered to be debt instruments providing for contingent payments. Under
the OID Regulations, debt instruments providing for contingent payments are not
subject to the same rules as debt instruments providing for noncontingent
payments. 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
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a "conversion transaction" within the meaning of Section 1258 of the Code. A
conversion transaction generally is one in which the taxpayer has taken two or
more positions in the same or similar property that reduce or eliminate market
risk, if substantially all of the taxpayer's return is attributable to the time
value of the taxpayer's net investment in such transaction. The amount of gain
realized in a conversion transaction that is recharacterized as ordinary income
generally will not exceed the amount of interest that would have accrued on the
taxpayer's net investment at 120% of the appropriate "applicable Federal rate"
(which rate is computed and published monthly by the IRS) at the time the
taxpayer enters into the conversion transaction, subject to appropriate
reduction for prior inclusion of interest and other ordinary income items from
the transaction.
Finally, a taxpayer may elect to have net capital gain taxed at ordinary
income rates rather than capital gains rates in order to include such net
capital gain in total net investment income for that taxable year, for purposes
of the rule that limits the deduction of interest on indebtedness incurred to
purchase or carry property held for investment to a taxpayer's net investment
income.
Grantor Trust Reporting. Unless otherwise provided in the related
Prospectus Supplement, the Trustee or Master Servicer, as applicable, will
furnish to each holder of a Grantor Trust Certificate with each distribution a
statement setting forth the amount of such distribution allocable to principal
on the underlying Mortgage Loans and to interest thereon at the related
Pass-Through Rate. In addition, the Trustee or Master 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
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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
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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 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
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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.
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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.
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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.
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INDEX OF PRINCIPAL TERMS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
401(c) Regulations ..................................... 84
Accrual Certificates ................................... 8
Accrued Certificate Interest ........................... 26
Act .................................................... 55
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 ...................................... 32
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 .................................................... 22
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 ........................................... 24
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
</TABLE>
89
<PAGE>
<TABLE>
<CAPTION>
PAGE
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<S> <C>
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
</TABLE>
90
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<TABLE>
<CAPTION>
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<S> <C>
REMIC Certificates ............................... 58
REMIC Provisions ................................. 58
REMIC Regular Certificates ....................... 10
REMIC Regulations ................................ 58
REMIC Residual Certificates ...................... 10
REO Property ..................................... 37
Restricted Group ................................. 82
Senior Certificates .............................. 7
Senior Liens ..................................... 14
Servicer ......................................... 5
SMMEA ............................................ 10
SPA .............................................. 22
Special Servicer ................................. 5
Stripped Interest Certificates ................... 7
Stripped Principal Certificates .................. 7
Subordinate Certificates ......................... 7
Sub-Servicer ..................................... 37
Sub-Servicing Agreement .......................... 37
Tax Exempt Investor .............................. 85
Tiered REMICs .................................... 59
Title V .......................................... 57
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>
================================================================================
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-54
Description of the Certificates ....................... S-62
Yield and Maturity Considerations ..................... S-80
Federal Income Tax Consequences ....................... S-95
Method of Distribution ................................ S-97
Legal Matters ......................................... S-98
Ratings ............................................... S-99
Legal Investment ...................................... S-100
ERISA Considerations .................................. S-100
Index of Significant Definitions ...................... S-102
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>
$887,578,000
(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 , 1999
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