Residential Accredit Loans, Inc.
Depositor
Residential Funding Corporation
Master Servicer
Mortgage Asset-Backed Pass-Through Certificates
Series 1997-QS5
$ 6,622,492 8.00% Class M-1 Certificates
Supplement dated March 8, 1999
to
supplement dated February 17, 1999
to
supplement dated January 7, 1999
to
prospectus supplement dated June 23, 1997
to
prospectus dated August 22, 1996, as supplemented
by the prospectus dated October 22, 1998
----------
Bear, Stearns & Co. Inc. will offer to the public the Class M-1
Certificates, in negotiated transactions or otherwise, directly or through
dealers, at varying prices to be determined at the time of sale. Bear, Stearns &
Co. Inc.'s commission will be the difference between the price it pays to the
depositor for the Class M-1 Certificates and the amount it receives from the
sale of the Class M-1 Certificates to the public. The proceeds to the depositor
from the sale of the Class M-1 Certificates to Bear, Stearns & Co. Inc. will be
$6,759,908.28 before deducting expenses.
The Class M-1 Certificates will be offered pursuant to an underwriting
agreement among the depositor, the master servicer and Bear, Stearns & Co. Inc.
Bear, Stearns & Co. Inc. and any dealers that may participate with Bear, Stearns
& Co. Inc. in the resale of the Class M-1 Certificates may receive compensation
from the depositor in the form of discounts or commissions or, in the case of
dealers, compensation from Bear, Stearns & Co. Inc. in the form of discounts,
concessions or commissions. The underwriting agreement provides that the
depositor will indemnify Bear, Stearns & Co. Inc. against certain civil
liabilities under the Securities Act of 1933, as amended, or contribute to
payments required to be made in respect thereof. There is currently no secondary
market for the Class M-1 Certificates. There can be no assurance that an active
secondary market will develop, or if it does develop, that it will continue.
This supplement may be used to offer or sell the certificates offered
hereby only if accompanied by the prospectus supplement and prospectus.
Dealers will be required to deliver a supplement, prospectus supplement and
prospectus when acting as underwriters of the certificates offered hereby and
with respect to their unsold allotments or subscriptions. In addition, all
dealers selling the Class M-1 Certificates, whether or not participating in this
offering, may be required to deliver a supplement, prospectus supplement and
prospectus until June 7, 1999.
-------------------------------------------
Bear, Stearns & Co. Inc.
March 8, 1999
Description of the Mortgage Pool
The Mortgage Pool consists of 1,199 Mortgage Loans with an outstanding
aggregate principal balance of approximately $117,958,439 as of February 1,
1999, after deducting payments of principal due on or prior to that date.
The principal balance of the Class M-1 Certificates after the February 25,
1999 payment date will represent approximately 5.61% of the Mortgage Loans.
As of February 1, 1999, thirty-six Mortgage Loans, representing
approximately 3.47% of the Mortgage Loans, were 30 to 59 days delinquent; five
Mortgage Loans, representing approximately 0.41% of the Mortgage Loans, were 60
to 89 days delinquent; seven Mortgage Loans, representing approximately 0.56% of
the Mortgage Loans, were 90 or more days delinquent; and seven Mortgage Loans,
representing approximately 0.84% of the Mortgage Loans, were in foreclosure. A
Mortgage Loan is considered to be "30 to 59 days", "60 to 89 days" or "90 or
more days" delinquent when a payment due on any due date remains unpaid as of
the close of business on the last business day immediately prior to the next
following monthly due date, the second next following monthly due date or the
third next following monthly due date, respectively. The determination as to
whether a Mortgage Loan falls into a category is made as of the close of
business on the last business day of each month. Delinquency information
presented herein as of February 1, 1999 was determined as of the close of
business on January 31, 1999.
For further information regarding the Mortgage Pool see "Description of
the Mortgage Pool" in the Prospectus Supplement.
Additional information regarding distributions to the Series 1997-QS5
certificates is provided in the distribution summary report for the February 25,
1999 payment date attached as Annex A hereto.
Year 2000 Considerations
Overview of the Year 2000 Issue
The Year 2000 ("Y2K") issue is the term generally used to describe the
potential failure of information technology components on or after January 1,
2000 because existing computer programs, applications and microprocessors
frequently use only two digits to identify a year. Since the Year 2000 is also a
leap year, there could be additional business disruptions as a result of the
inability of many computer systems to recognize February 29, 2000.
The failure to correct or replace computer programs, applications and
microprocessors with Y2K-ready alternatives may adversely impact the operations
of Residential Funding on or after January 1, 2000. The responsibilities of
Residential Funding as the Master Servicer include collecting payments from the
Sub-Servicers in respect of the Mortgage Loans, calculating the Available
Distribution Amount for each Distribution Date, remitting such amount to the
Trustee prior to each Distribution Date, calculating the amount of principal and
interest payments to be made to the Certificateholders on each Distribution
Date, and preparing the monthly statement to be sent to Certificateholders on
each Distribution Date.
Overview of Residential Funding's Y2K Project
In March 1997, Residential Funding commenced activities to determine the
impact of Y2K on its critical computer systems. In April 1998, Residential
Funding established a formal Y2K project team (the "Y2K Project Team") to
address Y2K issues. The Y2K Project Team remains in place and continues to work
on solving problems related to the Year 2000. In addition, the Y2K Project Team
coordinates its efforts with the Y2K programs established by General Motors
Acceptance Corporation and General Motors Corporation.
Members of the Y2K Project Team, together with relevant personnel from
Residential Funding's business units have developed and implemented a six-phase
management strategy (as discussed below), which is being applied to information
technology and non-information technology components ("Components") throughout
the organization. Residential Funding's Components primarily consist of the
following:
- hardware, including mainframe computers, desktop computers and network
devices;
- facilities equipment, including elevators, telephone systems, heating
systems and security systems;
- software applications, including vendor purchased applications,
in-house developed applications and end-user developed applications;
- business partner communication links, which primarily provide data
transmissions to and from business partners; and
- business partners data systems, which primarily process data for
Residential Funding. The six phases by which the Y2K Project Team will
seek to achieve Y2K readiness throughout Residential Funding are as
follows:
Phase Objective
Phase I - Awareness
To promote Y2K awareness throughout Residential Funding.
Emphasis has been placed on ensuring that Components
recently purchased (or to be purchased) by business units
are Y2K-ready prior to the implementation of such
Components.
Phase II - Inventory
To (i) create an inventory of all Components and (ii) assess
the Y2K risks associated with such Components.
Phase III -- Assessment
To (i) determine which Components are not Y2K-ready and (ii)
decide whether such Components should be replaced, retired
or repaired.
Phase IV -- Renovation
To execute Component replacement, retirement or repair to
ensure Y2K readiness.
Phase V -- Validation
To test Components that have been repaired to ensure Y2K
readiness and validate "mission critical" Components that
were assessed as Y2K-ready in Phase III.
Phase VI --
Implementation To deploy repaired and validated Components.
In order to execute the six-phase plan, a combination of internal
resources and external contractors have been, and will be, employed by the Y2K
Project Team.
Y2K Project Status
As of November 30, 1998, the Y2K Project Team had substantially completed
the six phases for internal "mission critical" Components. However, several
software applications used by Residential Funding in its role as Master Servicer
are still in the final three phases of the six-phase management plan described
above. Residential Funding expects that all phases with respect to such
applications will be substantially completed by March 31, 1999.
The Y2K Project Team anticipates that its efforts with respect to all
internal Components will be substantially complete by March 31, 1999. This
includes substantial completion of (i) renovation and validation of any
non-mission critical Components that the Y2K Project Team and related business
units determine to be necessary, (ii) validation of any remaining "mission
critical" Components that are either completing in-house remediation or waiting
for a vendor upgrade, and (iii) Y2K business continuity planning activities
discussed below.
The potential impact on Residential Funding of problems related to Y2K,
however, will not depend solely on the corrective measures undertaken by the Y2K
Project Team. The manner in which Y2K issues are addressed by business partners,
governmental agencies and other entities that provide data to, or receive data
from, Residential Funding, or whose financial condition or operational
capability is important to Residential Funding and its ability to act as Master
Servicer, will have a significant impact upon Residential Funding. These
entities include, among others, Sub-Servicers, the Trustee, the Custodian and
certain depositary institutions, as well as their respective suppliers and
vendors. Accordingly, Residential Funding is communicating with certain of these
parties to assess their Y2K readiness and evaluate any potential impact on
Residential Funding.
Due to the various dates by which Residential Funding's business partners
anticipate being Y2K-ready, it is expected that the Y2K Project Team will
continue to spend significant time assessing Y2K business partner issues
throughout 1999. Any business partner, including any Subservicer, the Trustee
and the Custodian, that (i) has not provided Residential Funding appropriate
documentation supporting its Y2K efforts, (ii) has not responded in a timely
manner to Residential Funding's inquiries regarding their Y2K efforts or (iii)
does not expect to be Y2K-ready until after June 30, 1999, has been, and will
be, placed in an "at risk" category. Residential Funding will carefully monitor
the efforts and progress of its "at risk" business partners, and if additional
steps are necessary Residential Funding will reassess the risk and act
accordingly.
During 1998, Residential Funding also commenced a formal business
continuity plan that is designed to address potential Y2K problems and other
possible disruptions. Residential Funding's business continuity plan has the
following four phases:
Phase Objective
Phase I -- Business Impact Assessment
To assess the impact upon Residential Funding business units
if "mission critical" Components were suddenly not available
or significantly impaired as a result of a natural disaster
or other type of disruption (including as a result of Y2K).
Phase II -- Strategic Development
To develop broad, strategic plans regarding the manner in
which Residential Funding will operate in the aftermath of a
natural disaster or other type of disruption (including as a
result of Y2K).
Phase III -- Business Continuity Planning
To develop detailed procedures on how Residential Funding
and individual business units will continue to operate in
the aftermath of a natural disaster or other type of
disruption (including as a result of Y2K).
Phase IV -- Validation
To test the plans developed in Phases II and III above.
As of December 15, 1998, Residential Funding had substantially completed
Phases I and II of its business continuity plan. Residential Funding anticipates
that Phase III will be substantially complete by March 31, 1999 and Phase IV
will be substantially complete by June 30, 1999.
Risks related to Y2K
Although Residential Funding's remediation efforts are directed at
eliminating its Y2K exposure, there can be no assurance that these efforts will
fully mitigate the effect of all Y2K problems. If Residential Funding fails to
identify or correct any material Y2K problem, there could be significant
disruptions in its normal business operations. Such disruptions could have a
material adverse effect on Residential Funding's ability to (i) collect (and
monitor any Sub-Servicer's collection of) payments on the Mortgage Loans, (ii)
distribute such collections to the Trustee and (iii) provide reports to
Certificateholders as set forth herein. Furthermore, if any Sub-Servicer, the
Trustee or any other business partner or any of their respective vendors or
third party service providers are not Y2K-ready, the ability to (a) service the
Mortgage Loans (in the case of any Sub-Servicer or any of their respective
vendors or third party service providers) and (b) make distributions to
Certificateholders (in the case of the Trustee or any of its vendors or third
party service providers), may be materially and adversely affected.
This section entitled "Year 2000 Considerations" contains "forward-looking
statements" within the meaning of Section 27A of the Securities Act. Generally,
all statements in this section that are not statements of historical fact are
forward-looking statements. Forward-looking statements made in this Y2K
discussion are subject to certain risks and uncertainties. Important factors
that could cause results to differ materially from such forward-looking
statements include, among other things, the ability of Residential Funding to
successfully identify Components that may pose Y2K problems, the nature and
amount of programming required to fix the affected Components, the costs of
labor and consultants related to such efforts, the continued availability of
resources (both personnel and technology) and the ability of business partners
that interface with Residential Funding to successfully address their Y2K
issues.
Legal Investment
The OTS has issued Thrift Bulletin 13a, entitled "Management of Interest
Rate Risk, Investment Securities, and Derivatives Activities" ("TB 13a"), which
was effective as of December 1, 1998 and applies to thrift institutions
regulated by the OTS. One of the primary purposes of TB 13a is to require thrift
institutions, prior to taking any investment position, to (i) conduct a
pre-purchase portfolio sensitivity analysis for any "significant transaction"
involving securities or financial derivatives, and (ii) conduct a pre-purchase
price sensitivity analysis of any "complex security" or financial derivative.
For the purposes of TB 13a, "complex security" includes among other things any
collateralized mortgage obligation or REMIC security, other than any "plain
vanilla" mortgage pass-through security (that is, securities that are part of a
single class of securities in the related pool, that are non-callable and do not
have any special features). The Class M-1 Certificates may be viewed as "complex
securities." The OTS recommends that while a thrift institution should conduct
its own in-house pre-acquisition analysis, it may rely on an analysis conducted
by an independent third party as long as management understands the analysis and
its key assumptions. Further, TB 13a recommends that the use of "complex
securities with high price sensitivity" be limited to transactions and
strategies that lower a thrift institution's portfolio interest rate risk. TB
13a warns that investment in complex securities by thrift institutions that do
not have adequate risk measurement, monitoring and control systems may be viewed
by OTS examiners as an unsafe and unsound practice.
See "Legal Investment" in the Prospectus Supplement and "Legal Investment
Matters" in the Prospectus.
<PAGE>
ANNEX A
Page: 1 of 3
RESIDENTIAL FUNDING CORPORATION (MASTER SERVICER)
RESIDENTIAL ACCREDIT LOANS, INC. (COMPANY)
MORTGAGE PASS-THROUGH CERTIFICATES SERIES 1997-QS5(POOL # 4248)
STATEMENT TO CERTIFICATEHOLDERS
DISTRIBUTION SUMMARY FOR POOL# 4248
- ------------------------------------------------------------------------------
- -
PRINCIPAL CURRENT
ORIGINAL BALANCE BEFORE PASS-THROUGH PRINCIPAL
CLASS CUSIP FACE VALUE DISTRIBUTION RATE DISTRIBUTION
- ------------------------------------------------------------------------------
- -
A-1 76110FHZ9 33,300,000.00 0.00 7.250000 % 0.00
A-2 76110FJA2 10,800,000.00 0.00 7.250000 % 0.00
A-3 76110FJB0 29,956,909.00 11,084,313.05 10.000000 % 1,316,125.66
A-4 76110FJC8 24,000,000.00 17,773,077.27 7.250000 % 3,509,668.43
A-5 76110FJD6 11,785,091.00 11,785,091.00 7.250000 % 0.00
A-6 76110FJE4 18,143,000.00 18,143,000.00 8.000000 % 0.00
A-7 76110FJF1 4,767,000.00 4,767,000.00 8.000000 % 0.00
A-8 76110FJG9 0.00 0.00 0.750000 % 0.00
A-9 76110FJH7 42,917,000.00 42,917,000.00 7.250000 % 0.00
A-10 76110FJJ3 340,158.57 255,371.64 0.000000 % 11,844.73
A-11-1 0.00 0.00 0.705328 % 0.00
A-11-2 0.00 0.00 0.350908 % 0.00
R-I 76110FJL8 100.00 0.00 8.000000 % 0.00
R-II 76110FJM6 100.00 0.00 8.000000 % 0.00
M-1 76110FJN4 6,730,000.00 6,627,029.55 8.000000 % 4,537.97
M-2 76110FJP9 4,330,000.00 4,263,750.07 8.000000 % 2,919.67
M-3 76110FJQ7 2,886,000.00 2,841,843.59 8.000000 % 1,946.00
B-1 1,058,000.00 1,041,812.36 8.000000 % 713.40
B-2 481,000.00 473,640.59 8.000000 % 324.33
B-3 866,066.26 834,160.77 8.000000 % 571.20
- -------------------------------------------------------------------------------
192,360,424.83 122,807,089.89 4,848,651.39
=====================================================================
- ------------------------------------------------------------------------------
REMAINING
INTEREST TOTAL DEFERRED REALIZED PRINCIPAL
DISTRIBUTION DISTRIBUTION INTEREST LOSSES BALANCE
- ------------------------------------------------------------------------------
- -
A-1 0.00 0.00 0.00 0.00 0.00
A-2 0.00 0.00 0.00 0.00 0.00
A-3 91,767.25 1,407,892.91 0.00 0.00 9,768,187.39
A-4 106,679.15 3,616,347.58 0.00 0.00 14,263,408.84
A-5 70,737.52 70,737.52 0.00 0.00 11,785,091.00
A-6 120,165.00 120,165.00 0.00 0.00 18,143,000.00
A-7 31,572.87 31,572.87 0.00 0.00 4,767,000.00
A-8 26,648.31 26,648.31 0.00 0.00 0.00
A-9 257,600.25 257,600.25 0.00 0.00 42,917,000.00
A-10 0.00 11,844.73 0.00 0.00 243,526.91
A-11-1 54,393.23 54,393.23 0.00 0.00 0.00
A-11-2 8,616.40 8,616.40 0.00 0.00 0.00
R-I 0.00 0.00 0.00 0.00 0.00
R-II 0.00 0.00 0.00 0.00 0.00
M-1 43,892.25 48,430.22 0.00 0.00 6,622,491.58
M-2 28,239.74 31,159.41 0.00 0.00 4,260,830.40
M-3 18,822.14 20,768.14 0.00 0.00 2,839,897.59
B-1 6,900.15 7,613.55 0.00 0.00 1,041,098.96
B-2 3,137.02 3,461.35 0.00 0.00 473,316.26
B-3 5,524.82 6,096.02 0.00 0.00 833,589.57
- -------------------------------------------------------------------------------
874,696.10 5,723,347.49 0.00 0.00 117,958,438.50
=====================================================================
<PAGE>
Page: 2 of 3
RESIDENTIAL FUNDING CORPORATION (MASTER SERVICER)
RESIDENTIAL ACCREDIT LOANS, INC. (COMPANY)
MORTGAGE PASS-THROUGH CERTIFICATES SERIES 1997-QS5(POOL # 4248)
STATEMENT TO CERTIFICATEHOLDERS
DISTRIBUTION SUMMARY FOR POOL# 4248
- ------------------------------------------------------------------------------
AMOUNTS PER $1,000 UNIT
- ------------------------------------------------------------------------------
<PAGE>
BEGINNING ENDING
BALANCE PRINCIPAL INTEREST TOTAL DEFERRED BALANCE
CLASS FACTOR FACTOR FACTOR DISTRIBUTION INTEREST FACTOR
- ------------------------------------------------------------------------------
- -
A-1 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000
A-2 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000
A-3 370.008570 43.933960 3.063308 46.997268 0.000000 326.074609
A-4 740.544886 146.236185 4.444965 150.681150 0.000000 594.308702
A-5 1000.000000 0.000000 6.002289 6.002289 0.000000 1000.000000
A-6 1000.000000 0.000000 6.623216 6.623216 0.000000 1000.000000
A-7 1000.000000 0.000000 6.623216 6.623216 0.000000 1000.000000
A-8 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000
A-9 1000.000000 0.000000 6.002289 6.002289 0.000000 1000.000000
A-10 750.742926 34.821201 0.000000 34.821201 0.000000 715.921724
A-11-1 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000
A-11-2 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000
R-I 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000
R-II 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000
M-1 984.699785 0.674290 6.521880 7.196170 0.000000 984.025495
M-2 984.699785 0.674289 6.521880 7.196169 0.000000 984.025497
M-3 984.699789 0.674290 6.521878 7.196168 0.000000 984.025499
B-1 984.699773 0.674291 6.521881 7.196172 0.000000 984.025482
B-2 984.699771 0.674283 6.521871 7.196154 0.000000 984.025489
B-3 963.160451 0.659545 6.379212 7.038757 0.000000 962.500913
- ------------------------------------------------------------------------------
DETERMINATION DATE 22-February-99
DISTRIBUTION DATE 25-February-99
Page: 3 of 3
RESIDENTIAL FUNDING CORPORATION (MASTER SERVICER)
RESIDENTIAL ACCREDIT LOANS, INC. (COMPANY)
MORTGAGE PASS-THROUGH CERTIFICATES 1997-QS5 (POOL # 4248)
STATEMENT TO CERTIFICATEHOLDERS
ADDITIONAL RELATED INFORMATION FOR POOL 4248
- ------------------------------------------------------------------------------
SERVICING COMPENSATION RECEIVED BY SUB-SERVICER 24,986.03
SERVICING COMPENSATION RECEIVED BY MASTER SERVICER 0.00
<PAGE>
SUBSERVICER ADVANCES THIS MONTH 49,101.54
MASTER SERVICER ADVANCES THIS MONTH 2,663.41
NUMBER OF PRINCIPAL
DELINQUENCIES: LOANS BALANCE
(A) ONE MONTHLY PAYMENT: 36 4,098,954.76
(B) TWO MONTHLY PAYMENTS: 5 483,037.38
(C) THREE OR MORE MONTHLY PAYMENTS: 7 662,985.96
FORECLOSURES
NUMBER OF LOANS 7
AGGREGATE PRINCIPAL BALANCE 994,377.95
SCHEDULED PRINCIPAL BALANCE OF MORTGAGE LOANS AFTER
DISTRIBUTION 117,958,438.50
AGGREGATE NUMBER OF LOANS IN THE POOL AS OF THE
DETERMINATION DATE 1,199
NUMBER OF REO LOANS ACQUIRED
INCLUDING ANY PENDING CASH LIQUIDATIONS 3
BOOK VALUE OF REAL ESTATE ACQUIRED THROUGH
FORECLOSURE OR GRANT OF A DEED IN LIEU OF
FORECLOSURE, INCLUDING ANY PENDING CASH LIQUIDATIONS
342,942.94
REMAINING SUBCLASS INTEREST SHORTFALL 0.00
CLASS A SHORTFALL (PRINCIPAL) 0.00
CLASS A SHORTFALL (INTEREST) 0.00
TOTAL PREPAYMENTS INCLUDED IN THIS DISTRIBUTION 4,764,484.20
TOTAL REPURCHASES INCLUDED IN THIS DISTRIBUTION 0.00
DISTRIBUTION PERCENTAGES:
SENIOR CLASS M CLASS B
CURRENT DISTRIBUTION 86.87718360 % 11.20557400 % 1.91724260 %
PREPAYMENT PERCENT 100.00000000 % 0.00000000 % 0.00000000 %
<PAGE>
NEXT DISTRIBUTION 86.34733340 % 11.63394476 % 1.99465370 %
BANKRUPTCY AMOUNT AVAILABLE 146,943.00
FRAUD AMOUNT AVAILABLE 1,490,509.00
SPECIAL HAZARD AMOUNT AVAILABLE 1,490,509.00
ENDING GROSS WEIGHTED AVERAGE INTEREST RATE 8.93195446
ENDING WEIGHTED AVERAGE MATURITY, IN MONTHS 332.61
POOL TRADING FACTOR: 61.32157309
................................................................................
<PAGE>
