SUBJECT TO COMPLETION, DATED __________, 199_
PROSPECTUS SUPPLEMENT*
(To Prospectus Dated , 1996)
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$____________
___________ Mortgage Loan Trust 199 -
Mortgage Loan Pass-Through Certificates, Series 199 -
- --------------------------------------------------------------------------------
$ % Class A-1 Group I Certificates, Variable Pass-Through Rate
$ % Class A-2 Group I Certificates, ____% Pass-Through Rate
$ % Class A-3 Group I Certificates, ____% Pass-Through Rate
$ % Class A-4 Group I Certificates, ____% Pass-Through Rate
$ % Class A-5 Group I Certificates, ____% Pass-Through Rate
$ % Class A-6 Group II Certificates, Variable Pass-Through Rate
- --------------------------------------------------------------------------------
Access Financial Lending Corp.
Company
- --------------------------------------------------------------------------------
The ________________ Mortgage Loan Asset Backed Certificates, Series 199 - (the
"Certificates") will consist of six classes of offered certificates, the Class
A-1 Group I Certificates, the Class A-2 Group I Certificates, the Class A-3
Group I Certificates, the Class A-4 Group I Certificates, the Class A-5 Group I
Certificates (collectively, the "Class A Group I Certificates") and the Class
A-6 Group II Certificates (together with the Class A Group I Certificates, the
"Class A Certificates") which represent beneficial ownership interests in
__________ Mortgage Loan Trust 19__-__ (the "Trust"). The assets of the Trust
consist primarily of a pool (the "Pool") of fixed and adjustable rate,
amortizing mortgage loans which are secured by first or second liens on
residential properties (the "Mortgage Loans"), funds on deposit in a trust
account (the "Pre-Funding Account") to be established with the Trustee and the
Certificate Insurance Policy (as defined below) covering the Class A
Certificates.
The Company has obtained a financial guaranty insurance policy (the "Certificate
Insurance Policy") from (the "Certificate Insurer") which will unconditionally
and irrevocably guarantee payment of certain amounts due to the Owners of the
Class A Certificates to the extent described herein.
(Cover continued on next page)
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For a discussion of certain risk factors regarding an investment in the Class A
Certificates, see "Risk Factors" herein and in the accompanying Prospectus.
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___________________ (the "Underwriters") have agreed to purchase from the Trust
the Class A-1 Group I Certificates at an aggregate price of _____% of the
principal amount thereof, the Class A-2 Group I Certificates at an aggregate
price of _____% of the principal amount thereof, the Class A-3 Group I
Certificates at an aggregate price of _____% of the principal amount thereof,
the Class A-4 Group I Certificates at an aggregate price of _____% of the
principal amount thereof, the Class A-5 Group I Certificates at an aggregate
price of _____% of the principal amount thereof, and the Class A-6 Group II
Certificates at an aggregate price of _____% of the principal amount thereof
(representing $________ aggregate proceeds to the Company before deducting
expenses payable by the Company, estimated at $_______) plus accrued interest,
if any, from _________, 199 for the Class A-2, A-3, A-4 and A-5 Group I
Certificates subject to the terms and conditions set forth in the Underwriting
Agreement dated ______, 199 among the Underwriters and the Company. See
"Underwriting" in this Prospectus Supplement.
The Underwriters propose to offer the Class A Certificates from time to time for
sale in negotiated transactions or otherwise, at market prices prevailing at the
time of sale or at negotiated prices. For further information with respect to
the plan of distribution and any discounts, commissions or profits on resale
that may be deemed underwriting discounts or commissions, see "Underwriting" in
this Prospectus Supplement.
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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 NOR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
The Class A Certificates are offered hereby by the Underwriters when, as and if
issued by the Trust, delivered and accepted by the Underwriters and subject to
their right to reject orders in whole or in part. It is expected that delivery
of the Class A Certificates will be made in book-entry form only through the
facilities of The Depository Trust Company, CEDEL, S.A. and Euroclear on or
about ________, 199 against payment in immediately available funds.
[NAME(S) OF UNDERWRITER(S)]
__________ , 199
*This Registration Statement includes a Prospectus and illustrative forms of
Prospectus Supplements. As described in the Prospectus, each transaction may
have Classes of Certificates with various characteristics, mortgage assets with
various characteristics, various forms and terms of credit enhancement, one or
more Servicers, various underwriting and servicing standards with respect to
mortgage assets, various tax consequences, and various other characteristics.
(Cover continued from previous page)
The Class A Group I Certificates will represent undivided ownership
interests in a group ("Group I") of Mortgage Loans in the Trust which bear fixed
rates of interest and the Class A-6 Group II Certificates will represent
undivided ownership interests in a group ("Group II") of Mortgage Loans in the
Trust which bear adjustable rates of interest. Group I and Group II are
collectively referred to herein as the "Mortgage Loan Groups" and each
singularly, a "Mortgage Loan Group".
The Certificates will be issued pursuant to a Pooling and Servicing
Agreement ("Pooling and Servicing Agreement") among Access Financial Lending
Corp. (the "Company"), __________, __________ (the "Master Servicer") and (the
"Trustee"). On or prior to the Closing Date, the Company will acquire the
Initial Mortgage Loans from the Originators, as described herein. In addition to
the Class A Certificates, the Trust will also issue a subordinate Class of
Certificates with respect to Group I (the "Class B Group I Certificates"), a
subordinate Class of Certificates with respect to Group II (the "Class B Group
II Certificates", together with the Class B Group I Certificates, the "Class B
Certificates") and one or more Classes of Residual Certificates. Only the Class
A Certificates are offered hereby. Distributions of interest on the Class A
Certificates are of an equal priority to the extent described herein, and
distributions on the Class B Certificates and on the Residual Certificates are
subordinate to distributions on the Class A Certificates to the extent described
herein.
The Pooling and Servicing Agreement provides that additional mortgage
loans (the "Subsequent Mortgage Loans") are intended to be purchased by the
Trust from the Company from time to time on or before , 199
from funds on deposit in the Pre-Funding Account. Any Subsequent Mortgage Loan
so acquired by the Trust will be assigned to one (and only one) of the two
Mortgage Loan Groups. On the Closing Date an aggregate cash amount not to exceed
$________ will be deposited with the Trustee in the Pre-Funding Account; amounts
not to exceed $________, and $________ of such aggregate amount will be funded
from the sale of the Group I Certificates and the Group II Certificates,
respectively, and may be used to acquire Subsequent Mortgage Loans with respect
to Group I and Group II, respectively.
All of the Mortgage Loans were originated under the Company's Mortgage
Loan Program by unaffiliated originators (the "Originators"). Except for certain
representations and warranties relating to the Mortgage Loans and certain other
matters, Access Financial Lending Corp., _________________, the Master Servicer,
any Sub-Servicers and the Originators will have no obligations with respect to
the Certificates.
Distributions of principal and interest on the Class A Certificates
will be made to the extent funds are available therefor on the day of each month
or if such day is not a business day, on the next succeeding business day
commencing , 199 (each, a "Payment Date") to holders of record as of the close
of business on the first business day of the current calendar month (with
respect to the Class A Fixed Rate Certificates) or as of the close of business
on the business on the business day immediately preceding such Payment Date
(with respect to the Class A-1 Group I Certificates and the Class A-6 Group II
Certificates), except in the case of the first Payment Date, on which
distributions will be made to holders of record as of the Closing Date (each
such date being the applicable "Record Date").
An ERISA Plan purchasing the Class A Certificates should consult with
its legal advisors concerning the impact of ERISA and the Code with respect to
such purchase. See "Risk Factors" and "ERISA Considerations" herein.
There is currently no secondary market for any Class of the Class A
Certificates. There can be no assurance that a secondary market for any of the
Class A Certificates will develop, or if it does develop, that it will continue.
One or more elections will be made to treat certain assets of the Trust
as "real estate mortgage investment conduits" ("REMICs") for federal income tax
purposes, pursuant to the Internal Revenue Code of 1986, as amended (the
"Code"). See "Certain Federal Tax Consequences" herein.
S-2
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION ABOUT
THE OFFERING OF THE SECURITIES. ADDITIONAL INFORMATION IS CONTAINED IN THE
PROSPECTUS AND PROSPECTIVE INVESTORS ARE URGED TO READ BOTH THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS IN FULL. SALES OF THE SECURITIES MAY NOT BE
CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CLASS A
CERTIFICATES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
THE CERTIFICATE INSURANCE POLICY IS NOT COVERED BY THE
PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW
YORK INSURANCE LAW.
THE CLASS A CERTIFICATES REPRESENT INTERESTS IN THE TRUST ONLY AND DO
NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF ACCESS FINANCIAL LENDING CORP., THE
TRUSTEE, THE CERTIFICATE INSURER, ANY SUB-SERVICER OR ANY OF THEIR RESPECTIVE
AFFILIATES. THE CLASS A CERTIFICATES AND THE MORTGAGE LOANS ARE NOT INSURED OR
GUARANTEED BY ANY GOVERNMENTAL AGENCY, NOR HAS ANY GOVERNMENTAL AGENCY PASSED
UPON THE ACCURACY OF THE INFORMATION CONTAINED IN THIS PROSPECTUS.
AVAILABLE INFORMATION
The Company has filed a Registration Statement under the Securities Act
of 1933, as amended, (the "1933 Act") with the Securities and Exchange
Commission (the "Commission") on behalf of the Trust with respect to the Class A
Certificates offered pursuant to this Prospectus Supplement and the related
Prospectus. For further information, reference is made to the Registration
Statement and amendments thereof and to the exhibits thereto, which are
available for inspection without charge at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549;
7 World Trade Center, 13th Floor, New York, New York 10048; and 500 West Madison
Street, Chicago, Illinois 60661. Copies of the Registration Statement and
amendments thereof and exhibits thereto may be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates.
REPORTS TO THE HOLDERS
So long as the Class A Certificates are in book-entry form, monthly and
annual reports concerning such Certificates and the Trust will be sent by the
Trustee to Cede & Co. ("Cede"), as the nominee of The Depository Trust Company
("DTC") and as registered holder of the Class A Certificates pursuant to the
Pooling and Servicing Agreement. DTC will forward such reports to the
Participants and indirect participants by mail for forwarding to the Owner of
any Class A Certificates (the "Owner" or "Certificateholder"). See "Risk
Factors" and "Description of the Certificates -- Reports to Owners". The Trust
will not provide any financial information to the Owners which has been examined
and reported upon, with an opinion expressed by, an independent public
accountant. The Company and the Master Servicer have determined that their
respective financial statements are not material to the offering made hereby.
The Trust will have no assets or obligations prior to issuance of the
Certificates and will engage in no activities other than those described herein.
Accordingly, no financial statements with respect to the Trust are included in
this Prospectus Supplement and the related Prospectus. The audited financial
statements of the Certificate Insurer are set forth in Appendix A hereto.
S-3
SUMMARY
This summary is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus Supplement and the
accompanying Prospectus. Reference is made to the Indices of Principal
Definitions for the location in either the Prospectus or this Prospectus
Supplement of the definitions of certain capitalized terms.
Issuer Access Financial Mortgage Loan Trust 199_-_
(the "Trust").
Securities Offered $________ aggregate principal amount of
Class A-1 Group I Certificates, Variable
Pass-Through Rate; $_________ aggregate
principal amount of Class A-2 Group I
Certificates, ____% Pass-Through Rate;
$________ aggregate principal amount of
Class A-3 Group I Certificates, ____%
Pass-Through Rate; $________ aggregate
principal amount of Class A-4 Group I
Certificates, ____% Pass-Through Rate;
$________ aggregate principal amount of
Class A-5 Group I Certificates, ____%
Pass-Through Rate; and $________ aggregate
principal amount of Class A-6 Group II
Certificates.
Company Access Financial Lending Corp., a Delaware
corporation ("AFL") and a wholly-owned
subsidiary of Access Financial Holdings
Corp., a wholly-owned subsidiary of Cargill
Financial Services Corporation (the
"Company").
Master Servicer ___________________ (the "Master Servicer").
Trustee ____________________ (the "Trustee").
Originators of the
Mortgage Loans The Mortgage Loans to be acquired by
the Trust have been acquired by the Company
from the Originators, in accordance with the
Company's underwriting criteria.
Original Pool Principal
Balance $_________ as of the close of business on
the Cut-Off Date.
Original Group I
Pool Principal Balance $_________ as of the close of business on
the Cut-Off Date.
Original Group II
Pool Principal Balance $_________ as of the close of business on
the Cut-Off Date.
Closing Date ________, 199_.
Cut-Off Date ________, 199_.
S-4
Description of the
Certificates The Certificates will be issued by the Trust
pursuant to a Pooling and Servicing
Agreement to be dated as of ________, 199_
(the "Pooling and Servicing Agreement")
among the Master Servicer, the Company and
the Trustee. The $_________ aggregate
principal amount of Class A Group I
Certificates, comprised of five "sequential
pay" Classes (the "Class A Group I
Certificates") and the $________ aggregate
principal amount of Class A-6 Group II
Certificates (the "Class A-6 Group II
Certificates") are senior certificates as
described herein.
The assets of the Trust initially will
include two groups (each, a "Mortgage Loan
Group") of closed-end mortgage loans (the
"Initial Mortgage Loans") secured by
mortgages or deeds of trust (the
"Mortgages") on one-to-four family
residential properties (the "Mortgaged
Properties") to be conveyed to the Trust on
the Closing Date and funds on deposit in a
trust account (the "Pre-Funding Account") to
be established with the Trustee. The Group I
Certificates will represent undivided
ownership interests in a group of fixed-rate
Mortgage Loans ("Group I"). The Group II
Certificates will represent undivided
ownership interests in a group of
adjustable-rate Mortgage Loans ("Group II").
The Pooling and Servicing Agreement provides
that additional mortgage loans (the
"Subsequent Mortgage Loans") are intended to
be purchased by the Trust from the Company
from time to time on or before __________,
199_ from funds on deposit in the
Pre-Funding Account. Any Subsequent Mortgage
Loan so acquired by the Trust will be
assigned to one (and only one) of the
Mortgage Loan Groups. On the Closing Date an
aggregate cash amount not to exceed
$________ will be deposited with the Trustee
in the Pre-Funding Account; amounts not to
exceed $________ and $________ of such
aggregate amount will be funded from the
sale of the Group I Certificates and the
Group II Certificates, respectively, and may
be used to acquire Subsequent Mortgage Loans
with respect to Group I and Group II,
respectively.
The Trust will issue a subordinate Class of
Certificates with respect to Group I (the
"Class B Group I Certificates") and a
subordinate Class of Certificates with
respect to Group II (the "Class B Group II
Certificates", and together with the Class B
Group I Certificates, the "Class B
Certificates"), which are subordinated to
the Class A Group I Certificates and the
Class A-6 Group II Certificates,
respectively. The Class B Certificates are
not being offered hereby. The Trust will
also issue one residual class of
Certificates with respect to each REMIC
election made by the Trust (the "Residual
Certificates") which are not being offered
hereby and will initially be retained by the
Company or its affiliates. The Class A Group
I Certificates, the Class A-6 Group II
Certificates, the Class B Group I
Certificates, the Class B Group II
Certificates and the Residual Certificates
are collectively referred to as the
"Certificates". The Class A Group I
Certificates and the Class A-6 Group II
Certificates are collectively referred to as
the "Class A Certificates".
A. Class A Group I The Class A Group I Certificates represent
Certificates senior beneficial ownership interests in
Group I. One hundred percent (100%) of the
Group I Insured Distribution Amount (as
described herein under "Description of the
S-5
Certificates") due to the Owners of the
Class A Group I Certificates on each Payment
Date is guaranteed by the Certificate
Insurer. The final scheduled Payment Date
for the Class A-1 Group I Certificates is
________, for the Class A-2 Group I
Certificates is ________, for the Class A-3
Group I Certificates is ________, for the
Class A-4 Group I Certificates is ________
and for the Class A-5 Group I Certificates
is ________. Each Class of Class A Group I
Certificates is issuable in original
principal amounts of $1,000 and integral
multiples thereof except that one
certificate for each Class of Class A Group
I Certificates may be issued in a different
amount.
B. Class A-6 Group
II Certificates The Class A-6 Group II Certificates
represent senior beneficial ownership
interests in Group II. One hundred percent
(100%) of the Group II Insured Distribution
Amount (as described herein under
"Description of the Certificates") due to
the Owners of the Class A-6 Group II
Certificates on each Payment Date is
guaranteed by the Certificate Insurer. The
final scheduled Payment Date for the Class
A-6 Group II Certificates is ________. The
Class A-6 Group II Certificates are issuable
in original principal amounts of $1,000 and
integral multiples thereof except that one
certificate may be issued in a different
amount.
The Mortgage Loan
Pool The statistical information concerning the
Pool of Mortgage Loans is based upon Pool
information as of the close of business on
________, 199_ (the "Cut-Off Date").
The Pool of Mortgage Loans consists of Notes
secured by mortgages, deeds of trust or
other instruments creating liens or estates
in fee simple interests ("Mortgages") on
one- to four-family residential properties,
including investment properties. The
Mortgage Loans will not be insured by
primary mortgage insurance policies, nor
will any pool insurance insure the Mortgage
Loans. The Mortgage Loans are not guaranteed
by the Company, the Master Servicer, the
Sub-Servicers, the Trustee or any of their
respective affiliates. The Mortgage Loans
will be serviced by the Master Servicer on a
"scheduled/actual" basis (i.e., "scheduled"
interest and "actual" principal receipts are
required to be remitted by the Master
Servicer to the Trustee each month).
The Subsequent Mortgage Loans to be
purchased by the Trust, if available, will
be originated on or prior to ____________,
199_ by one or more of the Originators, sold
by such Originators to the Company and then
sold by the Company to the Trust. Any
Subsequent Mortgage Loans sold to the Trust
will be assigned to one (and only one) of
the two Mortgage Loan Groups. The Pooling
and Servicing Agreement will provide that
the Mortgage Loans in each Mortgage Loan
Group, following the conveyance of any
Subsequent Mortgage Loans to such Mortgage
Loan Group, must in the aggregate conform to
certain specified characteristics. See "The
Mortgage Loan Pool--Conveyance of Subsequent
Mortgage Loans."
Each Mortgage Loan in the Trust will be
assigned to one of two mortgage loan groups
("Group I" or the "Group II", each, a
"Mortgage Loan Group") comprised of Mortgage
Loans which bear fixed-interest rates only
in the case of Group I, and Mortgage Loans
which bear adjustable interest rates only in
S-6
the case of Group II. As of the Cut-Off
Date, the Initial Mortgage Loans in Group I
had an aggregate principal balance of
approximately $________ (the "Original Group
I Pool Principal Balance"), and the Initial
Mortgage Loans in the Group II had an
aggregate principal balance of approximately
$________ (the "Original Group II Pool
Principal Balance"). The sum of the Original
Group I Pool Principal Balance and the
Original Group II Pool Principal Balance is
equal to the "Original Pool Principal
Balance".
The Pool of Initial Mortgage Loans in Group
I consists of approximately ____ Mortgages
secured by Mortgaged Properties located in
__ states and the District of Columbia. The
Pool of Initial Mortgage Loans in Group I
consists as of the Cut-Off Date and as a
percentage of the Original Group I Pool
Principal Balance, of approximately ____% of
loans secured by first liens on the related
Mortgaged Properties and approximately ____%
of loans secured by second liens on the
related Mortgaged Properties. The Pool of
Initial Mortgage Loans in Group I consists
of approximately ____% of loans secured by
primary residences. ____% of the Initial
Mortgage Loans in Group I will be fully
amortizing and ____% of the Initial Mortgage
Loans in Group I are "balloon loans"
("Balloon Loans"). The weighted average
Combined Loan-to-Value Ratio (with property
values calculated as of the time of
origination of the related Mortgage Loan) of
the Pool of Initial Mortgage Loans in Group
I is approximately ____% with a range from
approximately ____% to approximately ____%
the weighted average remaining term to
maturity is approximately ___ months, with a
range from ___ months to ___ months; the
weighted average number of months since
origination is approximately ___; the
average principal balance of the Initial
Mortgage Loans in Group I is approximately
$________, the highest principal balance is
approximately $________ and the lowest
principal balance is approximately
$________; the Coupon Rates (the "Coupon
Rates") of the Initial Mortgage Loans in
Group I range from ____% per annum to ____%
per annum, with a weighted average Coupon
Rate of approximately ____% per annum.
The Pool of Initial Mortgage Loans in Group
II consists of ___ Mortgages secured by
Mortgaged Properties located in ___ states
and the District of Columbia. The Pool of
Initial Mortgage Loans in Group II consists
as of the Cut-Off Date and as a percentage
of the Original Group II Pool Principal
Balance, of ___% of loans secured by first
liens on the related Mortgaged Properties.
The Pool of Initial Mortgage Loans in Group
II consists of approximately ____% of loans
secured by primary residences. ____% of the
Initial Mortgage Loans in Group II will be
fully amortizing and ____% of the Initial
Mortgage Loans in Group II are Balloon
Loans. The weighted average Combined
Loan-to-Value Ratio (with property values
calculated as of the time of origination of
the related Mortgage Loan) of the Pool of
Initial Mortgage Loans in Group II is
approximately ____% with a range from
approximately ____% to approximately ____%;
the weighted average remaining term to
maturity is approximately ____ months, with
a range from ____ months to ____ months; the
weighted average number of months since
origination is approximately ___; the
average principal balance of the Initial
Mortgage Loans in Group II is approximately
$________, the highest principal balance is
approximately $________ and the lowest
principal balance is approximately
$_________; the Coupon Rates of the Initial
Mortgage Loans in Group II range from ____%
per annum to ____% per
S-7
annum, with a weighted average Coupon Rate
of approximately ____% per annum; the
margins of the Initial Mortgage Loans in
Group II range from ____% to ____% with a
weighted average margin of approximately
____% per annum. The Coupon Rates of
Mortgage Loans in Group II bear interest
rates that adjust semi-annually based on
six-month LIBOR. In general the interest
rates on the Mortgage Loans in Group II are
subject to periodic interest rate caps and
interest rate ceilings.
Following the initial Cut-Off Date, the
Trust will be obligated to purchase from
time to time on or before ________________,
199_ subject to the availability thereof,
Subsequent Mortgage Loans which will be
originated on or before ___________________,
199_ by one or more Originators, and
acquired by the Company from such
Originators for subsequent sale to the Trust
pursuant to a Purchase Agreement (the
"Purchase Agreement") between the Company
and the Trust. Any Subsequent Mortgage Loans
sold to the Trust will be assigned to one
(and only one) of the two Mortgage Loan
Groups. The aggregate principal amounts of
Subsequent Mortgage Loans which may be
acquired by the Trust and assigned to Group
I and Group II are $________________ and
$__________________, respectively. In
connection with each purchase of Subsequent
Mortgage Loans, the Trust will be required
to pay to the Company a cash purchase price
of 100% of the principal amount thereof from
the Pre-Funding Account. Under the Pooling
and Servicing Agreement, the Company will be
obligated to sell Subsequent Mortgage Loans
to the Trust and the Trust will be
obligated, subject to the satisfaction of
certain conditions described herein, to
purchase such Subsequent Mortgage Loans. The
Company will designate as a cut-off date
(each a "Subsequent Cut-Off Date") the first
day of the month in which Subsequent
Mortgage Loans will be conveyed by the
Company to the Trust (each a "Subsequent
Transfer Date") occurring during the Funding
Period (as defined herein). The Trust may
purchase the Subsequent Mortgage Loans only
from the Company and not from any other
person.
Pre Funding Account On the Closing Date an aggregate cash amount
(the "Pre-Funded Amount"), which shall not
exceed $___________, will be deposited with
the Trustee in an account in the name of the
Trustee on behalf of the Trust (the
"Pre-Funding Account"); amounts not to
exceed $_______________ and $______________
of such aggregate amount will be funded from
the sale of the Group I Certificates and the
Group II Certificates, respectively, and may
be used to acquire subsequent Mortgage Loans
with respect to Group I and Group II,
respectively. During the period (the
"Funding Period") from the Closing Date
until the earliest of the date on which (i)
the amount on deposit in the Pre-Funding
Account with respect to each Mortgage Loan
Group is less than $100,000, (ii) an Event
of Default occurs under the Pooling and
Servicing Agreement, or (iii) the
______________, 199_ Payment Date occurs,
the Pre-Funded Amount will be maintained in
the Pre-Funding Account. The Pre-Funding
Account will be reduced during the Funding
Period by the amount thereof used to
purchase Subsequent Mortgage Loans in
accordance with the Pooling and Servicing
Agreement. The Company expects that the
Pre-Funded Amount will be reduced to less
than $100,000 with respect to each Mortgage
Loan Group by the __________________, 199_
Payment Date. Any Pre-Funded Amount
remaining at the end of the Funding Period
will be used to prepay pro rata the Class A
Certificates of the related Class on the
________________, 199_ Payment Date; the
Pooling and Servicing Agreement does not
permit Pre-Funding Account moneys
S-8
funded from the sale of one Class of Class A
Certificates to be used to acquire Mortgage
Loans relating to either of the other
Classes of Class A Certificates.
Class A-1 Pass-
Through Rate On each Payment Date, the "Class A-1
Pass-Through Rate" will be equal to the
least of (i) the London interbank offered
rate for one-month United States dollar
deposits ("LIBOR") (calculated as described
under "Description of the Certificates--
Calculation of LIBOR") as of the second to
last business day prior to the immediately
preceding Payment Date (or as of the second
to the last business day prior to the
Closing Date in the case of the first
Payment Date) plus ____% per annum, (ii) the
weighted average net coupon rate (i.e., the
weighted average coupon rate less ____% for
Servicing Fees, Trustee fees and Certificate
Insurer premiums) for Group I for such
Payment Date, and (iii) ____% per annum.
Class A-2 Pass-
Through Rate ____% per annum.
Class A-3 Pass-
Through Rate ____% per annum.
Class A-4 Pass-
Through Rate ____% per annum.
Class A-5 Pass-
Through Rate ____% per annum.
Class A-6 Pass-
Through Rate On each Payment Date, the "Class A-6
Pass-Through Rate" will be equal to the
lesser of (i) LIBOR as of the second to last
business day prior to the immediately
preceding Payment Date (or as of the second
to the last business day prior to the
Closing Date in the case of the first
Payment Date) plus ____% per annum, and (ii)
the weighted average net coupon rate (i.e.,
the weighted average coupon rate less
Servicing Fees, Trustee fees and Certificate
Insurer premiums) for Group II for such
Payment Date (the "Class A-6 Available Funds
Pass-Through Rate").
The "Class A-6 Formula Pass-Through Rate"
for a Payment Date is the rate described in
clause (i) of the definition of "Class A-6
Group II Pass-Through Rate" on such Payment
Date. The excess, if any, of (x) the
interest due on the Class A-6 Certificates
on any Payment Date calculated at the Class
A-6 Formula Pass-Through Rate over (y) the
interest due on the Class A-6 Certificates
calculated at the Class A-6 Available Funds
Pass-Through Rate is the "Supplemental
Interest Amount" for such Payment Date.
If, on any Payment Date, there is a
Supplemental Interest Amount calculated for
any Payment Date, the Owners of certain of
the Class R Certificates have agreed to pay
such amount. If the full amount of the
Supplemental Interest Amount is not paid on
a Payment Date, then the amount not paid
will accrue interest at the Class A-6
Formula Pass-Through Rate until actual
payment.
S-9
The Certificate Insurer does not guarantee
the payment of, nor do the ratings assigned
to the Class A-6 Certificates address the
likelihood of the payment of, any
Supplemental Interest Amount.
Payment Dates, Record Dates
and Accrual Periods On the ____ day of each month, or, if such
day is not a business day, then the next
succeeding business day, commencing
________, 199_ (each such day being a
"Payment Date"), the Trustee will be
required to distribute to the Owners of
record of the Certificates as of the close
of business on the first business day of the
current calendar month (with respect to the
Class A Fixed Rate Certificates) or as of
the close of business on the business day
immediately preceding such Payment Date
(with respect to the Class A-1 Group I
Certificates and the Class A-6 Group II
Certificates), except in the case of the
first Payment Date, on which distributions
will be made to holders of record as of the
Closing Date (each such date being the
applicable "Record Date") such Owners'
Percentage Interests in the amounts required
to be distributed to the Owners of each
Class of Certificates on such Payment Date.
Interest will accrue on each Class A-2, A-3,
A-4 and A-5 Group I Certificate during the
period from and including the second day of
the month preceding the month in which a
Payment Date occurs through and including
the first day of the month in which such
Payment Date occurs and on each Class A-1
Group I Certificate and Class A-6 Group II
Certificate from and including each Payment
Date (or the Closing Date, with respect to
the initial Payment Date) to and including
the day preceding the current Payment Date.
Each period referred to in the immediately
preceding sentence relating to the accrual
of interest is the "Accrual Period" for the
related Class of Certificates. Interest will
be calculated on the basis of a 360-day year
consisting of twelve 30-day months for the
Class A-2, A-3, A-4 and A-5 Group I
Certificates. Interest for the Class A-1
Group I Certificates and the Class A-6 Group
II Certificates will be calculated based
upon the actual number of days in the
related Accrual Period, divided by 360.
Distributions on the
Certificates
A. Priority of
Distributions As more fully described herein, each Class
of Certificates has a specified priority to
the collections on the Pool of Mortgage
Loans which comprise the related Mortgage
Loan Group, subject to the credit
enhancement and cross-collateralization
provisions hereinafter described. In
addition, _______________________, as
Certificate Insurer, is required pursuant to
the Certificate Insurance Policy to make
available to the Trustee on each Payment
Date 100% of the related Class A Insured
Distribution Amount for the related Mortgage
Loan Group to the extent that available
funds remaining after payment of the
Certificate Insurer's premium and the
Trustee's fee are insufficient to cover such
amount.
The Owners of the Class A Group I
Certificates and the Class A-6 Group II
Certificates will receive certain monthly
distributions of principal on each Payment
Date which generally reflect collections of
principal during the prior Remittance Period
with respect to the related Mortgage Loan
Group.
S-10
The Certificate Insurance Policy only
guarantees the amount by which the sum of
the related Interest Distribution Amount and
the related Subordination Deficit, if any,
exceeds Total Available Funds.
B. Distributions on
the Class A
Certificates
1. Interest Interest will accrue on each Class of Class
Distributions A Certificates at the related Class A
Pass-Through Rate during each Accrual Period
for such Class of Certificates, and will be
distributed, to the extent of the Total
Available Funds for the related Mortgage
Loan Group plus the proceeds of any Insured
Payments, on each Payment Date. Interest
accruing during the related Accrual Period
at the related Class A Pass-Through Rate on
the related Class A Principal Balance
immediately preceding such Payment Date is
referred to herein as the "Class A Interest
Distribution Amount" for the related Class
of Class A Certificates. The "Class A
Interest Distribution Amount" does not
include the amounts, if any, of the
Supplemental Interest Amount applicable to
the Class A-6 Group II Certificates. See
"Description of the Certificates -- Flow of
Funds and Distributions on the Class A
Certificates" herein.
2. Principal The Holders of the Class A Certificates
Distributions issued with respect to each Mortgage Loan
Group will be entitled to receive on each
Payment Date a distribution allocable to
principal (the "Class A Principal
Distribution Amount" for such Mortgage Loan
Group and Payment Date) which will be equal
to the lesser of:
(a) the Total Available Funds for the
related Mortgage Loan Group plus any
related Insured Payment minus the
interest then due on account of the
related Class A Certificates; and
(b) (i)the sum, without duplication, of:
(x) for the Mortgage Loans in the
related Mortgage Loan Group,
the sum of (i) the principal
portion of all scheduled and
unscheduled payments received
on the Mortgage Loans during
the related Remittance Period,
including (a) any full or
partial principal prepayments
of any Mortgage Loans
("Prepayments") received
during the related Remittance
Period, (b) the proceeds
received on any insurance
policy relating to a Mortgage
Loan, a Mortgaged Property or
a REO Property, net of
proceeds to be applied to the
repair of the Mortgaged
Property or released to the
Mortgagor (as defined herein)
and net of expenses
reimbursable therefrom
("Insurance Proceeds"), (c)
proceeds received in
connection with the
liquidation of any defaulted
Mortgage Loans, whether by
trustee's sale, foreclosure
sale or otherwise
("Liquidation Proceeds"), net
of fees and advances
reimbursable therefrom ("Net
Liquidation Proceeds") and (d)
proceeds received in
connection with a taking of a
Mortgaged Property by
condemnation or the exercise
of eminent domain or in
connection with a release of
part of
S-11
the Mortgaged Property from
the related lien ("Released
Mortgaged Property Proceeds"),
(ii) the principal portion of
all amounts deposited into the
Principal and Interest Account
on the related Remittance Date
in connection with the
repurchase of, or the
substitution of a
substantially similar mortgage
loan for, a Mortgage as to
which there is defective
documentation or a breach of a
representation or warranty
contained in the Pooling and
Servicing Agreement, (iii) any
moneys released from the
Pre-Funding Account at the end
of the Funding Period as a
prepayment of the related
Class of Class A Certificates,
and (iv) the proceeds received
by the Trustee in connection
with any termination of the
Trust, to the extent that such
proceeds relate to principal.
(y) the amount of any
Subordination Deficit with
respect to the related
Mortgage Loan Group for such
Payment Date; and
(z) the amount of any
Subordination Increase Amount
with respect to the related
Mortgage Loan Group for such
Payment Date, to the extent of
the Class B Interest available
to be applied for such purpose
for such Payment Date;
minus
(ii) the amount of any Subordination
Reduction Amount with respect to the
related Mortgage Loan Group for such
Payment Date.
The amount of any Subordination Deficit or
Subordination Increase Amount to be paid to
the Holders of the Class A Certificates will
be paid to the Holders of the Class A
Certificates then entitled to receive
distributions of principal. Similarly, the
amount of any Subordination Reduction Amount
to be deducted from the Class A Principal
Distribution Amount for the Class A
Certificates will be deducted from such
amounts otherwise due to the Holders of the
Class A Certificates then entitled to
receive distributions of principal.
The amount of any loss on a Liquidated
Mortgage Loan in the related Mortgage Loan
Group (i.e., a Realized Loss) may or may not
be allocated to the Owners of the Class A
Certificates issued with respect to such
Mortgage Loan Group on the Payment Date
which immediately follows the event of loss.
However, the Owners of each Class of the
Class A Certificates are entitled to receive
ultimate recovery of 100% of the original
principal balance for such Class.
The Class A Group I Certificates have been
tranched into five "sequential pay" Classes,
such that the Class A-5 Group I Certificates
are entitled to receive no principal
distributions until the Class A-4
Certificate Principal Balance has been
reduced to zero, the Class A-4 Group I
Certificates are entitled to receive no
principal distributions until the Class A-3
Certificate Principal Balance has been
reduced to zero, the Class A-3 Group I
Certificates are entitled to receive no
principal distributions until the Class A-2
Certificate Principal Balance has been
reduced to zero, and the Class A-
S-12
2 Group I Certificates are entitled to
receive no principal distributions until the
Class A-1 Certificate Principal Balance has
been reduced to zero.
As of any Payment Date, the "Class A
Certificate Principal Balance" for a Class
of Class A Certificates, prior to any
distribution on such Payment Date, will
equal the original Class A Certificate
Principal Balance of such Class less the sum
of all amounts previously distributed to the
Owners of the related Class of Class A
Certificates on account of principal. "Class
A Group I Certificate Principal Balance"
refers to the Class A Group I Certificates,
and the "Class A Group II Certificate
Principal Balance" refers to the Class A-6
Group II Certificates.
C. Class A
Distribution Amounts
and Class A Insured The "Class A Distribution Amount" with
Distribution Amounts respect to each Class of Class A
Certificates and Payment Date is the sum,
without duplication, of (x) the Class A
Interest Distribution Amount with respect to
such Class and Payment Date, (y) the Class A
Principal Distribution Amount, if any, with
respect to such Class and Payment Date and
(z) the Class A Carry-Forward Amount, if
any, with respect to such Class and Payment
Date.
The "Class A Carry-Forward Amount" means,
with respect to each Class of Class A
Certificates and Payment Date, the sum,
without duplication, of (a) the amount, if
any, by which (x) the Class A Distribution
Amount for the related Class of Class A
Certificates as of the immediately preceding
Payment Date exceeded (y) the amount of the
actual distribution, exclusive of any
portion thereof representing the proceeds of
an Insured Payment, to the Owners of the
related Class of Class A Certificates on
such immediately preceding Payment Date and
(b) interest on the amount, if any,
described in clause (a) at the related Class
A Pass-Through Rate from such immediately
preceding Payment Date.
The "Class A Insured Distribution Amount"
with respect to each Class of Class A
Certificates and Payment Date is the sum,
without duplication, of (x) the Class A
Interest Distribution Amount with respect to
such Class and Payment Date, (y) the amount
of any Subordination Deficit with respect to
such Class and Payment Date and (z) the
Class A Carry-Forward Amount, if any, with
respect to such class and Payment Date.
To the extent that the Certificate Insurer
pays Insured Payments the Certificate
Insurer, as subrogee, will be entitled to
receive the Class A Carry-Forward Amount.
The Pooling and Servicing Agreement provides
that to the extent any portion of a Class A
Carry-Forward Amount relates to principal
such portion shall be treated as a
distribution of principal, with any portion
which relates to interest being treated as a
distribution of interest.
Mandatory Prepayment Of the maximum original Pre-Funding Amount
of $________, maximum amounts of $________
and $________ will be funded from the
proceeds of the scale of the Group I
Certificates and the Group II Certificates,
respectively and may be used to acquire
Subsequent Mortgage Loans with respect to
Group I and Group II, respectively. In the
event that, on the
S-13
199_ Payment Date, not all of the
$________ and $________ funded from the
proceeds of the sale of the Group I
Certificates and the Group II Certificates,
respectively, has been used to acquire
subsequent Mortgage Loans with respect to
the related Mortgage Loan Group, then the
related Class A Certificates will be prepaid
in part on such date, on a pro rata basis
with respect to the Owners of individual
Certificates of the related Group, from and
to the extent of such remaining amounts. The
Pooling and Servicing Agreement does not
permit Pre-Funding Account moneys funded
from the sale of one Group of Class A
Certificates to be used to acquire Mortgage
Loans relating to the other Group of Class A
Certificates.
Registration of the
Class A Certificates The Class A Certificates will initially be
issued in book-entry form. Persons acquiring
beneficial ownership interests in such Class
A Certificates ("Beneficial Certificate
Owners") may elect to hold their interests
through The Depository Trust Company
("DTC"), in the United States, or Centrale
de Livraison de Valeurs Mobiliers, S.A.
("CEDEL") or the Euroclear System
("Euroclear"), in Europe. Transfers within
DTC, CEDEL or Euroclear, as the case may be,
will be in accordance with the usual rules
and operating procedures of the relevant
system. So long as the Class A Certificates
are book-entry certificates, such Class A
Certificates will be evidenced by one or
more Class A Certificates registered in the
name of Cede & Co. ("Cede"), as the nominee
of DTC or one of the relevant depositories
(collectively, the "European Depositories").
Cross-market transfers between persons
holding directly or indirectly through DTC,
on the one hand, and counterparties holding
directly or indirectly through CEDEL or
Euroclear, on the other, will be effected in
DTC through Citibank N.A. ("Citibank") or
Morgan Guaranty Trust Company of New York
("Morgan"), the relevant depositories of
CEDEL or Euroclear, respectively, and each a
participating member of DTC. The Class A
Certificates will initially be registered in
the name of Cede. The interests of the
Owners of such Class A Certificates will be
represented by book-entries on the records
of DTC and participating members thereof. No
Beneficial Certificate Owner will be
entitled to receive a definitive certificate
representing such person's interest, except
in the event that Definitive Certificates
(as defined herein) are issued under the
limited circumstances described herein. All
references herein to any Class A
Certificates reflect the rights of
Beneficial Certificate Owners only as such
rights may be exercised through DTC and its
participating organizations for so long as
such Class A Certificates are held by DTC.
See "Special Considerations" and
"Description of the Certificates --
Book-Entry Registration of the Class A
Certificates" herein.
Servicing of the The Master Servicer has agreed to service
Mortgage Loans the Mortgage Loans in accordance with the
Pooling and Servicing Agreement. In certain
limited circumstances, the Master Servicer
may be removed as Master Servicer under the
Pooling and Servicing Agreement. In the
event that __________ is removed as Master
Servicer under the Pooling and Servicing
Agreement, a successor Master Servicer will
be appointed thereunder.
The Master Servicer has entered into certain
Sub-Servicing Agreements with respect to the
Mortgage Loans. See "The Company and the
Master Servicer."
S-14
Monthly Servicing Fee The Master Servicer will retain fees not in
excess of ____% per annum (the "Servicing
Fee"), payable monthly at one-twelfth the
annual rate, of the then outstanding
principal amount of each Mortgage Loan
serviced by it as of the close of business
on the first day of the preceding calendar
month.
Subordination of Class B The Class B Certificates are subordinated to
Certificates the Class A Certificates. Such subordination
is intended to enhance the likelihood that
the Owners of the Class A Certificates will
receive full and timely receipt of all
amounts due to them. See "Description of the
Certificates -- Subordination of Class B
Certificates" herein.
Certificate
Insurer __________________, a _________________.
Certificate The Company will obtain the Certificate
Insurance Policy Insurance Policy, which is non-cancelable,
in favor of the Trustee on behalf of the
Owners of the Class A Certificates. On each
Payment Date, the Certificate Insurer is
required to make available to the Trustee
the amount of any insufficiency in Total
Available Funds for the related Mortgage
Loan Group as of such Payment Date necessary
to distribute the Class A Insured
Distribution Amount with respect to the
related Mortgage Loan Group. The Certificate
Insurance Policy does not guarantee any
specified rate of Prepayments. See "The
Certificate Insurance Policy and the
Certificate Insurer" and "Description of the
Certificates--Subordination of Class B
Certificates" herein.
The Trustee or paying agent will (i) receive
as attorney-in-fact of each Owner of the
Class A Certificates, any Insured Payment
from the Certificate Insurer and (ii)
disburse the same to each Owner of the
related Class A Certificates in accordance
with the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement will
provide that to the extent the Certificate
Insurer makes Insured Payments, either
directly or indirectly (as by paying through
the Trustee or a paying agent), to the
Owners of any Class A Certificates, the
Certificate Insurer will be subrogated to
the rights of such Owners of such Class A
Certificates with respect to such Insured
Payments. The Certificate Insurer will
receive reimbursement for such Insured
Payments, but only from the sources and in
the manner provided in the Pooling and
Servicing Agreement. Such subrogation and
reimbursement will have no effect on the
Certificate Insurer's obligations under the
Certificate Insurance Policy.
Optional The Company will have the right to purchase
Termination all the Mortgage Loans on any Payment Date
when the aggregate principal balances of the
Mortgage Loans has declined to ten percent
or less of the Original Pool Principal
Balance (the "Company Optional Termination
Date"). See "Description of the Certificates
-- Optional Termination by the Company"
herein.
Auction Sale The Pooling and Servicing Agreement requires
that, within ninety days following the
Company Optional Termination Date, if the
Company has not exercised its optional
termination right by such date, the Trustee
shall solicit bids for the purchase of all
Mortgage Loans remaining in the Trust. In
the event that satisfactory bids are
received as described in the Pooling and
Servicing Agreement, the net sale proceeds
will be distributed to Certificateholders,
in the same order of priority as collections
received in respect of the Mortgage Loans.
If satisfactory bids are not received, the
Trustee shall decline to sell the Mortgage
Loans and shall not be under any
S-15
obligation to solicit any further bids or
otherwise negotiate any further sale of the
Mortgage Loans. Such sale and consequent
termination of the Trust must constitute a
"qualified liquidation" of each REMIC
established by the Trust under Section 860F
of the Internal Revenue Code of 1986, as
amended, including, without limitation, the
requirement that the qualified liquidation
takes place over a period not to exceed 90
days.
Ratings It is a condition of the original issuance
of the Class A Certificates that the Class A
Certificates receive ratings of ___ or ___
by _____ and _____, respectively. 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 entity.
Such ratings address credit risk, but do not
purport to address any prepayment risk
associated with the Class A Certificates,
nor do such ratings cover the payment of the
Supplemental Interest Amounts.
Certain Federal Income
Tax Consequences One or more elections will be made to treat
certain assets of the Trust as one or more
REMICs for federal income tax purposes. Each
Class of the Class A Certificates will be
designated as a "regular interest" in a
REMIC and a separate class of certificates
will be designated as the "residual
interest" with respect to each REMIC.
Certificateholders that would otherwise
report income under a cash method of
accounting will be required to include in
income interest on the Class A Certificates
(including original issue discount, if any)
in accordance with an accrual method of
accounting. See "Certain Federal Income Tax
Consequences" herein and in the Prospectus.
ERISA As described under "ERISA Considerations"
Considerations herein, the Class A Certificates may be
purchased by a pension or other employee
benefit plan subject to the Employee
Retirement Income Security Act of 1974, as
amended ("ERISA"), or by individual
retirement accounts or Keogh plans covering
only a sole proprietor or partner which are
not subject to ERISA but are subject to
Section 4975 of the Code ("Plans"), after
the earlier of (i) the date on which the
Funding Period expires and (ii) the date on
which the Department of Labor amends the
Exemption (as defined below) to permit the
use of pre- funding accounts thereunder. See
"ERISA Considerations" herein and in the
Prospectus.
Legal Investment The Class A Certificates will not constitute
Considerations "mortgage related securities" for purposes
of the Secondary Mortgage Market Enhancement
Act of 1984 ("SMMEA"). Accordingly, many
institutions may not be legally authorized
to invest in the Class A Certificates.
Special For a discussion of certain factors that
Considerations should be considered by prospective
investors in the Class A Certificates, see
"Risk Factors" herein and in the
accompanying Prospectus.
S-16
RISK FACTORS
Prospective investors should consider, among other things, the
following factors (as well as the factors set forth under "Risk Factors" in the
accompanying Prospectus) in connection with the purchase of the Class A
Certificates.
Maturity and Prepayment Considerations. All of the Mortgage Loans are
prepayable in full or in part at any time. The rate of Prepayments on the
Mortgage Loans may be influenced by a variety of economic, social and other
factors, including interest rates, the availability of alternative financing and
homeowner mobility. Although there is little significant data available on the
effects of interest rates on prepayment rates for non-purchase money,
non-conforming credit mortgage loans, a number of factors suggest that the
prepayment behavior of a pool of such mortgage loans may be significantly
different from that of a pool of purchase money, conforming-credit mortgage
loans. One such factor is the typically smaller principal balance of the average
non-purchase money mortgage loan than that of the average purchase money
mortgage conventional loan in the typical pool. A smaller principal balance is
easier for a borrower to prepay than a larger balance and therefore a higher
prepayment rate may result for a non-purchase money mortgage loan pool than for
a pool of purchase money mortgage loans, irrespective of the relative average
interest rates in the two pools and the general interest rate environment. A
small principal balance, however, also may make refinancing a non-purchase money
mortgage loan at a lower loan rate less attractive to the borrower relative to
refinancing a larger principal balance non-purchase money mortgage loan, as the
perceived impact to the borrower of lower interest rates on the size of the
monthly payment on a mortgage loan is much less than for a larger principal
balance non-purchase money mortgage loan. Other factors that might be expected
to affect the prepayment rate of a pool of mortgage loans include the amounts
of, and interest rates on, the related senior mortgage loans, if one exists, and
the use of the first mortgage loans as long-term financing for home purchase and
junior mortgage loans as shorter-term financing for a variety of purposes,
including debt consolidation, home improvement, education expenses and purchases
of consumer durables such as automobiles. See "Special Considerations -- Yield
and Prepayment Considerations" in the accompanying Prospectus.
The weighted average life of a pool of loans is the average amount of
time for which each dollar of principal on such loans is outstanding. Because it
is expected that there will be payments of principal of Mortgage Loans in
advance of the scheduled due date for the payments of such principal (the
"Prepayments") and defaults on the Mortgage Loans, the actual weighted average
life of the Mortgage Loans is expected to vary substantially from the weighted
average life of the Mortgage Loans based upon their amortization schedules.
Prepayments may result from voluntary early payments by borrowers (including
payments in connection with refinancings of the related first mortgage loans or
the Mortgage Loan itself), the sale of Properties subject to due-on-sale
clauses, and liquidations due to default, as well as the receipt of proceeds
from physical damage insurance policies. In addition, repurchases of Mortgage
Loans from the Trust will have the same effect as Prepayments of the related
Mortgage Loans. Substantially all of the Mortgage Loans contain "due-on-sale"
provisions, and the Pooling and Servicing Agreement generally requires the
Master Servicer to enforce such provisions unless such enforcement is not
permitted by applicable law. See "Description of the Certificates -- Flow of
Funds and Distributions on the Class A Certificates", " -- General Servicing
Procedures", " -- Termination of the Trust", "Legal Investment Considerations",
and "Maturity, Prepayment and Yield Considerations" herein.
Risk of Higher Default Rates for Mortgage Loans with Balloon Payments.
____% of the Original Group I Pool Principal Balance of the Mortgage Loans in
Group I and ____% of the Original Group II Pool Principal Balance of the
Mortgage Loans in Group II are Balloon Loans. See "Special Considerations --
Risk of Losses Associated with Balloon Loans" in the accompanying Prospectus.
Geographic Concentration of Mortgage Loans. Approximately ____% of the
Original Group I Pool Principal Balance represents Mortgage Loans relating to
Mortgaged Properties located in five states: ________ ____%, _________ ____%,
________ ____%, ________ ____%, and ________ ____% Approximately ____%
S-17
of the Original Group II Pool Principal Balance represents Mortgage Loans
relating to Mortgaged Properties located in five states: _________ ____%,
________ ____%, ________ ____%, _________ ____% and ________ ____%. See "Special
Considerations--Geographic Concentration."
Risk of Higher Default Rates for Junior Lien Loans. ____% of the
Original Group I Pool Principal Balance of the Mortgage Loans relates to
Mortgage Loans secured by liens which are in a second position. See "Special
Considerations -- Risk of Losses Associated with Junior Liens" in the
Prospectus.
Risk of Potential Termination of Trust. The Trust may be terminated
when the aggregate principal balances of the Mortgage Loans has declined to ten
percent or less of the Original Pool Principal Balance, either by the Company,
exercising its optional termination right, or pursuant to the Auction Sale. See
"Description of Certificates -- Optional Termination by the Company" and
"Description of the Certificates -- Auction Sale". Such a termination would be
the equivalent of a prepayment of all the Mortgage Loans. The Owners of the
Class A Certificates would receive from the proceeds resulting from any such
termination, any interest accrued and unpaid, together with any distribution of
principal owed and unpaid, in the order of priority set forth under "Description
of Certificates -- Distributions on the Class A Certificates". Any such
termination of the Trust will reduce the yield to maturity on Class A
Certificates purchased at a premium. See "Description of the Certificates --
Termination of the Trust" herein.
Effect of Mortgage Loan Yield on Class A-1 and Class A-6 Pass-Through
Rate. The Class A-1 Pass- Through Rate is based upon the value of an adjustable
index (one-month LIBOR), while the Coupon Rates on the Group I Mortgage Loans
are fixed. Consequently, the interest which becomes due on such Mortgage Loans
in Group I (net of the Servicing Fees, the Trustee fees and the Certificate
Insurer premiums) during any Remittance Period may be less than the amount of
interest that would accrue at one-month LIBOR plus the margin on the Class A-1
Group I Certificates, during the related Accrual Period, and will be limited to
such lower amount. The Class A-1 Group I Certificates do not contain any
"carry-forward" or "catch-up" feature if the amount of interest paid is so
limited.
The Class A-6 Group II Pass-Through Rate is based upon the value of an
index (one-month LIBOR) which is different from the value of the indices
applicable to the Mortgage Loans in Group II, as described under "The Mortgage
Pool -- Group II" (either as a result of the use of a different index, rate
determination date, rate adjustment date or rate cap or floor). The Mortgage
Loans in Group II primarily adjust semi-annually or yearly based upon a
six-month LIBOR index whereas the Class A-6 Group II Pass-Through Rate adjusts
monthly based on a one-month LIBOR index and is limited by the Class A-6
Available Funds Pass-Through Rate, unless Supplemental Interest Amounts (the
payment of which is not insured by the Certificate Insurer and which is not
rated) are funded in full. Consequently the actual Class A-6 Pass-Through Rate
for such Payment Date may not equal the Class A-6 Formula Pass-Through Rate for
such Payment Date. In particular, the interest rates on the Mortgage Loans in
Group II adjust less frequently, with the result that the actual Class A-6 Pass-
Through Rate may be lower than the Class A-6 Formula Pass-Through Rate for
extended periods in a rising interest rate environment. In addition, one-month
LIBOR and six-month LIBOR may respond to different economic and market factors,
and there is not necessarily any correlation between them. Thus, it is possible,
for example, that one-month LIBOR may rise during periods in which one or more
Indices are falling or that, even if both one-month LIBOR and Indices rise
during the same period, one-month LIBOR may rise much more rapidly than
six-month LIBOR. See "Class A-6 Pass-Through Rate" in the Summary for this
Prospectus Supplement.
The Subsequent Mortgage Loans and the Pre-Funding Account. If the principal
amount of eligible
S-18
Mortgage Loans available during the Funding Period and sold to the Trust is less
than 100% of the Pre-Funded Amount, the Company will have insufficient Mortgage
Loans to sell to the Trust, on the Subsequent Transfer Dates, thereby resulting
in prepayments of principal to Owners of one or more Classes of Class A
Certificates as described herein. In addition, any conveyance of Subsequent
Mortgage Loans is subject to the following conditions, among others: (i) each
such Subsequent Mortgage Loan must satisfy the representations and warranties
specified in the Purchase Agreement and the Pooling and Servicing Agreement;
(ii) the Company will not select such Subsequent Mortgage Loans in a manner that
they believe is adverse to the interests of the Class A Certificateholders;
(iii) the Company will deliver certain opinions of counsel with respect to the
validity of the conveyance of such Subsequent Mortgage Loans; and (iv) as of the
Subsequent Cut-Off Date, the Mortgage Loans in the related Mortgage Loan Group
at that time, including the Subsequent Mortgage Loans to be conveyed by the
Company as of such Subsequent Cut-Off Date, will satisfy the criteria set forth
in the Pooling and Servicing Agreement, as described herein under "The Mortgage
Loan Pool - Conveyance of Subsequent Mortgage Loans".
To the extent that amounts on deposit in the Pre-Funding Account have
not been fully applied to the purchase of Subsequent Mortgage Loans by the Trust
by the end of the Funding Period, the Owners of one or more Classes of Class A
Certificates will receive a prepayment of principal in an amount equal to the
Pre- Funded Amount allocable to such Class and remaining in the Pre-Funding
Account following the purchase of any Subsequent Mortgage Loans on the first
Payment Date following the Funding Period. Although no assurances can be given,
it is anticipated by the Company that the principal amount of Subsequent
Mortgage Loans sold to the Trust will require the application of substantially
all amounts on deposit in the Pre-Funding Account and that there will be no
material principal prepayment to the Class A Certificateholders.
Each Subsequent Mortgage Loan must satisfy the eligibility criteria
referred to above at the time of its addition. However, Subsequent Mortgage
Loans may have been originated by the Originators or purchased by the Company
using credit criteria different from those which were applied to the Initial
Home Mortgage and may be of a different credit quality. Therefore, following the
transfer of Subsequent Mortgage Loans to the related Mortgage Loan Group, the
characteristics of the related Mortgage Loan Group included in the Trust may
vary significantly from those of the Initial Mortgage Loans included in such
Mortgage Loan Group. See "The Mortgage Loan Pool - Conveyance of Subsequent
Mortgage Loans".
USE OF PROCEEDS
The Trust will acquire the Mortgage Loans from the Company concurrently
with the sale of the Certificates and the net proceeds from the sale of the
Certificates will be paid to the Company. Such net proceeds (together with the
Residual Certificates retained by the Company or its affiliates) will, in
effect, represent the purchase price paid by the Trust to the Company for the
Mortgage Loans. The net proceeds, after funding transaction costs, to be
received from the sale of the Mortgage Loans will be added to the Company's
general funds and will be available for general corporate purposes.
THE COMPANY
Access Financial Lending Corp. ("AFL" or the "Company"), a Delaware
corporation, provides housing finance programs to consumers throughout the
United States through its Mortgage Lending and Manufactured Housing Programs.
The Company is the successor by merger of Access Financial Lending Corp., a
Delaware corporation (formerly Equicon Corporation), whose principal business
was the purchase of non-conforming mortgages, and Access Financial Corp., whose
principal business was the retail financing of manufactured housing. The merger
occurred on July 1, 1996.
S-19
The Company is a wholly-owned subsidiary of Access Financial Holding
Corp. ("AFH"), which is a Delaware corporation and wholly-owned subsidiary of
Cargill Financial Services Corporation. AFH was formed in January 1996 to
facilitate the continued growth of the housing finance business.
The Company maintains its principal offices at 400 Highway 169 South,
Suite 400, St. Louis Park, Minnesota 55426-0365.
As described herein, AFL will be obligated to repurchase certain
Mortgage Loans pursuant to certain representations and warranties made with
respect to the Mortgage Loans. See "The Mortgage Loan Pool -- Mortgage Loan
Program -- Underwriting Standards; Representations" herein and "Mortgage Loan
Program" in the accompanying Prospectus.
THE MASTER SERVICER
As Master Servicer, ________ will be obligated to service the Mortgage
Loans pursuant to the Pooling and Servicing Agreement. See "Description of the
Certificates -- General Servicing Procedures" herein. The Master Servicer has
entered into a sub-servicing agreement with __________, which provides for
servicing and administration of the Mortgage Loans. Notwithstanding such
sub-servicing agreement, the Master Servicer shall be obligated to the same
extent and under the same terms and conditions under the Pooling and Servicing
Agreement as if it alone were servicing and administering the Mortgage Loans.
See "Description of the Certificates--General Servicing Procedures" herein.
THE MORTGAGE LOAN POOL
General
The statistical information concerning the Pool of Mortgage Loans is
based upon Pool information as of the close of business on ________, 199_ (the
"Cut-Off Date").
The Initial Mortgage Loans consist of ____ mortgage loans evidenced by
promissory notes (the "Notes") secured by deeds of trust, security deeds or
mortgages on the properties (the "Properties" or "Mortgaged Properties"), which
are located in ___ states and the District of Columbia. The Properties securing
the Initial Mortgage Loans consist of one- to four-family residences (which may
be detached, part of a one- to four-family dwelling, a condominium unit, a
townhouse or a unit in a planned unit development). The Properties may be
owner-occupied (which includes second and vacation homes) and non-owner occupied
investment properties.
Each Mortgage Loan in the Trust will be assigned to one of two mortgage
loan groups: "Group I" or "Group II", (each a "Mortgage Loan Group") comprised
of Mortgage Loans which bear fixed interest rates only, in the case of Group I,
and Mortgage Loans which bear adjustable interest rates only, in the case of
Group II. The Class A Group I Certificates will be issued in respect of Group I
and the Class A-6 Group II Certificates will be issued in respect of Group II.
The Initial Mortgage Loans in Group I consist of ____% of fully
amortizing mortgage loans and ____% of Balloon Loans; consist of approximately
____% of loans secured by first liens on the related Properties, with the
remainder representing second liens; consist of approximately ____% of loans
secured by primary residences. No Group I Initial Mortgage Loan is more than ___
days contractually delinquent as of the Cut-Off Date.
The Initial Mortgage Loans in Group II consist of ____% of fully
amortizing mortgage loans and ____% of Balloon Loans; consist of ____% of loans
secured by first liens on the related Properties; and consist of
S-20
approximately ____% of Loans secured by primary residences. No Group II Initial
Mortgage Loan is more than ___ days contractually delinquent as of the Cut-Off
Date.
Additional mortgage loans (the "Subsequent Mortgage Loans") are
intended to be purchased by the Trust from the Company from time to time on or
before , 199_, from funds on deposit in the Pre- Funding Account. The Initial
Mortgage Loans and the Subsequent Mortgage Loans are referred herein
collectively as the "Mortgage Loans". The Subsequent Mortgage Loans to be
purchased by the Trust, if available, will be originated on or prior to , 199_
by the Originators, sold by the Originators to the Company and then sold by the
Company to the Trust. The Pooling and Servicing Agreement will provide that the
Mortgage Loans in each Mortgage Loan Group, following the conveyance of the
Subsequent Loans, must in the aggregate conform to certain specified
characteristics described below under "Conveyance of Subsequent Mortgage Loans".
S-21
Delinquency Experience on the Company's
Portfolio of Mortgage Loans(1)
As of
----------------------------------------------------------------------------------------
March December June 30, December June 30, December June 30,
31, 199 31, 199 199 31, 199 199 31, 199 199
----------------------------------------------------------------------------------------
Number of Mortgage Loans.........
Dollar amount of Mortgage Loans.. $ $ $ $ $ $ $
Delinquency Period
30-59 Days
% of number of loans (2)..... % % % % % % %
% of dollar amount of loans (3) % % % % % % %
60-89 days
% of number of loans (2)..... % % % % % % %
% of dollar amount of loans (3) % % % % % % %
90 days and over
% of number of loans (2)..... % % % % % % %
% of dollar amount of loans (3) % % % % % % %
Foreclosed Properties
% of number of loans (2)..... % % % % % % %
% of dollar amount of loans (3) % % % % % % %
- ----------
(1) The Mortgage Loans comprising the Company's portfolio were originated
beginning in April 1992. The variable rate program commenced in April
1994.
(2) The number of delinquent Mortgage Loans or the number of foreclosed
properties as a percentage of the total "Number of Mortgage Loans" as
of the date indicated.
(3) The dollar amount of delinquent Mortgage Loans or the dollar amount of
foreclosed properties as a percentage of the total "Dollar amount of
Mortgage Loans" as of the date indicated.
S-22
LOAN LOSS EXPERIENCE ON THE Company'S
PORTFOLIO OF MORTGAGE LOANS
Prior to June 14, 1995, the Company experienced no losses since the
Company's program began.
For the Twelve Months Ended For the Months Ended , 199
December 31, 199
--------------------------------------------------------------------
Average amount outstanding(1)................. $ $
Gross losses(2)...............................
Recoveries(3).................................
Net losses(4).................................
Net losses as a percentage of average
amount outstanding ......................... % %
(1) "Average Amount Outstanding" during the period is the arithmetic
average of the principal balances of the mortgage loans outstanding on
the last business day of each month during the period.
(2) "Gross Losses" are the principal amounts of the mortgage loans for each
respective period which have been determined to be uncollectible.
(3) "Recoveries" represent the excess of (x) the sum of recoveries from
liquidation proceeds and deficiency judgments over (y) the sum of
expenses and accrued interest.
(4) "Net Losses" represents "Gross Losses" minus "Recoveries".
While the above delinquency and loan loss experience represents the
recent experience of the Company's portfolio of Mortgage Loans, there can be no
assurance that the future delinquency and loan loss experience on the Mortgage
Loans included in the Pool will be similar. The Company can neither quantify the
impact of any recent property value declines on the Mortgage Loans nor predict
whether, to what extent or how long such declines may continue. In a period of
such decline, the rates of delinquencies, foreclosures and losses on the
Mortgage Loans could be higher than those heretofore experienced in the mortgage
lending industry in general. In addition, adverse economic conditions (which may
or may not affect real property values) may affect the timely payment by
borrowers of scheduled payments of principal and interest on the Mortgage Loans
and, accordingly, the actual rates of delinquencies, foreclosures and losses.
Group I
The Initial Mortgage Loans in Group I consist of approximately ____
loans under which the related Mortgaged Properties are located in ___ states and
the District of Columbia as set forth herein. As of the CutOff Date, the Initial
Mortgage Loans in Group I had an aggregate principal balance of $________, the
maximum principal balance of any of the Initial Mortgage Loans in the Group I
was $________, the minimum principal balance thereof was $________, and the
principal balance of the Initial Mortgage Loans in Group I averaged $________.
As of the Cut-Off Date, Coupon Rates on the Initial Mortgage Loans in Group I
ranged from ____% to ____% per annum, and the weighted average Coupon Rate of
the Initial Mortgage Loans in Group I was ____% per annum. As of the Cut-Off
Date, the original term to stated maturity of the Initial Mortgage Loans in
Group I ranged from ___ months to ___ months, the remaining term to stated
maturity ranged from ___ months to ___ months, the weighted average original
term to stated maturity was ___ months and the weighted average remaining term
to stated maturity was ___ months. No Initial Mortgage Loan in Group I had a
stated maturity later than ________. ____% of the aggregate principal balance of
the Initial Mortgage Loans in Group I require monthly payments of principal that
will fully amortize the Mortgage Loans by their respective maturity dates, and
____% of the aggregate principal balance of the Initial Mortgage Loans in Group
I are Balloon Loans.
The sum of the percentage columns set forth in the following tables may
not equal 100% due to rounding.
S-23
Geographic Distribution
Group I
Number Aggregate Unpaid
of Initial Principal Balance % of
Mortgage as of the Aggregate
State Loans Cut-Off Date Principal Balance
- ----- ---------------- ----------------------- --------------------
Alabama $ %
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
District of Columbia
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
Tennessee
Texas
Utah
Virginia
Washington
Wisconsin
Wyoming
- --------------------------------------------------------------------------------------------------------
TOTAL $ %
========================================================================================================
The combined loan-to-value ratio of a Mortgage Loan is equal to the
ratio (expressed as a percentage) of (x) the sum of the (i) original principal
balance of such Mortgage Loan and (ii) the outstanding principal balances of any
senior mortgage loans (computed at the date of origination of such Mortgage
Loan) and (y) the appraised value of the related Mortgaged Property at the time
of origination or in the case of a purchase money mortgage loan the lesser of
the purchase price or the appraised value at the time of origination (the
"Combined Loan-to-Value Ratio"). The Combined Loan-to-Value Ratios are
distributed as follows:
S-24
Combined Loan-To-Value Ratio Distribution
Group I
Number Aggregate Unpaid
of Initial Principal Balance % of
Range of Combined Mortgage as of the Aggregate
Loan-to-Value Ratios Loans Cut-Off Date Principal Balance
- -------------------- --------- ----------------- ------------------
- -------------------------------------------------------------------------------------------------------
TOTAL $ %
=======================================================================================================
The Combined Loan-to-Value Ratios shown above were calculated based
upon the appraised values of the Properties at the time of origination of the
Mortgage Loans or in the case of a purchase money mortgage loan the lesser of
the purchase price or the appraised value at the time of origination (the
"Appraised Values"). No assurance can be given that values of the Properties
have remained or will remain at their levels on the dates of origination of the
related Mortgage Loans. If the residential real estate market should experience
an overall decline in property values such that the unpaid principal balances of
the Mortgage Loans, together with the unpaid principal balances of any senior
mortgage loans, become equal to or greater than the value of the Properties, the
actual rates of delinquencies, foreclosures and losses could be higher than
those now generally experienced in the mortgage lending industry.
S-25
Coupon Rate Distribution
Group I
Number Aggregate Unpaid
of Initial Principal Balance % of
Range of Mortgage as of the Aggregate
Coupon Rates (%) Loans Cut-Off Date Principal Balance
- ---------------- --------- ----------------- ------------------
- --------------------------------------------------------------------------------------------------------
TOTAL $ 100.00%
========================================================================================================
S-26
Distribution of Unpaid Principal Balances as of the Cut-Off Date
Group I
Number Aggregate Unpaid
of Initial Principal Balance % of
Range of Unpaid Mortgage as of the Aggregate
Principal Balances ($) Loans Cut-Off Date Principal Balance
- ---------------------- ----- ------------- -----------------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL $ 100.00%
=============================================================================================================================
Lien Status and Occupancy Status
Group I
Number Aggregate Unpaid
of Initial Principal Balance % of
Lien Status and Mortgage as of the Aggregate
Occupancy Status Loans Cut-Off Date Principal Balance
- ---------------------------------- ------------ ------------------- -----------------
First Lien Owner Occupied $ %
Non-Owner Occupied
Second Lien Owner Occupied
Non-Owner Occupied
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL $ 100.00%
=============================================================================================================================
Distribution of Age (in months) from Origination to the Cut-Off Date
Group I
Number Aggregate Unpaid
of Initial Principal Balance % of
Months Elapsed Mortgage as of the Aggregate
Since Origination Loans Cut-Off Date Principal Balance
- ----------------- ---------- ------------------ -----------------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL $ 100.00%
=============================================================================================================================
S-27
Property Type
Group I
Number Aggregate Unpaid
of Initial Principal Balance % of
Mortgage as of the Aggregate
Property Type Loans Cut-Off Date Principal Balance
- ------------- ----------- ------------------ -----------------
Single-family $ %
Modular Housing
Manufactured Housing
FUD
SF Row House
Townhouse
Duplex
Condominium
2-4 family
- --------------------------------------------------------------------------------------------------------
TOTAL $ 100.00%
========================================================================================================
Distribution of Remaining Term to Maturity
(in months) as of the Cut-Off Date
Group I
Number Aggregate Unpaid
of Initial Principal Balance % of
Months Remaining Mortgage as of the Aggregate
to Maturity Loans Cut-Off Date Principal Balance
- ---------------- ---------- ----------------- -----------------
- ------------------------------------------------------------------------------------------------------------
TOTAL $ 100.00%
============================================================================================================
Group I -- Conveyance of Subsequent Mortgage Loans
The Pooling and Servicing Agreement permits the Trust to acquire up to
$ aggregate principal balance of Subsequent Mortgage Loans for assignment to
Group I. Accordingly, the statistical characteristics of Group I will vary as of
any Subsequent Cut-Off Date upon the acquisition of Subsequent Mortgage Loans
which are assigned to Group I.
The obligation of the Trust to purchase the Subsequent Mortgage Loans
on a Subsequent Transfer Date for assignment to Group I is subject to the
following requirements: (i) such Subsequent Mortgage Loan may not be _____ or
more days contractually delinquent as of the related Subsequent Cut-Off Date;
(ii) the stated term to maturity to such Subsequent Mortgage Loan may not exceed
_____ years; (iii) such Subsequent Mortgage Loan will be secured by a Mortgage
in a first lien position and (iv) following the purchase of such Subsequent
Mortgage Loans by the Trust, the Mortgage Loans in Group I (including the
Subsequent Mortgage Loans) (a) will have a weighted average Mortgage Rate of at
least %; (b) will have a weighted average original term to stated maturity of
not more
S-28
than months; (c) will have a weighted average LTV of not more than %; (d) will
not have more than % by aggregate principal balance Balloon Loans; (e) will have
no Mortgage Loan with a principal balance in excess of $ ; (f) will have a
[state] concentration not in excess of % by aggregate principal balance; and (g)
will have not more than % in aggregate principal balance of Mortgage Loans
relating to non-owner occupied Mortgaged Properties.
Group II
The Initial Mortgage Loans in Group II consist of approximately ___
loans under which the related Mortgaged Properties are located in ___ states and
the District of Columbia as set forth herein. As of the CutOff Date, the Initial
Mortgage Loans in Group II had an aggregate principal balance of $________, the
maximum principal balance of any of the Initial Mortgage Loans in Group II was
$________, the minimum principal balance thereof was $________ and the principal
balance of the Initial Mortgage Loans in Group II averaged $________. As of the
Cut-Off Date, Coupon Rates of the Initial Mortgage Loans in Group II ranged from
____% per annum to ____% per annum. As of the Cut-Off Date, the weighted average
Coupon Rate of the Mortgage Loans in Group II was ____%. As of the Cut-Off Date,
margins of the Initial Mortgage Loans in Group II ranged from ____% per annum to
____% per annum, and the weighted average margin was ____%. As of the Cut-Off
Date, the maximum coupons of the Initial Mortgage Loans in Group II ranged from
____% per annum to ____% per annum, and the weighted average maximum coupon was
____%. ____% of the aggregate principal balance of the Initial Mortgage Loans in
Group II had a periodic interest rate cap of ___%, and ____% of the aggregate
principal balance of the Initial Mortgage Loans in Group II had a periodic
interest rate cap of ___%, ____% of the aggregate principal balance of the
Initial Mortgage Loans in Group II were fixed rate loans that, in __ years from
origination, will be converted into variable rate loans with an interest rate
cap of ___% on the date of such conversion and with a periodic interest rate cap
of ___% thereafter, and ____% of the aggregate principal balance of the Initial
Mortgage Loans in Group II were fixed rate loans that, in ___ years from
origination, will be converted into variable rate loans with an interest rate
cap of ___% on the date of such conversion and with a periodic interest rate cap
of ___% thereafter.
As of the Cut-Off Date, the original term to stated maturity of the
Initial Mortgage Loans in Group II ranged from ___ months to ___ months, the
remaining term to stated maturity ranged from ___ months to ___ months, the
weighted average original term to stated maturity was ___ months and the
weighted average remaining term to stated maturity was ___ months. No Initial
Mortgage Loan in Group II had a stated maturity later than ________. ____% of
the aggregate principal balance of the Initial Mortgage Loans in Group II
require monthly payments of principal that will fully amortize the Initial
Mortgage Loans by their respective dates and ____% of the aggregate principal
balance of the Initial Mortgage Loans in Group II are Balloon Loans.
The Coupon Rates of the Initial Mortgage Loans in Group II adjust
semi-annually based on six month LIBOR.
S-29
The sum of the percentage columns set forth on the following tables may
not equal 100% due to rounding.
Geographic Distribution
Group II
Number Aggregate Unpaid
of Initial Principal Balance % of
Mortgage as of the Aggregate
State Loans Cut-Off Date Principal Balance
- ----- ----------- ------------------ -----------------
Alabama $ %
Arizona
California
Colorado
Connecticut
District of Columbia
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Maryland
Massachusetts
Michigan
Minnesota
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
Ohio
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Virginia
Washington
West Virginia
Wisconsin
Wyoming
- -------------------------------------------------------------------------------------------------------
TOTAL $ 100.00%
=======================================================================================================
S-30
The combined loan-to-value ratio of a Mortgage Loan is equal to the
ratio (expressed as a percentage) of (x) the sum of the (i) original principal
balance of such Mortgage Loan and (ii) the outstanding principal balances of any
senior mortgage loans (computed at the date of origination of such Mortgage
Loan) and (y) the appraised value of the related Mortgaged Property at the time
of origination or in the case of a purchase money mortgage loan the lesser of
the purchase price or the appraised value at the time of origination (the
"Combined Loan-to-Value Ratio"). The Combined Loan-to-Value Ratios are
distributed as follows:
Combined Loan-To-Value Ratio Distribution
Group II
Number Aggregate Unpaid
of Initial Principal Balance % of
Range of Combined Mortgage as of the Aggregate
Loan-to-Value Ratios Loans Cut-Off Date Principal Balance
-------------------- --------- ----------------- -----------------
10.36
- --------------------------------------------------------------------------------------------------
TOTAL $ 100.00%
==================================================================================================
The Combined Loan-to-Value Ratios shown above were calculated based
upon the appraised values of the Properties at the time of origination of the
Mortgage Loans or in the case of a purchase money mortgage loan the lesser of
the purchase price or the appraised value at the time of origination (the
"Appraised Values"). No assurance can be given that values of the Properties
have remained or will remain at their levels on the dates of origination of the
related Mortgage Loans. If the residential real estate market should experience
an overall decline in property values such that the unpaid principal balances of
the Mortgage Loans, together with the unpaid principal balances of any senior
mortgage loans, become equal to or greater than the value of the Properties, the
actual rates of delinquencies, foreclosures and losses could be higher than
those now generally experienced in the mortgage lending industry.
S-31
Distribution of Unpaid Principal Balances as of the Cut-Off Date
Group II
Number Aggregate Unpaid % of
of Initial Principal Balance Aggregate
Range of Unpaid Mortgage as of the Principal
Principal Balances ($) Loans Cut-Off Date Balance
---------------------- ----- ------------ -------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL $ 100.00%
=============================================================================================================================
Lien Status and Occupancy Status
Group II
Number Aggregate Unpaid
of Initial Principal Balance % of
Lien Status and Mortgage as of the Aggregate
Occupancy Status Loans Cut-Off Date Principal Balance
- --------------------------------- ----------- --------------------- -----------------
First Lien Owner Occupied $ %
Non-Owner Occupied
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL $ 100.00%
=============================================================================================================================
Distribution of Age (in months) from Origination to the Cut-Off Date
Group II
Number Aggregate Unpaid
of Initial Principal Balance % of
Months Elapsed Mortgage as of the Aggregate
Since Origination Loans Cut-Off Date Principal Balance
- ----------------- ---------- ------------------ -----------------
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL $ 100.00%
===========================================================================================================================
S-32
Property Type
Group II
Number Aggregate Unpaid
of Initial Principal Balance % of
Mortgage as of the Aggregate
Property Type Loans Cut-Off Date Principal Balance
- ------------- ---------- ------------------ -----------------
- --------------------------------------------------------------------------------------------------------
TOTAL $ 100.00%
========================================================================================================
Distribution of Remaining Term to Maturity
(in months) as of the Cut-Off Date
Group II
Number Aggregate Unpaid
of Initial Principal Balance % of
Months Remaining Mortgage as of the Aggregate
to Maturity Loans Cut-Off Date Principal Balance
----------- ----- ------------ -----------------
- --------------------------------------------------------------------------------------------------------
TOTAL $ 100.00%
========================================================================================================
S-33
Distribution of Current Coupon Rates
as of the Cut Off Date
Group II
Number Aggregate Unpaid
of Initial Principal Balance
Mortgage as of the % of Aggregate
Current Coupon Rates (%) Loans Cut-Off Date Principal Balance
- ----------------------- ----- ------------ -----------------
- ---------------------------------------------------------------------------------------------------
TOTAL $ 100.00%
===================================================================================================
Distribution of Maximum Coupon Rates
Group II
Number Aggregate Unpaid
of Initial Principal Balance
Mortgage as of the % of Aggregate
Maximum Coupon Rates (%) Loans Cut-Off Date Principal Balance
- ----------------------- ----- ------------ -----------------
- --------------------------------------------------------------------------------------------------------
TOTAL $ 100.00%
========================================================================================================
S-34
Distribution of Margins
as of the Cut Off Date
Group II
Number Aggregate Unpaid
of Initial Principal Balance
Mortgage as of the % of Original Pool
Margins (%) Loans Cut-Off Date Principal Balance
- ---------- ----- ------------ -----------------
- -----------------------------------------------------------------------------------------------------------------
TOTAL $ 100.00%
=================================================================================================================
S-35
Next Interest Adjustment Date
Group II
Number of Aggregate Unpaid
Initial Principal Balance
Next Interest Mortgage as of the % of Aggregate
Adjustment Date Loans Cut-Off Date Principal Balance
- --------------- ----- ------------ -----------------
- --------------------------------------------------------------------------------------------------------
TOTAL $ 100.00%
========================================================================================================
Distribution of Minimum
Coupon Rates
Group II
Number Aggregate Unpaid
of Initial Principal Balance
Minimum Mortgage as of the % of Aggregate
Coupon Rates (%) Loans Cut-Off Date Principal Balance
---------------- ----- ------------ -----------------
- --------------------------------------------------------------------------------------------------------
TOTAL $ 100.00%
========================================================================================================
Group II - Conveyance of Subsequent Mortgage Loans
The Pooling and Servicing Agreement permits the Trust to acquire up to
$ aggregate principal balance of Subsequent Mortgage Loans for assignment to
Group II. Accordingly, the statistical characteristics of Group II will vary as
of any Subsequent Cut-Off Date upon the acquisition of Subsequent Mortgage
Loans.
S-36
The obligation of the Trust to purchase the Subsequent Mortgage Loans
on a Subsequent Transfer Date for assignment to the Variable Rate Group is
subject to the following requirements: (i) such Subsequent Mortgage Loan may not
be _____ or more days contractually delinquent as of the related Subsequent
Cut-Off Date; (ii) the stated term to maturity of such Subsequent Mortgage Loan
may not exceed _____ years; (iii) must have an index which is any of 6 Monthly
Treasury Bills, One Year CMT, Cost of Funds (Eleventh District) or ; (iv) must
have a margin of at least over the related Index; (v) must have a floor Mortgage
Rate of at least % and (vi) following the purchase of such Subsequent Mortgage
Loans by the Trust, the Mortgage Loans in the Variable Rate Group (including the
Subsequent Mortgage Loans) (a) will have a weighted average Mortgage Rate of at
least %; (b) will have a weighted average original term to stated maturity of
not more than months; (c) will have a weighted average CLTV of not more than %;
(d) will have not more than % by aggregate principal balance Balloon Loans; (e)
will have no Mortgage Loan with a principal balance in excess of $ ; (f) will
have a [state] concentration not in excess of % by aggregate principal balance;
(g) will not have more than % in aggregate principal balance of Mortgage Loans
secured by third liens; (h) will have not less than % in aggregate principal
balance of Mortgage Loans secured by first liens; and (i) will have not more
than % in aggregate principal balance of Mortgage Loans relating to non-owner
occupied Mortgaged Properties.
The Mortgage Loan Program -- Underwriting Standards; Representations
The Initial Mortgage Loans were acquired by the Company from ___
Unaffiliated Originators. Not more than ___% of the Original Pool Principal
Balance represents Mortgage Loans purchased from any single Unaffiliated
Originator. All of the Mortgage Loans will be originated or acquired by the
Originators generally in accordance with underwriting criteria satisfactory to
the Company.
The Company will make representations and warranties with respect to
the Initial Mortgage Loans sold to the Trust as of the Closing Date pursuant to
the Pooling and Servicing Agreement and with respect to the Subsequent Mortgage
Loans as of the Subsequent Transfer Date pursuant to the Purchase Agreement. The
Company may be obligated to repurchase the Mortgage Loans in respect of which a
breach of representation or warranty has occurred.
See "Mortgage Loan Program" in the accompanying Prospectus.
The Company's Guidelines provide that each borrower is required to
provide, and the Originator is generally required to verify, personal financial
information. The borrower's total monthly obligations (including principal and
interest on each mortgage, tax assessments, other loans, charge accounts and all
other scheduled indebtedness) should not exceed 60% of the borrower's monthly
income. Borrowers who are salaried employees must provide current employment
information, in addition to recent employment history. The Originator verifies
this information for salaried borrowers based on a current pay stub and either
(i) a written verification of income signed by their employer or (ii) two years'
W-2 forms. A self-employed applicant is generally required to be successfully
self-employed in the same field for a minimum of two years. A self-employed
borrower is generally required to provide financial statements and signed copies
of federal income tax returns (including schedules) filed for the most recent
two years. The borrower's debt-to-income ratio is calculated based on income as
generally verified by the Originator and must be reasonable.
The Mortgage Loans were underwritten pursuant to the Company's "Full
Documentation Program," "Alternative Income Documentation Program" and "Stated
Income Program," as set forth in the Company's Guidelines. Under each of the
programs, the Originator reviews the loan applicant's source of income,
calculates the amount of income from sources indicated on the loan application
or similar documentation, reviews the credit history of the applicant,
calculates the debt service-to-income ratio to determine the applicant's ability
to repay the loan, reviews the type and use of the property being financed and
reviews the property for compliance with its standards. In determining the
ability of the applicant to repay an adjustable rate Mortgage Loan, the
Originators use a rate (the "Qualifying Rate") that generally is a rate equal to
the fully-indexed Mortgage interest rate for such adjustable rate Mortgage Loan.
The Company's Guidelines are applied in a standardized procedure that complies
with applicable federal and state laws and regulations.
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Under the Full Documentation Program, the income of each applicant and
the source of funds (if any) required to be deposited by an applicant into a
bank account will be verified by the Originators. Applicants are generally
required to submit a current pay stub and either (i) a written verification of
income signed by their employer or (ii) two years' W-2 forms. Under the
Alternative Income Documentation Program, a self-employed applicant is required
to provide the applicant's business' profit and loss statement, and bank account
statements supporting such statement for the prior calendar year and any
completed calendar quarter of the current year and a current copy of a business
license. Both the Alternative Income Program and the Stated Income Program
generally require (i) that the applicant's income be reasonable for its
business/profession, (ii) that the business has been in existence for three
years or more and (iii) that the loan-to-value ratio be reduced. In addition,
the Mortgage Loan will generally improve the applicant's cash flow. Verification
of the source of funds (if any) required to be deposited by the applicant into a
bank account is generally required under all documentation programs in the form
of a standard verification of deposit or two months' consecutive bank statements
or other acceptable documentation. Twelve months' mortgage payment or rental
history is generally required to be verified by the applicant's current lender
or landlord. If appropriate compensating factors exist, the Originators and the
Company may waive certain documentation requirements for individual applicants.
MATURITY, PREPAYMENT AND YIELD CONSIDERATIONS
Class A Certificates
The weighted average life of, and, if purchased at other than par, the
yield to maturity on, a Class A Certificate will be directly related to the rate
of payment of principal of the Mortgage Loans in the related Mortgage Loan
Group, including for this purpose Prepayments, liquidations due to defaults,
casualties and condemnations, and repurchases of Mortgage Loans by the Company,
or purchases of Mortgage Loans by the Master Servicer or a Sub- Servicer. The
Mortgage Loans in the related Mortgage Loan Group may be prepaid by the related
obligors on the Notes ("Mortgagors") at any time. The actual rate of principal
prepayments on pools of mortgage loans is influenced by a variety of economic,
tax, geographic, demographic, social, legal and other factors and has fluctuated
considerably in recent years. In addition, the rate of principal prepayments may
differ among pools of mortgage loans at any time because of specific factors
relating to the mortgage loans in the particular pool, including, among other
things, the age of the mortgage loans, the geographic locations of the
properties securing the loans, the extent of the mortgagors' equity in such
properties, and changes in the mortgagors' housing needs, job transfers and
unemployment.
Generally, however, because the Mortgage Loans in Group I bear interest
at fixed rates, and the rate of prepayment on fixed rate mortgage loans is
sensitive to prevailing interest rates, if prevailing interest rates were to
fall, the Mortgage Loans in Group I may be subject to higher prepayment rates.
Conversely, if prevailing interest rates were to rise, the rate of prepayments
on Mortgage Loans in Group I would be likely to decrease.
If purchased at other than par, the yield to maturity on a Class A
Certificate will be affected by the rate of the payment of principal of the
Mortgage Loans in the related Mortgage Loan Group. If the actual rate of
payments on the Mortgage Loans in the related Mortgage Loan Group is slower than
the rate anticipated by an investor who purchases a Class A Certificate at a
discount, the actual yield to such investor will be lower than such investor's
anticipated yield. If the actual rate of payments on the Mortgage Loans in the
related Mortgage Loan Group is faster than the rate anticipated by an investor
who purchases a Class A Certificate at a premium, the actual yield to such
investor will be lower than such investor's anticipated yield.
All of the Mortgage Loans in Group II are adjustable rate mortgage
loans. As is the case with conventional fixed rate mortgage loans, adjustable
rate mortgage loans may be subject to a greater rate of principal prepayments in
a declining interest rate environment. For example, if prevailing interest rates
fall significantly, adjustable rate mortgage loans could be subject to higher
prepayment rates than if prevailing interest rates remain constant because the
availability of fixed rate mortgage loans at competitive interest rates may
encourage Mortgagors to refinance their adjustable rate mortgage loans to "lock
in" a lower fixed interest
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rate. However, no assurance can be given by the Company as to the level of
prepayments that the Group II Mortgage Loans will experience.
The final scheduled Payment Date for the A-1 Group I Certificates is
________, for the Class A-2 Group I Certificates is ________, for the Class A-3
Group I Certificates is ________, for the A-4 Group I Certificates is ________,
for the Class A-5 Group I Certificates is ________, and for the Class A-6 Group
II Certificates is ________. Such dates are the dates on which the related Class
A Certificate Principal Balance would be reduced to zero, assuming, among other
things that with respect to the Class A-1 Group I Certificates, the Class A-2
Group I Certificates, the Class A-3 Group I Certificates and the Class A-4 Group
I Certificates (i) no Prepayments are received on any of the Mortgage Loans,
(ii) distributions of principal and interest on each of the Mortgage Loans is
timely received, (iii) Class B Interest will be used to make accelerated
payments of principal (i.e. Subordination Increase Amounts) to the Holders of
the Class A Certificates and (iv) the Mortgage Loans in each Mortgage Loan Group
have the applicable characteristics set forth in the "Weighted Average Lives of
Class A Certificates" section herein. The final scheduled Payment Date for the
Class A-5 Group I Certificates and the Class A-6 Group II Certificates is the
Payment Date in the calendar month in which the stated maturity of the Mortgage
Loan in the related Mortgage Loan Group having the latest stated maturity
occurs. The weighted average life of the Class A Certificates of each Class is
likely to be shorter than would be the case if payments actually made on the
Mortgage Loans in the related Mortgage Loan Group conformed to the foregoing
assumptions, and the final Payment Dates with respect to the Class A
Certificates of each Class could occur significantly earlier than such final
scheduled Payment Dates because (i) Prepayments are likely to occur, (ii) the
Company may repurchase Mortgage Loans in the related Mortgage Loan Group in the
event of breaches of representations and warranties and (iii) the Company may
cause, and the Trustee may, pursuant to the Auction Call, cause a termination of
the Trust when the Pool Principal Balance has declined to ten percent or less of
the Original Pool Principal Balance.
"Weighted average life" refers to the average amount of time from the
date of issuance of a security until each dollar of principal of such security
will be repaid to the investor. The weighted average lives of the Classes of
Class A Certificates will be influenced by the rate at which principal payments
(including scheduled payments and prepayments) on the Mortgage Loans in the
related Mortgage Loan Group are made. Principal payments on Mortgage Loans may
be in the form of scheduled amortization or prepayments (for this purpose, the
term "prepayment" includes prepayments and liquidations due to a default or
other dispositions of the Mortgage Loans). The weighted average lives of the
Class A Certificates will also be influenced by delays associated with realizing
on defaulted Mortgage Loans in the related Mortgage Loan Group. The model used
in this Prospectus Supplement (the "Home Equity Prepayment" Model or "HEP")
assumes that, (i) with respect to Group I, the pool of loans prepays in the
first month at a constant prepayment rate of 2.3% and increases by an additional
2.3% each month thereafter until the tenth month, where it remains at a constant
prepayment rate equal to 23% and (ii) with respect to Group II, the pool of
loans prepays in the first month at a constant prepayment rate of 2.4% and
increases by an additional 2.4%, each month thereafter until the tenth month,
where it remains at a constant prepayment rate equal to 24%, (the "Prepayment
Assumption"). HEP represents an assumed annualized rate of prepayment relative
to the then outstanding principal balance on a pool of new mortgage loans.
Mandatory Prepayment
Of the maximum original Pre-Funding Amount of $________, maximum
amounts of $________, and $________ will be funded from the proceeds of the sale
of the Group I Certificates and the Group II Certificates, respectively, and may
be used to acquire Subsequent Mortgage Loans with respect to Group I and the
Group II, respectively. In the event that, on the 199_ Payment Date, not all of
the $________, $y $________ funded from the proceeds of the sale of the Group I
Certificates and the Group II Certificates, respectively, has been used to
acquire subsequent Mortgage Loans with respect to the related Mortgage Loan
Group, then the related Class A Certificates will be prepaid in part on such
date, on a pro rata basis with respect to the Owners of individual Certificates
of the related Class, from and to the extent of such remaining amounts. The
Pooling and Servicing Agreement does not permit Pre-Funding Account moneys
funded from
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the sale of one Group of Class A Certificates to be used to acquire Mortgage
Loans relating to the other Group of Class A Certificates.
Although no assurances can be given, it is anticipated by the Company
that the principal amount of Subsequent Mortgage Loans sold to the Trust will
require the application of substantially all the amount on deposit in the
Pre-Funding Account and that there should be no material principal prepaid to
the Class A Certificateholders.
Weighted Average Lives of Class A Certificates
For the purpose of the tables below, it is assumed that: (i) the
Mortgage Loans of each Mortgage Loan Group consist of pools of loans with
level-pay and balloon amortization methodologies, Cut-Off Date principal
balances, gross coupon rates, net coupon rates, original and remaining terms to
maturity, and original amortization terms as applicable, as set forth below,
(ii) the Closing Date for the Certificates occurs on ______, 199_, (iii)
distributions on the Certificates are made on the ___ day of each month
regardless of the day on which the Payment Date actually occurs, commencing in
________ 199_ in accordance with the priorities described herein, (iv) the
difference between the gross coupon rate and the net coupon rate is sufficient
to pay Servicer Fees, Trustee fees and Certificate Insurer premiums, (v) the
Mortgage Loans' prepayment rates are a multiple of the Prepayment Assumption,
(vi) prepayments include 30 days' interest thereon, (vii) no optional
termination or mandatory termination is exercised, (viii) the Specified
Subordinated Amount for each Mortgage Loan Group is set initially as specified
in the Insurance Agreement and thereafter changes in accordance with the
provisions of the Insurance Agreement, (ix) no delinquencies in the payment by
Mortgagors of principal and interest on the Mortgage Loans are experienced, (x)
no Mortgage Loan is repurchased for breach of a representation and warranty or
otherwise, (xi) the Coupon Rate for each Mortgage Loan in Group II is adjusted
on its next rate adjustment date (and on subsequent rate adjustment dates, if
necessary) to equal the sum of (a) an assumed level of the applicable index
(____%) and (b) the respective gross margin (such sum being subject to the
applicable periodic adjustment cap and maximum interest rate) and (xii) the
Class A-6 Group II Pass-Through Rate remains constant at ____%.
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GROUP I CHARACTERISTICS
Original Remaining Original
Term to Term to Amortization
Pool Principal Gross Coupon Net Coupon Maturity Maturity Term Amortization
Number Balance Rate Rate (in months) (in months) (in months) Method
- ------------------------------------------------------------------------------------------------------------------------------------
GROUP II CHARACTERISTICS
Original Remaining Original
Gross Net Months Maximum Term to Term to Amortization
Pool Principal Coupon Coupon to Rate Interest Maturity Maturity Term Periodic Amortization
Number Balance Rate Rate Change Margin Rate (in months) (in months) (in months) Cap Method
- ---------------------------------------------------------------------------------------------------------------------------
(1) The aggregate principal balance of the Mortgage Loans are fixed rate
loans that, in __ years from origination, will be converted into
variable rate loans with an interest rate cap of __% on the date of
such conversion and with a periodic interest rate cap of __%
thereafter.
(2) The aggregate principal balance of the Mortgage Loans are fixed rate
loans that, in __ years from origination, will be converted into
variable rate loans with an interest rate cap of __% on the date of
such conversion and with a periodic interest rate cap of __%
thereafter.
The model used for the Mortgage Loan Groups in this Prospectus
Supplement is the prepayment assumption (the "Prepayment Assumption") which
represents an assumed rate of prepayment each month relative to the then
outstanding principal balance of a pool of Mortgage Loans for the life of such
Mortgage Loans. A 100% Prepayment Assumption with respect to Group I assumes
constant prepayment rates of 2.3% per annum of the then outstanding principal
balance of such Mortgage Loans in the first month of the life of the Mortgage
Loans and an additional 2.3% in each month thereafter until the tenth month.
Beginning in the tenth month and in each month thereafter during the life of the
Mortgage Loans, 100% Prepayment Assumption assumes a constant prepayment rate of
23% per annum each month. A 100% Prepayment Assumption with respect to Group II
assumes constant prepayment rates of 2.4% per annum of the then outstanding
principal balance of such Mortgage Loans in the first month of the life of the
Mortgage Loans and an additional 2.4% in each month thereafter until the tenth
month. Beginning in the tenth month and in each
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month thereafter during the life of the Mortgage Loans, 100% Prepayment
Assumption with respect to the Group II assumes a constant prepayment rate of
24% per annum each month.
With respect to the Mortgage Loan Groups as used in the tables below,
0% Prepayment Assumption assumes prepayment rates equal to 0% of the Prepayment
Assumption, i.e., no prepayments. Correspondingly, 100% Prepayment Assumption
assumes prepayment rates equal to 100% of the Prepayment Assumption, and so
forth. The Prepayment Assumption does not purport to be a historical description
of prepayment experience or a prediction of the anticipated rate of prepayment
of any pool of mortgage loans, including the Mortgage Loans. The Company
believes that no existing statistics of which it is aware provide a reliable
basis for holders of Class A Certificates to predict the amount or the timing of
receipt of prepayments on the related Mortgage Loans.
Since the tables were prepared on the basis of the assumptions in the
above paragraphs, there are discrepancies between the characteristics of the
actual Mortgage Loans and the characteristics of the Mortgage Loans assumed in
preparing the tables. Any such discrepancy may have an effect upon the
percentages of the related Class A Certificate Principal Balances outstanding
and weighted average lives of the Class A Certificates set forth in the tables.
In addition, since the actual Mortgage Loans in the Trust have characteristics
which differ from those assumed in preparing the tables set forth below, the
Class A Principal Distribution Amount may be made earlier or later than as
indicated in the tables.
The following tables set forth the percentages of the initial principal
amount of the Class A Certificates that would be outstanding after each of the
dates shown, based on a rate equal to varying percentages of the Prepayment
Assumption (as defined above).
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PERCENTAGE OF INITIAL CERTIFICATE PRINCIPAL BALANCE
Class A-1 Group I Certificates Class A-2 Group I Certificates Class A-3 Group I Certificates
Payment Date 0% 13% 18% 21% 23% 28% 0% 13% 18% 21% 23% 28% 0% 13% 18% 21% 23% 28%
-- --- --- --- --- --- -- --- --- --- --- --- -- --- --- --- --- ---
Weighted
Average
Life (Years)(1)
(1) The weighted average life of the Class A Certificates is determined by (i)
multiplying the amount of each principal payment by the number of years
from the Closing Date to the related Payment Date, (ii) adding the results,
and (iii) dividing the sum by the initial respective Certificate Principal
Balance for such Class of Class A Certificate.
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PERCENTAGE OF INITIAL CERTIFICATE PRINCIPAL BALANCE
Class A-4 Group I Certificates Class A-5 Group I Certificates Class A-6 Group II Certificates
Payment Date 0% 13% 18% 21% 23% 28% 0% 13% 18% 21% 23% 28% 0% 15% 20% 23% 24% 30%
-- --- --- --- --- --- -- --- --- --- --- --- -- --- --- --- --- ---
Weighted
Average
Life (Years)(1)
(1) The weighted average life of the Class A Certificates is determined by (i) multiplying the amount of each principal payment by
the number of years from the Closing Date to the related Payment Date, (ii) adding the results, and (iii) dividing the sum by
the initial respective Certificate Principal Balance for such Class of Class A Certificate.
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The Mortgage Loans will not have the characteristics assumed above, and
there can be no assurance that (i) the Mortgage Loans will prepay at any of the
rates shown in the table or at any other particular rate or will prepay
proportionately or (ii) the weighted average lives of the Class A Group I
Certificates of each Class or the weighted average life of the Class A-6 Group
II Certificates will be as calculated above. Because the rate of distributions
of principal of the Class A Certificates will be a result of the actual
amortization (including prepayments) of the Mortgage Loans in the related
Mortgage Loan Group, which will include Mortgage Loans that have remaining terms
to stated maturity shorter or longer than those assumed and Coupon Rates higher
or lower than those assumed, the weighted average lives of the Class A Group I
Certificates and the Class A-6 Group II Certificates will differ from those set
forth above, even if all of the Mortgage Loans in the related Mortgage Loan
Group prepay at the indicated constant prepayment rates.
Payment Delay Feature of Class A-2, A-3, A-4 and A-5 Group I Certificates
The effective yield to the Owners of the Class A-2, A-3, A-4 and A-5
Group I Certificates will be lower than the yield which would otherwise apply
because distributions will not be payable to such Owners until at least the ___
day of the month in which the related Accrual Period ends, without any
additional distribution of interest or earnings thereon in respect of such
delay.
DESCRIPTION OF THE CERTIFICATES
General
The Certificates will be issued in classes (each, a "Class") pursuant
to a Pooling and Servicing Agreement to be dated as of ________, 199_ (the
"Pooling and Servicing Agreement") among the Master Servicer, the Company and
the Trustee. The Trustee will make available for inspection a copy of the
Pooling and Servicing Agreement (without exhibits or schedules) to the Owners of
the Certificates on written request. The following summary describes certain
terms of the Pooling and Servicing Agreement, but does not purport to be
complete and is qualified in its entirety by reference to the Pooling and
Servicing Agreement.
The $________ aggregate principal amount of Class A-1 Group I
Certificates, Variable Pass-Through Rate (the "Class A-1 Group I Certificates"),
the $________ aggregate principal amount of Class A-2 Group I Certificates,
____% Pass-Through Rate (the "Class A-2 Group I Certificates"), the $________
aggregate principal amount of Class A-3 Group I Certificates, ____% Pass-Through
Rate (the "Class A-3 Group I Certificates"), the $________ aggregate principal
amount of Class A-4 Group I Certificates, ____% Pass-Through Rate (the "Class
A-4 Group I Certificates") and the $________ aggregate principal amount of Class
A-5 Group I Certificates, ____% Pass-Through Rate (the "Class A-5 Group I
Certificates", and, collectively with the Class A-1 Group I Certificates, the
Class A-2 Group I Certificates, the Class A-3 Group I Certificates, Class A-4
Group I Certificates, the "Class A Group I Certificates"), and the $________
aggregate principal amount of Class A-6 Group II Certificates (the "Class A-6
Group II Certificates") are senior certificates as described herein (together,
the "Class A Certificates"). The Class B Certificates are not being offered
hereby. Each Class of Class A Certificates will be issued in original principal
amounts of $1,000 and integral multiples thereof, except that one certificate
for each class of Class A Certificates may be issued in a different amount. The
Trust will also issue a residual class in each REMIC created by the Trust (the
"Residual Certificates") which are not being offered hereby and will initially
be retained by the Company or its affiliates. The Class A Certificates, the
Class B Certificates and the Residual Certificates are collectively referred to
as the "Certificates".
Payment Dates and Distributions
On the ____ day of each month, or, if such day is not a business day
then the next succeeding business day, commencing ________, 199_ (each such day
being a "Payment Date"), the Trustee will be required to distribute to the
Owners of record of the Certificates as of the related Record Date, such Owners'
Percentage Interest in the amounts required to be distributed to the Owners of
each Class of Certificates on
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such Payment Date. For so long as any Class A Certificate is in book-entry form
with DTC, the only "Owner" of such Class A Certificates will be Cede. See " --
Book-Entry Registration of the Class A Certificates" herein.
Each Owner of record of a Certificate as of each Record Date will be
entitled to receive such Owner's Percentage Interest in the amounts due on the
related Payment Date to the Owners of the related Class of Certificates. The
"Percentage Interest" of each Class A Certificate as of any date of
determination will be equal to the percentage obtained by dividing the principal
balance of such Class A Certificate as of the Cut-Off Date by the related Class
A Certificate Principal Balance as of the Cut-Off Date.
Flow of Funds and Distributions on the Class A Certificates
The Principal and Interest Account. The Pooling and Servicing Agreement
requires the Master Servicer to establish a custodial account (the "Principal
and Interest Account") on behalf of the Trustee at a depository institution
meeting the requirements set forth in the Pooling and Servicing Agreement. The
Pooling and Servicing Agreement requires the Master Servicer to deposit all
collections (other than amounts escrowed for taxes and insurance) related to the
Mortgage Loans to the Principal and Interest Account on a daily basis (but no
later than the first business day after receipt). All funds in the Principal and
Interest Account can only be invested in Eligible Investments. Investment
earnings on funds held in the Principal and Interest Account are for the account
of the Master Servicer, and the Master Servicer will be responsible for any
losses.
The Master Servicer is required pursuant to the Pooling and Servicing
Agreement on the thirteenth day or, if such day is not a business day, on the
next following business day (the "Remittance Date") of each month to remit to
the Trustee the following amounts with respect to the Mortgage Loans in each
Mortgage Loan Group: (i) an amount equal to the sum, without duplication, of (x)
the aggregate portions of the interest payments (whether or not collected)
becoming due on the Mortgage Loans during the immediately preceding Remittance
Period, and (y) any Compensating Interest calculated at the Coupon Rate on the
related Mortgage Loan, less the Servicing Fee with respect to the Mortgage Loans
serviced by the Master Servicer due with respect to such Mortgage Loans with
respect to the immediately preceding Remittance Period (the amount described in
this clause (i) for the Mortgage Loans in the Group I being the "Group I
Interest Remittance Amount" and the amount in this clause (i) for the Mortgage
Loans in the Group II being the "Group II Interest Remittance Amount"), (ii) an
amount equal to the sum, without duplication, of (x) the aggregate portions of
the scheduled principal payments, but only to the extent collected, on the
Mortgage Loans during the immediately preceding Remittance Period, (y) any
Prepayments, Insurance Proceeds and Net Liquidation Proceeds (but only to the
extent that such Net Liquidation Proceeds do not exceed the principal balance of
the related Mortgage Loan) and Released Mortgaged Property Proceeds, in each
case only to the extent collected on the Mortgage Loans during the preceding
Remittance Period and (z) all Loan Purchase Prices and Substitution Amounts with
respect to the related Mortgage Loans at such Remittance Date paid or received
by the Master Servicer for deposit to the Principal and Interest Account (the
amount described in this clause (ii) for the Mortgage Loans in the Group I being
the "Group I Principal Remittance Amount" and the amount described in this
clause (ii) for the Mortgage Loans in Group II being the "Group II Principal
Remittance Amount"). For any Remittance Date the Group I Interest Remittance
Amount and the Group I Principal Remittance Amount are together referred to as
the "Group I Monthly Remittance" for such Remittance Date, and the Group II
Interest Remittance Amount and the Group II Principal Remittance Amount are
together referred to as the "Group II Monthly Remittance" for such Remittance
Date. The sum of the Group I Interest Remittance Amount and the Group II
Interest Remittance Amount is equal to the "Interest Remittance Amount". The sum
of Group I Principal Remittance Amount and the Group II Principal Remittance
Amount is equal to the "Principal Remittance Amount". For any Remittance Date
the Interest Remittance Amount and the Principal Remittance Amount are together
referred to as the "Monthly Remittance" for such Remittance Date.
A "Remittance Period" is the period commencing at the opening of
business on the second day of each month and ending at the close of business on
the first day of the following month.
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Delinquency Advances. The Pooling and Servicing Agreement requires that
if, on any Remittance Date, the amount then on deposit in the Principal and
Interest Account from Mortgage Loan collections and relating to interest is less
than the Interest Remittance Amount applicable to such Remittance Period, then
the Master Servicer is required to deposit into the Principal and Interest
Account a sufficient amount of its own funds ("Delinquency Advances") to make
such amount equal to such Interest Remittance Amount. The Master Servicer is not
required to make a Delinquency Advance if it believes that such Delinquency
Advance will not be recoverable from the related Mortgage Loan. The Trustee, as
successor Master Servicer, will not be required to make a Delinquency Advance if
it believes that such Delinquency Advance will not be recoverable from the
related Mortgage Loan.
The Certificate Account. The Pooling and Servicing Agreement provides
that the Trustee shall create and maintain one or more accounts for the purpose
of funding distributions to the Owners (collectively, the "Certificate
Account"). The Pooling and Servicing Agreement provides that the Trustee shall
deposit to the Certificate Account (i) monthly, the Monthly Remittance received
from the Master Servicer on the related Remittance Date and (ii) all Insured
Payments received from the Certificate Insurer.
On each Payment Date, the Trustee shall withdraw from the Pre-Funding
Account any earnings received on investment of the Pre-Funding Amount held by it
in the Pre-Funding Account and deposit such earnings in the Certificate Account.
On the , 199_ Payment Date, the Trustee shall withdraw from the Pre-Funding
Account any funds theretofore remaining and deposit such funds in the
Certificate Account.
On the second business day prior to each Payment Date, in preparation
of making distributions on such Payment Date, if the Trustee determines with
respect to either Mortgage Loan Group that the Total Available Funds to be on
deposit in the Certificate Account with respect to such Mortgage Loan Group will
be insufficient to pay the full amount of the related Insured Distribution
Amount and the fees of the Trustee and Certificate Insurer for such Payment
Date, the Trustee will then be required to make a draw on the related
Certificate Insurance Policy for the deficiency (the amount of any such
deficiency being the amount of the "Insured Payment" required to be made) and to
deposit the amount received with respect to such draw into the Certificate
Account.
The Pooling and Servicing Agreement also establishes an account, the
"Supplemental Interest Account," which is held in trust by the Trustee, but does
not constitute a part of the Trust. The Supplemental Interest Account will hold
certain amounts and other property relating to the funding of Supplemental
Interest Amounts, if any, to the Owners of the Class A-6 Group II Certificates.
"Supplemental Interest Amounts" are payments due on any Payment Date which
result from any shortfall between Class A-6 Group II Certificate interest
calculated at the Class A-6 Formula Pass-Through Rate, and such interest
calculated at the Class A-6 Available Funds Pass-Through Rate.
Distributions on the Class A Certificates. On each Payment Date, the
Trustee shall be required to make the following disbursements and transfers from
the Certificate Account in the following order of priority, and each such
transfer and disbursement shall be treated as having occurred only after all
preceding transfers and disbursements have occurred:
(i) first, the Trustee shall pay first, to itself the
Trustee's fees then due;
(ii) second, the Trustee shall pay to the Certificate Insurer
the premium amount then due;
(iii) third, the Trustee shall pay, pari passu, to the Owners of
each of the Class A Certificates, the related Class A Distribution
Amount for such Class and such Payment Date;
(iv) fourth, the Trustee shall distribute any remaining amount
in the Certificate Account to the Owners of the related Class B
Certificates and as otherwise required by the Pooling and Servicing
Agreement.
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The Class A Group I Certificates have been tranched into five
"sequential pay" Classes, such that the Class A-5 Group I Certificates are
entitled to receive no principal distributions until the Class A-4 Certificate
Principal Balance has been reduced to zero, the Class A-4 Group I Certificates
are entitled to receive no principal distributions until the Class A-3
Certificate Principal Balance has been reduced to zero, the Class A-3 Group I
Certificates are entitled to receive no principal distributions until the Class
A-2 Certificate Principal Balance has been reduced to zero, and the Class A-2
Group I Certificates are entitled to receive no principal distributions until
the Class A-1 Certificate Principal Balance has been reduced to zero.
The Pooling and Servicing Agreement provides that to the extent the
Certificate Insurer makes Insured Payments, the Certificate Insurer will be
subrogated to the rights of the Owners of the related Class A Certificates with
respect to such Insured Payments and shall be deemed, to the extent of the
payments so made, to be a registered Owner of Class A Certificates and shall be
entitled to reimbursement for such Insured Payments, as provided in the Pooling
and Servicing Agreement.
Calculation of LIBOR
On the second business day preceding each Payment Date or, in the case
of the first Payment Date, on the second business day preceding the Closing Date
(each such date, an "Interest Determination Date"), the Trustee will determine
the London interbank offered rate for one-month U.S. dollar deposits ("LIBOR")
for the next Accrual Period for the Class A-1 Group I Certificates and Class A-6
Group II Certificates on the basis of the offered rates of the Reference Banks
for one-month U.S. dollar deposits, as such rates appear on the Reuters Screen
LIBO Page, as of 11:00 a.m. (London time) on such Interest Determination Date.
As used in this section, "business day" means a day on which banks are open for
dealing in foreign currency and exchange in London and New York City; "Reuters
Screen LIBO Page" means the display designated as page "LIBO" on the Reuter
Monitor Money Rates Service (or such other page as may replace the LIBO page on
that service for the purpose of displaying London interbank offered rates of
major banks); and "Reference Banks" means leading banks selected by the Trustee
and engaged in transactions in Eurodollar deposits in the international
Eurocurrency market (i) with an established place of business in London, (ii)
whose quotations appear on the Reuters Screen LIBO Page on the Interest
Determination Date in question, (iii) which have been designated as such by the
Trustee and (iv) not controlling, controlled by, or be under common control
with, the Company or the Trustee.
On each Interest Determination Date, LIBOR for the related Accrual
Period for the Class A-6 Group II Certificates will be established by the
Trustee as follows:
(a) If on such Interest Determination Date two or more Reference Banks
provide such offered quotations, LIBOR for the related Accrual Period for the
Class A-1 Group I and the Class A-6 Group II Certificates shall be the
arithmetic mean of such offered quotations (rounded upwards if necessary to the
nearest whole multiple of 1/16%).
(b) If on such Interest Determination Date fewer than two Reference
Banks provide such offered quotations, LIBOR for the related Accrual Period for
the Class A-1 Group I and the Class A-6 Group II Certificates shall be the
higher of (x) LIBOR as determined on the previous Interest Determination Date
and (y) the Reserve Interest Rate. The "Reserve Interest Rate" shall be the rate
per annum that the Trustee determines to be either (i) the arithmetic mean
(rounded upwards if necessary to the nearest whole multiple of 1/16%) of the
one-month U.S. dollar lending rates which New York City banks selected by the
Trustee are quoting on the relevant Interest Determination Date to the principal
London offices of leading banks in the London interbank market or, in the event
that the Trustee can determine no such arithmetic mean, (ii) the lowest
one-month U.S. dollar lending rate which New York City banks selected by the
Trustee are quoting on such Interest Determination Date to leading European
banks.
The establishment of LIBOR on each Interest Determination Date by the
Trustee and the Trustee's calculation of the rate of interest applicable to the
Class A-1 Group I and the Class A-6 Group II Certificates
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for the related Accrual Period shall (in the absence of manifest error) be final
and binding. Each such rate of interest may be obtained by telephoning the
Trustee at (612) 667-8085.
Subordination of Class B Certificates
The Class B Certificates are subordinated to the Class A Certificates.
Such subordination is intended to enhance the likelihood that the Owners of the
Class A Certificates will receive full and timely receipt of all amounts due to
them.
The Pooling and Servicing Agreement requires that the excess of the
aggregate principal balance of the Mortgage Loans in Group I over the Class A
Certificate Principal Balance for all Classes of the Class A Group I
Certificates be maintained at a certain amount (which amount may vary over time)
over the life of the transaction, which amount is specified by the Certificate
Insurer. The actual amount of this excess is the "Subordinated Amount" for Group
I, and the specified target amount of the excess at a point in time is the
"Specified Subordinated Amount" for Group I.
Similarly, the Pooling and Servicing Agreement requires that the excess
of Group II's Pool Principal Balance over the Class A Certificate Principal
Balance for the Class A-6 Group II Certificates be maintained at a certain
amount (which amount may vary over time) over the life of the transaction, which
amount is specified by the Certificate Insurer. The actual amount of this excess
is the "Subordinated Amount" for Group II, and the specified target amount of
the excess at a point in time is the "Specified Subordinated Amount" for Group
II.
The Certificate Insurer may permit the reduction of the Specified
Subordinated Amount without the consent of, or the giving of notice to, the
Owners of the related Class A Certificates; provided, that the Certificate
Insurer is not then in default; and provided, further, that such reduction would
not change materially the weighted average life of the related Class A
Certificates or the current rating thereof.
The Pooling and Servicing Agreement generally provides that the Owners
of the Class B Certificates will only receive distributions of principal to the
extent that the actual related Subordinated Amount exceeds the then related
Specified Subordinated Amount; i.e., to the extent that there is a level of
subordination greater than that required by the Certificate Insurer, as will be
the case when the Specified Subordinated Amount decreases or "steps down" in
accordance with its terms. Consequently, unless there exists on any particular
Payment Date such related excess subordination, the Owners of the related Class
A Certificates will be entitled to receive 100% of the principal to be
distributed on such Payment Date with respect to the related Mortgage Loan
Group.
The Class B Certificates are also entitled to receive all excess
interest available on any Payment Date for the related Mortgage Loan Group,
i.e., the interest remitted by the Master Servicer to the Trustee relating to
the prior Remittance Period (which interest remittance is itself net of the
aggregate monthly Servicing Fees) less the interest due and payable to the
Owners of the related Class A Certificates, together with the fees and premium
due and payable to the Trustee and the Certificate Insurer (such interest to
which the related Class B Certificates are entitled, the "Class B Interest" for
the related Mortgage Loan Group).
On each Payment Date the Class B Interest will be used, to the extent
available, to fund any shortfalls in amounts due to the Owners of the Class A
Certificates on such Payment Date. In addition, to the extent that the related
Specified Subordinated Amount increases or "steps up" due to the effect of the
triggers set forth in the definition thereof, or if, due to Realized Losses, the
related Subordinated Amount has been reduced below the related Specified
Subordinated Amount, the Pooling and Servicing Agreement requires that Class B
Interest be used to make payments of principal to the Owners of the Class A
Group I Certificates and the Class A-6 Group II Certificates for the purposes of
accelerating the amortization thereof relative to the amortization of the
Mortgage Loans in the related Mortgage Loan Group. Such accelerated payments of
principal will be made to the extent necessary to increase the related
Subordinated Amount to its then-applicable Specified
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Subordinated Amount. To the extent that, on any Payment Date, the actual related
Subordinated Amount is less than the related Specified Subordinated Amount, a
"Subordination Deficiency" will exist. The Insurance Agreement defines a "Group
I Subordination Deficit" with respect to a Payment Date to be the amount, if
any, by which (x) the aggregate Certificate Principal Balance of the Class A
Group I Certificates as of such Payment Date, and following the making of all
distributions to be made on such Payment Date (except for any payment to be made
as to principal from proceeds of the related Certificate Insurance Policy),
exceeds (y) an amount equal to the aggregate principal balances of the Mortgage
Loans in the Group I as of the close of business on the last day of the
preceding Remittance Period; a "Group II Subordination Deficit" with respect to
a Payment Date is the amount, if any, by which (x) the aggregate Certificate
Principal Balance of the Class A-6 Group II Certificates as of such Payment
Date, and following the making of all distributions to be made on such Payment
Date (except for any payment to be made as to principal from proceeds of the
related Certificate Insurance Policy) exceeds (y) the aggregate principal
balances of the Mortgage Loans in the Group II as of the close of business on
the last day of the preceding Remittance Period.
"Subordination Increase Amount" means, as of any Payment Date and with
respect to the related Mortgage Loan Group, the lesser of (i) the Subordination
Deficiency applicable to such Mortgage Loan Group as of such Payment Date and
(ii) the actual amount available to pay the Class B Interest on such Payment
Date.
"Subordination Reduction Amount" means, with respect to any Payment
Date and with respect to the related Mortgage Loan Group, an amount equal to the
lesser of (x) the excess of the actual Subordinated Amount applicable to such
Mortgage Loan Group over the Specified Subordinated Amount for such Payment Date
and (y) the amount described in clause (b)(i)(x) of the definition of Class A
Principal Distribution Amount for such Payment Date.
Overcollateralization and the Certificate Insurance Policy. The Pooling
and Servicing Agreement requires the Trustee to make a claim for an Insured
Payment under the related Certificate Insurance Policy not later than the second
business day prior to any Payment Date as to which the Trustee has determined
that a Subordination Deficit will occur for the purpose of applying the proceeds
of such Insured Payment as a payment of principal to the Owners of the Class A
Group I Certificates or Class A-6 Group II Certificates, as the case may be, on
such Payment Date. The Certificate Insurance Policy is thus similar to the
subordination provisions described above insofar as the Certificate Insurance
Policy guarantees ultimate, rather than current, payment of the amounts of any
Realized Losses to the Holders of the related Class A Group I Certificates and
Class A-6 Group II Certificates. Investors in the Class A Group I Certificates
of each Class and the Class A-6 Group II Certificates should realize that, under
extreme loss or delinquency scenarios applicable to the related Mortgage Loan
Pool, they may temporarily receive no distributions of principal.
Crosscollateralization Provisions
The Pooling and Servicing Agreement further provides that the Class B
Interest generated by the Group I may be used to fund certain shortfalls with
respect to the Group II and vice versa, provided that such Class B Interest must
first be applied to fund certain required payments with respect to the related
Mortgage Loan Group. Specifically, the Class B Interest generated by one
Mortgage Loan Group is to be applied in the following order of priority: (i)
first, to fund a Subordination Increase Amount payment in response to a
Subordination Deficit in the related Mortgage Loan Group; (ii) second, to fund a
Subordination Increase Amount payment in response to a Subordination Deficit or
interest shortfall in the other Mortgage Loan Group; (iii) third, to fund a
Subordination Increase Amount payment in response to a Subordination Deficiency
in the related Mortgage Loan Group; and (iv) fourth, to fund a Subordination
Increase Amount payment in response to a Subordination Deficiency with respect
to the other Mortgage Loan Group.
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Credit Enhancement Does Not Apply to Prepayment Risk
In general, the protection afforded by the subordination provisions and
by the Certificate Insurance Policy is protection for credit risk and not for
prepayment risk. The subordination provisions may not be adjusted, nor may a
claim be made under the Certificate Insurance Policy to guarantee or insure that
any particular rate of prepayment is experienced by either of the two Mortgage
Loan Groups.
Class A Certificate Distributions and Insured Payments
No later than the second business day prior to each Payment Date the
Trustee will be required to determine the amounts to be on deposit in the
Certificate Account on such Payment Date and following the application of the
cross-collateralization provisions described above with respect to each of the
two Mortgage Loan Groups, such amounts being the "Group I Total Available
Funds", and the "Group II Total Available Funds", respectively, or,
collectively, the "Total Available Funds". If the aggregate Class A Insured
Distribution Amount related to the Class A Group I Certificates for any Payment
Date exceeds the Group I Total Available Funds for such Payment Date, the
Trustee will be required to draw the amount of such insufficiency from the
Certificate Insurer under the Certificate Insurance Policy. Similarly, if on any
Payment Date the Class A Insured Distribution Amount related to the Class A-6
Group II Certificates exceeds the Group II Total Available Funds for such
Payment Date, the Trustee will be required to draw the amount of such
insufficiency from the Certificate Insurer under the Certificate Insurance
Policy. The Trustee will be required to deposit to the Certificate Account the
amount of any Insured Payment made by the Certificate Insurer. The Pooling and
Servicing Agreement provides that amounts which cannot be distributed to the
Owners of the Certificates as a result of final, non-appealable proceedings
under the United States Bankruptcy Code or similar insolvency laws will not be
considered in determining the amount of Total Available Funds with respect to
any Payment Date.
Book-Entry Registration of the Class A Certificates
The Class A Certificates will be book-entry certificates (the
"Book-Entry Certificates"). The Beneficial Certificate Owners may elect to hold
their Class A Certificates through DTC in the United States, or CEDEL or
Euroclear (in Europe) if they are participants of such systems ("Participants"),
or indirectly through organizations which are Participants in such systems. The
Book-Entry Certificates will be issued in one or more certificates per class of
Class A Certificates which in the aggregate equal the principal balance of such
Class A Certificates and will initially be registered in the name of Cede, the
nominee of DTC. CEDEL and Euroclear will hold omnibus positions on behalf of
their Participants through customers' securities accounts in CEDEL's and
Euroclear's names on the books of their respective depositories which in turn
will hold such positions in customers' securities accounts in the depositories'
names on the books of DTC. Citibank will act as depository for CEDEL and Morgan
will act as depository for Euroclear (in such capacities, individually the
"Relevant Depository" and collectively the "European Depositories"). Investors
may hold such beneficial interests in the Book-Entry Certificates in minimum
denominations representing principal amounts of $1,000. Except as described
below, no Beneficial Certificate Owner will be entitled to receive a physical
certificate representing such Certificate (a "Definitive Certificate"). Unless
and until Definitive Certificates are issued, it is anticipated that the only
"Owner" of such Class A Certificates will be Cede, as nominee of DTC. Beneficial
Certificate Owners will not be Owners as that term is used in the Pooling and
Servicing Agreement. Beneficial Certificate Owners are only permitted to
exercise their rights indirectly through Participants and DTC.
The Beneficial Certificate Owner's ownership of a Book-Entry
Certificate will be recorded on the records of the brokerage firm, bank, thrift
institution or other financial intermediary (each, a "Financial Intermediary")
that maintains the Beneficial Certificate Owner's account for such purpose. In
turn, the Financial Intermediary's Ownership of such Book-Entry Certificate will
be recorded on the records of DTC (or of a participating firm that acts as agent
for the Financial Intermediary, whose interest will in turn be recorded on the
records of DTC, or, if the Beneficial Certificate Owner's Financial Intermediary
is not a DTC Participant, then on the records of CEDEL or Euroclear, as
appropriate).
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Beneficial Certificate Owners will receive all distributions of
principal of, and interest on, the Class A Certificates from the Trustee through
DTC and DTC Participants. While such Class A Certificates are outstanding
(except under the circumstances described below), under the rules, regulations
and procedures creating and affecting DTC and its operations (the "Rules"), DTC
is required to make book-entry transfers among Participants on whose behalf it
acts with respect to such Class A Certificates and is required to receive and
transmit distributions of principal of, and interest on, such Class A
Certificates. Participants and indirect participants with whom Beneficial
Certificate Owners have accounts with respect to Class A Certificates are
similarly required to make book-entry transfers and receive and transmit such
distributions on behalf of their respective Beneficial Certificate Owners.
Accordingly, although Beneficial Certificate Owners will not possess
certificates, the Rules provide a mechanism by which Beneficial Certificate
Owners will receive distributions and will be able to transfer their interest.
Beneficial Certificate Owners will not receive or be entitled to
receive certificates representing their respective interests in the Class A
Certificates, except under the limited circumstances described below. Unless and
until Definitive Certificates are issued, Beneficial Certificate Owners who are
not Participants may transfer ownership of Class A Certificates only through
Participants and indirect participants by instructing such Participants and
indirect participants to transfer such Class A Certificates, by book-entry
transfer, through DTC for the account of the purchasers of such Class A
Certificates, which account is maintained with their respective Participants.
Under the Rules and in accordance with DTC's normal procedures, transfers of
ownership of such Class A Certificates will be executed through DTC and the
accounts of the respective Participants at DTC will be debited and credited.
Similarly, the Participants and indirect participants will make debits or
credits, as the case may be, on their records on behalf of the selling and
purchasing Beneficial Certificate Owners.
Because of time zone differences, credits of securities received in
CEDEL or Euroclear as a result of a transaction with a Participant will be made
during subsequent securities settlement processing and dated the business day
following the DTC settlement date. Such credits or any transactions in such
securities settled during such processing will be reported to the relevant
Euroclear or CEDEL Participants on such business day. Cash received in CEDEL or
Euroclear as a result of sales of securities by or through a CEDEL Participant
(as defined below) or Euroclear Participant (as defined below) to a DTC
Participant will be received with value on the DTC settlement date but will be
available in the relevant CEDEL or Euroclear cash account only as of the
business day following settlements in DTC. For information with respect to tax
documentation procedures relating to the Certificates, see "Certain Federal
Income Tax Consequences -- Foreign Investors" and " -- Backup Withholding" in
the Prospectus and "Global Clearance, Settlement and Tax Documentation
Procedures -- Certain U.S. Federal Income Tax Documentation Requirements" in
Annex I hereto.
Transfers between Participants will occur in accordance with DTC rules.
Transfers between CEDEL Participants and 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 CEDEL
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 Depository; 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 the
Relevant 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. CEDEL Participants and Euroclear Participants may not deliver instructions
directly to the European Depositories.
S-52
DTC, which is a New York-chartered limited purpose trust company,
performs services for its Participants ("DTC Participants"), some of which
(and/or their representatives) own DTC. In accordance with its normal
procedures, DTC is expected to record the positions held by each DTC Participant
in the Book-Entry Certificates, whether held for its own account or as a nominee
for another person. In general, beneficial ownership of Book-Entry Certificates
will be subject to the rules, regulations and procedures governing DTC and DTC
Participants as in effect from time to time.
CEDEL is incorporated under the laws of Luxembourg as a professional
depository. CEDEL holds securities for its participant organizations ("CEDEL
Participants") and facilitates the clearance and settlement of securities
transactions between CEDEL Participants through electronic book-entry changes in
accounts of CEDEL Participants, thereby eliminating the need for physical
movement of certificates. Transactions may be settled in CEDEL in any of 28
currencies, including United States dollars. CEDEL provides to its CEDEL
Participants, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. CEDEL interfaces with domestic markets in several
countries. As a professional depository, CEDEL is subject to regulation by the
Luxembourg Monetary Institute. CEDEL Participants are recognized financial
institutions around the world, including underwriters, securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations. Indirect access to CEDEL is also available to others, such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a CEDEL Participant, either directly or indirectly.
Euroclear was created in 1968 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. Transactions may now be settled in any of 31 currencies, including United
States dollars. Euroclear includes various other services, including securities
lending and borrowing and interfaces with domestic markets in several countries
generally similar to the arrangements for cross-market transfers with DTC
described above. 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 cooperative corporation (the
"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 Cooperative. The Cooperative establishes
policy for Euroclear on behalf of Euroclear Participants. Euroclear Participants
include banks (including central banks), securities brokers and dealers and
other professional financial intermediaries. Indirect access to Euroclear is
also available to other firms that clear through or maintain a custodial
relationship with a Euroclear Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear
operator are governed by the Terms and Conditions Governing Use of Euroclear and
the related Operating Procedures of the Euroclear System and applicable Belgian
law (collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of securities and
cash from Euroclear, and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
The Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear Participants, and has no record of or relationship with persons
holding through Euroclear Participants.
Distributions on the Book-Entry Certificates will be made on each
Payment Date by the Trustee to DTC. DTC will be responsible for crediting the
amount of such payments to the accounts of the applicable DTC Participants in
accordance with DTC's normal procedures. Each DTC Participant will be
responsible for
S-53
disbursing such payment to the Beneficial Certificate Owners of the Book-Entry
Certificates that it represents and to each Financial Intermediary for which it
acts as agent. Each such Financial Intermediary will be responsible for
disbursing funds to the Beneficial Certificate Owners of the Book-Entry
Certificates that it represents.
Under a book-entry format, Beneficial Certificate Owners of the
Book-Entry Certificates may experience some delay in their receipt of payments,
since such payments will be forwarded by the Trustee to Cede. Distributions with
respect to Class A Certificates held through CEDEL or Euroclear will be credited
to the cash accounts of CEDEL Participants or Euroclear Participants in
accordance with the relevant system's rules and procedures, to the extent
received by the Relevant Depository. Such distributions will be subject to tax
reporting in accordance with relevant United States tax laws and regulations.
Because DTC can only act on behalf of Financial Intermediaries, the ability of a
Beneficial Certificate Owner to pledge Book-Entry Certificates, to persons or
entities that do not participate in the Depository system, or otherwise take
actions in respect of such Book-Entry Certificates, may be limited due to the
lack of physical certificates for such Book-Entry Certificates. In addition,
issuance of the Book-Entry Certificates in book-entry form may reduce the
liquidity of such Certificates in the secondary market since certain potential
investors may be unwilling to purchase Certificates for which they cannot obtain
physical certificates.
Monthly and annual reports on the Trust provided by the Master Servicer
to Cede, as nominee of DTC, may be made available to Beneficial Certificate
Owners upon request, in accordance with the rules, regulations and procedures
creating and affecting the Depository, and to the Financial Intermediaries to
whose DTC accounts the Book-Entry Certificates of such Beneficial Certificate
Owners are credited.
DTC has advised the Trustee that, unless and until Definitive
Certificates are issued, DTC will take any action permitted to be taken by the
holders of the Book-Entry Certificates under the Pooling and Servicing Agreement
only at the direction of one or more Financial Intermediaries to whose DTC
accounts the Book-Entry Certificates are credited, to the extent that such
actions are taken on behalf of Financial Intermediaries whose holdings include
such Book-Entry Certificates. CEDEL or the Euroclear Operator, as the case may
be, will take any action permitted to be taken by an Owner under the Pooling and
Servicing Agreement on behalf of a CEDEL Participant or Euroclear Participant
only in accordance with its relevant rules and procedures and subject to the
ability of the Relevant Depository to effect such actions on its behalf through
DTC. DTC may take actions, at the direction of the related Participants, with
respect to some Class A Certificates which conflict with actions taken with
respect to other Class A Certificates.
Definitive Certificates will be issued to Beneficial Certificate Owners
of the Book-Entry Certificates, or their nominees, rather than to DTC, only if
(a) DTC or the Depositor advises the Trustee in writing that DTC is no longer
willing, qualified or able to discharge properly its responsibilities as a
nominee and depository with respect to the Book-Entry Certificates and the
Depositor or the Trustee is unable to locate a qualified successor, (b) the
Depositor, at its sole option, elects to terminate a book-entry system through
DTC or (c) DTC, at the direction of the Beneficial Certificate Owners
representing a majority of the outstanding Percentage Interests of the Class A
Certificates, advises the Trustee in writing that the continuation of a
book-entry system through DTC (or a successor thereto) is no longer in the best
interests of Beneficial Certificate Owners.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, the Trustee will be required to notify all Beneficial
Certificate Owners of the occurrence of such event and the availability through
DTC of Definitive Certificates. Upon surrender by DTC of the global certificate
or certificates representing the Book-Entry Certificates and instructions for
re-registration, the Trustee will issue Definitive Certificates, and thereafter
the Trustee will recognize the holders of such Definitive Certificates as Owners
under the Pooling and Servicing Agreement.
Although DTC, CEDEL and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of Certificates among Participants
of DTC, CEDEL and Euroclear, they are under no obligation to perform or continue
to perform such procedures and such procedures may be discontinued at any time.
S-54
Certain Activities
The Trust has not and will not: (i) issue securities (except for the
Certificates); (ii) borrow money; (iii) make loans; (iv) invest in securities
for the purpose of exercising control; (v) underwrite securities; (vi) except as
provided in the Pooling and Servicing Agreement, engage in the purchase and sale
(or turnover) of investments other than the purchase of Subsequent Mortgage
Loans; (vii) offer securities (except the Certificates) in exchange for
property; or (viii) repurchase or otherwise reacquire its securities. See
"Reports to the Holders" for information regarding reports to the
Certificateholders.
General Servicing Procedures
Acting directly or through one or more sub-servicers, ________ (the
"Master Servicer") is required to service and administer the Mortgage Loans in
accordance with the Pooling and Servicing Agreement.
The Master Servicer in its own name or in the name of a sub-servicer is
authorized and empowered pursuant to the Pooling and Servicing Agreement (i) to
execute and deliver any and all instruments of satisfaction or cancellation or
of partial or full release or discharge and all other comparable instruments
with respect to the Mortgage Loans and with respect to the Properties, (ii) to
institute foreclosure proceedings or obtain a deed in lieu of foreclosure so as
to effect ownership of any Property in its own name on behalf of the Trustee,
and (iii) to hold title in the name of the Trust to any Property upon such
foreclosure or deed in lieu of foreclosure on behalf of the Trustee; provided,
however, that to the extent any instrument described in clause (i) would be
delivered by the Master Servicer outside of its ordinary procedures for mortgage
loans held for its own account, the Master Servicer is required, prior to
executing and delivering such instrument, to obtain the prior written consent of
the Certificate Insurer.
The Master Servicer, in its own name or in the name of a Sub-Servicer,
has the right to approve requests of Mortgagors for consent to (i) partial
releases of Mortgages, (ii) alterations, and (iii) removal, demolition or
division of Properties subject to Mortgages. The Pooling and Servicing Agreement
provides that no such request shall be approved by the Master Servicer unless:
(i) (x) the provisions of the related Note and Mortgage have been complied with,
(y) the Combined Loan-to-Value Ratio (which may, for this purpose, be determined
at the time of any such action in a manner reasonably acceptable to the
Certificate Insurer) after any release does not exceed the Combined
Loan-to-Value Ratio set forth for such Mortgage Loan in the Schedule of Mortgage
Loans, and (z) the lien priority of the related Mortgage is not affected; or
(ii) the Certificate Insurer shall have approved the granting of such request.
On the tenth day of each month (or the immediately following business
day if the tenth day does not fall on a business day), the Master Servicer or
Sub-Servicer shall send to the Trustee a report detailing the payments on the
Mortgage Loans serviced by it in each of the two Mortgage Loan Groups during the
prior Remittance Period.
Collection of Certain Mortgage Loan Payments
The Master Servicer is required generally to service the Mortgage Loan
Pool in a prudent manner consistent with its general servicing standards for
similar mortgage loans and to make reasonable efforts to collect all payments
called for under the terms and provisions of the Mortgage Loans, and shall, to
the extent such procedures shall be consistent with the provisions of the
Pooling and Servicing Agreement, follow collection procedures for all Mortgage
Loans at least as rigorous as those the Master Servicer would take in servicing
loans and in collecting payments thereunder for its own account.
Consistent with the foregoing, the Master Servicer, in its own name or
in the name of a Sub-Servicer, may (i) in its discretion waive or permit to be
waived any late payment charge or assumption fee or any other fee or charge
which the Master Servicer would be entitled to retain as servicing compensation,
(ii) extend the due date for payments due on a Note for a period (with respect
to each payment as to which the due date is
S-55
extended) not greater than 125 days after the initially scheduled due date for
such payment, and (iii) amend any Note to extend the maturity thereof, provided
that no maturity shall be extended beyond the maturity date of the Mortgage Loan
with the latest maturity date and that no more than 1.0% of the Original Pool
Balance of the Mortgage Loans shall have a maturity date which has been extended
beyond the maturity date thereof at the Cut-Off Date; provided that such action
does not violate applicable REMIC provisions. In the event the Master Servicer,
in its own name or in the name of a Sub-Servicer, consents to the deferment of
the due dates for payments due on a Note, the Master Servicer or Sub-Servicer is
nonetheless required to make payment of any required Delinquency Advance with
respect to the payments so extended to the same extent as if such installment
were due, owing and delinquent and had not been deferred.
Generally the Class A Certificate Owners would prefer that
"due-on-sale" clauses be waived in the event of a sale of the underlying
Mortgaged Property, that extensions and accommodations be made with delinquent
Mortgagors, and that liquidations of Mortgage Loans be deferred, since upon
prepayment due to sale or upon liquidation such Owners will receive a payment of
principal in connection with such prepayment or liquidation. If attractive
re-investment opportunities are available at the time, Class A Certificate
Owners may prefer that "due-on-sale" clauses not be waived and that no such
extensions, accommodations or deferments be made, thus hastening the return of
principal to such Owners.
Owners do not have the right under the Pooling and Servicing Agreement
to make decisions with respect to Mortgagor accounts. Such decisions are in the
nature of mortgage servicing and the Master Servicer generally has the right to
make such decisions without the requirement of consent of the Owners, the
Trustee or the Certificate Insurer. The Master Servicer will generally be
required under the Pooling and Servicing Agreement to enforce "due-on-sale"
clauses, and will make decisions with respect to liquidations in accordance with
the Pooling and Servicing Agreement.
Under certain limited circumstances the Pooling and Servicing Agreement
may require the Master Servicer to obtain the consent of the Certificate Insurer
before taking certain actions with respect to defaulted Mortgage Loans and in
connection with the waiver of "due-on-sale" clauses. Since the Certificate
Insurer's exposure increases, to the extent of interest accrued, the longer the
liquidation process, it is likely to be the case that the Certificate Insurer
will favor quick liquidations in those situations in which its consent is
required. Similarly, the Certificate Insurer would favor the enforcement of a
"due-on-sale" clause, since a prepayment in the event of a sale also reduces its
exposure by limiting the accrual of interest.
Principal and Interest Account
The Master Servicer, in its own name or in the name of a Sub-Servicer,
is required to deposit to the Principal and Interest Account all collections on
the Mortgage Loans, certain proceeds received by the Master Servicer in
connection with the termination of the Trust, Loan Purchase Prices and
Substitution Amounts received or paid by the Master Servicer, insurance and
condemnation proceeds received by the Master Servicer, other amounts related to
the Mortgage Loans received by the Master Servicer, including any income from
REO Properties (net of Servicing Advances made with respect to such REO
Properties), and Delinquency Advances together with any amounts which are
reimbursable from the Principal and Interest Account, but net of the Servicing
Fee with respect to each Mortgage Loan serviced by the Master Servicer and other
servicing compensation to the Master Servicer as permitted by the Pooling and
Servicing Agreement.
The Master Servicer or Sub-Servicer may make withdrawals from the
Principal and Interest Account only for the following purposes: (a) to effect
the timely remittance to the Trustee of the Monthly Remittance due on the
Remittance Date; (b) to withdraw investment earnings on amounts on deposit in
the Principal and Interest Account; (c) to withdraw amounts that have been
deposited to the Principal and Interest Account in error; (d) to pay certain
miscellaneous amounts over to the Company and (e) to clear and terminate the
Principal and Interest Account.
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On each Remittance Date the Master Servicer and any Sub-Servicer is
required to remit the Monthly Remittance amount inclusive of all Delinquency
Advances and Compensating Interest to the Trustee by wire transfer, or otherwise
make funds available in immediately available funds.
Servicing Advances
The Pooling and Servicing Agreement obligates the Master Servicer to
pay all reasonable and customary "out-of-pocket" costs and expenses (including
reasonable legal fees) incurred in the performance of its servicing obligations
including, but not limited to, the cost of (i) preservation expenses, (ii) any
enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of REO Property (including, without limitation,
realtors' commissions) and (iv) advances made for taxes, insurance and other
charges against a Property. Each such expenditure will constitute a "Servicing
Advance". The Master Servicer may recover Servicing Advances from the Mortgagors
to the extent permitted by the Mortgage Loans or, if not theretofore recovered
from the Mortgagor on whose behalf such Servicing Advance was made, from
Liquidation Proceeds realized upon the liquidation of the related Mortgage Loan.
In no case may the Master Servicer recover Servicing Advances from the principal
and interest payments on any Mortgage Loan or from any amounts relating to any
other Mortgage Loan. The Master Servicer is not required to make a Servicing
Advance if it believes that such Servicing Advance will not be recoverable from
the related Mortgage Loan.
Compensating Interest
A full month's interest on each Mortgage Loan, calculated at a rate
equal to such Mortgage Loan's Coupon Rate less the Servicing Fee is due to the
Trustee on the outstanding principal balance of each Mortgage Loan as of the
beginning of each Remittance Period. If a Prepayment of a Mortgage Loan occurs
during any calendar month, any difference between the interest collected from
the Mortgagor during such calendar month and the full month's interest at such
rate ("Compensating Interest") that is due is required to be deposited by the
Master Servicer to the Principal and Interest Account (without any right of
reimbursement therefor) and shall be included in the Monthly Remittance and made
available to the Trustee on the next succeeding Remittance Date.
Maintenance of Insurance
The Master Servicer is required to cause to be maintained with respect
to each Mortgage Loan that it services and related Property a hazard insurance
policy with a carrier licensed in the state in which such Property is located
that provides for fire and extended coverage, and which provides for a recovery
by the Trust of insurance proceeds relating to such Mortgage Loan in an amount
not less than the least of (i) the outstanding principal balance of the Mortgage
Loan (together in the case of a Junior Mortgage, with the outstanding principal
balance of the senior lien), or (ii) the minimum amount required to compensate
for loss or damage on a replacement cost basis, or (iii) the full insurable
value of the premises.
If a Mortgage Loan at the time of origination relates to a Mortgaged
Property in an area identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards, the Master Servicer, in its
own name or in the name of a Sub-Servicer, will be required to maintain with
respect thereto a flood insurance policy in a form meeting the requirements of
the then-current guidelines of the Federal Insurance Administration with a
generally acceptable carrier in an amount representing coverage, and which
provides for recovery by the Master Servicer or a Sub-Servicer on behalf of the
Trust of insurance proceeds relating to such Mortgage Loan, of not less than the
least of (i) the outstanding principal balance of the Mortgage Loan, or (ii) the
minimum amount required to compensate for damage or loss on a replacement cost
basis, or (iii) the maximum amount of insurance that is available under the
Flood Disaster Protection Act of 1973, as amended.
In the event that the Master Servicer or a Sub-Servicer obtains and
maintains a blanket policy insuring against fire with extended coverage and
against flood hazards on all of the Mortgage Loans that it services,
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then, to the extent such policy names the Master Servicer or a Sub-Servicer as
loss payee and provides coverage in an amount equal to the aggregate unpaid
principal balance on the Mortgage Loans without co-insurance, and otherwise
complies with the requirements of the Pooling and Servicing Agreement, the
Master Servicer shall be deemed conclusively to have satisfied its obligations
with respect to fire and hazard insurance coverage under the Pooling and
Servicing Agreement. Such blanket policy may contain a deductible clause, in
which case the Master Servicer will be required, in the event that there shall
not have been maintained on the related Mortgaged Property a policy complying
with the Pooling and Servicing Agreement, and there shall have been a loss that
would have been covered by such policy, to deposit in the Principal and Interest
Account from the Master Servicer's own funds the difference, if any, between the
amount that would have been payable under a policy complying with the Pooling
and Servicing Agreement and the amount paid under such blanket policy.
Pursuant to the Pooling and Servicing Agreement, the Master Servicer
will be required to indemnify the Trust out of its own funds for any loss to the
Trust resulting from the Master Servicer's failure to maintain any required
insurance.
Due-on-Sale Clauses
When a Property has been or is about to be conveyed by the Mortgagor,
the Master Servicer or a Sub- Servicer, to the extent it has knowledge of such
conveyance or prospective conveyance, is required to exercise its rights to
accelerate the maturity of the related Mortgage Loan under any "due on sale"
clause contained in the related Mortgage or Note; provided, however, that the
Master Servicer will not be required to exercise any such right if the
"due-on-sale" clause, in the reasonable belief of the Master Servicer, is not
enforceable under applicable law; and provided further, that the Master Servicer
may refrain from exercising any such right if the Certificate Insurer gives its
prior consent to such non-enforcement.
Realization Upon Defaulted Mortgage Loans
The Master Servicer, in its own name or in the name of a Sub-Servicer,
is required to foreclose upon or otherwise comparably effect the ownership in
the name of the Trust, on behalf of the Trustee, of Properties relating to
defaulted Mortgage Loans that it services as to which no satisfactory
arrangements can be made for collection of delinquent payments and which the
Master Servicer has not purchased pursuant to its purchase option described
below, unless the Master Servicer reasonably believes that Net Liquidation
Proceeds with respect to such Mortgage Loan would not be increased as a result
of such foreclosure or other action, in which case such Mortgage Loan will be
charged off and will become a Liquidated Mortgage Loan. In connection with such
foreclosure or other conversion, the Master Servicer is required to exercise or
use foreclosure procedures with the same degree of care and skill as it would
exercise or use under the circumstances in the conduct of its own affairs. Any
amounts advanced in connection with such foreclosure or other action shall
constitute "Servicing Advances".
The Master Servicer, in its own name or in the name of a Sub-Servicer,
is required to sell any REO Property within 23 months of its acquisition by the
Trustee, unless the Master Servicer obtains for the Trustee an opinion of
counsel experienced in federal income tax matters, addressed to the Trustee and
the Master Servicer, to the effect that the holding by the Trust of such REO
Property for a greater specified period will not result in the imposition of
taxes on "prohibited transactions" of the Trust as defined in Section 860F of
the Code or cause the Trust to fail to qualify as a REMIC.
In accordance with the Pooling and Servicing Agreement, if the Master
Servicer has actual knowledge that a Property which it is contemplating
acquiring in foreclosure or by deed in lieu of foreclosure contains
environmental or hazardous waste risks known to it, the Master Servicer shall
notify the Certificate Insurer and the Trustee prior to acquiring the Property.
The Master Servicer is not permitted to take any action with respect to such a
Property without the prior written approval of the Certificate Insurer.
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The Master Servicer is required to determine, with respect to each
defaulted Mortgage Loan that it services, when it has recovered, whether through
trustee's sale, foreclosure sale or otherwise, all amounts, if any, it expects
to recover from or on account of such defaulted Mortgage Loan, whereupon such
Mortgage Loan shall become a "Liquidated Mortgage Loan".
Servicing Compensation
As compensation for its servicing activities under the Pooling and
Servicing Agreement, the Master Servicer shall be entitled to retain the amount
of the Servicing Fee with respect to each Mortgage Loan that it services.
Additional servicing compensation in the form of release fees, bad check
charges, assumption fees, late payment charges, and any other servicing-related
fees, and similar items may, to the extent collected from Mortgagors, be
retained by the Master Servicer.
Annual Statement as to Compliance
The Master Servicer is required to deliver, on its own behalf, to the
Trustee, the Company and the Certificate Insurer, on or before the last day of
April of each year, commencing in 1997, an Officer's Certificate stating, as to
each signer thereof, that (i) a review of the activities of the Master Servicer
during such preceding calendar year and of performance under the Pooling and
Servicing Agreement has been made under such officer's supervision, and (ii) to
the best of such officer's knowledge, based on such review, the Master Servicer
has fulfilled all its obligations under the Pooling and Servicing Agreement for
such year, or, if there has been a default in the fulfillment of all such
obligations, specifying each such default known to such officer and the nature
and status thereof including the steps being taken by the Master Servicer to
remedy such default.
Annual Independent Certified Public Accountants' Reports
On or before the last day of April of each year, commencing in 1997,
the Master Servicer is required to cause to be delivered, on its own behalf, to
the Trustee and the Certificate Insurer a letter or letters of a firm of
independent, nationally recognized certified public accountants reasonably
acceptable to the Certificate Insurer stating that such firm has, with respect
to the Master Servicer's overall servicing operations (i) performed applicable
tests in accordance with the compliance testing procedures as set forth in
Appendix 3 of the Audit Guide for Audits of HUD Approved Nonsupervised
Mortgagees or (ii) examined such operations in accordance with the requirements
of the Uniform Single Audit Program for Mortgage Bankers, and stating such
firm's conclusions relating thereto.
Assignment of Agreement
The Master Servicer may not assign its obligations under the Pooling
and Servicing Agreement, in whole or in part, unless it shall have first
obtained the written consent of the Company, the Trustee and the Certificate
Insurer; provided, however, that any assignee must meet the eligibility
requirements set forth in the Pooling and Servicing Agreement for a successor
Master Servicer.
Removal and Resignation of the Master Servicer; Events of Default
The Certificate Insurer, or with the consent of the Certificate
Insurer, the Company or the Owners of Class A Certificates owning a majority in
Percentage Interest in the Class A Certificates may remove the Master Servicer
upon the occurrence of any of the following events (each, an "Event of
Default"):
(i) The Master Servicer shall (I) apply for or consent to
the appointment of a receiver, trustee, liquidator or custodian or
similar entity with respect to itself or its property, (II) admit in
writing its inability to pay its debts generally as they become due,
(III) make a general assignment for the benefit of creditors, (IV) be
adjudicated bankrupt or insolvent, (V) commence a voluntary case under
the federal bankruptcy laws of the United States of America or file a
voluntary petition or
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answer seeking reorganization, an arrangement with creditors or an
order for relief or seeking to take advantage of any insolvency law or
file an answer admitting the material allegations of a petition filed
against it in any bankruptcy, reorganization or insolvency proceeding
or (VI) cause corporate action to be taken by it for the purpose of
effecting any of the foregoing; or
(ii) If without the application, approval or consent of the
Master Servicer, a proceeding shall be instituted in any court of
competent jurisdiction, under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking in respect of
the Master Servicer an order for relief or an adjudication in
bankruptcy, reorganization, dissolution, winding up, liquidation, a
composition or arrangement with creditors, a readjustment of debts, the
appointment of a trustee, receiver, liquidator or custodian or similar
entity with respect to the Master Servicer or of all or any substantial
part of its assets, or other like relief in respect thereof under any
bankruptcy or insolvency law, and, if such proceeding is being
contested by the Master Servicer in good faith, the same shall (A)
result in the entry of an order for relief or any such adjudication or
appointment or (B) continue undismissed or pending and unstayed for any
period of sixty (60) consecutive days; or
(iii) The Master Servicer shall fail to perform any one or
more of its obligations under the Pooling and Servicing Agreement
(other than its obligations referenced in clauses (vi) and (vii) below)
and shall continue in default thereof for a period of thirty (30) days
after the earlier to occur of (x) the date on which an authorized
officer of the Master Servicer knows or reasonably should know of such
failure or (y) receipt by the Master Servicer of a written notice by
the Trustee, any Owner, the Company or the Certificate Insurer of said
failure; or
(iv) The Master Servicer shall fail to cure any breach of
any of its representations and warranties set forth in the Pooling and
Servicing Agreement which materially and adversely affects the
interests of the Owners or Certificate Insurer for a period of thirty
(30) days after the earlier of (x) the date on which an authorized
officer of the Master Servicer knows or reasonably should know of such
breach or (y) receipt by the Master Servicer of a written notice from
the Trustee, any Owner, the Company or the Certificate Insurer of such
breach;
(v) If the Certificate Insurer pays out any money under the
Certificate Insurance Policy, or if the Certificate Insurer otherwise
funds any shortfall with its own money, because the amounts available
to the Trustee (other than from the Certificate Insurer) are
insufficient to make required distributions on the Class A
Certificates;
(vi) The failure by the Master Servicer to make any required
Servicing Advance for a period of 30 days following the earlier of (x)
the date on which an authorized officer of the Master Servicer knows or
reasonably should know of such failure or (y) receipt by the Master
Servicer of a written notice from the Trustee, any Owner, the Company
or the Certificate Insurer of such failure;
(vii) The failure by the Master Servicer to make any
required Delinquency Advance or to pay any Compensating Interest or to
pay over the Monthly Remittance; or
(viii) If the delinquency or loss levels applicable to the
Mortgage Loans serviced by the Master Servicer exceed certain "trigger"
levels set forth in the Pooling and Servicing Agreement;
provided, however, that (x) prior to any removal of the Master Servicer pursuant
to clauses (ii) through (iv) and (vi) above, any applicable grace period granted
by any such clause shall have expired prior to the time such occurrence shall
have been remedied and (y) in the event of the refusal or inability of the
Master Servicer to comply with its obligations described in clause (vii) above,
such removal shall be effective (without the requirement of any action on the
part of the Company, the Trustee or the Certificate Insurer) at 4 p.m. (New York
City time) on the second business day following the day on which the Trustee
notifies the Master Servicer that a required amount described in clause (vii)
above has not been received by the Trustee, unless the
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required amount described in clause (vii) above is paid by the Master Servicer
prior to such time. Upon the Trustee's determination that a required amount
described in clause (vii) above has not been made by the Master Servicer, the
Trustee shall so notify the Master Servicer, the Company and the Certificate
Insurer as soon as is reasonably practical.
The Master Servicer may not resign from the obligations and duties
imposed on it under the Pooling and Servicing Agreement, except upon
determination that its duties thereunder are no longer permissible under
applicable law or are in material conflict by reason of applicable law with any
other activities carried on by it, the other activities of the Master Servicer
so causing such a conflict being of a type and nature carried on by the Master
Servicer at the date of the Pooling and Servicing Agreement. Any such
determination permitting the resignation of the Master Servicer shall be
evidenced by an opinion of counsel to such effect which shall be delivered to
the Trustee, the Company and the Certificate Insurer.
No removal or resignation of the Master Servicer shall become effective
until the Trustee or a successor servicer shall have assumed the Master
Servicer's responsibilities and obligations in accordance with the Pooling and
Servicing Agreement.
Successor Master Servicer
Upon removal or resignation of ________ as Master Servicer under the
Pooling and Servicing Agreement, the Trustee (x) may solicit bids for a
successor Master Servicer under the Pooling and Servicing Agreement, and (y)
pending the appointment of a successor Master Servicer under the Pooling and
Servicing Agreement, as a result of soliciting such bids, is required to serve
as Master Servicer under the Pooling and Servicing Agreement, unless ________
has been removed without cause, in which event the Trustee prior to any such
removal must designate a successor Master Servicer under the Pooling and
Servicing Agreement acceptable to the Certificate Insurer. The Trustee, if it is
unable to obtain a qualifying bid and is prevented by law from acting as Master
Servicer under the Pooling and Servicing Agreement, may appoint, or petition a
court of competent jurisdiction to appoint, any housing and home finance
institution, bank or mortgage servicing institution which has been designated as
an approved seller-servicer by FNMA or FHLMC for first and second mortgage loans
and having equity of not less than $15,000,000, as determined in accordance with
generally accepted accounting principles, and acceptable to the Certificate
Insurer.
The Trustee, or any other successor Master Servicer, upon assuming the
duties of the Master Servicer, is required immediately to make payment of all
Compensating Interest and all Delinquency Advances which the Master Servicer has
theretofore failed to remit with respect to the Mortgage Loans; provided,
however, that if the Trustee is acting as successor Master Servicer, the Trustee
is only required to make Delinquency Advances (including the Delinquency
Advances described in this sentence) if, in the Trustee's reasonable good faith
judgment, such Delinquency Advances will ultimately be recoverable from the
related Mortgage Loans.
Investment of Accounts
All or a portion of the Principal and Interest Account, the Certificate
Account and any other account which may be created by the Trustee, may be
invested and reinvested in one or more Eligible Investments bearing interest or
sold at a discount. The bank serving as Trustee or any affiliate thereof, may be
the obligor on any investment in any Account which otherwise qualifies as an
Eligible Investment. No investment in any Account held by the Trustee may mature
later than the business day immediately preceding the next succeeding Payment
Date; provided, however, that if the investment is an investment of the bank
serving as Trustee, then it may mature on the Payment Date.
The Trustee will not in any way be held liable by reason of any
insufficiency in any Account resulting from any loss on any Eligible Investment
included therein (except to the extent that the bank serving as Trustee is the
obligor thereon).
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All income or other gain from investments in any Account will be
required to be deposited in such Account immediately upon receipt, and any loss
resulting from such investments will be required to be charged to such Account.
Eligible Investments
The Pooling and Servicing Agreement defines the following as Eligible
Investments:
(a) Direct general obligations of the United States or the
obligations of any agency or instrumentality of the United States, the
timely payment or the guarantee of which constitutes a full faith and
credit obligation of the United States.
(b) Federal Housing Administration debentures, but excluding
any such securities whose terms do not provide for payment of a fixed
dollar amount upon maturity or call for redemption.
(c) FHLMC senior debt obligations, but excluding any such
securities whose terms do not provide for payment of a fixed dollar
amount upon maturity or call for redemption.
(d) FNMA senior debt obligations, but excluding any such
securities whose terms do not provide for payment of a fixed dollar
amount upon maturity or call for redemption.
(e) Federal funds, certificates of deposit, time and demand
deposits, and bankers' acceptances (having original maturities of not
more than 365 days) of any domestic bank, the short-term debt
obligations of which have been rated A-1 or better by S&P and P-1 by
Moody's.
(f) Deposits of any bank or savings and loan association which
has combined capital, surplus and undivided profits of at least
$50,000,000 which deposits are not in excess of the applicable limits
insured by the Bank Insurance Fund or the Savings Association Insurance
Fund of the FDIC, provided that the long-term deposits of such bank or
savings and loan association are rated at least "BBB" by S&P and "Baa3"
by Moody's.
(g) Commercial paper (having original maturities of not more
than 270 days) rated A-1 or better by S&P and P-1 by Moody's.
(h) Investments in money market funds rated AAAm or AAAm-G by
S&P and Aaa or P-1 by Moody's.
(i) Such other investments as have been approved in writing by
S&P, Moody's and the Certificate Insurer.
provided that no instrument described above is permitted to evidence
either the right to receive (a) only interest with respect to obligations
underlying such instrument or (b) both principal and interest payments derived
from obligations underlying such instrument and the interest and principal
payments with respect to such instrument provided a yield to maturity at par
greater than 120% of the yield to maturity at par of the underlying obligations;
and provided, further, that no instrument described above may be purchased at a
price greater than par if such instrument may be prepaid or called at a price
less than its purchase price prior to stated maturity.
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Amendments
The Trustee, the Master Servicer and the Company may at any time and
from time to time, with the prior written consent of the Certificate Insurer but
without the consent of the Owners, amend the Pooling and Servicing Agreement,
for the purposes of (a) curing any ambiguity, or correcting or supplementing any
provision of any such agreement which may be inconsistent with any other
provision of such agreement, (b) if accompanied by an approving opinion of
counsel experienced in federal income tax matters, removing the restriction
against the transfer of a Residual Certificate to a Disqualified Organization
(as such term is defined in the Code) or (c) complying with the requirements of
the Code; provided, however, that such action shall not, as evidenced by an
opinion of counsel delivered to the Trustee, materially and adversely affect the
interests of any Owner or materially and adversely affect (without its written
consent) the rights and interests of the Certificate Insurer.
The Pooling and Servicing Agreement may also be amended by the Trustee,
the Master Servicer and the Company, as applicable, at any time and from time to
time, with the prior written approval of the Certificate Insurer and of not less
than 66 2/3% of the Percentage Interest represented by each affected Class of
Certificates then outstanding, for the purpose of adding any provisions or
changing in any manner or eliminating any of the provisions thereof or of
modifying in any manner the rights of the Owners thereunder; provided, however,
that no such amendment shall (a) change in any manner the amount of, or delay
the timing of, payments which are required to be distributed to any Owner
without the consent of the Owner of such Certificate or (b) change the aforesaid
percentages of Percentage Interest which are required to consent to any such
amendments, without the consent of the Owners of all Certificates of the Class
or Classes affected then outstanding. Any such amendment must be accompanied by
an opinion of tax counsel as to REMIC matters.
The Trustee will be required to furnish a copy of any such amendment to
each Owner in the manner set forth in the Pooling and Servicing Agreement.
Termination of the Trust
The Pooling and Servicing Agreement provides that the Trust will
terminate upon the payment to the Owners of all Certificates from amounts other
than those available under the Certificate Insurance Policy all amounts required
to be paid to such Owners upon the final payment and other liquidation (or any
advance made with respect thereto) of the last Mortgage Loan.
Optional Termination By the Company
At its option, the Company may purchase from the Trust all (but not
fewer than all) remaining Mortgage Loans and other property, acquired by
foreclosure, deed in lieu of foreclosure, or otherwise, then constituting the
Trust Estate, and thereby effect early retirement of the Certificates, on any
Payment Date when the Pool Principal Balance has declined to ten percent or less
of the Original Pool Principal Balance.
The termination of the Trust by the preceding method is equivalent to a
prepayment of all the Mortgage Loans and a liquidation of the Trust. The Owners
of the Class A Certificates would receive from the proceeds of such purchase any
interest owed and the Owners of the Class A Certificates would receive any
principal not yet paid, in the order of priority set forth under "Description of
Certificates -- Distributions on Class A Certificates". Consequently, a
termination of the Trust pursuant to the preceding methods, if purchased at a
price in excess of par, reduces the yield to maturity on the Class A
Certificates.
Auction Sale
The Pooling and Servicing Agreement requires that, within ninety days
following the Company Optional Termination Date, if the Company has not
exercised its optional termination right by such date, the Trustee solicit bids
for the purchase of all Mortgage Loans remaining in the Trust. In the event that
satisfactory
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bids are received as described in the Pooling and Servicing Agreement, the net
sale proceeds will be distributed to Certificateholders, in the same order of
priority as collections received in respect of the Mortgage Loans. If
satisfactory bids are not received, the Trustee shall decline to sell the
Mortgage Loans and shall not be under any obligation to solicit any further bids
or otherwise negotiate any further sale of the Mortgage Loans. Such sale and
consequent termination of the Trust must constitute a "qualified liquidation" of
each REMIC established by the Trust under Section 860F of the Internal Revenue
Code of 1986, as amended, including, without limitation, the requirement that
the qualified liquidation takes place over a period not to exceed 90 days.
THE TRUSTEE
Pursuant to the Pooling and Servicing Agreement, ______________________
will serve as trustee of the Trust. The Pooling and Servicing Agreement sets
forth provisions regarding the Trustee, certain of which are summarized below.
Certain Covenants of the Trustee
Withholding. The Trustee is required to comply with all requirements of
the Code or any applicable state or local law with respect to the withholding
from any distributions made by it to any Owner of any applicable withholding
taxes imposed thereon and with respect to any applicable reporting requirements
in connection therewith.
Unclaimed Moneys. Any money held by the Trustee in trust for the
payment of any amount due with respect to any Class A Certificate and remaining
unclaimed for the period then specified in the escheat laws of the State of New
York after such amount has become due and payable will be discharged from such
trust and be paid to the Company, and the Owner of such Class A Certificate
shall thereafter, as an unsecured general creditor, look only to the Company for
payment thereof (but only to the extent of the amounts so paid to the Company),
and all liability of the Trustee with respect to such trust money will thereupon
cease; provided, however, that the Trustee, before being required to make any
such payment, may at the expense of the Company cause to be published once, in
the eastern edition of The Wall Street Journal, notice that such money remains
unclaimed and that, after a date specified therein, which shall be not less than
30 days from the date of such publication, any unclaimed balance of such money
then remaining will be paid to the Company. The Trustee may also adopt and
employ, at the expense of the Company, any other reasonable means of
notification of such payment (including but not limited to mailing notice of
such payment to Owners whose right to or interest in moneys due and payable but
not claimed is determinable from the Register at the last address of record for
each such Owner).
Protection of Trust Estate. The trust estate (the "Trust Estate") of
the Trust primarily consists of (i) the Mortgage Loans, (ii) all moneys held in
the Accounts and (iii) the Certificate Insurance Policy. The Trustee is required
to hold the Trust Estate in Trust for the benefit of the Owners and, upon
request of and at the expense of the Company and at the expense of the
requesting party, will from time to time execute and deliver all such
supplements and amendments to the Pooling and Servicing Agreement, instruments
of further assurance and other instruments, and will take such other action upon
such request as it deems reasonably necessary or advisable, to more effectively
hold in trust all or any portion of the Trust Estate.
The Trustee has the power to enforce, and is required to enforce the
obligations of the other parties to the Pooling and Servicing Agreement by
action, suit or proceeding at law or equity, and also has the power to enjoin,
by action or suit, any acts or occurrences which may be unlawful or in violation
of the rights of the Owners; provided, however, that nothing in the Pooling and
Servicing Agreement requires any action by the Trustee unless the Trustee shall
first (i) have been furnished indemnity satisfactory to it and (ii) when
required by the Pooling and Servicing Agreement, have been requested to take
such action by the Owners.
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Performance and Enforcement of Obligations. The Pooling and Servicing
Agreement provides that the Trustee is under no obligation to exercise any of
the rights or powers vested in it by the Pooling and Servicing Agreement at the
request or direction of any of the Owners, unless such Owners shall have offered
to the Trustee reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction.
The Trustee may execute any of the rights or powers granted by the
Pooling and Servicing Agreement or perform any duties thereunder either directly
or by or through agents or attorneys, and the Trustee is responsible for any
misconduct or negligence on the part of any agent or attorney appointed and
supervised with due care by it thereunder.
Pursuant to the Pooling and Servicing Agreement, the Trustee is not
liable for any action it takes or omits to take in good faith which it
reasonably believes to be authorized by an authorized officer of any person or
within its rights or powers under the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement provides that no Owner has any
right to institute any proceeding, judicial or otherwise, with respect to the
Pooling and Servicing Agreement or the Certificate Insurance Policy, or for the
appointment of a receiver or trustee under the Pooling and Servicing Agreement,
unless:
(1) such Owner has previously given written notice to the
Company, the Certificate Insurer and the Trustee of such Owner's
intention to institute such proceeding;
(2) the Owners of not less than 25% of the Percentage
Interests represented by any Class of Class A Certificates then
outstanding or, if there are no Class A Certificates then outstanding,
by such Percentage Interest represented by the Class B Certificates
then outstanding, shall have made written request to the Trustee to
institute such proceeding in its own name as representative of the
Owners;
(3) such Owner or Owners have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Trustee for 30 days after its receipt of such notice,
request and offer of indemnity, has failed to institute such
proceeding; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Owners of a
majority of the Percentage Interests represented by each Class of Class
A Certificates then outstanding or, if there are no Class A
Certificates then outstanding, by a majority of the Percentage
Interests represented by the Class B Certificates then outstanding.
The Pooling and Servicing Agreement provides that no one or more Owners
shall have any right in any manner whatever by virtue of, or by availing
themselves of, any provision of the Pooling and Servicing Agreement to affect,
disturb or prejudice the rights of any other Owner of the same Class or to
obtain or to seek to obtain priority or preference over any other Owner of the
same Class or to enforce any right under the Pooling and Servicing Agreement,
except in the manner herein provided and for the equal and ratable benefit of
all the Owners of the same Class.
In the event the Trustee receives conflicting or inconsistent requests
and indemnity from two or more groups of Owners, each representing less than a
majority of the applicable Class of Certificates, the Trustee shall follow the
directions of the Certificate Insurer.
The Certificate Insurer or, with the consent of the Certificate
Insurer, the Owners of a majority of the Percentage Interests represented by
each Class of Class A Certificates then outstanding or, if there are no Class A
Certificates then outstanding, by such majority of the Percentage Interests
represented by the Class B
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Certificates then outstanding, may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee with respect
to the Certificates or exercising any trust or power conferred on the Trustee
with respect to the Certificates or the Trust Estate provided that: (1) such
direction is not in conflict with any rule of law or with the Pooling and
Servicing Agreement; (2) the Trustee has been provided with indemnity
satisfactory to it; and (3) the Trustee may take any other action deemed proper
by the Trustee which is not inconsistent with such direction; provided, however,
that the Trustee need not take any action which it determines might involve it
in liability or may be unjustly prejudicial to the Owners not so directing.
Disposition of Trust Estate. The Trustee covenants not to permit the
Trust to sell, transfer, exchange or otherwise dispose of any of the Trust
Estate except as expressly permitted by the Pooling and Servicing Agreement.
Reporting Requirements. On each Payment Date the Trustee is required to
report in writing to each Owner: (i) the amount of the distribution with respect
to the Class A Certificates, the Class B Certificates and the Residual
Certificates; (ii) the amount of such distributions allocable to principal,
separately identifying the aggregate amount of any Prepayments or other
recoveries of principal included therein; (iii) the amount of such distributions
allocable to interest; (iv) the amount of such distributions allocable to the
Class A Carry-Forward Amount or the Class B Carry-Forward Amount; (v) the amount
of any Insured Payment made with respect to such Payment Date; (vi) the Class A
Principal Balance as of such Payment Date, together with the principal amount of
each Class A Certificate (based on a Certificate in the original principal
amount of $1,000) then outstanding, in each case after giving effect to any
payment of principal on such Payment Date; (vii) the Class B Principal Balance
as of such Payment Date, together with the principal amount of each Class B
Certificate (based on a Certificate in the original principal amount of $1,000)
then outstanding, in each case after giving effect to any payment of principal
on such Payment Date; (viii) the total of any Substitution Amounts and any Loan
Purchase Prices included in such distribution; (ix) the amount of the Servicing
Fee paid with respect to such Payment Date; and (x) the Subordinated Amount as
of such Payment Date.
Removal of Trustee for Cause
The Trustee may be removed upon the occurrence of any of the following
events (whatever the reason for such event and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) the Trustee shall fail to distribute to the Owners
entitled thereto on any Payment Date amounts available for distribution
in accordance with the terms of the Pooling and Servicing Agreement; or
(2) the Trustee shall fail in the performance of, or breach,
any covenant or agreement of the Trustee in the Pooling and Servicing
Agreement, or if any representation or warranty of the Trustee made in
the Pooling and Servicing Agreement or in any certificate or other
writing delivered pursuant thereto or in connection therewith shall
prove to be incorrect in any material respect as of the time when the
same shall have been made, and such failure or breach shall continue or
not be cured for a period of 30 days after, there shall have been
given, by registered or certified mail, to the Trustee by the Company
or by the Certificate Insurer or by the Owners of at least 25% of the
aggregate Percentage Interest represented by any Class of Class A
Certificates then outstanding, or, if there are no Class A Certificates
then outstanding, by such Percentage Interest represented by the Class
B Certificates then outstanding, a written notice specifying such
failure or breach and requiring it to be remedied; or
(3) certain insolvency events related to the Trustee.
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If any event described above occurs and is continuing, then and in
every such case (x) the Company or the Certificate Insurer or (y) with the
consent of the Certificate Insurer, the Owners of a majority Percentage Interest
represented by any Class of Class A Certificates or, if there are no Class A
Certificates then outstanding, by such Percentage Interest represented by the
Class B Certificates then outstanding, may immediately appoint a successor
trustee.
Liability of the Trustee
The Trustee, prior to the occurrence of an Event of Default and after
the curing of all Events of Default which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in the
Pooling and Servicing Agreement. If an Event of Default has occurred and has not
been cured or waived, the Trustee shall exercise such of the rights and powers
vested in it by the Pooling and Servicing Agreement, and use the same degree of
care and skill in its exercise as a prudent person would exercise or use under
the circumstances in the conduct of such person's own affairs. Prior to the
occurrence of an Event of Default, and after the curing of all such Events of
Default which may have occurred, the Trustee (i) undertakes to perform such
duties and only such duties as are specifically set forth in the Pooling and
Servicing Agreement, and no implied covenants or obligations shall be read into
the Pooling and Servicing Agreement against the Trustee and (ii) in the absence
of bad faith on its part, may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished pursuant to and conforming to the
requirements of the Pooling and Servicing Agreement; provided, however, that
such provisions do not protect the Trustee or any such person against any
liability which would otherwise be imposed by reason of negligent action,
negligent failure to act or willful misconduct in the performance of duties or
by reason of reckless disregard of obligations and duties thereunder.
The Trustee and any director, officer, employee or agent of the Trustee
may rely and will be protected in acting or refraining from acting in good faith
in reliance on any certificate, notice or other document of any kind prima facie
properly executed and submitted by the authorized officer of any person
respecting any matters arising under the Pooling and Servicing Agreement.
THE CERTIFICATE INSURANCE POLICY AND THE CERTIFICATE INSURER
General
[description of certificate insurer]
Capitalization
The following table sets forth the capitalization of the Certificate
Insurer as of December 31, 199_ and December 31, 199_, respectively, on the
basis of generally accepted accounting principles. No material adverse change in
the capitalization of the Certificate Insurer has occurred since December 31,
199_.
December 31, December 31,
199_ 199_
------------- ---------------
(in millions) (in millions)
Unearned Premiums............................................................. $ $
Other Liabilities.............................................................
Stockholder's Equity
Common Stock...............................................................
Additional Paid-in Capital.................................................
Net Unrealized Gains/(Losses)..............................................
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Foreign Currency Translation Adjustment....................................
Retained Earnings..........................................................
Total Stockholder's Equity....................................................
Total Liabilities and Stockholder's Equity.................................... $ $
==== ====
For further financial information concerning the Certificate Insurer,
see the audited financial statements of the Certificate Insurer included as
Appendix A.
Copies of the Certificate Insurer's quarterly and annual statutory
statements filed by the Certificate Insurer with the New York Insurance
Department are available upon request to ____________________,
____________________, Attention: ____________________. The Certificate Insurer's
telephone number is
- ----------.
The Certificate Insurer does not accept any responsibility for the
accuracy or completeness of this Prospectus or any information or disclosure
contained herein, or omitted herefrom, other than with respect to the accuracy
of information regarding the Certificate Insurer and the Certificate Insurance
Policy set forth under the heading "The Certificate Insurance Policy and The
Certificate Insurer" and in Appendix A.
An indemnification agreement among the Certificate Insurer, the Company
and the Underwriters provides that each of the parties to such agreement will
indemnify each other for certain liabilities under the 1933 Act.
The Certificate Insurance Policy
The Company will obtain the Certificate Insurance Policy, issued by the
Certificate Insurer, in favor of the Owners of the Class A Certificates. The
Certificate Insurance Policy provides for 100% coverage of the related Insured
Distribution Amount.
The Certificate Insurance Policy unconditionally guarantees the payment
of Insured Payments on the Class A Certificates. The Certificate Insurer is
required to make Insured Payments to the Trustee as paying agent on the later of
the Payment Date or on the business day next following the day on which the
Certificate Insurer shall have received telephonic or telegraphic notice,
subsequently confirmed in writing, or written notice by registered or certified
mail, from the Trustee that an Insured Payment is due.
The Pooling and Servicing Agreement will provide that the term "Total
Available Funds" does not include Insured Payments and does not include any
amounts that cannot be distributed to the Owners of any Class A Certificates by
the Trustee as a result of final, non-appealable proceedings under the United
States Bankruptcy Code.
Each Owner of a Class A Certificate which pays to the bankruptcy court
as a "voidable preference" under the United States Bankruptcy Code any amounts
("Preference Amounts") theretofore received by such Owner on account of such
Class A Certificate will be entitled to receive reimbursement for such amounts
from the Certificate Insurer, but only after (i) delivering a copy to the
Trustee of a final, nonappealable order (a "Preference Order") of a court having
competent jurisdiction demanding payment of such amount to the bankruptcy court
and (ii) assigning such Owner's claim with respect to such Preference Order to
the Certificate Insurer. In no event shall the Certificate Insurer pay more than
one Insured Payment in respect of any Preference Amount.
The Certificate Insurance Policy is non-cancelable.
THE CERTIFICATE INSURANCE POLICY IS NOT COVERED BY THE
PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW
YORK INSURANCE LAW.
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The Certificate Insurer's obligation under the Certificate Insurance
Policy will be discharged to the extent that funds are received by the Trustee
for distribution to the Class A Certificateholders, whether or not such funds
are properly distributed by the Trustee.
The Certificate Insurance Policy does not guarantee to the owners of
the Class A Certificates any specific rate of prepayments of principal of the
Mortgage Loans. Also, the Certificate Insurance Policy does not guarantee the
payment of any Supplemental Interest Amount.
Pursuant to the Pooling and Servicing Agreement, the Certificate
Insurer is subrogated to the rights of the Owners of the Class A Certificates to
the extent of any such payment under the Certificate Insurance Policy.
Credit Enhancement Does Not Apply to Prepayment Risk
In general, the protection afforded by the Certificate Insurance Policy
is protection for credit risk and not for prepayment risk. A claim may not be
made under the Certificate Insurance Policy in an attempt to guarantee or insure
that any particular rate of prepayment is experienced by the Trust.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion of the material federal income tax
consequences of the purchase, ownership and disposition of the Class A
Certificates is to be considered only in connection with "Certain Federal Income
Tax Considerations" in the Prospectus. The discussion herein and in the
Prospectus is based upon laws, regulations, rulings and decisions now in effect,
all of which are subject to change. The discussion below and in the Prospectus
does not purport to deal with all federal tax consequences applicable to all
categories of investors, some of which may be subject to special rules.
Investors should consult their own tax advisors in determining the federal,
state, local and any other tax consequences to them of the purchase, ownership
and disposition of the Class A Certificates.
REMIC Election
The Trustee will cause one or more elections to be made with respect to
certain specified assets of the Trust as real estate mortgage investment
conduits ("REMICs") within the meaning of Code Section 860D. _______________,
special tax counsel, will advise that, in its opinion, for federal income tax
purposes, assuming the REMIC elections are made and compliance with the Pooling
and Servicing Agreement, each Class of Class A Certificates will be treated as a
"regular interest" in a REMIC.
For federal income tax purposes, regular interests in a REMIC are
treated as debt instruments issued by the REMIC on the date on which those
interests are created, and not as ownership interests in the REMIC or its
assets. Owners of Class A Certificates that otherwise report income under a cash
method of accounting will be required to report income with respect to such
Certificates under an accrual method. The prepayment assumption that will be
used in determining the rate of accrual of original issue discount on the Class
A Certificates is ___% of the "Prepayment Assumption." See "Maturity, Prepayment
and Yield Considerations" herein and "Certain Federal Income Tax Considerations
- -- Discount and Premium" in the Prospectus.
The Owners of Class A-6 Group II Certificates and the related rights to
receive Supplemental Interest Amounts will be treated for tax purposes as owning
two separate investments: (i) Class A-6 Group II Certificates without the right
to receive Supplemental Interest Amounts and (ii) the right to receive the
Supplemental Interest Amounts. The Owners of Class A-6 Group II Certificates
must allocate the purchase price of their Certificates between these two
investments based on their relative fair market values. The purchase price
allocated to the first investment will be the issue price of the Class A-6 Group
II Certificates for calculating accruals of OID (if any). See "Certain Federal
Income Tax Consequences--Discount and Premium" in the Prospectus.
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An Owner of a Class A-6 Group II Certificate and the related rights to
receive Supplemental Interest Amounts will be treated for federal income tax
purposes as having entered into a notional principal contract on the date that
it purchases its Certificate. Treasury Regulations under Section 446 of the Code
relating to notional principal contracts (the "Notional Principal Contract
Regulations") provide that taxpayers must recognize periodic payments with
respect to a notional principal contract under the accrual method of accounting.
Any Supplemental Interest Amounts will be periodic payments. Income with respect
to periodic payments under a notional principal contract for a taxable year
should constitute ordinary income. The purchase price allocated to the right to
receive the related Supplemental Interest Amounts will be treated as a
nonperiodic payment under the Notional Principal Contract Regulations. Such a
nonperiodic payment may be amortized using several methods, including the level
payment method described in the Notional Principal contract Regulations.
The right to receive the Supplemental Interest Amounts will not
constitute: (i) a "real estate asset" within the meaning of section 858(c)(5)(A)
of the Internal Revenue Code (the "Code") if held by a real estate investment
trust; (ii) a "qualified mortgage" within the meaning of section 860G(a)(3) of
the Code or a "permitted investment" within the meaning of section 860G(a)(5) of
the Code if held by a REMIC, or (iii) an asset described in section
7701(a)(19)(C)(xi) of the Code if held by a thrift. Moreover, other special
rules may apply to certain investors, including dealers in securities and
dealers in notional principal contracts.
Taxation of Foreign Investors
In general, foreign investors will not be subject to U.S. withholding
on income from the Class A Certificates. See "Certain Federal Income Tax
Considerations -- Foreign Investors -- Grantor Trust Securities and REMIC
Regular Securities" in the Prospectus.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended
("ERISA"), imposes certain requirements on those employee benefit plans to which
it applies ("ERISA Plan") and on those persons who are fiduciaries with respect
to such ERISA Plans. Certain employee benefit plans, such as governmental plans
(as defined in ERISA Section 3(32)) and certain church plans (as defined in
ERISA Section 3(33)), are not subject to ERISA. In accordance with ERISA's
general fiduciary standards, before investing in a Class A Certificate, an ERISA
Plan fiduciary should determine whether such an investment is permitted under
the governing ERISA Plan instruments and is appropriate for the ERISA Plan in
view of its overall investment policy and the composition and diversification of
its portfolio.
In addition, provisions of ERISA, and the corresponding provisions of
the Code, prohibit a broad range of transactions involving assets of ERISA
Plans, individual retirement accounts, and Keogh plans covering only a sole
proprietor or partners (collectively, the "Plans") and persons having certain
specified relationships to such a Plan ("parties in interest" and "disqualified
persons"). Such transactions are treated as "prohibited transactions" under
Sections 406 and 407 of ERISA and excise taxes are imposed upon such persons by
Section 4975 of the Code. Certain affiliates of the Originators, the Company,
the Master Servicer, any Sub- Servicer, and of the Trustee might be considered
"parties in interest" or "disqualified persons" with respect to a Plan. If so,
the acquisition or holding of Class A Certificates by or on behalf of such Plan
could be considered to give rise to a "prohibited transaction" within the
meaning of ERISA or the Code unless an exemption is available. Furthermore, if
an investing Plan's assets were deemed to include an interest in the assets of
the Mortgage Loans which constitute the Trust Estate and not merely an interest
in the Class A Certificates, transactions occurring in the servicing of the
Mortgage Loans might constitute prohibited transactions unless an administrative
exemption applies.
The DOL has issued to ____________________ an administrative exemption,
Prohibited Transaction Exemption _____ (the "Exemption"), which generally
exempts from the application of the prohibited transaction provisions of Section
406(a), Section 406(b)(1) and Section 406(b)(2) of ERISA and the excise taxes
imposed
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pursuant to Sections 4975(a) and (b) of the Code, certain transactions relating
to the servicing and operation of asset pools, including pools of mortgage
loans, and the purchase, sale and holding of asset-backed pass-through
certificates, including pass-through certificates evidencing interests in
mortgage loans, such as the Class A Certificates underwritten by
____________________ and certain of its affiliates, provided that certain
conditions set forth in the Exemption are satisfied.
If the general conditions of Section II of the Exemption are satisfied,
the Exemption may provide an exemption from the restrictions imposed by Sections
406(a) and 407(a) of ERISA (as well as the excise taxes imposed by Sections
4975(a) and (b) of the Code by reason of Section 4975(c)(1)(A) through (D) of
the Code) in connection with the direct or indirect sale, exchange or transfer
of Class A Certificates by Plans in the initial issue of Certificates, the
holding of Class A Certificates by Plans or the direct or indirect acquisition
or disposition in the secondary market of Class A Certificates by Plans.
However, no exemption is provided from the restrictions of Section 406(a)(1)(E),
406(a)(2) and 407 of ERISA for the acquisition or holding of a Class A
Certificate on behalf of an "Excluded Plan" (defined below) by any person who
has discretionary authority or renders investment advice with respect to the
assets of such Excluded Plan. For purposes of the Class A Certificates, an
Excluded Plan is a Plan sponsored by (1) the Underwriters, (2) the Master
Servicer and any Sub- Servicer, (3) the Certificate Insurer, (4) the Trustee,
(5) the Company, (6) any Mortgagor with respect to Mortgage Loans constituting
more than 5 percent of the aggregate unamortized principal balance of the
Mortgage Loans as of the date of initial issuance and (7) any affiliate or
successor of a person described in (1) to (6) above (the "Restricted Group").
If the specific conditions of paragraph I.B of Section I 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 Class A Certificates in the initial issuance of Class A
Certificates between the Company, the Underwriters and a Plan when the person
who has discretionary authority or renders investment advice with respect to the
investment of Plan assets in Class A Certificates is (a) a mortgagor with
respect to 5 percent or less of the fair market value of the Mortgage Loans or
(b) an affiliate of such a person, (2) the direct or indirect acquisition or
disposition in the secondary market of Class A Certificates by Plans and (3) the
holding of Class A Certificates by Plans.
If the specific conditions of paragraph I.C of Section I of the
Exemption are satisfied, the Exemptions may provide an exemption from the
restrictions imposed by Sections 406(a), 406(b) and 407(a) 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 Trust.
The Exemption may provide an exemption from the restrictions imposed by
Section 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" or a "disqualified person" 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
such Plan's ownership of Class A Certificates.
The Exemption set forth the following seven general conditions which
must be satisfied for a transaction to be eligible for exemptive relief
thereunder.
(1) The acquisition of the certificates by a Plan is on terms
(including the price for the certificates) that are at least as
favorable to the Plan as they would be in an arm's length transaction
with an unrelated party;
(2) The rights and interests evidenced by the certificates
acquired by the Plan are not subordinated to the rights and interests
evidenced by other certificates of the trust;
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(3) The certificates acquired by the Plan have received a
rating at the time of such acquisition that is one of the three highest
generic rating categories from either Standard & Poor's Corporation
("S&P"), Moody's Investors Service, Inc. ("Moody's"), Duff & Phelps
Rating Co. ("D&P") or Fitch Investors Service, Inc. ("Fitch");
(4) The trustee is not an affiliate of any other member of
the Restricted Group (as defined above);
(5) The sum of all payments made to and retained by the
Underwriters in connection with the distribution of certificates
represents not more than reasonable compensation for underwriting the
certificates. The sum of all payments made and retained by the seller
pursuant to the assignment of the loans to the trust fund represents
not more than the fair market value of such loans. The sum of all
payments made to and retained by the servicer represents not more than
reasonable compensation for such person's services under the pooling
and servicing agreement and reimbursement of such person's reasonable
expenses in connection therewith; and
(6) The Plan investing in the certificates is an "accredited
investor" as defined in Rule 501(a)(1) of Regulation D of the
Commission under the Securities Act of 1933.
(7) The trust fund must also meet the following requirements:
(i) the corpus of 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 generic rating
categories of S&P, Moody's, Fitch or D&P for at least one year
prior to the Plan's acquisition of certificates; and
(iii) certificates evidencing interests in such other
investment pools must have been purchased by investors other
than Plans for at least one year prior to any Plan's
acquisition of certificates.
It is a condition of issuance of the Class A Certificates that they be
rated ___ or ___ by _____ and _____, respectively. Prior to the earlier of (i)
the date on which the Funding Period expires and (ii) the date on which the DOL
amends the Exemption to permit the use of pre-funding accounts thereunder, Plans
will not be permitted to purchase the Class A Certificates. On or after the
earlier to occur of such dates, the Exemption may be available for the purchase
of Class A Certificates by Plans. Before purchasing a Class A Certificate, based
on the Exemption, a fiduciary of a Plan should itself confirm (1) that such
Certificate constitutes a "certificate" for purposes of the Exemption and (2)
that the specific conditions set forth in Section I of the Exemption, the
general conditions set forth in Section II of the Exemption and the other
requirements set forth in the Exemption would be satisfied.
Any person purchasing a Class A-6 Group II Certificate and the related
right to receive Supplemental Interest Amounts will have acquired for purposes
of ERISA and for federal income tax purposes, such Class A-6 Certificate without
the right to receive the Supplemental Interest Amounts, together with the right
to receive the Supplemental Interest Amounts. The Exemption does not apply to
the acquisition, holding or resale of the right to receive the Supplemental
Interest Amounts. Accordingly, the acquisition of the right to receive the
Supplemental Interest Amounts by a Plan could result in a prohibited transaction
unless another administrative exemption to ERISA's prohibited transaction rules
is applicable. One or more alternative exemptions may be available with respect
to certain prohibited Transaction rules of ERISA that might apply in connection
with the initial purchase, holding and resale of the right to receive the
Supplemental Interest Amounts, including, but not limited to: (i) Prohibited
transaction Class Exemption ("PTCE") 91-38, regarding investments by bank
collective investment funds; (ii) PTCE 90-1, regarding investments by insurance
company pooled separate
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accounts; (iii) PTCE 84-14, regarding transactions negotiated by qualified
professional asset managers; or (iv) PTCE 75-1, Part II, regarding principal
transactions by broker-dealers (the "Principal Transactions Exemption"). It is
believed that the conditions of the Principal Transactions Exemption will be met
with respect to the acquisition of a right to receive the Supplemental Interest
Amounts by a Plan, so long as such Underwriter is not a fiduciary with respect
to the Plan (and is not a party in interest with respect to the Plan by reason
of being a participating employer or affiliate thereof). Before purchasing Class
A-6 Group II Certificates based on an administrative exemption (or exemptions),
a fiduciary of a Plan should determine whether the conditions of such exemption
(or exemptions) would be met and whether the scope of the relief provided by
such exemption (or exemptions) would cover all acts that might be construed as
prohibited transactions.
Prospective Plan investors in the Class A Certificates should consult
with their legal advisors concerning the impact of ERISA and the Code, the
applicability of the Exemption, and the potential consequences in their specific
circumstances, prior to making an investment in the Class A Certificates.
Moreover, each Plan fiduciary should determine whether under the general
fiduciary standards of investment prudence and diversification an investment in
the Class A Certificates is appropriate for the Plan, taking into account the
overall investment policy of the Plan and the composition of the Plan's
investment portfolio.
In addition to the matters described above, purchasers of a Class A
Certificate that are insurance companies should consult with their counsel with
respect to the United States Supreme Court case interpreting the fiduciary
responsibility rules of ERISA, John Hancock Mutual Life Insurance Co. v. Harris
Trust and Savings Bank, 114 S.CT. 517 (1993). In John Hancock, the Supreme Court
ruled that assets held in an insurance company's general account may be deemed
to be "plan assets" for ERISA purposes under certain circumstances. Prospective
purchasers using insurance company general account assets should determine
whether the decision affects their ability to make purchases of the Class A
Certificates.
Non-ERISA Plans
Employee benefit plans that are governmental plans (as defined in
Section 3(32) of ERISA) and certain 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 the Class A Certificates without regard to the ERISA
restrictions described above, subject to applicable provisions of other federal
and state laws.
RATINGS
Ratings which are assigned to securities such as the Class A
Certificates generally evaluate the ability of the issuer (i.e., the Trust) and
any guarantor (i.e., the Certificate Insurer) to make timely payment when such
payments are due, as required by such securities. The amounts which are "due"
with respect to the Class A Certificates consist of principal and interest. In
general, ratings address credit risk and not prepayment risk. The ratings issued
with respect to the Class A-6 Group II Certificates do not cover the payment of
the Supplemental Interest Amounts.
It is a condition of the original issuance of the Class A Certificates
that they receive ratings of ___ or ___ by _____ and _____, respectively.
Explanations of the significance of such rating may be obtained from such rating
agency. The ratings will be the views only of such rating agencies. There is no
assurance that any such ratings will continue for any period of time or that
such ratings will not be revised or withdrawn. Any such revision or withdrawal
of such ratings may have an adverse effect on the market price of the Class A
Certificates. A security rating is not a recommendation to buy, sell or hold
securities.
S-73
LEGAL INVESTMENT CONSIDERATIONS
The Class A Certificates will not constitute "mortgage related
securities" for purposes of the Secondary Mortgage Market Enhancement Act of
1984 ("SMMEA"). Accordingly, many institutions may not be legally authorized to
invest in the Class A Certificates.
UNDERWRITING
Under the terms and subject to the conditions contained in an
Underwriting Agreement dated ________, 199_ (the "Underwriting Agreement"),
_____________________ and ____________________ (together, the "Underwriters")
have agreed to purchase, and the Company has agreed to sell, the Class A
Certificates offered hereby.
In the Underwriting Agreement, each of the Underwriters has agreed,
subject to the terms and conditions set forth therein, to purchase, the
principal amount of the Class A Certificates set forth opposite its name below.
Underwriter Principal Amount of Class A Certificates
----------- ----------------------------------------
____________________...................................... $168,602,000
____________________...................................... 42,000,000
Total................................................ $210,602,000
The Underwriters have advised the Company that they propose to offer
the Class A Certificates for sale from time to time in one or more transactions
(which may include block transactions), in negotiated transactions or otherwise,
or a combination of such methods of sale, at market prices prevailing at the
time of sale or at negotiated prices. The Underwriters may effect such
transactions by selling the Class A Certificates to or through dealers, and such
dealers may receive compensation in the form of underwriting discounts,
concessions or commissions from the Underwriters and/or the purchasers of the
Class A Certificates for whom they may act as agents. In connection with the
sale of the Class A Certificates, the Underwriters may be deemed to have
received compensation from the Company in the form of underwriting discounts,
and the Underwriters may also receive commissions from purchasers of the Class A
Certificates for whom it may act as agent. The Underwriters and any dealers that
participate with the Underwriters in the distribution of the Class A
Certificates may be deemed to be underwriters, and any discounts or commissions
received by them and any profit on the resale of the Class A Certificates by
them may be deemed to be underwriting discounts or commissions.
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will be obligated to purchase all the Class A Certificates offered
hereby if any are purchased.
The Class A Certificates are a new issue of securities with no
established trading market. The Underwriters have advised the Company that they
intend to act as market makers for the Class A Certificates. However, the
Underwriters are not obligated to do so and may discontinue any market making at
any time without notice. No assurance can be given as to the liquidity of the
trading market for the Class A Certificates.
The Company has agreed to indemnify each Underwriter against certain
liabilities, including civil liabilities under the Securities Act of 1933, or
contribute to payments which either Underwriter may be required to make in
respect thereof.
S-74
EXPERTS
The financial statements of _____________________, included in this
Prospectus Supplement in Appendix A, as of December 31, 199 and 199 and for each
of the years in the three year period ended December 31, 199 , have been
included in reliance upon the report of ____________________, independent
certified public accountants, appearing in Appendix A, and upon the authority of
such firm as experts in accounting and auditing.
The report of ____________________ refers to changes, in 1993, in
accounting methods for multiple- year retrospectively rated reinsurance
contracts, and for the adoption of the provisions of the Financial Accounting
Standards Board's Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities."
CERTAIN LEGAL MATTERS
Certain legal matters will be passed upon for the Company by
____________________, counsel to the Company. Certain tax matters concerning the
issuance of the Certificates will be passed upon by
- --------------------.
S-75
ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Access
Financial Mortgage Loan Trust 199_-_ Class A Certificates (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, CEDEL 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.
Secondary market trading between investors through CEDEL and Euroclear
will be conducted in the ordinary way in accordance with the normal rules and
operating procedures of CEDEL and Euroclear and in accordance with conventional
eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors through DTC will be
conducted according to DTC's rules and procedures applicable to U.S. corporate
debt obligations.
Secondary cross-market trading between CEDEL or Euroclear and DTC
Participants holding Certificates will be effected on a delivery-against-payment
basis through the respective Depositories of CEDEL 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 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, CEDEL and Euroclear will
hold positions on behalf of their participants through their Relevant Depository
which in turn will hold such positions in their accounts as DTC Participants.
Investors electing to hold their Global Securities through DTC will
follow DTC settlement practices. Investor 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 CEDEL 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 payment 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 prior home
equity loan asset-backed certificates issues in same-day funds.
I-1
Trading between CEDEL and/or Euroclear Participants. Secondary market
trading between CEDEL Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
Trading between DTC, Company and CEDEL or Euroclear Participants. When
Global Securities are to be transferred from the account of a DTC Participant to
the account of a CEDEL Participant or a Euroclear Participant, the purchaser
will send instructions to CEDEL or Euroclear through a CEDEL Participant or
Euroclear Participant at least one business day prior to settlement. CEDEL or
Euroclear will instruct the Relevant Depository, 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, on the basis of the actual number of days in such
accrual period and a year assumed to consist of 360 days. For transactions
settling on the 31st of the month, payment will include interest accrued to and
excluding the first day of the following month. Payment will then be made by the
Relevant Depository 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 CEDEL Participant's or Euroclear
Participant's account. The securities credit will appear the next day (European
time) and the cash debt 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 CEDEL or Euroclear cash debt
will be valued instead as of the actual settlement date.
CEDEL 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 preposition
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within CEDEL or Euroclear. Under this
approach, they may take on credit exposure to CEDEL or Euroclear until the
Global Securities are credited to their account one day later.
As an alternative, if CEDEL or Euroclear has extended a line of credit
to them, CEDEL Participants or Euroclear Participants can elect not to
preposition funds and allow that credit line to be drawn upon to finance
settlement. Under this procedure, CEDEL 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 the result will depend on each CEDEL
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 crediting Global
Securities to the respective European Depository for the benefit of CEDEL
Participants or Euroclear Participants. The sale proceeds will be available to
the DTC seller on the settlement date. Thus, to the DTC Participants a
cross-market transaction will settle no differently than a trade between two DTC
Participants.
Trading between CEDEL or Euroclear Company and DTC Purchaser. Due to
time zone differences in their favor, CEDEL 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 Depository, to a DTC Participant. The seller will send
instructions to CEDEL or Euroclear through a CEDEL Participant or Euroclear
Participant at least one business day prior to settlement. In these cases CEDEL
or Euroclear will instruct the respective Depository, as appropriate, to credit
the Global Securities to the DTC Participant's account against payment. Payment
will include interest accrued on the Global Securities from and including the
last coupon payment to and excluding the settlement date on the basis of the
actual number of days in such accrual period and a year assumed to consist of
360 days. For transactions settling on the 31st of the month, payment will
include interest accrued to and excluding the first day of the following month.
The payment will then be reflected in the account of CEDEL Participant or
Euroclear Participant the
I-2
following day, and receipt of the cash proceeds in the CEDEL 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). In the event
that the CEDEL Participant or Euroclear Participant have a line of credit with
its respective clearing system and elect to be in debt in anticipation of
receipt of the sale proceeds in its account, the back-valuation will extinguish
any overdraft 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 CEDEL Participant's or Euroclear Participant's account would instead be
valued as of the actual settlement date.
Finally, day traders that use CEDEL or Euroclear and that purchase
Global Securities from DTC Participants for delivery to CEDEL Participants or
Euroclear Participants should note that these trades would automatically fail on
the sale side unless affirmative action is taken. At least three techniques
should be readily available to eliminate this potential problem:
(a) borrowing through CEDEL or Euroclear for one day (until the
purchase side of the trade is reflected in their CEDEL 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 prior to settlement, which would give the Global
Securities sufficient time to be reflected in their CEDEL or Euroclear account
in order 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 prior to the value date for the sale to the CEDEL Participant or Euroclear
Participant.
Certain U.S. Federal Income Tax Documentation Requirements
A beneficial owner of Global Securities holding securities through
CEDEL 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 (as defined below), unless (i) 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 (ii) 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 Certificate
Owners of Global Securities that are Non-U.S. Persons (as defined below) 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 (as defined below), 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 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 Certificate Owners or their agent.
I-3
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 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.
On April 22, 1996 the IRS issued proposed regulations relating to (i)
withholding income tax on U.S.- source income paid to Non-U.S. Persons; (ii)
claiming Non-U.S. Person status to avoid backup withholding; and (iii) reporting
to the IRS of payments to Non-U.S. Persons. The proposed regulations would
substantially revise some aspects of the current system for withholding on and
reporting amounts paid to Non-U.S. Persons. The regulations unify current
certification procedures and forms and reliance standards are clarified. Most
forms are proposed to be combined into a single form: Form W-8. The regulations
are proposed to be effective for payments made after December 31, 1997.
Certificates issued, however, on or before the date that is 60 days after the
proposed regulations are made final will continue to be valid until they expire.
All proposed regulations are subject to change before adoption in their final
form. No reliable prediction can be made as to when, if ever, the proposed
regulations will be made final and if so, as to their final form.
The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation, partnership or other entity organized in or under
the laws of the United States or any political subdivision thereof or (iii) an
estate or trust that is subject to U.S. federal income tax regardless of the
source of its income. The term "Non-U.S. Person" means any person who is not a
U.S. Person. 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.
I-4
APPENDIX A
Audited Financial Statements
-------------------------
Years ended December 31, 1995 and 1994
with Report of Independent Auditors
A-1
INDEX OF PRINCIPAL DEFINITIONS
1933 Act ................................................................................................3
Accrual Period ...............................................................................................10
AFH ...............................................................................................21
AFL ...............................................................................................20
Appraised Values ...........................................................................................26, 32
Balloon Loans ................................................................................................7
Beneficial Certificate Owner.....................................................................................14
Book-Entry Certificates..........................................................................................52
Cede ............................................................................................3, 14
CEDEL ...............................................................................................14
CEDEL Participants...............................................................................................54
Certificate Account..............................................................................................48
Certificate Insurance Policy......................................................................................1
Certificate Insurer...............................................................................................1
Certificateholder ................................................................................................3
Certificates .........................................................................................1, 5, 46
Citibank ...............................................................................................14
Class ...............................................................................................46
Class A Carry-Forward Amount.....................................................................................13
Class A Certificate Principal Balance............................................................................13
Class A Certificates.......................................................................................1, 5, 46
Class A Distribution Amount......................................................................................13
Class A Group I Certificate Principal Balance....................................................................13
Class A Group I Certificates...............................................................................1, 5, 46
Class A Group II Certificate Principal Balance...................................................................13
Class A Insured Distribution Amount..............................................................................13
Class A Interest Distribution Amount.............................................................................11
Class A Principal Distribution Amount............................................................................11
Class A-1 Group I Certificates...................................................................................46
Class A-1 Pass-Through Rate.......................................................................................9
Class A-2 Group I Certificates...................................................................................46
Class A-3 Group I Certificates...................................................................................46
Class A-4 Group I Certificates...................................................................................46
Class A-5 Group I Certificates...................................................................................46
Class A-6 Formula Pass-Through Rate...............................................................................9
Class A-6 Group II Certificates...............................................................................5, 46
Class A-6 Pass-Through Rate.......................................................................................9
Class B Certificates...........................................................................................2, 5
Class B Group I Certificates...................................................................................2, 5
Class B Group II Certificates..................................................................................2, 5
Class B Interest ...............................................................................................50
Closing Date ................................................................................................4
Code ................................................................................................2
Combined Loan-to-Value Ratio.................................................................................25, 32
Commission ................................................................................................3
Company ............................................................................................4, 20
Company Optional Termination Date................................................................................15
Compensating Interest............................................................................................58
Cooperative ...............................................................................................54
Coupon Rates ................................................................................................7
Cut-Off Date .........................................................................................4, 6, 21
i
D&P ...............................................................................................73
Definitive Certificate...........................................................................................52
Delinquency Advances.............................................................................................48
Description of the Certificates...................................................................................5
Disqualified persons.............................................................................................71
DTC ............................................................................................3, 14
DTC Participants ...............................................................................................54
ERISA ...........................................................................................16, 71
ERISA Plan ...............................................................................................71
Euroclear ...............................................................................................14
Euroclear Operator...............................................................................................54
Euroclear Participants...........................................................................................54
European Depositaries............................................................................................52
European Depositories............................................................................................14
Event of Default ...............................................................................................60
Excluded Plan ...............................................................................................72
Exemption ...........................................................................................16, 71
Financial Intermediary...........................................................................................52
Fitch ...............................................................................................73
Global Securities ................................................................................................1
Group I .............................................................................................2, 6
Group I Interest Remittance Amount...............................................................................47
Group I Monthly Remittance.......................................................................................47
Group I Principal Remittance Amount..............................................................................47
Group I Subordination Deficit....................................................................................51
Group I Total Available Funds....................................................................................52
Group II .............................................................................................2, 6
Group II Interest Remittance Amount..............................................................................47
Group II Monthly Remittance......................................................................................47
Group II Principal Remittance Amount.............................................................................47
Group II Subordination Deficit...................................................................................51
Group II Total Available Funds...................................................................................52
Insurance Proceeds...............................................................................................11
Insured Payment ...............................................................................................48
Interest Determination Date......................................................................................49
Interest Remittance Amount.......................................................................................47
LIBOR ............................................................................................9, 49
Liquidated Mortgage Loan.........................................................................................60
Liquidation Proceeds.............................................................................................11
Master Servicer ............................................................................................2, 56
Monthly Remittance...............................................................................................47
Moody's ...............................................................................................73
Morgan ...............................................................................................14
Mortgage Loan Group........................................................................................2, 6, 21
Mortgage Loans ................................................................................................1
Mortgaged Properties.............................................................................................21
Mortgages ................................................................................................6
Mortgagors ...............................................................................................39
Net Liquidation Proceeds.........................................................................................11
Non-U.S. Person ................................................................................................4
Notes ...............................................................................................21
Original Group I Pool Principal Balance...........................................................................7
Original Group II Pool Principal Balance..........................................................................7
Original Pool Principal Balance...................................................................................7
ii
Original Variable Rate Pool Principal Balance
Original Variable Rate Pool Principal Balance............................................................4
Originators ................................................................................................2
Owner ................................................................................................3
Participants ...............................................................................................52
Parties in interest..............................................................................................71
Payment Date ........................................................................................2, 10, 46
Percentage Interest..............................................................................................47
Plans ...........................................................................................16, 71
Pool ................................................................................................1
Pooling and Servicing Agreement............................................................................2, 5, 46
Pre-Funded Amount ................................................................................................8
Pre-Funding Account............................................................................................1, 8
Preference Amounts...............................................................................................69
Preference Order ...............................................................................................69
Prepayment Assumption............................................................................................42
Prepayments ...........................................................................................11, 18
Principal and Interest Account...................................................................................47
Principal Remittance Amount......................................................................................47
Properties ...............................................................................................21
Qualifying Rate ...............................................................................................38
Record Date ............................................................................................2, 10
Reference Banks ...............................................................................................49
Released Mortgaged Property Proceeds.............................................................................12
Relevant Depositary..............................................................................................52
REMICs ............................................................................................2, 70
Remittance Date ...............................................................................................47
Remittance Period ...............................................................................................47
Reserve Interest Rate............................................................................................49
Residual Certificates.........................................................................................5, 46
Restricted Group ...............................................................................................72
Reuters Screen LIBO Page.........................................................................................49
Rules ...............................................................................................53
S&P ...............................................................................................73
Servicing Advances...............................................................................................59
Servicing Fee ...............................................................................................15
SMMEA ...........................................................................................16, 75
Specified Subordinated Amount....................................................................................50
Subordinated Amount..............................................................................................50
Subordination Deficiency.........................................................................................51
Subordination Increase Amount....................................................................................51
Subordination Reduction Amount...................................................................................51
Subsequent Cut-Off Date...........................................................................................8
Subsequent Mortgage Loans..................................................................................2, 5, 22
Subsequent Transfer Date..........................................................................................8
Terms and Conditions.............................................................................................54
The Mortgage Loan Pool............................................................................................6
Total Available Funds............................................................................................52
Trust .............................................................................................1, 4
Trust Estate ...............................................................................................65
Trustee .............................................................................................2, 4
U.S. Person ................................................................................................4
Underwriters ............................................................................................1, 75
Underwriting Agreement...........................................................................................75
iii
Weighted average life............................................................................................40
iv
- -------------------------------------------------------------- -----------------------------------------------------------
No dealer, salesperson or any other person has been
authorized to give any information or to make any ________________
representation not contained in this Prospectus Mortgage Loan Trust
Supplement and the Prospectus, if given or made, 199_-_
such information or representations may not be
relied upon as having been authorized by the
Company 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 in any Mortgage Loan Pass-Through
jurisdiction to any person to whom it is unlawful Certificates,
to make such offer in such jurisdiction. Neither
the delivery of this Prospectus Supplement or
Prospectus nor any sale made hereunder shall, under Series 199_-_
any circumstances, create any implication that
information herein is correct as of any time
subsequent to the date hereof or that there has been
no change in the affairs of the Company, the Master
Servicer or the Certificate Insurer since such date. $__________ Class A-1 Group I Certificates,
Variable Pass-Through Rate
------------------ ----------------------
$__________ Class A-2 Group I Certificates,
TABLE OF CONTENTS ___% Pass-Through Rate
PROSPECTUS SUPPLEMENT ----------------------
Page
Available Information.................................. S- $__________ Class A-3 Group I Certificates,
Reports to the Holders................................. S- ___% Pass-Through Rate
Summary................................................ S- ----------------------
Risk Factors........................................... S-
Use of Proceeds........................................ S- $__________ Class A-4 Group I Certificates,
The Company............................................ S- ___% Pass-Through Rate
The Master Servicer.................................... S- ----------------------
The Mortgage Loan Pool................................. S-
Maturity, Prepayment and Yield Considerations.......... S- $__________ Class A-5 Group I Certificates,
Description of the Certificates........................ S- ___% Pass-Through Rate
The Trustee............................................ S- ----------------------
The Certificate Insurance Policy and the
Certificate Insurer.................................. S- $__________ Class A-6 Group II Certificates,
Certain Federal Income Tax Consequences................ S- Variable Pass-Through Rate
ERISA Considerations................................... S- ----------------------
Ratings................................................ S-
Legal Investment Considerations........................ S-
Underwriting........................................... S- Access Financial Lending Corp.
Experts................................................ S- Company
Certain Legal Matters.................................. S- ----------------------
Annex I................................................ I-
Appendix A--Audited Financial Statements of
Certificate Insurer.................................. A-1
Index of Principal Definitions......................... i PROSPECTUS SUPPLEMENT
PROSPECTUS
Incorporation of Certain Documents by Reference
Summary of Prospectus.................................. [Names of Underwriters]
Risk Factors...........................................
The Trusts.............................................
The Mortgage Pools.....................................
Mortgage Loan Program..................................
Description of the Securities..........................
Subordination.......................................... __________, 199_
Description of Credit Enhancement......................
Hazard Insurance; Claims Thereunder....................
The Company............................................
The Servicer...........................................
The Pooling and Servicing Agreement....................
The Trustee............................................
Yield Considerations...................................
Maturity and Prepayment Considerations.................
Certain Legal Aspects of Mortgage Loans
and Related Matters..................................
Certain Federal Income Tax Considerations..............
ERISA Considerations...................................
Legal Investment Matters...............................
Use of Proceeds........................................
Methods of Distribution................................
Legal Matters..........................................
Additional Information.................................
Index of Principal Definitions.........................
------------------
Until 90 days after the date of this Prospectus Supplement,
all dealers effecting transactions in the Class A
Certificates, whether or not participating in this
distribution, may be required to deliver a Prospectus
Supplement or a Prospectus. This is in addition to the
obligation of dealers to deliver a Prospectus Supplement and
Prospectus when acting as underwriters and with respect to
their unsold allotments or subscriptions.
- -------------------------------------------------------------- -----------------------------------------------------------