1
Filed Pursuant to Rule 424(b)(5)
Registration Statement No. 333-66805
Prospectus Supplement
(To Prospectus dated September 14, 2000)
$693,084,792 (APPROXIMATE)
BANC OF AMERICA COMMERCIAL MORTGAGE INC.
(FORMERLY KNOWN AS NATIONSLINK FUNDING CORPORATION)
DEPOSITOR
MIDLAND LOAN SERVICES, INC.
MASTER SERVICER
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2000-1
---------------------------------
The Series 2000-1 Commercial Mortgage Pass-Through
CONSIDER CAREFULLY THE RISK Certificates will consist of the following classes:
FACTORS BEGINNING ON PAGE S-18
IN THIS PROSPECTUS SUPPLEMENT - senior certificates consisting of the Class A-1A, Class
AND PAGE 10 IN THE ACCOMPANYING A-2A, Class A-1B, Class A-2B, Class A-3B and Class X
PROSPECTUS. Certificates;
Neither the certificates nor the - junior certificates consisting of the Class B, Class C,
underlying mortgage loans are Class D, Class E, Class F, Class G, Class H, Class K, Class
insured or guaranteed by any L, Class M and Class N Certificates; and
governmental agency.
- the residual certificates consisting of the Class R-I,
The certificates will represent Class R-II, Class R-III, Class R-IIIU and Class R-IV
interests only in the trust and Certificates.
will not represent interests in
or obligations of Banc of Only the Class A-1A, Class A-2A, Class A-1B, Class A-2B,
America Commercial Mortgage Inc. Class A-3B, Class X, Class B, Class C, Class D, Class E and
or any of its affiliates, Class F Certificates are offered hereby.
including Bank of America
Corporation. The trust's assets will consist primarily of 159 mortgage
loans and other property described in this prospectus
supplement and the accompanying prospectus. The mortgage
loans are secured by first liens on commercial and
multifamily properties. This prospectus supplement more
fully describes the offered certificates, as well as the
characteristics of the mortgage loans and the related
mortgaged properties.
- ----------------------------------
Certain characteristics of the offered certificates include:
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
CERTIFICATE BALANCE OR ASSUMED FINAL
NOTIONAL AMOUNT PASS-THROUGH RATE DISTRIBUTION RATINGS
CLASS AS OF DELIVERY DATE(1) AS OF DELIVERY DATE DATE(3) MOODY'S/S&P(4)
- -------------------------------------------------------------------------------------------------------------------
Class A-1A.............. $153,230,577 7.1090% November 15, 2008 Aaa/AAA
Class A-2A.............. $299,000,640 7.3330%(2) October 15, 2009 Aaa/AAA
Class A-1B.............. $ 55,591,451 6.8010% July 15, 2004 Aaa/AAA
Class A-2B.............. $ 38,390,866 7.2570%(2) October 15, 2007 Aaa/AAA
Class A-3B.............. $ 19,967,220 7.4180%(2) October 15, 2009 Aaa/AAA
Class X................. $771,179,585(6) 0.5466%(7) December 15, 2013 Aaa/AAA
Class B................. $ 40,999,766 7.5120%(2) October 15, 2009 Aa2/AA
Class C................. $ 35,142,657 7.6510%(2) November 15, 2009 A2/A
Class D................. $ 11,714,219 7.6463%(8) November 15, 2009 A3/A-
Class E................. $ 27,333,177 7.7488%(9) November 15, 2009 Baa2/BBB
Class F................. $ 11,714,219 7.7488%(9) November 15, 2009 Baa3/BBB-
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- ------------------------ --------------------
- ------------------------ --------------------
RATED FINAL
DISTRIBUTION
CLASS DATE(5)
- ------------------------ --------------------
Class A-1A.............. November 15, 2031
Class A-2A.............. November 15, 2031
Class A-1B.............. November 15, 2031
Class A-2B.............. November 15, 2031
Class A-3B.............. November 15, 2031
Class X................. November 15, 2031
Class B................. November 15, 2031
Class C................. November 15, 2031
Class D................. November 15, 2031
Class E................. November 15, 2031
Class F................. November 15, 2031
- -------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
(Footnotes to table on page S-4)
- --------------------------------------------------------------------------------
The underwriter, Banc of America Securities LLC, will purchase the offered
certificates from Banc of America Commercial Mortgage Inc. and will offer them
to the public at negotiated prices determined at the time of sale. Banc of
America Securities LLC expects to deliver the offered certificates to purchasers
on or about September 27, 2000. Banc of America Commercial Mortgage Inc. expects
to receive from this offering approximately 103.53% of the initial principal
amount of the offered certificates, plus accrued interest from September 1,
2000, before deducting expenses payable by Banc of America Commercial Mortgage
Inc.
- --------------------------------------------------------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE OFFERED SECURITIES OR DETERMINED
IF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
BANC OF AMERICA SECURITIES LLC
September 14, 2000
2
Banc of America Commercial Mortgage Inc.
- --------------------------------------------------------------------------------
Commercial Mortgage Pass-Through Certificates, Series 2000-1
Geographic Overview of Mortgage Pool
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE
DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR THE PURPOSE OF EDGAR
FILING.]
[MAP]
% OF
NUMBER OF AGGREGATE INITIAL
MORTGAGED CUT-OFF DATE POOL
PROPERTY LOCATION PROPERTIES BALANCE BALANCE
----------------- ---------- -------------- -------
CA................... 46 $ 184,857,856 23.9%
TX................... 23 90,120,768 11.7%
WA................... 16 60,340,829 7.8%
NV................... 7 55,067,535 7.1%
AZ................... 11 48,345,756 6.3%
FL................... 4 41,702,241 5.4%
SC................... 7 34,677,882 4.5%
NC................... 6 32,020,565 4.1%
NJ................... 3 30,278,306 3.9%
OR................... 8 29,600,408 3.8%
IL................... 5 27,589,480 3.6%
VA................... 5 25,223,557 3.3%
GA................... 8 20,619,799 2.7%
NY................... 7 14,954,554 1.9%
MD................... 3 14,897,516 1.9%
MI................... 1 10,594,358 1.4%
AK................... 2 7,617,960 1.0%
PA................... 1 7,570,819 1.0%
LA................... 3 7,257,928 0.9%
IN................... 2 6,070,800 0.8%
MA................... 1 4,290,570 0.6%
IA................... 2 4,079,136 0.5%
DE................... 1 3,966,443 0.5%
MO................... 1 2,369,494 0.3%
ID................... 1 2,096,962 0.3%
AL................... 1 1,725,206 0.2%
MS................... 1 2,080,395 0.3%
UT................... 1 1,109,663 0.1%
MN................... 1 795,656 0.1%
MORTGAGE POOL BY PROPERTY TYPE
- ------------------------------
[PIE CHART] [ ] < 1.0% of Initial Pool Balance
-
Retail............... 34.4% [ ] 1.1% - 5.0% of Initial Pool Balance
Multifamily.......... 26.6% [ ] 5.1% - 10.0% of Initial Pool Balance
Office............... 12.5% [ ] > 10.0% of Initial Pool Balance
Hotel................ 11.6%
Health Care.......... 5.8%
Industrial........... 3.9%
Mobile Home.......... 2.0%
Special Purpose...... 1.8%
Mini Storage......... 1.4%
3
FOR MORE INFORMATION
Banc of America Commercial
Mortgage Inc. (formerly known
as NationsLink Funding
Corporation) has filed with
the SEC additional
registration materials
relating to the certificates.
You may read and copy any of
these materials at the SEC's
Public Reference Room at the
following locations:
- SEC Public Reference
Section
450 Fifth Street, N.W.
Room 1204
Washington, D.C. 20549
- SEC Midwest Regional
Offices
Citicorp Center
500 West Madison Street
Suite 1400
Chicago, Illinois
60661-2511
- SEC Northeast Regional
Office
7 World Trade Center
Suite 1300
New York, New York 10048
You may obtain information on
the operation of the Public
Reference Room by calling the
SEC at 1-800-SEC-0330. The
SEC also maintains an
Internet site that contains
reports, proxy and
information statements, and
other information that has
been filed electronically
with the SEC. The Internet
address is
http://www.sec.gov.
You may also contact Banc of
America Commercial Mortgage
Inc. in writing at Bank of
America Corporate Center, 100
North Tryon Street,
Charlotte, North Carolina
28255, or by telephone at
(704) 386-2400.
See also the sections
captioned "Available
Information" and
"Incorporation of Certain
Information by Reference"
appearing at the end of the
accompanying prospectus.
TABLE OF CONTENTS
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS..................................... S-5
EXECUTIVE SUMMARY................................ S-6
SUMMARY OF PROSPECTUS SUPPLEMENT................. S-8
RISK FACTORS..................................... S-18
Risks Related to the Certificates.............. S-18
Lack of Control Over Trust Fund.............. S-18
Potential Conflicts of Interest.............. S-18
Yield Considerations......................... S-18
Prepayments and Repurchases.................. S-19
Borrower Default............................. S-20
Bankruptcy Proceedings....................... S-20
Advance Interest and Other Payments.......... S-22
Limited Liquidity and Market Value........... S-22
Different Timing of Mortgage Loan
Amortization.............................. S-22
Subordination of Subordinate Offered
Certificates.............................. S-22
Risks Related to the Mortgage Loans............ S-22
Nature of the Mortgaged Properties........... S-22
Seasoning of the Portfolio Mortgage Loans.... S-23
Management................................... S-24
Balloon Payments............................. S-24
Risks Particular to Multifamily Properties... S-24
Risks Particular to Retail Properties........ S-25
Risks Particular to Skilled Nursing/Assisted
Living Properties......................... S-25
Risks Particular to Office Properties........ S-27
Risks Particular to Hotels................... S-27
Risks Particular to Mobile Home Park
Properties................................ S-27
Risks Particular to Mini-Storage
Facilities................................ S-28
Risks of Subordinate Financing............... S-28
Limited Recourse............................. S-28
Environmental Considerations................. S-29
Limitations on Enforceability of Cross-
Collateralization......................... S-29
Related Parties.............................. S-30
Geographic Concentration..................... S-30
Seismic Risks................................ S-31
Other Concentrations......................... S-31
Changes in Concentrations.................... S-31
Prepayment Premiums.......................... S-31
Tax Considerations Related to Foreclosure.... S-33
Leasehold Risks.............................. S-33
Zoning and Building Code Compliance.......... S-33
Limited Information.......................... S-33
Litigation................................... S-34
Other Risks.................................... S-34
DESCRIPTION OF THE MORTGAGE POOL................. S-35
General........................................ S-35
Certain Terms and Conditions of the Mortgage
Loans........................................ S-36
Due Dates.................................... S-36
Mortgage Rates; Calculations of Interest..... S-36
Recourse..................................... S-36
Amortization of Principal.................... S-37
Prepayment Provisions........................ S-37
Defeasance................................... S-38
"Due-on-Sale" and "Due-on-Encumbrance"
Provisions................................ S-38
S-1
4
Significant Mortgage Loans..................... S-39
Additional Mortgage Loan Information........... S-46
General...................................... S-46
Delinquencies................................ S-46
Tenant Matters............................... S-46
Ground Leases................................ S-46
Subordinate Financing........................ S-46
Conduit Mortgage Loans.................... S-46
Portfolio Mortgage Loans.................. S-46
Generally................................. S-46
Health Care Properties....................... S-46
Lender/Borrower Relationships................ S-47
Certain Underwriting Matters................... S-47
Environmental Assessments.................... S-47
Conduit Mortgage Loans.................... S-47
Portfolio Mortgage Loans.................. S-47
Generally................................. S-47
Property Condition Assessments............... S-49
Conduit Mortgage Loans.................... S-49
Portfolio Mortgage Loans.................. S-49
Appraisals and Market Studies................ S-49
Conduit Mortgage Loans.................... S-49
Portfolio Mortgage Loans.................. S-49
Seismic Reviews.............................. S-50
Conduit Mortgage Loans....................... S-50
Portfolio Mortgage Loans..................... S-50
Zoning and Building Code Compliance.......... S-50
Hazard, Liability and Other Insurance........ S-51
The Mortgage Loan Seller....................... S-51
Assignment of the Mortgage Loans;
Repurchases.................................. S-52
Representations and Warranties; Repurchases.... S-54
Conduit Mortgage Loans....................... S-54
Portfolio Mortgage Loans..................... S-56
Changes in Mortgage Pool Characteristics....... S-58
Portfolio Loan Environmental Policy............ S-58
SERVICING OF THE MORTGAGE LOANS.................. S-59
General........................................ S-59
The Master Servicer............................ S-63
The Special Servicer........................... S-63
Sub-Servicers.................................. S-63
Servicing and Other Compensation and Payment of
Expenses..................................... S-64
Evidence as to Compliance...................... S-67
Modifications, Waivers, Amendments and
Consents..................................... S-67
Sale of Defaulted Mortgage Loans............... S-69
REO Properties................................. S-70
Inspections; Collection of Operating
Information.................................. S-70
Termination of the Special Servicer............ S-71
DESCRIPTION OF THE CERTIFICATES.................. S-72
General........................................ S-72
Registration and Denominations................. S-72
Certificate Balances and Notional Amount....... S-73
Pass-Through Rates............................. S-74
Distributions.................................. S-75
General...................................... S-75
The Available Distribution Amount............ S-76
Application of the Available Distribution
Amount.................................... S-76
Distributable Certificate Interest........... S-80
Principal Distribution Amount................ S-80
Distributions of Prepayment Premiums......... S-81
Treatment of REO Properties.................. S-82
S-2
5
Subordination; Allocation of Losses and Certain
Expenses..................................... S-82
Interest Reserve Account....................... S-84
P&I Advances................................... S-84
Appraisal Reductions........................... S-85
Reports to Certificateholders; Certain
Available Information........................ S-86
Trustee Reports.............................. S-86
Servicer Reports............................. S-87
Other Information............................ S-89
Voting Rights.................................. S-90
Termination.................................... S-90
The Trustee.................................... S-90
YIELD AND MATURITY CONSIDERATIONS................ S-91
Yield Considerations........................... S-91
General...................................... S-91
Class X Certificate Pass-Through Rate........ S-91
Rate and Timing of Principal Payments........ S-92
Losses and Shortfalls........................ S-93
Certain Relevant Factors..................... S-93
Weighted Average Lives......................... S-94
Yield Sensitivity of the Class X
Certificates................................. S-100
USE OF PROCEEDS.................................. S-101
CERTAIN FEDERAL INCOME TAX CONSEQUENCES.......... S-101
General........................................ S-101
Discount and Premium; Prepayment Premiums...... S-101
Characterization of Investments in Offered
Certificates................................. S-102
Possible Taxes on Income From Foreclosure
Property..................................... S-102
Reporting and Other Administrative Matters..... S-103
CERTAIN ERISA CONSIDERATIONS..................... S-103
LEGAL INVESTMENT................................. S-106
METHOD OF DISTRIBUTION........................... S-106
LEGAL MATTERS.................................... S-107
RATINGS.......................................... S-107
INDEX OF PRINCIPAL DEFINITIONS................... S-109
ANNEX A.......................................... A-1
ANNEX B.......................................... B-1
ANNEX C.......................................... C-1
S-3
6
FOOTNOTES TO TABLE ON COVER OF PROSPECTUS SUPPLEMENT
(1) Subject to a variance of plus or minus 5%.
(2) Approximate Pass-Through Rate as of the Delivery Date. The Pass-Through
Rate for any Class A-2A, Class A-2B, Class A-3B, Class B and Class C
Certificate on any Distribution Date will not exceed the weighted average
of the interest rates (net of the fee rates payable to the Master Servicer,
the Special Servicer and the Trustee) borne by the mortgage loans. See
"Description of the Certificates -- Pass-Through Rates" in this prospectus
supplement.
(3) As of the Commencement Date, the "Assumed Final Distribution Date" with
respect to any class of Sequential Pay Certificates is the Distribution
Date on which the final distribution would occur for such class of
certificates based upon the assumptions, among others, that all payments
are made when due and that no prepayments are made on any Mortgage Loan,
except that 6% CPR was assumed in the case of the Group B Mortgage Loans
after the expiration of the applicable Lock-Out Period, if any. As of the
Commencement Date, the Assumed Final Distribution Date with respect to the
Class X Certificates is the Distribution Date on which the final
distribution would occur for such class of certificates based on the
assumptions, among others, that there are no prepayments on the Mortgage
Loans through their Lock-Out and Yield Maintenance Periods, and prepayments
occur at 100% CPR thereafter except that in the case of the Group B
Mortgage Loans, 6% CPR was assumed after the expiration of any applicable
Lock-Out Periods through Yield Maintenance Periods, and 100% CPR
thereafter. The actual performance and experience of the mortgage loans
will likely differ from such assumptions. See "Yield and Maturity
Considerations" in this prospectus supplement.
(4) It is a condition to their issuance that the classes of offered
certificates be assigned ratings by Moody's Investors Service, Inc.
("Moody's") and/or Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc. ("S&P"; and together with Moody's, the "Rating
Agencies") no lower than those set forth above. The ratings on the offered
certificates do not represent any assessments of (i) the likelihood or
frequency of voluntary or involuntary principal prepayments on the mortgage
loans, (ii) the degree to which such prepayments might differ from those
originally anticipated or (iii) whether and to what extent Prepayment
Premiums will be received. Also a security rating does not represent any
assessment of the yield to maturity that investors may experience or the
possibility that the Class X Certificateholders might not fully recover
their investment in the event of rapid prepayments of the mortgage loans
(including both voluntary and involuntary prepayments).
(5) The "Rated Final Distribution Date" for each class of offered certificates
has been set at the first Distribution Date that follows two years after
the end of the amortization term for the mortgage loan that, as of the
Cut-off Date, has the longest remaining amortization term, irrespective of
its scheduled maturity. See "Ratings" in this prospectus supplement.
(6) The Class X Certificates will not have a Certificate Balance. The Class X
Certificates will accrue interest on a Notional Amount that is equal to the
aggregate of the Certificate Balances of the Class A-1A, Class A-2A, Class
A-1B, Class A-2B, Class A-3B, Class B, Class C, Class D, Class E, Class F,
Class G, Class H, Class K, Class L, Class M and Class N Certificates
outstanding from time to time.
(7) Approximate Pass-Through Rate as of the Delivery Date. The Pass-Through
Rate for the Class X Certificates will equal the excess, if any, of (a) the
weighted average of the interest rates (net of the fee rates payable to the
Master Servicer, the Special Servicer and the Trustee) borne by the
mortgage loans, over (b) the weighted average of the Pass-Through Rates for
the Class A-1A, Class A-2A, Class A-1B, Class A-2B, Class A-3B, Class B,
Class C, Class D, Class E, Class F, Class G, Class H, Class K, Class L,
Class M and Class N Certificates from time to time. See "Description of the
Certificates -- Pass-Through Rates" in this prospectus supplement.
(8) Pass-Through Rate as of the Delivery Date. The Pass-Through Rate for any
Class D Certificate will, in general, equal the weighted average of the
interest rates (net of fee rates payable to the Master Servicer, the
Special Servicer and the Trustee) borne by the mortgage loans minus 0.1025%
per annum.
(9) Pass-Through Rate as of the Delivery Date. The Pass-Through Rate for any
Class E and Class F Certificate will, in general, equal the weighted
average of the interest rates (net of fee rate payable to the Master
Servicer, Special Servicer and the Trustee) borne by the mortgage loans.
S-4
7
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
Information about the offered certificates is contained in two separate
documents that progressively provide more detail: (a) the accompanying
prospectus, which provides general information, some of which may not apply to
the offered certificates; and (b) this prospectus supplement, which describes
the specific terms of the offered certificates. If the terms of the offered
certificates vary between this prospectus supplement and the accompanying
prospectus, you should rely on the information in this prospectus supplement.
You should rely only on the information contained in this prospectus
supplement and the accompanying prospectus. We have not authorized anyone to
provide you with information that is different from that contained in this
prospectus supplement and the prospectus. The information in this prospectus
supplement is accurate only as of the date of this prospectus supplement.
This prospectus supplement begins with several introductory sections
describing the Series 2000-1 and the trust in abbreviated form:
Executive Summary, which begins on page S-6 of this prospectus
supplement and shows certain characteristics of the offered certificates in
tabular form;
Summary of Prospectus Supplement, which begins on page S-8 of this
prospectus supplement and gives a brief introduction of the key features of
Series 2000-1 and the mortgage loans; and
Risk Factors, which begins on page S-18 of this prospectus supplement
and describes risks that apply to Series 2000-1 which are in addition to
those described in the accompanying prospectus with respect to the
securities issued by the trust generally.
This prospectus supplement and the accompanying prospectus include cross
references to sections in these materials where you can find further related
discussions. The Tables of Contents in this prospectus supplement and the
accompanying prospectus identify the pages where these sections are located.
Certain capitalized terms are defined and used in this prospectus
supplement and the prospectus to assist you in understanding the terms of the
offered certificates and this offering. The capitalized terms used in this
prospectus supplement are defined on the pages indicated under the caption
"Index of Principal Definitions" beginning on page S-109 in this prospectus
supplement. The capitalized terms used in the accompanying prospectus are
defined on the pages indicated under the caption "Index of Principal
Definitions" beginning on page 101 in the prospectus.
In this prospectus supplement, "we" refers to the Depositor, Banc of
America Commercial Mortgage Inc., and "you" refers to a prospective investor in
the offered certificates.
---------------------
Until December 20, 2000 all dealers that buy, sell or trade the offered
certificates, whether or not participating in this offering, may be required to
deliver a prospectus supplement and the accompanying prospectus. This is in
addition to the dealers' obligation to deliver a prospectus supplement and the
accompanying prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
If and to the extent required by applicable law or regulation, this
prospectus supplement and the accompanying prospectus will be used by the
underwriter in connection with offers and sales related to market-making
transactions in the offered certificates with respect to which the underwriter
is a principal. The underwriter may also act as agent in such transactions. Such
sales will be made at negotiated prices at the time of sale.
S-5
8
EXECUTIVE SUMMARY
The following Executive Summary does not include all relevant information
relating to the offered certificates and the mortgage loans. In particular, the
Executive Summary does not address the risks and special considerations involved
with an investment in the offered certificates, and prospective investors should
carefully review the detailed information appearing elsewhere in this prospectus
supplement and in the accompanying prospectus before making any investment
decision. Certain capitalized terms used in this Executive Summary may be
defined elsewhere in this prospectus supplement, including in Annex A hereto, or
in the prospectus. An "Index of Principal Definitions" is included at the end of
both this prospectus supplement and the prospectus. Terms that are used but not
defined in this prospectus supplement will have the meanings specified in the
prospectus.
- -------------------------------------------------------------------------------------------------------------------
APPROXI-
CERTIFICATE MATE APPROXI- PASS-THROUGH WEIGHTED
BALANCE OR PERCENTAGE MATE RATE AS AVERAGE
NOTIONAL OF POOL CREDIT OF DELIVERY LIFE
CLASS RATINGS(1) AMOUNT(2) BALANCE(7) SUPPORT(7) RATE TYPE DATE (YEARS)(4)
- -------------------------------------------------------------------------------------------------------------------
Offered Certificates
- -------------------------------------------------------------------------------------------------------------------
A-1A Aaa/AAA $153,230,577 19.87% 26.58% Fixed Rate 7.1090% 5.50
- -------------------------------------------------------------------------------------------------------------------
A-2A Aaa/AAA $299,000,640 38.77% 26.58% Fixed Rate(3) 7.3330%(3) 8.79
- -------------------------------------------------------------------------------------------------------------------
A-1B Aaa/AAA $ 55,591,451 7.21% 26.58% Fixed Rate 6.8010% 2.00
- -------------------------------------------------------------------------------------------------------------------
A-2B Aaa/AAA $ 38,390,866 4.98% 26.58% Fixed Rate(3) 7.2570%(3) 5.50
- -------------------------------------------------------------------------------------------------------------------
A-3B Aaa/AAA $ 19,967,220 2.59% 26.58% Fixed Rate(3) 7.4180%(3) 7.66
- -------------------------------------------------------------------------------------------------------------------
X Aaa/AAA $771,179,585(5) N/A N/A Variable Rate(6) 0.5466%(6) 7.56
- -------------------------------------------------------------------------------------------------------------------
B Aa2/AA $ 40,999,766 5.32% 21.27% Fixed Rate(3) 7.5120%(3) 9.05
- -------------------------------------------------------------------------------------------------------------------
C A2/A $ 35,142,657 4.56% 16.71% Fixed Rate(3) 7.6510%(3) 9.07
- -------------------------------------------------------------------------------------------------------------------
D A3/A- $ 11,714,219 1.52% 15.19% WAC(8) 7.6463%(8) 9.13
- -------------------------------------------------------------------------------------------------------------------
E Baa2/BBB $ 27,333,177 3.54% 11.65% WAC(9) 7.7488%(9) 9.13
- -------------------------------------------------------------------------------------------------------------------
F Baa3/BBB- $ 11,714,219 1.52% 10.13% WAC(9) 7.7488%(9) 9.13
- -------------------------------------------------------------------------------------------------------------------
Private Certificates -- Not Offered Hereby
- -------------------------------------------------------------------------------------------------------------------
(Not
G Offered) $ 11,714,219 1.52% 8.61% Fixed Rate 6.8500% 9.13
- -------------------------------------------------------------------------------------------------------------------
(Not
H Offered) $ 19,523,698 2.53% 6.08% Fixed Rate 6.8500% 9.13
- -------------------------------------------------------------------------------------------------------------------
(Not
K Offered) $ 3,904,740 0.51% 5.57% Fixed Rate 6.8500% 9.13
- -------------------------------------------------------------------------------------------------------------------
(Not
L Offered) $ 15,618,958 2.03% 3.54% Fixed Rate 6.0000% 10.14
- -------------------------------------------------------------------------------------------------------------------
(Not
M Offered) $ 7,809,479 1.01% 2.53% Fixed Rate 6.0000% 11.38
- -------------------------------------------------------------------------------------------------------------------
(Not
N Offered) $ 19,523,699 2.53% N/A Fixed Rate 6.0000% 13.50
- -------------------------------------------------------------------------------------------------------------------
- --------- -------------------
PRINCIPAL
CLASS WINDOW(4)
- --------- -------------------
Offered
Certificates
- --------------------------------------------------------------------------------------------------------------------------------
A-1A 10/15/00-11/15/08
- -------------------------------------------------------------------------------------------------------------------
A-2A 11/15/08-10/15/09
- -------------------------------------------------------------------------------------------------------------------
A-1B 10/15/00-07/15/04
- -------------------------------------------------------------------------------------------------------------------
A-2B 07/15/04-10/15/07
- -------------------------------------------------------------------------------------------------------------------
A-3B 10/15/07-10/15/09
- -------------------------------------------------------------------------------------------------------------------
X N/A
- -------------------------------------------------------------------------------------------------------------------
B 10/15/09-10/15/09
- -------------------------------------------------------------------------------------------------------------------
C 10/15/09-11/15/09
- -------------------------------------------------------------------------------------------------------------------
D 11/15/09-11/15/09
- -------------------------------------------------------------------------------------------------------------------
E 11/15/09-11/15/09
- -------------------------------------------------------------------------------------------------------------------
F 11/15/09-11/15/09
- -------------------------------------------------------------------------------------------------------------------
Private
Certificates --
Not Offered
Hereby
- -------------------------------------------------------------------------------------------------------------------
G 11/15/09-11/15/09
- -------------------------------------------------------------------------------------------------------------------
H 11/15/09-11/15/09
- -------------------------------------------------------------------------------------------------------------------
K 11/15/09-11/15/09
- -------------------------------------------------------------------------------------------------------------------
L 11/15/09-2/15/12
- -------------------------------------------------------------------------------------------------------------------
M 2/15/12-2/15/12
- -------------------------------------------------------------------------------------------------------------------
N 2/15/12-4/15/18
- -------------------------------------------------------------------------------------------------------------------
(1) Ratings shown are those of Moody's and S&P, respectively.
(2) As of the Delivery Date (assuming receipt of all scheduled payments through
the Commencement Date and there are no prepayments other than those actually
received prior to the Commencement Date). Subject to a variance of plus or
minus 5%.
(3) The Pass-Through Rate for any Class A-2A, Class A-2B, Class A-3B, Class B
and Class C Certificate on any Distribution Date will not exceed the
weighted average of the interest rates (net of the fee rates payable to the
Master Servicer, the Special Servicer and the Trustee) borne by the mortgage
loans. The rate shown in the "Pass-Through Rate as of Delivery Date" column
is the approximate Pass-Through Rate as of the Delivery Date for such
Classes. See "Description of the Certificates -- Pass-Through Rates" in this
prospectus supplement.
(4) Based on the Maturity Assumptions (as defined under "Yield and Maturity
Considerations" in this prospectus supplement). As of the Commencement Date,
the calculations for the Sequential Pay Certificate assumed no prepayments
on the Mortgage Loans, except that 6% CPR was assumed in the case of the
Group B Mortgage Loans after the expiration of the applicable Lock-Out
Period, if any. As of the Commencement Date, calculations for the Class X
Certificates assumed no prepayments on the Mortgage Loans through Lock-Out
and Yield Maintenance Periods and prepayments at 100% CPR thereafter, except
that in the case of the Group B Mortgage Loans, 6% CPR was assumed after the
expiration of the applicable Lock-Out Periods, if any, through Yield
Maintenance Periods, and 100% CPR thereafter. The Class X Certificates are
subject to a 1% clean up call.
(5) Notional Amount.
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(6) The Pass-Through Rate for the Class X Certificates for any Distribution Date
will, in general, equal the excess, if any, of (a) the weighted average of
the interest rates (net of the fee rates payable to the Master Servicer, the
Special Servicer and the Trustee) borne by the mortgage loans, over (b) the
weighted average of the Pass-Through Rates for the Class A-1A, Class A-2A,
Class A-1B, Class A-2B, Class A-3B, Class B, Class C, Class D, Class E,
Class F, Class G, Class H, Class K, Class L, Class M and Class N
Certificates for such Distribution Date.
(7) As of the Delivery Date (assuming receipt of all scheduled payments through
the Commencement Date and there are no prepayments other than those actually
received prior to the Commencement Date).
(8) The Pass-Through Rate for any Class D Certificate will, in general, equal
the weighted average interest rates (net of the fee rates payable to the
Master Servicer, the Special Servicer and the Trustee) borne by the mortgage
loans minus 0.1025% per annum. The rate shown in the "Pass-Through Rate as
of the Delivery Date" column is the approximate Pass-Through Rate for such
Class as of the Delivery Date. See "Description of the Certificates -- Pass-
Through Rates" in this prospectus supplement.
(9) The Pass-Through Rate for any Class E and Class F Certificate will, in
general, equal the weighted average of the interest rates (net of the fee
rates payable to the Master Servicer, the Special Servicer and the Trustee)
borne by the mortgage loans. The rate shown in the "Pass-Through Rate as of
the Delivery Date" column is the Pass-Through Rate as of the Delivery Date
on the Class E and Class F Certificates.
Below is certain information regarding the Mortgage Loans and the Mortgaged
Properties as of the Cut-off Date. All weighted averages set forth below are
based on the respective Cut-off Date Balances (as defined herein) of the
Mortgage Loans. Such information is described, and additional information
regarding the Mortgage Loans and the Mortgaged Properties is contained, under
"Description of the Mortgage Pool" in this prospectus supplement and in Annex A
to this prospectus supplement.
MORTGAGE POOL CHARACTERISTICS
ENTIRE MORTGAGE POOL
CHARACTERISTICS (APPROXIMATE)
- --------------- --------------------
Initial Pool Balance......................... $771,922,444
Number of Mortgage Loans..................... 159
Number of Mortgaged Properties............... 178
Average Cut-off Date Balance................. $ 4,854,858
Weighted Average Mortgage Rate............... 7.892%
Weighted Average Remaining Lock-Out Period... 83 months
Weighted Average Remaining Term to
Maturity................................... 102 months
Weighted Average Underwriting Debt Service
Coverage Ratio............................. 1.43x
Weighted Average Cut-off Date Loan-to-Value
Ratio...................................... 66.2%
"Cut-off Date Loan-to-Value Ratio" and "Underwriting Debt Service Coverage
Ratio" are calculated as described in Annex A hereto.
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SUMMARY OF PROSPECTUS SUPPLEMENT
This summary highlights selected information from this prospectus
supplement. It does not contain all of the information you need to consider in
making your investment decision. TO UNDERSTAND ALL OF THE TERMS OF THE OFFERING
OF THE OFFERED CERTIFICATES, READ THIS ENTIRE DOCUMENT AND THE ACCOMPANYING
PROSPECTUS CAREFULLY.
RELEVANT PARTIES AND DATES
DEPOSITOR
Banc of America Commercial Mortgage Inc. (formerly known as NationsLink
Funding Corporation). The Depositor, a Delaware corporation, is a subsidiary of
the Mortgage Loan Seller. The Depositor maintains its principal office at Bank
of America Corporate Center, 100 North Tryon Street, Charlotte, North Carolina
28255. See "The Depositor" in this prospectus supplement. Neither the Depositor
nor any of its affiliates has insured or guaranteed the Offered Certificates.
TRUSTEE
Wells Fargo Bank Minnesota, N.A. (successor in interest to Norwest Bank
Minnesota, National Association). The Trustee will also act as REMIC
Administrator. See "Description of the Certificates -- The Trustee" in this
prospectus supplement.
MASTER SERVICER
Midland Loan Services, Inc., a Delaware corporation. See "Servicing of the
Mortgage Loans -- The Master Servicer" in this prospectus supplement.
SPECIAL SERVICER
GMAC Commercial Mortgage Corporation. See "Servicing of the Mortgage
Loans -- The Special Servicer" in this prospectus supplement.
MORTGAGE LOAN SELLER
Bank of America, N.A. (the "Mortgage Loan Seller"). The Mortgage Loan
Seller is a national banking association. The Mortgage Loan Seller is the parent
of the Depositor and a wholly-owned subsidiary of NB Holdings Corporation, which
in turn is a wholly-owned subsidiary of Bank of America Corporation. The
Mortgage Loan Seller maintains its principal office at Bank of America Corporate
Center, 100 North Tryon Street, Charlotte, North Carolina 28255. See
"Description of the Mortgage Pool -- The Mortgage Loan Seller" in this
prospectus supplement.
ORIGINAL CUT-OFF DATE
December 1, 1999
CUT-OFF DATE
August 1, 2000.
TRUST FORMATION DATE
December 21, 1999.
COMMENCEMENT DATE
September 1, 2000.
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DELIVERY DATE
On or about September 27, 2000.
RECORD DATE
With respect to each Class of Offered Certificates and each Distribution
Date, the last business day of the calendar month immediately preceding the
month in which such Distribution Date occurs.
DISTRIBUTION DATE
The 15th day of each month or, if any such 15th day is not a business day,
the next succeeding business day. The first Distribution Date with respect to
the Offered Certificates will occur in October 2000.
DETERMINATION DATE
With respect to any Distribution Date, the fifth business day prior to such
date.
COLLECTION PERIOD
With respect to any Distribution Date, the period that begins immediately
following the Determination Date in the calendar month preceding the month in
which such Distribution Date occurs and ends on and includes the Determination
Date in the calendar month in which such Distribution Date occurs. The first
Collection Period applicable to the Offered Certificates will begin immediately
following the Determination Date in September 2000 and end on the Determination
Date in October 2000.
MORTGAGE LOANS
THE MORTGAGE POOL
The pool of mortgage loans (the "Mortgage Pool") consists of 111
conventional, multifamily and commercial mortgage loans originated prior to the
Merger by Bank of America, N.A. (formerly known as NationsBank, N.A.) or its
conduit participants (the "Conduit Mortgage Loans") representing approximately
80.5% of the Mortgage Pool and 48 conventional, multifamily and commercial
mortgage loans originated prior to the Merger by Bank of America NT&SA (or
predecessor institutions) (the "Portfolio Mortgage Loans"; together with the
Conduit Loans, the "Mortgage Loans") representing approximately 19.5% of the
Mortgage Pool. The Mortgage Loans have an aggregate Cut-off Date Balance of
approximately $771,922,444 (the "Initial Pool Balance"), subject to a variance
of plus or minus 5%. The Mortgage Loans comprise two separate groups, Group A
and Group B (each, a "Group"). Group A will consist of all of the Conduit
Mortgage Loans and 12 Portfolio Mortgage Loans, which collectively represent
approximately 85.2% of the Initial Pool Balance. Group B will consist of the 36
remaining Mortgage Loans, which collectively represent approximately 14.8% of
the Initial Pool Balance. Payments of principal on the Mortgage Loans in Group A
will be paid first to the Class A-1A and Class A-2A in that order, until the
Certificate Balance of each such Class is reduced to zero. All remaining
payments in respect of principal will be paid sequentially to each Class of
Certificates as and to the extent described in this prospectus supplement. See
"Description of the Certificates -- Distributions."
All numerical information provided herein with respect to the Mortgage
Loans is provided on an approximate basis. All weighted average information
provided herein with respect to the Mortgage Loans reflects weighting by related
Cut-off Date Balance. All percentages of the Mortgage Pool, or of any specified
sub-group thereof, referred to herein without further description are
approximate percentages by aggregate Cut-off Date Balance. See "Description of
the Mortgage Pool -- Changes in Mortgage Pool Characteristics" in this
prospectus supplement.
The "Cut-off Date Balance" of each Mortgage Loan is the unpaid principal
balance thereof as of the Cut-off Date, after application of all payments of
principal due on or before such date, whether or not
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received. The Cut-off Date Balances of the Mortgage Loans range from $456,316 to
$58,000,000, and the average Cut-off Date Balance is $4,854,858.
As of the Cut-off Date, the Mortgage Loans had the following additional
characteristics.
SELECTED MORTGAGE LOAN CHARACTERISTICS
Range of Mortgage Rates.................. 6.770% per annum to 9.750% per annum
Weighted Average Mortgage Rate........... 7.892% per annum
Range of Remaining Terms to Stated
Maturity............................... 2 months to 212 months
Weighted Average Remaining Term to Stated
Maturity............................... 102 months
Range of Remaining Amortization Terms.... 41 months to 351 months
Weighted Average Remaining Amortization
Term................................... 302 months
Range of Cut-off Date Loan-to-Value
Ratios................................. 27.0% to 86.3%
Weighted Average Cut-off Date
Loan-to-Value Ratio.................... 66.2%
Range of Maturity Date Loan-to-Value
Ratios of Balloon Loans................ 16.8% to 76.7%
Weighted Average Maturity Date Loan-to-
Value Ratio of Balloon Loans........... 57.8%
Range of Underwriting Debt Service
Coverage Ratios........................ 1.10x to 2.69x
Weighted Average Underwriting Debt
Service Coverage Ratio................. 1.43x
"Cut-off Date Loan-to-Value Ratio," "Maturity Date Loan-to-Value Ratio" and
"Underwriting Debt Service Coverage Ratio" are each defined in Annex A to this
prospectus supplement.
Set forth below are the number of Mortgaged Properties, and the approximate
percentage of the Initial Pool Balance secured by such Mortgaged Properties,
located in the five states with the highest concentrations:
GEOGRAPHIC CONCENTRATION
NUMBER OF PERCENTAGE OF
MORTGAGED INITIAL POOL
STATE PROPERTIES BALANCE
- ----- ---------- -------------
California.................................................. 46 23.9%
Texas....................................................... 23 11.7
Washington.................................................. 16 7.8
Nevada...................................................... 7 7.1
Arizona..................................................... 11 6.3
The remaining Mortgaged Properties are located throughout 24 other states,
with no more than 5.4% of the Initial Pool Balance secured by Mortgaged
Properties located in any such other jurisdiction.
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Set forth below are the number of Mortgaged Properties, and the approximate
percentage of the Initial Pool Balance secured by such Mortgaged Properties,
operated for each indicated purpose:
PROPERTY TYPE
NUMBER OF PERCENTAGE OF
MORTGAGED INITIAL POOL
PROPERTIES BALANCE(1)
---------- -------------
Retail...................................................... 57 34.4%
Multifamily................................................. 59 26.6
Office...................................................... 20 12.5
Hotel....................................................... 14 11.6
Health Care................................................. 6 5.8
Industrial.................................................. 9 3.9
Mobile Home................................................. 5 2.0
Special Purpose............................................. 2 1.8
Mini Storage................................................ 6 1.4
- ---------------
(1) The sum of the percentages in this column may not equal 100% due to
rounding.
FOR MORE DETAILED STATISTICAL INFORMATION REGARDING THE MORTGAGE POOL, SEE
ANNEX A HERETO.
On the Trust Formation Date, the Mortgage Loan Seller, at the direction of
the Depositor, transferred all of the Conduit Mortgage Loans and all of the
Portfolio Mortgage Loans, without recourse, to the Trustee for the benefit of
holders of the Certificates (the "Certificateholders"). In connection with such
transfer, the Mortgage Loan Seller made certain representations and warranties
regarding the characteristics of the Mortgage Loans so transferred by the
Mortgage Loan Seller. As described in more detail later in this prospectus
supplement, the Mortgage Loan Seller will be obligated to cure any material
breach of any such representation or warranty made by the Mortgage Loan Seller
with respect to its Mortgage Loans or repurchase the affected Mortgage Loan. See
"Description of the Mortgage Pool -- Assignment of the Mortgage Loan;
Repurchases" and "--Representations and Warranties; Repurchases" in this
prospectus supplement.
The Mortgage Loan Seller has sold its respective Mortgage Loans without
recourse and will have no obligations with respect to the Offered Certificates
other than pursuant to such representations, warranties and repurchase
obligations. The Depositor will make no representations or warranties with
respect to the Mortgage Loans and will have no obligation to repurchase or
replace Mortgage Loans with deficient documentation or which are otherwise
defective. See "Description of the Mortgage Pool" and "Risk Factors -- Risks
Related to the Mortgage Loans" in this prospectus supplement and "Description of
the Trust Funds" and "Certain Legal Aspects of Mortgage Loans" in the
accompanying prospectus.
The Master Servicer and, if circumstances require, the Special Servicer,
will service and administer the Mortgage Loans pursuant to the Pooling Agreement
(as defined below). See "Servicing of the Mortgage Loans" in this prospectus
supplement and "The Pooling and Servicing Agreements" in the accompanying
prospectus. The compensation to be received by the Master Servicer (including
Master Servicing Fees) and the Special Servicer (including Standby Fees, Special
Servicing Fees, Liquidation Fees and Workout Fees) for their services is
described in this prospectus supplement under "Servicing of the Mortgage
Loans -- Servicing and Other Compensation and Payment of Expenses".
OFFERED SECURITIES
THE OFFERED CERTIFICATES; CERTIFICATE BALANCES AND PASS-THROUGH RATES
We are offering eleven classes of Commercial Mortgage Pass-Through
Certificates (collectively, the "Offered Certificates") as part of Series
2000-1, namely the Class A-1A, Class A-2A, Class A-1B, Class A-2B, Class A-3B,
Class X, Class B, Class C, Class D, Class E and Class F Certificates. As of the
Delivery Date, your certificates will have the approximate aggregate principal
amount or notional amount
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indicated in the chart on the cover of this prospectus supplement, subject to a
variance of plus or minus 5%, and will accrue interest at an annual rate (the
"Pass-Through Rate") indicated in the chart on the cover of this prospectus
supplement and the accompanying footnotes. See "Description of the
Certificates -- Pass-Through Rates" in this prospectus supplement. Interest on
the Offered Certificates (including the Class X Certificates) will be calculated
based on a 360-day year consisting of twelve 30-day months, or a 30/360 basis.
Series 2000-1 consists of a total of twenty-two classes of Certificates,
the following eleven of which are not being offered through this prospectus
supplement and the accompanying prospectus: Class G, Class H, Class K, Class L,
Class M, Class N, Class R-I, Class R-II, Class R-III, Class R-IIIU and Class
R-IV (collectively, the "Private Certificates"). The Pass-Through Rates
applicable to each of the Class G, Class H, Class K, Class L, Class M and Class
N Certificates for each Distribution Date are set forth on page S-74 hereof.
None of the Class R-I, Class R-II, Class R-III, Class R-IIIU nor Class R-IV
Certificates (the "REMIC Residual Certificates") will have a Certificate Balance
or a Notional Amount.
The Offered Certificates and the Private Certificates will represent
beneficial ownership interests in a trust created by Banc of America Commercial
Mortgage Inc. The trust's assets will primarily be 159 mortgage loans secured by
first liens on commercial and multifamily properties.
CLASS X CERTIFICATES
The notional amount of the Class X Certificates will generally be equal to
the aggregate of the Certificate Balances of the Class A-1A, Class A-2A, Class
A-1B, Class A-2B, Class A-3B, Class B, Class C, Class D, Class E, Class F, Class
G, Class H, Class K, Class L, Class M and Class N Certificates (the "Sequential
Pay Certificates") outstanding from time to time. The notional amount of the
Class X Certificates is used solely for the purpose of determining the amount of
interest to be distributed on such Class of Certificates and does not represent
the right to receive any distributions of principal.
The Pass-Through Rate applicable to the Class X Certificates for each
Distribution Date will, in general, equal the excess, if any, of (1) the
Weighted Average Net Mortgage Rate, over (2) the weighted average of the
Pass-Through Rates applicable to all the Classes of Sequential Pay Certificates
for such Distribution Date (weighted on the basis of their respective
Certificate Balances immediately prior to such Distribution Date). The
Pass-Through Rate on the Class X Certificates will be calculated without regard
to any modification of the terms of any Mortgage Loan subsequent to the Trust
Formation Date.
See "Description of the Certificates -- Pass-Through Rates" and
"-- Distributions" in this prospectus supplement.
DISTRIBUTIONS
The total of all payments or other collections (or advances in lieu
thereof) on or in respect of the Mortgage Loans (but excluding Prepayment
Premiums) that are available for distributions of interest on and principal of
the Certificates on any Distribution Date is herein referred to as the
"Available Distribution Amount" for such date. The Available Distribution Amount
for either Group for any Distribution Date generally is the total of all such
payments or other collections on or in respect of the Mortgage Loans in such
Group that are available for distribution on the Certificates on such date. The
"Group A Senior Certificate Principal Distribution Amount" will be, with respect
to Group A and any Distribution Date, the portion of the Principal Distribution
Amount for Group A for such Distribution Date that represents scheduled
payments, Balloon Payments, Principal Prepayments, Liquidation Proceeds,
Insurance and Condemnation Proceeds, and REO Income on the Mortgage Loans in
Group A. See "Description of the Certificates -- Distributions -- The Available
Distribution Amount" in this prospectus supplement.
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On each Distribution Date, the Trustee will apply the Available
Distribution Amount for such date for the following purposes and in the
following order of priority:
A. Amount and Order of Distributions
First, Class A and Class X: Concurrently, from the Available Distribution
Amount, pro rata, to interest on the Class A-1A, Class A-2A, Class A-1B, Class
A-2B, Class A-3B and Class X Certificates.
Second, Class A: Sequentially, to the Class A-1A and Class A-2A
Certificates, in that order, the Group A Senior Certificate Principal
Distribution Amount, until each such class is reduced to zero.
Third, Class A: Sequentially, to the Class A-1B, Class A-2B, Class A-3B,
Class A-1A and Class A-2A Certificates, in that order and without regard to
Group, the remaining funds available for distribution of principal, until each
such class is reduced to zero.
Fourth, Class A: To reimburse the Class A-1A, Class A-2A, Class A-1B,
Class A2B and Class A3B Certificates, pro rata, for any previously unreimbursed
losses on the mortgage loans allocable to principal that were previously borne
by those classes.
Fifth, Class B: To Class B as follows: (a) to interest on Class B in the
amount of its interest entitlement; (b) to the extent of funds available for
principal, to principal on Class B until reduced to zero; and (c) to reimburse
Class B for any previously unreimbursed losses on the mortgage loans allocable
to principal that were previously borne by that class.
Sixth, Class C: To Class C in a manner analogous to the Class B
allocations of the fifth step.
Seventh, Class D: To Class D in a manner analogous to the Class B
allocations of the fifth step.
Eighth, Class E: To Class E in a manner analogous to the Class B
allocations of the fifth step.
Ninth, Class F: To Class F in a manner analogous to the Class B
allocations of the fifth step.
Finally, Class G, Class H, Class K, Class L, Class M, Class N, Class R-I,
Class R-II, Class R-III, Class R-IIIU and Class R-IV: In the amounts and order
of priority provided for in the Pooling Agreement.
The distributions referred to in priority Second and Third above, in the
aggregate, will be made pro rata among the Class A-1A, Class A-2A, Class A-1B,
Class A2B and Class A-3B Certificates when the Certificate Balances of the
Subordinate Certificates have been reduced to zero and in any event on the final
Distribution Date as described under "Description of the
Certificates -- Distributions -- The Available Distribution Amount" in this
prospectus supplement.
B. Interest and Principal Entitlements
A description of each Class's interest entitlement can be found in
"Description of the Certificates -- Distributions -- Distributable Certificate
Interest" in this prospectus supplement. As described in such section, there are
circumstances in which your interest entitlement for a distribution date could
be less than one full month's interest at the Pass-Through Rate on your
certificate's principal amount or notional amount.
The amount of principal required to be distributed to the classes entitled
to principal on a particular distribution date also can be found in "Description
of the Certificates -- Principal Distribution Amount" in this prospectus
supplement. If you invest in the Class X Certificates, you will not be entitled
to distributions of principal on the Class X Certificates.
C. Prepayment Premiums
The manner in which any prepayment consideration and yield maintenance
premiums received during a particular Collection Period will be allocated to one
or more of the classes of Offered Certificates is described in "Description of
the Certificates -- Distributions -- Distributions of Prepayment Premiums" in
this prospectus supplement.
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SUBORDINATION
A. General
The chart below describes the manner in which the rights of various classes
will be senior to the rights of other classes. Entitlement to receive principal
and interest on any Distribution Date is depicted in descending order. The
manner in which mortgage loan losses are allocated is depicted in ascending
order. No principal payments or loan losses will be allocated to the Class X
Certificates. However, the Notional Amount on the Class X Certificates (which is
used to calculate interest due on the Class X Certificates) will effectively be
reduced by the allocation of principal payments and loan losses to the other
classes of Certificates, the principal balances of which correspond to the
Notional Amount of the Class X Certificates.
(FLOW CHART)
*The Class X Certificates will only be senior with respect to payments of
interest and will not be entitled to receive any payments in respect of
principal.
No other form of credit enhancement will be available for the benefit of
the holders of the Offered Certificates.
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See "Description of the Certificates -- Subordination; Allocation of Losses
and Certain Expenses" in this prospectus supplement.
B. Shortfalls in Available Funds
The following types of shortfalls in available funds will be allocated in
the same manner as mortgage loan losses:
- shortfalls resulting from additional compensation which the
Master Servicer or Special Servicer is entitled to receive;
- shortfalls resulting from interest on advances of principal
and interest or property expenses made by the Master
Servicer or the Trustee;
- shortfalls resulting from extraordinary expenses of the trust; and
- shortfalls resulting from a reduction of a mortgage loan's
interest rate by a bankruptcy court or from other
unanticipated or default-related expenses of the trust.
See "Description of the Certificates -- Distributions" in this prospectus
supplement.
ADVANCES OF PRINCIPAL AND INTEREST
A. P&I Advances
The Master Servicer is required to advance (each, a "P&I Advance")
delinquent monthly mortgage loan payments if it determines that the advance will
be recoverable. The Master Servicer will not be required to advance balloon
payments due at maturity or interest in excess of a loan's regular interest
rate. The Master Servicer also is not required to advance prepayment or yield
maintenance premiums. If an advance is made, the Master Servicer will not
advance its servicing fee, but will advance the Trustee's fee and the Special
Servicer's standby fee.
B. Property Protection Advances
The Master Servicer may also be required to make advances to pay delinquent
real estate taxes, assessments and hazard insurance premiums and similar
expenses necessary to protect and maintain the mortgaged property, to maintain
the lien on the mortgaged property or enforce the related mortgage loan
documents ("Servicing Advances," and collectively with P&I Advances,
"Advances").
C. Interest on Advances
The Master Servicer and the Trustee, as applicable, will be entitled to
interest as described in this prospectus supplement on any Advances made.
Interest accrued on outstanding Advances may result in reductions in amounts
otherwise payable on the certificates.
See "Description of the Certificates -- P&I Advances" and "Servicing of the
Mortgage Loans -- Servicing and Other Compensation and Payment of Expenses" in
this prospectus supplement and "Description of the Certificates -- Advances in
Respect of Delinquencies" and "The Pooling and Servicing
Agreements -- Certificate Account" in the accompanying prospectus.
OTHER ASPECTS OF THE OFFERED CERTIFICATES
A. Denominations
The Class A-1A, Class A-2A, Class A-1B, Class A-2B and Class A-3B
Certificates will be offered in minimum denominations of $10,000 initial
principal amount. The Class X Certificates will be offered in minimum
denominations of $1,000,000 initial notional amount. The Class B, Class C, Class
D, Class E and Class F Certificates will be offered in minimum denominations of
$100,000 initial principal amount. Investments in excess of the minimum
denominations may be made in multiples of $1.
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B. Registration, Clearance and Settlement
Each class of Offered Certificates will be registered in the name of Cede &
Co., as nominee of The Depository Trust Company ("DTC"). We may elect to
terminate the book-entry system through DTC with respect to all or any portion
of any class of the Offered Certificates.
See "Description of the Certificates -- Registration and Denominations" in
this prospectus supplement and in the accompanying prospectus.
OPTIONAL TERMINATION
At its option, any holder or holders (other than the Depositor or the
Mortgage Loan Seller) of Certificates representing a majority interest in the
Controlling Class may purchase, and if such holder or holders fail to purchase,
the Master Servicer may purchase, and if the Master Servicer fails to purchase,
the Special Servicer may purchase, all of the Mortgage Loans and REO Properties,
and thereby effect a termination of the Trust and early retirement of the
then-outstanding Certificates, on any Distribution Date on which the remaining
aggregate Stated Principal Balance of the Mortgage Pool is less than 1.0% of the
Initial Pool Balance. See "Description of the Certificates -- Termination" in
this prospectus supplement and in the accompanying prospectus.
TAX STATUS
Elections have been made or will be made to treat portions of the Trust as
five separate REMICs -- REMIC I, REMIC II, REMIC III, REMIC IIIU and REMIC
IV -- for federal income tax purposes. In the opinion of counsel, such portions
of the Trust will qualify for this treatment.
Pertinent federal income tax consequences of an investment in the Offered
Certificates include:
- Each class of Offered Certificates will constitute "regular
interests" in one of the REMICs.
- The regular interests will be treated as newly originated
debt instruments for federal income tax purposes.
- Beneficial owners will be required to report income thereon
in accordance with the accrual method of accounting.
- The Class X Certificates will, and one or more other
classes of Offered Certificates may, be issued with
original issue discount for federal income tax purposes,
which generally requires you to report income in advance of
the related cash distributions.
See "Certain Federal Income Tax Consequences" in this prospectus supplement
and in the accompanying prospectus.
ERISA CONSIDERATIONS
Subject to important considerations described under "Certain ERISA
Considerations" in this prospectus supplement and in the accompanying
prospectus, the Depositor expects that the Class A and Class X Certificates are
eligible for purchase by persons investing assets of employee benefit plans or
individual retirement accounts.
UNDER CURRENT LAW, THE CLASS B, CLASS C, CLASS D, CLASS E AND CLASS F
CERTIFICATES MAY NOT BE PURCHASED BY, OR TRANSFERRED TO, A PLAN OR ANY PERSON
INVESTING THE ASSETS OF A PLAN. (THIS PROHIBITION DOES NOT APPLY TO AN INSURANCE
COMPANY INVESTING ASSETS OF ITS GENERAL ACCOUNT UNDER CIRCUMSTANCES WHICH WOULD
QUALIFY FOR AN EXEMPTION UNDER SECTIONS I AND III OF U.S. DEPARTMENT OF LABOR
PROHIBITED TRANSACTION CLASS EXEMPTION 95-60.)
See "Certain ERISA Considerations" in this prospectus supplement and in the
accompanying prospectus.
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LEGAL INVESTMENT
The Class A, Class X and Class B Certificates will constitute "mortgage
related securities" for purposes of the Secondary Mortgage Market Enhancement
Act of 1984, as amended ("SMMEA"), so long as those certificates are rated in
one of the two highest rating categories by one or more rating agencies. The
other classes of Offered Certificates will not constitute "mortgage related
securities" within the meaning of SMMEA.
See "Legal Investment" in this prospectus supplement and in the
accompanying prospectus.
CERTIFICATE RATINGS
It is a requirement for issuance of the Offered Certificates that they
receive credit ratings no lower than the following credit ratings from Moody's
and S&P (together, the "Rating Agencies"):
MOODY'S S&P
------- ---
Class A-1A.................................................. Aaa AAA
Class A-2A.................................................. Aaa AAA
Class A-1B.................................................. Aaa AAA
Class A-2B.................................................. Aaa AAA
Class A-3B.................................................. Aaa AAA
Class X..................................................... Aaa AAA
Class B..................................................... Aa2 AA
Class C..................................................... A2 A
Class D..................................................... A3 A-
Class E..................................................... Baa2 BBB
Class F..................................................... Baa3 BBB-
The Rating Agencies' ratings of the Offered Certificates address the
likelihood of the timely payment of interest and the ultimate repayment of
principal by the Rated Final Distribution Date. A security rating does not
address the frequency of prepayments (either voluntary or involuntary) or the
possibility that certificateholders might suffer a lower than anticipated yield,
nor does a security rating address the likelihood of receipt of Prepayment
Premiums. Also, a security rating does not represent any assessment of the yield
to maturity that investors may experience or the possibility that the Class X
Certificateholders might not fully recover their investment in the event of
rapid prepayments and/or other liquidations of the Mortgage Loans (including
both voluntary and involuntary prepayments). In general, the ratings thus
address credit risk and not prepayment risk.
A security rating is not a recommendation to buy, sell or hold securities
and may be subject to revision or withdrawal at any time by the assigning rating
organization. Any such revision, if negative, or withdrawal of a rating could
have a material adverse effect on the affected class of Offered Certificates. In
this regard, we note that S&P considered the claims-paying ratings of the
Environmental Insurer in assigning its ratings to the Offered Certificates;
accordingly, the downgrade, withdrawal or qualification of the ratings
applicable to the Environmental Insurer could have a corresponding effect upon
the ratings assigned to one or more classes of the Offered Certificates. See
"Ratings" in this prospectus supplement and "Rating" in the accompanying
prospectus for a discussion of the basis upon which ratings are assigned, the
limitations and restrictions on ratings, and conclusions that should not be
drawn from a rating.
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RISK FACTORS
You should carefully consider the following risks before making an
investment decision. In particular, distribution on your certificates will
depend on payments received on and other recoveries with respect to the mortgage
loans. Therefore, you should carefully consider the risk factors relating to the
mortgage loans and the mortgaged properties.
The risks and uncertainties described below are not the only ones relating
to your certificates. Additional risks and uncertainties not presently known to
us or that we currently deem immaterial may also impair your investment.
If any of the following risks actually occur, your investment could be
materially and adversely affected.
This prospectus supplement also contains forward-looking statements that
involve risks and uncertainties. Actual results could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors, including the risks described below and elsewhere in this prospectus
supplement.
RISKS RELATED TO THE CERTIFICATES
LACK OF CONTROL OVER TRUST FUND
You and other certificateholders generally do not have the right to make
decisions with respect to the administration of the trust. See "Servicing of the
Mortgage Loans -- General" in this prospectus supplement. Such decisions are
generally made, subject to the express terms of the Pooling Agreement, by the
Master Servicer, the Trustee or the Special Servicer, as applicable. Any
decision made by one of those parties in respect of the trust, even if such
decision is determined to be in your best interests by such party, may be
contrary to the decision that you or other certificateholders would have made
and may negatively affect your interests.
POTENTIAL CONFLICTS OF INTEREST
The Special Servicer will have considerable latitude in determining whether
to liquidate or modify defaulted Mortgage Loans. See "Servicing of the Mortgage
Loans -- Modifications, Waivers, Amendments and Consents" in this prospectus
supplement.
The Special Servicer or an affiliate has purchased certain of the Private
Certificates (including the Controlling Class discussed in this prospectus
supplement under "Servicing of the Mortgage Loans -- General"). This could cause
a conflict between the Special Servicer's duties to the Trust under the Pooling
Agreement and its interest as a holder of a certificate. However, the Pooling
Agreement provides that the mortgage loans shall be administered in accordance
with the servicing standards without regard to ownership of any certificate by
the Master Servicer, the Special Servicer or any affiliate of the Special
Servicer. See "Servicing of the Mortgage Loans -- General" in this prospectus
supplement.
YIELD CONSIDERATIONS
The yield on any offered certificate will depend on (a) the price at which
such certificate is purchased by an investor and (b) the rate, timing and amount
of distributions on such certificate. The rate, timing and amount of
distributions on any offered certificate will, in turn, depend on, among other
things:
- the Pass-Through Rate for such certificate;
- the rate and timing of principal payments (including principal
prepayments) and other principal collections on or in respect of the
Mortgage Loans and the extent to which such amounts are to be applied
or otherwise result in a reduction of the Certificate Balance or
Notional Amount of the class of certificates to which such certificate
belongs;
- the rate, timing and severity of Realized Losses and Additional Trust
Fund Expenses and the extent to which such losses and expenses result
in the failure to pay interest on, or a reduction of the Certificate
Balance or Notional Amount of, the class of certificates to which such
certificate belongs;
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- the timing and severity of any Net Aggregate Prepayment Interest
Shortfalls and the extent to which such shortfalls are allocated in
reduction of the Distributable Certificate Interest payable on the
class of certificates to which such certificate belongs; and
- the extent to which Prepayment Premiums are collected and, in turn,
distributed on the class of certificates to which such certificate
belongs.
It is impossible to predict with certainty any of the factors described in
the preceding paragraph. Accordingly, investors may find it difficult to analyze
the effect that such factors might have on the yield to maturity of any class of
offered certificates. See "Description of the Mortgage Pool", "Description of
the Certificates -- Distributions" and "-- Subordination; Allocation of Losses
and Certain Expenses" and "Yield and Maturity Considerations" in this prospectus
supplement. See also "Yield and Maturity Considerations" in the accompanying
prospectus.
The yield to investors in the Class A-1A and Class A-2A Certificates will
be sensitive to the rate and timing of receipt of principal in respect of the
Group A Mortgage Loans, and the yield to investors in the Class A-1B, Class A-2B
and Class A-3B Certificates will be sensitive to the rate and timing of receipt
of principal in respect of the Group B Mortgage Loans.
The yield to maturity of the Class X Certificates will be highly sensitive
to the rate and timing of principal payments (including by reason of
prepayments, loan extensions, defaults and liquidations) and losses on the
Mortgage Loans. Investors in the Class X Certificates should fully consider the
associated risks, including the risk that an extremely rapid rate of
amortization, prepayment or other liquidation of the Mortgage Loans could result
in the failure of such investors to recoup fully their initial investments.
Because the Notional Amount of the Class X Certificates is equal to the
aggregate of the Certificate Balances of the Sequential Pay Certificates
outstanding from time to time, any payment of principal in respect of any
Mortgage Loan that is applied in reduction of the Certificate Balance of any
class of Sequential Pay Certificates will reduce such Notional Amount.
In general, in the case of the Class X Certificates and any other class of
offered certificates purchased at a premium, if principal payments on the
Mortgage Loans occur at a rate faster than anticipated at the time of purchase,
then (to the extent that the required Prepayment Premiums are not received or
are distributable to a different class of certificates) the investors' actual
yield to maturity will be lower than that assumed at the time of purchase.
Conversely, in the case of any class of offered certificates purchased at a
discount, if principal payments on the Mortgage Loans occur at a rate slower
than anticipated at the time of purchase, then (to the extent that the required
Prepayment Premiums are not received or are distributable to a different class
of certificates) the investors' actual yield to maturity will be lower than that
assumed at the time of purchase. Prepayment Premiums, even if available and
distributable on the Class X Certificates or other classes of offered
certificates, may not be sufficient to offset fully any loss in yield on such
class or classes of certificates attributable to the related prepayments of the
Mortgage Loans.
PREPAYMENTS AND REPURCHASES
The yield to maturity on your certificates will depend, in significant
part, upon the rate and timing of principal payments on the mortgage loans. For
this purpose, principal payments include both voluntary prepayments, if
permitted, and involuntary prepayments, such as prepayments resulting from
casualty or condemnation, defaults and liquidations or repurchases upon breaches
of representations and warranties. Because the Notional Amount of the Class X
Certificates is based upon the Certificate Balances of the certificates with
principal balances, the yield to maturity on the Class X Certificates will be
extremely sensitive to the rate and timing of prepayments of principal.
The investment performance of your certificates may vary materially and
adversely from your expectations if the actual rate of prepayment on the
mortgage loans is higher or lower than you anticipate.
Voluntary prepayments, if permitted, generally require payment of a
Prepayment Premium. Nevertheless, we cannot assure you that the related
borrowers will refrain from prepaying their mortgage loans due to the existence
of a prepayment premium. Also, we cannot assure you that involuntary prepayments
will not occur.
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The rate at which voluntary prepayments occur on the mortgage loans will be
affected by a variety of factors, including:
- the terms of the mortgage loans;
- the length of any prepayment lockout period;
- the level of prevailing interest rates;
- the availability of mortgage credit;
- the applicable yield maintenance charges or prepayment premiums;
- the Master Servicer's or Special Servicer's ability to enforce those
charges or premiums;
- the occurrence of casualties or natural disasters; and
- economic, demographic, tax, legal or other factors.
No yield maintenance charge or prepayment premium will be required for
prepayments in connection with a casualty or condemnation unless, in the case of
most of the mortgage loans, an event of default has occurred and is continuing.
In addition, if the Mortgage Loan Seller repurchases any mortgage loan from the
trust due to breaches of representations or warranties, the repurchase price
paid will be passed through to the holders of the certificates with the same
effect as if the mortgage loan had been prepaid in part or in full, except that
no prepayment premium or yield maintenance charge would be payable. Such a
repurchase may therefore adversely affect the yield to maturity on your
certificates.
BORROWER DEFAULT
The rate and timing of delinquencies or defaults on the mortgage loans will
affect:
- the aggregate amount of distributions on the offered
certificates;
- their yield to maturity;
- the rate of principal payments; and
- their weighted average life.
If losses on the mortgage loans exceed the aggregate principal amount of
the classes of certificates subordinated to a particular class, such class will
suffer a loss equal to the full amount of such excess (up to the outstanding
principal amount of such certificate).
If you calculate your anticipated yield based on assumed rates of defaults
and losses that are lower than the default rate and losses actually experienced
and such losses are allocable to your certificates, your actual yield to
maturity will be lower than the assumed yield. Under certain extreme scenarios,
such yield could be negative. In general, the earlier a loss borne by you on
your certificates occurs, the greater the effect on your yield to maturity.
Even if losses on the mortgage loans are not borne by your certificates,
those losses may affect the weighted average life and yield to maturity of your
certificates. This may be so because those losses lead to your certificates
having a higher percentage ownership interest in the trust and related
distributions of principal payments on the mortgage loans than would otherwise
have been the case. The effect on the weighted average life and yield to
maturity of your certificates will depend upon the characteristics of the
remaining mortgage loans.
Additionally, delinquencies and defaults on the mortgage loans may
significantly delay the receipt of distributions by you on your certificates,
unless P&I Advances are made to cover delinquent payments or the subordination
of another class of certificates fully offsets the effects of any such
delinquency or default.
BANKRUPTCY PROCEEDINGS
Under the Bankruptcy Code, the filing of a petition in bankruptcy by or
against a borrower will stay the sale of the real property owned by that
borrower, as well as the commencement or continuation of a foreclosure action.
In addition, if a court determines that the value of the mortgaged property is
less than the principal balance of the mortgage loan it secures, the court may
prevent a lender from foreclosing on the mortgaged property (subject to certain
protections available to the lender). As part of a restructuring plan, a
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court also may reduce the amount of secured indebtedness to the then-value of
the mortgaged property. Such an action would make the lender a general unsecured
creditor for the difference between the then-value and the amount of its
outstanding mortgage indebtedness. A bankruptcy court also may: (1) grant a
debtor a reasonable time to cure a payment default on a mortgage loan; (2)
reduce monthly payments due under a mortgage loan; (3) change the rate of
interest due on a mortgage loan; or (4) otherwise alter the mortgage loan's
repayment schedule.
Moreover, the filing of a petition in bankruptcy by, or on behalf of, a
junior lienholder may stay the senior lienholder from taking action to foreclose
on the junior lien. Additionally, the borrower's trustee or the borrower, as
debtor-in-possession, has certain special powers to avoid, subordinate or
disallow debts. In certain circumstances, the claims of the trustee may be
subordinated to financing obtained by a debtor-in-possession subsequent to its
bankruptcy.
Under the Bankruptcy Code, the lender will be stayed from enforcing a
borrower's assignment of rents and leases. The Bankruptcy Code also may
interfere with the Trustee's ability to enforce lockbox requirements. The legal
proceedings necessary to resolve these issues can be time consuming and may
significantly delay the receipt of rents. Rents also may escape an assignment to
the extent they are used by the borrower to maintain the mortgaged property or
for other court authorized expenses.
As a result of the foregoing, the Trustee's recovery with respect to
borrowers in bankruptcy proceedings may be significantly delayed, and the
aggregate amount ultimately collected may be substantially less than the amount
owed.
The bankruptcy of a major tenant may also adversely affect a borrower's
ability to make its mortgage loan payments. The Depositor is aware from
published reports that Edwards Theaters Circuit Inc. ("Edwards"), the tenant
with respect to the movie theater (the "Movie Theater") constituting the
Mortgaged Property securing one of the Conduit Mortgage Loans, representing 2.8%
of the Initial Pool Balance (the "Movie Theater Loan"), has filed for bankruptcy
protection. Although no payment default has occurred under the Movie Theater
Loan as of the Cut-off Date, the Depositor can make no assurance regarding the
tenant's future plans or financial condition.
The Movie Theater was built in 1998 using a megaplex format with 21
screens, an IMAX theater, stadium seating, and surround and digital sound
technology. It is located near a busy intersection on an outparcel in the
Ontario Mills Mall. According to information provided by Edwards, the Movie
Theater is the third highest grossing theater in the Edwards chain. As of the
Cut-off Date, the loan amount represents approximately 78.4% loan-to-cost, and
there is approximately $6.02 million cash equity. Based on the appraised value
(completed 9/14/99) of $29,250,000, the Cut-Off Date Balance represents a 74.9%
Loan to Value and market equity of approximately $7.354 million. The Borrower
under the Movie Theater Loan is a joint venture between Starwood Capital
(Starwood Opportunity Fund V) and Wasserman, Inc. Principals in the Borrower
have been developing, rehabilitating, purchasing, and maintaining a portfolio of
commercial real estate for approximately 35 years.
Subject to the limitations noted below, Bank of America has agreed to
indemnify the Trust for the benefit of the holders of the Offered Certificates,
per their respective entitlements, if any (as determined as described under
"Description of the Certificates --Distributions --Distributions of Prepayment
Premiums" in this prospectus supplement), for any Prepayment Premiums due, but
not received, in the event of a payment default relating to Edwards under the
Movie Theater Loan, and for the amount of the ultimate loss to any Offered
Certificateholder, if any, realized on the Movie Theater Loan following any
liquidation of such Mortgage Loan that results from such a default (regardless
when such loss is realized by such Offered Certificateholder). Bank of America's
indemnification obligation is subject to certain limitations. Amounts paid by
Bank of America pursuant to such indemnification obligation will be applied
first in respect of Prepayment Premiums and second to principal. The
indemnification obligation will expire upon the earlier to occur of (i) the date
that is three years after the date the property securing the Movie Theater Loan
is no longer included in the bankruptcy estate of Edwards and (ii) the date the
Movie Theater is leased to a tenant having a rating of "B" or better or the
equivalent from any nationally recognized rating agency. In addition, and in all
events, the total amount of the indemnification is limited to 10% of the
aggregate then outstanding principal balance of the Movie Theater Loan.
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ADVANCE INTEREST AND OTHER PAYMENTS
To the extent described in this prospectus supplement, the Master Servicer,
the Special Servicer or the Trustee, as applicable, will be entitled to receive
interest on unreimbursed Advances. This interest will generally accrue from the
date on which the related Advance is made or the related expense is incurred
through the date of reimbursement. In addition, under certain circumstances,
including delinquencies in the payment of principal and interest, a mortgage
loan will be specially serviced and the Special Servicer will be entitled to
compensation for special servicing activities. The right to receive interest on
Advances or special servicing compensation is senior to the rights of
certificateholders to receive distributions on the offered certificates. The
payment of interest on advances and the payment of compensation to the Special
Servicer may lead to shortfalls in amounts otherwise distributable on your
certificates.
LIMITED LIQUIDITY AND MARKET VALUE
Your certificates will not be listed on any securities exchange or traded
on the NASDAQ Stock Market, and there is currently no secondary market for your
certificates. While the Underwriter currently intends to make a secondary market
in the offered certificates, it is not obligated to do so. Accordingly, you may
not have an active or liquid secondary market for your certificates. Lack of
liquidity could result in a substantial decrease in the market value of your
certificates. Many other factors may affect the market value of your
certificates including the then-prevailing interest rates.
DIFFERENT TIMING OF MORTGAGE LOAN AMORTIZATION
As principal payments or prepayments are made on a mortgage loan that is
part of a pool of mortgage loans, the pool will be subject to more concentrated
risks with respect to the diversity of mortgaged properties, types of mortgaged
properties and number of borrowers, as described above. Classes that have a
later sequential designation or a lower payment priority are more likely to be
exposed to this concentration risk than are classes with an earlier sequential
designation or a higher priority. This is so because principal on the offered
certificates is generally payable in sequential order, and no class entitled to
distribution of principal generally receives principal until the principal
amount of the preceding class or classes entitled to receive principal have been
reduced to zero.
SUBORDINATION OF SUBORDINATE OFFERED CERTIFICATES
As described in this prospectus supplement, unless your certificates are
Class A-1A, Class A-2A, Class A-1B, Class A-2B, Class A-3B or Class X
Certificates, your rights to receive distributions of amounts collected or
advanced on or in respect of the mortgage loans will be subordinated to those of
the holders of the offered certificates with an earlier alphabetical
designation.
RISKS RELATED TO THE MORTGAGE LOANS
NATURE OF THE MORTGAGED PROPERTIES
The Mortgaged Properties consist solely of multifamily rental and
commercial properties. Commercial and multifamily lending is generally viewed as
exposing a lender to a greater risk of loss than lending on the security of one-
to four-family residences. This is because multifamily and commercial real
estate lending usually involves larger loans, and repayment is typically
dependent upon the successful operation of the related real estate project.
A large number of factors may adversely affect the net operating income and
property value of the mortgaged properties. Some of these factors relate to the
property itself, such as:
- the age, design and construction quality of the property;
- perceptions regarding the safety, convenience and
attractiveness of the property;
- the proximity and attractiveness of competing properties;
- the adequacy of the property's management and maintenance;
- increases in operating expenses;
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- an increase in the capital expenditures needed to maintain
the property or make improvements;
- a decline in the financial condition of a major tenant;
- an increase in vacancy rates; and
- a decline in rental rates as leases are renewed or entered
into with new tenants.
Operation of a multifamily or commercial property may also be affected by
circumstances outside the control of the borrower or lender, such as the quality
or stability of the surrounding neighborhood, the development of competing
projects or businesses, maintenance expenses (such as energy costs), and changes
in laws (such as the imposition of rent control or stabilization laws in the
case of multifamily rental properties, changes in the tax laws and retroactive
changes in building codes). If the cash flow from a particular property is
reduced (for example, if leases are not obtained or renewed, if tenant defaults
increase or rental rates decline or, in the case of a property occupied by its
owner, if the owner's business declines), the borrower's ability to repay the
loan may be impaired and the resale value of the particular property may
decline.
The borrowers' income would be adversely affected if tenants were unable to
pay rent, if space were unable to be rented on favorable terms or at all, or if
a significant tenant were to become a debtor in a bankruptcy case under the
United States Bankruptcy Code. For example, if any borrower were to relet or
renew the existing leases at rental rates significantly lower than expected
rates, then such lower rates would adversely affect borrower's funds from
operations. Changes in payment patterns by tenants may result from a variety of
social, legal and economic factors, such as the rate of inflation and
unemployment levels and may be reflected in the rental rates offered for
comparable space. In addition, upon reletting or renewing existing leases at
commercial properties, borrowers will likely be required to pay leasing
commissions and tenant improvement costs which may adversely affect cash flow
from the Mortgaged Property. See "Description of the Mortgage Pool -- Additional
Mortgage Loan Information -- Tenant Matters" herein.
Commercial properties represent security for 71.4% of the Initial Pool
Balance. Lending on commercial properties is generally perceived as involving
greater risk than lending on the security of multifamily residential properties,
and certain types of commercial properties are exposed to particular kinds of
risks. See "-- Risks Particular to Retail Properties", "-- Risks Particular to
Senior Housing/Health Care Properties", "-- Risks Particular to Hotels",
"-- Risks Particular to Office Properties" and "-- Risks Particular to
Mini-Storage Facilities" below.
SEASONING OF THE PORTFOLIO MORTGAGE LOANS
Many of the Portfolio Mortgage Loans are "seasoned" mortgage loans, having
been outstanding between 20 months and 85 months. The weighted average time that
the term Portfolio Mortgage Loans have been outstanding is 50 months. While
seasoned mortgage loans have the benefit of established payment histories, there
are a number of risks associated with seasoned mortgage loans that are not
present, or present to a lesser degree, with more recently originated mortgage
loans. For example:
- property values and the surrounding neighborhood may have changed
dramatically since origination;
- for most properties, no recent site inspections have been conducted to
verify the condition of the mortgaged property;
- origination standards may have been significantly different;
- the market for any related businesses may have changed significantly
from the time the mortgage loan was originated;
- the current financial performance of the related borrower, its
business, or the related mortgaged property in general, may be
significantly different than at origination, and debt service coverage
ratios and tests established at origination may no longer by
meaningful.
Among other things, such factors make it difficult to estimate the current
value on the related mortgaged property, and estimated values of mortgaged
properties discussed in this prospectus supplement, to the extent based upon or
extrapolated from general market data, may not be accurate in the case of
particular mortgaged properties.
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Further, some of the mortgage loans have experienced delinquencies, or been
modified, since origination and accordingly have not been current during the
full seasoning term.
MANAGEMENT
The successful operation of a real estate project is dependent on the
performance and viability of the property manager of such project. The property
manager is responsible for responding to changes in the local market, planning
and implementing the rental structure or the business plan, as the case may be,
and ensuring that maintenance and capital improvements can be carried out in a
timely fashion. Accordingly, by controlling costs, providing appropriate service
to tenants and seeing to the maintenance of improvements, sound property
management can improve occupancy rates/business and cash flow, reduce operating
and repair costs and preserve building value. On the other hand, management
errors can, in some cases, impair the long term viability of a real estate
project.
There are 18 groups of Mortgaged Properties that have the same or related
management. No such group represents security for more than 7.5% of the Initial
Pool Balance.
BALLOON PAYMENTS
One hundred fifty-three of the Mortgage Loans, which represent 97.9% of the
Initial Pool Balance, will have substantial payments (that is, Balloon Payments)
due at their respective stated maturities, in each case unless the Mortgage Loan
is previously prepaid. Ninety-two of the Balloon Loans, representing in the
aggregate 70.0% of the Initial Pool Balance, will have Balloon Payments due
during the period from November 2008 through November 2009.
Mortgage Loans with Balloon Payments involve a greater risk to the lender
than fully amortizing loans, because the ability of a borrower to make a Balloon
Payment typically will depend upon its ability either to refinance the loan or
to sell the related Mortgaged Property at a price sufficient to permit the
borrower to make the Balloon Payment. Circumstances that will affect the ability
of the borrower to accomplish either of these goals at the time of attempted
sale or refinancing include:
- the level of available mortgage rates;
- the fair market value of the property;
- the borrower's equity in the related property;
- the financial condition of the borrower and operating
history of the property;
- tax laws;
- prevailing economic conditions; and
- the availability of credit for multifamily or commercial
properties, as the case may be.
See "Description of the Mortgage Pool -- Certain Terms and Conditions of
the Mortgage Loans" and "-- Additional Mortgage Loan Information" in this
prospectus supplement and "Risk Factors -- Certain Factors Affecting
Delinquency, Foreclosure and Loss of the Mortgage Loans -- Increased Risk of
Default Associated with Balloon Payments" in the accompanying prospectus.
RISKS PARTICULAR TO MULTIFAMILY PROPERTIES
Multifamily properties secure 57 of the Mortgage Loans, representing 26.6%
of the Initial Pool Balance. All of the Mortgage Loans secured by Multifamily
Properties are contained in Group A.
Several factors may adversely affect the value and successful operation of
a multifamily property, including:
- the physical attributes of the apartment building (e.g.,
its age, appearance and construction quality);
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- the location of the property (e.g., a change in the
neighborhood over time);
- the ability and willingness of management to provide
adequate maintenance and insurance;
- the types of services the property provides;
- the property's reputation;
- the level of mortgage interest rates (which may encourage
tenants to purchase rather than lease housing);
- the presence of competing properties;
- adverse local or national economic conditions; and
- state and local regulations.
RISKS PARTICULAR TO RETAIL PROPERTIES
Retail properties secure 51 of the Mortgage Loans, representing 34.4% of
the Initial Pool Balance.
Several factors may adversely affect the value and successful operation of
a retail property, including:
- changes in consumer spending patterns, local competitive
conditions (such as the supply of retail space or the
existence or construction of new competitive shopping
centers or shopping malls);
- alternative forms of retailing (such as direct mail, video
shopping networks and internet web sites which reduce the
need for retail space by retail companies);
- the quality and philosophy of management;
- the attractiveness of the property to tenants and their
customers or clients;
- the public perception of the safety of customers at
shopping malls and shopping centers; and
- the need to make major repairs or improvements to satisfy
the needs of major tenants.
The general strength of retail sales also directly affects retail
properties. The retailing industry is currently undergoing consolidation due to
many factors, including growth in discount and alternative forms of retailing.
If the sales by tenants in the Mortgaged Properties that contain retail space
were to decline, the rents that are based on a percentage of revenues may also
decline, and tenants may be unable to pay the fixed portion of their rents or
other occupancy costs. The cessation of business by a significant tenant can
adversely affect a retail property, not only because of rent and other factors
specific to such tenant, but also because significant tenants at a retail
property play an important part in generating customer traffic and making a
retail property a desirable location for other tenants at such property. In
addition, certain tenants at retail properties may be entitled to terminate
their leases if an anchor tenant fails to renew or terminates its lease, becomes
the subject of a bankruptcy proceeding or ceases operations at such property.
RISKS PARTICULAR TO SKILLED NURSING/ASSISTED LIVING PROPERTIES
Properties operated as skilled nursing facilities or assisted living
facilities secure 4 of the Mortgage Loans, which represent approximately 4.0% of
the Initial Pool Balance. Providers of long-term nursing care and other medical
services are subject to federal and state laws that relate to the adequacy of
medical care, distribution of pharmaceuticals, rate setting, equipment,
personnel, operating policies and additions to facilities and services. To the
extent dependent on patients whose fees are reimbursed by private insurers, such
providers are also subject to the reimbursement policies of such insurers. In
addition, facilities where such care or other medical services are provided may
be subject to periodic inspection by governmental authorities to determine
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compliance with various standards necessary for continued licensing under state
law and continued participation in the Medicaid and Medicare reimbursement
programs.
In addition to risks generally associated with commercial real estate, the
following are some of the other conditions that can adversely impact the
performance of healthcare-related facilities:
- most healthcare-related facilities (including hospitals and
nursing facilities) receive significant revenues from
government reimbursement programs, primarily Medicaid and
Medicare, and payments under these programs are subject to
reductions as a result of statutory and regulatory changes,
changes in reimbursement methodologies, retroactive rate
adjustments, administrative rulings, policy interpretations,
delays by payment intermediaries and government funding
restrictions;
- governmental payors have employed cost-containment measures
that limit payments to healthcare providers;
- legislative efforts to further decrease government
healthcare expenditures are expected to continue and could
have a material adverse impact upon the healthcare-related
facilities;
- non-government payors have sought to transfer the financial
risk of treating patients to providers and
healthcare-related facilities, which has created
profitability pressures in the healthcare industry;
- the care delivery, billing and reimbursement processes may
be particularly affected by any year 2000 computer problems
experienced by payors or the healthcare-related facilities;
- healthcare-related facilities are highly regulated by
federal, state, commonwealth and local law, and these
regulations could increase the cost of operation and limit
growth;
- failure to comply with any of the numerous laws and
regulations applicable to healthcare-related facilities
could also result in monetary penalties, civil or criminal
sanctions or appointment of a receiver or temporary manager,
the suspension or termination of the operator from
government payment programs, termination of payments or
other actions that could severely impair the ability to make
payments on a mortgage loan; and
- continued focus by government authorities on abuses by
healthcare-related facilities and providers for billing
processes, filings, and relationships among providers,
suppliers, and facilities could increase the possibility
that a healthcare facility's operations are found to be
violative of the law.
Federal and state laws and regulations generally prohibit Medicare and
Medicaid reimbursements to any person other than the provider of the related
medical goods and services. Accordingly, after a foreclosure on a
healthcare-related facility, none of the trustee, the master servicer, the
special servicer or a subsequent lessee or operator of the mortgaged property
would receive directly any federal or state government reimbursement payments
for services furnished at the facility prior to foreclosure. This would increase
the risk of loss on a healthcare-related facility after foreclosure.
Furthermore, if there is a foreclosure or other proposed transfer of a
healthcare-related facility, the trustee (or special servicer) or a purchaser in
a foreclosure sale or other transferee may have no rights under any required
licenses and regulatory approvals and may have to apply in its own right for
those licenses and approvals, which may be impossible to obtain. In addition,
healthcare-related facilities are generally "special purpose" properties that
cannot be readily converted to a new use. Transfers of healthcare-related
facilities are subject to regulatory approvals under state, commonwealth and in
some cases federal law not required for transfers of other types of commercial
operations and other types of real estate. All of these factors may adversely
affect the liquidation value of healthcare-related properties upon foreclosure.
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RISKS PARTICULAR TO OFFICE PROPERTIES
Office properties secure 18 of the Mortgage Loans, representing
approximately 12.5% of the Initial Pool Balance.
A large number of factors may adversely affect the value of office
properties, including:
- the quality of an office building's tenants;
- the physical attributes of the building in relation to
competing buildings (e.g., age, condition, design, access to
transportation and ability to offer certain amenities, such
as sophisticated building systems);
- the desirability of the area as a business location; and
- the strength and nature of the local economy (including
labor costs and quality, tax environment and quality of life
for employees).
In addition, there may be significant costs associated with tenant
improvements and concessions in connection with reletting office space.
Moreover, the cost of refitting office space for a new tenant is often higher
than the cost of refitting other types of property.
RISKS PARTICULAR TO HOTELS
Properties operated as hotels secure 7 of the Mortgage Loans, representing
approximately 11.6% of the Initial Pool Balance.
Various factors may adversely affect the economic performance of a hotel,
including:
- adverse economic and social conditions, either local,
regional or national (which may limit the amount that can be
charged for a room and reduce occupancy levels);
- the construction of competing hotels or resorts;
- continuing expenditures for modernizing, refurbishing, and
maintaining existing facilities prior to the expiration of
their anticipated useful lives;
- a deterioration in the financial strength or managerial
capabilities of the owner and operator of a hotel; and
- changes in travel patterns caused by changes in access,
energy prices, strikes, relocation of highways, the
construction of additional highways or other factors.
Because hotel rooms generally are rented for short periods of time, hotel
properties tend to respond more quickly to adverse economic conditions and
competition than do other commercial properties. In addition, the franchise
license may be owned by an entity operating the hotel and not the borrower or,
if the franchise license is owned by the borrower, the transferability of the
related franchise license agreement may be restricted and, in the event of a
foreclosure on a hotel property, the mortgagee may not have the right to use the
franchise license without the franchisor's consent. Furthermore, the ability of
a hotel to attract customers, and some of such hotel's revenues, may depend in
large part on its having a liquor license. Such a license may not be
transferable.
RISKS PARTICULAR TO MOBILE HOME PARK PROPERTIES
Mobile home park properties ("Mobile Home Properties") secure 5 of the
Mortgage Loans representing 2.0% of the Initial Pool Balance. Significant
factors determining the value of Mobile Home Properties are generally similar to
the factors affecting the value of multifamily residential properties. In
addition, the Mobile Home Properties are special purpose properties that could
not be readily converted to general residential, retail or office use. In fact,
certain states also regulate changes in mobile home park use and require that
the landlord give written notice to its tenants a substantial period of time
prior to the projected change. Consequently, if the operation of any of the
Mobile Home Properties becomes unprofitable such that the borrower becomes
unable to meet its obligation on the related Mortgage Loan, the liquidation
value of that Mobile Home Property may be substantially less, relative to the
amount owing on the Mortgage Loan, than would be the case if the Mobile Home
Property were readily adaptable to other uses.
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RISKS PARTICULAR TO MINI-STORAGE FACILITIES
Properties operated as mini-storage facilities secure 4 of the Mortgage
Loans, representing security for approximately 1.4% of the Initial Pool Balance.
Mini-storage (or self-storage) properties are considered vulnerable to
competition, because both acquisition costs and break-even occupancy are
relatively low. The conversion of mini-storage facilities to alternative uses
generally requires substantial capital expenditures. Thus, if the operation of
any of the mini-storage Mortgaged Properties becomes unprofitable such that the
borrower becomes unable to meet its obligations on the related Mortgage Loan,
the liquidation value of that mini-storage Mortgaged Property may be
substantially less, relative to the amount owning on the Mortgage Loan, than
would be the case if the mini-storage Mortgaged Property were readily adaptable
to other uses. Tenant privacy, anonymity and efficient access may heighten
environmental risks. No environmental assessment of a Mortgaged Property
included an inspection of the contents of the self-storage units included in the
self-storage Mortgaged Properties. We cannot assure you that all of the units
included in the mini-storage Mortgaged Properties are free from hazardous
substances, or that they will remain so in the future.
RISKS OF SUBORDINATE FINANCING
The existence of subordinated indebtedness encumbering a Mortgaged Property
may increase the difficulty of refinancing the related Mortgage Loan at maturity
and the possibility that reduced cash flow could result in deferred maintenance.
Also, in the event that the holder of the subordinated debt files for bankruptcy
or is placed in involuntary receivership, foreclosure on the Mortgaged Property
could be delayed.
Conduit Mortgage Loans. We are aware that 4 of the mortgaged properties
relating to the Conduit Mortgage Loans, representing 3.5% of the Initial Pool
Balance, were encumbered by subordinate debt as of the Cut-off Date. Although
the Conduit Mortgage Loans generally either prohibit the related borrower from
encumbering the Mortgaged Property with additional secured debt or require the
consent of the holder of the first lien prior to so encumbering such property, a
violation of such prohibition may not become evident until the related Mortgage
Loan otherwise defaults. In addition, the related borrower may be permitted to
incur additional indebtedness secured by furniture, fixtures and equipment, and
to incur additional unsecured indebtedness. Ten of the mortgage loans,
representing 15.3% of the Initial Pool Balance, permit unsecured indebtedness
subject to certain conditions. See "Certain Legal Aspects of Mortgage
Loans -- Subordinate Financing" in the accompanying prospectus.
Portfolio Mortgage Loans. We are aware that 4 of the mortgaged properties
relating to the Portfolio Mortgage Loans, representing 1.2% of the Initial Pool
Balance, were encumbered by subordinate debt as of the Cut-off Date. However,
several of the Portfolio Mortgage Loans do not prohibit the related mortgagor
from incurring subordinate debt in the future. The existence of subordinated
indebtedness encumbering a mortgaged property may increase the difficulty of
refinancing the related mortgage loan at maturity and the possibility that
reduced cash flow could result in deferred maintenance. Also, in the event that
the holder of the subordinated debt files for bankruptcy or is placed in
involuntary receivership, foreclosure on the mortgaged property could be
delayed. Regardless of whether the terms of a mortgage loan prohibit the
incurrence of subordinate debt, the related borrower may be permitted to incur
additional indebtedness secured by furniture, fixtures and equipment, and to
incur additional unsecured indebtedness. See "Certain Legal Aspects of Mortgage
Loans -- Subordinate Financing" in the accompanying prospectus.
LIMITED RECOURSE
If a default occurs under any Conduit Mortgage Loan, recourse generally may
be had only against the specific properties and other assets that have been
pledged to secure the loan. Payment prior to maturity is consequently dependent
primarily on the sufficiency of the net operating income of the mortgaged
property. Payment at maturity is primarily dependent upon the market value of
the mortgaged property or the borrower's ability to refinance the property. Even
in the case of the Portfolio Mortgage Loans, of which 92.5% (by Cut-off Date
principal balance) are recourse loans, and the very limited cases where recourse
to a borrower is permitted by the loan documents relating to a Conduit Mortgage
Loan, the Depositor has not undertaken an evaluation of the financial condition
of such person.
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ENVIRONMENTAL CONSIDERATIONS
Conduit Mortgage Loans. An environmental site assessment (or an update of
a previously conducted assessment) was performed (generally in a manner
consistent with industry-wide standards) at each of the Mortgaged Properties
relating to a Conduit Mortgage Loan during or after May 1997. No such assessment
or update otherwise revealed any material adverse environmental condition or
circumstance at any Mortgaged Property, except such potentially material adverse
conditions or circumstances as described under "Description of the Mortgage
Pool -- Certain Underwriting Matters -- Environmental Assessments" in this
prospectus supplement. We cannot assure you, however, that such environmental
assessments identified all environmental conditions and risks. Nor can we assure
you that all recommended operations and maintenance plans recommended in
environmental assessments have been or will continue to be implemented.
Portfolio Mortgage Loans. The Mortgage Loan Seller has represented and
warranted in the Pooling Agreement with respect to each mortgaged property
relating to a Portfolio Mortgage Loan that there are no material adverse
environmental conditions existing at such mortgaged property at the Trust
Formation Date. Any breach of such warranty will result in an obligation to
repurchase the affected Portfolio Mortgage Loans, subject to a cure right as
described under "-- Representations and Warranties; Repurchases". Although we
are not aware of any such material adverse environmental conditions at the Trust
Formation Date, we otherwise cannot assure you that no such conditions that
would create a cure or repurchase obligation exist. Many of the Portfolio
Mortgage Loans are seasoned loans originated during a time when it was not
common practice for the originator of such loans to conduct environmental
assessments in connection with the origination of mortgage loans.
With respect to any material adverse conditions arising at such Mortgaged
Property after the Trust Formation Date, the Trust Fund will have the limited
benefit of an environmental insurance policy as described under Description of
the Mortgage Pool -- Portfolio Loan Environmental Policy".
LIMITATIONS ON ENFORCEABILITY OF CROSS-COLLATERALIZATION
As described under "Description of the Mortgage Pool -- General" herein,
the Mortgage Pool includes 4 sets of Cross-Collateralized Mortgage Loans, which
represent 12.8% of the Initial Pool Balance. Cross-collateralization
arrangements seek to reduce the risk that the inability of one or more of the
Mortgaged Properties securing any such set of Cross-Collateralized Mortgage
Loans (or any such Mortgage Loan with multiple Mortgaged Properties) to generate
net operating income sufficient to pay debt service will result in defaults and
ultimate losses. In addition, one or more of the related Mortgaged Properties
for certain sets of related Cross-Collateralized Mortgage Loans may be released
from the lien of the applicable Mortgage under the circumstances described under
"Description of the Mortgage Pool -- Certain Terms and Conditions of the
Mortgage Loans" in this prospectus supplement.
Certain related Cross-Collateralized Mortgage Loans have different
borrowers. Cross-collateralization arrangements involving more than one borrower
could be challenged as fraudulent conveyances by creditors of the related
borrower in an action brought outside a bankruptcy case or, if such borrower
were to become a debtor in a bankruptcy case, by the borrower's representative.
A lien granted by such a borrower entity could be avoided if a court were
to determine that:
(1) such borrower was insolvent when granted the lien, was rendered
insolvent by the granting of the lien or was left with inadequate capital,
or was not able to pay its debts as they matured; and
(2) such borrower did not receive fair consideration or reasonably
equivalent value when it allowed its mortgaged property or properties to be
encumbered by a lien securing the entire indebtedness.
Among other things, a legal challenge to the granting of the liens may
focus on the benefits realized by such borrower from the respective mortgage
loan proceeds, as well as the overall cross-collateralization. If a court were
to conclude that the granting of the liens was an avoidable fraudulent
conveyance, that court could
(1) subordinate all or part of the pertinent mortgage loan to existing
or future indebtedness of that borrower;
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(2) recover payments made under that mortgage loan; or
(3) take other actions detrimental to the holders of the certificates,
including, under certain circumstances, invalidating the mortgage loan or
the mortgages securing such cross-collateralization.
RELATED PARTIES
Certain groups of borrowers under the Mortgage Loans are affiliated or
under common control with one another. However, no such group of affiliated
borrowers are obligors on Mortgage Loans representing more than 4.6% of the
Initial Pool Balance. In addition, tenants in certain Mortgaged Properties also
may be tenants in other Mortgaged Properties, and certain tenants may be owned
by affiliates of the borrowers or otherwise related to or affiliated with a
borrower. There are also several cases in which a particular entity is a tenant
at multiple Mortgaged Properties, and although it may not be a Major Tenant at
any such property, it may be significant to the success of such properties.
In such circumstances, any adverse circumstances relating to a borrower or
tenant or a respective affiliate and affecting one of the related Mortgage Loans
or Mortgaged Properties could arise in connection with the other related
Mortgage Loans or Mortgaged Properties. In particular, the bankruptcy or
insolvency of any such borrower or tenant or respective affiliate could have an
adverse effect on the operation of all of the related Mortgaged Properties and
on the ability of such related Mortgaged Properties to produce sufficient cash
flow to make required payments on the related Mortgage Loans. For example, if a
person that owns or directly or indirectly controls several Mortgaged Properties
experiences financial difficulty at one Mortgaged Property, it could defer
maintenance at one or more other Mortgaged Properties in order to satisfy
current expenses with respect to the Mortgaged Property experiencing financial
difficulty. It could also attempt to avert foreclosure by filing a bankruptcy
petition that might have the effect of interrupting Monthly Payments for an
indefinite period on all the related Mortgage Loans. See "Certain Legal Aspects
of Mortgage Loans -- Bankruptcy Laws" in the accompanying prospectus.
In addition, a number of the borrowers under the Mortgage Loans are limited
or general partnerships. Under certain circumstances, the bankruptcy of the
general partner in a partnership may result in the dissolution of such
partnership. The dissolution of a borrower partnership, the winding-up of its
affairs and the distribution of its assets could result in an acceleration of
its payment obligations under the related Mortgage Loan.
GEOGRAPHIC CONCENTRATION
A concentration of Mortgaged Properties in a particular state or region
increases the exposure of the Mortgage Pool to any adverse economic developments
that may occur in such state or region, conditions in the real estate market
where the Mortgaged Properties securing the related Mortgage Loans are located,
changes in governmental rules and fiscal polices, acts of nature, including
floods, tornadoes and earthquakes (which may result in uninsured losses), and
other factors which are beyond the control of the borrowers. In this regard:
- 46 of the Mortgaged Properties, which constitute security
for 23.9% of the Initial Pool Balance, are located in
California.
- 23 of the Mortgaged Properties, which constitute security
for 11.7% of the Initial Pool Balance, are located in Texas.
- 16 of the Mortgaged Properties, which constitute security
for 7.8% of the Initial Pool Balance, are located in
Washington.
- 7 of the Mortgaged Properties, which constitute security for
7.1% of the Initial Pool Balance, are located in Nevada.
- 11 of the Mortgaged Properties, which constitute security
for 6.3% of the Initial Pool Balance, are located in
Arizona.
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No more than 6.1% of Initial Pool Balance is secured by Mortgaged
Properties located in any particular county in California.
SEISMIC RISKS
The mortgaged properties relating to 22 of the Portfolio Mortgage Loans,
representing 8.7% of the Initial Pool Balance, are located in California. In
general, the Portfolio Mortgage Loans do not require earthquake insurance.
Accordingly, the occurrence of an earthquake in California could result in
losses for which there would be no insurance or other form of recovery. Seismic
evaluations generally were not conducted in connection with the origination of
the Portfolio Mortgage Loans. However, the Mortgage Loan Seller has obtained a
seismic analysis as described under "Description of the Mortgage Pool -- Certain
Underwriting Matters -- Seismic Reviews."
OTHER CONCENTRATIONS
Concentrations in a pool of mortgage loans with larger than average
balances can result in losses that are more severe, relative to the size of the
pool, than would be the case if the aggregate balance of such pool were more
evenly distributed. In this regard:
- 46 Mortgage Loans have Cut-off Date Balances that are higher
than the average Cut-off Date Balance.
- The largest single Mortgage Loan, by Cut-off Date Balance,
represents approximately 7.5% of the Initial Pool Balance,
and the largest group of Cross-Collateralized Mortgage
Loans, by Cut-off Date Balances, represents in the aggregate
approximately 4.4% of the Initial Pool Balance.
- The ten largest Mortgage Loans, or groups of
Cross-Collateralized Mortgage Loans, have Cut-off Date
Balances that represent in the aggregate approximately 34.4%
of the Initial Pool Balance.
CHANGES IN CONCENTRATIONS
As payments in respect of principal (including payments in the form of
voluntary principal prepayments, Liquidation Proceeds and the repurchase prices
for any Mortgage Loans repurchased due to breaches of representations or
warranties) are received with respect to the Mortgage Loans, the remaining
Mortgage Loans as a group may exhibit increased concentration with respect to
the type of properties, property characteristics, number of borrowers and
affiliated borrowers and geographic location. Because principal on the
Sequential Pay Certificates is payable in sequential order, Classes that have a
lower priority with respect to the payment of principal are relatively more
likely to be exposed to any risks associated with changes in concentrations.
PREPAYMENT PREMIUMS
Conduit Mortgage Loans. Approximately 94.7% of the Conduit Mortgage Loans
(by Cut-off Date principal balance) generally permit defeasance only, and
prohibit any voluntary principal prepayment until two or three months prior to
the maturity date of the Mortgage Loan. The remaining approximately 5.4% of the
Conduit Mortgage Loans permit voluntary principal prepayments during certain
periods only upon the payment of a Prepayment Premium. See "Description of the
Mortgage Pool -- Certain Terms and Conditions of the Mortgage
Loans -- Prepayment Provisions" in this prospectus supplement. Any Prepayment
Premiums actually collected on the remaining Conduit Mortgage Loans, which
generally permit voluntary prepayments during particular periods and, depending
on the period, require the payment of a Prepayment Premium with such prepayment,
will be distributed among the respective Classes of the REMIC Regular
Certificates in the amounts and in accordance with the priorities described in
this prospectus supplement under "Description of the
Certificates -- Distributions -- Distributions of Prepayment Premiums". The
Depositor, however, makes no representation as to the collectibility of any
Prepayment Premium.
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Portfolio Mortgage Loans. Most of the Portfolio Mortgage Loans do not
effectively prohibit principal prepayments either because they do not contain
any prohibition or because the related Lock-Out Period has expired. However, all
of the Portfolio Mortgage Loans, representing 19.5% of the Initial Pool Balance,
require that any voluntary principal prepayment be accompanied by a Prepayment
Premium (except during the Open Period, if any). The formulas for determining
the applicable Prepayment Premium differ widely among the mortgage loans. See
"Description of the Mortgage Pool -- Certain Terms and Conditions of the
Mortgage Loans -- Prepayment Provisions" in this prospectus supplement.
Prepayment Premiums actually collected on the mortgage loans will be distributed
as described under "Description of the Certificates -- Distributions --
Prepayment Premiums" in this prospectus supplement.
See "Servicing of the Mortgage Loans -- Modifications, Waivers, Amendments
and Consents" herein and "Certain Legal Aspects of Mortgage Loans -- Default
Interest and Limitations on Prepayments" in the Prospectus. See "Description of
the Mortgage Pool -- Assignment of the Mortgage Loans; Repurchases" and
"-- Representations and Warranties; Repurchases", "Servicing of the Mortgage
Loans -- Sale of Defaulted Mortgage Loans" and "Description of the
Certificates -- Termination" in this prospectus supplement.
Generally. Provisions requiring Prepayment Premiums may not be enforceable
in some states and under federal bankruptcy law. Those provisions also may
constitute interest for usury purposes. Accordingly, we cannot assure you that
the obligation to pay a Prepayment Premium will be enforceable. Also, we cannot
assure you that foreclosure proceeds will be sufficient to pay an enforceable
Prepayment Premium. Additionally, although the collateral substitution
provisions related to defeasance do not have the same effect on the
certificateholders as prepayment, we cannot assure you that a court would not
interpret those provisions as requiring a Prepayment Premium. In certain
jurisdictions those collateral substitution provisions might therefore be deemed
unenforceable under applicable law, or usurious.
We also note the following with respect to Prepayment Premiums:
- Liquidation Proceeds recovered in respect of any defaulted
Mortgage Loan will, in general, be applied to cover
outstanding Advances prior to being applied to cover any
Prepayment Premium due in connection with the liquidation of
such Mortgage Loan.
- The Special Servicer may waive a Prepayment Premium in
connection with obtaining a pay-off of a defaulted Mortgage
Loan.
- No Prepayment Premium will be payable in connection with any
repurchase of a Mortgage Loan by the Mortgage Loan Seller
for a material breach of representation or warranty on the
part of the Mortgage Loan Seller or any failure to deliver
documentation relating thereto.
- No Prepayment Premium will be payable in connection with the
purchase of all of the Mortgage Loans and any REO Properties
by the Master Servicer or any holder or holders of
Certificates evidencing a majority interest in the
Controlling Class in connection with the termination of the
Trust.
- No Prepayment Premium will be payable in connection with the
purchase of defaulted Mortgage Loans by the Master Servicer,
Special Servicer or any holder or holders of Certificates
evidencing a majority interest in the Controlling Class.
See "Servicing of the Mortgage Loans -- Modifications, Waivers, Amendments
and Consents" herein and "Certain Legal Aspects of Mortgage Loans -- Default
Interest and Limitations on Prepayments" in the accompanying prospectus. See
"Description of the Mortgage Pool -- Assignment of the Mortgage Loans;
Repurchases" and "-- Representations and Warranties; Repurchases", "Servicing of
the Mortgage Loans -- Sale of Defaulted Mortgage Loans" and "Description of the
Certificates -- Termination" in this prospectus supplement.
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TAX CONSIDERATIONS RELATED TO FORECLOSURE
If the Trust Fund were to acquire a mortgaged property subsequent to a
default on the related mortgage loan pursuant to a foreclosure or deed in lieu
of foreclosure, the Special Servicer would be required to retain an independent
contractor to operate and manage the mortgaged property. Among other things, the
independent contractor would not be permitted to perform construction work on
the mortgaged property unless such construction generally was at least 10%
complete at the time default on the related mortgage loan became imminent. In
addition, any net income from such operation and management, other than
qualifying "rents from real property" (as defined in Section 856(d) of the
Internal Revenue Code of 1986, as amended (the "Code")), or any rental income
based on the net profits of a tenant or sub-tenant or allocable to a service
that is non-customary in the area and for the type of building involved, will
subject the Trust Fund to federal (and possibly state or local) tax on such
income at the highest marginal corporate tax rate (currently 35%), thereby
reducing net proceeds available for distribution to Certificateholders.
LEASEHOLD RISKS
Seven mortgage loans, representing approximately 7.9% of the Initial Pool
Balance, are secured primarily by a mortgage on a ground lease. Leasehold
mortgages are subject to certain risks not associated with mortgage loans
secured by the fee estate of the mortgagor. The most significant of these risks
is that the ground lease may terminate if, among other reasons, the ground
lessee breaches or defaults in its obligations under the ground lease or there
is a bankruptcy of the ground lessee or the ground lessor. Accordingly, a
leasehold mortgagee may lose the collateral securing its leasehold mortgage. In
addition, although the consent of the ground lessor generally will not be
required for foreclosure, the terms and conditions of a leasehold mortgage are
subject to the terms and conditions of the ground lease, and the rights of a
ground lessee or a leasehold mortgagee with respect to, among other things,
insurance, casualty and condemnation will be governed by the provisions of the
ground lease.
ZONING AND BUILDING CODE COMPLIANCE
The Mortgage Loan Seller has not examined whether the use and operation of
the mortgaged properties related to the Portfolio Mortgage Loans were in
compliance with all applicable zoning, land-use, environmental, building, fire
and health ordinances, rules, regulations and orders applicable to such
mortgaged properties at the time such mortgage loans were originated.
LIMITED INFORMATION
Conduit Mortgage Loans. The information set forth in this prospectus
supplement with respect to the Conduit Mortgage Loans is derived principally
from one or more of the following sources:
- A review of the available credit and legal files relating to
the Mortgage Loans.
- Inspections of the Mortgaged Properties related to the
Conduit Mortgage Loans undertaken by or on behalf of the
Mortgage Loan Seller.
- Unaudited operating statements for the Mortgaged Properties
related to the Conduit Mortgage Loans supplied by the
borrowers.
- Appraisals for the Mortgaged Properties related to the
Conduit Mortgage Loans that generally were performed at
origination (which appraisals were used in presenting
information regarding the values of such Mortgaged
Properties as of the Cut-off Date under "Description of the
Mortgage Pool" and under Annex A for illustrative purposes
only).
- Information supplied by entities from which the Mortgage
Loan Seller acquired, or which currently service, certain of
the Conduit Mortgage Loans.
Also, several Conduit Mortgage Loans constitute acquisition financing.
Accordingly, limited or no operating information is available with respect to
the related Mortgaged Property. All of the Conduit Mortgage Loans were
originated during the preceding 36 months.
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Portfolio Mortgage Loans. The information set forth in this prospectus
supplement with respect to the Portfolio Mortgage Loans is derived principally
from one or more of the following sources:
- A partial review of the available credit and legal files
relating to the Portfolio Mortgage Loans.
- Inspections of the Mortgaged Properties related to the
Portfolio Mortgage Loans undertaken by or on behalf of the
originators of the Portfolio Mortgage Loans, and inspections
of a sampling of the mortgaged properties conducted on
behalf of the Mortgage Loan Seller.
- Appraisals of the Mortgaged Properties related to the
Portfolio Mortgage Loans that generally were performed at
origination or other source documents or information
provided by the Mortgage Loan Seller (appraisal values and
compilations based on appraisals used in this prospectus
supplement are based on such appraisals, documents and/or
information).
- Information supplied by entities from which the Mortgage
Loan Seller acquired, or which currently service, certain of
the Portfolio Mortgage Loans.
- Broker price opinions.
Because many of the Portfolio Mortgage Loans are seasoned loans, the
information from many of these sources may be out of date and we cannot assure
you that it is accurate or complete with respect to the Portfolio Mortgage Loans
as they exist on the date hereof. We note that delinquency data on the Portfolio
Mortgage Loans generally has been compiled only since approximately January 1,
1994. In addition, with only very limited exceptions, the Mortgage Loan Seller
has not undertaken any inspection or other form of assessment of any Mortgaged
Property. In particular, it has made no attempt to determine whether any
Mortgaged Property related to the Portfolio Mortgage Loans is in compliance with
applicable laws.
As described in this prospectus supplement under "Representations and
Warranties; Repurchases," the Mortgage Loan Seller has made certain
representations and warranties about the Portfolio Mortgage Loans. While the
Mortgage Loan Seller has no reason to believe that there is breach of
representations or warranties with respect to any Portfolio Mortgage Loans, or
that information in this prospectus supplement with respect to such mortgage
loans is incorrect, a more complete review of mortgage files might have revealed
such a breach or inaccuracy. Any material breach of representation or warranty,
if not cured by the Mortgage Loan Seller, may require the Mortgage Loan Seller
to repurchase the applicable Portfolio Mortgage Loan, having the same impact on
certificateholders as a prepayment.
LITIGATION
Certain borrowers and the principals of certain borrowers and/or managers
may have been involved in bankruptcy or similar proceedings or have otherwise
been parties to real estate-related litigation.
There may also be other legal proceedings pending and, from time to time,
threatened against the borrowers and their affiliates relating to the business
of or arising out of the ordinary course of business of the borrowers and their
affiliates. We cannot assure you that such litigation will not have a material
adverse effect on the distributions to Certificateholders.
OTHER RISKS
SEE "RISK FACTORS" IN THE ACCOMPANYING PROSPECTUS FOR A DESCRIPTION OF
CERTAIN OTHER RISKS AND SPECIAL CONSIDERATIONS THAT MAY BE APPLICABLE TO YOUR
CERTIFICATES AND THE MORTGAGE LOANS.
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DESCRIPTION OF THE MORTGAGE POOL
GENERAL
The Mortgage Pool consists of 111 conventional, multifamily and commercial
mortgage loans originated by Bank of America, N.A. (or its predecessor,
NationsBank, N.A., or its conduit participants) (the "Conduit Mortgage Loans"),
representing approximately 80.5% of the Mortgage Pool, and 48 conventional,
multifamily and commercial loans originated prior to the Merger by Bank of
America NT&SA (or its predecessor institutions) (the "Portfolio Mortgage Loans"
and, together with the Conduit Mortgage Loans, the "Mortgage Loans"),
representing approximately 19.5% of the Mortgage Pool. The Mortgage Loans have
an aggregate Cut-off Date Balance of $771,922,444 (the "Initial Pool Balance"),
subject to a variance of plus or minus 5%. See "Description of the Trust Funds"
and "Certain Legal Aspects of Mortgage Loans" in the prospectus. The Mortgage
Loans comprise two separate groups, Group A and Group B (each, a "Group"). Group
A will consist of all 111 Conduit Mortgage Loans and 12 Portfolio Mortgage
Loans, and Group B will consist of the remaining 36 Mortgage Loans. The Group A
Certificate Principal Distribution Amount first will be paid to the Class A-1A,
and Class A-2A Certificates, in that order, until the Certificate Balance of
each such Class is reduced to zero.
The "Cut-off Date Balance" of each Mortgage Loan is the unpaid principal
balance thereof as of August 1, 2000 (the "Cut-off Date"), after application of
all payments of principal due on or before such date, whether or not received.
All numerical information provided herein with respect to the Mortgage Loans is
provided on an approximate basis. All weighted average information provided
herein with respect to the Mortgage Loans reflects weighting by related Cut-off
Date Balance. All percentages of the Mortgage Pool, or of any specified
sub-group thereof, referred to herein without further description are
approximate percentages by aggregate Cut-off Date Balance.
Each Mortgage Loan is evidenced by a promissory note (a "Mortgage Note")
and secured by a mortgage, deed of trust or other similar security instrument (a
"Mortgage") that creates a first mortgage lien on a fee simple and/or leasehold
interest in real property (a "Mortgaged Property"). Each Mortgaged Property is
improved by (i) an apartment building or complex consisting of five or more
rental living units or a mobile home park (a "Multifamily Mortgaged Property";
and any Mortgage Loan secured thereby, a "Multifamily Loan") (62 Mortgage Loans,
representing 28.6% of the Initial Pool Balance), or (ii) a retail shopping mall
or center, an office building or complex, a hotel, a health care facility, an
industrial building, a self storage facility or a theater (a "Commercial
Mortgaged Property"; and any Mortgage Loan secured thereby, a "Commercial Loan")
(97 Mortgage Loans, representing 71.4% of the Initial Pool Balance).
Four sets of Mortgage Loans contain Mortgage Loans (the
"Cross-Collateralized Mortgage Loans") that are, solely as among such Mortgage
Loans in such particular set, cross-defaulted and cross-collateralized with each
other. The 4 sets of related Cross-Collateralized Mortgage Loans represent 12.8%
of the Initial Pool Balance. Each of the Cross-Collateralized Mortgage Loans is
evidenced by a separate Mortgage Note and secured by a separate Mortgage, which
Mortgage contains provisions creating the relevant cross-collateralization and
cross-default arrangements. See Annex A hereto for information regarding the
Cross-Collateralized Mortgage Loans and see "Risk Factors -- Risks Related to
the Mortgage Loans -- Limitations on Enforceability of Cross-Collateralization"
in this prospectus supplement.
In general, with limited exception, the Conduit Mortgage Loans constitute
nonrecourse obligations of the related borrower. Upon any such borrower's
default in the payment of any amount due under the related Mortgage Loan, the
holder thereof may look only to the related Mortgaged Property or Properties for
satisfaction of the borrower's obligation. In addition, in the case of the
Portfolio Mortgage Loans (which generally do permit recourse to a borrower or a
guarantor) and in the case of certain Conduit Mortgage Loans where the loan
documents permit recourse to a borrower or guarantor, the Depositor has not
undertaken an evaluation of the financial condition of any such person, and
prospective investors should thus consider all of the Mortgage Loans to be
nonrecourse. None of the Mortgage Loans is insured or guaranteed by the United
States, any governmental entity or instrumentality, or any private mortgage
insurer. See "Risk Factors -- Risks Related to the Mortgage Loans -- Limited
Recourse" in this prospectus supplement.
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Forty-six of the Mortgaged Properties, which constitute security for
approximately 23.9% of the Initial Pool Balance, are located in California; 23
of the Mortgaged Properties, which constitute security for 11.7% of the Initial
Pool Balance, are located in Texas; 16 of the Mortgaged Properties, which
constitute security for 7.8% of the Initial Pool Balance, are located in
Washington; 7 of the Mortgaged Properties, which constitute security for 7.1% of
the Initial Pool Balance, are located in Nevada; and 11 of the Mortgaged
Properties, which constitute security for 6.3% of the Initial Pool Balance, are
located in Arizona. The remaining Mortgaged Properties are located throughout 24
other states, with no more than 5.4% of the Initial Pool Balance secured by
Mortgaged Properties located in any such other jurisdiction.
CERTAIN TERMS AND CONDITIONS OF THE MORTGAGE LOANS
Due Dates. With the exception of 3 Portfolio Mortgage Loans, representing
approximately 1.3% of the Initial Pool Balance, each of the Mortgage Loans
provides for scheduled payments of principal and interest ("Monthly Payments")
to be due on the first day of each month (as to each such Mortgage Loan, the
"Due Date").
Mortgage Rates; Calculations of Interest. All of the Mortgage Loans bear
interest at a rate per annum (a "Mortgage Rate") that is fixed for the remaining
term of the Mortgage Loan. As of the Cut-off Date, the Mortgage Rates of the
Mortgage Loans ranged from 6.770% per annum to 9.750% per annum, and the
weighted average Mortgage Rate of the Mortgage Loans was 7.892%. No Mortgage
Loan permits negative amortization or the deferral of accrued interest.
One hundred and thirteen Mortgage Loans (the "Actual/360 Mortgage Loans"),
which represent 81.0% of the Initial Pool Balance, accrue interest on the basis
of the actual number of days elapsed in the relevant month of accrual and a
360-day year (an "Actual/360 Basis"). Forty-five Mortgage Loans (the "30/360
Mortgage Loans"), which represent 18.8% of the Initial Pool Balance, accrue
interest on the basis of a 360-day year consisting of twelve 30-day months (a
"30/360 Basis"). One Mortgage Loan, which represents 0.23% of the Initial Pool
Balance, accrues interest on the actual number of days in the relevant month of
accrual and a 360-day year, except that during any year February will accrue
interest based upon 28 days in such month ("Actual 365/360 Basis"). The total
amount of the Monthly Payment for each Actual/360 Mortgage Loan and Actual
365/360 Mortgage Loan is determined as though the Mortgage Loan accrued interest
on a 30/360 Basis, and the portion of such Monthly Payment allocated to interest
is determined based on interest accrued in the preceding month on an Actual/360
Basis or Actual 365/360 Basis with the balance allocated to amortized principal.
As a result, the full amortization term is longer than would be the case if
calculated on a 30/360 Basis, and the Balloon Payment on any such Mortgage Loan
will be larger than would be the case if interest accrued on a 30/360 Basis.
Recourse. The Conduit Mortgage Loans are generally non-recourse loans,
while the Portfolio Mortgage Loans are generally recourse loans.
Most of the Portfolio Mortgage Loans, representing approximately 92.5% of
such Mortgage Loans (by Cut-off Date principal balance) are recourse obligations
of the related borrower. Upon any such borrower's default in the payment of any
amount due under the related Portfolio Mortgage Loan, the holder thereof may
look to other assets of the borrower in addition to the related Mortgaged
Property or Properties for satisfaction of any deficiency. Although most of the
loan documents permit recourse to a borrower or guarantor, the Depositor has not
undertaken current evaluation of the financial condition of any such person.
None of the Portfolio Mortgage Loans (or Conduit Mortgage Loans) is insured or
guaranteed by the United States, any governmental entity or instrumentality, or
any private mortgage insurer. Several states have laws that prohibit more than
one "judicial action" to enforce a mortgage obligation, and some courts have
construed the term "judicial action" broadly. Accordingly, the Pooling Agreement
will require the Special Servicer to obtain advice of counsel prior to enforcing
any of the Trust Fund's rights under any of the Portfolio Mortgage Loans that
include properties where the rule could be applicable. In addition, in the case
of a Portfolio Mortgage Loan secured by Mortgaged Properties located in multiple
states, the Special Servicer may be required to foreclose first on properties
located in states where such "one action" rules apply (and where non-judicial
foreclosure is permitted) before foreclosing on properties located in states
where judicial foreclosure is the
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only permitted method of foreclosure. See "Certain Legal Aspects of Mortgage
Loans -- Foreclosure" in the accompanying prospectus.
RECOURSE TO THE BORROWER -- PORTFOLIO MORTGAGE LOANS
% OF WEIGHTED WEIGHTED WEIGHTED
% OF INITIAL AVERAGE AVERAGED AVERAGE
NUMBER OF MORTGAGE AGGREGATE CUT-OFF POOL UNDERWRITING CUT-OFF DATE MORTGAGE
RECOURSE TO THE BORROWER MORTGAGE LOANS LOANS DATE BALANCE BALANCE DSCR LTV RATIO RATE
- ------------------------ -------------- -------- ----------------- ------- ------------ ------------ --------
Full................... 46 95.8% $139,459,381 92.5% 1.37 60.1% 8.158%
Partial(1)............. 2 4.2% 11,363,809 7.5% 1.28 59.1% 8.003%
--- ----- ------------ ----- ---- ---- -----
Total/Wtd. Avg. ....... 48 100.0% $150,823,190 100.0% 1.36 60.0% 8.146%
=== ===== ============ ===== ==== ==== =====
One of the partial recourse Portfolio Mortgage Loans representing 0.6% of
the aggregate initial balance of Group A is in Group A; the other partial
recourse Portfolio Mortgage Loan is in Group B and represents 6.6% of the
aggregate principal balance of Group B.
Amortization of Principal. 153 Mortgage Loans, which represent 97.9% of
the Initial Pool Balance, provide for monthly payments of principal based on
amortization schedules significantly longer than the respective remaining terms
thereof, thereby leaving substantial principal amounts due and payable (each
such loan, a "Balloon Loan," and each such payment, together with the
corresponding interest payment, a "Balloon Payment") on their respective
maturity dates, unless prepaid prior thereto. Six Mortgage Loans, which
represent 2.1% of the Initial Pool Balance, are fully amortizing loans.
The original term to stated maturity of each Mortgage Loan was between 60
and 223 months. The original amortization schedules of the Mortgage Loans
(calculated, in the case of Actual/360 and Actual 365/360 Mortgage Loans on a
30/360 Basis for the purposes of the accrual of interest) ranged from 120 to 360
months. As of the Cut-off Date, the remaining terms to stated maturity of the
Mortgage Loans will range from 2 to 212 months, and the weighted average
remaining term to stated maturity of the Mortgage Loans will be 102 months. As
of the Cut-off Date, the remaining amortization terms of the Mortgage Loans
(calculated on a 30/360 Basis for the accrual of interest) will range from 41 to
351 months, and the weighted average remaining amortization term (calculated on
a 30/360 Basis for purposes of the accrual of interest) of the Mortgage Loans
will be 302 months. See "Risk Factors -- Risks Related to the Mortgage
Loans -- Balloon Payments" in this prospectus supplement.
Prepayment Provisions. All of the Conduit Mortgage Loans provided as of
origination either (a) that voluntary prepayments were prohibited until a period
generally two or three months before the final payment date of such Mortgage
Loan, during which voluntary prepayments can be made without penalty, or (b) for
a sequence of three periods as follows:
(1) a period (a "Lock-out Period") during which voluntary principal
prepayments are prohibited, followed by
(2) a period (a "Prepayment Premium Period") during which any
voluntary principal prepayment be accompanied by a premium, penalty, or fee
(a "Prepayment Premium"), followed by
(3) a period (an "Open Period") during which voluntary principal
prepayments may be made without an accompanying Prepayment Premium.
Voluntary principal prepayments (after any Lock-out Period) may be made in
full or in part, subject to certain limitations and, during a Prepayment Premium
Period, payment of the applicable Prepayment Premium. As of the Cut-off Date,
the remaining Lock-out Periods for the Conduit Mortgage Loans ranged from 13
months to 166 months, with a weighted average remaining Lock-out Period of 103
months. As of the Cut-off Date, the Open Period for each Conduit Mortgage Loan
ranged from 2 months to 7 months prior to stated maturity with a weighted
average Open Period of 3 months. Prepayment Premiums on the Conduit Mortgage
Loans are generally calculated either on the basis of a yield maintenance
formula (subject, in certain instances, to a minimum equal to a specified
percentage of the principal amount prepaid) or as a
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percentage (which may decline over time) of the principal amount prepaid. The
prepayment terms of each of the Conduit Mortgage Loans are more particularly
described in Annex A to this prospectus supplement.
Any Lock-Out Periods once applicable to the Portfolio Mortgage Loans have
expired. Approximately 4 Portfolio Mortgage Loans have Open Periods that have
not expired, which range from 2 to 4 months. Prepayment Premiums, to the extent
applicable with respect to Portfolio Mortgage Loans, are more particularly
described in Annex A to this prospectus supplement.
As more fully described herein, Prepayment Premiums actually collected on
the Mortgage Loans will be distributed to the respective Classes of
Certificateholders in the amounts and priorities described under "Description of
the Certificates -- Distributions -- Distributions of Prepayment Premiums"
herein. The Depositor makes no representation as to the enforceability of the
provision of any Mortgage Loan requiring the payment of a Prepayment Premium or
as to the collectibility of any Prepayment Premium. See "Risk Factors -- Risks
Related to the Mortgage Loans -- Prepayment Premiums" in this prospectus
supplement and "Certain Legal Aspects of Mortgage Loans -- Default Interest and
Limitations on Prepayments" in the accompanying prospectus.
Defeasance. One hundred one Conduit Mortgage Loans, representing 76.2% of
the Initial Pool Balance and 94.7% of the Cut-off Date principal balance of the
Conduit Mortgage Loans, permit the applicable borrower at any time after a
specified period (the "Defeasance Lock-Out Period"), which is at least two years
from the Trust Formation Date, provided no event of default exists, to obtain a
release of a Mortgaged Property from the lien of the related Mortgage (a
"Defeasance Option"). None of the Portfolio Mortgage Loans provide for
defeasance. The borrower must meet certain conditions in order to exercise its
Defeasance Option. Among other conditions the borrower must pay on any Due Date
(the "Release Date"):
(1) all interest accrued and unpaid on the principal balance of the
Note to and including the Release Date
(2) all other sums, excluding scheduled interest or principal
payments, due under the Mortgage Loan and all other loan documents executed
in connection therewith and
(3) an amount (the "Collateral Substitution Deposit") that will be
sufficient to purchase direct non-callable obligations of the United States
of America providing payments (a) on or prior to, but as close as possible
to, all successive scheduled payment dates from the Release Date to the
related maturity date, (b) in amounts equal to the scheduled payments due
on such dates under the Mortgage Loan or the defeased amount thereof in the
case of a partial defeasance and (c) any costs and expenses incurred in
connection with the purchase of such U.S. government obligations.
In addition, the borrower must deliver a security agreement granting the
Trust Fund a first priority lien on the Collateral Substitution Deposit and
generally, an opinion of counsel to such effect. Simultaneously with such
actions, the related Mortgaged Property will be released from the lien of the
Mortgage Loan and the pledged U.S. government obligations (together with any
Mortgaged Property not released, in the case of a partial defeasance) will be
substituted as the collateral securing the Mortgage Loan. In general, a
successor borrower established or designated pursuant to the related loan
documents will assume all of the defeased obligations of a borrower exercising a
Defeasance Option under a Mortgage Loan and the borrower will be relieved of all
of the defeased obligations thereunder.
The Depositor makes no representation as to the enforceability of the
defeasance provisions of any Mortgage Loan.
"Due-on-Sale" and "Due-on-Encumbrance" Provisions. The Mortgage Loans
contain both "due-on-sale" and "due-on-encumbrance" clauses that in each case,
subject to certain limited exceptions, permit the holder of the Mortgage to
accelerate the maturity of the related Mortgage Loan if the borrower sells or
otherwise transfers or encumbers the related Mortgaged Property or prohibit the
borrower from doing so without consent of the holder of the Mortgage. See
"-- Additional Mortgage Loan Information -- Subordinate Financing" herein.
Certain of the Mortgage Loans permit transfer of the related Mortgaged Property
if certain specified conditions are satisfied or if the transfer is to a
borrower reasonably acceptable to
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the lender. The Master Servicer or the Special Servicer, as applicable, will
determine, in a manner consistent with the servicing standard described herein
under "Servicing of the Mortgage Loans -- General" and with the REMIC
Provisions, whether to exercise any right the holder of any Mortgage may have
under any such clause to accelerate payment of the related Mortgage Loan upon,
or to withhold its consent to, any transfer or further encumbrance of the
related Mortgaged Property; provided, however, that neither the Master Servicer
nor the Special Servicer shall waive any right it has, or grant any consent that
it may otherwise withhold, under any related "due-on-sale" or
"due-on-encumbrance" clause unless it: (1) shall have received written
confirmation from each Rating Agency that such action would not result in the
qualification, downgrade or withdrawal of the rating then assigned by such
Rating Agency to any Class of Certificates, such confirmation to be required in
the case of any waiver of rights under a related "due-on-sale" clause only if
the then-outstanding principal balance of the subject Mortgage Loan (together
with the then-outstanding aggregate principal balance of all other Mortgage
Loans to the same borrower or borrowers that are, to the actual knowledge of the
Master Servicer, affiliated) exceeds the applicable threshold amount for such
Rating Agency; and (2) shall have provided, at least five days prior to the
granting of such waiver or consent, to any majority Certificateholder of the
Controlling Class and, in the case of the Master Servicer, to the Special
Servicer, written notice of the matter and a written explanation of the
surrounding circumstances and, upon request made within such five-day period,
shall have discussed the matter with such majority Certificateholder of the
Controlling Class and, in the case of the Master Servicer, with the Special
Servicer. See "The Pooling and Servicing Agreements -- Due-on-Sale and
Due-on-Encumbrance Provisions" and "Certain Legal Aspects of Mortgage
Loans -- Due-on-Sale and Due-on-Encumbrance" in the accompanying prospectus.
SIGNIFICANT MORTGAGE LOANS
Certain of the larger Mortgage Loans or groups of Mortgage Loans (by
outstanding principal balance) are described below. Terms used below relating to
underwriting or property characteristics have the meaning assigned to such term
in Annex A.
THE 411 NORTH AKARD LOAN
The Loan. The Mortgage Loan (the "411 North Akard Loan") is secured by a
first mortgage encumbering a 9-story office building located in the central
business district of Dallas, Texas. The building sits on a 1.23-acre parcel of
land and contain 349,810 square feet of net rentable area and a six-level garage
containing 805 parking spaces. The buildout consists of 347,526 square feet of
office space (99.35% of net rentable area) that is entirely occupied by Bank of
America and 2,284 square feet of retail space (0.65% of net rentable area). Bank
of America's lease term expires on December 31, 2009 and it is co-terminous with
the loan term. Bank of America is AA- rated by S&P, Aa1 rated by Moody's, and AA
rated by Fitch. Originated in November 1999, the 411 North Akard Loan has a
principal balance as of the Cut-off Date of $26,313,039, representing 3.4% of
the Initial Pool Balance.
The 411 North Akard Loan was made to a new single-asset entity created by
the principals to receive the transfer of the collateral at closing from the
existing owner, SCI-ROEV Texas Partners, L.P., a Texas limited partnership. The
ultimate owners of the SCI and ROEV interest in the United States are various
foreign families; the Pirelli Family, Gemina, and Bozzo Group are major
stockholders in SCI S.p.A. SCI S.p.A. owns 99% of the stock of SCI/USA S.p.A.,
which owns 100% of stock of SCI Real Estate Development Limited, LTD, a New York
Corporation. Normal & customary carve-outs apply for the borrower and the
borrower principals, ROEV General, Inc., a Delaware Corporation and SCI Real
Estate Development, LTD, a New York corporation.
The 411 North Akard Loan has a remaining term of 111 months and matures on
November 1, 2009. The 411 North Akard may not be prepaid before October 1, 2009.
However, the 411 North Akard Loan is subject to defeasance with United States
Treasury obligations beginning twenty five months from the Trust Formation Date.
(The 411 North Akard Loan may be prepaid without the payment of a prepayment
penalty on the final two (2) scheduled payment dates.) The 411 North Akard Loan
is a ten-year loan on a 25-year amortization.
Additional terms and escrows for the 411 North Akard Loan are set forth in
Annex A.
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The Property. 99.35% of the net rentable area of the building on the
property is occupied by Bank of America. The building was constructed in 1964
and contains a 6-level underground garage. Bank of America uses the building to
conduct activities relating to online banking, retail loans and customer
service. The building is located near the new Dart rail system that runs through
the heart of downtown Dallas.
Lock Box Account. A hard lock box was established at closing. All revenue
from the tenants in excess of the amount necessary to pay debt service and
required reserves will accrue for the benefit to the borrower and, provided no
event of default shall have occurred, the excess will be returned to the
borrower at the end of each month. If at any time the debt service coverage
ratio falls below 1.20x over a three month trailing period, the lender will
require a cash sweep of all cash flow, after debt service, escrow reserves and
all related operating expenses, as additional collateral for the loan, up to an
amount equaling 9-months of debt service. In the event the debt service falls
below a 1.10x for any month(s), the lender may review and terminate the property
manager.
Ground Lease. An escrow totaling approximately thirty-six (36) months
advance ground rent for all eligible properties with ground leases will be held
at all times in an interest bearing account accruing for the benefit of borrower
and will serve as additional collateral for the loan. At the loan closing, the
Borrower deposited twelve (12) months advance ground rent (totaling $12,000) in
an interest bearing account and twenty-four (24) months advance ground rent
totaling approximately $24,000 allocated from the tenant improvement and leasing
commission escrow to the escrow account.
Property Management. 411 North Akard is managed by SCI ROEV Realty Group
LP, a management company that is related to borrower through common principals.
SCI ROEV Realty Group LP manages all the space owned by the borrower and it is
controlled by SCI Real Estate Development and ROEV General. The principals
behind SCI Real Estate Development and ROEV General have extensive backgrounds
is managing large commercial real estate. SCI ROEV Realty Group L.P. has
1,551,000 square feet under management, with 1,214,00 square feet of that space
being in the Dallas and Fort Worth markets.
Operating History.
1997 1998 1999 APPRAISER'S ORIGINATOR'S
ACTUAL ACTUAL ACTUAL ESTIMATE UNDERWRITTEN
---------- ---------- ---------- ----------- ------------
EGI.......................... $5,623,803 $5,697,577 $5,983,147 $6,232,948 $6,157,782
Expenses..................... $1,676,682 $1,640,285 $1,620,452 $2,145,992 $1,928,098
---------- ---------- ---------- ---------- ----------
NOI.......................... $3,947,121 $4,057,292 $4,362,696 $4,086,956 $4,229,684
Cash Flow.................... $3,947,121 $4,057,292 $4,004,823 $3,999,503 $3,636,581
========== ========== ========== ========== ==========
Occupancy.................... 100.0% 99.0% 99.9%
DSCR based on NOI............ 1.52x 1.56x 1.68x 1.57x 1.63x
DSCR based on Cash Flow...... 1.52x 1.56x 1.54x 1.54x 1.40x
ELEVATORS: The property contains five passenger car elevators (3,500
lbs/300 fpm), two garage car elevators (2,500 lbs/150 fpm),
and one freight car elevator (4,000 lbs/100 fpm).
HVAC: The 2nd through 9th floors of the building are heated and
cooled by a high velocity dual duct system which delivers
conditioned air to mixing boxes located in the ceiling
plenum space. The first floor is heated and cooled by
ceiling mounted fan units. The primary air units and the fan
coil units are supplied with hot and chilled water from a
central system. The central system has two Kewanee oil/gas
fired hot water boilers. These boilers are original and were
retubbed in 1994 and 1995. Chilled water is supplied by
three centrifugal chillers.
MAJOR TENANT: Bank of America (AA- by S&P, Aa1 rating Moody's rating and
AA Fitch rating), the Mortgage Loan Seller and the parent of
the Depositor, occupies 99.35% of net rentable area.
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THE 224-246 WORTH AVENUE LOAN AND THE 256 WORTH AVENUE LOAN
The Loans. The Mortgage Loans (the "224-246 Worth Avenue Loan" and the
"256 Worth Avenue Loan"), which are each secured by a first deed of trust
encumbering a retail building in Palm Beach, Florida, represent approximately
2.3% and 1.5% of the Initial Pool Balance, respectively. The 224-246 Worth
Avenue and the 256 Worth Avenue Loans are cross-defaulted and
cross-collateralized with each other and have principal balances as of the
Cut-off Date of $17,582,614 and $11,850,805, respectively. The 224-246 Worth
Avenue Loan was made to Palm V Associates, LP, a single asset limited
partnership which is owned by Regent Associates, LP (89.91%), Chauncey Lane
Investments (9.09%) and Palm Management Associates (1%). Each of the three
entities is controlled by the borrower principal, Burton Handelsman. The 256
Worth Avenue Loan was made to Power-Love Associates, a Florida General
Partnership which is owned by Chauncy Lane Investment Co. (78.57%) and Worth
Avenue Realty Associates (21.43%). Each of the two entities is controlled by the
borrower principal, Burton Handelsman. Counsel to each borrower has provided
both a satisfactory non-consolidation opinion and an opinion that each related
borrower is a bankruptcy remote, special purpose entity.
The 224-246 Worth Avenue Loan and the 256 Worth Avenue Loan were originated
on July 19, 1999 and mature August 1, 2009. The 224-246 Worth Avenue and the 256
Worth Avenue Loan have a remaining term of 108 months. The anticipated Maturity
Date loan-to-value ratio for each loan is 68.1% and 63.6%, respectively. The
224-246 Worth Avenue Loan and the 256 Worth Avenue Loan may not be prepaid prior
to, and including, May 1, 2009. However, both loans are subject to defeasance
with United States Treasury obligations beginning two years from the Trust
Formation Date. The 224-246 Worth Avenue Loan and the 256 Worth Avenue Loan may
be prepaid without a prepayment penalty (but including a full month's interest)
during the three (3) months preceding the maturity date. The 224-246 Worth
Avenue Loan and The 256 Worth Avenue Loan are ten-year loans on 30-year
amortizations.
Additional terms and escrows for the 224-246 Worth Avenue Loan and the 256
Worth Avenue Loan are set forth in Annex A.
The Properties. The property securing the 224-246 Worth Avenue Loan is a
combination of one and two-story Spanish Colonial stucco buildings totaling
37,210 square feet of net leasable area. The property uses are retail, office
and apartments, with 26,654 square feet of retail space fronting on Worth
Avenue, 3,501 square feet exists in the Via's (internal courtyards), 1,611
square feet comprises second floor office space and 5,444 square feet is
currently being used for apartments. Portions of the property were constructed
in 1931, 1936, 1950 and 1958. Renovations have been on-going as new tenants
built-out their bays and current tenants remodel their existing spaces. All of
the buildings are well maintained and in good repair. The estimated remaining
useful life is 50 years. Tenants at the property include Malo, Mondi and
Georgio's, as well as internationally owned jewelers, galleries and clothing
boutiques.
The property securing the 256 Worth Avenue Loan consists of two three-story
Spanish Colonial stucco buildings totaling 29,088 square feet. Of the 29,088
square feet, 14,400 square feet of the space is occupied by Worth Avenue
tenants, Gucci and Halpern, 4,173 square feet exists in the Via's (internal
courtyards), 5,465 square feet comprises second and third floor office space and
5,200 square feet is currently being used for an apartment. Constructed in 1930,
the property's buildings have been well maintained with renovations of the
tenant spaces taking place primarily during tenant changeover and upgrades. All
of the buildings are of good repair and have an estimated remaining useful life
of 50 years. The building fronting Worth Avenue is occupied by retailers Gucci
and St. John Knits on the first floor, with offices for each of the retailers
located on the second and third floors. Other office tenants occupy the second
and third floors as well. The second building at the subject is located on a
courtyard directly behind the Worth Avenue frontage. The first floor space on
the courtyard houses five more retail tenants. Office space is located on the
second and third floors with tenants including Margaritaville Holdings, Jimmy
Buffet's personal office.
Both properties are located in a unique, 100% occupied, retail district,
comprising three blocks, which caters to the residents and visitors of Palm
Beach, and offers exclusive retailers including Saks Fifth Avenue, Gucci,
Tiffany's, Ralph Lauren, Cartier, Hermes, Bally, Valentino and Chanel. Within
this district lies Worth Avenue, an area of fine boutiques with a number of
tasteful eateries, clothiers, jewelers and galleries. The
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Worth Avenue "submarket" has remained fully occupied for many years and is
expected to remain occupied going forward due to significant barriers to entry
and demand for any available space. Worth Avenue has an international reputation
as one of the top six retail avenues along with Fifth Avenue, Rodeo Dr.,
Michigan Avenue, Union Square (San Francisco) and Newburry Street (Boston). New
competition in the market is hindered due to the complete build-out of the three
block corridor that makes up Worth Avenue. Worth Avenue is bordered by water to
the east and west, by the Everglades Golf Course to the south and by an upscale
residential development to the north.
Property Management. Both properties are managed by an affiliate of Love
Realty of the Palm Beaches, Inc. an entity that is affiliated to the borrowing
entity through common ownership. Love Management Corporation manages
approximately 250,000 square feet of retail space in 25 properties located in
Palm Beach, Florida and on Fifth Avenue in New York. Within the Palm Beach
submarket, Love Management Corporation and its affiliates manage approximately
100,000 square feet of retail space in 7 properties.
Operating History -- 224-246 Worth Avenue.
1998 1999 ORIGINATOR'S
ACTUAL ACTUAL UNDERWRITTEN
---------- ---------- ------------
EGI.................................................... $2,651,971 $3,589,261 $2,721,902
Expenses............................................... $ 609,609 $1,066,345 $ 625,403
---------- ---------- ----------
NOI.................................................... $2,042,362 $2,522,916 $2,096,499
Cash Flow.............................................. $2,029,214 $2,513,974 $2,024,142
========== ========== ==========
Occupancy.............................................. 100% 100% 94.5%
DSCR based on NOI...................................... 1.31x 1.62x 1.34x
DSCR based on Cash Flow................................ 1.30x 1.61x 1.30x
Operating History -- 256 Worth Avenue.
1998 1999 ORIGINATOR'S
ACTUAL ACTUAL UNDERWRITTEN
---------- ---------- ------------
EGI.................................................... $1,842,528 $2,162,504 $1,812,888
Expenses............................................... $ 449,076 $ 635,912 $ 470,211
---------- ---------- ----------
NOI.................................................... $1,393,452 $1,526,593 $1,342,677
Cash Flow.............................................. $1,366,730 $1,523,979 $1,314,742
========== ========== ==========
Occupancy.............................................. 100% 100% 96.4%
DSCR based on NOI...................................... 1.32x 1.45x 1.28x
DSCR based on Cash Flow................................ 1.30x 1.45x 1.25x
Operating History -- Combined Loans.
1998 1999 ORIGINATOR'S
ACTUAL ACTUAL UNDERWRITTEN
---------- ---------- ------------
EGI.................................................... $4,494,499 $5,751,766 $4,534,790
Expenses............................................... $1,058,685 $1,702,257 $1,095,614
---------- ---------- ----------
NOI.................................................... $3,435,814 $4,049,509 $3,439,176
Cash Flow.............................................. $3,395,944 $4,037,954 $3,338,884
========== ========== ==========
Occupancy.............................................. 100% 100% 95.3%
DSCR based on NOI...................................... 1.32x 1.55x 1.32x
DSCR based on Cash Flow................................ 1.30x 1.55x 1.28x
THE INNKEEPERS LOAN
The Loan. The mortgage loan (the "Innkeepers Loan") is secured by a first
mortgage lien on eight upper-tier, extended-stay hotels and represents 7.5% of
the Initial Pool Balance. The Innkeepers Loan was
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originated by the Mortgage Loan Seller on September 24, 1999. The Innkeepers
Loan has a $58,000,000 outstanding principal balance as of the Cut-Off Date.
The Innkeepers Loan has a term of 120 months (10 years) and amortizes over
264 months (22 years). The Innkeepers Loan is interest-only for the first three
years of the loan term. The loan may not be prepaid before September 1, 2009.
The Innkeepers Loan is subject to defeasance with U.S. Treasury obligations
beginning the earlier of 25 months from the Trust Formation Date or 49 months
from loan funding. On the final two scheduled payment dates, the Innkeepers Loan
may be prepaid without penalty.
Additional terms and escrows for the Innkeepers Loan are set forth in Annex
A.
The properties. The collateral for the Innkeepers Loan consists of eight
upper-tier extended-stay hotels. The hotels operate under two of the top
national franchises in the United States and are located in Washington, Oregon,
California and Texas. The hotels have 1,005 rooms and are operated by two
operating lessees under two separate lease agreements (collectively, the "Lease
Agreements").
NUMBER OF YR. BUILT/
ROOMS OCCUPANCY RENOVATED
--------- --------- ----------
Residence Inn -- Bellevue, WA............................... 120 83.7% 1984/97
Residence Inn -- Vancouver, WA.............................. 120 86.7% 1987/99
Residence Inn -- Seattle, WA................................ 144 91.1% 1985/98
Residence Inn -- Lynnwood, WA............................... 120 85.5% 1987/98
Residence Inn -- Lake Oswego, OR............................ 112 74.0% 1985/98
Summerfield Suites -- Belmont, CA........................... 132 81.8% 1995
Summerfield Suites -- West Hollywood, CA.................... 109 80.7% 1973/93
Summerfield Suites -- Irving, TX............................ 148 77.8% 1996
Lease Agreements. The five Residence Inns are operated by Innkeepers
Hospitality VII, Inc., an affiliate of the borrower. The three Summerfield
Suites are operated by Summerfield KPA Lessee, L.P., an affiliate of Wyndham
International, Inc. Both lessees are newly-formed, bankruptcy-remote,
single-purpose entities. Each operating lease is subordinate to the Innkeepers
Loan and can be terminated for non-performance without penalty. Leases provide
for a base rent, increased annually by the consumer price index, with percentage
rent after certain revenue targets are achieved. The landlord is obligated to
pay real estate taxes, insurance (Residence Inns only), and 4% of revenues for
capital expenditures. The Summerfield Suites lease obligation is secured by a
pledge of $5 million of a letter of credit provided by Chase Manhattan Bank.
Debt Service Coverage Ratio. The DSCR is predicated on several levels of
cash flow and is structured to address the cash flow of the underlying property
operations and the contractual payments under the lease agreements. The DSCR is
calculated based on full principal and interest payments beginning in year four
of the loan term. The underwritten DSCR is 2.49x on property operations and
2.41x on lease payments.
Loan to Value Ratio. The loan-to-value ratio is 44.2% as of the Cut-Off
Date.
Cash Management Account. A cash management account was established at
closing and all revenue payable to the borrower from the lessees is deposited
directly into the account. Principal, interest and all escrows due under the
loan are paid from the cash management account. One month of debt service and
all reserve deposits are required to remain in the account at all times. In the
event that the DSCR based aggregate operations ever falls below 1.75x, the
borrower will deposit funds sufficient to pay three months of debt service into
the cash management account.
Substitution of Collateral. Substitution of collateral will be allowed,
but total substitution over the loan term will be limited to no more than 25% of
the original principal amount of each loan. Further, after giving effect to the
substitution, the debt service coverage ratios (on operations and lease
payments) for the applicable loan (s) will be at least equal to the greater of
(1) the debt service coverage ratios at closing; or (2) the debt service
coverage ratios immediately prior to such substitution. Moreover, substitution
of collateral is subject, among other things, to (a) written confirmation from
each Rating Agency that such
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substitution will not result in a withdrawal, downgrade or qualification of the
rating of any certificate and (b) documentation subject to review and approval
of lender counsel.
Sponsorship. Innkeepers USA Trust ("Innkeepers") is a self-administered
and self-managed REIT that specializes in the ownership of upscale, extended
stay hotels. As of December 31, 1998, Innkeepers owns 63 hotels in 23 states
with an aggregate of 7,639 rooms through its interests in Innkeepers USA Limited
Partnership. Residence Inn, the dominant brand in the extended-stay segment,
represents the majority of Innkeepers' portfolio. All of the company's hotels
are managed under operating leases. A majority of the hotels are leased to an
affiliate, Innkeepers Hospitality, Inc.
Operating History.
1998 1999 ORIGINATOR'S
ACTUAL ACTUAL UNDERWRITTEN
----------- ----------- ------------
EGI................................................. $35,494,380 $35,735,579 $33,634,257
Expenses............................................ $17,829,853 $17,494,846 $18,879,459
----------- ----------- -----------
NOI................................................. $17,664,527 $18,240,733 $14,754,798
Cash Flow........................................... $17,496,542 $16,819,745 $13,073,085
=========== =========== ===========
Occupancy........................................... 81.9% 84.4% 77.2%
DSCR based on NOI................................... 3.37x 3.48x 2.81x
DSCR based on Cash Flow............................. 3.34x 3.21x 2.49x
THE FIEGA LOANS
The Loans. The Mortgage Loans secured by the Tiburon Apartments, Farmstead
Apartments and Cimarron Apartments (collectively, the "Fiega Loans") represent
2.1%, 1.4% and 0.8% of the Initial Pool Balance, respectively. Each loan is
cross-collateralized and cross-defaulted with the others and each is held in a
single asset entity with common borrower principals. The Fiega Loans are secured
by a first deed of trust on three separate apartment buildings all located in
Mesa, Arizona representing in the aggregate approximately 4.4% of the Initial
Pool Balance. Originated on October 20, 1999, the Fiega Loans had an aggregate
principal balance as of the Cut-off Date of $33,700,222. Counsel to each
borrower under the Fiega Loans has provided both a non-consolidation opinion and
an opinion that each borrower is a bankruptcy remote, special purpose entity.
The Fiega Loans have a remaining term of 111 months and mature on November
1, 2009. The Fiega Loans may not be prepaid before September 1, 2009. However,
the Fiega Loans are subject to defeasance with United States Treasury
obligations beginning two years from the Trust Formation Date. (The Fiega Loans
may be prepaid without the payment of a prepayment penalty on the final three
(3) scheduled payment dates.) The Fiega Loans are all ten-year loans on 30 year
amortizations.
Additional terms and escrows for the Fiega Loans are set forth in Annex A.
The Properties. All three properties under the Fiega Loans are located
within a three mile radius in Mesa, Arizona.
Tiburon Apartments is a 582 unit, garden-style apartment complex. The
property was constructed in 1987 and consists of 28 buildings including a
two-story clubhouse building containing the leasing and administrative offices,
fitness center, social room with kitchen, two racquetball courts and laundry
facilities. Common area amenities, include a swimming pool, lap pool, spa, two
tennis courts, two volleyball courts, one basketball court, barbecues,
landscaped courtyards and a paved jogging path through the community.
Farmstead Apartments is a 348 unit, garden-style apartment complex
constructed in 1985. The complex consists of 16 buildings including a two-story
clubhouse building containing the leasing and administrative offices, fitness
center, social room with kitchen, one racquetball court and laundry facilities.
Common area amenities include a swimming pool, spa, two tennis courts, two
volleyball courts, barbecues, and landscaped courtyards throughout the
community.
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Cimmaron Apartments is a 210 unit, garden-style apartment complex.
Constructed in 1985, the complex consists of 11 buildings, including the
two-story clubhouse building containing the leasing and administrative offices,
fitness center, social room with kitchen, two racquetball courts, and laundry
facilities. Common area amenities include a swimming pool, spa, tennis court,
barbecues, and landscaped courtyards.
Crossed Structure. Tiburon Apartments, Farmstead Apartment and Cimarron
Apartments are all cross-collateralized and cross-defaulted with related
borrower principals. The loans have a combined LTV and underwritten DSC of 79%
and 1.20x, respectively. In event that any of the Fiega Loans are paid-in-full
or assumed, the lender may, under certain circumstances, release the
cross-collateralization and cross-default provisions upon the related borrower's
payment of an amount equal to 25% of the remaining outstanding principal balance
of any of the loans, immediately preceding the full repayment or on the date of
assumption of the related loan. The 25% payment will be applied, without premium
or penalty, on a pro-rata basis against the then remaining outstanding principal
balances of the remaining loans.
Property Management. The properties relating to the Fiega Loans are
managed by Bernard/Finney Management Services, Inc. They have been in business
for over twenty-five years and, in total, manage 55 properties with 14,126 units
and in the submarket, 8 properties with 2,278 units.
Tiburon Operating History:
1998 1999 ORIGINATOR'S
ACTUAL ACTUAL UNDERWRITTEN
---------- ---------- ------------
EGI........................................................ $3,153,530 $3,179,495 $3,153,174
Expenses................................................... $1,248,849 $1,318,303 $1,287,666
---------- ---------- ----------
NOI........................................................ $1,904,681 $1,861,192 $1,865,508
Cash Flow.................................................. $1,904,681 $1,768,654 $1,740,989
========== ========== ==========
Occupancy.................................................. 94.0% 95.4% 85.7%
DSCR Based on NOI.......................................... 1.31x 1.28x 1.29x
DSCR based on Cash Flow.................................... 1.31x 1.22x 1.20x
Farmstead Operating History:
1998 1999 ORIGINATOR'S
ACTUAL ACTUAL UNDERWRITTEN
---------- ---------- ------------
EGI........................................................ $1,980,352 $1,992,080 $2,032,695
Expenses................................................... $ 735,233 $ 765,332 $ 772,063
---------- ---------- ----------
NOI........................................................ $1,245,119 $1,226,747 $1,260,632
Cash Flow.................................................. $1,187,699 $1,161,599 $1,186,682
========== ========== ==========
Occupancy.................................................. 94.0% 93.7% 92.0%
DSCR Based on NOI.......................................... 1.27x 1.25x 1.28x
DSCR based on Cash Flow.................................... 1.21x 1.18x 1.21x
Cimarron Operating History:
1998 1999 ORIGINATOR'S
ACTUAL ACTUAL UNDERWRITTEN
---------- ---------- ------------
EGI........................................................ $1,212,780 $1,195,076 $1,215,817
Expenses................................................... $ 514,868 $ 518,209 $ 522,151
---------- ---------- ----------
NOI........................................................ $ 697,912 $ 676,868 $ 693,666
Cash Flow.................................................. $ 697,912 $ 641,168 $ 648,736
========== ========== ==========
Occupancy.................................................. 93.4% 95.7% 90.8%
DSCR Based on NOI.......................................... 1.29x 1.25x 1.28x
DSCR based on Cash Flow.................................... 1.29x 1.19x 1.20x
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ADDITIONAL MORTGAGE LOAN INFORMATION
General. For a detailed presentation of certain characteristics of the
Mortgage Loans and Mortgaged Properties, on an individual basis and in tabular
format, see Annex A hereto. Certain capitalized terms that appear herein are
defined in Annex A. See Annex B hereto for certain information with respect to
capital improvement, replacement and tenant improvement reserve accounts, as
well as certain other information with respect to Multifamily Mortgaged
Properties.
Delinquencies. As of the Cut-off Date, no Mortgage Loan will have been 30
days or more delinquent in respect of any Monthly Payment during the past 12
months. All of the Mortgage Loans were originated during the 86 months prior to
the Cut-off Date.
Tenant Matters. Sixty-seven of the retail, office, special purpose and
industrial Mortgaged Properties, which represent security for 41.7% of the
Initial Pool Balance, are leased in large part to one or more Major Tenants. The
three concentrations of Major Tenants with respect to more than one property
(groups of Mortgage Loans where the same company is a Major Tenant of each
Mortgage Loan in the group) represent 1.8%, 2.9% and 4.8% of the Initial Pool
Balance. In addition, there are several cases in which a particular entity is a
tenant at multiple Mortgaged Properties, and although it may not be a Major
Tenant at any such property, it may be significant to the success of such
properties. "Major Tenants" means any tenant at a Commercial Mortgaged Property
that rents at least 20% of the Leasable Square Footage (as defined in Annex A)
at such property.
Certain of the Multifamily Mortgaged Properties have material
concentrations of student tenants.
Ground Leases. Seven Mortgage Loans, which represent 7.9% of the Initial
Pool Balance, are, in each such case, secured primarily by a Mortgage on the
applicable borrower's leasehold interest in the related Mortgaged Property. In
each case, either (i) the ground lessor has subordinated its interest in the
related Mortgaged Property to the interest of the holder of the related Mortgage
Loan or (ii) the ground lessor has agreed to give the holder of the Mortgage
Loan notice of, and has granted such holder the right to cure, any default or
breach by the lessee. See "Certain Legal Aspects of Mortgage
Loans -- Foreclosure -- Leasehold Considerations" in the accompanying
prospectus.
Subordinate Financing
Conduit Mortgage Loans. We are aware that 4 of the mortgaged properties
relating to the Conduit Mortgage Loans, representing 3.5% of the Initial Pool
Balance, were encumbered by subordinate debt as of the Cut-off Date. The Conduit
Mortgage Loans either prohibit the related borrower from encumbering the
Mortgaged Property with additional secured debt or require the consent of the
holder of the first lien prior to so encumbering such property.
Portfolio Mortgage Loans. We are aware that 4 of the mortgaged properties
relating to the Portfolio Mortgage Loans, representing security for 1.2% of the
Initial Pool Balance, are presently encumbered by subordinate debt. However,
several of the Portfolio Mortgage Loans do not prohibit the related mortgagor
from incurring such subordinate debt in the future.
Generally. The existence of subordinated indebtedness encumbering a
mortgaged property may increase the difficulty of refinancing the related
mortgage loan at maturity and the possibility that reduced cash flow could
result in deferred maintenance. Also, in the event that the holder of the
subordinated debt files for bankruptcy or is placed in involuntary receivership,
foreclosure on the mortgaged property could be delayed. Regardless of whether
the terms of a mortgage loan prohibit the incurrence of subordinate debt, the
related borrower may be permitted to incur additional indebtedness secured by
furniture, fixtures and equipment, and to incur additional unsecured
indebtedness. See "Certain Legal Aspects of Mortgage Loans -- Subordinate
Financing" in the accompanying prospectus.
Health Care Properties. Six Mortgage Loans, which represent 5.8% of the
Initial Pool Balance, are secured by liens on health care properties. Health
care facilities typically receive a substantial portion of their revenues from
government reimbursement programs, primarily Medicaid and Medicare. Medicaid and
Medicare are subject to statutory and regulatory changes, retroactive rate
adjustments, administrative rulings,
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policy interpretations, delays by fiscal intermediaries and government funding
restrictions, all of which can adversely affect revenues from operation.
Moreover, governmental payors have employed cost-containment measures that limit
payments to health care providers and there are currently under consideration
various proposals for national health care relief that could further limit these
payments. In addition, providers of long-term nursing care and other medical
services are highly regulated by federal, state and local law and are subject
to, among other things, federal and state licensing requirements, facility
inspections, rate setting, reimbursement policies, and laws relating to the
adequacy of medical care, distribution of pharmaceuticals, equipment, personnel,
operating policies and maintenance of and additions to facilities and services,
any or all of which factors can increase the cost of operation, limit growth
and, in extreme cases, require or result in suspension or cessation of
operations.
Lender/Borrower Relationships. The Mortgage Loan Seller or the Depositor
or any of their affiliates may maintain certain banking or other relationships
with borrowers under the Mortgage Loans or their affiliates, and proceeds of the
Mortgage Loans may, in certain limited cases, be used by such borrowers or their
affiliates in whole or in part to pay indebtedness owed to the Mortgage Loan
Seller, the Depositor or such other entities.
CERTAIN UNDERWRITING MATTERS
Environmental Assessments
Conduit Mortgage Loans. Each of the Mortgaged Properties related to a
Conduit Mortgage Loan was subject to an environmental site assessment consisting
of a "Phase I" or, in the case of certain Conduit Mortgage Loans having an
initial principal balance under $1,000,000, a transaction screen or an update of
a previously conducted assessment, which assessment or update was conducted
generally in accordance with industry-wide standards, during or after May 1997.
No such assessment or update otherwise revealed any material adverse
environmental condition or circumstance at any Mortgaged Property, except the
potentially materially adverse conditions or circumstances as set forth below or
in certain other cases in which environmental site assessments recommend
corrective action to address environmental conditions, and which environmental
conditions have been mitigated, or are expected to be addressed in the manner
and within the time frames specified in third-party clean-up agreements or the
related Mortgage Loan documents.
Portfolio Mortgage Loans. The Mortgage Loan Seller has represented and
warranted in the Pooling Agreement with respect to each Mortgaged Property
relating to a Portfolio Mortgage Loan that there are no material adverse
environmental conditions existing at such Mortgaged Property at the Trust
Formation Date. Any breach of such warranty will result in an obligation to
repurchase the affected Mortgage Loans, subject to a cure right as described
under "-- Representations and Warranties; Repurchases". Although we are not
aware of any material adverse environmental conditions with respect to the
Portfolio Mortgage Loans, we otherwise cannot assure you that any such
conditions do not exist. Some of the Portfolio Mortgage Loans are seasoned loans
originated during a time when it was not required to conduct environmental
assessments in connection with the origination of mortgage loans. As a result,
in such cases no environmental assessments have been conducted.
The Mortgage Loan Seller will not make any representation or warranty with
respect to environmental conditions arising after the Trust Formation Date, and
will not be obligated to repurchase any Mortgage Loan due to any such condition.
However, the Trust Fund will have the benefit of an environmental insurance
policy as described under "-- Portfolio Loan Environmental Policy".
Generally. Certain federal, state and local laws, regulations and
ordinances govern the management, removal, encapsulation or disturbance of
asbestos-containing materials ("ACMs"). Such laws, as well as common law, may
impose liability for releases of or exposure to ACMs and may provide for third
parties to seek recovery from owners or operators of real properties for
personal injuries associated with such releases.
Owners of residential housing constructed prior to 1978 are required by
federal law to disclose to potential residents or purchasers any known
lead-based paint hazards and violations can incur treble damages for any failure
to so notify. In addition, the ingestion of lead-based paint chips or dust
particles by children can result
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in lead poisoning, and the owner of a property where such circumstances exist
may be held liable for such injuries and for the costs of removal or
encapsulation of the lead-based paint. Testing for lead-based paint or lead in
the water was conducted with respect to certain of the Mortgaged Properties,
generally based on the age and/or condition thereof.
The Environmental Protection Agency has identified certain health risks
associated with elevated radon gas in buildings, and has recommended that
certain mitigating measures be considered.
When recommended by environmental site assessments, operations and
maintenance plans (addressing in some cases ACMs, lead-based paint, and/or
radon) were required, except in the case of certain Mortgaged Properties where
the environmental consultant conducting the assessment also identified the
condition of the ACM as good and non-friable(i.e., not easily crumbled). In a
few instances where related Mortgage Loan documents required the submission of
operations and maintenance plans, these plans have yet to be received. There can
be no assurance that recommended operations and maintenance plans have been or
will continue to be implemented. In many cases, certain potentially adverse
environmental conditions were not tested for. For example, lead based paint and
radon were tested for only at Multifamily Mortgaged Properties and only if, in
the case of lead based paint, the age of the Mortgaged Property warranted such
testing and, in the case of radon, radon is prevalent in the geographic area
where the Mortgaged Property is located; however, at several Multifamily
Mortgaged Properties located in geographic areas where radon is prevalent, radon
testing was not conducted.
Certain of the Mortgaged Properties have off-site leaking underground
storage tank ("UST") sites located nearby which the environmental assessments
either have indicated are not likely to contaminate the related Mortgaged
Properties but may require future monitoring or have identified a party not
related to the mortgagor (borrower) as responsible for such condition. Certain
other Mortgaged Properties may contain contaminants in the soil or groundwater
at levels which the environmental consultant has advised are below regulatory
levels or otherwise are indicative of conditions typically not of regulatory
concern and are not likely to require any further action. In some cases, there
was no further investigation of a potentially adverse environmental condition.
In the case of several of the Mortgaged Properties where the environmental site
assessment recommended the repair or removal of ACM in poor condition, such
repair or removal was not required in the related Mortgage Loan documents. In a
few instances where related Mortgage Loan documents required ACM repair or
removal and the submission of a confirmation that this work has been performed,
the confirmations have yet to be received.
The environmental assessments revealed other adverse environmental
conditions such as the existence of old or abandoned USTs needing replacement or
removal, possible polychlorinated byphenyl materials in equipment on-site, and
elevated radon levels, in connection with which environmental reserves have been
established and/or removal or monitoring programs have been or are expected to
be implemented. At certain Mortgaged Properties, a leaking UST has been, or is
in the process of being, removed and cleanup is being undertaken with state
oversight. In at least one such case, response costs are expected to be
reimbursed by a state UST cleanup fund.
The information contained herein regarding environmental conditions at the
Mortgaged Properties is based on the environmental assessments and has not been
independently verified by the Depositor, the Mortgage Loan Seller, the
Underwriter, the Master Servicer, the Special Servicer, the Trustee, the REMIC
Administrator, or any of their respective affiliates. There can be no assurance
that such environmental assessments or studies, as applicable, identified all
environmental conditions and risks, or that any such environmental conditions
will not have material adverse effect on the value or cash flow of the related
Mortgaged Property.
The Pooling Agreement requires that the Special Servicer obtain an
environmental site assessment of a Mortgaged Property prior to acquiring title
thereto or assuming its operation. Such requirement precludes enforcement of the
security for the related Mortgage Loan until a satisfactory environmental site
assessment is obtained (or until any required remedial action is taken), but
will decrease the likelihood that the Trust will become liable for a material
adverse environmental condition at the Mortgaged Property. However, there can be
no assurance that the requirements of the Pooling Agreement will effectively
insulate the Trust from
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potential liability for a materially adverse environmental condition at any
Mortgaged Property. See "Servicing of the Mortgage Loans" herein and "The
Pooling and Servicing Agreements -- Realization Upon Defaulted Mortgage Loans",
"Risk Factors -- Certain Factors Affecting Delinquency, Foreclosure and Loss of
the Mortgage Loans -- Risk of Liability Arising from Environmental Conditions"
and "Certain Legal Aspects of Mortgage Loans -- Environmental Considerations" in
the accompanying prospectus.
Property Condition Assessments
Conduit Mortgage Loans. Inspections of each of the Mortgaged Properties
relating to the Conduit Mortgage Loans were conducted by independent licensed
engineers in connection with or subsequent to the origination of the related
Conduit Mortgage Loan. Such inspections were generally commissioned to inspect
the exterior walls, roofing, interior construction, mechanical and electrical
systems and general condition of the site, buildings and other improvements
located at a Mortgaged Property. With respect to certain of the Conduit Mortgage
Loans, the resulting reports indicated a variety of deferred maintenance items
and recommended capital improvements. The estimated cost of the necessary
repairs or replacements at a Mortgaged Property was included in the related
property condition assessment; and, in the case of certain Mortgaged Properties,
such cost exceeded $100,000. In general, with limited exception, cash reserves
were established to fund such estimated deferred maintenance or replacement
items. In addition, various Mortgage Loans require monthly deposits into cash
reserve accounts to fund property maintenance expenses.
Portfolio Mortgage Loans. The Mortgage Loan Seller has inspected, or
caused to have been inspected, each of the Mortgaged Properties relating to the
Portfolio Mortgage Loans at least once since March 1999, except for one loan
last inspected in November 1997. Such inspections were performed by employees or
third-party contractors of the Mortgage Loan Seller and did not include all the
procedures that would be performed by a licensed engineer. While we cannot
assure you that such scope was adequate to identify every possible defect, no
such inspection revealed any condition existing at any Mortgaged Property
relating to a Portfolio Mortgage Loan which would materially and adversely
impair the value of such Mortgaged Property.
Appraisals and Market Studies
Conduit Mortgage Loans. An independent appraiser that is either a member
of the Appraisal Institute ("MAI") or state certified performed an appraisal (or
updated an existing appraisal) of each of the related Mortgaged Properties in
connection with or subsequent to the origination of each Conduit Mortgage Loan
in order to establish that the appraised value of the related Mortgaged Property
or Properties exceeded the original principal balance of the Mortgage Loan. Such
appraisal or property valuation was prepared on or about the "Appraisal Date"
indicated on Annex A hereto, and except for certain mortgaged properties
involving operating businesses, conforms to the appraisal guidelines set forth
in Title XI of the Federal Financial Institutions Reform, Recovery and
Enforcement Act of 1989 ("FIRREA"). In general, such appraisals represent the
analysis and opinions of the respective appraisers at or before the time made,
and are not guarantees of, and may not be indicative of, present or future
value. There can be no assurance that another appraiser would not have arrived
at a different valuation, even if such appraiser used the same general approach
to and same method of appraising the property. In addition, appraisals seek to
establish the amount a typically motivated buyer would pay a typically motivated
seller. Such amount could be significantly higher than the amount obtained from
the sale of a Mortgaged Property under a distress or liquidation sale.
None of the Depositor, the Mortgage Loan Seller, the Underwriter, the
Master Servicer, the Special Servicer, the Trustee, the REMIC Administrator, or
any of their respective affiliates has prepared or conducted its own separate
appraisal or reappraisal of any Mortgaged Property.
Portfolio Mortgage Loans. Most of the Portfolio Mortgage Loans are
seasoned loans. At the time the Portfolio Mortgage Loans were originated it was
the practice of the Mortgage Loan Seller for an independent appraiser or an
appraiser then in its employ which, in either case, was either MAI or state
certified, to perform an appraisal (or update an existing appraisal) of each of
the related Mortgaged Properties in connection with the origination of each
Mortgage Loan in order to establish that the appraised value of the related
Mortgaged Property or Properties exceeded the original principal balance of the
Mortgage Loan. In general, such appraisals represent the analysis and opinions
of the respective appraisers at or before the time made, and are
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not guarantees of, and may not be indicative of, present or future value. There
can be no assurance that another appraiser would not have arrived at a different
valuation, even if such appraiser used the same general approach to and same
method of appraising the property. In addition, appraisals seek to establish the
amount a typically motivated buyer would pay a typically motivated seller. Such
amount could be significantly higher than the amount obtained from the sale of a
Mortgaged Property under a distress or liquidation sale.
None of the Depositor, the Mortgage Loan Seller, the Underwriter, the
Master Servicer, the Special Servicer, the Trustee, the REMIC Administrator, or
any of their respective affiliates has prepared or conducted its own separate
appraisal or reappraisal of any Mortgaged Property (except for appraisals
conducted with respect to some of the Mortgaged Properties at the time of
origination by appraisers then in the employ of Bank of America).
Seismic Reviews.
Conduit Mortgage Loans. With respect to any Conduit Mortgage Loan
originated in California, a seismic study was performed in connection with the
origination of such Conduit Mortgage Loan. Based on a portion of such Conduit
Mortgage Loan equal to approximately such studies, 5 Conduit Mortgage Loans,
representing approximately 1.8% of the Initial Pool Balance, can expect at least
one event that will cause at least a total property loss greater than 20% of the
appraised value over the next 475 years. In addition, one Conduit Mortgage Loan,
which is secured by eight properties and represents approximately 7.5% of the
Initial Pool Balance, is secured in part by two properties, representing
security for 2.6% of the Initial Pool Balance, that can similarly expect at
least one event that will cause at least a total property loss greater than 20%
of the appraised value over the next 475 years.
Portfolio Mortgage Loans. The Mortgage Loan Seller has, however,
contracted with Risk Management Solutions, Inc. ("RMS") to perform a review of
the Portfolio Mortgage Loans.
RMS conducted an analysis of the potential property and default losses due
to earthquakes for Mortgage Loans in the states of California, Oregon, and
Washington. From this analysis, RMS concluded that 1 Mortgage Loan representing
0.7% of the pool can expect at least one event that will cause at least a total
property loss greater than 20% of the appraised value over the next 475 years.
Mobile Home Properties were not included in this analysis.
The results are based on data provided by the Mortgage Loan Seller and
compiled using IRAS(TM) (Insurance and Investment Risk Assessment System), a
proprietary RMS computer risk assessment system. The system is based on
scientific data, mathematical and empirical models, and the encoded experience
of earthquake engineers, structural engineers, geologists, seismologists, and
geotechnical specialists. As with any model of complex physical systems,
particularly those with low frequencies of occurrence and potentially high
severity outcomes, the actual losses from catastrophic events may differ from
the results of simulation analyses. Furthermore, the accuracy of the loss
estimations presented above is largely dependent on the accuracy and quality of
the information and data supplied to RMS by Bank of America NT&SA.
Zoning and Building Code Compliance. The Mortgage Loan Seller has
examined whether the use and operation of the Mortgaged Properties related to
the Conduit Mortgage Loans were in compliance in all material respects with all
applicable zoning, land-use, environmental, building, fire and health
ordinances, rules, regulations and orders applicable to such Mortgaged
Properties at the time such Mortgage Loans were originated. The Mortgage Loan
Seller has made no such examination of the Mortgaged Properties related to the
Portfolio Mortgage Loans. Establishment of such compliance may have been
supported by legal opinions, certifications from government officials and/or
representations by the related borrower contained in the related Mortgage Loan
documents. Certain violations may exist, but the Mortgage Loan Seller does not
consider them to be material.
In some cases, the use, operation and/or structure of the related Mortgaged
Property constitutes a permitted nonconforming use and/or structure that may not
be rebuilt to its current state in the event of a material casualty event. With
respect to such Mortgaged Properties, the Mortgage Loan Seller has determined
that in the event of a material casualty affecting the Mortgaged Property that
either:
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(1) insurance proceeds would be available and sufficient to pay off
the related Mortgage Loan in full,
(2) the Mortgaged Property, if permitted to be repaired or restored in
conformity with current law, would constitute adequate security for the
related Mortgage Loan, or
(3) the risk that the entire Mortgaged Property would suffer a
material casualty to such a magnitude that it could not be rebuilt to its
current state is remote.
Although the lender expects insurance proceeds to be available for
application to the related Mortgage Loan in the event of a material casualty, no
assurance can be given that such proceeds would be sufficient to pay off such
Mortgage Loan in full. In addition, if the Mortgaged Property were to be
repaired or restored in conformity with current law, no assurance can be given
as to what its value would be relative to the remaining balance of the related
Mortgage Loan or what would be the revenue-producing potential of the property.
Hazard, Liability and Other Insurance. The Mortgage Loans require that
each Mortgaged Property be insured by a hazard insurance policy in an amount
(subject to a customary deductible) at least equal to the lesser of the
outstanding principal balance of the related Mortgage Loan and 100% of the full
insurable replacement cost of the improvements located on the related Mortgaged
Property, and if applicable, that the related hazard insurance policy contain
appropriate endorsements to avoid the application of co-insurance and not permit
reduction in insurance proceeds for depreciation; provided that, in the case of
certain of the Mortgage Loans, the hazard insurance may be in such other amounts
as was required by the related originators.
In addition, if any portion of a Mortgaged Property securing any Mortgage
Loan was, at the time of the origination of such Mortgage Loan, in an area
identified in the Federal Register by the Federal Emergency Management Agency as
having special flood hazards, and flood insurance was available, a flood
insurance policy meeting any requirements of the then-current guidelines of the
Federal Insurance Administration is required to be in effect with a generally
acceptable insurance carrier, in an amount representing coverage not less than
the least of
(1) the outstanding principal balance of such Mortgage Loan,
(2) the full insurable value of such Mortgaged Property,
(3) the maximum amount of insurance available under the National Flood
Insurance Act of 1968, as amended, and
(4) 100% of the replacement cost of the improvements located on the
related Mortgaged Property.
In general, the standard form of hazard insurance policy covers physical
damage to, or destruction of, the improvements on the Mortgaged Property by
fire, lightning, explosion, smoke, windstorm and hail, riot or strike and civil
commotion, subject to the conditions and exclusions set forth in each policy.
Each Conduit Mortgage Loan generally also requires the related borrower to
maintain comprehensive general liability insurance against claims for personal
and bodily injury, death or property damage occurring on, in or about the
related Mortgaged Property in an amount customarily required by institutional
lenders.
Each Conduit Mortgage Loan generally further requires the related borrower
to maintain business interruption insurance in an amount not less than 100% of
the projected rental income from the related Mortgaged Property for not less
than twelve months (or, in the case of a Mortgaged Property not having an
elevator, for at least a six month period).
In general, the Mortgage Loans (including those secured by Mortgaged
Properties located in California) do not require earthquake insurance.
THE MORTGAGE LOAN SELLER
The Mortgage Loan Seller is a national banking association. The principal
office of the Mortgage Loan Seller is in Charlotte, North Carolina. The Mortgage
Loan Seller was formed by the merger on July 23, 1999
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of Bank of America, N.A. (known prior to July 5, 1999 as NationsBank, N.A.) and
Bank of America NT&SA (the "Merger"). The Mortgage Loan Seller is a wholly-owned
subsidiary of NB Holdings Corporation, which in turn is a wholly-owned
subsidiary of Bank of America Corporation.
The information set forth herein concerning the Mortgage Loan Seller has
been provided by the Mortgage Loan Seller. Neither the Depositor nor Banc of
America Securities LLC (the "Underwriter") makes any representation or warranty
as to the accuracy or completeness of such information.
The table below reflects accounting losses and recoveries for Bank of
America NT&SA's commercial term real estate mortgage portfolio while the assets
were recorded as loans. The loans in this pool were selected from this category
of loans. The commercial term mortgage portfolio is a subset of a larger real
estate category and as such is not separately disclosed. The numbers shown have
been extracted from the larger portfolio using methods believed to be accurate.
BANK OF AMERICA NT&SA COMMERCIAL TERM MORTGAGE PORTFOLIO
LOAN LOSS HISTORY (PRE-MERGER)
LOSS RECOVERY NET LOSS
% OF % OF % OF
PRINCIPAL PRINCIPAL PRINCIPAL
YEAR BALANCE BALANCE BALANCE
- ---- --------- --------- ---------
1989........................................................ 0.66% 0.82% (0.16)%
1990........................................................ 0.90% 0.28% 0.62%
1991........................................................ 0.87% 0.15% 0.72%
1992........................................................ 0.55% 0.11% 0.44%
1993........................................................ 0.98% 0.35% 0.63%
1994........................................................ 0.51% 0.27% 0.25%
1995........................................................ 0.46% 0.15% 0.31%
1996........................................................ 0.18% 0.11% 0.07%
1997........................................................ 0.19% 0.06% 0.12%
1998........................................................ 0.03% 0.04% (0.01)%
3 Year Average.............................................. 0.13% 0.07% 0.06%
5 Year Average.............................................. 0.27% 0.13% 0.15%
10 Year Average............................................. 0.53% 0.23% 0.30%
ASSIGNMENT OF THE MORTGAGE LOANS; REPURCHASES
On or prior to the Trust Formation Date, by agreement with the Depositor,
the Mortgage Loan Seller (except as described in the next paragraph) assigned,
sold and transferred the Mortgage Loans, without recourse, to the Trustee for
the benefit of the Certificateholders. In connection with such assignment, the
Mortgage Loan Seller was required to deliver the following documents, among
others, to the Trustee with respect to each Mortgage Loan so assigned by the
Mortgage Loan Seller:
(1) the original Mortgage Note, endorsed (without recourse) to the
order of the Trustee;
(2) the original or a copy of the related Mortgage(s), together with
originals or copies of any intervening assignments of such document(s), in
each case (unless the particular document has not been returned from the
applicable recording office) with evidence of recording thereon;
(3) the original or a copy of any related assignment(s) of leases and
rents (if any such item is a document separate from the Mortgage), together
with originals or copies of any intervening assignments of such
document(s), in each case (unless the particular document has not been
returned from the applicable recording office) with evidence of recording
thereon;
(4) an assignment of each related Mortgage in favor of the Trustee, in
recordable form (or a certified copy of such assignment as sent for
recording);
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(5) an assignment of any related assignment(s) of leases and rents (if
any such item is a document separate from the Mortgage) in favor of the
Trustee, in recordable form (or a certified copy of such assignment as sent
for recording);
(6) an original or copy of the related lender's title insurance policy
(or, if a title insurance policy has not yet been issued, a commitment for
title insurance "marked-up" at the closing of such Mortgage Loan or other
binding commitment to issue title insurance);
(7) an assignment in favor of the Trustee of each effective UCC
financing statement in the possession of the transferor (or a certified
copy of such assignment as sent for filing); and
(8) in those cases where applicable, the original or a copy of the
related ground lease.
Some or all of the Mortgage Loans were instead transferred to the Trustee
by a Delaware business trust wholly owned by the Mortgage Loan Seller (the "NB
Owner Trust"). With respect to such Mortgage Loans, the Mortgage Loan Seller has
nevertheless made the representations and warranties described below under
"-- Representations and Warranties; Repurchases" and, at the direction of such
business trust, has been required to deliver the documents listed above.
The Trustee is required to review the documents delivered thereto by the
Mortgage Loan Seller (regardless whether so delivered at the direction of the
Depositor or the NB Owner Trust) with respect to each Mortgage Loan within a
specified period following such delivery, and the Trustee will hold the related
documents in trust. If it is found during the course of such review or at any
time thereafter that any of the above-described documents was not delivered with
respect to any Mortgage Loan or that any such document is defective, and in
either case such omission or defect materially and adversely affects the value
of the related Mortgage Loan or the interests of Certificateholders therein,
then the Mortgage Loan Seller will be obligated, except as otherwise described
below, within a period of 90 days following its receipt of notice of such
omission or defect to deliver the missing documents or cure the defect in all
material respects, as the case may be, or to repurchase (or cause the repurchase
of) the affected Mortgage Loan at a price (the "Purchase Price") generally equal
to the unpaid principal balance of such Mortgage Loan, plus any accrued but
unpaid interest thereon at the related Mortgage Rate to but not including the
Due Date in the Collection Period of repurchase, plus any related unreimbursed
Servicing Advances (as defined herein) and any interest on any Advances.
However, with respect to Non-Specially Serviced Mortgage Loans only, if such
defect or breach is capable of being cured but not within the 90 day period and
the Mortgage Loan Seller has commenced and is diligently proceeding with cure of
such defect or breach within such 90 day period, then the Mortgage Loan Seller,
shall have, with respect to Non-Specially Serviced Mortgage Loans only, an
additional 90 days to complete such cure or, failing such cure, to repurchase
the related Mortgage Loan (such possible additional cure period shall not apply
in the event of a defect that causes the Mortgage Loan not to constitute a
"qualified mortgage" within the meaning of Section 860G(a)(3) of the Code or not
to meet certain Code-specified criteria with respect to required loan-to-value
ratio, customary prepayment penalties or permissible defeasance).
With respect to any Cross-Collateralized Mortgage Loan, the repurchase
obligations of the Mortgage Loan Seller shall apply to any other Mortgage Loan
with which such Mortgage Loan is cross-collateralized or cross-defaulted, but
only if such other Mortgage Loans are materially and adversely affected by the
default under, or breach of, the repurchased Mortgage Loan, or the removal of
such Mortgage Loan from the Trust.
The cure/repurchase obligations of the Mortgage Loan Seller will constitute
the sole remedies available to the Certificateholders for any failure on the
part of the Mortgage Loan Seller to deliver any of the above-described documents
with respect to any Mortgage Loan or for any defect in any such document, and
neither the Depositor nor any other person will be obligated to repurchase the
affected Mortgage Loan if the Mortgage Loan Seller defaults on its obligation to
do so. Notwithstanding the foregoing, if any of the above-described documents is
not delivered with respect to any Mortgage Loan because such document has been
submitted for recording, and neither such document nor a copy thereof, in either
case with evidence of recording thereon, can be obtained because of delays on
the part of the applicable recording office, then the Mortgage Loan Seller will
not be required to repurchase (or cause the repurchase of) the affected Mortgage
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Loan on the basis of such missing document so long as it continues in good faith
attempt to obtain such document or such copy.
The Pooling Agreement required that the assignments in favor of the Trustee
with respect to each Mortgage Loan described in clauses (4) and (5) of the first
paragraph under this heading be submitted for recording in the real property
records of the appropriate jurisdictions within a specified number of days
following the Trust Formation Date at the expense of the Mortgage Loan Seller.
See "The Pooling and Servicing Agreements -- Assignment of Mortgage Loans;
Repurchases" in the accompanying prospectus.
REPRESENTATIONS AND WARRANTIES; REPURCHASES
Conduit Mortgage Loans. In the Pooling Agreement, the Mortgage Loan Seller
represented and warranted with respect to the Conduit Mortgage Loans, as of the
Trust Formation Date or as of such earlier date specifically provided in the
related representation or warranty, among other things, substantially as
follows:
(1) the information set forth in the schedule of Conduit Mortgage
Loans (the "Conduit Mortgage Loan Schedule") attached to the Pooling
Agreement (which will contain a limited portion of the information set
forth in Annex A) is true and correct in all material respects as of
December 1, 1999 (the "Original Cut-off Date");
(2) each Mortgage securing a Conduit Mortgage Loan is a valid first
lien on the related Mortgaged Property subject only to (a) the lien of
current real estate taxes and assessments not yet due and payable, (b)
covenants, conditions and restrictions, rights of way, easements and other
matters of public record, (c) rights of tenants (whether under ground
leases, space leases or operating leases) at the Mortgaged Property to
remain following a foreclosure or similar proceeding (provided that such
tenants are performing under such leases), (d) exceptions and exclusions
specifically referred to in the related lender's title insurance policy
issued or, as evidenced by a "marked-up" commitment, to be issued in
respect of such Conduit Mortgage Loan and (e) if such Conduit Mortgage Loan
is cross-collateralized with any other Conduit Mortgage Loan, the lien of
the Mortgage for such other Conduit Mortgage Loan (the exceptions set forth
in the foregoing clauses (a), (b), (c), (d), and (e) collectively,
"Permitted Encumbrances");
(3) the Mortgage(s) and Mortgage Note for each Conduit Mortgage Loan
and all other documents to which the related borrower is a party and which
evidence or secure such Conduit Mortgage Loan, are the legal, valid and
binding obligations of the related borrower (subject to any non-recourse
provisions contained in any of the foregoing agreements and any applicable
state anti-deficiency legislation), enforceable in accordance with their
respective terms, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, receivership, moratorium or other laws relating
to or affecting the rights of creditors generally and by general principles
of equity regardless of whether such enforcement is considered in a
proceeding in equity or at law;
(4) no Conduit Mortgage Loan was as of the Original Cut-off Date, or
during the twelve-month period prior thereto, 30 days or more delinquent in
respect of any Monthly Payment, without giving effect to any applicable
grace period;
(5) there is no valid offset, defense or counterclaim to any Conduit
Mortgage Loan;
(6) it has not waived any material default, breach, violation or event
of acceleration existing under any Mortgage or Mortgage Note;
(7) it has not received actual notice that (a) there is any proceeding
pending or threatened for the total or partial condemnation of any
Mortgaged Property, or (b) there is any material damage at any Mortgaged
Property that materially and adversely affects the value of such Mortgaged
Property;
(8) all insurance coverage required under each Mortgage securing a
Conduit Mortgage Loan is in full force and effect with respect to the
related Mortgaged Property;
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(9) at origination, each Conduit Mortgage Loan complied in all
material respects with all requirements of federal and state law, including
those requirements pertaining to usury, relating to the origination of such
Conduit Mortgage Loan;
(10) in connection with or subsequent to the origination of the
related Conduit Mortgage Loan, one or more environmental site assessments
(or an update of a previously conducted assessment) has been performed with
respect to each Mortgaged Property, and it, having made no independent
inquiry other than reviewing the resulting report(s) and/or employing an
environmental consultant to perform the assessments or updates referenced
herein, has no knowledge of any material and adverse environmental
condition or circumstance affecting such Mortgaged Property that was not
disclosed in the related report(s);
(11) the lien of each Mortgage is insured by a title insurance policy
issued by a nationally recognized title insurance company that insures the
originator, its successors and assigns, as to the first priority lien of
such Mortgage in the original principal amount of the related Conduit
Mortgage Loan after all advances of principal, subject only to Permitted
Encumbrances (or, if a title insurance policy has not yet been issued in
respect of any Conduit Mortgage Loan, a policy meeting the foregoing
description is evidenced by a commitment for title insurance "marked-up" at
the closing of such loan);
(12) the proceeds of each Conduit Mortgage Loan have been fully
disbursed, and there is no requirement for future advances thereunder;
(13) the terms of the Mortgage Note and Mortgage(s) for each Conduit
Mortgage Loan have not been impaired, waived, altered or modified in any
material respect, except as specifically set forth in the related Mortgage
File or indicated on the Mortgage Loan Schedule;
(14) there are no delinquent taxes, ground rents, insurance premiums,
assessments, including, without limitation, assessments payable in future
installments, or other similar outstanding charges (and, to its actual
knowledge, at the origination of such Conduit Mortgage Loan, there were no
delinquent water charges or sewer rents) affecting the related Mortgaged
Property;
(15) the related borrower's interest in each Mortgaged Property
securing a Conduit Mortgage Loan consists of a fee simple and/or leasehold
estate or interest in real property;
(16) no Conduit Mortgage Loan contains any equity participation by the
lender, provides for any contingent or additional interest in the form of
participation in the cash flow of the related Mortgaged Property or
provides for the negative amortization of interest; and
(17) all escrow deposits (including capital improvements and
environmental remediation reserves) relating to each Conduit Mortgage Loan
that were required to be delivered to the mortgagee under the terms of the
related loan documents have been received and, to the extent of any
remaining balances of such escrow deposits, are in the possession or under
the control of the representing party or its agents (which shall include
the Master Servicer).
In the Pooling Agreement, the Mortgage Loan Seller has also made
representations, among other things, concerning the priority and certain terms
of ground leases securing Conduit Mortgage Loans, and certain terms of the
mortgage loan documents and other characteristics relating to Mortgaged
Properties that are health care facilities. The Mortgage Loan Seller has also
represented and warranted, as of the Trust Formation Date, that, immediately
prior to the transfer of the Conduit Mortgage Loans to the Trustee, the Mortgage
Loan Seller or the NB Owner Trust had good and marketable title to, and was the
sole owner of, each Conduit Mortgage Loan and had full right and authority to
sell, assign and transfer such Conduit Mortgage Loan. The Mortgage Loan Seller
has also represented with respect to each Conduit Mortgage Loan that the related
Mortgage File contains an appraisal of the Mortgaged Property, and that such
appraisal and the related appraisal satisfy the requirements of Title XI of the
Federal Financial Institutions, Reform, Recovery and Enforcement Act of 1989 and
the regulations promulgated thereunder, all as in effect on the date the
Mortgage Loan was originated.
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If the Mortgage Loan Seller discovers or is notified of a breach of any of
the foregoing representations and warranties with respect to any Conduit
Mortgage Loan and such breach materially and adversely affects the value of such
Conduit Mortgage Loan or the interests of Certificateholders therein, then the
Mortgage Loan Seller will be obligated, within a period of 90 days following its
discovery or receipt of notice of such breach, to cure such breach in all
material respects or to repurchase (or cause the repurchase of) the affected
Conduit Mortgage Loan at the applicable Purchase Price. However, if such defect
or breach is capable of being cured but not within the 90 day period and the
Mortgage Loan Seller has commenced and is diligently proceeding with cure of
such defect or breach within such 90 day period, the Mortgage Loan Seller shall
have an additional 90 days to complete such cure or, failing such cure, to
repurchase the related Conduit Mortgage Loan (such possible additional cure
period shall not apply on the event of a defect that causes the Conduit Mortgage
Loan not to constitute a "qualified mortgage" within the meaning of Section
860G(a)(3) of the Code, including not meeting certain Code-specified criteria
with respect to required loan-to-value ratio, customary prepayment penalties or
permissible defeasance).
The foregoing cure/repurchase obligation of the Mortgage Loan Seller will
constitute the sole remedy available to the Certificateholders for any breach of
any of the foregoing representations and warranties, and neither the Depositor
nor any other person will be obligated to repurchase any affected Conduit
Mortgage Loan in connection with a breach of such representations and warranties
if the Mortgage Loan Seller defaults on its obligation to do so. The Mortgage
Loan Seller will be the sole Warranting Party (as defined in the accompanying
prospectus) in respect of the Conduit Mortgage Loans. See "The Pooling and
Servicing Agreements -- Representations and Warranties; Repurchases" in the
accompanying prospectus.
Portfolio Mortgage Loans. In the Pooling Agreement, the Mortgage Loan
Seller represented and warranted with respect to the Portfolio Mortgage Loans,
as of the Trust Formation Date or as of such earlier date specifically provided
in the related representation or warranty, among other things, substantially as
follows:
(1) The information set forth in the schedule of Portfolio Mortgage
Loans (the "Portfolio Mortgage Loan Schedule") attached to the Pooling
Agreement is true and correct in all material respects as of the Original
Cut-off Date.
(2) No Portfolio Mortgage Loan was as of the Original Cut-off Date, or
during the twelve-month period prior thereto, 30 days or more delinquent in
respect of any Monthly Payment, without giving effect to any applicable
grace period. Such non-delinquent status with respect to principal and/or
interest is not due to any advance made by the Mortgage Loan Seller.
(3) Each Mortgage securing a Portfolio Mortgage Loan is a valid first
lien on the related Mortgaged Property subject only to (a) the lien of
delinquent real estate taxes and assessments or current real estate taxes
and assessments not yet due and payable, (b) covenants, conditions and
restrictions, rights of way, easements and other matters of public record,
(c) rights of tenants (whether under ground leases, space leases or
operating leases) at the Mortgaged Property to remain following a
foreclosure or similar proceeding (provided that such tenants are
performing under such leases), (d) exceptions and exclusions specifically
referred to in the related lender's title insurance policy issued or, as
evidenced by a "marked-up" commitment, to be issued in respect to such
Portfolio Mortgage Loan and (e) if such Portfolio Mortgage Loan is
cross-collateralized with any other Portfolio Mortgage Loan, the lien of
the Mortgage for such other Portfolio Mortgage Loan (the exceptions set
forth in the foregoing clauses (a), (b), (c), (d) and (e) collectively,
"Permitted Encumbrances"). Such Permitted Encumbrances do not materially
interfere with the security intended to be provided by the related
Mortgage(s), the current use of the related Mortgaged Property, or the
ability of the related borrower to timely pay in full the principal and
interest on the Portfolio Mortgage Loan. Notwithstanding the foregoing, no
representation is made as to the perfection of any security interest in
personal property.
(4) The lien of each Mortgage is insured by a title insurance policy
issued by a nationally recognized title insurance company that insures the
originator, its successors and assigns, as to the first priority lien of
such Mortgage in the original principal amount of the related Portfolio
Mortgage Loan after all advances of principal, subject only to Permitted
Encumbrances. The premiums under such title
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insurance policy have been paid, and to the Mortgage Loan Seller's actual
knowledge, each title insurance policy is in full force and effect and no
claims have been made under any title insurance policy.
(5) To the best of the Mortgage Loan Seller's knowledge, it has not
waived any material default, breach, violation or event of acceleration
existing under any Mortgage or Mortgage Note.
(6) There is no valid offset, defense or counterclaim to any Portfolio
Mortgage Loan.
(7) It has not received actual notice that (a) there is any proceeding
pending or threatened for the total or partial condemnation of any
Mortgaged Property, or (b) there is any material damage at any Mortgaged
Property that materially and adversely affects the value of such Mortgaged
Property.
(8) At origination, each Portfolio Mortgage Loan complied in all
material respects with all requirements of federal and state law, including
those requirements pertaining to usury, relating to the origination of such
Portfolio Mortgage Loan.
(9) The proceeds of each Portfolio Mortgage Loan have been fully
disbursed, and there is no requirement for future advances thereunder.
(10) The Mortgage(s) and Mortgage Note for each Portfolio Mortgage
Loan and all other documents to which the related borrower is a party and
which evidence or secure such Portfolio Mortgage Loan, are the legal, valid
and binding obligations of the related borrower (subject to any
non-recourse provisions contained in any of the foregoing agreements and
any applicable state antideficiency legislation), enforceable in accordance
with their respective terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, receivership, moratorium or other
laws relating to or affecting the rights of creditors generally and by
general principles if equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law).
(11) There is no material and adverse environmental condition or
circumstance affecting the Mortgaged Property.
(12) Except as contained in the related Mortgage File, the terms of
the Mortgage Note and Mortgage(s) for each Portfolio Mortgage Loan have not
been impaired, waived, altered or modified in any material respect.
(13) Except as identified in the Pooling Agreement, there are no
delinquent or unpaid taxes or assessments (including assessments payable in
future installments), or other outstanding charges affecting any Mortgaged
Property which are or may become a lien of priority equal to or higher than
the lien of the related Mortgage.
(14) The related borrower's interest in each Mortgaged Property
securing a Portfolio Mortgage Loan consist of a fee simple and/or leasehold
estate or interest in real property.
(15) All escrow deposits (including capital improvements and
environmental remediation reserves) relating to each Portfolio Mortgage
Loan that were required to be delivered to the mortgagee under the terms of
the related loan documents have been received and, to the extent of any
remaining balances of such escrow deposits, are in the possession or under
the control of the representing party or its agents (which shall include
the Master Servicer).
In the Pooling Agreement, the Mortgage Loan Seller has also made
representations concerning, among other things, the priority and certain terms
of ground leases securing Portfolio Mortgage Loans, and certain terms of the
mortgage loan documents and characteristics of the Mortgaged Properties. The
Mortgage Loan Seller has also represented and warranted, as of the Trust
Formation Date, that, immediately prior to the transfer of the Mortgage Loans to
the Trustee, the Mortgage Loan Seller had good and marketable title to, and was
the sole owner of, each Portfolio Mortgage Loan and had full right and authority
to sell, assign and transfer such Portfolio Mortgage Loan.
If the Mortgage Loan Seller discovers or is notified of a breach of any of
the representations and warranties contained in the Pooling Agreement with
respect to any Portfolio Mortgage Loan and such breach materially and adversely
affects the value of such Portfolio Mortgage Loan or the interests of
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holders therein, then the Mortgage Loan Seller will be obligated, within a
period of 90 days following its discovery or receipt of notice of such breach,
to cure such breach in all material respects or to repurchase (or cause the
repurchase of) the affected Portfolio Mortgage Loan at the applicable Purchase
Price. However, if such defect or breach is capable of being cured but not
within the 90 day period and the Mortgage Loan Seller has commenced and is
diligently proceeding to cure such defect or breach within such 90 day period,
the Mortgage Loan Seller shall have an additional 90 days to complete such cure
or, failing such cure, to repurchase the related Portfolio Mortgage Loan (such
possible additional cure period shall not apply in the event of a defect that
causes the Portfolio Mortgage Loan not to constitute a "qualified mortgage"
within the meaning of Section 860G(a)(3) of the Code, including not meeting
certain Code-specified criteria with respect to required loan-to-value ratio,
permissible index or customary prepayment penalties). In the event of discovery
of a breach of the representation and warranty with respect to environmental
conditions, the Mortgage Loan Seller will similarly have an opportunity to cure
such breach. However, the breach will be deemed to have been cured if and only
if the Special Servicer (or if the Mortgage Loan Seller shall be the Special
Servicer, an independent party designated by the Master Servicer) shall have
determined in good faith that (a) the Mortgage Loan Seller has either caused the
condition that was the cause of such breach to be eliminated, or has established
a reserve for the costs of remediating the condition that was the cause of such
breach and has instituted a program which was reasonably expected to remediate
such condition within two years after the program was instituted; (b) the
estimated cost to cure is less than 50% of the then-outstanding principal
balance of the loan (or 25% if such balance is greater than $3,000,000); and (c)
retention of such Portfolio Mortgage Loan in the Mortgage Pool would not violate
the Servicing Standard. None of the Master Servicer, the Special Servicer or the
Trustee will be entitled to interest from the Trust on Advances made by it with
respect to such Portfolio Mortgage Loan until any such environmental breach is
cured or such loan is repurchased.
The foregoing cure/repurchase obligation of the Mortgage Loan Seller will
constitute the sole remedy available to the Certificateholders for any breach of
any of the foregoing representations and warranties, and neither the Depositor
nor any other person will be obligated to repurchase any affected Portfolio
Mortgage Loan in connection with a breach of such representations and warranties
if the Mortgage Loan Seller defaults on its obligation to do so. The Mortgage
Loan Seller will be the sole Warranting Party (as defined in the accompanying
prospectus) in respect of the Portfolio Mortgage Loans. See "The Pooling and
Servicing Agreements -- Representations and Warranties; Repurchases" in the
accompanying prospectus. In addition, each of the foregoing representations and
warranties by the Mortgage Loan Seller has been made as of the Trust Formation
Date or such earlier date specifically provided for in the related
representation and warranty, and the Mortgage Loan Seller will not be obligated
to cure or repurchase any Mortgage Loan due to the breach arising from events
subsequent to the date which such representation or warranty was made.
CHANGES IN MORTGAGE POOL CHARACTERISTICS
The description in this prospectus supplement of the Mortgage Pool and the
Mortgaged Properties is based upon the Mortgage Pool as constituted on the
Cut-off Date, as adjusted for the scheduled principal payments due on the
Mortgage Loans on or before the Cut-off Date. The Depositor believes that the
information set forth herein is representative of the characteristics of the
Mortgage Pool as constituted on the Cut-off Date, although the range of Mortgage
Rates and maturities, as well as the other characteristics of the Mortgage Loans
described herein, may vary.
A Current Report on Form 8-K (the "Form 8-K") will be available to
purchasers of the Offered Certificates on or shortly after the Delivery Date and
will be filed, together with the Pooling Agreement, with the Securities and
Exchange Commission within fifteen days after the initial issuance of the
Offered Certificates. In the event Mortgage Loans are removed from or added to
the Mortgage Pool as set forth in the preceding paragraph, such removal or
addition will be noted in the Form 8-K.
PORTFOLIO LOAN ENVIRONMENTAL POLICY
As described above under "Representations and Warranties;
Repurchases -- Portfolio Mortgage Loans," with respect to each Portfolio
Mortgage Loan, the Mortgage Loan Seller has represented and warranted that
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there are no material adverse environmental conditions on the related Mortgaged
Properties as of the Trust Formation Date, and except to the extent such
condition is covered by the Environmental Policy described below, the repurchase
obligation described above (subject to the cure obligation also described above)
is the sole remedy available to Certificateholders with respect to any such
environmental condition arising on or prior to the Trust Formation Date.
The Mortgage Loan Seller, in pursuing a cure or following its repurchase of
a Portfolio Mortgage Loan with respect to any related Mortgaged Property as to
which such an environmental condition arose prior to the Trust Formation Date,
may have the benefit of an environmental insurance policy (the "Environmental
Policy") issued by Steadfast Insurance Company (the "Environmental Insurer").
The Trust Fund may also have the benefit of the Environmental Policy with
respect to any such environmental condition covered by such Environmental Policy
arising prior to or after the Trust Formation Date. If there is a default with
respect to the related Mortgage Loan, the Environmental Policy provides coverage
for adverse environmental conditions in an amount generally equal to the lesser
of the outstanding principal balance of such Mortgage Loan or the estimated
cleanup costs. The Environmental Policy is subject to coverage limits of
$10,000,000 per occurrence and $50,000,000 in the aggregate. Because each of the
Mortgage Loan Seller and the Trustee are named insureds under the Environmental
Policy, claims paid to the Mortgage Loan Seller in respect of environmental
conditions arising on or prior to the Trust Formation Date will reduce the
remaining coverage available for claims by the Trustee (or the Servicer on its
behalf), and vice versa.
The Environmental Insurer is a member of the Zurich U.S. group of pooled
companies, which has been assigned an "AA+" rating from S&P and an "A+" rating
from A.M. Best.
The Environmental Policy relates only to Portfolio Mortgage Loans, and
provides no coverage in respect of any mortgaged property relating to any
Conduit Mortgage Loan.
SERVICING OF THE MORTGAGE LOANS
GENERAL
The Master Servicer and the Special Servicer, either directly or through
sub-servicers, will each be required to service and administer the respective
Mortgage Loans for which it is responsible on behalf of the Trust, in the best
interests and for the benefit of the Certificateholders, in accordance with any
and all applicable laws, the terms of the Pooling Agreement and the respective
Mortgage Loans and, to the extent consistent with the foregoing, the following
standard (the "Servicing Standard"): (a) in the same manner in which, and with
the same care, skill, prudence and diligence with which, the Master Servicer or
Special Servicer, as the case may be, generally services and administers
comparable mortgage loans or assets, as applicable, for third parties or
generally services and administers comparable mortgage loans or assets, as
applicable, owned by it, whichever servicing procedure is of a higher standard;
(b) with a view to the timely collection of all scheduled payments of principal
and interest under the Mortgage Loans or, if a Mortgage Loan comes into and
continues in default and if, in the good faith and reasonable judgment of the
Special Servicer, no satisfactory arrangements can be made for the collection of
the delinquent payments, the maximization of the recovery on such Mortgage Loan
to the Certificateholders (collectively) on a present value basis; and (c)
without regard to (1) any relationship that the Master Servicer or the Special
Servicer, as the case may be, or any affiliate thereof may have with any related
borrower; (2) the ownership of any Certificate by the Master Servicer or the
Special Servicer, as the case may be, or any affiliate thereof; (3) the Master
Servicer's obligation to make Advances (as defined herein); (4) the Special
Servicer's obligation to make Emergency Advances (as defined herein) or to
direct the Master Servicer to make Servicing Advances (as defined herein); and
(5) the right of the Master Servicer or the Special Servicer, as the case may
be, or any affiliate thereof to receive compensation for its services or
reimbursement of costs under the Pooling Agreement or with respect to any
particular transaction.
In general, the Master Servicer will be responsible for the servicing and
administration of all the Mortgage Loans as to which no Servicing Transfer Event
(as defined herein) has occurred and all Corrected Mortgage Loans (as defined
herein), and the Special Servicer will be obligated to service and administer
each Mortgage Loan (other than a Corrected Mortgage Loan) as to which a
Servicing Transfer Event has occurred
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(each, a "Specially Serviced Mortgage Loan") and each Mortgaged Property
acquired on behalf of the Certificateholders in respect of a defaulted Mortgage
Loan through foreclosure, deed-in-lieu of foreclosure or otherwise (upon
acquisition, an "REO Property"). A "Servicing Transfer Event" with respect to
any Mortgage Loan consists of any of the following events: (1) the related
borrower has failed to make when due any Balloon Payment, which failure has
continued, or the Master Servicer determines in its good faith and reasonable
judgment will continue, unremedied for 30 days and such borrower has not
delivered to the Master Servicer a written refinancing commitment from an
acceptable lender and reasonably satisfactory in form and substance to the
Master Servicer which provides such refinancing will occur within 60 days after
the date of such Balloon Payment (provided that if such refinancing does not
occur during such time, a Servicing Transfer Event will be deemed to have
occurred); (2) the related borrower has failed to make when due any Monthly
Payment (other than a Balloon Payment) or any other payment required under the
related Mortgage Note or the related Mortgage(s), which failure has continued,
or the Master Servicer determines in its good faith and reasonable judgment will
continue, unremedied for 60 days; (3) the Master Servicer has determined in its
good faith and reasonable judgment that a default in the making of a Monthly
Payment (including a Balloon Payment) or any other payment required under the
related Mortgage Note or the related Mortgage(s) is likely to occur within 30
days and is likely to remain unremedied for at least 60 days or, in the case of
a Balloon Payment, for at least 30 days and such borrower has not delivered to
the Master Servicer a written refinancing commitment from an acceptable lender
and reasonably satisfactory in form and substance to the Master Servicer which
provides such refinancing will occur within 60 days after the date of such
payment (provided that if such refinancing does not occur during such time, a
Servicing Transfer Event will be deemed to have occurred); (4) there shall have
occurred a default under the related loan documents, other than as described in
clause (1) or (2) above, that may, in the Master Servicer's good faith and
reasonable judgment, materially impair the value of the related Mortgaged
Property as security for the Mortgage Loan or otherwise materially and adversely
affect the interests of Certificateholders, which default has continued
unremedied for the applicable cure period under the terms of the Mortgage Loan
(or, if no cure period is specified, 60 days); (5) a decree or order of a court
or agency or supervisory authority having jurisdiction in the premises in an
involuntary case under any present or future federal or state bankruptcy,
insolvency or similar law or the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings, or for the winding-up or liquidation of its
affairs, shall have been entered against the related borrower and such decree or
order shall have remained in force undischarged or unstayed for a period of 60
days; (6) the related borrower shall have consented to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or relating to
such borrower or of or relating to all or substantially all of its property; (7)
the related borrower shall have admitted in writing its inability to pay its
debts generally as they become due, filed a petition to take advantage of any
applicable insolvency or reorganization statute, made an assignment for the
benefit of its creditors, or voluntarily suspended payment of its obligations;
or (8) the Master Servicer shall have received notice of the commencement of
foreclosure or similar proceedings with respect to the related Mortgaged
Property or Properties. The Master Servicer shall continue to collect
information and prepare all reports to the Trustee required under the Pooling
Agreement with respect to any Specially Serviced Mortgage Loans and REO
Properties, and further to render incidental services with respect to any
Specially Serviced Mortgage Loans and REO Properties as are specifically
provided for in the Pooling Agreement. The Master Servicer and the Special
Servicer shall not have any responsibility for the performance by each other of
their respective duties under the Pooling Agreement.
A Mortgage Loan will cease to be a Specially Serviced Mortgage Loan (and
will become a "Corrected Mortgage Loan" as to which the Master Servicer will
re-assume servicing responsibilities) at such time as such of the following as
are applicable occur with respect to the circumstances identified above that
caused the Mortgage Loan to be characterized as a Specially Serviced Mortgage
Loan (and provided that no other Servicing Transfer Event then exists):
(w) with respect to the circumstances described in clauses (1) and (2)
of the preceding paragraph, the related borrower has made three consecutive
full and timely Monthly Payments under the terms of such Mortgage Loan (as
such terms may be changed or modified in connection with a bankruptcy or
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similar proceeding involving the related borrower or by reason of a
modification, waiver or amendment granted or agreed to by the Special
Servicer);
(x) with respect to the circumstances described in clauses (3), (5),
(6) and (7) of the preceding paragraph, such circumstances cease to exist
in the good faith and reasonable judgment of the Special Servicer;
(y) with respect to the circumstances described in clause (4) of the
preceding paragraph, such default is cured; and
(z) with respect to the circumstances described in clause (8) of the
preceding paragraph, such proceedings are terminated.
The Directing Certificateholder will be entitled to advise the Special
Servicer with respect to the following actions. In addition, except as otherwise
described below, the Special Servicer will not be permitted to take any of the
following actions as to which the Directing Certificateholder has objected in
writing within ten business days of having been notified in writing thereof and
having been provided with all reasonably requested information with respect
thereto --
- any foreclosure upon or comparable conversion, which may include
acquisitions of an REO Property, of the ownership of properties securing
those Specially Serviced Mortgage Loans as come into and continue in
default;
- any modification, amendment or waiver of a monetary term, including the
timing of payments, or any material non-monetary term of a Mortgage Loan
(other than in accordance with the terms of such Mortgage Loan);
- any proposed sale of a defaulted Mortgage Loan or any related REO
Property, other than in connection with the termination of the trust as
described under "Description of the Certificates -- Termination" in this
prospectus supplement, for less than the Purchase Price;
- any acceptance of a discounted payoff;
- any determination to bring an REO Property into compliance with
applicable environmental laws or to otherwise address hazardous material
located at an REO Property;
- any release of collateral for a Mortgage Loan, other than in accordance
with the terms of, or upon satisfaction of, that Mortgage Loan;
- any acceptance of substitute or additional collateral for a Mortgage
Loan, other than in accordance with the terms of that Mortgage Loan;
- any waiver of a "due-on-sale" or "due-on-encumbrance" clause; and
- any acceptance of an assumption agreement releasing a borrower from
liability under a Mortgage Loan.
In addition, except as otherwise described below, that Directing
Certificateholder may direct the Special Servicer to take, or to refrain from
taking, such actions as the Directing Certificateholder may consider advisable
or as to which provision is otherwise made in the Pooling Agreement.
Notwithstanding the foregoing, no advice, direction or objection given or
made by the Directing Certificateholder, as contemplated by either of the two
preceding paragraphs, may --
- require or cause the Special Servicer to violate the terms of a Specially
Serviced Mortgage Loan, applicable law or any provision of the Pooling
Agreement, including the Special Servicer's obligation to act in
accordance with the Servicing Standards and to maintain the REMIC status
of each REMIC;
- result in the imposition of a "prohibited transaction" or "prohibited
contribution" tax under the REMIC Provisions;
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- expose the Master Servicer, the Special Servicer, the Depositor, the
Mortgage Loan Seller, the Trust Fund, the Trustee or their officers,
directors, employees or agents to any claim, suit or liability; or
- materially expand the scope of the Master Servicer's or the Special
Servicer's responsibilities under the Pooling Agreement.
The Special Servicer is to disregard any such advice, direction or
objection that does so. Furthermore, the Special Servicer will not be obligated
to seek approval from the Directing Certificateholder for any action to be taken
by the Special Servicer with respect to any particular Specially Serviced
Mortgage Loan if --
- the Special Servicer has, as described above, notified the Directing
Certificateholder in writing of various actions that the Special Servicer
proposes to take with respect to the workout or liquidation of that
Mortgage Loan, and
- for 60 days following the first such notice, the Directing
Certificateholder has objected to all of those proposed actions and has
failed to suggest any alternative actions that the Special Servicer
considers to be consistent with the Servicing Standard.
The Directing Certificateholder will have no liability to the
Certificateholders for taking any action, or for refraining from the taking of
any action, in good faith pursuant to the Pooling Agreement, or for errors in
judgement. The Directing Certificateholder may, and is permitted under the
Pooling Agreement to, take actions that favor interests of the Holders of the
Controlling Class over the interests of the Holders of one or more other Classes
of Certificates.
The "Directing Certificateholder" is the Controlling Class
Certificateholder selected by the majority Certificateholder of the Controlling
Class, as certified by the Trustee from time to time; provided, however, that
(i) absent such selection, or (ii) until a Directing Certificateholder is so
selected, or (iii) upon receipt of a notice from a majority of the Controlling
Class, by Certificate Balance, that a Directing Certificateholder is no longer
designated, the Controlling Class Certificateholder that owns the largest
aggregate Certificate Balance of the Controlling Class will be the Directing
Certificateholder.
A "Controlling Class Certificateholder" is each Holder (or Certificate
Owner, if applicable) of a Certificate of the Controlling Class as certified to
the Trustee from time to time by such Holder (or Certificate Owner).
The "Controlling Class" will be, as of any date of determination, the
outstanding Class of Sequential Pay Certificates with the lowest payment
priority (the Class A Certificates being treated as a single class for this
purpose) that has a then outstanding Certificate Balance at least equal to 25%
of its initial Certificate Balance (or, if no Class of Sequential Pay
Certificates has a Certificate Balance at least equal to 25% of its initial
Certificate Balance, then the Controlling Class shall be the outstanding Class
of Sequential Pay Certificates with the then lowest principal payment priority
with at least two percent of the initial Class principal balance outstanding).
The Controlling Class as of the Delivery Date will be the Class N Certificates.
The Master Servicer and Special Servicer will each be required to service
and administer any group of related Cross-Collateralized Mortgage Loans as a
single Mortgage Loan as and when it deems necessary and appropriate, consistent
with the Servicing Standard. If any Cross-Collateralized Mortgage Loan becomes a
Specially Serviced Mortgage Loan, then each other Mortgage Loan that is
cross-collateralized with it shall also become a Specially Serviced Mortgage
Loan. Similarly, no Cross-Collateralized Mortgage Loan shall subsequently become
a Corrected Mortgage Loan, unless and until all Servicing Transfer Events in
respect of each other Mortgage Loan with which it is cross-collateralized, are
remediated or otherwise addressed as contemplated above.
Set forth below is a description of certain pertinent provisions of the
Pooling Agreement relating to the servicing of the Mortgage Loans. Reference is
also made to the accompanying prospectus, in particular to the section captioned
"The Pooling and Servicing Agreements," for additional important information
regarding the terms and conditions of the Pooling Agreement as such terms and
conditions relate to the rights and obligations of the Master Servicer and the
Special Servicer thereunder.
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THE MASTER SERVICER
Midland Loan Services, Inc. ("Midland"), a wholly-owned subsidiary of PNC
Bank, National Association, is a real estate financial services company which
provides loan servicing and asset management for large pools of commercial and
multifamily real estate assets and that originates commercial real estate loans.
Midland's address is 210 West 10th Street, 6th Floor, Kansas City, Missouri
64105.
As of August 31, 2000, Midland was responsible for the servicing of
approximately 13,938 commercial and multifamily loans with a principal balance
of approximately $48.8 billion. The collateral for these loans is located in all
50 states, Puerto Rico, Canada and the District of Columbia. Approximately 9,948
loans with a total principal balance of approximately $39.3 billion pertain to
commercial and multifamily mortgage-backed securities. The portfolio includes
multifamily, office, retail, hotel/motel and other types of income producing
properties. Midland also services newly-originated loans and loans acquired in
the secondary market for issuers of commercial and multifamily mortgage-backed
securities, financial institutions and private investors.
Midland has been approved as a master and special servicer for investment
grade-rated commercial and multifamily mortgage-backed securities by S&P and
Moody's. Midland is also a HUD/FHA-approved mortgagee and a Fannie Mae-approved
multifamily loan servicer.
The Master Servicer currently maintains an Internet-based investor
reporting system, CMBS Investor Insight(sm), that contains updated performance
information at the portfolio, loan and property levels on the various commercial
mortgage-backed securities transactions that it services. Certificateholders,
prospective transferees and other appropriate parties may obtain access to CMBS
Investor Insight(sm) through the Master Servicer's website, www.midlandls.com.
The Master Servicer may require registration and the execution of an access
agreement in connection with providing access to CMBS Investor Insight(sm).
Specific questions about portfolio, loan and property performance may be sent to
the Master Servicer via e-mail at askmidland@midlandls.com.
The information set forth herein concerning the Master Servicer has been
provided by Midland and neither the Depositor nor the Underwriter makes any
representation or warranty as to the accuracy or completeness of such
information.
THE SPECIAL SERVICER
GMAC Commercial Mortgage Corporation, a California corporation ("GMACCM"),
will act as the special servicer (the "Special Servicer") pursuant to the
Pooling Agreement. GMACCM is a wholly-owned direct subsidiary of GMAC Commercial
Holding Corporation, which in turn is a direct subsidiary of GMAC Mortgage
Group, Inc. GMAC Mortgage Group, Inc. is in turn a wholly-owned direct
subsidiary of General Motors Acceptance Corporation. The principal offices of
GMACCM are located at 200 Witmer Road, Horsham, Pennsylvania 19044.
As of June 30, 2000, GMACCM was the special servicer of a portfolio of
multifamily and commercial loans totaling approximately $43 billion in aggregate
outstanding principal amount.
The information set forth herein concerning the Special Servicer has been
provided by GMACCM and neither the Depositor nor the Underwriter makes any
representation or warranty as to the accuracy or completeness of such
information.
SUB-SERVICERS
The Master Servicer and Special Servicer may each delegate its servicing
obligations in respect of the Mortgage Loans serviced thereby to one or more
third-party servicers (each, a "Sub-Servicer"); provided that the Master
Servicer or Special Servicer, as the case may be, will remain obligated under
the Pooling Agreement for such delegated duties. A majority of the Mortgage
Loans are currently being primary serviced by third-party servicers that are
entitled to and will become Sub-Servicers of such loans on behalf of the Master
Servicer. Each sub-servicing agreement between the Master Servicer or Special
Servicer, as the case may be, and a Sub-Servicer (each, a "Sub-Servicing
Agreement") must provide that, if for any reason the
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Master Servicer or Special Servicer, as the case may be, is no longer acting in
such capacity, the Trustee or any successor to such Master Servicer or Special
Servicer may (1) assume such party's rights and obligations under such
Sub-Servicing Agreement, (2) enter into a new Sub-Servicing Agreement with such
Sub-Servicer on such terms as the Trustee or such other successor Master
Servicer or Special Servicer and such Sub-Servicer shall mutually agree or (3)
terminate such Sub-Servicer without cause (but only upon payment to the
Sub-Servicer of specified compensation). The Master Servicer and Special
Servicer will each be required to monitor the performance of Sub-Servicers
retained by it.
The Trust will not be responsible for any fees owed to any Sub-Servicer
retained by the Master Servicer or the Special Servicer. Each Sub-Servicer
retained thereby will be reimbursed by the Master Servicer or Special Servicer,
as the case may be, for certain expenditures which it makes, generally to the
same extent the Master Servicer or Special Servicer would be reimbursed under
the Pooling Agreement. See " -- Servicing and Other Compensation and Payment of
Expenses" herein.
SERVICING AND OTHER COMPENSATION AND PAYMENT OF EXPENSES
The principal compensation to be paid to the Master Servicer in respect of
its master servicing activities will be the Master Servicing Fee. The "Master
Servicing Fee" will be payable monthly on a loan-by-loan basis from amounts
received in respect of interest on each Mortgage Loan (including Specially
Serviced Mortgage Loans and Mortgage Loans as to which the related Mortgaged
Property has become an REO Property), will accrue at the applicable Master
Servicing Fee Rate and will be computed on the Stated Principal Balance as of
the Due Date in the immediately preceding Collection Period and for the same
number of days respecting which any related interest payment on the related
Mortgage Loan is computed under the terms of the related Mortgage Note and
applicable law. The "Master Servicing Fee Rate" will range from 0.09075% to
0.29075% per annum, on a loan-by-loan basis, with a weighted average Master
Servicing Fee Rate of 0.13798% per annum as of the Cut-off Date. In the event
that Midland shall resign or be terminated as the Master Servicer and a
successor Master Servicer shall agree for any reason to perform services of the
Master Servicer for an amount (the "Successor Servicer Retained Fee") less than
the Master Servicing Fee, no part of any excess of the Master Servicing Fee over
the Successor Servicer Retained Fee will be available for payment to
Certificateholders. As additional servicing compensation, the Master Servicer
will be entitled to retain Prepayment Interest Excesses (as described below)
collected on the Mortgage Loans. In addition, the Master Servicer will be
authorized to invest or direct the investment of funds held in any and all
accounts maintained by it that constitute part of the Certificate Account, in
certain government securities and other investment grade obligations specified
in the Pooling Agreement ("Permitted Investments"), and the Master Servicer will
be entitled to retain any interest or other income earned on such funds, but
will be required to cover any losses from its own funds without any right to
reimbursement.
If a borrower prepays a Mortgage Loan, in whole or in part, after the Due
Date but on or before the Determination Date in any calendar month, the amount
of interest (net of related Master Servicing Fees) accrued on such prepayment
from such Due Date to, but not including, the date of prepayment (or any later
date through which interest accrues) will, to the extent actually collected,
constitute a "Prepayment Interest Excess". Conversely, if a borrower prepays a
Mortgage Loan other than a Specially-Serviced Mortgage Loan (a "Non-Specially
Serviced Mortgage Loan"), in whole or in part, after the Determination Date in
any calendar month and does not pay interest on such prepayment through the end
of such calendar month, then the shortfall in a full month's interest (net of
related Master Servicing Fees) on such prepayment will constitute a "Prepayment
Interest Shortfall". Prepayment Interest Excesses (to the extent not offset by
Prepayment Interest Shortfalls) collected on the Mortgage Loans will be retained
by the Master Servicer as additional servicing compensation. The Master Servicer
will cover, out of its own funds, any Prepayment Interest Shortfalls incurred
with respect to the Non-Specially Serviced Mortgage Loans during any Collection
Period, but only to the extent of Prepayment Interest Excesses and a portion of
its aggregate Master Servicing Fee for the related Collection Period, which
portion is, in the case of each and every Non-Specially Serviced Mortgage Loan,
calculated at 0.01% per annum.
The principal compensation to be paid to the Special Servicer in respect of
its special servicing activities will be the Standby Fee, the Special Servicing
Fee, the Workout Fee and the Liquidation Fee. The "Standby
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Fee" will accrue with respect to each Mortgage Loan (including a Specially
Serviced Mortgage Loan and a Mortgage Loan as to which the related Mortgaged
Property has become an REO Property) in the same manner as the Master Servicing
Fee, and will be payable by the Master Servicer out of its Master Servicing Fees
received with respect to such Mortgage Loan (or be advanced if such fees are
insufficient). The "Special Servicing Fee" will accrue with respect to each
Specially Serviced Mortgage Loan and each Mortgage Loan as to which the related
Mortgaged Property has become an REO Property, at a rate equal to 0.25% per
annum (the "Special Servicing Fee Rate"), on the Stated Principal Balance as of
the Due Date in the immediately preceding Collection Period and for the same
number of days respecting which any related interest payment due or deemed due
on such Mortgage Loan is computed under the related Mortgage Loan and applicable
law. All such Special Servicing Fees will be payable monthly from general
collections on the Mortgage Loans and any REO Properties on deposit in the
Certificate Account from time to time. A "Workout Fee" will in general be
payable with respect to each Corrected Mortgage Loan. As to each Corrected
Mortgage Loan, the Workout Fee will be payable out of, and will be calculated by
application of a "Workout Fee Rate" of 1.0% to, each collection of interest
(other than Default Interest (as defined below)) and principal (including
scheduled payments, prepayments, Balloon Payments, Liquidation Proceeds and
payments at maturity) received on such Mortgage Loan for so long as it remains a
Corrected Mortgage Loan. The Workout Fee with respect to any Corrected Mortgage
Loan will cease to be payable if such loan again becomes a Specially Serviced
Mortgage Loan or if the related Mortgaged Property becomes an REO Property;
provided that a new Workout Fee will become payable if and when such Mortgage
Loan again becomes a Corrected Mortgage Loan. If the Special Servicer is
terminated (other than for cause), resigns or is replaced, it shall retain the
right to receive any and all Workout Fees payable with respect to Mortgage Loans
that became Corrected Mortgage Loans during the period that it acted as Special
Servicer and were still such at the time of such termination or resignation (and
the successor Special Servicer shall not be entitled to any portion of such
Workout Fees), in each case until the Workout Fee for any such loan ceases to be
payable in accordance with the preceding sentence. A "Liquidation Fee" will be
payable with respect to each Specially Serviced Mortgage Loan as to which the
Special Servicer obtains a full or discounted payoff or unscheduled or partial
payments in lieu thereof with respect thereto from the related borrower and,
except as otherwise described below, with respect to any Specially Serviced
Mortgage Loan or REO Property as to which the Special Servicer receives any
Liquidation Proceeds. As to each such Specially Serviced Mortgage Loan and REO
Property, the Liquidation Fee will be payable from, and will be calculated by
application of a "Liquidation Fee Rate" of 1.0% to, the related payment or
proceeds (other than any portion thereof that represents accrued but unpaid
Default Interest). Notwithstanding anything to the contrary described above, no
Liquidation Fee will be payable based on, or out of, Liquidation Proceeds
received in connection with (i) the repurchase of any Mortgage Loan by the
Mortgage Loan Seller, for a breach of representation or warranty or for
defective or deficient Mortgage Loan documentation so long as such repurchase
occurs within the time required under the Pooling Agreement, (ii) the purchase
of any defaulted Mortgage Loan or REO Property by the Master Servicer, the
Special Servicer or any holder or holders of Certificates evidencing a majority
interest in the Controlling Class or (iii) the purchase of all of the Mortgage
Loans and REO Properties by the Master Servicer, the Special Servicer or any
holder or holders of Certificates evidencing a majority interest in the
Controlling Class in connection with the termination of the Trust. If, however,
Liquidation Proceeds are received with respect to any Corrected Mortgage Loan
and the Special Servicer is properly entitled to a Workout Fee, such Workout Fee
will be payable based on and out of the portion of such Liquidation Proceeds
that constitute principal and/or interest. The Special Servicer will be
authorized to invest or direct the investment of funds held in any accounts
maintained by it that constitute part of the Certificate Account, in Permitted
Investments, and the Special Servicer will be entitled to retain any interest or
other income earned on such funds, but will be required to cover any losses from
its own funds without any right to reimbursement.
The Master Servicer and the Special Servicer will each be responsible for
the fees of any Sub-Servicers retained by it (without right of reimbursement
therefor). As additional servicing compensation, the Sub-Servicers (or, to the
extent such Sub-Servicers are not entitled thereto, the Master Servicer) with
respect to Mortgage Loans that are not Specially Serviced Mortgage Loans, and
the Special Servicer with respect to Specially Serviced Mortgage Loans,
generally will be entitled to retain all assumption and modification fees
(except that with respect to Portfolio Mortgage Loans that are not Specially
Serviced Mortgage Loans, the
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Master Servicer and the Special Servicer may choose to divide such fees as they
see fit), "Default Interest" (that is, interest in excess of interest at the
related Mortgage Rate accrued as a result of a default) and late payment charges
(to the extent such Default Interest and/or late payment charges are not
otherwise applied to cover interest on Advances if received on a Conduit
Mortgage Loan that is primary serviced by the Mortgage Loan Seller, a Portfolio
Mortgage Loan or a Specially Serviced Mortgage Loan (if, but only if, such
Default Interest is allocable to the period such Mortgage Loan was a Specially
Serviced Mortgage Loan)), charges for beneficiary statements or demands and any
similar fees, in each case to the extent actually paid by the borrowers with
respect to such Mortgage Loans (and, accordingly, such amounts will not be
available for distribution to Certificateholders). The respective Sub-Servicers
(or, to the extent such Sub-Servicers are not entitled thereto, the Master
Servicer) shall be entitled to receive all amounts collected for checks returned
for insufficient funds with respect to all Mortgage Loans as additional
servicing compensation. Default Interest and late payment charges accrued in
respect of any Conduit Mortgage Loan that is primary serviced by the Mortgage
Loan Seller or any Portfolio Mortgage Loan are to be applied to cover interest
on Advances in respect of such Mortgage Loan. Additionally, Default Interest and
late payment charges accrued in respect of any Mortgage Loan after it has become
a Specially Serviced Mortgage Loan are to be applied to cover interest on
Advances in respect of such Mortgage Loan. In addition, collections on a
Mortgage Loan are to be applied to interest (at the related Mortgage Rate) and
principal then due and owing prior to being applied to Default Interest and late
payment charges.
The Master Servicer and the Special Servicer will, in general, each be
required to pay its overhead and any general and administrative expenses
incurred by it in connection with its servicing activities under the Pooling
Agreement, and neither will be entitled to reimbursement therefor except as
expressly provided in the Pooling Agreement. In general, customary, reasonable
and necessary "out of pocket" costs and expenses incurred by the Master Servicer
or Special Servicer in connection with the servicing of a Mortgage Loan after a
default, delinquency or other unanticipated event, or in connection with the
administration of any REO Property, will constitute "Servicing Advances"
(Servicing Advances and P&I Advances, collectively, "Advances") and, in all
cases (subject to recoverability), will be reimbursable from future payments and
other collections, including in the form of Insurance Proceeds, Condemnation
Proceeds and Liquidation Proceeds, on or in respect of the related Mortgage Loan
or REO Property ("Related Proceeds"). Notwithstanding the foregoing, the Master
Servicer and the Special Servicer will each be permitted to pay, or to direct
the payment of, certain servicing expenses directly out of the Certificate
Account and at times without regard to the relationship between the expense and
the funds from which it is being paid (including in connection with the
remediation of any adverse environmental circumstance or condition at a
Mortgaged Property or an REO Property, although in such specific circumstances
the Master Servicer may advance the costs thereof). The Special Servicer will
only be required to make Servicing Advances if such a Servicing Advance must be
made within five Business Days in order to avoid a material adverse consequence
to the Trust Fund (each such Servicing Advance, an "Emergency Advance"). The
Special Servicer may from time to time require the Master Servicer to reimburse
it for any Servicing Advance made as an Emergency Advance thereby (in which
case, such Servicing Advance will be deemed to have been made by the Master
Servicer). Servicing Advances other than Emergency Advances will be made by the
Master Servicer. However, the Special Servicer is obligated to make any
Servicing Advance with respect to Specially Serviced Mortgage Loans and REO
Properties that it fails to timely request the Master Servicer to make. The
Special Servicer will, with limited exception as described in the preceding
sentence, be relieved of any obligations with respect to an Advance that it
timely requests the Master Servicer to make (regardless of whether or not the
Master Servicer makes that Advance). The Master Servicer will be required to
make any such Servicing Advance that it is requested by the Special Servicer to
so make within five business days of the Master Servicer's receipt of such
request.
If (i) the Special Servicer is required under the Pooling Agreement to make
a Servicing Advance, but does not make such Servicing Advance within two
business days after the Special Servicer receives notice from the Trustee or the
Master Servicer of failure to make such Servicing Advance, the Master Servicer
will, if it has actual knowledge of such failure on the part of the Special
Servicer, make such Servicing Advance, and if the Master Servicer fails to make
such Servicing Advance, then within one business day after the Master Servicer
receives notice from the Trustee of its failure to make such Servicing Advance,
and/or
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(ii) the Master Servicer is required under the Pooling Agreement to make a
Servicing Advance, but does not make such Servicing Advance within one business
day after the Master Servicer receives notice from the Trustee of failure to
make such Servicing Advance, then if the Trustee has actual knowledge of such
failure on the part of the Master Servicer in either of clause (i) or (ii)
above, it will be required to make such Servicing Advance.
Notwithstanding the foregoing, the Master Servicer, the Special Servicer
and the Trustee will be obligated to make Servicing Advances only to the extent
that such Servicing Advances are, in the reasonable and good faith judgment of
the Master Servicer, the Special Servicer or the Trustee, as the case may be,
ultimately recoverable from Related Proceeds (any Servicing Advance not so
recoverable, a "Nonrecoverable Servicing Advance").
The foregoing paragraph notwithstanding, the Master Servicer is required
(at the direction of the Special Servicer if a Specially Serviced Mortgage Loan
or an REO Property is involved) to pay directly out of the Certificate Account
any servicing expense that, if paid by the Master Servicer or the Special
Servicer, would constitute a Nonrecoverable Servicing Advance; provided that the
Master Servicer (or the Special Servicer, if a Specially Serviced Mortgage Loan
or an REO Property is involved) has determined in accordance with the Servicing
Standard that making such payment is in the best interests of the
Certificateholders (as a collective whole), as evidenced by an officer's
certificate delivered promptly to the Trustee, the Depositor and the Rating
Agencies, setting forth the basis for such determination and accompanied by any
supporting information the Master Servicer or the Special Servicer may have
obtained.
As and to the extent described herein, the Master Servicer, the Special
Servicer and the Trustee are each entitled to receive interest at the
Reimbursement Rate (compounded monthly) on Servicing Advances made thereby. See
"The Pooling and Servicing Agreements -- Certificate Account" and "-- Servicing
Compensation and Payment of Expenses" in the accompanying prospectus and
"Description of the Certificates -- P&I Advances" in this prospectus supplement.
EVIDENCE AS TO COMPLIANCE
On or before April 30 of each year, beginning April 30, 2000, each of the
Master Servicer and the Special Servicer, at its expense, will be required to
cause a firm of independent public accountants that is a member of the American
Institute of Certified Public Accountants to furnish a statement to the
Depositor and the Trustee to the effect that such firm has examined such
documents and records as it has deemed necessary and appropriate relating to the
Master Servicer's or Special Servicer's, as the case may be, servicing of the
Mortgage Loans under the Pooling Agreement or servicing of mortgage loans
similar to the Mortgage Loans under substantially similar agreements for the
preceding calendar year (or during the period from the date of commencement of
the Master Servicer's or Special Servicer's, as the case may be, duties under
the Pooling Agreement until the end of such preceding calendar year in the case
of the first such certificate) and that on the basis of such examination
conducted substantially in compliance with generally accepted auditing standards
and the Uniform Single Attestation Program for Mortgage Bankers, such servicing
has been conducted in compliance with similar agreements except for such
significant exceptions or errors in records that, in the opinion of such firm,
generally accepted auditing standards and the Uniform Single Attestation Program
for Mortgage Bankers require it to report, in which case such exceptions and
errors shall be so reported.
The Pooling Agreement also requires that, on or before a specified date in
each year, commencing in 2000, each of the Master Servicer and the Special
Servicer deliver to the Trustee a statement signed by one or more officers
thereof to the effect that the Master Servicer or Special Servicer, as the case
may be, has fulfilled its material obligations under the Pooling Agreement in
all material respects throughout the preceding calendar year or the portion
thereof during which the Certificates were outstanding.
MODIFICATIONS, WAIVERS, AMENDMENTS AND CONSENTS
The Special Servicer (as to Specially Serviced Mortgage Loans, and, where
applicable, as to consents to actions of the Master Servicer) and, to a limited
extent, the Master Servicer (as to Non-Specially Serviced
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Mortgage Loans) each may, consistent with the Servicing Standard, agree to any
modification, waiver or amendment of any term of, forgive or defer the payment
of interest on and principal of, permit the release, addition or substitution of
collateral securing, and/or permit the release of the borrower on or any
guarantor of any Mortgage Loan it is required to service and administer, without
the consent of the Trustee or any Certificateholder, subject, however, to each
of the following limitations, conditions and restrictions:
(i) with limited exception, the Master Servicer shall not agree to any
modification, waiver or amendment of any term of, with respect to, any
Mortgage Loan without the consent of the Special Servicer (which shall
decide whether to withhold or grant such consent in accordance with the
Servicing Standard) and neither the Master Servicer nor the Special
Servicer may agree to any modification, waiver or amendment of any term of,
or take any of the other above referenced actions with respect to, any
Mortgage Loan it is required to service and administer that would affect
the amount or timing of any related payment of principal, interest or other
amount payable thereunder or, in the Master Servicer's or the Special
Servicer's good faith and reasonable judgment, would materially alter the
security for such Mortgage Loan or reduce the likelihood of timely payment
of amounts due thereon; provided, however, the Special Servicer may agree
to any modification, waiver or amendment of any term of, or take any of the
other above referenced actions with respect to, a Specially Serviced
Mortgage Loan that would have any such effect, but only if a material
default on such Mortgage Loan has occurred or, in the Special Servicer's
reasonable and good faith judgment, a default in respect of payment on such
Mortgage Loan is reasonably foreseeable, and such modification, waiver,
amendment or other action is reasonably likely to produce a greater
recovery to Certificateholders (collectively) on a present value basis than
would liquidation as certified to the Trustee in an officer's certificate;
(ii) the Special Servicer may not, in connection with any particular
extension, extend the maturity date of a Mortgage Loan beyond a date that
is two years prior to the Rated Final Distribution Date, or beyond a date
which is 10 years prior to the expiration date of any related Ground Lease;
(iii) unless the proviso to clause (i) above applies, neither the
Master Servicer nor the Special Servicer may make or permit any
modification, waiver or amendment of any term of, or take any of the other
above referenced actions with respect to, any Mortgage Loan that would
constitute a "significant modification" of such Mortgage Loan within the
meaning of Treasury Regulations Section 1.860G-2(b) (neither the Master
Servicer nor the Special Servicer shall be liable for judgments as regards
decisions made under this subsection which were made in good faith and,
unless it would constitute bad faith or gross negligence to do so, each of
the Master Servicer and the Special Servicer may rely on opinions of
counsel in making such decisions);
(iv) the Special Servicer shall not, in the case of Specially Serviced
Mortgage Loans, permit (or, in the case of Non-Specially Serviced Mortgage
Loans, consent to the Master Servicer's permitting) any borrower to add or
substitute any collateral for an outstanding Mortgage Loan, which
collateral constitutes real property, unless (A) the Special Servicer shall
have first determined in accordance with the Servicing Standard, based upon
a Phase I environmental assessment (and such additional environmental
testing as the Special Servicer deems necessary and appropriate), that such
additional or substitute collateral is in compliance with applicable
environmental laws and regulations and that there are no circumstances or
conditions present with respect to such new collateral relating to the use,
management or disposal of any hazardous materials for which investigation,
testing, monitoring, containment, clean-up or remediation would be required
under any then applicable environmental laws and/or regulations and (B) if
required by a Rating Agency, the Master Servicer or the Special Servicer,
as the case may be, shall have obtained written confirmation from such
Rating Agency that such addition or substitution will not result in the
withdrawal, downgrade or qualification of any rating then assigned to any
Class of Certificates;
(v) with limited exceptions, including a permitted defeasance as
described above under "Description of the Mortgage Pool -- Certain Terms
and Conditions of the Mortgage Loans -- Defeasance" and specific releases
contemplated by the terms of the mortgage loans in effect on the Trust
Formation Date, the Special Servicer shall not, in the case of Specially
Serviced Mortgage Loans, release (or, in the case
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of Non-Specially Serviced Mortgage Loans, consent to the Master Servicer's
releasing) release any collateral securing an outstanding Mortgage Loan;
and
(vi) except to the extent the Special Servicer determines that a
modification, waiver or amendment is required for the best interests of all
Certificateholders in accordance with the Servicing Standard, the Special
Servicer shall not agree to any modification, waiver or amendment of any
term of, or take any of the other foregoing actions, with respect to any
Specially Serviced Mortgage Loan if such action would not be generally
consistent with the Servicing Standard.
In addition, assumptions of Non-Specially Serviced Mortgage Loans will also
require the consent of the Special Servicer (which consent shall be granted or
withheld in accordance with the Servicing Standard). Notwithstanding clauses (i)
through (vi) above, neither the Master Servicer nor the Special Servicer will be
required to oppose the confirmation of a plan in any bankruptcy or similar
proceeding involving a borrower if in their reasonable and good faith judgment
such opposition would not ultimately prevent the confirmation of such plan or
one substantially similar.
The Master Servicer will not be required to seek the consent of the Special
Servicer or any Certificateholder in order to approve certain minor or routine
modifications, waivers or amendments of the Mortgage Loans, including waivers of
minor covenant defaults, releases of non-material parcels of a Mortgaged
Property, grants of easements that do not materially affect the use or value of
a Mortgaged Property or a borrower's ability to make any payments with respect
to the related Mortgage Loan; provided that any such modification, waiver or
amendment may not affect a payment term of the Certificates, constitute a
"significant modification" of such Mortgage Loan pursuant to Treasury
Regulations Section 1.860G-2(b) or otherwise have an adverse REMIC effect, be
inconsistent with the Servicing Standard, or violate the terms, provisions or
limitations of the Pooling Agreement.
SALE OF DEFAULTED MORTGAGE LOANS
The Pooling Agreement grants to the Master Servicer, the Special Servicer
and any holder or holders of Certificates evidencing a majority interest in the
Controlling Class a right to purchase from the Trust certain defaulted Mortgage
Loans in the priority described below. If the Special Servicer has determined,
in its good faith and reasonable judgment, that any defaulted Mortgage Loan will
become the subject of a foreclosure sale or similar proceeding and that the sale
of such Mortgage Loan under the circumstances described in this paragraph is in
accordance with the Servicing Standard, the Special Servicer will be required to
promptly so notify in writing the Trustee and the Master Servicer, and the
Trustee will be required, within 5 business days after receipt of such notice,
to notify the holder (or holders) of the Controlling Class. A single holder or
particular group of holders of Certificates evidencing a majority interest in
the Controlling Class may, at its or their option, purchase any such defaulted
Mortgage Loan from the Trust, at a price equal to the applicable Purchase Price.
If such Certificateholder(s) has (have) not purchased such defaulted Mortgage
Loan within 5 days of its having received notice in respect thereof, either the
Special Servicer or the Master Servicer, in that order, may, at its option,
purchase such defaulted Mortgage Loan from the Trust, at a price equal to the
applicable Purchase Price.
The Special Servicer may offer to sell any defaulted Mortgage Loan that has
not otherwise been purchased as described in the prior paragraph, if and when
the Special Servicer determines, consistent with the Servicing Standard, that
such a sale would maximize the recovery of such Mortgage Loan on a present value
basis. Such offer is to be made in a commercially reasonable manner. Unless the
Special Servicer determines that acceptance of any offer would not be in the
best interest of the Trust, the Special Servicer shall accept the highest cash
offer received from any person that constitutes a fair price (which may be less
than the Purchase Price) for such Mortgage Loan; provided that none of the
Special Servicer, the Master Servicer, the Depositor, the Mortgage Loan Seller,
the holder of any Certificate or any affiliate of any such party (each, an
"Interested Person") may purchase such Mortgage Loan (or any REO Property
acquired in respect thereof) for less than the Purchase Price unless at least
two other offers are received from independent third parties at a price that is
less than the Purchase Price and the price proposed by any Interested Persons;
and provided, further, that neither the Trustee nor an affiliate thereof may
make an offer for any such
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Mortgage Loan. See also "The Pooling and Servicing Agreements--Realization Upon
Defaulted Mortgage Loans" in the accompanying prospectus.
REO PROPERTIES
If title to any Mortgaged Property is acquired by the Special Servicer on
behalf of the Certificateholders, the Special Servicer, on behalf of such
holders, will be required to sell the Mortgaged Property not later than the end
of third calendar year following the year of acquisition, unless (i) the
Internal Revenue Service grants an extension of time to sell such property (an
"REO Extension") or (ii) the Special Servicer obtains an opinion of independent
counsel generally to the effect that the holding of the property subsequent to
the end of the third calendar year following the year in which such acquisition
occurred will not result in the imposition of a tax on the Trust or cause REMIC
I, REMIC II, REMIC III, REMIC IIIU or REMIC IV to fail to qualify as a REMIC
under the Code. Subject to the foregoing, the Special Servicer will generally be
required to solicit cash offers for any Mortgaged Property so acquired in such a
manner as will be reasonably likely to realize a fair price for such property.
The Special Servicer may retain an independent contractor to operate and manage
any REO Property; however, the retention of an independent contractor will not
relieve the Special Servicer of its obligations with respect to such REO
Property.
Subject to the foregoing and other requirements of the Code for maintaining
the status of "foreclosure property", however, the Special Servicer shall have
full power and authority to do any and all things in connection therewith as are
in the best interests of and for the benefit of the Certificateholders (as
determined by the Special Servicer in its good faith and reasonable judgment).
The Special Servicer could determine that it would not be commercially feasible
to manage and operate such property in a manner that would avoid the imposition
of a tax on "net income from foreclosure property". Generally, net income from
foreclosure property means income which does not qualify as "rents from real
property" within the meaning of Code Section 856(c)(3)(A) and Treasury
regulations thereunder or as income from the sale of such REO Property. "Rents
from real property" do not include the portion of any rental based on the net
income or gain of any tenant or sub-tenant. No determination has been made
whether rent on any of the Mortgaged Properties meets this requirement. "Rents
from real property" include charges for services customarily furnished or
rendered in connection with the rental of real property, whether or not the
charges are separately stated. Services furnished to the tenants of a particular
building will be considered as customary if, in the geographic market in which
the building is located, tenants in buildings which are of similar class are
customarily provided with the service. No determination has been made whether
the services furnished to the tenants of the Mortgaged Properties are
"customary" within the meaning of applicable regulations. It is therefore
possible that a portion of the rental income with respect to a Mortgaged
Property owned by the Trust Fund, presumably allocated based on the value of any
non-qualifying services, would not constitute "rents from real property." In
addition to the foregoing, any net income from a trade or business operated or
managed by an independent contractor on a Mortgaged Property owned by REMIC I,
such as a hotel or skilled nursing care business, will not constitute "rents
from real property." Any of the foregoing types of income instead constitute
"net income from foreclosure property," which would be taxable to REMIC I at the
highest marginal federal corporate rate (currently 35%) and may also be subject
to state or local taxes. Any such taxes would be chargeable against the related
income for purposes of determining the Net REO Proceeds available for
distribution to holders of Certificates. See "Certain Federal Income Tax
Consequences -- REMICs -- Prohibited Transactions Tax and Other Taxes" in the
accompanying prospectus.
INSPECTIONS; COLLECTION OF OPERATING INFORMATION
Commencing in 2001, the Master Servicer is required to perform (or cause to
be performed) physical inspections of each Mortgaged Property (other than REO
Properties and Mortgaged Properties securing Specially Serviced Mortgage Loans)
at least once every two years (or, if the related Mortgage Loan has a
then-current balance greater than $2,000,000 or greater than or equal to 2% of
the then current aggregate principal balance of the Mortgage Pool, at least once
every year), provided that at least 50% of the Mortgaged Properties (by both
number and aggregate Stated Principal Balances of the related Mortgage Loans)
will be inspected each year by the Master Servicer (or an entity employed by the
Master Servicer for such purpose)
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or, as described in the following sentence, the Special Servicer. In addition,
the Special Servicer, subject to statutory limitations or limitations set forth
in the related loan documents, is required to perform a physical inspection of
each Mortgaged Property within 60 days after servicing of the related Mortgage
Loan is transferred thereto and annually thereafter so long as it is a Specially
Serviced Mortgage Loan. The Special Servicer and the Master Servicer will each
be required to prepare (or cause to be prepared) as soon as reasonably possible
a written report of each such inspection performed thereby describing the
condition of the Mortgaged Property.
With respect to each Mortgage Loan that requires the borrower to deliver
quarterly or annual operating statements with respect to the related Mortgaged
Property, the Master Servicer or the Special Servicer, depending on which is
obligated to service such Mortgage Loan, is also required to make reasonable
efforts to collect and review such statements. However, there can be no
assurance that any operating statements required to be delivered will in fact be
so delivered, nor is the Master Servicer or the Special Servicer likely to have
any practical means of compelling such delivery in the case of an otherwise
performing Mortgage Loan.
TERMINATION OF THE SPECIAL SERVICER
The holder or holders of Certificates evidencing a majority interest in the
Controlling Class may at any time replace any Special Servicer. Such holder(s)
shall designate a replacement to so serve by the delivery to the Trustee of a
written notice stating such designation. The Trustee shall, promptly after
receiving any such notice, so notify the Rating Agencies. If the designated
replacement is acceptable to the Trustee, which approval may not be unreasonably
withheld, the designated replacement shall become the Special Servicer as of the
date the Trustee shall have received: (i) written confirmation from each Rating
Agency stating that if the designated replacement were to serve as Special
Servicer under the Pooling Agreement, the then-current rating or ratings of one
or more Classes of the Certificates would not be qualified, downgraded or
withdrawn as a result thereof; (ii) a written acceptance of all obligations of
the Special Servicer, executed by the designated replacement; and (iii) an
opinion of counsel to the effect that the designation of such replacement to
serve as Special Servicer is in compliance with the Pooling Agreement, that the
designated replacement will be bound by the terms of the Pooling Agreement and
that the Pooling Agreement will be enforceable against such designated
replacement in accordance with its terms. The existing Special Servicer shall be
deemed to have resigned simultaneously with such designated replacement's
becoming the Special Servicer under the Pooling Agreement.
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DESCRIPTION OF THE CERTIFICATES
GENERAL
The Depositor originally issued its Commercial Mortgage Pass-Through
Certificates, Series 2000-1 (the "Certificates") on December 21, 1999 (the
"Trust Formation Date"), pursuant to a Pooling and Servicing Agreement, dated as
of the Original Cut-off Date, among the Depositor, the Master Servicer, the
Special Servicer, the Trustee, the REMIC Administrator and the Mortgage Loan
Seller (the "Original Pooling Agreement"). Interests in the trust established by
the Original Pooling Agreement corresponding to the Offered Certificates and the
Class G, Class H and Class K Certificates were issued to the Mortgage Loan
Seller in partial consideration for the Mortgage Loans. On February 16, 2000
(the "First Amendment Date"), the Mortgage Loan Seller transferred interests
corresponding to the Class X, Class G, Class H and Class K Certificates to the
Depositor, the Depositor transferred such interests to the Trustee in exchange
for the newly structured Class X, Class G, Class H and Class K Certificates (the
Original Pooling Agreement, as so amended and restated, is referred to in this
prospectus supplement as the "First Amended Pooling Agreement"). On and as of
September 27, 2000 (the "Delivery Date"), the Mortgage Loan Seller will transfer
interests corresponding to the Offered Certificates to the Depositor, the
Depositor will transfer such interests to the Trustee in exchange for the
Offered Certificates, and the First Amended Pooling Agreement will be amended
and restated in accordance with its terms to enable the issuance of the Offered
Certificates. The First Amended Pooling Agreement, as so amended and restated,
is referred to in this prospectus supplement as the "Pooling Agreement". On or
about the Delivery Date, the Certificates will be collectively redesignated as
the Banc of America Commercial Mortgage Inc. Commercial Mortgage Pass-Through
Certificates, Series 2000-1.
The Offered Certificates, together with the Non-Offered Certificates, will
represent in the aggregate the entire beneficial interest in a trust (the
"Trust"), the assets of which (such assets collectively, the "Trust Fund")
include: (i) the Mortgage Loans and all payments thereunder and proceeds thereof
received after the Commencement Date (exclusive of payments of principal,
interest and other amounts due thereon on or before the Commencement Date); (ii)
any REO Properties; and (iii) such funds or assets as from time to time are
deposited in the Certificate Account and the Interest Reserve Account (see "The
Pooling and Servicing Agreements -- Certificate Account" in the accompanying
prospectus).
The Certificates will consist of twenty-two classes (each, a "Class") to be
designated as: (i) the Class A-1A Certificates, the Class A-2A Certificates, the
Class A-1B Certificates, the Class A-2B Certificates and the Class A-3B
Certificates (collectively, the "Class A Certificates" and together with the
Class X Certificates, the "Senior Certificates"); (ii) the Class B Certificates,
the Class C Certificates, the Class D Certificates, the Class E Certificates,
the Class F Certificates, the Class G Certificates, the Class H Certificates,
the Class K Certificates, the Class L Certificates, the Class M Certificates and
the Class N Certificates (collectively with the Class A Certificates, the
"Sequential Pay Certificates"); (iii) the Class X Certificates (the "Class X
Certificates", and collectively with the Sequential Pay Certificates, the "REMIC
Regular Certificates"); and (iv) the Class R-I Certificates, the Class R-II
Certificates, the Class R-III Certificates, the Class R-IIIU Certificates and
the Class R-IV Certificates (collectively, the "REMIC Residual Certificates").
Only the Class X, Class A-1A, Class A-2A, Class A-1B, Class A-2B, Class A-3B,
Class B, Class C, Class D, Class E and Class F Certificates (collectively, the
"Offered Certificates") are offered hereby.
The Class G, Class H, Class K, Class L, Class M and Class N Certificates
and the REMIC Residual Certificates (collectively, the "Non-Offered
Certificates") have not been registered under the Securities Act and are not
offered hereby. Accordingly, to the extent this prospectus supplement contains
information regarding the terms of the Non-Offered Certificates, such
information is provided because of its potential relevance to a prospective
purchaser of an Offered Certificate.
REGISTRATION AND DENOMINATIONS
The Offered Certificates will be issued in book-entry format in
denominations of: (i) in the case of the Class A-1A, Class A-2A, Class A-1B,
Class A-2B, and Class A-3B Certificates, $10,000 actual principal amount and in
any whole dollar denomination in excess thereof; (ii) in the case of the Class X
Certificates, $1,000,000 notional principal amount and in any whole dollar
denomination in excess thereof; and (iii) in the
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case of the other Offered Certificates, $100,000 actual principal amount and in
any whole dollar denomination in excess thereof.
Each Class of Offered Certificates will initially be represented by one or
more Certificates registered in the name of the nominee of The Depository Trust
Company ("DTC"). The Depositor has been informed by DTC that DTC's nominee will
be Cede & Co. No beneficial owner of an Offered Certificate (each, a
"Certificate Owner") will be entitled to receive a fully registered physical
certificate (a "Definitive Certificate") representing its interest in such
Class, except under the limited circumstances described under "Description of
the Certificates -- Book-Entry Registration and Definitive Certificates" in the
accompanying prospectus. Unless and until Definitive Certificates are issued in
respect of the Offered Certificates, beneficial ownership interests in each such
Class of Certificates will be maintained and transferred on the book-entry
records of DTC and its participating organizations (its "Participants"), and all
references to actions by holders of each such Class of Certificates will refer
to actions taken by DTC upon instructions received from the related Certificate
Owners through its Participants in accordance with DTC procedures, and all
references herein to payments, notices, reports and statements to holders of
each such Class of Certificates will refer to payments, notices, reports and
statements to DTC or Cede & Co., as the registered holder thereof, for
distribution to the related Certificate Owners through its Participants in
accordance with DTC procedures. The form of such payments and transfers may
result in certain delays in receipt of payments by an investor and may restrict
an investor's ability to pledge its securities. See "Description of the
Certificates -- Book-Entry Registration and Definitive Certificates" in the
accompanying prospectus.
The Trustee will initially serve as registrar (in such capacity, the
"Certificate Registrar") for purposes of recording and otherwise providing for
the registration of the Offered Certificates and, if and to the extent
Definitive Certificates are issued in respect thereof, of transfers and
exchanges of the Offered Certificates.
CERTIFICATE BALANCES AND NOTIONAL AMOUNT
On the Delivery Date, the respective classes of Sequential Pay Certificates
will have the following Certificate Balances or Notional Amount, as the case may
be, (in each case, subject to a variance of plus or minus 5%):
APPROXIMATE
CERTIFICATE PERCENT APPROXIMATE
BALANCE OR OF POOL CREDIT
CLASS NOTIONAL AMOUNT(1) BALANCE(1) SUPPORT(1)
----- ------------------ ----------- -----------
Class A-1A................................ $153,230,577 19.87% 26.58%
Class A-2A................................ $299,000,640 38.77% 26.58%
Class A-1B................................ $ 55,591,451 7.21% 26.58%
Class A-2B................................ $ 38,390,866 4.98% 26.58%
Class A-3B................................ $ 19,967,220 2.59% 26.58%
Class X................................... $771,179,585 N/A N/A
Class B................................... $ 40,999,766 5.32% 21.27%
Class C................................... $ 35,142,657 4.56% 16.71%
Class D................................... $ 11,714,219 1.52% 15.19%
Class E................................... $ 27,333,177 3.54% 11.65%
Class F................................... $ 11,714,219 1.52% 10.13%
Class G................................... $ 11,714,219 1.52% 8.61%
Class H................................... $ 19,523,698 2.53% 6.08%
Class K................................... $ 3,904,740 0.51% 5.57%
Class L................................... $ 15,618,958 2.03% 3.54%
Class M................................... $ 7,809,479 1.01% 2.53%
Class N................................... $ 19,523,699 2.53% N/A
- ---------------------
(1) As of the Delivery Date (assuming receipt of all scheduled payments through
the Commencement Date and there are no prepayments other than those actually
received prior to the Commencement Date).
The "Certificate Balance" of any Class of Sequential Pay Certificates
outstanding at any time will be the then aggregate stated principal amount
thereof. On each Distribution Date, the Certificate Balance of each
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Class of Sequential Pay Certificates will be reduced by any distributions of
principal actually made on such Class of Certificates on such Distribution Date,
and will be further reduced by any Realized Losses and Additional Trust Fund
Expenses allocated to such Class of Certificates on such Distribution Date. See
"-- Distributions" and "-- Subordination; Allocation of Losses and Certain
Expenses" below.
The Class X Certificates will not have a Certificate Balance. The Class X
Certificates will represent the right to receive distributions of interest
accrued as described herein on a notional amount ("Notional Amount") equal to
the aggregate of the Certificate Balances of all of the Classes of Sequential
Pay Certificates outstanding from time to time.
No class of REMIC Residual Certificates will have a Certificate Balance or
a Notional Amount.
A Class of Offered Certificates will be considered to be outstanding until
its Certificate Balance or Notional Amount, as the case may be, is reduced to
zero; provided, however, that, under very limited circumstances, reimbursement
of any previously allocated Realized Losses and Additional Trust Fund Expenses
may thereafter be made with respect thereto.
PASS-THROUGH RATES
The Pass-Through Rates applicable to the Class A-1A, Class A-2A, Class
A-1B, Class A-2B, Class A-3B, Class B and Class C Certificates will, for any
Distribution Date, at all times, be equal to the rate set forth on the cover of
this prospectus supplement. However, the Pass-Through Rates of the Class A-2A,
Class A-2B, Class A-3B, Class B and Class C Certificates will not exceed the
Weighted Average Net Mortgage Rate on any Distribution Date.
The Pass-Through Rate for the Class D Certificates for the October 2000
Distribution Date will equal approximately 7.6463% per annum. The Pass-Through
Rate applicable to the Class D Certificates for each subsequent Distribution
Date will, in general, equal the Weighted Average Net Mortgage Rate minus
0.1025% per annum. The Pass-Through Rates for the Class E and Class F
Certificates for the October 2000 Distribution Date will equal approximately
7.7488%, and 7.7488% per annum, respectively. The Pass-Through Rates applicable
to the Class E and Class F Certificates for each subsequent Distribution Date
will, in general, equal the Weighted Average Net Mortgage Rate.
The Pass-Through Rate applicable to the Class X Certificates for the
October 2000 Distribution Date will equal approximately 0.5466% per annum. The
Pass-Through Rate applicable to the Class X Certificates for each subsequent
Distribution Date will, in general, equal the excess, if any, of (i) the
Weighted Average Net Mortgage Rate, over (ii) the weighted average of the
Pass-Through Rates applicable to the Sequential Pay Certificates for such
Distribution Date (weighted on the basis of their respective Certificate
Balances immediately prior to such Distribution Date), such that the interest
accrued at such Pass-Through Rate on the Notional Amount of the Class X
Certificates will, in general, equal the sum of the amounts by which interest
accrued at the Weighted Average Net Mortgage Rate on an amount equal to the
Certificate Balance of each Class of Sequential Pay Certificates exceeds the
interest accrued at the applicable Pass-Through Rate on such Class.
The Pass-Through Rate applicable to the Class G, Class H, Class K, Class L,
Class M and Class N Certificates will, for any Distribution Date, be equal to
6.85%, 6.85%, 6.85%, 6.00%, 6.00% and 6.00% per annum, respectively.
"Weighted Average Net Mortgage Rate" for any Distribution Date, means the
weighted average of the Net Mortgage Rates for all the Mortgage Loans (weighted
on the basis of their respective Stated Principal Balances (as defined herein)
immediately following the preceding Distribution Date.
The "Net Mortgage Rate" with respect to any Mortgage Loan is, in general, a
per annum rate equal to the related Mortgage Rate in effect from time to time,
minus the sum of the applicable Master Servicing Fee Rate (including the Standby
Fee rate) and the per annum rate at which the monthly Trustee Fee is calculated
(such sum, the "Administrative Fee Rate"); provided, however, that for purposes
of calculating the Pass-Through Rate for each Class of REMIC Regular
Certificates from time to time, the Net Mortgage Rate for
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any Mortgage Loan will be calculated without regard to any modification, waiver
or amendment of the terms of such Mortgage Loan subsequent to the Trust
Formation Date; and provided further, however, that if any Mortgage Loan does
not accrue interest on the basis of a 360-day year consisting of twelve 30-day
months (which is the basis on which interest accrues in respect of the REMIC
Regular Certificates), then the Net Mortgage Rate of such Mortgage Loan for any
one-month period preceding a related Due Date will be the annualized rate at
which interest would have to accrue in respect of such loan on the basis of a
360-day year consisting of twelve 30-day months in order to produce the
aggregate amount of interest actually accrued in respect of such loan during
such one-month period at the related Mortgage Rate (net of the related
Administrative Fee Rate); provided, however, that with respect to such Mortgage
Loans, the Mortgage Rate for the one month period (1) prior to the due dates in
January and February in any year which is not a leap year or in February in any
year which is a leap year, and (2) prior to the due date in March, will be the
per annum rate stated in the related Mortgage Note. As of the Cut-off Date
(without regard to the adjustment described in the proviso to the second
preceding sentence), the Net Mortgage Rates for the Mortgage Loans ranged from
6.626% per annum to 9.606% per annum, with a weighted average Net Mortgage Rate
of 7.750% per annum. See "Servicing of the Mortgage Loans -- Servicing and Other
Compensation and Payment of Expenses" in this prospectus supplement.
The "Stated Principal Balance" of each Mortgage Loan will initially equal
the Cut-off Date Balance thereof and will be permanently reduced (to not less
than zero) on each Distribution Date by (i) any payments or other collections
(or advances in lieu thereof) of principal on such Mortgage Loan that have been
(or, if they had not been applied to cover Additional Trust Fund Expenses, would
have been) distributed on the Certificates on such date, and (ii) the principal
portion of any Realized Loss incurred in respect of such Mortgage Loan during
the related Collection Period.
The "Collection Period" for each Distribution Date is the period that
begins immediately following the Determination Date in the calendar month
preceding the month in which such Distribution Date occurs and ends on the
Determination Date in the calendar month in which such Distribution Date occurs;
provided, however, that with respect to one Mortgage Loan (Mortgage Loan number
3018413 (Apple Apartments)), the Collection Period for any Distribution Date
will be the period commencing on and including the eleventh day of the calendar
month preceding the month in which such Distribution Date occurs (or, in the
case of the initial Distribution Date, commencing immediately following the
Commencement Date) and ending on and including the tenth day in the calendar
month in which such Distribution Date occurs. The "Determination Date" for each
Distribution Date will be the 5th business day prior to such Distribution Date.
DISTRIBUTIONS
General. Distributions on or with respect to the Certificates will be made
by the Trustee, to the extent of available funds, on the 15th day of each month
or, if any such 15th day is not a business day, then on the next succeeding
business day (each, a "Distribution Date"). The first Distribution Date with
respect to the Offered Certificates will occur in October 2000. Except as
otherwise described below, all such distributions will be made to the persons in
whose names the Certificates are registered at the close of business on the
related Record Date and, as to each such person, will be made by wire transfer
in immediately available funds to the account specified by the Certificateholder
at a bank or other entity having appropriate facilities therefor, if such
Certificateholder will have provided the Trustee with written wiring
instructions no less than five business days prior to the related Record Date,
or otherwise by check mailed to such Certificateholder. Until Definitive
Certificates are issued in respect thereof, Cede & Co. will be the registered
holder of the Offered Certificates. See "-- Registration and Denominations"
above. The final distribution on any Certificate (determined without regard to
any possible future reimbursement of any Realized Losses or Additional Trust
Fund Expense previously allocated to such Certificate) will be made in like
manner, but only upon presentation and surrender of such Certificate at the
location that will be specified in a notice of the pendency of such final
distribution. Any distribution that is to be made with respect to a Certificate
in reimbursement of a Realized Loss or Additional Trust Fund Expense previously
allocated thereto, which reimbursement is to occur after the date on which such
Certificate is surrendered as contemplated by the preceding sentence (the
likelihood of any such distribution being remote), will be made by check mailed
to the Certificateholder that
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surrendered such Certificate. All distributions made on or with respect to a
Class of Certificates will be allocated pro rata among such Certificates based
on their respective percentage interests in such Class.
With respect to any Distribution Date and any Class of Certificates, the
"Record Date" will be the last business day of the calendar month immediately
preceding the month in which such Distribution Date occurs.
The Available Distribution Amount. With respect to any Distribution Date,
distributions of interest on and principal of the Certificates will be made from
the Available Distribution Amount for such Distribution Date. The "Available
Distribution Amount" for any Distribution Date will, in general, equal (a) all
amounts on deposit in the Certificate Account as of the close of business on the
related Determination Date, exclusive of any portion thereof that represents one
or more of the following:
(i) Monthly Payments collected but due on a Due Date subsequent to the
related Collection Period;
(ii) any payments of principal and interest, Liquidation Proceeds and
Insurance and Condemnation Proceeds received after the end of the related
Collection Period;
(iii) Prepayment Premiums (which are separately distributable on the
Certificates as hereinafter described);
(iv) amounts that are payable or reimbursable to any person other than
the Certificateholders (including amounts payable to the Master Servicer,
the Special Servicer, any Sub-Servicers or the Trustee as compensation
(including Trustee Fees, Master Servicing Fees, Special Servicing Fees,
Workout Fees, Liquidation Fees, Default Interest and late payment charges
(to the extent not otherwise applied to cover interest on Advances),
assumption fees and modification fees), amounts payable in reimbursement of
outstanding Advances, together with interest thereon, and amounts payable
in respect of other Additional Trust Fund Expenses);
(v) amounts deposited in the Certificate Account in error; and
(vi) with respect to each Mortgage Loan which accrues interest on an
Actual/360 Basis and any Distribution Date relating to the one month period
preceding the Distribution Date in each February (and in any January of a
year which is not a leap year other than in the case of the Actual 365/360
Mortgage Loan), an amount equal to the related Withheld Amount.
(b) to the extent not already included in clause (a), any P&I Advances made
with respect to such Distribution Date, any payments made by the Master Servicer
to cover Prepayment Interest Shortfalls incurred during the related Collection
Period and for the Distribution Date occurring in each March, the related
Withheld Amounts remitted to the Trustee for distribution to the
Certificateholders as described under "Description of the
Certificates -- Interest Reserve Account."
See "The Pooling and Servicing Agreements -- Certificate Account" in the
accompanying prospectus.
Application of the Available Distribution Amount. On each Distribution
Date, the Trustee will apply the Available Distribution Amount for such date for
the following purposes and in the following order of priority:
(1) concurrently from the Available Distribution Amount, pro rata, to
the Class A-1A, Class A-2A, Class A-1B, Class A-2B, Class A-3B and Class X
Certificates, up to an amount equal to, and pro rata as among such Classes
in accordance with, all Distributable Certificate Interest in respect of
each such Class for such Distribution Date and, to the extent not
previously paid, for all prior Distribution Dates;
(2) to the Class A-1A, and Class A-2A Certificates, in that order, in
reduction of the Certificate Balances thereof until the Certificate
Balances thereof have been reduced to zero, an amount up to the Group A
Senior Certificate Principal Distribution Amount (as defined herein) for
such Distribution Date;
(3) sequentially, to the Class A-1B, Class A-2B, Class A-3B, Class
A-1A and Class A-2A Certificates, in reduction of the Certificate Balances
thereof, an amount up to the remaining portion of the Principal
Distribution Amount for such Distribution Date remaining after the
distribution described in clause (2) until the Certificate Balance of each
such Class is reduced to zero;
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(4) to reimburse the holders of the Class A-1A, Class A-2A, Class
A-1B, Class A-2B, and Class A-3B Certificates, up to an amount equal to,
and pro rata as among such Classes in accordance with, the respective
amounts of Realized Losses and Additional Trust Fund Expenses, if any,
previously allocated to such Classes of Certificates and for which no
reimbursement has previously been paid; and
(5) to make payments on the other Classes of Certificates
(collectively, the "Subordinate Certificates") as contemplated below;
provided that, on each Distribution Date as of which the aggregate Certificate
Balance of the Subordinate Certificates is to be or has been reduced to zero,
and in any event on the final Distribution Date in connection with a termination
of the Trust (see "--Termination" below), the payments of principal to be made
as contemplated by clause (2) and (3) above with respect to the Class A
Certificates, will be so made (subject to available funds) to the holders of the
respective Classes of such Certificates, up to an amount equal to, and pro rata
as among such Classes in accordance with, the respective then outstanding
Certificate Balances of such Classes of Certificates.
On each Distribution Date, following the above-described distributions on
the Senior Certificates, the Trustee will apply the remaining portion, if any,
of the Available Distribution Amount for such date for the following purposes
and in the following order of priority:
(1) to pay interest to the holders of the Class B Certificates, up to
an amount equal to all Distributable Certificate Interest in respect of
such Class of Certificates for such Distribution Date and, to the extent
not previously paid, for all prior Distribution Dates;
(2) if the Certificate Balances of the Class A Certificates have been
reduced to zero, to pay principal to the holders of the Class B
Certificates, up to an amount equal to the lesser of (a) the then
outstanding Certificate Balance of such Class of Certificates and (b) the
remaining portion of the Principal Distribution Amount for such
Distribution Date;
(3) to reimburse the holders of the Class B Certificates, up to an
amount equal to all Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to the Certificate Balance of such Class of
Certificates and for which no reimbursement has previously been paid;
(4) to pay interest to the holders of the Class C Certificates, up to
an amount equal to all Distributable Certificate Interest in respect of
such Class of Certificates for such Distribution Date and, to the extent
not previously paid, for all prior Distribution Dates;
(5) if the Certificate Balances of the Class A and Class B
Certificates have been reduced to zero, to pay principal to the holders of
the Class C Certificates, up to an amount equal to the lesser of (a) the
then outstanding Certificate Balance of such Class of Certificates and (b)
the remaining portion of the Principal Distribution Amount for such
Distribution Date;
(6) to reimburse the holders of the Class C Certificates, up to an
amount equal to all Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to the Certificate Balance of such Class of
Certificates and for which no reimbursement has previously been received;
(7) to pay interest to the holders of the Class D Certificates, up to
an amount equal to all Distributable Certificate Interest in respect of
such Class of Certificates for such Distribution Date and, to the extent
not previously paid, for all prior Distribution Dates;
(8) if the Certificate Balances of the Class A, Class B and Class C
Certificates have been reduced to zero, to pay principal to the holders of
the Class D Certificates, up to an amount equal to the lesser of (a) the
then outstanding Certificate Balance of such Class of Certificates and (b)
the remaining portion of the Principal Distribution Amount for such
Distribution Date;
(9) to reimburse the holders of the Class D Certificates, up to an
amount equal to all Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to the Certificate Balance of such Class of
Certificates and for which no reimbursement has previously been received;
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(10) to pay interest to the holders of the Class E Certificates, up to
an amount equal to all Distributable Certificate Interest in respect of
such Class of Certificates for such Distribution Date and, to the extent
not previously paid, for all prior Distribution Dates;
(11) if the Certificate Balances of the Class A, Class B, Class C and
Class D Certificates have been reduced to zero, to pay principal to the
holders of the Class E Certificates, up to an amount equal to the lesser of
(a) the then outstanding Certificate Balance of such Class of Certificates
and (b) the remaining portion of the Principal Distribution Amount for such
Distribution Date;
(12) to reimburse the holders of the Class E Certificates, up to an
amount equal to all Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to the Certificate Balance of such Class of
Certificates and for which no reimbursement has previously been received;
(13) to pay interest to the holders of the Class F Certificates, up to
an amount equal to all Distributable Certificate Interest in respect of
such Class of Certificates for such Distribution Date and, to the extent
not previously paid, for all prior Distribution Dates;
(14) if the Certificate Balances of the Class A, Class B, Class C,
Class D and Class E Certificates have been reduced to zero, to pay
principal to the holders of the Class F Certificates, up to an amount equal
to the lesser of (a) the then outstanding Certificate Balance of such Class
of Certificates and (b) the remaining portion of the Principal Distribution
Amount for such Distribution Date;
(15) to reimburse the holders of the Class F Certificates, up to an
amount equal to all Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to the Certificate Balance of such Class of
Certificates and for which no reimbursement has previously been received;
(16) to pay interest to the holders of the Class G Certificates, up to
an amount equal to all Distributable Certificate Interest in respect of
such Class of Certificates for such Distribution Date and, to the extent
not previously paid, for all prior Distribution Dates;
(17) if the Certificate Balances of the Class A, Class B, Class C,
Class D, Class E and Class F Certificates have been reduced to zero, to pay
principal to the holders of the Class G Certificates, up to an amount equal
to the lesser of (a) the then outstanding Certificate Balance of such Class
of Certificates and (b) the remaining portion of the Principal Distribution
Amount for such Distribution Date;
(18) to reimburse the holders of the Class G Certificates, up to an
amount equal to all Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to the Certificate Balance of such Class of
Certificates and for which no reimbursement has previously been received;
(19) to pay interest to the holders of the Class H Certificates, up to
an amount equal to all Distributable Certificate Interest in respect of
such Class of Certificates for such Distribution Date and, to the extent
not previously paid, for all prior Distribution Dates;
(20) if the Certificate Balances of the Class A, Class B, Class C,
Class D, Class E, Class F and Class G Certificates have been reduced to
zero, to pay principal to the holders of the Class H Certificates, up to an
amount equal to the lesser of (a) the then outstanding Certificate Balance
of such Class of Certificates and (b) the remaining portion of the
Principal Distribution Amount for such Distribution Date;
(21) to reimburse the holders of the Class H Certificates, up to an
amount equal to all Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to the Certificate Balance of such Class of
Certificates and for which no reimbursement has previously been received;
(22) to pay interest to the holders of the Class K Certificates, up to
an amount equal to all Distributable Certificate Interest in respect of
such Class of Certificates for such Distribution Date and, to the extent
not previously paid, for all prior Distribution Dates;
(23) if the Certificate Balances of the Class A, Class B, Class C,
Class D, Class E, Class F, Class G and Class H Certificates have been
reduced to zero, to pay principal to the holders of the Class K
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Certificates, up to an amount equal to the lesser of (a) the then
outstanding Certificate Balance of such Class of Certificates and (b) the
remaining portion of the Principal Distribution Amount for such
Distribution Date;
(24) to reimburse the holders of the Class K Certificates, up to an
amount equal to all Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to the Certificate Balance of such Class of
Certificates and for which no reimbursement has previously been received;
(25) to pay interest to the holders of the Class L Certificates, up to
an amount equal to all Distributable Certificate Interest in respect of
such Class of Certificates for such Distribution Date and, to the extent
not previously paid, for all prior Distribution Dates;
(26) if the Certificate Balances of the Class A, Class B, Class C,
Class D, Class E, Class F, Class G, Class H and Class K Certificates have
been reduced to zero, to pay principal to the holders of the Class L
Certificates, up to an amount equal to the lesser of (a) the then
outstanding Certificate Balance of such Class of Certificates and (b) the
remaining portion of the Principal Distribution Amount for such
Distribution Date;
(27) to reimburse the holders of the Class L Certificates, up to an
amount equal to all Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to the Certificate Balance of such Class of
Certificates and for which no reimbursement has previously been received;
(28) to pay interest to the holders of the Class M Certificates, up to
any amount equal to all Distributable Certificate Interest in respect of
such Class of Certificates for such Distribution Date and, to the extent
not previously paid, for all prior Distribution Dates;
(29) if the Certificate Balances to the Class A, Class B, Class C,
Class D, Class E, Class F, Class G, Class H, Class K and Class L
Certificates have been reduced to zero, to pay principal to the holders of
the Class M Certificates, up to an amount equal to the lesser of (a) the
then outstanding Certificate Balance of such Class of Certificates and (b)
the remaining portion of the Principal Distribution Amount for such
Distribution Date;
(30) to reimburse the holders of the Class M Certificates, up to an
amount equal to all Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to the Certificate Balance of such Class of
Certificates and for which no reimbursement has previously been received;
(31) to pay interest to the holders of the Class N Certificates, up to
an amount equal to all Distributable Certificate Interest in respect of
such Class of Certificates for such Distribution Date and, to the extent
not previously paid, for all prior Distribution Dates;
(32) if the Certificate Balances of the Class A, Class B, Class C,
Class D, Class E, Class F, Class G, Class H, Class K, Class L and Class M
Certificates have been reduced to zero, to pay principal to the holders of
the Class N Certificates, up to an amount equal to the lesser of (a) the
then outstanding Certificate Balance of such Class of Certificates and (b)
the remaining portion of the Principal Distribution Amount for such
Distribution Date;
(33) to reimburse the holder of the Class N Certificates, up to an
amount equal to all Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to the Certificate Balance of such Class of
Certificates and for which no reimbursement has previously been received;
and
(34) to pay to the holders of the REMIC Residual Certificates, the
balance, if any, of the Available Distribution Amount for such Distribution
Date;
provided that, on the final Distribution Date in connection with a termination
of the Trust, the payments of principal to be made as contemplated by any of
clauses (2), (5), (8), (11), (14), (17), (20), (23), (26), (29) and (32) above
with respect to any Class of Sequential Pay Certificates, will be so made
(subject to available funds) up to an amount equal to the entire then
outstanding Certificate Balance of such Class of Certificates.
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Distributable Certificate Interest. The "Distributable Certificate
Interest" in respect of each Class of REMIC Regular Certificates for each
Distribution Date is equal to the Accrued Certificate Interest in respect of
such Class of Certificates for such Distribution Date, reduced by such Class of
Certificates' allocable share (calculated as described below) of any Net
Aggregate Prepayment Interest Shortfall for such Distribution Date.
The "Accrued Certificate Interest" in respect of each Class of REMIC
Regular Certificates for each Distribution Date is equal to one month's interest
at the Pass-Through Rate applicable to such Class of Certificates for such
Distribution Date accrued on the related Certificate Balance or Notional Amount,
as the case may be, outstanding immediately prior to such Distribution Date.
Accrued Certificate Interest will be calculated on the basis of a 360-day year
consisting of twelve 30-day months.
To the extent of Prepayment Interest Excesses and a portion of its
aggregate Master Servicing Fee for the related Collection Period, which portion
is, in the case of each and every Non-Specially Serviced Mortgage Loan,
calculated at 0.01% per annum, the Master Servicer is required to make a
non-reimbursable payment with respect to each Distribution Date to cover the
aggregate of any Prepayment Interest Shortfalls incurred with respect to the
Mortgage Pool during such Collection Period. The "Net Aggregate Prepayment
Interest Shortfall" for any Distribution Date will be the amount, if any, by
which (a) the aggregate of all Prepayment Interest Shortfalls incurred with
respect to the Mortgage Pool during the related Collection Period, exceeds (b)
any such payment made by the Master Servicer with respect to such Distribution
Date to cover such Prepayment Interest Shortfalls. See "Servicing of the
Mortgage Loans -- Servicing and Other Compensation and Payment of Expenses" in
this prospectus supplement. The Net Aggregate Prepayment Interest Shortfall, if
any, for each Distribution Date will be allocated on such Distribution Date pro
rata to each Class of Certificates, in accordance with the respective amounts of
Accrued Certificate Interest for each such Class of Certificates for such
Distribution Date.
Principal Distribution Amount. The "Principal Distribution Amount" for any
Distribution Date will, in general, equal the aggregate of the following:
(a) the principal portions of all Monthly Payments (other than Balloon
Payments) and any Assumed Monthly Payments due or deemed due, as the case
may be, in respect of the Mortgage Loans for their respective Due Dates
occurring during the related Collection Period;
(b) all voluntary principal prepayments received on the Mortgage Loans
during the related Collection Period;
(c) with respect to any Balloon Loan as to which the related stated
maturity date occurred during or prior to the related Collection Period,
any payment of principal (exclusive of any voluntary principal prepayment
and any amount described in clause (d) below) made by or on behalf of the
related borrower during the related Collection Period, net of any portion
of such payment that represents a recovery of the principal portion of any
Monthly Payment (other than a Balloon Payment) due, or the principal
portion of any Assumed Monthly Payment deemed due, in respect of such
Mortgage Loan on a Due Date during or prior to the related Collection
Period and not previously recovered;
(d) all Liquidation Proceeds and Insurance and Condemnation Proceeds
received on the Mortgage Loans during the related Collection Period that
were identified and applied by the Master Servicer as recoveries of
principal thereof, in each case net of any portion of such amounts that
represents a recovery of the principal portion of any Monthly Payment
(other than a Balloon Payment) due, or the principal portion of any Assumed
Monthly Payment deemed due, in respect of the related Mortgage Loan on a
Due Date during or prior to the related Collection Period and not
previously recovered; and
(e) the excess, if any, of (i) the Principal Distribution Amount for
the immediately preceding Distribution Date, over (ii) the aggregate
distributions of principal made on the Sequential Pay Certificates in
respect of such Principal Distribution Amount on such immediately preceding
Distribution Date.
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For purposes of the foregoing, the Monthly Payment due on any Mortgage Loan
on any related Due Date will reflect any waiver, modification or amendment of
the terms of such Mortgage Loan, whether agreed to by the Master Servicer or
Special Servicer or resulting from a bankruptcy, insolvency or similar
proceeding involving the related borrower.
The "Group A Senior Certificate Principal Distribution Amount" will be,
with respect to Group A, and any Distribution Date, the portion of the Principal
Distribution Amount for Group A for such Distribution Date that represents
scheduled payments, Balloon Payments, Principal Prepayments, Liquidation
Proceeds, Insurance and Condemnation Proceeds, and income received in connection
with the operation of an REO Property ("REO Income").
An "Assumed Monthly Payment" is an amount deemed due in respect of: (i) any
Mortgage Loan that is delinquent in respect of its Balloon Payment beyond the
first Determination Date that follows its stated maturity date and as to which
no arrangements have been agreed to for collection of the delinquent amounts; or
(ii) any Mortgage Loan as to which the related Mortgaged Property has become an
REO Property. The Assumed Monthly Payment deemed due on any such Mortgage Loan
delinquent as to its Balloon Payment, for its stated maturity date and for each
successive Due Date that it remains outstanding, will equal the Monthly Payment
that would have been due thereon on such date if the related Balloon Payment had
not come due, but rather such Mortgage Loan had continued to amortize in
accordance with its amortization schedule, if any, in effect immediately prior
to maturity and had continued to accrue interest in accordance with such loan's
terms in effect immediately prior to maturity. The Assumed Monthly Payment
deemed due on any such Mortgage Loan as to which the related Mortgaged Property
has become an REO Property, for each Due Date that such REO Property remains
part of the Trust Fund, will equal the Monthly Payment (or, in the case of a
Mortgage Loan delinquent in respect of its Balloon Payment as described in the
prior sentence, the Assumed Monthly Payment) due on the last Due Date prior to
the acquisition of such REO Property.
Distributions of Prepayment Premiums. On any Distribution Date, Prepayment
Premiums collected during the related Collection Period are required to be
distributed to the holders of the Classes of Offered Certificates as described
below.
On each Distribution Date, Prepayment Premiums collected on the Mortgage
Loans in Group A during the related Prepayment Period will be distributed by the
Trustee to the following Classes of Offered Certificates: to the Class A-1A,
Class A-2A, Class B, Class C, Class D, Class E and Class F Certificates, in an
amount equal to the product of (a) a fraction, not greater than 1, whose
numerator is the amount distributed as principal to such Class on such
Distribution Date, and whose denominator is the total amount distributed as
principal to the Class A-1A, Class A-2A, Class B, Class C, Class D, Class E,
Class F, Class G, Class H, Class K, Class L, Class M and Class N Certificates on
such Distribution Date, (b) the Base Interest Fraction for the related principal
payment on such Class of Certificates, and (c) the aggregate amount of
Prepayment Premiums relating to the Mortgage Loans in Group A collected on such
principal prepayments during the related Prepayment Period. Any Prepayment
Premiums relating to the Mortgage Loans in Group A collected during the related
Prepayment Period remaining after such distributions will be distributed to the
holders of the Class X Certificates.
On each Distribution Date, Prepayment Premiums collected on the Mortgage
Loans in Group B during the related Collection Period will be distributed by the
Trustee to the Class A-1B, Class A-2B and Class A-3B Certificates, in an amount
equal to the product of (a) a fraction, not greater than 1, whose numerator is
the amount distributed as principal to such Class on such Distribution Date, and
whose denominator is the total amount distributed as principal on such
Distribution Date from the Mortgage Loans in Group B, (b) the Base Interest
Fraction for the related principal payment on such Class of Certificates, and
(c) the aggregate amount of Prepayment Premiums relating to the Mortgage Loans
in Group B collected on such principal prepayments during the related Prepayment
Period. Any Prepayment Premiums relating to the Mortgage Loans in Group B
collected during the related Prepayment Period remaining after such
distributions will be distributed to the holders of the Class X Certificates.
The "Base Interest Fraction" with respect to any principal prepayment on
any Mortgage Loan and with respect to any class of Offered Certificates is a
fraction (a) whose numerator is the amount, if any, by which
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(i) the Pass-Through Rate on such Class of Certificates exceeds (ii) the
discount rate used in accordance with the related Mortgage Loan documents in
calculating the Prepayment Premium with respect to such Principal Prepayment and
(b) whose denominator is the amount, if any, by which (i) the Mortgage Rate on
such Mortgage Loan exceeds (ii) the discount rate used in accordance with the
related Mortgage Loan documents in calculating the yield maintenance charge with
respect to such principal prepayment. However, under no circumstances shall the
Base Interest Fraction be greater than one. If such discount rate is greater
than or equal to the lesser of (x) the Mortgage Rate on such Mortgage Loan and
(y) the Pass-Through Rate described in the preceding sentence, then the Base
Interest Fraction will equal zero.
No Prepayment Premiums will be distributed to the holders of the Class G,
Class H, Class K, Class L, Class M or Class N Certificates. Instead, after the
Certificate Balances of the Class A-1A, Class A-2A, Class B, Class C, Class D,
Class E and Class F Certificates have been reduced to zero, all prepayment
premiums and yield maintenance charges with respect to the Mortgage Loans in
Group A will be distributed to the holders of the Class X Certificates.
Similarly, after the Certificate Balances of the Class A-1B, Class A-2B and
Class A-3B Certificates have been reduced to zero, all Prepayment Premiums with
respect to the Mortgage Loans in Group B will be distributed to holders of the
Class X Certificates.
Prepayment Premiums will be distributed on any Distribution Date only to
the extent they are received in respect of the Mortgage Loans in the related
Prepayment Period.
The Depositor makes no representation as to the enforceability of the
provision of any Mortgage Note requiring the payment of a Prepayment Premium or
of the collectibility of any Prepayment Premium. See "Description of the
Mortgage Pool -- Certain Terms and Conditions of the Mortgage
Loans -- Prepayment Provisions" and "Risk Factors -- Risks Related to the
Mortgage Loans -- Prepayment Premiums" in this prospectus supplement.
Treatment of REO Properties. Notwithstanding that any Mortgaged Property
may be acquired as part of the Trust Fund through foreclosure, deed in lieu of
foreclosure or otherwise, the related Mortgage Loan will be treated, for
purposes of, among other things, determining distributions on the Certificates,
allocations of Realized Losses and Additional Trust Fund Expenses to the
Certificates, and the amount of Master Servicing Fees, Standby Fees, Special
Servicing Fees and Trustee Fees payable under the Pooling Agreement, as having
remained outstanding until such REO Property is liquidated. Among other things,
such Mortgage Loan will be taken into account when determining the Pass-Through
Rate for the Class X Certificates and the Principal Distribution Amount for each
Distribution Date. In connection therewith, operating revenues and other
proceeds derived from such REO Property (after application thereof to pay
certain costs and taxes, including certain reimbursements payable to the Master
Servicer, the Special Servicer and/or the Trustee, incurred in connection with
the operation and disposition of such REO Property) will be "applied" by the
Master Servicer as principal, interest and other amounts "due" on such Mortgage
Loan; and, subject to the recoverability determination described below (see
"-- P&I Advances"), the Master Servicer and the Trustee will be required to make
P&I Advances in respect of such Mortgage Loan, in all cases as if such Mortgage
Loan had remained outstanding.
SUBORDINATION; ALLOCATION OF LOSSES AND CERTAIN EXPENSES
As and to the extent described herein, the rights of holders of the
Subordinate Certificates to receive distributions of amounts collected or
advanced on the Mortgage Loans will, in the case of each Class thereof, be
subordinated to the rights of holders of the Senior Certificates and, further,
to the rights of holders of each other Class of Subordinate Certificates, if
any, with an earlier alphabetical Class designation. This subordination is
intended to enhance the likelihood of timely receipt by holders of the
respective Classes of Senior Certificates of the full amount of Distributable
Certificate Interest payable in respect of their Certificates on each
Distribution Date, and the ultimate receipt by holders of the respective Classes
of Class A Certificates of principal equal to, in each such case, the entire
related Certificate Balance. Similarly, but to decreasing degrees, this
subordination is also intended to enhance the likelihood of timely receipt by
holders of the other Classes of Offered Certificates of the full amount of
Distributable Certificate Interest payable in respect of their Certificates on
each Distribution Date, and the ultimate receipt by holders of the other Classes
of
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Offered Certificates of principal equal to, in each such case, the entire
related Certificate Balance. The subordination of any Class of Subordinate
Certificates will be accomplished by, among other things, the application of the
Available Distribution Amount on each Distribution Date in the order of priority
described under "-- Distributions -- The Available Distribution Amount" above.
No other form of credit support will be available for the benefit of holders of
the Offered Certificates.
If, following the distributions to be made in respect of the Certificates
on any Distribution Date, the aggregate Stated Principal Balance of the Mortgage
Pool that will be outstanding immediately following such Distribution Date is
less than the then aggregate Certificate Balance of the Sequential Pay
Certificates, the Certificate Balances of the Class N, Class M, Class L, Class
K, Class H, Class G, Class F, Class E, Class D, Class C and Class B Certificates
will be reduced, sequentially in that order, in the case of each such Class
until such deficit (or the related Certificate Balance) is reduced to zero
(whichever occurs first). If any portion of such deficit remains at such time as
the Certificate Balances of such Classes of Certificates are reduced to zero,
then the respective Certificate Balances of the Class A Certificates will be
reduced, pro rata in accordance with the relative sizes of the remaining
Certificate Balances of such Classes of Certificates, until such deficit (or
each such Certificate Balance) is reduced to zero. Any such deficit will, in
general, be the result of Realized Losses incurred in respect of the Mortgage
Loans and/or Additional Trust Fund Expenses to the extent paid from funds which
would otherwise have been used to make distributions of principal. Accordingly,
the foregoing reductions in the Certificate Balances of the respective Classes
of the Sequential Pay Certificates will constitute an allocation of any such
Realized Losses and Additional Trust Fund Expenses. Any such reduction in the
Certificate Balance of a Class of Sequential Pay Certificates will result in a
corresponding reduction in the Notional Amount of the Class X Certificates.
"Realized Losses" are losses on or in respect of the Mortgage Loans arising
from the inability of the Master Servicer and/or the Special Servicer to collect
all amounts due and owing under any such Mortgage Loan, including by reason of
the fraud or bankruptcy of a borrower or a casualty of any nature at a Mortgaged
Property, to the extent not covered by insurance. The Realized Loss in respect
of a liquidated Mortgage Loan (or related REO Property) is an amount generally
equal to the excess, if any, of (a) the outstanding principal balance of such
Mortgage Loan as of the date of liquidation, together with (i) all accrued and
unpaid interest thereon at the related Mortgage Rate to but not including the
Due Date in the Collection Period in which the liquidation occurred and (ii) all
related unreimbursed Servicing Advances and outstanding liquidation expenses,
over (b) the aggregate amount of Liquidation Proceeds, if any, recovered in
connection with such liquidation. If any portion of the debt due under a
Mortgage Loan is forgiven, whether in connection with a modification, waiver or
amendment granted or agreed to by the Master Servicer or the Special Servicer or
in connection with the bankruptcy or similar proceeding involving the related
borrower, the amount so forgiven also will be treated as a Realized Loss.
"Additional Trust Fund Expenses" include, among other things, (i) all
Special Servicing Fees, Workout Fees and Liquidation Fees paid to the Special
Servicer, (ii) any interest paid to the Master Servicer, the Special Servicer
and/or the Trustee in respect of unreimbursed Advances, (iii) the cost of
various opinions of counsel required or permitted to be obtained in connection
with the servicing of the Mortgage Loans and the administration of the Trust
Fund, (iv) certain unanticipated, non-Mortgage Loan specific expenses of the
Trust, including certain reimbursements and indemnifications to the Trustee as
described under "The Pooling and Servicing Agreements -- Certain Matters
Regarding the Trustee" in the accompanying prospectus, certain reimbursements to
the Master Servicer, the Special Servicer, the REMIC Administrator and the
Depositor as described under "The Pooling and Servicing Agreements -- Certain
Matters Regarding the Master Servicer, the Special Servicer, the REMIC
Administrator and the Depositor" in the accompanying prospectus and certain
federal, state and local taxes, and certain tax-related expenses, payable out of
the Trust Fund as described under "Certain Federal Income Tax
Consequences -- Possible Taxes on Income From Foreclosure Property and Other
Taxes" herein and "Certain Federal Income Tax Consequences --
REMICs -- Prohibited Transactions Tax and Other Taxes" in the accompanying
prospectus, (v) if not advanced by the Master Servicer, any amounts expended on
behalf of the Trust to remediate an adverse environmental condition at any
Mortgaged Property securing a defaulted Mortgage Loan (see "The Pooling and
Servicing Agreements -- Realization Upon Defaulted Mortgage Loans" in the
accompanying prospec-
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tus), and (vi) any other expense of the Trust Fund not specifically included in
the calculation of "Realized Loss" for which there is no corresponding
collection from a borrower. Additional Trust Fund Expenses will reduce amounts
payable to Certificateholders and, consequently, may result in a loss on the
Offered Certificates.
INTEREST RESERVE ACCOUNT
The Master Servicer will be required to establish and maintain an "Interest
Reserve Account" in the name of the Master Servicer for the benefit of the
holders of the Certificates. On each Master Servicer Remittance Date occurring
in February and in January of any year which is not a leap year, an amount will
be required to be withdrawn from the Certificate Account, in respect of each
Mortgage Loan (other than the Actual 365/360 Mortgage Loan) which accrues
interest on an Actual/360 Basis, for deposit into the Interest Reserve Account,
equal to one day's interest at the related Net Mortgage Rate on the respective
Stated Principal Balance, as of the Due Date in the month preceding the month in
which such Master Servicer Remittance Date occurs, of each such Mortgage Loan,
to the extent a Monthly Payment or P&I Advance is made in respect thereof (all
amounts so withdrawn in any consecutive January (if applicable) and February,
the "Withheld Amount"). The "Master Servicer Remittance Date" for any month is
the business day preceding each Distribution Date. On each Master Servicer
Remittance Date occurring in March, the Master Servicer will be required to
withdraw from the Interest Reserve Account an amount equal to the Withheld
Amounts from the preceding January (if applicable) and February, if any, and
remit such amount to the Trustee for distribution to the Certificateholders.
Amounts on deposit in the Interest Reserve Account may be invested only in
Permitted Investments. The Master Servicer will have no obligation to invest the
funds on deposit in the Interest Reserve Account.
P&I ADVANCES
With respect to each Distribution Date, the Master Servicer will be
obligated, subject to the recoverability determination described below, to make
advances (each, a "P&I Advance") out of its own funds or, subject to the
replacement thereof as and to the extent provided in the Pooling Agreement,
funds held in the Certificate Account that are not required to be part of the
Available Distribution Amount for such Distribution Date, in an amount generally
equal to the aggregate of all Monthly Payments (other than Balloon Payments) and
any Assumed Monthly Payments, in each case net of related Master Servicing Fees
(other than the portion thereof corresponding to the Standby Fee), Liquidation
Fees and Workout Fees, that were due or deemed due, as the case may be, in
respect of the Mortgage Loans during the related Collection Period and that were
not paid by or on behalf of the related borrowers or otherwise collected as of
the close of business on the last day of the related Collection Period. The
Master Servicer's obligations to make P&I Advances in respect of any Mortgage
Loan will continue through liquidation of such Mortgage Loan or disposition of
any REO Property acquired in respect thereof. Notwithstanding the foregoing, if
it is determined that an Appraisal Reduction Amount (as defined below) exists
with respect to any Required Appraisal Loan (as defined below), then, with
respect to the Distribution Date immediately following the date of such
determination and with respect to each subsequent Distribution Date for so long
as such Appraisal Reduction Amount exists, in the event of subsequent
delinquencies on such Mortgage Loan, the interest portion of the P&I Advance
required to be made in respect of such Mortgage Loan will be reduced (no
reduction to be made in the principal portion, however) to an amount equal to
the product of (i) the amount of the interest portion of such P&I Advance that
would otherwise be required to be made for such Distribution Date without regard
to this sentence, multiplied by (ii) a fraction (expressed as a percentage), the
numerator of which is equal to the Stated Principal Balance of such Mortgage
Loan, net of such Appraisal Reduction Amount, and the denominator of which is
equal to the Stated Principal Balance of such Mortgage Loan. See "--Appraisal
Reductions" below. Subject to the recoverability determination described below,
if the Master Servicer fails to make a required P&I Advance, the Trustee will be
required to make such P&I Advance. See "-- The Trustee" below.
The Master Servicer and the Trustee will each be entitled to recover any
P&I Advance made out of its own funds from any Related Proceeds. Notwithstanding
the foregoing, neither the Master Servicer nor the
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Trustee will be obligated to make any P&I Advance that it determines in its
reasonable good faith judgment would, if made, not be recoverable out of Related
Proceeds (a "Nonrecoverable P&I Advance"; and, together with a Nonrecoverable
Servicing Advance, "Nonrecoverable Advances"), and the Master Servicer and the
Trustee, as applicable, will be entitled to recover any Advance that at any time
is determined to be a Nonrecoverable Advance (and interest thereon) out of funds
received on or in respect of other Mortgage Loans. See "Description of the
Certificates -- Advances in Respect of Delinquencies" and "The Pooling and
Servicing Agreements -- Certificate Account" in the accompanying prospectus.
The Master Servicer and the Trustee will each be entitled with respect to
any Advance made thereby, and the Special Servicer will be entitled with respect
to any Servicing Advance made thereby, to interest accrued on the amount of such
Advance for so long as it is outstanding at a rate per annum (the "Reimbursement
Rate") equal to the "prime rate" as published in the "Money Rates" section of
The Wall Street Journal, as such "prime rate" may change from time to time. Such
interest on any Advance will be payable to the Master Servicer, the Special
Servicer or the Trustee, as the case may be, first, out of Default Interest and
late payment charges collected on the related Mortgage Loan, but only if such
Mortgage Loan is a Portfolio Mortgage Loan, a Conduit Mortgage Loan primary
serviced by the Mortgage Loan Seller, or a Specially Serviced Mortgage Loan (to
the extent such items accrued after such Mortgage Loan became a Specially
Serviced Mortgage Loan) and, second, at any time coinciding with or following
the reimbursement of such Advance, out of any amounts then on deposit in the
Certificate Account. To the extent not offset by Default Interest and/or late
payment charges accrued and actually collected on the related Mortgage Loan as
described above, interest accrued on outstanding Advances will result in a
reduction in amounts payable on the Certificates.
APPRAISAL REDUCTIONS
Within 60 days (or within such longer period as the Special Servicer is
diligently and in good faith proceeding to obtain such appraisal) after the
earliest of (i) the date on which any Mortgage Loan becomes a Modified Mortgage
Loan (as defined below), (ii) the 60th day following the occurrence of any
uncured delinquency in Monthly Payments with respect to any Mortgage Loan, (iii)
the date on which a receiver is appointed and continues in such capacity in
respect of the Mortgaged Property securing any Mortgage Loan, (iv) the date on
which the borrower under any Mortgage Loan becomes the subject of bankruptcy or
insolvency proceedings, and (v) the date on which a Mortgaged Property securing
any Mortgage Loan becomes an REO Property (each such Mortgage Loan, a "Required
Appraisal Loan"; and each such date, a "Required Appraisal Date"), the Special
Servicer will be required to obtain an appraisal of the related Mortgaged
Property from an independent MAI-designated appraiser, unless such an appraisal
had previously been obtained within the prior twelve months; provided, however,
an appraisal may, in the case of any Mortgage Loan with an outstanding principal
balance of $2,000,000 or less, only, consist solely of an internal valuation
performed by the Special Servicer. The cost of such appraisal will be advanced
by the Master Servicer, subject to its right to be reimbursed therefor as a
Servicing Advance. As a result of any such appraisal, it may be determined that
an Appraisal Reduction Amount exists with respect to the related Required
Appraisal Loan. The "Appraisal Reduction Amount" for any Required Appraisal Loan
will, in general, be an amount (determined by the Special Servicer and verified
by the Master Servicer as of the Determination Date immediately succeeding the
later of the date on which the relevant appraisal is obtained and the earliest
relevant Required Appraisal Date and as of each Determination Date thereafter)
equal to the excess, if any, of (a) the sum of (i) the Stated Principal Balance
of such Required Appraisal Loan, (ii) to the extent not previously advanced by
or on behalf of the Master Servicer or the Trustee, all unpaid interest on the
Required Appraisal Loan through the most recent Due Date prior to such
Determination Date at a per annum rate equal to the sum of the related Net
Mortgage Rate and the per annum rate at which the Trustee Fee is calculated,
(iii) all accrued but unpaid Master Servicing Fees and Special Servicing Fees in
respect of such Required Appraisal Loan, (iv) all related unreimbursed Advances
made by or on behalf of the Master Servicer, the Special Servicer or the Trustee
with respect to such Required Appraisal Loan plus interest accrued thereon at
the Reimbursement Rate and (v) all currently due and unpaid real estate taxes
and assessments, insurance premiums and, if applicable, ground rents in respect
of the related Mortgaged Property (net of any escrow reserves held by the Master
Servicer or Special Servicer to cover any such item and net of
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any reserves for debt service coverage, capital expenditures and replacement
reserves), over (b) 90% of an amount equal to (i) the appraised value of the
related Mortgaged Property or REO Property as determined by such appraisal, net
of (ii) the amount of any liens on such property (not otherwise arising out of
the items described in clause (a)(v) above) that are prior to the lien of the
Required Appraisal Loan; provided that, if an appraisal is required to be
obtained as contemplated by the first sentence of this paragraph but has not
been received within the time period contemplated by such sentence, then until
(but just until) such appraisal is obtained the Appraisal Reduction Amount for
the subject Required Appraisal Loan will be deemed to equal 30% of the Stated
Principal Balance of such Required Appraisal Loan (after receipt of such
appraisal, the Appraisal Reduction Amount, if any, will be calculated without
regard to this proviso).
With respect to each Required Appraisal Loan (unless such Mortgage Loan has
become a Corrected Mortgage Loan and has remained current for three consecutive
Monthly Payments, and no other Servicing Transfer Event has occurred with
respect thereto during the preceding twelve months, in which case it will cease
to be a Required Appraisal Loan), the Special Servicer is required, within 30
days of each anniversary of such Mortgage Loan having become a Required
Appraisal Loan, to order an update of the prior appraisal (the cost of which
will be advanced by the Master Servicer at the direction of the Special Servicer
and will be reimbursable as a Servicing Advance). Based upon such appraisal, the
Special Servicer is to redetermine and, subject to verification by the Master
Servicer, report to the Trustee and the Master Servicer the Appraisal Reduction
Amount, if any, with respect to such Mortgage Loan.
A "Modified Mortgage Loan" is any Mortgage Loan as to which any Servicing
Transfer Event has occurred and which has been modified by the Special Servicer
in a manner that: (A) affects the amount or timing of any payment of principal
or interest due thereon (other than, or in addition to, bringing current Monthly
Payments with respect to such Mortgage Loan); (B) except as expressly
contemplated by the related Mortgage, results in a release of the lien of the
Mortgage on any material portion of the related Mortgaged Property without a
corresponding principal prepayment in an amount not less than the fair market
value (as is) of the property to be released; or (C) in the good faith and
reasonable judgment of the Special Servicer, otherwise materially impairs the
security for such Mortgage Loan or reduces the likelihood of timely payment of
amounts due thereon.
REPORTS TO CERTIFICATEHOLDERS; CERTAIN AVAILABLE INFORMATION
Trustee Reports. Based solely on information provided in monthly reports
prepared by the Master Servicer and the Special Servicer and delivered to the
Trustee, on each Distribution Date the Trustee will be required to deliver or
make available electronically each month to each Certificateholder and
Certificate Owner (so long as such Certificate Owner provides the Trustee with a
certification which discloses such Certificate Owner's status as a holder), the
following statements and reports (collectively, the "Distribution Date
Statement") substantially in the forms set forth in Annex C (although such forms
may be subject to change over time) and substantially containing the information
below:
(1) A statement setting forth, among other things: (i) the amount of
distributions, if any, made on such Distribution Date to the holders of
each Class of REMIC Regular Certificates and applied to reduce the
respective Certificate Balances thereof; (ii) the amount of distributions,
if any, made on such Distribution Date to the holders of each Class of
REMIC Regular Certificates allocable to Distributable Certificate Interest
and Prepayment Premiums; (iii) the Available Distribution Amount for such
Distribution Date; (iv) the aggregate amount of P&I Advances made in
respect of the immediately preceding Distribution Date; (v) the aggregate
Stated Principal Balance of the Mortgage Pool outstanding immediately
before and immediately after such Distribution Date; (vi) the number,
aggregate principal balance, weighted average remaining term to maturity
and weighted average Mortgage Rate of the Mortgage Pool as of the end of
the Collection Period for the prior Distribution Date; (vii) as of the end
of the Collection Period for the immediately preceding Distribution Date,
the number and aggregate unpaid principal balance of Mortgage Loans (A)
delinquent 30-59 days, (B) delinquent 60-89 days, (C) delinquent 90 days or
more, and (D) as to which foreclosure proceedings have been commenced
(except with respect to REO Properties); (viii) with respect to any REO
Property included in the Trust Fund as of the end of the Collection Period
for such Distribution Date, the principal
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balance of the Mortgage Loan as of the date such Mortgage Loan became
delinquent; (ix) the Accrued Certificate Interest and Distributable
Certificate Interest in respect of each Class of REMIC Regular Certificates
for such Distribution Date; (x) the aggregate amount of Distributable
Certificate Interest payable in respect of each Class of REMIC Regular
Certificates on such Distribution Date, including, without limitation, any
Distributable Certificate Interest remaining unpaid from prior Distribution
Dates; (xi) any unpaid Distributable Certificate Interest in respect of
such Class of REMIC Regular Certificates after giving effect to the
distributions made on such Distribution Date; (xii) the Pass-Through Rate
for each Class of REMIC Regular Certificates for such Distribution Date;
(xiii) the Principal Distribution Amount for such Distribution Date,
separately identifying the respective components of such amount; (xiv) the
aggregate of all Realized Losses incurred during the related Collection
Period and, aggregated by type, all Additional Trust Fund Expenses incurred
during the related Collection Period; (xv) the Certificate Balance or
Notional Amount, as the case may be, of each Class of REMIC Regular
Certificates outstanding immediately before and immediately after such
Distribution Date, separately identifying any reduction therein due to the
allocation of Realized Losses and Additional Trust Fund Expenses on such
Distribution Date; (xvi) the aggregate amount of servicing fees paid to the
Master Servicer and the Special Servicer, collectively and separately,
during the Collection Period for the prior Distribution Date; and (xvii) a
brief description of any material waiver, modification or amendment of any
Mortgage Loan entered into by the Master Servicer or Special Servicer
pursuant to the Pooling Agreement during the related Collection Period. In
the case of information furnished pursuant to clauses (i) and (ii) above,
the amounts shall be expressed as a dollar amount in the aggregate for all
Certificates of each applicable Class and per a specified denomination.
(2) A report containing information regarding the Mortgage Loans as of
the close of business on the immediately preceding Determination Date,
which report shall contain certain of the categories of information
regarding the Mortgage Loans set forth in this prospectus supplement in the
tables under the caption "Annex A: Certain Characteristics of the Mortgage
Loans" (calculated, where applicable, on the basis of the most recent
relevant information provided by the borrowers to the Master Servicer or
the Special Servicer and by the Master Servicer or the Special Servicer, as
the case may be, to the Trustee) and such information shall be presented in
a loan-by-loan and tabular format substantially similar to the formats
utilized in this prospectus supplement on Annex A (provided that no
information will be provided as to any repair and replacement or other cash
reserve and the only financial information to be reported on an ongoing
basis will be actual expenses, actual revenues and actual net operating
income for the respective Mortgaged Properties and a debt service coverage
ratio calculated on the basis thereof).
Servicer Reports. The Master Servicer is required to deliver to the
Trustee on the second Business Day prior to each Distribution Date (beginning in
April 2000), and the Trustee is to provide or make available, either in
electronic format or by first-class mail (if requested in writing) to each
Certificateholder, and any potential investor in the Certificates, on each
Distribution Date, the following five reports (the "Servicer Reports"), all of
which will be made available electronically to any interested party including
the Rating Agencies, the underwriters of the Certificates and any party to the
Pooling Agreement via the Trustee's Website:
(1) A "Delinquent Loan Status Report" setting forth, among other
things, those Mortgage Loans which, as of the end of the Collection Period
for the related Distribution Date, were delinquent 30-59 days, delinquent
60-89 days, delinquent 90 days or more, current but specially serviced, or
in foreclosure but not an REO Property, or as to which the related borrower
has filed for bankruptcy.
(2) An "Historical Loan Modification Report" setting forth, among
other things, those Mortgage Loans which, as of the close of business on
the immediately preceding Determination Date, have been modified pursuant
to the Pooling Agreement (i) during the Collection Period ending on such
Determination Date and (ii) since the Cut-off Date, showing the original
and the revised terms thereof.
(3) An "Historical Loss Report" setting forth, among other things, as
of the close of business on the immediately preceding Determination Date,
(i) the aggregate amount of Liquidation Proceeds received, and liquidation
expenses incurred, both during the Collection Period ending on such
Determination Date
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and historically, and (ii) the amount of Realized Losses occurring during
such Collection Period and historically, set forth on a Mortgage
Loan-by-Mortgage Loan basis.
(4) A "REO Status Report" setting forth, among other things, with
respect to each REO Property that was included in the Trust Fund as of the
close of business on the immediately preceding Determination Date, (i) the
acquisition date of such REO Property and (ii) the value of the REO
Property based on the most recent appraisal or other valuation thereof
available to the Master Servicer as of such Determination Date (including
any prepared internally by the Special Servicer).
(5) A "Special Servicer Loan Status Report" setting forth, among other
things, as of the close of business on the immediately preceding
Determination Date, (i) the aggregate principal balance of all Specially
Serviced Mortgage Loans and (ii) a loan-by-loan listing of all Specially
Serviced Mortgage Loans indicating their status, date and reason for
transfer to the Special Servicer; provided however, that such information
may be shown as part of the reports described above and other Commercial
Mortgage Securities Association ("CMSA") form reports in lieu of in a
separate report.
In addition, on the second Business Day prior to each Distribution Date
(beginning in April 2000), the Master Servicer will deliver to the Trustee, the
Special Servicer and the Rating Agencies a list of all Mortgage Loans the Master
Servicer has determined are in jeopardy of becoming Specially Serviced Mortgage
Loans based on criteria described in the Pooling Agreement.
None of the Distribution Date Statement or the Servicer Reports will
include any information that the Master Servicer deems to be confidential. The
information that pertains to Specially Serviced Mortgage Loans and REO
Properties reflected in such reports shall be based solely upon the reports
delivered by the Special Servicer to the Master Servicer prior to the related
Distribution Date. None of the Master Servicer, the Special Servicer or the
Trustee shall be responsible for the accuracy or completeness of any information
supplied to it by a borrower or other third party that is included in any
reports, statements, materials or information prepared or provided by the Master
Servicer, the Special Servicer or the Trustee, as applicable.
Following the end of each calendar quarter, commencing with the calendar
quarter ended March 31, 2000, within 105 days (or 180 days, in the case of
annual operating information) of receipt by the Master Servicer, as to
Non-Specially Serviced Mortgage Loans, and within 30 days after receipt by the
Special Servicer, as to Specially Serviced Mortgage Loans, of any annual or
quarterly operating statements or rent rolls with respect to any Mortgaged
Property or REO Property, the Master Servicer or the Special Servicer, as
applicable, will, based upon such operating statements or rent rolls prepare
(or, if previously prepared, update) the written analysis of the operations (the
"Operating Statement Analysis Report"), and the Special Servicer will remit each
Operating Statement Analysis Report prepared by it or the related data fields,
together with the underlying operating statements and rent rolls, to the Master
Servicer in an electronic format reasonably acceptable to the Master Servicer.
Certain information in each Operating Statement Analysis Report will be
normalized using standard CMSA methodology as modified from time to time. All
Operating Statement Analysis Reports and worksheets showing computations made to
normalize annual net cash flow and debt service coverage numbers ("Operating
Statement Analysis Worksheets") will be maintained by the Master Servicer with
respect to each Mortgaged Property and REO Property, and the Master Servicer
will forward copies thereof to the Trustee, the Directing Certificateholder,
each Rating Agency requesting such copies and, upon written request any
Certificateholder, or to the extent the Trustee or a beneficial owner of an
Offered Certificate (a "Certificate Owner") has confirmed its ownership interest
in the Certificates held thereby, such Certificate Owner, together with the
related operating statement or rent rolls. Conveyance of notices and other
communications by DTC to Participants, and by Participants to Certificate
Owners, will be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time. The Master
Servicer, the Special Servicer, the Trustee, the Depositor, the REMIC
Administrator, the Mortgage Loan Seller and the Certificate Registrar are
required to recognize as Certificateholders only those persons in whose names
the Certificates are registered on the books and records of the Certificate
Registrar.
The Trustee will make available each month, to any interested party, the
Distribution Date Statement (and any additional files containing the same
information in an alternative format) via the Trustee's Website. In addition,
the Trustee will make available to any interested party each month the Servicer
Reports on the
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Trustee's Website. The Trustee's Website will initially be located at
"www.ctslink.com/cmbs". The Trustee's fax-on-demand service may be accessed by
calling (301) 815-6610. In addition, the Trustee will also make Mortgage Loan
information as presented in the CMSA loan setup file and CMSA loan periodic
update file format available each month to any Certificateholder, any
Certificate Owner, the Rating Agencies, the parties hereto or any other
Interested Party via the Trustee's Website. In addition, pursuant to the Pooling
Agreement, the Trustee will make available, as a convenience for Interested
Parties (and not in furtherance of the distribution of the accompanying
prospectus or the prospectus supplement under the securities laws), the Pooling
Agreement, the accompanying prospectus and the prospectus supplement via the
Trustee's Website. For assistance with the above-referenced services, interested
parties may call (301) 815-6600. The Trustee will make no representations or
warranties as to the accuracy or completeness of such documents and will assume
no responsibility therefor.
In connection with providing access to the Trustee's Website, the Trustee
may require registration and the acceptance of a disclaimer. The Trustee shall
not be liable for the dissemination of information in accordance with the
Pooling Agreement.
For a discussion of certain annual information reports to be furnished by
the Trustee to persons who at any time during the prior calendar year were
holders of the Offered Certificates, see "Description of the
Certificates -- Reports to Certificateholders" in the accompanying prospectus.
Other Information. The Pooling Agreement requires that the Trustee make
available at its offices, during normal business hours, upon reasonable advance
written notice, for review by any holder or Certificate Owner of an Offered
Certificate or any person identified to the Trustee by any such holder or
Certificate Owner as a prospective transferee of an Offered Certificate or any
interest therein, originals or copies of, among other things, the following
items: (a) all officer's certificates delivered to the Trustee since the
Delivery Date as described under "Servicing of the Mortgage Loans -- Evidence as
to Compliance" herein, (b) all accountant's reports delivered to the Trustee
since the Trust Formation Date as described under "Servicing of the Mortgage
Loans -- Evidence as to Compliance" herein, and (c) the Mortgage Note, Mortgage
and other legal documents relating to each Mortgage Loan, including any and all
modifications, waivers and amendments of the terms of a Mortgage Loan entered
into by the Master Servicer or the Special Servicer and delivered to the
Trustee. In addition, the Master Servicer is required to make available, during
normal business hours, upon reasonable advance written notice, for review by any
holder or Certificate Owner of an Offered Certificate or any person identified
to the Master Servicer as a prospective transferee of an Offered Certificate or
any interest therein, originals or copies of any and all documents (in the case
of documents generated by the Special Servicer, to the extent received
therefrom) that constitute the servicing file for each Mortgage Loan, in each
case except to the extent the Master Servicer in its reasonable, good faith
determination believes that any item of information contained in such servicing
file is of a nature that it should be conveyed to all Certificateholders at the
same time, in which case the Master Servicer is required, as soon as reasonably
possible following its receipt of any such item of information, to disclose such
item of information to the Trustee for inclusion by the Trustee along with the
Distribution Date Statement referred to under "-- Reports to Certificateholders;
Certain Available Information -- Trustee Reports" above; provided that, until
the Trustee has either disclosed such information to all Certificateholders
along with the Distribution Date Statement or has properly filed such
information with the Securities and Exchange Commission on behalf of the Trust
under the Securities Exchange Act of 1934, the Master Servicer is entitled to
withhold such item of information from any Certificateholder or Certificate
Owner or prospective transferee of a Certificate or an interest therein; and,
provided, further, that the Master Servicer is not required to make information
contained in any servicing file available to any person to the extent that doing
so is prohibited by applicable law or by any documents related to a Mortgage
Loan.
The Trustee and, subject to the last sentence of the prior paragraph, the
Master Servicer will each make available, upon reasonable advance written notice
and at the expense of the requesting party, originals or copies of the items
referred to in the prior paragraph that are maintained thereby, to
Certificateholders, Certificate Owners and prospective purchasers of
Certificates and interests therein; provided that the Trustee and Master
Servicer may each require (a) in the case of a Certificate Owner, a written
confirmation executed by the requesting person or entity, in a form reasonably
acceptable to the Trustee or Master Servicer, as
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applicable, generally to the effect that such person or entity is a beneficial
owner of Offered Certificates and will keep such information confidential, and
(b) in the case of a prospective purchaser, confirmation executed by the
requesting person or entity, in a form reasonably acceptable to the Trustee or
Master Servicer, as applicable, generally to the effect that such person or
entity is a prospective purchaser of Offered Certificates or an interest
therein, is requesting the information solely for use in evaluating a possible
investment in such Certificates and will otherwise keep such information
confidential. Certificateholders, by the acceptance of their Certificates, will
be deemed to have agreed to keep such information confidential.
VOTING RIGHTS
At all times during the term of the Pooling Agreement, 97.0% of the voting
rights for the Certificates (the "Voting Rights") shall be allocated among the
holders of the respective Classes of Sequential Pay Certificates in proportion
to the Certificate Balances of their Certificates and 3.0% of the Voting Rights
shall be allocated to the holders of the Class X Certificates in proportion to
their Notional Amounts. Voting Rights allocated to a Class of Certificateholders
shall be allocated among such Certificateholders in proportion to the percentage
interests in such Class evidenced by their respective Certificates. See
"Description of the Certificates -- Voting Rights" in the accompanying
prospectus. GMAC Commercial Mortgage Corporation is the initial holder of one or
more classes of the Non-Offered Certificates, and continues to be the holder of
one or more classes of Non-Offered Certificates, and as such, is entitled to
Voting Rights.
TERMINATION
The obligations created by the Pooling Agreement will terminate following
the earliest of (i) the final payment (or advance in respect thereof) or other
liquidation of the last Mortgage Loan or related REO Property remaining in the
Trust Fund, and (ii) the purchase of all of the Mortgage Loans and REO
Properties remaining in the Trust Fund by the Master Servicer, Special Servicer
or by any holder or holders (other than the Depositor or Mortgage Loan Seller)
of Certificates representing a majority interest in the Controlling Class.
Written notice of termination of the Pooling Agreement will be given to each
Certificateholder, and the final distribution with respect to each Certificate
will be made only upon surrender and cancellation of such Certificate at the
office of the Certificate Registrar or other location specified in such notice
of termination.
Any such purchase by the Master Servicer, Special Servicer or the majority
holder(s) of the Controlling Class of all the Mortgage Loans and REO Properties
remaining in the Trust Fund is required to be made at a price equal to (a) the
sum of (i) the aggregate Purchase Price of all the Mortgage Loans then included
in the Trust Fund (other than any Mortgage Loans as to which the related
Mortgaged Properties have become REO Properties) and (ii) the fair market value
of all REO Properties then included in the Trust Fund, as determined by an
appraiser mutually agreed upon by the Master Servicer and the Trustee, minus (b)
(solely in the case of a purchase by the Master Servicer) the aggregate of all
amounts payable or reimbursable to the Master Servicer under the Pooling
Agreement. Such purchase will effect early retirement of the then outstanding
Certificates, but the right of the Master Servicer or the majority holder(s) of
the Controlling Class to effect such termination is subject to the requirement
that the then aggregate Stated Principal Balance of the Mortgage Pool be less
than 1.0% of the Initial Pool Balance. The purchase price paid by the Master
Servicer or the majority holder(s) of the Controlling Class, exclusive of any
portion thereof payable or reimbursable to any person other than the
Certificateholders, will constitute part of the Available Distribution Amount
for the final Distribution Date.
THE TRUSTEE
Wells Fargo Bank Minnesota, N.A. (successor in interest to Norwest Bank
Minnesota, National Association ("Wells Fargo Bank")) will act as Trustee
pursuant to the Pooling Agreement. Wells Fargo Bank, a direct, wholly-owned
subsidiary of Wells Fargo & Company, is a national banking association
originally chartered in 1872 and is engaged in a wide range of activities
typical of a national bank. Wells Fargo Bank's principal office is located at
Wells Fargo, Sixth and Marquette, Minneapolis, Minnesota 55479-0113. Certificate
transfer services are conducted at Wells Fargo Bank's offices in Minneapolis.
Wells Fargo Bank otherwise conducts its trustee and securities administration
services, including administration of the Trust
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Fund, at its offices in Columbia, Maryland. Such office is located at 11000
Broken Land Parkway, Columbia, Maryland 21044-3562. In addition, Wells Fargo
Bank maintains a trust office in New York City located at 45 Broadway, 12th
Floor, New York, New York 10004. The Trustee is at all times to be, and will be
required to resign if it fails to be, (i) a corporation, bank or banking
association, organized and doing business under the laws of the United States of
America or any state thereof, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of not less than $50,000,000
and subject to supervision or examination by federal or state authority and (ii)
an institution whose long-term senior unsecured debt is rated not less than "AA"
by Moody's and "AA" by S&P (or such lower rating as would not result, as
confirmed in writing by each Rating Agency, in a qualification, downgrade or
withdrawal of any of the then current ratings assigned by such Rating Agency to
the Certificates). See "The Pooling and Servicing Agreements -- The Trustee",
"-- Duties of the Trustee", "-- Certain Matters Regarding the Trustee" and
"-- Resignation and Removal of the Trustee" in the accompanying prospectus.
Pursuant to the Pooling Agreement, the Trustee will be entitled to a
monthly fee (the "Trustee Fee"; and, together with the Master Servicing Fee
(including the Standby Fee), the "Administrative Fees") payable out of general
collections on the Mortgage Loans and any REO Properties.
The Trustee will also have certain duties with respect to REMIC
administration (in such capacity the "REMIC Administrator"). See "Certain
Federal Income Tax Consequences -- REMICs -- Reporting and Other Administrative
Matters" and "The Pooling and Servicing Agreements -- Certain Matters Regarding
the Master Servicer, the Special Servicer, the REMIC Administrator and the
Depositor", "-- Events of Default" and "-- Rights Upon Event of Default" in the
accompanying prospectus.
YIELD AND MATURITY CONSIDERATIONS
YIELD CONSIDERATIONS
General. The yield on any Offered Certificate will depend on (a) the price
at which such Certificate is purchased by an investor and (b) the rate, timing
and amount of distributions on such Certificate. The rate, timing and amount of
distributions on any Offered Certificate will in turn depend on, among other
things, (v) the Pass-Through Rate for such Certificate, (w) the rate and timing
of principal payments (including principal prepayments) and other principal
collections on or in respect of the Mortgage Loans and the extent to which such
amounts are to be applied or otherwise result in reduction of the Certificate
Balance or Notional Amount of the Class of Certificates to which such
Certificate belongs, (x) the rate, timing and severity of Realized Losses on or
in respect of the Mortgage Loans and of Additional Trust Fund Expenses and
Appraisal Reductions and the extent to which such losses, expenses and
reductions are allocable to or otherwise result in the nonpayment or deferred
payment of interest on, or reduction of the Certificate Balance or Notional
Amount of, the Class of Certificates to which such Certificate belongs, (y) the
timing and severity of any Net Aggregate Prepayment Interest Shortfalls and the
extent to which such shortfalls are allocable in reduction of the Distributable
Certificate Interest payable on the Class of Certificates to which such
Certificate belongs and (z) the extent to which Prepayment Premiums are
collected and, in turn, distributed on the Class of Certificates to which such
Certificate belongs. The yield to maturity on the Class A-1A and Class A-2A
Certificates is sensitive to the rate and timing of Principal Prepayments and
other unscheduled collections on the Mortgage Loans in Group A (including
collections made in connection with liquidations of such Mortgage Loans due to
defaults, casualties or condemnations affecting such Mortgage Loans and
purchases of such Mortgage Loans out of the Trust Fund). Similarly, the yield to
maturity on the Class A-1B, Class A-2B and Class A-3B Certificates is sensitive
to the rate and timing of Principal Prepayments and other unscheduled
collections on the Mortgage Loans in Group B (including collections made in
connection with liquidations of such Mortgage Loans due to defaults, casualties,
or condemnations affecting such Mortgage Loans and purchases of such Mortgage
Loans out of the Trust Fund).
Class X Certificate Pass-Through Rate. The Pass-Through Rate applicable to
the Class X Certificates will be variable and will be calculated based in part
on the weighted average of the Net Mortgage Rates on the Mortgage Loans from
time to time. Accordingly, the yield on such Certificates will be sensitive to
changes in
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the relative composition of the Mortgage Pool as a result of scheduled
amortization, voluntary prepayments and liquidations of Mortgage Loans following
default. The Pass-Through Rate and yield to maturity of the Class X Certificates
will be adversely affected if Mortgage Loans with relatively higher Mortgage
Rates amortize and/or prepay faster than Mortgage Loans with relatively lower
Mortgage Rates. See "Description of the Certificates -- Pass-Through Rates" and
"Description of the Mortgage Pool" herein and "-- Rate and Timing of Principal
Payments" below.
Rate and Timing of Principal Payments. The yield to holders of the Class X
Certificates will be extremely sensitive to, and the yield to holders of any
other Class of Offered Certificates purchased at a discount or premium will be
affected by, the rate and timing of reductions of the Certificate Balances or
Notional Amount, as the case may be, of such Class of Certificates. As described
herein, the Principal Distribution Amount for each Distribution Date will be
distributable entirely in respect of the Class A Certificates until the related
Certificate Balances thereof are reduced to zero. Following retirement of the
Class A Certificates, the Principal Distribution Amount for each Distribution
Date will be distributable entirely in respect of the other Classes of
Sequential Pay Certificates, sequentially in alphabetical order of Class
designation, in each such case until the related Certificate Balance is reduced
to zero. The Notional Amount of the Class X Certificates will equal the
aggregate Certificate Balances of the Classes of Sequential Pay Certificates
outstanding from time to time. Consequently, the rate and timing of reductions
of the Certificate Balance or Notional Amount, as the case may be, of each Class
of Offered Certificates will depend on the rate and timing of principal payments
on or in respect of the Mortgage Loans, which will in turn be affected by the
amortization schedules thereof, the dates on which any Balloon Payments are due
and the rate and timing of principal prepayments and other unscheduled
collections thereon (including for this purpose, collections made in connection
with liquidations of Mortgage Loans due to defaults, casualties or condemnations
affecting the Mortgaged Properties, or purchases of Mortgage Loans out of the
Trust Fund). Prepayments and, assuming the respective stated maturity dates
therefor have not occurred, liquidations of the Mortgage Loans will result in
distributions on the Sequential Pay Certificates of amounts that would otherwise
be distributed over the remaining terms of the Mortgage Loans and will tend to
shorten the weighted average lives of those Certificates. Defaults on the
Mortgage Loans, particularly in the case of Balloon Loans at or near their
stated maturity dates, may result in significant delays in payments of principal
on the Mortgage Loans (and, accordingly, on the Sequential Pay Certificates)
while workouts are negotiated or foreclosures are completed, and such delays
will tend to lengthen the weighted average lives of those Certificates. See
"Servicing of the Mortgage Loans -- Modifications, Waivers, Amendments and
Consents" herein and "The Pooling and Servicing Agreements -- Realization Upon
Defaulted Mortgage Loans" and "Certain Legal Aspects of Mortgage
Loans -- Foreclosure" in the accompanying prospectus.
The extent to which the yield to maturity of any Class of Offered
Certificates may vary from the anticipated yield will depend upon the degree to
which such Certificates are purchased at a discount or premium and when, and to
what degree, payments of principal on or in respect of the Mortgage Loans are
distributed or otherwise result in a reduction of the Certificate Balance or
Notional Amount of such Certificates. An investor should consider, in the case
of any Offered Certificate purchased at a discount, the risk that a slower than
anticipated rate of principal payments on the Mortgage Loans could result in an
actual yield to such investor that is lower than the anticipated yield and, in
the case of a Class X Certificate or any other Offered Certificate purchased at
a premium, the risk that a faster than anticipated rate of principal payments on
the Mortgage Loans could result in an actual yield to such investor that is
lower than the anticipated yield. In general, the earlier a payment of principal
on or in respect of the Mortgage Loans is distributed or otherwise results in
reduction of the notional amount of a Class X Certificate or the principal
balance of any other Offered Certificate purchased at a discount or premium, the
greater will be the effect on an investor's yield to maturity. As a result, the
effect on an investor's yield of principal payments occurring at a rate higher
(or lower) than the rate anticipated by the investor during any particular
period may not be fully offset by a subsequent like reduction (or increase) in
the rate of principal payments. Investors in the Class X Certificates should
fully consider the risk that an extremely rapid rate of principal payments on
the Mortgage Loans could result in the failure of such investors to fully recoup
their initial investments. Because the rate of principal payments on or in
respect of the Mortgage Loans will depend on future events and a variety of
factors (as described more fully below), no assurance can be given as to such
rate or the rate of principal prepayments
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in particular. The Depositor is not aware of any relevant publicly available or
authoritative statistics with respect to the historical prepayment experience of
a large group of mortgage loans comparable to the Mortgage Loans.
Losses and Shortfalls. The yield to holders of the Offered Certificates
will also depend on the extent to which such holders are required to bear the
effects of any losses or shortfalls on the Mortgage Loans. As and to the extent
described herein, Realized Losses and Additional Trust Fund Expenses will be
allocated to the respective Classes of Sequential Pay Certificates (which
allocation will, in general, reduce the amount of interest distributable thereto
in the case of Additional Trust Fund Expenses and reduce the Certificate Balance
thereof in the case of Realized Losses) in the following order: first, to each
Class of Sequential Pay Certificates (other than the Class A Certificates), in
reverse alphabetical order of Class designation, until the Certificate Balance
thereof has been reduced to zero; then, to the Class A-1A, Class A-2A, Class
A-1B, Class A-2B and Class A-3B Certificates, pro rata in accordance with their
respective remaining Certificate Balances, until the remaining Certificate
Balance of each such Class of Certificates has been reduced to zero. Any such
reduction in the Certificate Balance of a Class of Sequential Pay Certificates
will cause a corresponding reduction of the Notional Amount of the Class X
Certificates.
The Net Aggregate Prepayment Interest Shortfall, if any, for each
Distribution Date will be allocated to the respective Classes of REMIC Regular
Certificates (in each case, to reduce the amount of interest otherwise payable
thereon on such Distribution Date) pro rata in accordance with the respective
amounts of Accrued Certificate Interest for each such Class of Certificates for
such Distribution Date.
Certain Relevant Factors. The rate and timing of principal payments and
defaults and the severity of losses on or in respect of the Mortgage Loans may
be affected by a number of factors, including, without limitation, prevailing
interest rates, the terms of the Mortgage Loans (for example, Prepayment
Premiums, Lock-out Periods and amortization terms that require Balloon
Payments), the demographics and relative economic vitality of the areas in which
the Mortgaged Properties are located and the general supply and demand for
retail shopping space, rental apartments, hotel rooms, industrial space, health
care facility beds, senior living units or office space, as the case may be, in
such areas, the quality of management of the Mortgaged Properties, the servicing
of the Mortgage Loans, possible changes in tax laws and other opportunities for
investment. See "Risk Factors -- Risks Related to the Mortgage Loans",
"Description of the Mortgage Pool" and "Servicing of the Mortgage Loans" herein
and "The Pooling and Servicing Agreements" and "Yield and Maturity
Considerations -- Yield and Prepayment Considerations" in the accompanying
prospectus.
The rate of prepayment on the Mortgage Loans is likely to be affected by
prevailing market interest rates for mortgage loans of a comparable type, term
and risk level. When the prevailing market interest rate is below the Mortgage
Rate at which a Mortgage Loan accrues interest, a borrower may have an increased
incentive to refinance such Mortgage Loan. Conversely, to the extent prevailing
market interest rates exceed the applicable Mortgage Rate for any Mortgage Loan,
such Mortgage Loan may be less likely to prepay out of certain net cash flow
from the related Mortgaged Property.
Depending on prevailing market interest rates, the outlook for market
interest rates and economic conditions generally, some borrowers may sell
Mortgaged Properties in order to realize their equity therein, to meet cash flow
needs or to make other investments. In addition, some borrowers may be motivated
by federal and state tax laws (which are subject to change) to sell Mortgaged
Properties prior to the exhaustion of tax depreciation benefits.
If a Mortgage Loan is not in a Lock-out Period, any Prepayment Premium in
respect of such Mortgage Loan may not be sufficient economic disincentive to
prevent the related borrower from voluntarily prepaying the loan as part of a
refinancing thereof or a sale of the related Mortgaged Property. See
"Description of the Mortgage Pool -- Certain Terms and Conditions of the
Mortgage Loans" in this prospectus supplement.
The Depositor makes no representation or warranty as to the particular
factors that will affect the rate and timing of prepayments and defaults on the
Mortgage Loans, as to the relative importance of such factors, as to the
percentage of the principal balance of the Mortgage Loans that will be prepaid
or as to which a
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default will have occurred as of any date or as to the overall rate of
prepayment or default on the Mortgage Loans.
WEIGHTED AVERAGE LIVES
The weighted average life of any Offered Certificate (other than a Class X
Certificate) refers to the average amount of time that will elapse from the date
of its issuance until each dollar to be applied in reduction of the principal
balance of such Certificate is distributed to the investor. For purposes of this
prospectus supplement, the weighted average life of any such Offered Certificate
is determined by (i) multiplying the amount of each principal distribution
thereon by the number of years from the assumed Settlement Date (as defined
below) to the related Distribution Date, (ii) summing the results and (iii)
dividing the sum by the aggregate amount of the reductions in the principal
balance of such Certificate. Accordingly, the weighted average life of any such
Offered Certificate will be influenced by, among other things, the rate at which
principal of the Mortgage Loans is paid or otherwise collected or advanced and
the extent to which such payments, collections and/or advances of principal are
in turn applied in reduction of the Certificate Balance of the Class of
Certificates to which such Offered Certificate belongs. As described herein, the
Principal Distribution Amount for each Distribution Date will be distributable
entirely in respect of the Class A Certificates until the Certificate Balances
thereof are reduced to zero, and will thereafter be distributable entirely in
respect of the other Classes of Sequential Pay Certificates, sequentially in
alphabetical order of Class designation, in each such case until the related
Certificate Balance is reduced to zero. As a consequence of the foregoing, the
weighted average lives of the Class A Certificates may be shorter, and the
weighted average lives of the other Classes of Sequential Pay Certificates may
be longer, than would otherwise be the case if the Principal Distribution Amount
for each Distribution Date was being distributed on a pro rata basis among the
respective Classes of Sequential Pay Certificates.
Prepayments on mortgage loans may be measured by a prepayment standard or
model. The model used in this prospectus supplement is the CPR model (as
described in the accompanying prospectus). The columns headed "Scenario 1,"
"Scenario 2," "Scenario 3," "Scenario 4," "Scenario 5" and "Scenario 6" in the
following tables assume that no prepayments are made on any Mortgage Loan during
such Mortgage Loan's Lock-out Period, if any, and, in the case of the Group A
Mortgage Loans only, during such Mortgage Loan's yield maintenance period, if
any, and are otherwise made on each of the Mortgage Loans at the following CPRs:
SCENARIO 1 SCENARIO 2 SCENARIO 3 SCENARIO 4 SCENARIO 5 SCENARIO 6
---------- ---------- ---------- ---------- ---------- ----------
Group A Mortgage Loans.............. 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Group B Mortgage Loans.............. 0.00% 3.00% 4.50% 6.00% 7.50% 9.00%
There is no assurance, however, that prepayments of the Mortgage Loans (whether
or not in a Lock-out Period or a yield maintenance period) will conform to any
particular CPR, and no representation is made that the Mortgage Loans will
prepay in accordance with the assumptions at any of the CPRs shown or at any
other particular prepayment rate, that all the Mortgage Loans will prepay in
accordance with the assumptions at the same rate or that Mortgage Loans that are
in a Lock-out Period or a yield maintenance period will not prepay as a result
of involuntary liquidations upon default or otherwise. A "yield maintenance
period" is any period during which a Mortgage Loan provides that voluntary
prepayments be accompanied by a Prepayment Premium calculated on the basis of a
yield maintenance formula.
The following tables indicate the percentages of the initial Certificate
Balances of the Class A-1A, Class A-2A, Class A-1B, Class A-2B, Class A-3B,
Class B, Class C, Class D, Class E and Class F Certificates that would be
outstanding after each of the dates shown at various CPRs, and the corresponding
weighted average lives of such Classes of Certificates, under the following
assumptions (the "Maturity Assumptions"): (i) the Mortgage Loans have the
characteristics set forth on Annex A as of the Cut-off Date but with balances
adjusted to reflect their actual balances as of the Commencement Date, (ii) the
Pass-Through Rate and the initial Certificate Balance or Notional Amount, as the
case may be, of each Class of Offered Certificates are as described herein,
(iii) the scheduled Monthly Payments for each Mortgage Loan that accrues
interest on the basis of a 360-day year consisting of twelve 30-day months (a
"30/360 Basis"), are based on such Mortgage
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Loan's Cut-off Date Balance, calculated remaining amortization term as of the
Cut-off Date and Mortgage Rate as of the Cut-off Date, and the scheduled Monthly
Payments for each Mortgage Loan that accrues interest on the basis of actual
number of days elapsed during the month of accrual in a 360-day year are the
actual contractual Monthly Payments (adjusted to take into account the addition
or subtraction of any Withheld Amounts as described under "Description of the
Certificates -- Interest Reserve Account") and further that the Mortgage Loan
that accrues interest on an Actual 365/360 Basis (Loan Number 3041985) accrues
interest instead on an Actual/360 Basis, (iv) there are no delinquencies or
losses in respect of the Mortgage Loans, there are no modifications, extensions,
waivers or amendments affecting the payment by borrowers of principal or
interest on the Mortgage Loans, there are no Appraisal Reduction Amounts with
respect to the Mortgage Loans and there are no casualties or condemnations
affecting the Mortgaged Properties, (v) scheduled Monthly Payments on the
Mortgage Loans are timely received on the first day of each month, commencing in
October 2000, (vi) no voluntary or involuntary prepayments are received as to
any Mortgage Loan during such Mortgage Loan's Lock-out Period ("LOP"), if any,
or, in the case of the Group A Mortgage Loans, yield maintenance period ("YMP"),
if any, otherwise, prepayments are made on each of the Mortgage Loans at the
indicated CPRs set forth in the tables (without regard to any limitations in
such Mortgage Loans on partial voluntary principal prepayments), (vii) neither
the Master Servicer nor any majority holder(s) of the Controlling Class
exercises its or exercise their right of optional termination described herein,
(viii) no Mortgage Loan is required to be repurchased by the Mortgage Loan
Seller, (ix) no Prepayment Interest Shortfalls are incurred and all Prepayment
Premiums are collected, (x) there are no Additional Trust Fund Expenses, (xi)
distributions on the Offered Certificates are made on the 15th day of each
month, commencing in October 2000, (xii) the Offered Certificates are settled on
September 27, 2000 (the "Settlement Date") and (xiii) there are no prepayments
other than those actually received prior to the Commencement Date. To the extent
that the Mortgage Loans have characteristics that differ from those assumed in
preparing the tables set forth below, Class A-1A, Class A-2A, Class A-1B, Class
A-2B, Class A-3B, Class B, Class C, Class D, Class E and Class F Certificates
may mature earlier or later than indicated by the tables. It is highly unlikely
that the Mortgage Loans will prepay in accordance with the above assumptions at
any of the specified CPRs until maturity or that all the Mortgage Loans will so
prepay at the same rate. In addition, variations in the actual prepayment
experience and the balance of the Mortgage Loans that prepay may increase or
decrease the percentages of initial Certificate Balances (and weighted average
lives) shown in the following tables. Such variations may occur even if the
average prepayment experience of the Mortgage Loans were to conform to the
assumptions and be equal to any of the specified CPRs. Investors are urged to
conduct their own analyses of the rates at which the Mortgage Loans may be
expected to prepay.
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF
THE CLASS A-1A CERTIFICATES UNDER THE SPECIFIED SCENARIOS
(PREPAYMENTS LOCKED OUT THROUGH LOP ON ALL MORTGAGE LOANS
AND YMP ON GROUP A MORTGAGE LOANS)
CPR PREPAYMENT SCENARIO
---------------------------------------------------------------------------
DATE SCENARIO 1 SCENARIO 2 SCENARIO 3 SCENARIO 4 SCENARIO 5 SCENARIO 6
---- ---------- ---------- ---------- ---------- ---------- ----------
Initial Percentage.................. 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
September 15, 2001.................. 89.81 89.81 89.81 89.81 89.81 89.81
September 15, 2002.................. 85.41 85.41 85.41 85.41 85.41 85.41
September 15, 2003.................. 80.01 80.01 80.01 80.01 80.01 80.01
September 15, 2004.................. 72.26 72.26 72.26 72.26 72.26 72.26
September 15, 2005.................. 66.03 66.03 66.03 66.03 66.03 66.03
September 15, 2006.................. 54.17 54.17 54.17 54.17 54.17 54.17
September 15, 2007.................. 40.23 40.23 40.23 40.23 40.23 40.23
September 15, 2008.................. 9.93 9.93 9.93 9.93 9.93 9.93
September 15, 2009.................. 0.00 0.00 0.00 0.00 0.00 0.00
Weighted Average Life (years)....... 5.50 5.50 5.50 5.50 5.50 5.50
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PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF
THE CLASS A-2A CERTIFICATES UNDER THE SPECIFIED SCENARIOS
(PREPAYMENTS LOCKED OUT THROUGH LOP ON ALL MORTGAGE LOANS
AND YMP ON GROUP A MORTGAGE LOANS)
CPR PREPAYMENT SCENARIO
---------------------------------------------------------------------------
DATE SCENARIO 1 SCENARIO 2 SCENARIO 3 SCENARIO 4 SCENARIO 5 SCENARIO 6
---- ---------- ---------- ---------- ---------- ---------- ----------
Initial Percentage.................. 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
September 15, 2001.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2002.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2003.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2004.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2005.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2006.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2007.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2008.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2009.................. 9.88 9.88 9.88 9.88 9.88 9.88
September 15, 2010.................. 0.00 0.00 0.00 0.00 0.00 0.00
Weighted Average Life (years)....... 8.79 8.79 8.79 8.79 8.79 8.79
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF
THE CLASS A-1B CERTIFICATES UNDER THE SPECIFIED SCENARIOS
(PREPAYMENTS LOCKED OUT THROUGH LOP ON ALL MORTGAGE LOANS
AND YMP ON GROUP A MORTGAGE LOANS)
CPR PREPAYMENT SCENARIO
---------------------------------------------------------------------------
DATE SCENARIO 1 SCENARIO 2 SCENARIO 3 SCENARIO 4 SCENARIO 5 SCENARIO 6
---- ---------- ---------- ---------- ---------- ---------- ----------
Initial Percentage.................. 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
September 15, 2001.................. 82.66 77.03 74.22 71.41 68.59 65.78
September 15, 2002.................. 70.26 59.90 54.84 49.86 44.96 40.14
September 15, 2003.................. 53.84 39.97 33.35 26.93 20.72 14.70
September 15, 2004.................. 26.46 11.39 4.35 0.00 0.00 0.00
September 15, 2005.................. 10.78 0.00 0.00 0.00 0.00 0.00
September 15, 2006.................. 0.00 0.00 0.00 0.00 0.00 0.00
Weighted Average Life (years)....... 2.91 2.38 2.18 2.00 1.85 1.71
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF
THE CLASS A-2B CERTIFICATES UNDER THE SPECIFIED SCENARIOS
(PREPAYMENTS LOCKED OUT THROUGH LOP ON ALL MORTGAGE LOANS
AND YMP ON GROUP A MORTGAGE LOANS)
CPR PREPAYMENT SCENARIO
---------------------------------------------------------------------------
DATE SCENARIO 1 SCENARIO 2 SCENARIO 3 SCENARIO 4 SCENARIO 5 SCENARIO 6
---- ---------- ---------- ---------- ---------- ---------- ----------
Initial Percentage.................. 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
September 15, 2001.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2002.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2003.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2004.................. 100.00 100.00 100.00 96.59 87.33 78.51
September 15, 2005.................. 100.00 91.93 81.14 71.01 61.50 52.59
September 15, 2006.................. 78.02 56.31 46.64 37.70 29.44 21.83
September 15, 2007.................. 36.07 19.16 11.80 5.11 0.00 0.00
September 15, 2008.................. 0.00 0.00 0.00 0.00 0.00 0.00
Weighted Average Life (years)....... 6.46 6.03 5.77 5.50 5.21 4.96
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PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF
THE CLASS A-3B CERTIFICATES UNDER THE SPECIFIED SCENARIOS
(PREPAYMENTS LOCKED OUT THROUGH LOP ON ALL MORTGAGE LOANS
AND YMP ON GROUP A MORTGAGE LOANS)
CPR PREPAYMENT SCENARIO
---------------------------------------------------------------------------
DATE SCENARIO 1 SCENARIO 2 SCENARIO 3 SCENARIO 4 SCENARIO 5 SCENARIO 6
---- ---------- ---------- ---------- ---------- ---------- ----------
Initial Percentage.................. 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
September 15, 2001.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2002.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2003.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2004.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2005.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2006.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2007.................. 100.00 100.00 100.00 100.00 98.12 87.51
September 15, 2008.................. 36.23 28.39 25.06 22.08 19.42 17.04
September 15, 2009.................. 18.81 14.30 12.43 10.78 9.33 8.05
September 15, 2010.................. 0.00 0.00 0.00 0.00 0.00 0.00
Weighted Average Life (years)....... 8.03 7.83 7.74 7.66 7.59 7.49
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF
THE CLASS B CERTIFICATES UNDER THE SPECIFIED SCENARIOS
(PREPAYMENTS LOCKED OUT THROUGH LOP ON ALL MORTGAGE LOANS
AND YMP ON GROUP A MORTGAGE LOANS)
CPR PREPAYMENT SCENARIO
---------------------------------------------------------------------------
DATE SCENARIO 1 SCENARIO 2 SCENARIO 3 SCENARIO 4 SCENARIO 5 SCENARIO 6
---- ---------- ---------- ---------- ---------- ---------- ----------
Initial Percentage.................. 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
September 15, 2001.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2002.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2003.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2004.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2005.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2006.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2007.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2008.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2009.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2010.................. 0.00 0.00 0.00 0.00 0.00 0.00
Weighted Average Life (years)....... 9.05 9.05 9.05 9.05 9.05 9.05
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE
CLASS C CERTIFICATES UNDER THE SPECIFIED SCENARIOS
(PREPAYMENTS LOCKED OUT THROUGH LOP ON ALL MORTGAGE LOANS
AND YMP ON GROUP A MORTGAGE LOANS)
CPR PREPAYMENT SCENARIO
---------------------------------------------------------------------------
DATE SCENARIO 1 SCENARIO 2 SCENARIO 3 SCENARIO 4 SCENARIO 5 SCENARIO 6
---- ---------- ---------- ---------- ---------- ---------- ----------
Initial Percentage.................. 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
September 15, 2001.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2002.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2003.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2004.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2005.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2006.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2007.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2008.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2009.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2010.................. 0.00 0.00 0.00 0.00 0.00 0.00
Weighted Average Life (years)....... 9.07 9.07 9.07 9.07 9.07 9.07
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PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF
THE CLASS D CERTIFICATES UNDER THE SPECIFIED SCENARIOS
(PREPAYMENTS LOCKED OUT THROUGH LOP ON ALL MORTGAGE LOANS
AND YMP ON GROUP A MORTGAGE LOANS)
CPR PREPAYMENT SCENARIO
---------------------------------------------------------------------------
DATE SCENARIO 1 SCENARIO 2 SCENARIO 3 SCENARIO 4 SCENARIO 5 SCENARIO 6
---- ---------- ---------- ---------- ---------- ---------- ----------
Initial Percentage.................. 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
September 15, 2001.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2002.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2003.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2004.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2005.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2006.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2007.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2008.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2009.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2010.................. 0.00 0.00 0.00 0.00 0.00 0.00
Weighted Average Life (years)....... 9.13 9.13 9.13 9.13 9.13 9.13
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF
THE CLASS E CERTIFICATES UNDER THE SPECIFIED SCENARIOS
(PREPAYMENTS LOCKED OUT THROUGH LOP ON ALL MORTGAGE LOANS
AND YMP ON GROUP A MORTGAGE LOANS)
CPR PREPAYMENT SCENARIO
---------------------------------------------------------------------------
DATE SCENARIO 1 SCENARIO 2 SCENARIO 3 SCENARIO 4 SCENARIO 5 SCENARIO 6
---- ---------- ---------- ---------- ---------- ---------- ----------
Initial Percentage.................. 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
September 15, 2001.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2002.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2003.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2004.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2005.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2006.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2007.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2008.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2009.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2010.................. 0.00 0.00 0.00 0.00 0.00 0.00
Weighted Average Life (years)....... 9.13 9.13 9.13 9.13 9.13 9.13
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PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF
THE CLASS F CERTIFICATES UNDER THE SPECIFIED SCENARIOS
(PREPAYMENTS LOCKED OUT THROUGH LOP ON ALL MORTGAGE LOANS
AND YMP ON GROUP A MORTGAGE LOANS)
CPR PREPAYMENT SCENARIO
---------------------------------------------------------------------------
DATE SCENARIO 1 SCENARIO 2 SCENARIO 3 SCENARIO 4 SCENARIO 5 SCENARIO 6
---- ---------- ---------- ---------- ---------- ---------- ----------
Initial Percentage.................. 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
September 15, 2001.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2002.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2003.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2004.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2005.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2006.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2007.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2008.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2009.................. 100.00 100.00 100.00 100.00 100.00 100.00
September 15, 2010.................. 0.00 0.00 0.00 0.00 0.00 0.00
Weighted Average Life (years)....... 9.13 9.13 9.13 9.13 9.13 9.13
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YIELD SENSITIVITY OF THE CLASS X CERTIFICATES
The yield to maturity of the Class X Certificates will be highly sensitive
to the rate and timing of principal payments (including by reason of
prepayments, loan extensions, defaults and liquidations) and losses on or in
respect of the Mortgage Loans. Investors in the Class X Certificates should
fully consider the associated risks, including the risk that an extremely rapid
rate of amortization, prepayment or other liquidation of the Mortgage Loans
could result in the failure of such investors to recoup fully their initial
investments.
The following tables indicate the approximate pre-tax yield to maturity on
a corporate bond equivalent ("CBE") basis on the Class X Certificates for the
CPRs specified for each Scenario below based on the Maturity Assumptions, except
that with respect to the collection of Prepayment Premiums it was assumed, as
specifically indicated in a particular table, that 0% or 100% of any Prepayment
Premium is collected in connection with each prepayment as to which such a
Prepayment Premium is applicable. It was further assumed that the purchase price
of the Class X Certificates is as specified below, expressed as a percentage of
the initial Notional Amount of such Certificates, without accrued interest.
SCENARIO 1 SCENARIO 2 SCENARIO 3 SCENARIO 4 SCENARIO 5
---------- ---------- ---------- ---------- ----------
Group A Mortgage Loans
During YMP.............................. 0.00% 0.00% 0.00% 0.00% 0.00%
During Fixed Penalty/Open Period........ 0.00% 25.00% 50.00% 75.00% 100.00%
Group B Mortgage Loans
During YMP.............................. 6.00% 6.00% 6.00% 6.00% 6.00%
During Fixed Penalty/Open Period........ 0.00% 25.00% 50.00% 75.00% 100.00%
The yields set forth in the following tables were calculated by determining
the monthly discount rates that, when applied to the assumed streams of cash
flows to be paid on the Class X Certificates, would cause the discounted present
value of such assumed stream of cash flows to equal the assumed purchase price
thereof, and by converting such monthly rates to semi-annual corporate bond
equivalent rates. Such calculation does not take into account shortfalls in
collection of interest due to prepayments (or other liquidations) of the
Mortgage Loans or the interest rates at which investors may be able to reinvest
funds received by them as distributions on the Class X Certificates (and,
accordingly, does not purport to reflect the return on any investment in the
Class X Certificates when such reinvestment rates are considered).
The characteristics of the Mortgage Loans may differ from those assumed in
preparing the tables below. In addition, there can be no assurance that the
Mortgage Loans will prepay in accordance with the above assumptions at any of
the rates shown in the tables or at any other particular rate, that the cash
flows on the Class X Certificates will correspond to the cash flows shown herein
or that the aggregate purchase price of the Class X Certificates will be as
assumed. In addition, it is unlikely that the Mortgage Loans will prepay in
accordance with the above assumptions at any of the specified CPRs until
maturity or that all the Mortgage Loans will so prepay at the same rate. Timing
of changes in the rate of prepayments may significantly affect the actual yield
to maturity to investors, even if the average rate of principal prepayments is
consistent with the expectations of investors. Investors must make their own
decisions as to the appropriate prepayment assumption to be used in deciding
whether to purchase Class X Certificates.
PRE-TAX YIELD TO MATURITY (CBE)
OF THE CLASS X CERTIFICATES (0% COLLECTION OF PREPAYMENT PREMIUMS)
(PREPAYMENTS LOCKED OUT THROUGH LOP ON ALL MORTGAGE LOANS AND YMP ON GROUP A
MORTGAGE LOANS)
ASSUMED CPR PREPAYMENT SCENARIO
PURCHASE --------------------------------------------------------------
PRICE SCENARIO 1 SCENARIO 2 SCENARIO 3 SCENARIO 4 SCENARIO 5
- -------- ---------- ---------- ---------- ---------- ----------
3.15237% 9.51% 9.50% 9.49% 9.47% 9.30%
PRE-TAX YIELD TO MATURITY (CBE)
OF THE CLASS X CERTIFICATES (100% COLLECTION OF PREPAYMENT PREMIUMS)
(PREPAYMENTS LOCKED OUT THROUGH LOP ON ALL MORTGAGE LOANS AND YMP ON GROUP A
MORTGAGE LOANS)
ASSUMED CPR PREPAYMENT SCENARIO
PURCHASE --------------------------------------------------------------
PRICE SCENARIO 1 SCENARIO 2 SCENARIO 3 SCENARIO 4 SCENARIO 5
- -------- ---------- ---------- ---------- ---------- ----------
3.15237% 10.26% 10.25% 10.24% 10.23% 10.06%
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USE OF PROCEEDS
Substantially all of the proceeds from the sale of the Offered Certificates
will be used by the Depositor to purchase interests in the Trust from the
Mortgage Loan Seller as described under "Description of the
Certificates -- General" in this prospectus supplement, and to pay certain
expenses in connection with the issuance of the Certificates.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
For federal income tax purposes, five separate "real estate mortgage
investment conduit" ("REMIC") elections will be made with respect to designated
portions of the Trust Fund, the resulting REMICs being herein referred to as
"REMIC I," "REMIC II," "REMIC III," "REMIC IIIU," and "REMIC IV", respectively.
The assets of REMIC I will include the Mortgage Loans, any REO Properties
acquired on behalf of the Certificateholders and amounts with respect thereto
contained in the Certificate Account, the Interest Reserve Account and the REO
Accounts (each as defined in the accompanying prospectus). The assets of REMIC
II, REMIC III, REMIC IIIU and REMIC IV consist of certain uncertificated
"regular interests" in a numerically preceding REMIC and amounts in the
Certificate Account with respect thereto. For federal income tax purposes, (i)
the Offered Certificates evidence the "regular interests" in, and generally will
be treated as debt obligations of, REMIC IV, and (ii) the REMIC Residual
Certificates represent the sole class of "residual interests" in the related
REMICs. Upon issuance of the Offered Certificates, Cadwalader, Wickersham &
Taft, special tax counsel to the Depositor, will deliver its opinion generally
to the effect that, assuming compliance with all provisions of the Pooling
Agreement, for federal income tax purposes, each of REMIC I, REMIC II and REMIC
III will continue to qualify as a REMIC and REMIC IIIU and REMIC IV will qualify
as REMICs under the Code. See "Certain Federal Income Tax Consequences --
REMICs" in the accompanying prospectus.
DISCOUNT AND PREMIUM; PREPAYMENT PREMIUMS
The Offered Certificates generally will be treated as newly originated debt
instruments originated on the related Startup Day for federal income tax
purposes. The Startup Day of REMIC I and REMIC II is the Trust Formation Date.
The Startup Day of REMIC III is February 16, 2000. The Startup Day of REMIC IIIU
and REMIC IV is the Delivery Date. Beneficial owners of the Offered Certificates
will be required to report income on such regular interests in accordance with
the accrual method of accounting. One or more of the Classes of Offered
Certificates may be issued with original issue discount for federal income tax
purposes. See "Certain Federal Income Tax Consequences -- REMICs -- Taxation of
Owners of REMIC Regular Certificates -- Original Issue Discount" and
"-- Premium" in the accompanying prospectus.
Although unclear for federal income tax purposes, it is anticipated that
the Class X Certificates will be considered to be issued with original issue
discount in an amount equal to the excess of all distributions of interest
expected to be received thereon (assuming the Weighted Average Net Mortgage Rate
changes in accordance with the Prepayment Assumption (as described below)), over
their respective issue prices (including accrued interest, if any). Any
"negative" amounts of original issue discount on the Class X Certificates
attributable to rapid prepayments with respect to the Mortgage Loans will not be
deductible currently, but may be offset against future positive accruals of
original issue discount, if any. Finally, a holder of a Class X Certificate may
be entitled to a loss deduction to the extent it becomes certain that such
holder will not recover a portion of its basis in such Certificate, assuming no
further prepayments. In the alternative, it is possible that rules similar to
the "noncontingent bond method" of the OID Regulations, as amended on June 12,
1996, may be promulgated with respect to the Certificates. See "Certain Federal
Income Tax Consequences -- REMICs -- Taxation of Owners of REMIC Regular
Certificates -- Original Issue Discount" in the accompanying prospectus.
For purposes of accruing original issue discount, determining whether such
original issue discount is de minimis and amortizing any premium on the
Sequential Pay Certificates the Prepayment Assumption will be
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0% CPR as to the Conduit Mortgage Loans and 6% CPR as to the Group B Loans. See
"Yield and Maturity Considerations -- Weighted Average Lives" herein. No
representation is made as to the rate, if any, at which the Mortgage Loans will
prepay. For purposes of accruing original issue discount, determining whether
such original issue discount is de minimis and amortizing any premium on the
Class X Certificates, the Prepayment Assumption will be 0% on the Mortgage Loans
through Lock-Out and Yield Maintenance Periods and prepayments at 100% CPR
thereafter, except that in the case of the Group B Mortgage Loans, 6% CPR was
assumed after the expiration of the applicable Lock-Out Periods, if any, through
Yield Maintenance Periods, and 100% CPR thereafter.
Although not free from doubt, it is anticipated that any prepayment
premiums will be treated as ordinary income to the extent allocable to
beneficial owners of the Offered Certificates as such amounts become
distributable to such beneficial owners.
CHARACTERIZATION OF INVESTMENTS IN OFFERED CERTIFICATES
Generally, except to the extent noted below, the Offered Certificates will
be "real estate assets" within the meaning of Section 856(c)(4)(A) of the Code
in the same proportion that the assets of the Trust would be so treated. In
addition, interest (including original issue discount, if any) on the Offered
Certificates will be interest described in Section 856(c)(3)(B) of the Code to
the extent that such Certificates are treated as "real estate assets" within the
meaning of Section 856(c)(4)(A) of the Code. If 95% or more of the Mortgage
Loans are treated as assets described in Section 856(c)(4)(A) of the Code, the
Offered Certificates will be treated as such assets in their entirety. The
Offered Certificates will generally only be considered assets described in
Section 7701(a)(19)(C) of the Code to the extent that the Mortgage Loans are
secured by residential property, including residences for persons under health
care. As of the Cut-off Date, 26.6%, 2.0% and 5.8% of the Initial Pool Balance
were Mortgage Loans secured by multifamily properties, mobile home community
properties and health care properties, respectively. None of the foregoing
characterizations will apply to the extent the Mortgage Loans have been
defeased. Accordingly, an investment in the Offered Certificates may not be
suitable for some thrift institutions. Furthermore, Mortgage Loans that have
been defeased with government securities will not qualify for the foregoing
treatments. The Offered Certificates will be treated as "qualified mortgages"
for another REMIC under Section 860G(a)(3)(C) of the Code and as "permitted
assets" for a financial asset securitization investment trust under Section
860L(c) of the Code. See "Description of the Mortgage Pool" in this prospectus
supplement and "Certain Federal Income Tax
Consequences -- REMICs -- Characterization of Investments in REMIC Certificates"
in the accompanying prospectus.
POSSIBLE TAXES ON INCOME FROM FORECLOSURE PROPERTY
In general, the Special Servicer will be obligated to operate and manage
any Mortgaged Property acquired as REO Property in a manner that would, to the
extent commercially feasible, maximize the Trust's net after-tax proceeds from
such property. After the Special Servicer reviews the operation of such property
and consults with the REMIC Administrator to determine the Trust's federal
income tax reporting position with respect to income it is anticipated that the
Trust would derive from such property, the Special Servicer could determine that
it would not be commercially feasible to manage and operate such property in a
manner that would avoid the imposition of a tax on "net income from foreclosure
property" (generally, income not derived from renting or selling real property)
within the meaning of the REMIC Provisions (an "REO Tax"). To the extent that
income the Trust receives from an REO Property is subject to a tax on "net
income from foreclosure property," such income would be subject to federal tax
at the highest marginal corporate tax rate (currently 35%). The determination as
to whether income from an REO Property would be subject to an REO Tax will
depend on the specific facts and circumstances relating to the management and
operation of each REO Property. These considerations will be of particular
relevance with respect to any health care facilities or hotels that become REO
Property. Any REO Tax imposed on the Trust's income from an REO Property would
reduce the amount available for distribution to Certificateholders.
Certificateholders are advised to consult their own tax advisors regarding the
possible imposition of REO Taxes in connection with the operation of commercial
REO Properties by REMICs.
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REPORTING AND OTHER ADMINISTRATIVE MATTERS
Reporting of interest income, including any original issue discount, if
any, with respect to REMIC Regular Certificates is required annually, and may be
required more frequently under Treasury regulations. These information reports
generally are required to be sent to individual holders of REMIC Regular
Certificates and the IRS; holders of REMIC Regular Certificates that are
corporations, trusts, securities dealers and certain other non-individuals will
be provided interest and original issue discount income information and the
information set forth in the following paragraph upon request in accordance with
the requirements of the applicable regulations. The information must be provided
by the later of 30 days after the end of the quarter for which the information
was requested, or two weeks after the receipt of the request. The REMIC must
also comply with rules requiring information relating to original issue discount
on REMIC Regular Certificates to be reported to the IRS. Reporting with respect
to the REMIC Residual Certificates, including income, excess inclusions,
investment expenses and relevant information regarding qualification of the
REMIC's assets will be made as required under the Treasury regulations,
generally on a quarterly basis.
As applicable, the REMIC Regular Certificate information reports will
include a statement of the adjusted issue price of the REMIC Regular Certificate
at the beginning of each accrual period. In addition, the reports will include
information required by regulations with respect to computing the accrual of any
market discount. Because exact computation of the accrual of market discount on
a constant yield method would require information relating to the holder's
purchase price that the REMIC Administrator may not have, such regulations only
require that information pertaining to the appropriate proportionate method of
accruing market discount be provided.
For further information regarding the federal income tax consequences of
investing in the Offered Certificates, see "Certain Federal Income Tax
Consequences -- REMICs" in the accompanying prospectus.
CERTAIN ERISA CONSIDERATIONS
A fiduciary of any retirement plan or other employee benefit plan or
arrangement, including individual retirement accounts and annuities, Keogh plans
and collective investment funds and separate accounts in which such plans,
accounts or arrangements are invested, including insurance company general
accounts, that is subject to Title I of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), or Section 4975 of the Code (each, a "Plan")
should carefully review with its legal advisors whether the purchase or holding
of Offered Certificates could give rise to a transaction that is prohibited or
is not otherwise permitted either under ERISA or Section 4975 of the Code or
whether there exists any statutory or administrative exemption applicable
thereto. Certain fiduciary and prohibited transaction issues arise only if the
assets of the Trust constitute "plan assets" for purposes of Part 4 of Title I
of ERISA and Section 4975 of the Code ("Plan Assets"). Whether the assets of the
Trust will constitute Plan Assets at any time will depend on a number of
factors, including the portion of any Class of Certificates that are held by
"benefit plan investors" (as defined in U.S. Department of Labor Regulation
Section 2510.3-101).
The U.S. Department of Labor issued to NationsBank Corporation (predecessor
in interest to Bank of America Corporation) an individual prohibited transaction
exemption, Prohibited Transaction Exemption ("PTE") 93-31 (the "Exemption"),
which generally exempts from the application of the prohibited transaction
provisions of Sections 406(a) and (b) and 407(a) of ERISA, and the excise taxes
imposed on such prohibited transactions pursuant to Sections 4975(a) and (b) of
the Code, certain transactions, among others, relating to the servicing and
operation of mortgage pools, such as the Mortgage Pool, and the purchase, sale
and holding of mortgage pass-through certificates, such as the Senior
Certificates, underwritten by an Exemption-Favored Party (as hereinafter
defined), provided that certain conditions set forth in the Exemption are
satisfied. "Exemption-Favored Party" shall include (a) Bank of America
Corporation, (b) any person directly or indirectly, through one or more
intermediaries, controlling, controlled by or under common control with Bank of
America Corporation (such as Banc of America Securities LLC), and (c) any member
of the underwriting syndicate or selling group of which a person described in
(a) or (b) is a manager or co-manager with respect to the Class A-1A, Class
A-2A, Class A-1B, Class A-2B, Class A-3B and Class X Certificates (collectively,
the "Senior Certificates").
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The Exemption sets forth six general conditions which must be satisfied for
a transaction involving the purchase, sale and holding of a Senior Certificate
to be eligible for exemptive relief thereunder. First, the acquisition of such
Senior Certificate by a Plan must be on terms that are at least as favorable to
the Plan as they would be in an arm's-length transaction with an unrelated
party. Second, the rights and interests evidenced by such Senior Certificate
must not be subordinated to the rights and interests evidenced by the other
Certificates. Third, such Senior Certificate at the time of acquisition by the
Plan must be rated in one of the three highest generic rating categories by
Fitch, Inc. ("Fitch"), Moody's and S&P. Fourth, the Trustee cannot be an
affiliate of any other member of the "Restricted Group", which (in addition to
the Trustee) consists of any Exemption-Favored Party, the Depositor, the Master
Servicer, the Special Servicer, any sub-servicer, the Mortgage Loan Seller, any
borrower with respect to Mortgage Loans constituting more than 5% of the
aggregate unamortized principal balance of the Mortgage Pool as of the date of
initial issuance of the Certificates and any affiliate of any of the
aforementioned persons. Fifth, the sum of all payments made to and retained by
the Exemption-Favored Parties must represent not more than reasonable
compensation for underwriting the Senior Certificates; the sum of all payments
made to and retained by the Depositor pursuant to the assignment of the Mortgage
Loans to the Trust must represent not more than the fair market value of such
obligations; and the sum of all payments made to and retained by the Master
Servicer, the Special Servicer and any sub-servicer must represent not more than
reasonable compensation for such person's services under the Pooling Agreement
and reimbursement of such person's reasonable expenses in connection therewith.
Sixth, the investing Plan must be an accredited investor as defined in Rule
501(a)(1) of Regulation D of the Commission under the Securities Act.
Because the Senior Certificates are not subordinated to any other Class of
Certificates, the second general condition set forth above is satisfied with
respect to such Certificates. It is a condition of their issuance that each
Class of Senior Certificates be rated not lower than "AAA" by S&P, and "Aaa" by
Moody's. As of the Trust Formation Date, the fourth general condition set forth
above was satisfied with respect to the Senior Certificates. A fiduciary of a
Plan contemplating purchasing a Senior Certificate in the secondary market must
make its own determination that, at the time of such purchase, such Certificate
continues to satisfy the third and fourth general conditions set forth above. A
fiduciary of a Plan contemplating purchasing a Senior Certificate, whether in
the initial issuance of such Certificate or in the secondary market, must make
its own determination that the first and fifth general conditions set forth
above will be satisfied with respect to such Certificate as of the date of such
purchase. A Plan's authorizing fiduciary will be deemed to make a representation
regarding satisfaction of the sixth general condition set forth above in
connection with the purchase of a Senior Certificate.
The Exemption also requires that the Trust meet the following requirements:
(i) the Trust Fund must consist solely of assets of the type that have been
included in other investment pools; (ii) certificates evidencing interests in
such other investment pools must have been rated in one of the three highest
categories of Fitch, Moody's or S&P for at least one year prior to the Plan's
acquisition of a Senior Certificate; 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 a Senior
Certificate. The Depositor has confirmed to its satisfaction that such
requirements have been satisfied as of the date hereof.
If the general conditions of the Exemption are satisfied, the Exemption may
provide an exemption from the restrictions imposed by Sections 406(a) and 407(a)
of ERISA, as well as the excise taxes imposed by Sections 4975(a) and (b) of the
Code by reason of Sections 4975(c)(1)(A) through (D) of the Code, in connection
with (i) the direct or indirect sale, exchange or transfer of Senior
Certificates in the initial issuance of Senior Certificates between the
Depositor or an Exemption-Favored Party and a Plan when the Depositor, an
Exemption-Favored Party, the Trustee, the Master Servicer, the Special Servicer,
a sub-servicer, the Mortgage Loan Seller or a borrower is a party in interest
(within the meaning of Section 3(14) of ERISA) or a disqualified person (within
the meaning of Section 4975(e)(2) of the Code) (a "Party in Interest") with
respect to the investing Plan, (ii) the direct or indirect acquisition or
disposition in the secondary market of Senior Certificates by a Plan and (iii)
the continued holding of Senior Certificates by a Plan. However, no exemption is
provided from the restrictions of Sections 406(a)(1)(E), 406(a)(2) and 407 of
ERISA for the acquisition or holding of a Senior Certificate on behalf of an
Excluded Plan (as defined in the next sentence)
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by any person who has discretionary authority or renders investment advice with
respect to the assets of such Excluded Plan. For purposes hereof, an "Excluded
Plan" is a Plan sponsored by any member of the Restricted Group.
Moreover, if the general conditions of the Exemption, as well as certain
other specific conditions set forth in the Exemption, are satisfied, the
Exemption may also provide an exemption from the restrictions imposed by
Sections 406(b)(1) and (b)(2) of ERISA, and the excise 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 Senior
Certificates in the initial issuance of Senior Certificates between the
Depositor or an Exemption-Favored Party and a Plan when the person who has
discretionary authority or renders investment advice with respect to the
investment of Plan assets in such Certificates is (a) a borrower with respect to
5% or less of the fair market value of the Mortgage Pool or (b) an affiliate of
such a person, (2) the direct or indirect acquisition or disposition in the
secondary market of Senior Certificates by a Plan and (3) the continued holding
of Senior Certificates by a Plan.
Further, if the general conditions of the Exemption, as well as certain
other conditions set forth in the Exemption, are satisfied, the Exemption may
provide an exemption from the restrictions imposed by Sections 406(a), 406(b)
and 407(a) of ERISA, and the excise taxes imposed by Sections 4975(a) and (b) of
the Code by reason of Section 4975(c) of the Code, for transactions in
connection with the servicing, management and operation of the Mortgage Pool.
Lastly, if the general conditions of the Exemption are satisfied, the
Exemption also may provide an exemption from the restrictions imposed by
Sections 406(a) and 407(a) of ERISA, and the excise taxes imposed by Sections
4975(a) and (b) of the Code by reason of Sections 4975(c)(1) (A) through (D) of
the Code, if such restrictions are deemed to otherwise apply merely because a
person is deemed to be a Party in Interest with respect to an investing Plan by
virtue of providing services to the Plan (or by virtue of having certain
specified relationships to such a person) solely as a result of the Plan's
ownership of Senior Offered Certificates.
Before purchasing a Senior Certificate, a fiduciary of a Plan should itself
confirm that (i) the Senior Certificates constitute "certificates" for purposes
of the Exemption and (ii) the specific and general conditions and the other
requirements set forth in the Exemption would be satisfied. In addition to
making its own determination as to the availability of the exemptive relief
provided in the Exemption, the Plan fiduciary should consider the availability
of any other prohibited transaction class exemptions. See "Certain ERISA
Considerations" in the accompanying prospectus. There can be no assurance that
any such class exemptions will apply with respect to any particular Plan
investment in the Senior Certificates or, even if it were deemed to apply, that
any exemption would apply to all transactions that may occur in connection with
such investment.
The characteristics of the Class B, Class C, Class D, Class E and Class F
Certificates do not meet the current requirements of the Exemption. Accordingly,
the Certificates of those Classes may not be acquired by a Plan, other than an
insurance company general account, which may be able to rely on Sections I and
III of PTCE 95-60 or Section 401(c) of ERISA, as discussed in "Certain ERISA
Considerations -- Insurance Company General Accounts" in the accompanying
prospectus.
The Department of Labor has proposed amendments (the "Proposed Amendments")
to the Exemption that, if finalized in current form, generally will be effective
as of August 23, 2000. Among other changes, it is anticipated that the amended
Exemption would permit Plans to purchase subordinated Certificates rated in any
of the four highest ratings categories (provided that all other requirements of
the Exemption are met). It is not certain if and when the Proposed Amendments
will be issued in final form, and it is not certain that the Proposed
Amendments, if finalized, will contain the same relief as is currently proposed.
Plan fiduciaries should, and other potential investors who may be analyzing the
potential liquidity of their investment may wish to, consult with their advisors
regarding the Proposed Amendments.
A governmental plan as defined in Section 3(32) of ERISA is not subject to
Title I of ERISA or Section 4975 of the Code. However, such a governmental plan
may be subject to a federal, state or local law
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which is, to a material extent, similar to the foregoing provisions of ERISA or
the Code ("Similar Law"). A fiduciary of a governmental plan should make its own
determination as to the need for and the availability of any exemptive relief
under Similar Law.
Any Plan fiduciary considering whether to purchase an Offered Certificate
on behalf of a Plan should consult with its counsel regarding the applicability
of the fiduciary responsibility and prohibited transaction provisions of ERISA
and the Code to such investment.
The sale of Offered Certificates to a Plan is in no respect a
representation by the Depositor or the Underwriter that this investment meets
all relevant legal requirements with respect to investments by Plans generally
or by any particular Plan, or that this investment is appropriate for Plans
generally or for any particular Plan.
LEGAL INVESTMENT
The Class A, Class X and the Class B Certificates will constitute "mortgage
related securities" for purposes of SMMEA, so long as they are rated in one of
the two highest rating categories by one or more Rating Agencies. None of the
other Offered Certificates will constitute "mortgage related securities" within
the meaning of SMMEA. The appropriate characterization of the Offered
Certificates under various legal investment restrictions, and thus the ability
of investors subject to these restrictions to purchase the Offered Certificates,
is subject to significant interpretive uncertainties. Except as to the status of
certain Classes of Offered Certificates as "mortgage related securities," no
representation is made as to the proper characterization of any class of Offered
Certificates for legal investment, financial institution regulatory or other
purposes, or as to the ability of particular investors to purchase the Offered
Certificates under applicable legal investment or other restrictions. All
institutions whose investment activities are subject to legal investment laws
and regulations, regulatory capital requirements or review by regulatory
authorities should consult with their own legal advisors in determining whether
and to what extent the Offered Certificates constitute legal investments for
them or are subject to investment, capital or other restrictions. See "Legal
Investment" in the accompanying prospectus.
METHOD OF DISTRIBUTION
Subject to the terms and conditions set forth in the Underwriting Agreement
between the Depositor and Banc of America Securities LLC (the "Underwriter")
(the "Underwriting Agreement"), the Offered Certificates will be purchased from
the Depositor by the Underwriter upon issuance. The Underwriter is an affiliate
of the Depositor. Proceeds to the Depositor from the sale of the Offered
Certificates, before deducting expenses payable by the Depositor, will be an
amount equal to approximately 103.53% of the initial aggregate Certificate
Balance of the Offered Certificates, plus accrued interest on all the Offered
Certificates, before deducting expenses payable by the Depositor.
The Underwriter has agreed in the Underwriting Agreement to purchase the
aggregate principal balance or notional amount, as the case may be, of each
Class of Offered Certificates.
Distribution of the Offered Certificates will be made by the Underwriter
from time to time in negotiated transactions or otherwise at varying prices to
be determined at the time of sale. The Underwriter may effect such transactions
by selling the Offered Certificates to or through dealers, and such dealers may
receive compensation in the form of underwriting discounts, concessions or
commissions from the Underwriter. In connection with the purchase and sale of
the Offered Certificates, the Underwriter may be deemed to have received
compensation from the Depositor in the form of underwriting discounts. The
Underwriter and any dealers that participate with the Underwriter in the
distribution of the Offered Certificates may be deemed to be underwriters and
any profit on the resale of the Offered Certificates positioned by them may be
deemed to be underwriting discounts and commissions under the Securities Act.
Purchasers of the Offered Certificates, including dealers, may, depending
on the facts and circumstances of such purchases, be deemed to be "underwriters"
within the meaning of the Securities Act in connection
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with reoffers and sales by them of Offered Certificates. Certificateholders
should consult with their legal advisors in this regard prior to any such
reoffer or sale.
The Depositor also has been advised by the Underwriter that the Underwriter
presently intends to make a market in the Offered Certificates; however, the
Underwriter has no obligation to do so, any market making may be discontinued at
any time and there can be no assurance that an active public market for the
Offered Certificates will develop. See "Risk Factors -- Risks Related to the
Certificates -- Limited Liquidity and Market Value" in this prospectus
supplement and "Risk Factors -- Limited Liquidity of Certificates" in the
accompanying prospectus.
The Depositor has agreed to indemnify the Underwriter and each person, if
any, who controls the Underwriter within the meaning of Section 15 of the
Securities Act against, or make contributions to the Underwriter and the such
controlling person with respect to, certain liabilities, including certain
liabilities under the Securities Act. The Mortgage Loan Seller has agreed to
indemnify the Depositor, its officers and directors, the Underwriter, and each
person, if any, who controls the Depositor or the Underwriter within the meaning
of Section 15 of the Securities Act, with respect to certain liabilities,
including certain liabilities under the Securities Act, relating to certain of
the Mortgage Loans.
LEGAL MATTERS
Certain legal matters will be passed upon for the Depositor and the
Underwriter by Cadwalader, Wickersham & Taft, New York, New York.
RATINGS
It is a condition to their issuance that the Offered Certificates receive
the credit ratings indicated below from Moody's Investors Service, Inc.
("Moody's") and Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc. ("S&P"; and, together with Moody's, the "Rating
Agencies"):
CLASS MOODY'S S&P
- ----- ------- ----
Class A-1A.................................................. Aaa AAA
Class A-2A.................................................. Aaa AAA
Class A-1B.................................................. Aaa AAA
Class A-2B.................................................. Aaa AAA
Class A-3B.................................................. Aaa AAA
Class X..................................................... Aaa AAA
Class B..................................................... Aa2 AA
Class C..................................................... A2 A
Class D..................................................... A3 A-
Class E..................................................... Baa2 BBB
Class F..................................................... Baa3 BBB-
The ratings of the Offered Certificates address the likelihood of the
timely receipt by holders thereof of all payments of interest to which they are
entitled on each Distribution Date and, except in the case of the Class X
Certificates, the ultimate receipt by holders thereof of all payments of
principal to which they are entitled by the Distribution Date is November 15,
2031 (the "Rated Final Distribution Date"). The ratings take into consideration
the credit quality of the Mortgage Pool, structural and legal aspects associated
with the Certificates, and the extent to which the payment stream from the
Mortgage Pool is adequate to make payments of principal and/or interest, as
applicable, required under the Offered Certificates. The ratings of the Offered
Certificates do not, however, represent any assessments of (i) the likelihood or
frequency of voluntary or involuntary principal prepayments on the Mortgage
Loans, (ii) the degree to which such prepayments might differ from those
originally anticipated or (iii) whether and to what extent Prepayment Premiums
will be collected on the Mortgage Loans in connection with such prepayments or
the corresponding effect on yield
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to investors or (iv) whether and to what extent Default Interest will be
received or Net Aggregate Prepayment Interest Shortfalls will be realized. Also,
a security rating does not represent any assessment of the yield to maturity
that investors may experience or the possibility that the Class X
Certificateholders might not fully recover their investment in the event of
rapid prepayments and/or other liquidations of the Mortgage Loans (including
both voluntary and involuntary prepayments). In general, the ratings thus
address credit risk and not prepayment risk. As described herein, the amounts
payable with respect to the Class X Certificates consist only of interest (and,
to the extent described herein, may consist of a portion of the Prepayment
Premiums actually collected on the Mortgage Loans). If the entire pool were to
prepay in the initial month, with the result that the Class X Certificateholders
receive only a single month's interest and thus suffer a nearly complete loss of
their investment, all amounts "due" to such Certificateholders will nevertheless
have been paid, and such result is consistent with the ratings received on the
Class X Certificates. The Notional Amounts upon which interest is calculated
with respect to the Class X Certificates are subject to reduction in connection
with each reduction in the Certificate Balance of a Class of Sequential Pay
Certificates, whether as a result of principal payments or the allocation of
Realized Losses. The ratings on the Class X Certificates do not address the
timing or magnitude of reduction of such Notional Amounts, but only the
obligation to pay interest timely on such Notional Amounts as so reduced from
time to time. Accordingly, the ratings on the Class X Certificates should be
evaluated independently from similar ratings on other types of securities.
There is no assurance that any rating assigned to the Offered Certificates
by a Rating Agency will not be lowered, qualified (if applicable) or withdrawn
by such Rating Agency, if, in its judgment, circumstances so warrant. There can
be no assurance as to whether any rating agency not requested to rate the
Offered Certificates will nonetheless issue a rating to any Class thereof and,
if so, what such rating would be. In this regard, we note that S&P considered
the claims-paying ratings of the Environmental Insurer in assigning its ratings
to the Offered Certificates; accordingly, the downgrade, withdrawal or
qualification of the ratings applicable to the Environmental Insurer could have
a corresponding effect on the ratings assigned to one or more Classes of the
Offered Certificates. A rating assigned to any Class of Offered Certificates by
a rating agency that has not been requested by the Depositor to do so may be
lower than the ratings assigned thereto by S&P and/or Moody's.
The ratings on the Offered Certificates should be evaluated independently
from similar ratings on other types of securities. A security rating is not a
recommendation to buy, sell or hold securities and may be subject to revision or
withdrawal at any time by the assigning rating agency. See "Risk
Factors -- Limited Nature of Ratings" in the accompanying prospectus.
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INDEX OF PRINCIPAL DEFINITIONS
PAGE
----
224-246 Worth Avenue Loan........ S-41
256 Worth Avenue Loan............ S-41
30/360 Basis..................... S-36, S-94
30/360 Mortgage Loans............ S-36
411 North Akard Loan............. S-39
Accrued Certificate Interest..... S-80
ACMs............................. S-47
Actual/360 Basis................. S-36
Actual/360 Mortgage Loans........ S-36
Additional Trust Fund Expenses... S-83
Administrative Fee Rate.......... S-74, A-1
Administrative Fees.............. S-91
Advances......................... S-15, S-66
Annual Debt Service.............. A-1
Appraisal Reduction Amount....... S-85
Appraisal Value.................. A-1
Assumed Monthly Payment.......... S-81
Available Distribution Amount.... S-12, S-76
Balloon.......................... A-1
Balloon Loan..................... S-37
Balloon Payment.................. S-37
Base Interest Fraction........... S-81
Beds............................. A-4
Cash Flow........................ A-1
CBE.............................. S-100
Certificate Balance.............. S-73
Certificate Owner................ S-73
Certificate Registrar............ S-73
Certificateholders............... S-11
Certificates..................... S-72
Class............................ S-72
Class A Certificates............. S-72
Class X Certificates............. S-72
CMSA............................. S-88
Code............................. S-33
Collateral Substitution
Deposit........................ S-38
Collection Period................ S-75
Commencement Date................ S-8
Commercial Loan.................. S-35
Commercial Mortgaged Property.... S-35
Conduit Mortgage Loan Schedule... S-54
Conduit Mortgage Loans........... S-9, S-35
Controlling Class................ S-62
Controlling Class
Certificateholder.............. S-62
Corrected Mortgage Loan.......... S-60
Cross-Collateralized Mortgage
Loans.......................... S-35
Cut-off Date..................... S-35
Cut-off Date Balance............. S-9, S-35
PAGE
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Cut-off Date Loan-to-Value
Ratio.......................... A-2
Cut-off Date LTV................. A-2
Cut-off Date LTV Ratio........... A-2
Default Interest................. S-66
DEF.............................. A-2
Defeasance Lock-Out Period....... S-38
Defeasance Option................ S-38
Definitive Certificate........... S-73
Delinquent Loan Status Report.... S-87
Depositor........................ S-8
Delivery Date.................... S-72
Determination Date............... S-9, S-75
Directing Certificateholder...... S-62
Discount Rate.................... A-2
Distributable Certificate
Interest....................... S-80
Distribution Date................ S-75
Distribution Date Statement...... S-86
DTC.............................. S-16, S-73
Due Date......................... S-36
Edwards.......................... S-21
Emergency Advance................ S-66
Environmental Insurer............ S-59
Environmental Policy............. S-59
ERISA............................ S-103
Excluded Plan.................... S-105
Exemption-Favored Party.......... S-103
Exemption........................ S-103
Expenses......................... A-1
Fiega Loans...................... S-44
FIRREA........................... S-49
First Amendment Date............. S-72
First Amended Pooling
Agreement...................... S-72
Fitch............................ S-104
Form 8-K......................... S-58
Fully Amortizing................. A-2
GAAP............................. A-2
GMACCM........................... S-63
Group............................ S-9, S-35
Group A Senior Certificate
Principal Distribution
Amount......................... S-12, S-81
Historical Loan Modification
Report......................... S-87
Historical Loss Report........... S-87
Initial Pool Balance............. S-9, S-35
Innkeepers....................... S-44
Innkeepers Loan.................. S-42
Int. Rate Diff................... A-2
Interest Reserve Account......... S-84
Interested Person................ S-69
S-109
112
PAGE
----
Leasable Square Footage.......... A-3
Lease Agreements................. S-43
Liquidation Fee.................. S-65
Liquidation Fee Rate............. S-65
Lock-out Period.................. S-37
LOP.............................. S-95
MAI.............................. S-49
Major Tenants.................... S-46
Master Servicer.................. S-8
Master Servicer Remittance
Date........................... S-84
Master Servicing Fee............. S-64
Master Servicing Fee Rate........ S-64
Maturity......................... A-3
Maturity Assumptions............. S-94
Maturity Date.................... A-3
Maturity Date Balance............ A-3
Maturity Date Loan-to-Value
Ratio.......................... A-2
Maturity Date LTV................ A-2
Merger........................... S-52
Midland.......................... S-63
Mobile Home Properties........... S-27
Modified Mortgage Loan........... S-86
Money Market Rate................ A-3
Monthly Discount Rate............ A-3
Monthly Payments................. S-36
Moody's.......................... S-107
Mortgage......................... S-35
Mortgage Loan Seller............. S-8
Mortgage Loans................... S-9, S-35
Mortgage Note.................... S-35
Mortgage Pool.................... S-9
Mortgage Rate.................... S-36
Mortgaged Property............... S-35
Most Recent DSCR................. A-4
Most Recent End Date............. A-4
Most Recent Expenses............. A-4
Most Recent Cash Flow............ A-4
Most Recent Revenues............. A-4
Movie Theater.................... S-21
Multifamily Loan................. S-35
Multifamily Mortgaged Property... S-35
NB Owner Trust................... S-53
Net Aggregate Prepayment Interest
Shortfall...................... S-80
Net Mortgage Rate................ S-74
Net Rentable Area(SF)............ A-3
Non-Offered Certificates......... S-72
Nonrecoverable Advances.......... S-85
Nonrecoverable P&I Advance....... S-85
Nonrecoverable Servicing
Advance........................ S-67
PAGE
----
Non-Specially Serviced Mortgage
Loan........................... S-64
Notional Amount.................. S-74
Occupancy Percent................ A-4
Occupancy %...................... A-4
Offered Certificates............. S-11, S-72
Open Period...................... S-37
Operating Statement Analysis
Report......................... S-88
Operating Statement Analysis
Worksheets..................... S-88
Original Pooling Agreement....... S-72
Participants..................... S-73
Party in Interest................ S-104
Pass-Through Rate................ S-12
Permitted Encumbrances........... S-54, S-56
Permitted Investments............ S-64
P&I Advance...................... S-15, S-84
Plan............................. S-103
Plan Assets...................... S-103
Pooling Agreement................ S-72
Portfolio Mortgage Loan
Schedule....................... S-56
Portfolio Mortgage Loans......... S-9, S-35
Prepayment Interest Excess....... S-64
Prepayment Interest Shortfall.... S-64
Prepayment Premium............... S-37
Prepayment Premium Period........ S-37
Principal Distribution Amount.... S-80
Proposed Amendments.............. S-105
PTE.............................. S-103
Purchase Price................... S-53
Rated Final Distribution Date.... S-107
Rating Agencies.................. S-17, S-107
Realized Losses.................. S-83
Record Date...................... S-76
Reimbursement Rate............... S-85
Related Loans.................... A-4
Related Proceeds................. S-66
Release Date..................... S-38
REMIC............................ S-101
REMIC Administrator.............. S-91
REMIC I.......................... S-101
REMIC II......................... S-101
REMIC III........................ S-101
REMIC IIIU....................... S-101
REMIC IV......................... S-101
REMIC Regular Certificates....... S-72
REMIC Residual Certificates...... S-12, S-72
REO Extension.................... S-70
REO Income....................... S-81
REO Property..................... S-60
REO Status Report................ S-88
S-110
113
PAGE
----
REO Tax.......................... S-102
Required Appraisal Date.......... S-85
Required Appraisal Loan.......... S-85
Restricted Group................. S-104
Revenues......................... A-1
RMS.............................. S-50
Rooms............................ A-4
Senior Certificates.............. S-72, S-103
Sequential Pay Certificates...... S-12, S-72
Servicer Reports................. S-87
Servicing Advances............... S-15, S-66
Servicing Standard............... S-59
Servicing Transfer Event......... S-60
Settlement Date.................. S-95
Similar Law...................... S-106
SMMEA............................ S-17
S&P.............................. S-4, S-107
Special Servicer................. S-8, S-63
Special Servicer Loan Status
Report......................... S-88
Special Servicing Fee............ S-64
Special Servicing Fee Rate....... S-64
Specially Serviced Mortgage
Loan........................... S-60
Standby Fee...................... S-64
Stated Principal Balance......... S-75
Subordinate Certificates......... S-77
Sub-Servicer..................... S-63
Sub-Servicing Agreement.......... S-63
Sub-Servicing Fee Rate........... A-1
PAGE
----
Successor Servicer Retained
Fee............................ S-64
Trust............................ S-72
Trust Formation Date............. S-72
Trust Fund....................... S-72
Trustee Fee...................... S-91
Underwriter...................... S-52
Underwriting Cash Flow........... A-5
Underwriting Debt Service
Coverage Ratio................. A-4
Underwriting DSCR................ A-4
Units............................ A-4
UPB.............................. A-4
UST.............................. S-48
U/W Cash Flow.................... A-5
U/W DSCR......................... A-4
U/W Expenses..................... A-5
U/W Reserves..................... A-5
U/W Reserves Per Unit............ A-6
U/W Revenues..................... A-5
Voting Rights.................... S-90
Weighted Average Net Mortgage
Rate........................... S-74
Wells Fargo Bank................. S-90
Withheld Amount.................. S-84
Workout Fee...................... S-65
Workout Fee Rate................. S-65
YM............................... A-6
YMP.............................. S-95
S-111
114
ANNEX A
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
The schedule and tables appearing in this Annex A set forth certain
information with respect to the Mortgage Loans and the Mortgaged Properties.
Unless otherwise indicated, such information is presented as of the Cut-off
Date. The statistics in such schedule and tables were derived, in many cases,
from operating statements and other information furnished by or on behalf of the
respective borrowers, or was derived from information provided by the primary
servicers. In any event, such information was generally unaudited and has not
been independently verified by the Depositor or by the Underwriter, or any of
their respective affiliates or any other person.
For purposes of the prospectus supplement, including the schedule and
tables in this Annex A, the indicated terms shall have the following meanings:
1. "Administrative Fee Rate" means the sum of the Master Servicing Fee
Rate (including the per annum rates at which the monthly sub-servicing fee
is payable to the related Sub-Servicer (the "Sub-Servicing Fee Rate") and
the Standby Fee is payable to the Special Servicer), plus the per annum
rate applicable to the calculation of the Trustee Fee.
2. "Annual Debt Service" means, for any Mortgage Loan, twelve times
the amount of the Monthly Payment under such Mortgage Loan as of the
Cut-off Date.
3. "Appraisal Value" means, for any Mortgaged Property, the
appraiser's value as stated in the appraisal available to the Depositor as
of the date specified on the schedule.
4. "Balloon" means Balloon Loan.
5. "Cash Flow" means with respect to any Mortgaged Property, the total
cash flow available for annual debt service on the related Mortgage Loan,
generally calculated as the excess of Revenues over Expenses, capital
expenditures and tenant improvements and leasing commissions.
(i) "Revenues" generally consist of certain revenues received in
respect of a Mortgaged Property, including, for example, (A) for the
Multifamily Mortgaged Properties, rental and other revenues; (B) for the
Commercial Mortgaged Properties (other than the health care related and
hotel Mortgaged Properties), base rent (less mark-to-market adjustments
in some cases), percentage rent, expense reimbursements and other
revenues; (C) for the health care Mortgaged Properties, resident
charges, Medicaid and Medicare payments, and other revenues; (D) for the
hotel and Mortgaged Properties, guest room rates, food and beverage
charges, telephone charges and other revenues.
(ii) "Expenses" generally consist of all expenses incurred for a
Mortgaged Property, including for example, salaries and wages, the costs
or fees of utilities, repairs and maintenance, marketing, insurance,
management, landscaping, security (if provided at the Mortgaged
Property) and the amount of real estate taxes, general and
administrative expenses, ground lease payments, and other costs but
without any deductions for debt service, depreciation and amortization
or capital expenditures therefor. In the case of hotel Mortgaged
Properties, Expenses include, for example, expenses relating to guest
rooms (hotels only), food and beverage costs, telephone bills, and
rental and other expenses, and such operating expenses as general and
administrative, marketing and franchise fees. Examples of expenses in
the case of health care Mortgaged Properties include routine and
ancillary contractual expenses, nursing expenses, dietary expenses,
laundry/housekeeping expenses, activities/social service expenses,
equipment rental expenses and other expenses.
In certain cases, Most Recent Cash Flow and/or U/W Cash Flow have been
adjusted by removing certain non-recurring expenses and revenue or by
certain other normalizations. Such Cash Flow does not necessarily reflect
accrual of certain costs such as capital expenditures and leasing
commissions and does not reflect non-cash items such as depreciation or
amortization. In some cases, capital expenditures and
A-1
115
non-recurring items may have been treated by a borrower as an expense but
were deducted from Most Recent Expenses or U/W Expenses to reflect
normalized Most Recent Cash Flow or U/W Cash Flow, as the case may be. The
Depositor has not made any attempt to verify the accuracy of any
information provided by each borrower or to reflect changes that may have
occurred since the date of the information provided by each borrower for
the related Mortgaged Property. Such Cash Flow was not necessarily
determined in accordance with generally accepted accounting principles
("GAAP"). Such Cash Flow is not a substitute for net income determined in
accordance with GAAP as a measure of the results of a Mortgaged Property's
operations or a substitute for cash flows from operating activities
determined in accordance with GAAP as a measure of liquidity. Moreover, in
certain cases such Cash Flow may reflect partial-year annualizations.
6. "Cut-off Date Loan-to-Value Ratio", "Cut-off Date LTV Ratio" or
"Cut-off Date LTV" means, with respect to any Mortgage Loan, the Cut-off
Date Balance of such Mortgage Loan divided by the Appraisal Value of the
related Mortgaged Property. "Maturity Date Loan-to-Value Ratio" or
"Maturity Date LTV" means, with respect to any Mortgage Loan, the Maturity
Date Balance, divided by the Appraisal Value of the related Mortgaged
Property.
7. "DEF" means, with respect to any Mortgage Loan, that such Mortgage
Loan is subject to a Defeasance Option.
8. "Discount Rate" means, with respect to any prepayment premium
calculation, the yield on the U.S. Treasury issue with a maturity date
closest to the maturity date for the Mortgage Loan being prepaid, or an
interpolation thereof.
9 "Fully Amortizing" means fully amortizing Mortgage Loan.
10. "Int. Rate Diff." refers to the Interest Rate Differential method
of calculation of a yield maintenance premium (or, in the case of Type 4,
refers to a present value method of calculation as described below). The
various types of methods applicable to the Mortgage Loans are described
below. For purposes of the Maturity Assumptions, it has been assumed for
all cases that the prepaid amount constitutes a full prepayment.
Prepayment premiums under Type 1A and Type 1B Interest Rate
Differential methods are generally equal to the product obtained by
multiplying (a) the amount of principal balance being prepaid, times (b)
the difference obtained by (i) in the case of Type 1A, subtracting from the
Mortgage Rate the Discount Rate or (ii) in the case of Type 1B, subtracting
from the Initial Reference Rate set forth on page A-7 the Money Market
Rate, times (c) the present value factor calculated using the following
formula:
-n
1-(1+r)
----------------
r
where r is equal to the Discount Rate or the Money Market Rate, as the case
may be (depending on the type of Mortgage Loan as described above), and n
is equal to the number of years (or fraction thereof) remaining between the
prepayment date and the maturity date. (In the case of Loan Number 3018256,
the difference described in clause (b) above is obtained by subtracting
from the Mortgage Rate the Money Market Rate.)
Prepayment premiums under Type 2A and Type 2B Interest Rate
Differential methods are generally calculated as the difference between the
Initial Reference Rate and the Discount Rate times the applicable
Prepayment Fee Factor, times the principal amount of the loan being prepaid
to the extent that the Initial Reference Rate set forth on Page A-7 is
greater than the Discount Rate.
A-2
116
The Prepayment Factors applicable during particular periods during the
term of a Mortgage Loan are set forth below for each of Type 2A and Type 2B
(linear interpolation should be used for months falling in between the
factor schedules):
INT. RATE DIFF. (TYPE
2A)
Period............... 0 3 6 9 12 24 36 48 60 84 120 240 360
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----- -----
Rate................. 0.00 0.26 0.49 0.71 0.94 1.80 2.70 3.40 4.20 5.60 7.40 11.60 14.00
INT. RATE DIFF. (TYPE
2B)
Period............... 0 12 24 36 48 60 84 120 240 360
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Rate................. 0.00 0.90 1.70 2.40 3.10 3.70 4.70 5.90 7.90 8.60
Prepayment Premiums under Type 3 Interest Rate Differential methods
are generally equal to the product obtained by multiplying (a) the amount
of principal balance being prepaid, times (b) the difference obtained by
subtracting from the Mortgage Rate either (A) the Discount Rate, if the
remaining term is more than 5 years, or (B) the Money Market Rate, if the
remaining term of the Mortgage Loan is 5 years or less, times (c) the
present value factor calculated using the following formula:
-n
1-(1+(r+k))
-----------------
r+k
where r is equal to the Discount Rate or the Money Market Rate, as the case
may be (depending on the remaining term of the Mortgage Loan as described
above), n is equal to the number of years (or fraction thereof) remaining
between the prepayment date and the maturity date and k is equal to zero
basis points, if the Money Market Rate is used, and 25 basis points if the
Discount Rate is used.
Prepayment Premiums under Type 4 are generally equal to the product of
(a) the amount of principal being prepaid (expressed as a percentage of the
principal balance outstanding assuming no prepayments have been made) and
(b) the present value as of the prepayment date of the remaining scheduled
payments of principal and interest from the prepayment date through the
maturity date determined by discounting such payments at the "Monthly
Discount Rate", in the case of Type 4, the treasury rate plus 25 basis
points (except in the case of Mortgage Loan number 2006963, the treasury
rate only) if the remaining term of the Mortgage Loan is more than 5 years,
or the Money Market Rate, if the remaining term of the Mortgage Loan is 5
years or less, less the amount of principal being prepaid. The term
"Monthly Discount Rate" means the rate which, when compounded monthly, is
equivalent to the Discount Rate or the Money Market Rate, as applicable.
In all cases, a Prepayment Premium will be collected only to the
extent the Interest Rate Differential is positive.
Further, it has been assumed that no Prepayment Premium will be
collected at all with respect to Loan Number 3057650.
11. "Leasable Square Footage" or "Net Rentable Area (SF)" means, in
the case of a Mortgaged Property operated as a retail center, office
complex or industrial facility, the square footage of the net leasable
area.
12. "Maturity" or "Maturity Date" means, with respect to any Mortgage
Loan, the date specified in the related Mortgage Note as its stated
maturity date.
13. "Maturity Date Balance" means, with respect to any Mortgage Loan,
the balance due at maturity, assuming no prepayments, defaults or
extensions.
14. "Money Market Rate" means, with respect to a Mortgage Loan and for
purposes of the Maturity Assumptions, (a) if the remaining term of the
Mortgage Loan is more than 5 years, the Discount Rate and (b) if the
remaining term of the Mortgage Loan is 5 years or less, the money market
A-3
117
rate quoted by Bank of America, N.A., in its principal office in San
Francisco for certificates of deposit of $100,000. This definition is
solely for purposes for the Maturity Assumptions; the money market rate
applicable to the calculation of a Prepayment Premium for any particular
Mortgage Loan will be determined as required by the applicable loan
documents.
15. "Most Recent DSCR" means, with respect to any Mortgage Loan, (a)
the Most Recent Cash Flow for the related Mortgaged Property, divided by
(b) the Annual Debt Service for such Mortgage Loan.
16. "Most Recent End Date" means, with respect to each Mortgage Loan,
the date indicated on Annex A as the "Most Recent End Date" with respect to
such Mortgage Loan, which date is generally the end date with respect to
the period covered by the latest available annual operating statement
provided by the related borrower.
17. "Most Recent Cash Flow" means, with respect to any Mortgaged
Property, the Cash Flow derived therefrom that was available for debt
service, calculated as Most Recent Revenues less Most Recent Expenses, Most
Recent capital expenditures and Most Recent tenant improvements and leasing
commissions. See also "Cash Flow" above.
(i) "Most Recent Revenues" are the Revenues received (or annualized
or estimated in certain cases) in respect of a Mortgaged Property for
the 12-month period ended as of the Most Recent End Date, based upon the
latest available annual operating statement and other information
furnished by the borrower for its most recently ended fiscal year.
(ii) "Most Recent Expenses" are the Expenses incurred (or
annualized or estimated in certain cases) for a Mortgaged Property for
the 12-month period ended as of the Most Recent End Date, based upon the
latest available annual operating statement and other information
furnished by the borrower for its most recently ended fiscal year.
18. "Occupancy %" or "Occupancy Percent" means the percentage of
Leasable Square Footage or Total Units/Rooms/Pads, as the case may be, of
the Mortgaged Property that was occupied as of a specified date, as
specified by the borrower or as derived from the Mortgaged Property's rent
rolls, which generally are calculated by physical presence or,
alternatively, collected rents as a percentage of potential rental
revenues.
19. "OPEN" means, with respect to any Mortgage Loan, that such
Mortgage Loan may be voluntarily prepaid without a Prepayment Premium.
20. "Related Loans" means two or more Mortgage Loans with respect to
which the related Mortgaged Properties are either owned by the same entity
or owned by two or more entities controlled by the same key principals.
21. "Type 1A", "Type 1B", "Type 2A", "Type 2B", "Type 3", "Type 4":
See "Int. Rate Diff." above in this Annex A.
22. "UPB" means, with respect to any Mortgage Loan, its unpaid
principal balance.
23. "Units" "Rooms" and "Beds" respectively, mean: (i) in the case of
a Mortgaged Property operated as multifamily housing, the number of
apartments, regardless of the size of or number of rooms in such apartment
(referred to in the schedule as "Units"); (ii) in the case of a Mortgaged
Property operated as a hotel, the number of rooms (referred to in the
schedule as "Rooms"); and (iii) in the case of a Mortgaged Property
operated as a health care facility, the number of beds (referred to in the
schedule as "Beds").
24. "U/W DSCR", "Underwriting DSCR" or "Underwriting Debt Service
Coverage Ratio" means, with respect to any Mortgage Loan, (a) the U/W Cash
Flow for the related Mortgaged Property divided by (b) the Annual Debt
Service for such Mortgage Loan.
A-4
118
25. "U/W Cash Flow" or "Underwriting Cash Flow" means, with respect of
any Mortgaged Property, the Cash Flow derived therefrom that was available
for debt service, calculated as U/W Revenues less U/W Expenses, U/W
Reserves and U/W tenant improvements and leasing commissions. See also
"Cash Flow" above.
(i) "U/W Revenues" are the anticipated Revenues in respect of a
Mortgaged Property, generally determined by means of an estimate made at
the origination of such Mortgage Loan. U/W Revenues have generally been
calculated (a) assuming that the occupancy rate for the Mortgaged
Property was consistent with the Mortgaged Property's current or
historical rate, or the relevant market rate, if such rate was less than
the occupancy rate reflected in the most recent rent roll or operating
statements, as the case may be, furnished by the related borrower, and
(b) in the case of retail, office and industrial Mortgaged Properties,
assuming a level of reimbursements from tenants consistent with the
terms of the related leases or historical trends at the Mortgaged
Property, and in certain cases, assuming that a specified percentage of
rent will become defaulted or otherwise uncollectible. In addition, in
the case of retail, office and industrial Mortgaged Properties, upward
adjustments may have been made with respect to such revenues to account
for all or a portion of the rents provided for under any new leases
scheduled to take effect later in the year. Also, in the case of certain
Mortgaged Properties that are operated as nursing home or hotel
properties and are subject to an operating lease with a single operator,
U/W Revenues were calculated based on revenues received by the operator
rather than rental payments received by the related borrower under the
operating lease.
(ii) "U/W Expenses" are the anticipated Expenses in respect of a
Mortgaged Property, generally determined by means of an estimate made at
the origination of such Mortgage Loan. U/W Expenses were generally
assumed to be equal to historical annual expenses reflected in the
operating statements and other information furnished by the borrower,
except that such expenses were generally modified by (a) if there was no
management fee or a below market management fee, assuming that a
management fee was payable with respect to the Mortgaged Property in an
amount approximately equal to a percentage of assumed gross revenues for
the year, (b) adjusting certain historical expense items upwards or
downwards to amounts that reflect industry norms for the particular type
of property and/or taking into consideration material changes in the
operating position of the related Mortgaged Property (such as newly
signed leases and market data) and (c) adjusting for non-recurring items
(such as capital expenditures) and tenant improvement and leasing
commissions, if applicable (in the case of certain retail, office and
industrial Mortgaged Properties, adjustments may have been made to
account for tenant improvements and leasing commissions at costs
consistent with historical trends or prevailing market conditions and,
in other cases, operating expenses did not include such costs).
Actual conditions at the Mortgaged Properties will differ, and may
differ substantially, from the assumed conditions used in calculating U/W
Cash Flow. In particular, the assumptions regarding tenant vacancies,
tenant improvements and leasing commissions, future rental rates, future
expenses and other conditions if and to the extent used in calculating U/W
Cash Flow for a Mortgaged Property, may differ substantially from actual
conditions with respect to such Mortgaged Property. There can be no
assurance that the actual costs of reletting and capital improvements will
not exceed those estimated or assumed in connection with the origination or
purchase of the Mortgage Loans.
In most cases, U/W Cash Flow describes the cash flow available after
deductions for capital expenditures such as tenant improvements, leasing
commissions and structural reserves. In those cases where such "reserves"
were so included, no cash may have been actually escrowed. No
representation is made as to the future net cash flow of the properties,
nor is U/W Cash Flow set forth herein intended to represent such future net
cash flow.
26. "U/W Reserves" means, with respect to any Mortgaged Property, the
aggregate amount of on-going reserves (generally for capital improvements
and replacements) assumed to be maintained with
A-5
119
respect to such Mortgaged Property. In each case, actual reserves, if any,
may be less than the amount of U/W Reserves.
27. "U/W Reserves Per Unit" means, with respect to any Mortgaged
Property, (a) the related U/W Reserves, divided by (b) the number of Units,
Leasable Square Feet, Rooms or Beds, as applicable.
28. "YM" means, with respect to any Mortgage Loan, a yield maintenance
premium.
The table below sets forth the Initial Reference Rate associated with Mortgage
Loans that require an Initial Reference Rate for the computation of prepayment
premiums.
LOAN NUMBER INITIAL REFERENCE RATE
- ----------- ----------------------
1795152..................................................... 5.790%
3032166..................................................... 6.030%
3032679..................................................... 5.570%
3041985..................................................... 5.540%
3054319..................................................... 5.520%
3057650..................................................... 5.535%
4537841..................................................... 5.360%
4541876..................................................... 5.370%
4542254..................................................... 5.530%
4542437..................................................... 6.080%
4548590..................................................... 6.050%
4548707..................................................... 6.350%
A-6
120
ANNEX A
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
SE- ORIGINATION LOAN
QUENCE GROUP NUMBER PROPERTY NAME PROPERTY ADDRESS
- ------ ----------- ------ ---------------------------------------- --------------------
A1 C 51545 224-246 Worth Avenue (Palm V) 224-246 Worth Avenue
A2 C 51546 256 Worth Avenue (Power-Love Associates) 256 Worth Avenue
SUB-TOTAL CROSSED LOANS
A3 C 51447 Dutch Square Center 800 Bush River Road
A4 C 51828 Edwards Megaplex Theater 4900 East 4th Street
A5 C 51022 Huffman Mill Plaza Huffman Mill Road
A6.1 C 51671 Wal-Mart - Harvey, LA 2100 Alex Kornmam Blvd
A6.2 C 51671 Wal-Mart - Denham Springs, LA 904 S. Range Ave
A6.3 C 51671 Wal-Mart - Hattiesburg, MS 4600 Hardy St
A6.4 C 51671 Wal-Mart - Griffin, GA 643 N. Expressway
A6.5 C 51671 Wal-Mart - Daphne, AL 28810 US Highway 98
A6.6 C 51671 Wal-Mart - Fort Dodge, IA 301 S. 29th St
A6 C 51671 WAL-MART STORES PORTFOLIO 2 (ROLL-UP)
A7.1 C 51670 Wal-Mart - White Settlement, TX 1401 S. Cherry Lane
A7.2 C 51670 Wal-Mart - El Paso, TX 201 S. Americas Ave
A7 C 51670 WAL-MART STORES PORTFOLIO 1 (ROLL-UP)
SUB-TOTAL CROSSED LOANS
A8 C 51573 Golden Triangle Mall 2201 I-35E South
A9 C 51521 Mansfield Plaza State Route 57
A10 C 51524 Raintree Towne Shopping Center Smithburg Road (Route 537)
A11 C 51547 175 Worth Avenue (Hals Realty Associates) 175 Worth Avenue and 411 South Country Road
A12 C 51605 Tinseltown Theater Complex 320 South Lincoln Way
A13 C 51606 Lucky Center 923-965 E. Las Tunas Drive
B14 P 3018223 2739-2741 Taylor 211-229 Jefferson 2739-2741 Taylor & 211-229 Jefferson
A15 C 50592 Huntersville Square S/C NE Corner of Gilead Road and Statesville Rd.
A16 C 51625 Orange Village Shopping Center 541-591 North Madison Road (U.S. Route 15)
A17 C 50889 Barnes & Noble/Chili's Land Lease 98-108 Middlesex Turnpike
A18 C 50998 Southside Shopping Center 32 Mill Creek Drive and Avon Street Extended
B19 P 2021590 Almond Orchard Shopping Center 11753 Fair Oaks Boulevard
A20 C 50740 Laurel Square Shopping Center US 13 and State Route 468
B21 P 3101680 South Lake Center NEC of Interstate 5 and Lower Boones Ferry Road
A22 C 51223 Wayman Court Shopping Center 23120-23130 Lyons Ave.
A23 C 51126 New Lake Hill Shopping Center 901-927 Hillside Ave.
B24 P 3018256 Gateway Crossing Entertainment Complex 1919 Verdugo Boulevard
A25 C 51062 Bainbridge Market Place 2600 Bainbridge Blvd.
A26 C 51611 Franconia Center 6110-6122 Franconia Road
B27 P 2021699 Olivewood Shopping Center 1200-1390 West Olive Avenue
B28 P 3045150 Bancroft Center 2546-2580 Bancroft Way
A29 C 51561 Southside Commons 2108 S. Irby Street
B30 P 1201524 Plaza Bel Air 4751 East Sunrise Drive
B31 P 3101847 Allen Business Park 6110-6190 Southwest Arctic Dr., et al.
A32 C 51578 Mt. Paran Shopping Center 5290 Roswell Road
A33 C 51562 White Horse Commons 6134 White Horse Road
B34 P 2006195 Comp USA & Mens Warehouse 6400 Owensmouth Avenue
B35 P 3048386 Harbor / 91 Freeway Shopping Center 1604 - 1620 South Harbor Blvd
A36 C 51572 Town Center Mall Shoppes 390 Ernest W. Barrett Parkway
A37 C 51551 Pecos Wigwam Commercial 2599 Wigwam Parkway
A38 C 50814 Town Center 3286 US Hwy 17 S
B39 P 3018165 Venetian Gardens Shopping Center 1401-1465 West March Lane
A40 C 50874 Cinco Village Shopping Center 23144 Cinco Ranch Blvd.
B41 P 3012895 Orchard Supply Hardware 300 Foresta Boulvard
A42 C 50917 Cantrell Shopping Center SC Hwy. 9 @ Old Furnace Rd.
B43 P 3027125 2132-2154 Center Street 2132-2154 Center Street
A44 C 51564 Huffines Plaza 229 Huffines Plaza
A45 C 51522 Town East Center 1100 Homer Road
B46 P 3028172 South Point Plaza 2700 West Baseline Road
A47 C 51518 Centre Stage at Jonestown Shopping Center 381 Jonestown Road
B48 P 2092138 Brookhurst Shopping Center 614-658 South Brookhurst Street
A49 C 51588 Windy Hill Crossing 2311-2343 Windy Hill Road
A50 C 51534 Harrison Ridge 417-435 Ridge Road
A51 C 51589 Zaragosa Retail Center 835 Zaragosa Road
A52 C 51842 Tiburon Apartments 901 South Country Club Drive
A53 C 51841 Farmstead Apartments 1415 North Country Club Drive
A54 C 51840 Cimarron Apartments 151 East First Street
SUB-TOTAL CROSSED LOANS
A55 C 50927 Wellington Meadows Apartments 9550 West Sahara Avenue
SE- ORIGINATION LOAN ZIP PROPERTY
QUENCE GROUP NUMBER COUNTY CITY STATE CODE TYPE
- ------ ----------- ------ ---------- ---------- ----- ---- --------
A1 C 51545 Palm Beach Palm Beach FL 33480 Retail
A2 C 51546 Palm Beach Palm Beach FL 33480 Retail
A3 C 51447 Richland Columbia SC 29210 Retail
A4 C 51828 San Bernardino Ontario CA 91764 Retail
A5 C 51022 Alamance Burlington NC 27215 Retail
A6.1 C 51671 Jefferson Harvey LA 70058 Retail
A6.2 C 51671 Livingston Denham Springs LA 70726 Retail
A6.3 C 51671 Lamar Hattiesburg MS 39402 Retail
A6.4 C 51671 Spalding Griffin GA 30223 Retail
A6.5 C 51671 Baldwin Daphne AL 36526 Retail
A6.6 C 51671 Webster Fort Dodge IA 50501 Retail
A6 C 51671 Retail
A7.1 C 51670 Tarrant White Settlement TX 76108 Retail
A7.2 C 51670 El Paso El Paso TX 79907 Retail
A7 C 51670 Retail
A8 C 51573 Denton Denton TX 76205 Retail
A9 C 51521 Warren Hackettstown NJ 07840 Retail
A10 C 51524 Monmouth Freehold NJ 07728 Retail
A11 C 51547 Palm Beach Palm Beach FL 33480 Retail
A12 C 51605 Kane North Aurora IL 60542 Retail
A13 C 51606 Los Angeles San Gabriel CA 91776 Retail
B14 P 3018223 San Francisco San Francisco CA 94133 Retail
A15 C 50592 Mecklenburg Huntersville NC 28078 Retail
A16 C 51625 Orange Orange VA 22960 Retail
A17 C 50889 Middlesex Burlington MA 01803 Retail
A18 C 50998 Albemarle Charlottesville VA 22902 Retail
B19 P 2021590 Sacramento Citrus Heights CA 95610 Retail
A20 C 50740 Sussex Laurel DE 19956 Retail
B21 P 3101680 Washington Tualatin OR 97062 Retail
A22 C 51223 Los Angeles Santa Clarita CA 91321 Retail
A23 C 51126 Nassau New Hyde Park NY 11040 Retail
B24 P 3018256 Los Angeles La Canada Flintridge CA 91011 Retail
A25 C 51062 Chesapeake Chesapeake VA 23324 Retail
A26 C 51611 Fairfax Alexandria VA 22310 Retail
B27 P 2021699 Merced Merced CA 95340 Retail
B28 P 3045150 Alameda Berkeley CA 94704 Retail
A29 C 51561 Florence Florence SC 29505 Retail
B30 P 1201524 Pima Tucson AZ 85718 Retail
B31 P 3101847 Washington Beaverton OR 97005 Retail
A32 C 51578 Fulton Atlanta GA 30342 Retail
A33 C 51562 Greenville Greenville SC 29611 Retail
B34 P 2006195 Los Angeles Woodland Hills CA 91367 Retail
B35 P 3048386 Orange Fullerton CA 92832 Retail
A36 C 51572 Cobb Kennesaw GA 30144 Retail
A37 C 51551 Clark Henderson NV 89014 Retail
A38 C 50814 Beaufort Chocowinity NC 27817 Retail
B39 P 3018165 San Joaquin Stockton CA 95207 Retail
A40 C 50874 Fort Bend Katy TX 77494 Retail
B41 P 3012895 Alameda San Leandro CA 94578 Retail
A42 C 50917 Spartanburg Boiling Springs SC 29316 Retail
B43 P 3027125 Alameda Berkeley CA 94704 Retail
A44 C 51564 Denton Lewisville TX 75057 Retail
A45 C 51522 Webster Minden LA 71055 Retail
B46 P 3028172 Maricopa Tempe AZ 85282 Retail
A47 C 51518 Forsyth Winston-Salem NC 27104 Retail
B48 P 2092138 Orange Anaheim CA 92804 Retail
A49 C 51588 Cobb Marietta GA 30067 Retail
A50 C 51534 Lake Munster IN 46321 Retail
A51 C 51589 El Paso El Paso TX 79907 Retail
A52 C 51842 Maricopa Mesa AZ 85210 Multifamily
A53 C 51841 Maricopa Mesa AZ 85201 Multifamily
A54 C 51840 Maricopa Mesa AZ 85201 Multifamily
A55 C 50927 Clark Las Vegas NV 89117 Multifamily
CUT-OFF MATURITY
SE- ORIGINATION LOAN ORIGINAL DATE DATE LOAN
QUENCE GROUP NUMBER BALANCE BALANCE BALANCE TYPE
- ------ ----------- ------ ---------- ----------- ----------- -------
A1 C 51545 17,705,750 $17,582,614 $15,863,955 Balloon
A2 C 51546 11,933,800 11,850,805 10,692,418 Balloon
---------- ----------- -----------
29,639,550 29,433,419 26,556,373
A3 C 51447 23,800,000 23,513,186 21,248,370 Balloon
A4 C 51828 22,000,000 21,895,906 19,898,662 Balloon
A5 C 51022 18,400,000 18,253,463 16,145,270 Balloon
A6.1 C 51671
A6.2 C 51671
A6.3 C 51671
A6.4 C 51671
A6.5 C 51671
A6.6 C 51671
A6 C 51671 12,600,000 12,533,113 10,804,994 Balloon
A7.1 C 51670
A7.2 C 51670
A7 C 51670 4,400,000 4,376,643 3,773,173 Balloon
---------- ----------- -----------
17,000,000 16,909,756 14,578,166
A8 C 51573 17,000,000 16,888,821 15,313,547 Balloon
A9 C 51521 8,500,000 8,436,912 7,570,403 Balloon
A10 C 51524 8,222,000 8,159,555 7,306,775 Balloon
A11 C 51547 6,253,000 6,209,513 5,602,547 Balloon
A12 C 51605 5,484,022 5,459,909 4,990,053 Balloon
A13 C 51606 5,442,000 5,403,248 4,865,512 Balloon
B14 P 3018223 6,045,000 5,070,756 Fully Amortizing
A15 C 50592 4,451,249 4,392,581 1,889,245 Balloon
A16 C 51625 4,400,000 4,370,033 3,922,843 Balloon
A17 C 50889 4,500,000 4,290,570 1,599,969 Balloon
A18 C 50998 4,103,086 4,076,151 3,631,711 Balloon
B19 P 2021590 4,500,000 3,993,906 3,677,691 Balloon
A20 C 50740 4,000,000 3,966,443 3,545,840 Balloon
B21 P 3101680 4,000,000 3,676,344 3,321,605 Balloon
A22 C 51223 3,675,000 3,571,357 2,971,054 Balloon
A23 C 51126 3,600,000 3,540,855 3,144,591 Balloon
B24 P 3018256 4,000,000 3,395,176 3,240,591 Balloon
A25 C 51062 3,400,000 3,376,254 2,638,728 Balloon
A26 C 51611 3,309,789 3,290,083 2,987,007 Balloon
B27 P 2021699 3,750,000 2,973,679 2,447,286 Balloon
B28 P 3045150 3,060,000 2,958,854 2,513,832 Balloon
A29 C 51561 2,872,000 2,838,810 2,378,598 Balloon
B30 P 1201524 3,000,000 2,717,648 2,667,458 Balloon
B31 P 3101847 2,855,000 2,658,308 2,397,322 Balloon
A32 C 51578 2,694,000 2,676,429 2,427,306 Balloon
A33 C 51562 2,517,000 2,487,912 2,084,586 Balloon
B34 P 2006195 3,000,000 2,437,826 2,079,450 Balloon
B35 P 3048386 2,650,000 2,415,111 Fully Amortizing
A36 C 51572 2,450,000 2,434,493 2,213,026 Balloon
A37 C 51551 2,400,000 2,382,193 2,151,728 Balloon
A38 C 50814 2,400,000 2,373,051 1,887,118 Balloon
B39 P 3018165 2,450,000 2,259,730 2,185,817 Balloon
A40 C 50874 2,235,000 2,197,213 1,966,992 Balloon
B41 P 3012895 2,350,000 2,089,289 1,635,107 Balloon
A42 C 50917 2,093,559 2,072,179 1,853,625 Balloon
B43 P 3027125 2,080,000 1,995,428 1,730,364 Balloon
A44 C 51564 1,971,000 1,938,246 1,427,933 Balloon
A45 C 51522 1,900,000 1,828,604 958,376 Balloon
B46 P 3028172 2,000,000 1,761,588 Fully Amortizing
A47 C 51518 1,714,700 1,689,977 1,421,606 Balloon
B48 P 2092138 1,700,000 1,426,765 1,187,426 Balloon
A49 C 51588 1,400,000 1,353,004 698,452 Balloon
A50 C 51534 1,125,000 1,114,849 971,432 Balloon
A51 C 51589 992,250 977,367 735,814 Balloon
A52 C 51842 16,524,000 16,435,833 14,787,839 Balloon
A53 C 51841 11,200,000 11,140,240 10,023,227 Balloon
A54 C 51840 6,157,000 6,124,148 5,510,089 Balloon
--------- --------- ---------
33,881,000 33,700,222 30,321,154
A55 C 50927 19,040,000 18,873,500 16,679,082 Balloon
ADMINI-
STRATIVE SUB- NET
SE- ORIGINATION LOAN MORTGAGE FEE SERVICING MORTGAGE NOTE
QUENCE GROUP NUMBER RATE RATE (i) FEE RATE RATE DATE
- ------ ----------- ------ -------- -------- --------- -------- -------
A1 C 51545 8.010% 0.144% 0.100% 7.866% 7/19/99
A2 C 51546 8.010% 0.144% 0.100% 7.866% 7/19/99
A3 C 51447 7.875% 0.144% 0.100% 7.731% 12/21/98
A4 C 51828 8.430% 0.144% 0.100% 8.286% 10/8/99
A5 C 51022 7.170% 0.144% 0.100% 7.026% 8/11/99
A6.1 C 51671
A6.2 C 51671
A6.3 C 51671
A6.4 C 51671
A6.5 C 51671
A6.6 C 51671
A6 C 51671 7.990% 0.144% 0.100% 7.846% 10/28/99
A7.1 C 51670
A7.2 C 51670
A7 C 51670 7.990% 0.144% 0.100% 7.846% 10/28/99
A8 C 51573 8.240% 0.144% 0.100% 8.096% 7/1/99
A9 C 51521 7.760% 0.144% 0.100% 7.616% 7/15/99
A10 C 51524 7.670% 0.144% 0.100% 7.526% 7/15/99
A11 C 51547 8.010% 0.144% 0.100% 7.866% 7/19/99
A12 C 51605 8.700% 0.144% 0.100% 8.556% 10/25/99
A13 C 51606 7.920% 0.144% 0.100% 7.776% 7/19/99
B14 P 3018223 8.355% 0.144% 0.100% 8.211% 7/1/96
A15 C 50592 7.694% 0.144% 0.100% 7.550% 9/27/99
A16 C 51625 7.810% 0.124% 0.080% 7.686% 8/19/99
A17 C 50889 7.090% 0.144% 0.100% 6.946% 7/29/98
A18 C 50998 7.500% 0.144% 0.100% 7.356% 9/30/99
B19 P 2021590 8.250% 0.144% 0.100% 8.106% 7/8/93
A20 C 50740 7.553% 0.144% 0.100% 7.409% 6/4/99
B21 P 3101680 9.200% 0.144% 0.100% 9.056% 9/19/94
A22 C 51223 7.250% 0.144% 0.100% 7.106% 7/30/98
A23 C 51126 7.000% 0.144% 0.100% 6.856% 10/27/98
B24 P 3018256 9.430% 0.144% 0.100% 9.286% 6/26/95
A25 C 51062 7.250% 0.144% 0.100% 7.106% 9/14/99
A26 C 51611 8.330% 0.144% 0.100% 8.186% 8/11/99
B27 P 2021699 7.625% 0.144% 0.100% 7.481% 9/24/93
B28 P 3045150 8.580% 0.144% 0.100% 8.436% 12/17/97
A29 C 51561 8.070% 0.144% 0.100% 7.926% 7/15/99
B30 P 1201524 7.750% 0.144% 0.100% 7.606% 8/4/94
B31 P 3101847 9.550% 0.144% 0.100% 9.406% 2/10/95
A32 C 51578 8.250% 0.144% 0.100% 8.106% 7/8/99
A33 C 51562 8.070% 0.144% 0.100% 7.926% 7/15/99
B34 P 2006195 8.000% 0.144% 0.100% 7.856% 7/1/93
B35 P 3048386 8.000% 0.144% 0.100% 7.856% 3/6/98
A36 C 51572 8.360% 0.144% 0.100% 8.216% 7/1/99
A37 C 51551 8.020% 0.144% 0.100% 7.876% 6/18/99
A38 C 50814 7.525% 0.144% 0.100% 7.381% 2/24/99
B39 P 3018165 9.250% 0.144% 0.100% 9.106% 9/26/96
A40 C 50874 7.290% 0.144% 0.100% 7.146% 8/21/98
B41 P 3012895 8.125% 0.144% 0.100% 7.981% 12/21/95
A42 C 50917 7.350% 0.144% 0.100% 7.206% 6/1/99
B43 P 3027125 9.125% 0.144% 0.100% 8.981% 3/21/97
A44 C 51564 8.650% 0.144% 0.100% 8.506% 8/4/99
A45 C 51522 7.980% 0.144% 0.100% 7.836% 6/25/99
B46 P 3028172 9.000% 0.144% 0.100% 8.856% 3/27/97
A47 C 51518 8.090% 0.144% 0.100% 7.946% 4/14/99
B48 P 2092138 8.400% 0.144% 0.100% 8.256% 3/17/94
A49 C 51588 8.330% 0.244% 0.200% 8.086% 7/30/99
A50 C 51534 9.610% 0.144% 0.100% 9.466% 6/15/99
A51 C 51589 9.370% 0.144% 0.100% 9.226% 8/13/99
A52 C 51842 7.970% 0.144% 0.100% 7.826% 10/20/99
A53 C 51841 7.970% 0.144% 0.100% 7.826% 10/20/99
A54 C 51840 7.970% 0.144% 0.100% 7.826% 10/20/99
A55 C 50927 7.100% 0.144% 0.100% 6.956% 7/30/99
ORIGINAL ORIGINAL
FIRST INTEREST TERM TO AMORTIZATION
SE- ORIGINATION LOAN PAYMENT ACCRUAL MONTHLY MATURITY TERM
QUENCE GROUP NUMBER DATE METHOD PAYMENT (MONTHS) (MONTHS) (ii)
- ------ ----------- ------ ------- -------- -------- -------- -------------
A1 C 51545 9/1/99 ACT/360 $130,042 120 360
A2 C 51546 9/1/99 ACT/360 87,649 120 360
A3 C 51447 2/1/99 ACT/360 172,567 120 360
A4 C 51828 12/1/99 ACT/360 168,071 120 360
A5 C 51022 10/1/99 ACT/360 124,524 120 360
A6.1 C 51671
A6.2 C 51671
A6.3 C 51671
A6.4 C 51671
A6.5 C 51671
A6.6 C 51671
A6 C 51671 12/1/99 ACT/360 92,367 147 360
A7.1 C 51670
A7.2 C 51670
A7 C 51670 12/1/99 ACT/360 32,255 147 360
A8 C 51573 9/1/99 ACT/360 127,596 120 360
A9 C 51521 9/1/99 ACT/360 60,954 120 360
A10 C 51524 9/1/99 ACT/360 58,450 120 360
A11 C 51547 9/1/99 ACT/360 45,926 120 360
A12 C 51605 12/1/99 ACT/360 42,947 120 360
A13 C 51606 9/1/99 ACT/360 39,628 120 360
B14 P 3018223 9/1/96 30/360 58,859 180 180
A15 C 50592 10/1/99 ACT/360 34,133 223 283
A16 C 51625 10/1/99 ACT/360 31,705 120 360
A17 C 50889 9/1/98 ACT/360 35,132 192 240
A18 C 50998 11/1/99 ACT/360 28,689 120 360
B19 P 2021590 9/1/93 30/360 35,480 120 300
A20 C 50740 8/1/99 ACT/360 28,114 120 360
B21 P 3101680 11/1/94 30/360 34,177 120 298
A22 C 51223 9/1/98 ACT/360 26,563 120 300
A23 C 51126 12/1/98 ACT/360 23,951 120 360
B24 P 3018256 7/1/95 30/360 41,600 73 180
A25 C 51062 11/1/99 ACT/360 23,194 180 360
A26 C 51611 10/1/99 ACT/360 25,052 120 360
B27 P 2021699 12/1/93 30/360 31,186 120 228
B28 P 3045150 2/1/98 30/360 24,805 120 300
A29 C 51561 9/1/99 ACT/360 22,300 120 300
B30 P 1201524 10/1/94 ACT/360 22,660 82 300
B31 P 3101847 4/1/95 30/360 25,043 120 300
A32 C 51578 9/1/99 ACT/360 20,239 120 360
A33 C 51562 9/1/99 ACT/360 19,543 120 300
B34 P 2006195 10/1/93 30/360 25,093 120 240
B35 P 3048386 5/1/98 30/360 25,325 180 180
A36 C 51572 9/1/99 ACT/360 18,596 120 360
A37 C 51551 8/1/99 ACT/360 17,644 120 360
A38 C 50814 4/1/99 ACT/360 16,822 180 360
B39 P 3018165 12/1/96 30/360 22,439 60 240
A40 C 50874 10/1/98 ACT/360 15,307 120 360
B41 P 3012895 2/1/96 30/360 19,840 120 240
A42 C 50917 7/1/99 ACT/360 14,503 113 353
B43 P 3027125 5/1/97 30/360 17,634 120 300
A44 C 51564 10/1/99 ACT/360 17,292 120 240
A45 C 51522 8/1/99 ACT/360 18,135 118 180
B46 P 3028172 6/1/97 30/360 20,285 180 180
A47 C 51518 6/1/99 ACT/360 13,337 120 300
B48 P 2092138 6/1/94 30/360 14,651 120 240
A49 C 51588 9/1/99 ACT/360 13,647 120 180
A50 C 51534 8/1/99 ACT/360 9,915 120 300
A51 C 51589 10/1/99 ACT/360 9,165 120 240
A52 C 51842 12/1/99 ACT/360 $120,902 120 360
A53 C 51841 12/1/99 ACT/360 81,948 120 360
A54 C 51840 12/1/99 ACT/360 45,049 120 360
A55 C 50927 9/1/99 ACT/360 127,955 120 360
REMAINING
TERM TO CROSS- LOCKOUT
SE- ORIGINATION LOAN SEASONING MATURITY MATURITY COLLATERALIZED RELATED EXPIRATION
QUENCE GROUP NUMBER (MONTHS) (MONTHS) DATE LOANS LOANS DATE
- ------ ----------- ------ --------- --------- -------- -------------- ------- ----------
A1 C 51545 12 108 8/1/09 Yes(1) Yes(A) 5/1/09
A2 C 51546 12 108 8/1/09 Yes(1) Yes(A) 5/1/09
A3 C 51447 19 101 1/1/09 No No 10/2/08
A4 C 51828 9 111 11/1/09 No No 8/31/09
A5 C 51022 11 109 9/1/09 No No 6/1/09
A6.1 C 51671
A6.2 C 51671
A6.3 C 51671
A6.4 C 51671
A6.5 C 51671
A6.6 C 51671
A6 C 51671 9 138 2/1/12 Yes(2) Yes(B) 12/1/11
A7.1 C 51670
A7.2 C 51670
A7 C 51670 9 138 2/1/12 Yes(2) Yes(B) 12/1/11
A8 C 51573 12 108 8/1/09 No No 5/1/09
A9 C 51521 12 108 8/1/09 No Yes(C) 5/1/09
A10 C 51524 12 108 8/1/09 No Yes(C) 5/1/09
A11 C 51547 12 108 8/1/09 No Yes(A) 5/1/09
A12 C 51605 9 111 11/1/09 No No 9/1/09
A13 C 51606 12 108 8/1/09 No No 6/1/09
B14 P 3018223 48 132 8/1/11 No No
A15 C 50592 11 212 4/1/18 No No 3/31/08
A16 C 51625 11 109 9/1/09 No No 7/1/09
A17 C 50889 24 168 8/1/14 No No 3/31/14
A18 C 50998 10 110 10/1/09 No No 6/1/09
B19 P 2021590 84 36 8/1/03 No No
A20 C 50740 13 107 7/1/09 No No 6/30/03
B21 P 3101680 70 50 10/1/04 No Yes(D)
A22 C 51223 24 96 8/1/08 No No 6/1/08
A23 C 51126 21 99 11/1/08 No No 6/30/08
B24 P 3018256 62 11 6/28/01 No No
A25 C 51062 10 170 10/1/14 No No 6/1/14
A26 C 51611 11 109 9/1/09 No No 6/1/09
B27 P 2021699 81 39 11/1/03 No No
B28 P 3045150 31 89 1/1/08 No No
A29 C 51561 12 108 8/1/09 No Yes(E) 6/1/09
B30 P 1201524 71 11 7/1/01 No No
B31 P 3101847 65 55 3/1/05 No Yes(D)
A32 C 51578 12 108 8/1/09 No No 5/1/09
A33 C 51562 12 108 8/1/09 No Yes(E) 6/1/09
B34 P 2006195 83 37 9/1/03 No No
B35 P 3048386 28 152 4/1/13 No No
A36 C 51572 12 108 8/1/09 No No 5/1/09
A37 C 51551 13 107 7/1/09 No No 4/1/09
A38 C 50814 17 163 3/1/14 No No 11/1/13
B39 P 3018165 45 15 11/1/01 No No
A40 C 50874 23 97 9/1/08 No No 8/31/01
B41 P 3012895 55 65 1/1/06 No No
A42 C 50917 14 99 11/1/08 No No 7/1/08
B43 P 3027125 40 80 4/1/07 No No
A44 C 51564 11 109 9/1/09 No No 6/1/09
A45 C 51522 13 105 5/1/09 No No 2/1/09
B46 P 3028172 39 141 5/1/12 No No
A47 C 51518 15 105 5/1/09 No No 2/1/09
B48 P 2092138 75 45 5/1/04 No No
A49 C 51588 12 108 8/1/09 No No 5/1/09
A50 C 51534 13 107 7/1/09 No No 4/1/99
A51 C 51589 11 109 9/1/09 No No 6/1/09
A52 C 51842 9 111 11/1/09 Yes(3) Yes(F) 8/1/09
A53 C 51841 9 111 11/1/09 Yes(3) Yes(F) 8/1/09
A54 C 51840 9 111 11/1/09 Yes(3) Yes(F) 8/1/09
A55 C 50927 12 108 8/1/09 No No 6/1/09
SE- ORIGINATION LOAN
QUENCE GROUP NUMBER PREPAYMENT PENALTY DESCRIPTION (MONTHS) YIELD MAINTENANCE TYPE
- ------ ----------- ------ --------------------------------------- ----------------------
A1 C 51545 LO(117)/OPEN(3)/DEF NAP
A2 C 51546 LO(117)/OPEN(3)/DEF NAP
A3 C 51447 LO(117)/OPEN(3)/DEF NAP
A4 C 51828 LO(117)/OPEN(3)/DEF NAP
A5 C 51022 LO(117)/OPEN(3)/DEF NAP
A6.1 C 51671
A6.2 C 51671
A6.3 C 51671
A6.4 C 51671
A6.5 C 51671
A6.6 C 51671
A6 C 51671 LO(145)/OPEN(2)/DEF NAP
A7.1 C 51670
A7.2 C 51670
A7 C 51670 LO(145)/OPEN(2)/DEF NAP
A8 C 51573 LO(117)/OPEN(3)/DEF NAP
A9 C 51521 LO(117)/OPEN(3)/DEF NAP
A10 C 51524 LO(117)/OPEN(3)/DEF NAP
A11 C 51547 LO(117)/OPEN(3)/DEF NAP
A12 C 51605 LO(118)/OPEN(2)/DEF NAP
A13 C 51606 LO(118)/OPEN(2)/DEF NAP
B14 P 3018223 YM(180) Int. Rate Diff. (Type 4)
A15 C 50592 LO(102)/GRTR1%PPMTorYM(114)/OPEN(7) Int. Rate Diff. (Type 1A)
A16 C 51625 LO(118)/OPEN(2)/DEF NAP
A17 C 50889 LO(187)/OPEN(5)/DEF NAP
A18 C 50998 LO(116)/OPEN(4)/DEF NAP
B19 P 2021590 YM(120) Int. Rate Diff. (Type 3)
A20 C 50740 LO(47)/GRTR1%PPMTorYM(66)/OPEN(7) Int. Rate Diff. (Type 1A)
B21 P 3101680 YM(120) Int. Rate Diff. (Type 3)
A22 C 51223 LO(118)/OPEN(2)/DEF NAP
A23 C 51126 LO(115)/OPEN(5)/DEF NAP
B24 P 3018256 OPEN(13)/YM(60) Int. Rate Diff. (Type 1A)
A25 C 51062 LO(176)/OPEN(4)/DEF NAP
A26 C 51611 LO(117)/OPEN(3)/DEF NAP
B27 P 2021699 YM(120) Int. Rate Diff. (Type 3)
B28 P 3045150 YM(120) Int. Rate Diff. (Type 3)
A29 C 51561 LO(118)/OPEN(2)/DEF NAP
B30 P 1201524 YM(82) Int. Rate Diff. (Type 3)
B31 P 3101847 YM(120) Int. Rate Diff. (Type 3)
A32 C 51578 LO(117)/OPEN(3)/DEF NAP
A33 C 51562 LO(118)/OPEN(2)/DEF NAP
B34 P 2006195 YM(120) Int. Rate Diff. (Type 3)
B35 P 3048386 YM(180) Int. Rate Diff. (Type 4)
A36 C 51572 LO(117)/OPEN(3)/DEF NAP
A37 C 51551 LO(117)/OPEN(3)/DEF NAP
A38 C 50814 LO(176)/OPEN(4)/DEF NAP
B39 P 3018165 $250+YM(60) Int. Rate Diff. (Type 1A)
A40 C 50874 LO(36)/GRTR1%PPMTorYM(48)/3%(12)/2%(12)/1%(6)/OPEN(6) Int. Rate Diff. (Type 1A)
B41 P 3012895 $250+YM(120) Int. Rate Diff. (Type 1A)
A42 C 50917 LO(109)/OPEN(4)/DEF NAP
B43 P 3027125 $250+YM(120) Int. Rate Diff. (Type 1A)
A44 C 51564 LO(117)/OPEN(3)/DEF NAP
A45 C 51522 LO(115)/OPEN(3)/DEF NAP
B46 P 3028172 YM(180) Int. Rate Diff. (Type 4)
A47 C 51518 LO(117)/OPEN(3)/DEF NAP
B48 P 2092138 YM(120) Int. Rate Diff. (Type 3)
A49 C 51588 LO(117)/OPEN(3)/DEF NAP
A50 C 51534 LO(117)/OPEN(3)/DEF NAP
A51 C 51589 LO(117)/OPEN(3)/DEF NAP
A52 C 51842 LO(117)/OPEN(3)/DEF NAP
A53 C 51841 LO(117)/OPEN(3)/DEF NAP
A54 C 51840 LO(117)/OPEN(3)/DEF NAP
A55 C 50927 LO(118)/OPEN(2)/DEF NAP
121
CUT-OFF
DATE
ORIGINATION LOAN APPRAISAL APPRAISAL LTV YEAR BUILT/
SEQUENCE GROUP NUMBER PROPERTY NAME VALUE DATE RATIO RENOVATED
- -------- ----- ------ ------------- ----- ---- ----- ---------
A1 C 51545 224-246 Worth Avenue (Palm V) $23,300,000 11/19/98 75% 1931/1958
A2 C 51546 256 Worth Avenue (Power-Love Associates) 16,825,000 11/19/98 70% 1930
----------
SUB-TOTAL CROSSED LOANS 40,125,000
A3 C 51447 Dutch Square Center 33,300,000 11/9/98 71% 1969/1997
A4 C 51828 Edwards Megaplex Theater 29,250,000 9/14/99 75% 1998
A5 C 51022 Huffman Mill Plaza 23,220,000 9/1/99 79% 1988/1999
A6.1 C 51671 Wal-Mart - Harvey, LA 1986
A6.2 C 51671 Wal-Mart - Denham Springs, LA 1986/1998
A6.3 C 51671 Wal-Mart - Hattiesburg, MS 1983/1995
A6.4 C 51671 Wal-Mart - Griffin, GA 1986
A6.5 C 51671 Wal-Mart - Daphne, AL 1984/1999
A6.6 C 51671 Wal-Mart - Fort Dodge, IA 1986
A6 C 51671 WAL-MART STORES PORTFOLIO 2 (ROLL-UP) 24,700,000 8/30/99 51%
A7.1 C 51670 Wal-Mart - White Settlement, TX 1986/1992
A7.2 C 51670 Wal-Mart - El Paso, TX 1986
A7 C 51670 WAL-MART STORES PORTFOLIO 1 (ROLL-UP) 8,600,000 8/26/99 51%
-----------
SUB-TOTAL CROSSED LOANS 33,300,000
A8 C 51573 Golden Triangle Mall 30,700,000 6/4/99 55% 1980
A9 C 51521 Mansfield Plaza 14,100,000 1/20/99 60% 1972/1998
A10 C 51524 Raintree Towne Shopping Center 15,300,000 3/13/99 53% 1986/1997
A11 C 51547 175 Worth Avenue (Hals Realty Associates) 8,100,000 11/19/98 77% 1945/1980
A12 C 51605 Tinseltown Theater Complex 7,900,000 6/15/99 69% 1998
A13 C 51606 Lucky Center 7,300,000 3/22/99 74% 1960/1999
B14 P 3018223 2739-2741 Taylor 211-229 Jefferson 11,425,000 2/21/96 44% 1940/1953
A15 C 50592 Huntersville Square S/C 6,550,000 9/1/99 67% 1974/1995
A16 C 51625 Orange Village Shopping Center 5,500,000 6/22/99 79% 1987/1998
A17 C 50889 Barnes & Noble/Chili's Land Lease 8,300,000 7/1/98 52% 1968/1999
A18 C 50998 Southside Shopping Center 5,190,000 12/1/99 79% 1999
B19 P 2021590 Almond Orchard Shopping Center 8,350,000 5/19/93 48% 1978
A20 C 50740 Laurel Square Shopping Center 5,000,000 3/16/99 79% 1999
B21 P 3101680 South Lake Center 6,400,000 6/10/94 57% 1986
A22 C 51223 Wayman Court Shopping Center 4,900,000 6/15/98 73% 1989
A23 C 51126 New Lake Hill Shopping Center 5,015,000 8/3/98 71% 1987/1994
B24 P 3018256 Gateway Crossing Entertainment Complex 6,280,000 11/1/95 54% 1995
A25 C 51062 Bainbridge Market Place 4,350,000 8/18/99 78% 1999
A26 C 51611 Franconia Center 4,500,000 6/29/99 73% 1975/1998
B27 P 2021699 Olivewood Shopping Center 5,500,000 8/1/93 54% 1983
B28 P 3045150 Bancroft Center 6,300,000 11/19/97 47% 1934/1964
A29 C 51561 Southside Commons 4,000,000 4/12/99 71% 1999
B30 P 1201524 Plaza Bel Air 4,600,000 5/16/94 59% 1975/1986
B31 P 3101847 Allen Business Park 3,925,000 1/6/95 68% 1994
A32 C 51578 Mt. Paran Shopping Center 3,700,000 6/14/99 72% 1989/1998
A33 C 51562 White Horse Commons 3,475,000 4/13/99 72% 1999
B34 P 2006195 Comp USA & Mens Warehouse 4,900,000 4/12/93 50% 1993
B35 P 3048386 Harbor / 91 Freeway Shopping Center 4,400,000 9/29/97 55% 1949/1995
A36 C 51572 Town Center Mall Shoppes 3,325,000 5/5/99 73% 1987
A37 C 51551 Pecos Wigwam Commercial 5,750,000 5/1/99 41% 1991/1999
A38 C 50814 Town Center 3,000,000 7/1/98 79% 1998
B39 P 3018165 Venetian Gardens Shopping Center 3,940,000 7/17/96 57% 1976
A40 C 50874 Cinco Village Shopping Center 3,000,000 3/24/98 73% 1998
B41 P 3012895 Orchard Supply Hardware 3,430,000 12/14/95 61% 1983
A42 C 50917 Cantrell Shopping Center 2,700,000 4/12/99 77% 1998
B43 P 3027125 2132-2154 Center Street 3,200,000 2/7/97 62% 1927/1994
A44 C 51564 Huffines Plaza 3,310,000 3/24/99 59% 1962
A45 C 51522 Town East Center 5,700,000 2/23/99 32% 1989
B46 P 3028172 South Point Plaza 3,225,000 3/12/97 55% 1987
A47 C 51518 Centre Stage at Jonestown Shopping Center 2,450,000 2/22/99 69% 1987
B48 P 2092138 Brookhurst Shopping Center 2,380,000 12/21/93 60% 1977
A49 C 51588 Windy Hill Crossing 2,750,000 3/23/99 49% 1985
A50 C 51534 Harrison Ridge 1,500,000 3/23/99 74% 1973
A51 C 51589 Zaragosa Retail Center 1,410,000 5/15/99 69% 1996/1998
A52 C 51842 Tiburon Apartments 21,000,000 8/13/99 78% 1987
A53 C 51841 Farmstead Apartments 13,500,000 8/13/99 83% 1985
A54 C 51840 Cimarron Apartments 8,000,000 8/13/99 77% 1985
----------
SUB-TOTAL CROSSED LOANS 42,500,000
A55 C 50927 Wellington Meadows Apartments 23,800,000 4/14/99 79% 1998
TOTAL SF/ LOAN
UNITS/ UNIT/ NET BALANCE
ORIGINATION LOAN ROOM/ ROOM/ RENTABLE S/F/UNIT/
SEQUENCE GROUP NUMBER PROPERTY NAME BED BED AREA (SF) ROOM/BED
- -------- ----- ------ ------------- --- --- --------- --------
A1 C 51545 224-246 Worth Avenue (Palm V) $ 37,210 SF 37,210 473
A2 C 51546 256 Worth Avenue (Power-Love Associates) 29,088 SF 29,088 407
SUB-TOTAL CROSSED LOANS
A3 C 51447 Dutch Square Center 540,070 SF 540,070 44
A4 C 51828 Edwards Megaplex Theater 124,614 SF 124,614 176
A5 C 51022 Huffman Mill Plaza 295,300 SF 295,300 62
A6.1 C 51671 Wal-Mart - Harvey, LA 111,000 SF 111,000
A6.2 C 51671 Wal-Mart - Denham Springs, LA 228,000 SF 228,000
A6.3 C 51671 Wal-Mart - Hattiesburg, MS 104,365 SF 104,365
A6.4 C 51671 Wal-Mart - Griffin, GA 115,000 SF 115,000
A6.5 C 51671 Wal-Mart - Daphne, AL 81,922 SF 81,922
A6.6 C 51671 Wal-Mart - Fort Dodge, IA 81,922 SF 81,922
A6 C 51671 WAL-MART STORES PORTFOLIO 2 (ROLL-UP) 722,209 SF 722,209 17
A7.1 C 51670 Wal-Mart - White Settlement, TX 120,000 SF 120,000
A7.2 C 51670 Wal-Mart - El Paso, TX 81,922 SF 81,922
A7 C 51670 WAL-MART STORES PORTFOLIO 1 (ROLL-UP) 201,922 SF 201,922 22
-
SUB-TOTAL CROSSED LOANS
A8 C 51573 Golden Triangle Mall 262,648 SF 262,648 64
A9 C 51521 Mansfield Plaza 154,398 SF 154,398 55
A10 C 51524 Raintree Towne Shopping Center 124,218 SF 124,218 66
A11 C 51547 175 Worth Avenue (Hals Realty Associates) 19,740 SF 19,740 315
A12 C 51605 Tinseltown Theater Complex 60,560 SF 60,560 90
A13 C 51606 Lucky Center 67,538 SF 67,538 80
B14 P 3018223 2739-2741 Taylor 211-229 Jefferson 24,435 SF 24,435 208
A15 C 50592 Huntersville Square S/C 84,098 SF 84,098 52
A16 C 51625 Orange Village Shopping Center 100,882 SF 100,882 43
A17 C 50889 Barnes & Noble/Chili's Land Lease 47,000 SF 47,000 91
A18 C 50998 Southside Shopping Center 45,891 SF 45,891 89
B19 P 2021590 Almond Orchard Shopping Center 84,527 SF 84,527 47
A20 C 50740 Laurel Square Shopping Center 56,200 SF 56,200 71
B21 P 3101680 South Lake Center 41,760 SF 41,760 88
A22 C 51223 Wayman Court Shopping Center 31,080 SF 31,080 115
A23 C 51126 New Lake Hill Shopping Center 27,567 SF 27,567 128
B24 P 3018256 Gateway Crossing Entertainment Complex 37,793 SF 37,793 90
A25 C 51062 Bainbridge Market Place 46,444 SF 46,444 73
A26 C 51611 Franconia Center 45,663 SF 45,663 72
B27 P 2021699 Olivewood Shopping Center 53,222 SF 53,222 56
B28 P 3045150 Bancroft Center 22,655 SF 22,655 131
A29 C 51561 Southside Commons 37,410 SF 37,410 76
B30 P 1201524 Plaza Bel Air 65,911 SF 65,911 41
B31 P 3101847 Allen Business Park 79,698 SF 79,698 33
A32 C 51578 Mt. Paran Shopping Center 33,593 SF 33,593 80
A33 C 51562 White Horse Commons 33,620 SF 33,620 74
B34 P 2006195 Comp USA & Mens Warehouse 30,000 SF 30,000 81
B35 P 3048386 Harbor / 91 Freeway Shopping Center 32,831 SF 32,831 74
A36 C 51572 Town Center Mall Shoppes 24,261 SF 24,261 100
A37 C 51551 Pecos Wigwam Commercial 35,640 SF 35,640 67
A38 C 50814 Town Center 45,978 SF 45,978 52
B39 P 3018165 Venetian Gardens Shopping Center 52,304 SF 52,304 43
A40 C 50874 Cinco Village Shopping Center 20,000 SF 20,000 110
B41 P 3012895 Orchard Supply Hardware 42,024 SF 42,024 50
A42 C 50917 Cantrell Shopping Center 25,425 SF 25,425 82
B43 P 3027125 2132-2154 Center Street 19,348 SF 19,348 103
A44 C 51564 Huffines Plaza 57,885 SF 57,885 33
A45 C 51522 Town East Center 152,511 SF 152,511 12
B46 P 3028172 South Point Plaza 49,332 SF 49,332 36
A47 C 51518 Centre Stage at Jonestown Shopping Center 25,200 SF 25,200 67
B48 P 2092138 Brookhurst Shopping Center 31,500 SF 31,500 45
A49 C 51588 Windy Hill Crossing 32,000 SF 32,000 42
A50 C 51534 Harrison Ridge 28,285 SF 28,285 39
A51 C 51589 Zaragosa Retail Center 16,660 SF 16,660 59
A52 C 51842 Tiburon Apartments 582 Units 317,910 28,240
A53 C 51841 Farmstead Apartments 348 Units 187,908 32,012
A54 C 51840 Cimarron Apartments 210 Units 113,499 29,163
SUB-TOTAL CROSSED LOANS
A55 C 50927 Wellington Meadows Apartments 332 Units 310,236 56,848
OCCUPANCY
ORIGINATION LOAN OCCUPANCY AS OF U/W U/W
SEQUENCE GROUP NUMBER PROPERTY NAME PERCENT DATE REVENUES EXPENSES
- -------- ----- ------ ------------- ------- ---- -------- --------
A1 C 51545 224-246 Worth Avenue (Palm V) 100% 7/10/99 $2,721,902 $ 625,403
A2 C 51546 256 Worth Avenue (Power-Love Associates) 100% 7/10/99 1,812,888 470,211
SUB-TOTAL CROSSED LOANS
A3 C 51447 Dutch Square Center 90% 7/2/99 5,096,201 2,121,641
A4 C 51828 Edwards Megaplex Theater 100% 10/5/99 2,884,200 92,757
A5 C 51022 Huffman Mill Plaza 100% 7/30/99 2,341,855 263,587
A6.1 C 51671 Wal-Mart - Harvey, LA 100% 9/30/99
A6.2 C 51671 Wal-Mart - Denham Springs, LA 100% 9/30/99
A6.3 C 51671 Wal-Mart - Hattiesburg, MS 100% 9/30/99
A6.4 C 51671 Wal-Mart - Griffin, GA 100% 9/30/99
A6.5 C 51671 Wal-Mart - Daphne, AL 100% 9/30/99
A6.6 C 51671 Wal-Mart - Fort Dodge, IA 100% 9/30/99
A6 C 51671 WAL-MART STORES PORTFOLIO 2 (ROLL-UP) 100% 9/30/99 3,219,772 926,126
A7.1 C 51670 Wal-Mart - White Settlement, TX 100% 9/30/99
A7.2 C 51670 Wal-Mart - El Paso, TX 100% 9/30/99
A7 C 51670 WAL-MART STORES PORTFOLIO 1 (ROLL-UP) 100% 9/30/99 1,128,761 265,113
-
SUB-TOTAL CROSSED LOANS
A8 C 51573 Golden Triangle Mall 93% 6/30/99 5,210,054 2,811,349
A9 C 51521 Mansfield Plaza 100% 7/31/99 1,570,256 462,810
A10 C 51524 Raintree Towne Shopping Center 95% 8/30/99 1,801,159 683,301
A11 C 51547 175 Worth Avenue (Hals Realty Associates) 100% 7/10/99 922,697 250,835
A12 C 51605 Tinseltown Theater Complex 100% 10/19/99 719,150 17,411
A13 C 51606 Lucky Center 99% 7/12/99 795,456 160,760
B14 P 3018223 2739-2741 Taylor 211-229 Jefferson 100% 4/1/99 1,355,772 347,263
A15 C 50592 Huntersville Square S/C 99% 8/15/99 682,573 117,178
A16 C 51625 Orange Village Shopping Center 94% 6/8/99 591,843 104,539
A17 C 50889 Barnes & Noble/Chili's Land Lease 100% 5/31/99 866,293 154,339
A18 C 50998 Southside Shopping Center 96% 8/31/99 518,629 93,348
B19 P 2021590 Almond Orchard Shopping Center 85% 5/6/99 1,029,289 289,329
A20 C 50740 Laurel Square Shopping Center 100% 8/6/99 540,866 112,679
B21 P 3101680 South Lake Center 100% 9/21/99 885,888 176,832
A22 C 51223 Wayman Court Shopping Center 100% 7/26/99 575,259 150,409
A23 C 51126 New Lake Hill Shopping Center 100% 8/24/99 688,427 296,886
B24 P 3018256 Gateway Crossing Entertainment Complex 100% 9/15/99 945,931 317,855
A25 C 51062 Bainbridge Market Place 100% 8/11/99 490,067 112,190
A26 C 51611 Franconia Center 98% 6/30/99 621,144 197,433
B27 P 2021699 Olivewood Shopping Center 100% 12/31/98 599,170 149,818
B28 P 3045150 Bancroft Center 100% 9/20/99 841,432 269,409
A29 C 51561 Southside Commons 100% 8/20/99 428,417 73,125
B30 P 1201524 Plaza Bel Air 100% 9/15/99 911,020 350,137
B31 P 3101847 Allen Business Park 100% 9/20/99 590,886 181,748
A32 C 51578 Mt. Paran Shopping Center 100% 6/22/99 434,032 101,117
A33 C 51562 White Horse Commons 100% 8/20/99 388,786 77,793
B34 P 2006195 Comp USA & Mens Warehouse 100% 9/12/99 492,480 24,624
B35 P 3048386 Harbor / 91 Freeway Shopping Center 100% 9/15/99 583,553 85,727
A36 C 51572 Town Center Mall Shoppes 100% 6/15/99 388,151 83,763
A37 C 51551 Pecos Wigwam Commercial 91% 6/30/99 630,300 184,015
A38 C 50814 Town Center 100% 8/23/99 337,438 70,050
B39 P 3018165 Venetian Gardens Shopping Center 96% 5/28/99 583,936 119,860
A40 C 50874 Cinco Village Shopping Center 100% 9/1/99 354,635 84,211
B41 P 3012895 Orchard Supply Hardware 100% 9/18/99 297,251 14,863
A42 C 50917 Cantrell Shopping Center 100% 9/2/99 287,376 48,091
B43 P 3027125 2132-2154 Center Street 100% 2/1/98 384,673 122,599
A44 C 51564 Huffines Plaza 100% 7/16/99 438,875 103,920
A45 C 51522 Town East Center 95% 5/26/99 661,268 106,251
B46 P 3028172 South Point Plaza 95% 9/21/99 633,646 237,325
A47 C 51518 Centre Stage at Jonestown Shopping Center 100% 8/17/99 351,561 134,115
B48 P 2092138 Brookhurst Shopping Center 100% 9/15/99 345,830 83,817
A49 C 51588 Windy Hill Crossing 100% 8/19/99 393,266 143,472
A50 C 51534 Harrison Ridge 100% 6/30/99 277,744 95,689
A51 C 51589 Zaragosa Retail Center 100% 7/1/99 213,411 61,316
A52 C 51842 Tiburon Apartments 95% 10/15/99 3,153,174 1,287,666
A53 C 51841 Farmstead Apartments 94% 10/15/99 2,032,695 772,063
A54 C 51840 Cimarron Apartments 96% 10/15/99 1,215,817 522,151
SUB-TOTAL CROSSED LOANS
A55 C 50927 Wellington Meadows Apartments 95% 7/8/99 3,130,026 1,122,801
U/W MOST
CASH RECENT
ORIGINATION LOAN U/W FLOW U/W RESERVES END
SEQUENCE GROUP NUMBER PROPERTY NAME CASH FLOW DSCR RESERVES PER UNIT DATE
- -------- ----- ------ ------------- --------- ---- -------- -------- ----
A1 C 51545 224-246 Worth Avenue (Palm V) $2,024,142 1.30 $ 8,942 $0.24 12/31/99
A2 C 51546 256 Worth Avenue (Power-Love Associates) 1,314,742 1.25 6,208 0.21 12/31/99
SUB-TOTAL CROSSED LOANS
A3 C 51447 Dutch Square Center 2,591,971 1.25 83,189 0.15 12/31/99
A4 C 51828 Edwards Megaplex Theater 2,626,301 1.30 27,415 0.22
A5 C 51022 Huffman Mill Plaza 1,995,043 1.34 43,943 0.15 12/31/99
A6.1 C 51671 Wal-Mart - Harvey, LA
A6.2 C 51671 Wal-Mart - Denham Springs, LA
A6.3 C 51671 Wal-Mart - Hattiesburg, MS
A6.4 C 51671 Wal-Mart - Griffin, GA
A6.5 C 51671 Wal-Mart - Daphne, AL
A6.6 C 51671 Wal-Mart - Fort Dodge, IA
A6 C 51671 WAL-MART STORES PORTFOLIO 2 (ROLL-UP) 2,039,388 1.84 134,984 0.19 12/31/99
A7.1 C 51670 Wal-Mart - White Settlement, TX
A7.2 C 51670 Wal-Mart - El Paso, TX
A7 C 51670 WAL-MART STORES PORTFOLIO 1 (ROLL-UP) 792,768 2.05 37,630 0.19 12/31/99
SUB-TOTAL CROSSED LOANS
A8 C 51573 Golden Triangle Mall 1,933,907 1.26 151,746 0.58 12/31/99
A9 C 51521 Mansfield Plaza 990,871 1.35 27,792 0.18 12/31/99
A10 C 51524 Raintree Towne Shopping Center 1,017,051 1.45 32,296 0.26 12/31/99
A11 C 51547 175 Worth Avenue (Hals Realty Associates) 661,372 1.20 4,935 0.25 12/31/99
A12 C 51605 Tinseltown Theater Complex 644,207 1.25 12/31/99
A13 C 51606 Lucky Center 594,502 1.25 13,508 0.20 12/31/98
B14 P 3018223 2739-2741 Taylor 211-229 Jefferson 955,496 1.35 6,109 0.25 12/31/99
A15 C 50592 Huntersville Square S/C 533,107 1.30 13,029 0.15 12/31/99
A16 C 51625 Orange Village Shopping Center 456,780 1.20 16,141 0.16 12/31/98
A17 C 50889 Barnes & Noble/Chili's Land Lease 696,209 1.65 2,350 0.05
A18 C 50998 Southside Shopping Center 413,127 1.20 6,884 0.15
B19 P 2021590 Almond Orchard Shopping Center 634,912 1.49 21,132 0.25 12/31/99
A20 C 50740 Laurel Square Shopping Center 409,661 1.21 5,620 0.10 12/31/99
B21 P 3101680 South Lake Center 672,390 1.64 10,440 0.25 12/31/99
A22 C 51223 Wayman Court Shopping Center 399,185 1.25 10,221 0.33 12/31/99
A23 C 51126 New Lake Hill Shopping Center 368,546 1.28 4,686 0.17 12/31/99
B24 P 3018256 Gateway Crossing Entertainment Complex 593,278 1.19 7,559 0.20 12/31/99
A25 C 51062 Bainbridge Market Place 363,923 1.31 6,967 0.15 12/31/99
A26 C 51611 Franconia Center 375,777 1.25 6,849 0.15 12/31/99
B27 P 2021699 Olivewood Shopping Center 413,629 1.11 13,306 0.25 12/31/99
B28 P 3045150 Bancroft Center 544,257 1.83 5,664 0.25 12/31/99
A29 C 51561 Southside Commons 334,558 1.25 5,612 0.15
B30 P 1201524 Plaza Bel Air 518,658 1.91 16,478 0.25 12/31/99
B31 P 3101847 Allen Business Park 369,407 1.23 15,940 0.20 12/31/99
A32 C 51578 Mt. Paran Shopping Center 303,649 1.25 8,398 0.25 12/31/99
A33 C 51562 White Horse Commons 293,268 1.25 5,043 0.15
B34 P 2006195 Comp USA & Mens Warehouse 441,682 1.47 6,000 0.20 12/31/99
B35 P 3048386 Harbor / 91 Freeway Shopping Center 468,105 1.54 8,208 0.25 12/31/99
A36 C 51572 Town Center Mall Shoppes 279,011 1.25 4,852 0.20 12/31/98
A37 C 51551 Pecos Wigwam Commercial 417,105 1.97 7,128 0.20 12/31/99
A38 C 50814 Town Center 255,467 1.27 6,897 0.15 12/31/99
B39 P 3018165 Venetian Gardens Shopping Center 428,864 1.59 13,076 0.25 12/31/99
A40 C 50874 Cinco Village Shopping Center 249,959 1.36 3,000 0.15 12/31/99
B41 P 3012895 Orchard Supply Hardware 261,754 1.10 10,506 0.25 12/31/99
A42 C 50917 Cantrell Shopping Center 227,314 1.31 3,812 0.15 12/31/99
B43 P 3027125 2132-2154 Center Street 252,076 1.19 6,497 0.34 12/31/99
A44 C 51564 Huffines Plaza 259,488 1.25 15,629 0.27 12/31/98
A45 C 51522 Town East Center 463,979 2.13 30,502 0.20 12/31/99
B46 P 3028172 South Point Plaza 363,831 1.49 12,333 0.25 12/31/99
A47 C 51518 Centre Stage at Jonestown Shopping Center 200,055 1.25 5,100 0.20 12/31/99
B48 P 2092138 Brookhurst Shopping Center 240,870 1.37 7,875 0.25 12/31/99
A49 C 51588 Windy Hill Crossing 225,066 1.37 7,360 0.23 12/31/99
A50 C 51534 Harrison Ridge 154,053 1.29 7,071 0.25 12/31/99
A51 C 51589 Zaragosa Retail Center 137,477 1.25 4,165 0.25 12/31/99
A52 C 51842 Tiburon Apartments 1,740,989 1.20 124,519 213.95 12/31/99
A53 C 51841 Farmstead Apartments 1,186,682 1.21 73,950 212.50 12/31/99
A54 C 51840 Cimarron Apartments 648,736 1.20 44,930 213.95 12/31/99
SUB-TOTAL CROSSED LOANS
A55 C 50927 Wellington Meadows Apartments 1,940,825 1.26 66,400 200.00
MOST
RECENT
MOST MOST MOST CASH
ORIGINATION LOAN RECENT RECENT RECENT FLOW
SEQUENCE GROUP NUMBER PROPERTY NAME REVENUES EXPENSES CASH FLOW DSCR
- -------- ----- ------ ------------- -------- -------- --------- ----
A1 C 51545 224-246 Worth Avenue (Palm V) 3,589,261 1,066,345 2,513,974 1.61
A2 C 51546 256 Worth Avenue (Power-Love Associates) 2,162,504 635,912 1,523,979 1.45
SUB-TOTAL CROSSED LOANS
A3 C 51447 Dutch Square Center 5,219,320 2,297,113 2,814,895 1.36
A4 C 51828 Edwards Megaplex Theater
A5 C 51022 Huffman Mill Plaza 1,786,638 226,753 1,340,617 0.90
A6.1 C 51671 Wal-Mart - Harvey, LA
A6.2 C 51671 Wal-Mart - Denham Springs, LA
A6.3 C 51671 Wal-Mart - Hattiesburg, MS
A6.4 C 51671 Wal-Mart - Griffin, GA
A6.5 C 51671 Wal-Mart - Daphne, AL
A6.6 C 51671 Wal-Mart - Fort Dodge, IA
A6 C 51671 WAL-MART STORES PORTFOLIO 2 (ROLL-UP) 2,738,738 2,738,738 2.47
A7.1 C 51670 Wal-Mart - White Settlement, TX
A7.2 C 51670 Wal-Mart - El Paso, TX
A7 C 51670 WAL-MART STORES PORTFOLIO 1 (ROLL-UP) 882,311 882,311 2.28
SUB-TOTAL CROSSED LOANS
A8 C 51573 Golden Triangle Mall 6,501,833 2,924,039 2,238,645 1.46
A9 C 51521 Mansfield Plaza 1,727,248 614,619 1,070,922 1.46
A10 C 51524 Raintree Towne Shopping Center 2,181,253 736,811 1,343,060 1.91
A11 C 51547 175 Worth Avenue (Hals Realty Associates) 903,820 222,452 666,180 1.21
A12 C 51605 Tinseltown Theater Complex 842,452 86,506 755,946 1.47
A13 C 51606 Lucky Center 707,366 112,755 592,681 1.25
B14 P 3018223 2739-2741 Taylor 211-229 Jefferson 1,514,385 324,215 1,190,170 1.69
A15 C 50592 Huntersville Square S/C 529,710 71,368 448,070 1.09
A16 C 51625 Orange Village Shopping Center 567,368 69,358 478,171 1.26
A17 C 50889 Barnes & Noble/Chili's Land Lease
A18 C 50998 Southside Shopping Center
B19 P 2021590 Almond Orchard Shopping Center 959,836 254,377 567,064 1.33
A20 C 50740 Laurel Square Shopping Center 499,017 91,239 407,778 1.21
B21 P 3101680 South Lake Center 986,587 173,953 794,739 1.94
A22 C 51223 Wayman Court Shopping Center 665,604 128,999 499,379 1.57
A23 C 51126 New Lake Hill Shopping Center 778,735 275,949 498,100 1.73
B24 P 3018256 Gateway Crossing Entertainment Complex 948,397 319,569 628,828 1.26
A25 C 51062 Bainbridge Market Place 446,849 98,932 343,274 1.23
A26 C 51611 Franconia Center 660,650 274,325 307,647 1.02
B27 P 2021699 Olivewood Shopping Center 801,037 201,899 599,138 1.60
B28 P 3045150 Bancroft Center 879,330 297,269 582,061 1.96
A29 C 51561 Southside Commons
B30 P 1201524 Plaza Bel Air 1,061,472 270,208 779,770 2.87
B31 P 3101847 Allen Business Park 686,922 167,343 446,675 1.49
A32 C 51578 Mt. Paran Shopping Center 518,430 109,255 400,776 1.65
A33 C 51562 White Horse Commons
B34 P 2006195 Comp USA & Mens Warehouse 560,950 560,950 1.86
B35 P 3048386 Harbor / 91 Freeway Shopping Center 473,279 58,420 414,859 1.37
A36 C 51572 Town Center Mall Shoppes 372,757 74,795 279,786 1.25
A37 C 51551 Pecos Wigwam Commercial 747,025 220,326 497,897 2.35
A38 C 50814 Town Center 335,211 67,005 262,229 1.30
B39 P 3018165 Venetian Gardens Shopping Center 547,639 130,601 328,626 1.22
A40 C 50874 Cinco Village Shopping Center 387,488 81,024 303,464 1.65
B41 P 3012895 Orchard Supply Hardware 312,894 312,894 1.31
A42 C 50917 Cantrell Shopping Center 302,801 44,590 250,712 1.44
B43 P 3027125 2132-2154 Center Street 458,699 186,768 271,931 1.29
A44 C 51564 Huffines Plaza 392,130 83,537 203,447 0.98
A45 C 51522 Town East Center 658,204 71,480 562,322 2.58
B46 P 3028172 South Point Plaza 651,607 250,747 362,826 1.49
A47 C 51518 Centre Stage at Jonestown Shopping Center 410,179 158,546 232,634 1.45
B48 P 2092138 Brookhurst Shopping Center 353,619 66,381 285,942 1.63
A49 C 51588 Windy Hill Crossing 396,740 121,546 251,991 1.54
A50 C 51534 Harrison Ridge 303,171 79,701 215,749 1.81
A51 C 51589 Zaragosa Retail Center 230,600 44,504 181,932 1.65
A52 C 51842 Tiburon Apartments 3,179,495 1,318,303 1,768,654 1.22
A53 C 51841 Farmstead Apartments 1,992,080 765,332 1,161,599 1.18
A54 C 51840 Cimarron Apartments 1,195,076 518,209 641,168 1.19
SUB-TOTAL CROSSED LOANS
A55 C 50927 Wellington Meadows Apartments
2ND
2ND MOST
MOST 2ND 2ND 2ND RECENT
RECENT MOST MOST MOST CASH
ORIGINATION LOAN END RECENT RECENT RECENT FLOW
SEQUENCE GROUP NUMBER PROPERTY NAME DATE REVENUES EXPENSES CASH FLOW DSCR
- -------- ----- ------ ------------- ---- -------- -------- --------- ----
A1 C 51545 224-246 Worth Avenue (Palm V) 12/31/98 2,651,971 609,609 2,029,214 1.30
A2 C 51546 256 Worth Avenue (Power-Love Associates) 12/31/98 1,842,528 449,076 1,366,730 1.30
SUB-TOTAL CROSSED LOANS
A3 C 51447 Dutch Square Center 12/31/98 5,138,165 1,878,219 3,259,946 1.57
A4 C 51828 Edwards Megaplex Theater
A5 C 51022 Huffman Mill Plaza
A6.1 C 51671 Wal-Mart - Harvey, LA
A6.2 C 51671 Wal-Mart - Denham Springs, LA
A6.3 C 51671 Wal-Mart - Hattiesburg, MS
A6.4 C 51671 Wal-Mart - Griffin, GA
A6.5 C 51671 Wal-Mart - Daphne, AL
A6.6 C 51671 Wal-Mart - Fort Dodge, IA
A6 C 51671 WAL-MART STORES PORTFOLIO 2 (ROLL-UP)
A7.1 C 51670 Wal-Mart - White Settlement, TX
A7.2 C 51670 Wal-Mart - El Paso, TX
A7 C 51670 WAL-MART STORES PORTFOLIO 1 (ROLL-UP) 12/31/98 855,322 855,322 2.21
SUB-TOTAL CROSSED LOANS
A8 C 51573 Golden Triangle Mall 12/31/98 6,519,015 2,855,974 3,100,684 2.03
A9 C 51521 Mansfield Plaza 12/31/98 1,249,355 356,715 867,640 1.19
A10 C 51524 Raintree Towne Shopping Center 12/31/98 1,916,808 624,445 1,002,563 1.43
A11 C 51547 175 Worth Avenue (Hals Realty Associates) 12/31/98 935,275 243,000 692,275 1.26
A12 C 51605 Tinseltown Theater Complex
A13 C 51606 Lucky Center 12/31/97 696,665 129,707 565,207 1.19
B14 P 3018223 2739-2741 Taylor 211-229 Jefferson 12/31/98 1,506,413 292,989 1,213,424 1.72
A15 C 50592 Huntersville Square S/C 12/31/98 398,684 76,011 322,038 0.79
A16 C 51625 Orange Village Shopping Center 12/31/97 647,950 65,857 560,593 1.47
A17 C 50889 Barnes & Noble/Chili's Land Lease
A18 C 50998 Southside Shopping Center
B19 P 2021590 Almond Orchard Shopping Center 12/31/98 1,032,478 289,027 694,754 1.63
A20 C 50740 Laurel Square Shopping Center
B21 P 3101680 South Lake Center 12/31/98 953,139 170,905 724,684 1.77
A22 C 51223 Wayman Court Shopping Center 12/31/97 499,473 141,978 351,302 1.10
A23 C 51126 New Lake Hill Shopping Center 12/31/98 692,231 258,954 413,277 1.44
B24 P 3018256 Gateway Crossing Entertainment Complex 12/31/98 1,046,909 244,726 802,183 1.61
A25 C 51062 Bainbridge Market Place
A26 C 51611 Franconia Center 12/31/98 546,204 205,367 38,907 0.13
B27 P 2021699 Olivewood Shopping Center 12/31/98 864,281 119,859 744,422 1.99
B28 P 3045150 Bancroft Center 12/31/98 827,922 269,337 555,903 1.87
A29 C 51561 Southside Commons
B30 P 1201524 Plaza Bel Air 12/31/98 1,009,570 343,377 666,193 2.45
B31 P 3101847 Allen Business Park 12/31/98 594,950 178,243 390,352 1.30
A32 C 51578 Mt. Paran Shopping Center 12/31/98 530,734 81,518 449,216 1.85
A33 C 51562 White Horse Commons
B34 P 2006195 Comp USA & Mens Warehouse
B35 P 3048386 Harbor / 91 Freeway Shopping Center
A36 C 51572 Town Center Mall Shoppes 12/31/97 350,946 76,235 272,211 1.22
A37 C 51551 Pecos Wigwam Commercial 12/31/98 700,973 163,796 516,709 2.44
A38 C 50814 Town Center
B39 P 3018165 Venetian Gardens Shopping Center 12/31/98 556,129 109,910 446,219 1.66
A40 C 50874 Cinco Village Shopping Center
B41 P 3012895 Orchard Supply Hardware 12/31/97 312,896 312,896 1.31
A42 C 50917 Cantrell Shopping Center
B43 P 3027125 2132-2154 Center Street 12/31/98 384,673 123,122 261,551 1.24
A44 C 51564 Huffines Plaza 12/31/97 472,114 67,664 404,450 1.95
A45 C 51522 Town East Center 12/31/98 746,906 50,329 696,077 3.20
B46 P 3028172 South Point Plaza 12/31/98 633,699 206,886 424,190 1.74
A47 C 51518 Centre Stage at Jonestown Shopping Center 12/31/98 373,726 132,245 235,404 1.47
B48 P 2092138 Brookhurst Shopping Center 12/31/98 349,814 59,401 290,413 1.65
A49 C 51588 Windy Hill Crossing 12/31/98 392,661 131,728 250,670 1.53
A50 C 51534 Harrison Ridge 12/31/98 295,383 84,747 206,495 1.74
A51 C 51589 Zaragosa Retail Center 12/31/98 230,600 44,504 185,908 1.69
A52 C 51842 Tiburon Apartments 12/31/98 3,153,530 1,248,849 1,904,681 1.31
A53 C 51841 Farmstead Apartments 12/31/98 1,980,352 735,233 1,187,699 1.21
A54 C 51840 Cimarron Apartments 12/31/98 1,212,780 514,868 697,912 1.29
SUB-TOTAL CROSSED LOANS
A55 C 50927 Wellington Meadows Apartments
SECOND SECOND
LARGEST LARGEST SECOND LARGEST LARGEST
LARGEST TENANT TENANT LARGEST TENANT TENANT
TENANT % OF LEASE TENANT % OF LEASE
LEASED TOTAL EXPIRA- SECOND LARGEST LEASED TOTAL EXPIRA-
SEQUENCE LARGEST TENANT SF SF ION TENANT SF S/F ION
- -------- -------------- -- -- --- ------ -- --- ---
A1 Giorgio's of Palm Beach 4,100 11% 9/30/06 Rangoni 2,600 7% 6/30/09
A2 Gucci 9,200 32% 10/31/11 Halpern 5,200 18% 11/14/07
A3 Belks-Simpson Group 203,459 38% 1/31/08 Burlington Coat Factory 84,434 16% 8/31/07
A4 Edwards Cinemas 124,614 100% 7/31/19
A5 Wal-Mart 201,074 68% 3/26/19 Tractor Supply 24,271 8% 4/30/08
A6.1 Wal-Mart 111,000 100% 1/31/12
A6.2 Wal-Mart 228,000 100% 1/31/12
A6.3 Wal-Mart 104,365 100% 1/31/12
A6.4 Wal-Mart 115,000 100% 1/31/12
A6.5 Wal-Mart 81,922 100% 1/31/12
A6.6 Wal-Mart 81,922 100% 1/31/12
A6 Wal-Mart 228,000 32% 1/31/12 Wal-Mart 115,000 16% 1/31/12
A7.1 Wal-Mart 120,000 100% 1/31/12
A7.2 Wal-Mart 81,922 100% 1/31/12
A7 Wal-Mart 120,000 59% 1/31/12 Wal-Mart 81,922 41% 1/31/12
A8 Ross Dress For Less 26,506 10% 8/31/09 Old Navy 23,000 9% 1/31/04
A9 Shoprite 69,132 45% 10/11/12 Clearview Cinema 35,653 23% 4/30/18
A10 Foodtown 40,139 32% 4/30/11 CVS 9,800 8% 7/15/09
A11 First Union 10,540 53% 9/30/11 US Post Office 6,700 34% 2/22/18
A12 Cinemark 60,560 100% 10/31/18
A13 Lucky Stores, Inc. 34,693 51% 2/28/06 American Drug Stores, Inc. 11,060 16% 6/30/05
B14 The Bay Company 10,042 41% NAV Tokyo Sukiyaki Restaurant 7,168 29% 9/30/00
A15 Food Lion 44,000 52% 8/15/24 Hancock Fabrics 8,000 10% 6/30/01
A16 Food Lion 43,070 43% 2/28/17 Specialty Retailers Inc. 14,093 14% 1/31/09
A17 Barnes & Noble 40,000 85% 4/30/14 Chili's Restaurant 7,000 15% 5/15/08
A18 Food Lion 33,000 72% 12/31/19 Blackstone's 1,913 4% 6/12/02
B19 Beverly Fabrics 14,230 17% 10/31/02 Merryhill School 8,310 10% 10/31/00
A20 Food Lion 33,000 59% 3/9/19 Happy Harrys Drug 10,200 18% 3/31/19
B21 Fuddruckers 6,600 16% 10/31/01 The Sleep Train 6,270 15% 3/31/03
A22 Western Dental Services 4,900 16% 9/30/07 The Cat Doctor 3,250 10% NAV
A23 Marty's Shoe 8,813 32% 5/31/03 United Retail 4,517 16% 1/31/03
B24 United Artists Theatre 29,951 79% 1/28/14 Goldstein's Bagels 2,815 7% 8/31/15
A25 Food Lion 37,944 82% 2/23/19 Dollar Tree Stores 4,200 9% 2/28/09
A26 Applied Career Training 10,171 22% 2/28/05 Fairfax County 7,043 15% 12/31/00
B27 Wherehouse 6,300 12% 1/31/03 Dollar Tree 5,600 11% NAV
B28 Copy Central 6,194 27% 8/31/08 Limited 3,358 15% 1/1/05
A29 Dollar Tree 4,500 12% 3/31/04 JD's Fashion 4,500 12% 3/31/02
B30 Wild Oats Market 29,760 45% 8/31/00 Ace Hardware 8,210 12% 3/31/01
B31 Anixter Bros. Inc. 14,292 18% 5/31/01 Comark Instruments 7,276 9% 7/31/02
A32 Jenny Pruitt Realty 11,975 36% 12/31/09 Imperatori Karate 7,780 23% 3/30/04
A33 Catos 4,720 14% 1/31/04 Dollar Tree 4,500 13% 3/31/04
B34 CompUSA, Inc. 30,000 100% 9/19/07
B35 Shoe City 12,613 38% 1/17/05 Pet City 5,000 15% NAV
A36 Golf Warehouse 8,287 34% 5/30/04 Dinette Showroom 4,543 19% 4/30/03
A37 Rae's Restaurant 5,640 16% 10/31/03 Henderson Public Library 3,960 11% NAV
A38 Food Lion 29,000 63% 1/12/19 Dollar General 7,500 16% 5/31/08
B39 Jo-Ann Fabrics 24,650 47% 6/30/01 New Cambodian Supermarket 5,913 11% NAV
A40 The Cottage Schools 5,170 26% 7/31/03 Keller Williams 3,640 18% 6/30/03
B41 Orchard Hardware Supply Corp. 42,024 100% 4/20/03
A42 Dollar General 8,000 31% 11/1/08 Blockbuster Video 5,525 22% 8/14/08
B43 Sante Fe Bistro 2,000 10% NAV Cafe Rio 1,200 6% NAV
A44 Thrift Store 10,236 18% 4/30/05 Dollar General 8,430 15% 6/30/02
A45 Wal-Mart 73,493 48% 5/16/09 Minden Market 34,107 22% 11/30/10
B46 Sheplers Western 18,615 38% 12/31/13 Blockbuster Video 3,390 7% 12/31/03
A47 Action Video 3,300 13% 3/31/01 Bernardin's 3,300 13% 6/30/02
B48 Movie Town 6,050 19% 6/1/03 Super Duper 99 Cent Store 6,050 19% NAV
A49 Kinkos 7,200 23% 9/30/00 LensCrafters 5,400 17% 4/30/01
A50 Bruce Clark 4,860 17% NAV Bridal Collections 4,800 17% NAV
A51 Eunice Fashions 2,400 14% 7/31/01 Dollar Store 1,360 8% NAV
A52
A53
A54
A55
122
ORIGI-
SE- NATION LOAN
QUENCE GROUP NUMBER PROPERTY NAME PROPERTY ADDRESS
- ------ ----- ------ ------------- ----------------
A56 C 50156 Mariner Shores Apartments 2201 N. Buffalo Drive
A57 C 51520 The Mark at Salem Station 11132-A Sunburst Lane
A58 C 51816 Oasis Vista Apartments 3300 Needles Highway
A59 C 51519 Hickory Hills Townhouses 22501 Iverson Dr.
A60 C 50787 1121 Morrison Ave 1121-1175 Morrison Ave.
A61 C 51669 North Decatur Manor Apartments 3799-F North Decatur Road
A62 P 3102092 Alder Creek Apartments 11716 NE 49th
A63 C 50130 Grassy Creek Apartments 1331 Panama Ave.
A64 C 50295 Oakridge Apartments 633 Rushcreek Drive
A65 P 3018413 Apple Apartments 764 East Twain Avenue
A66 P 2006617 Kingswood Gardens Apartments 540 South Winery Avenue
A67 P 3012945 Golf Course Square Apartments 1082 Golf Course Drive
A68 P 3012952 Woodgate Oaks Apartments 290 Harvest Lane
A69 C 51663 Seasons Apartments 819 Robin Hood Trail
A70 C 51460 Bath Street Apartments 215 Bath Street
A71 P 3016946 Park Brighton Apartments 1229 Brighton Avenue
A72 P 4542254 Sunrise Village Apartments 15615 East 4th Avenue
A73 P 3009552 Ashton Park Apartments 4441 South Escondido Road
A74 C 51533 Clearbrook Apartments 4000 West 34th Street
A75 P 3032679 First Place Apartments 13008 NE 199th Street
A76 C 51568 Sunchase Square Apartments 7317 Holly Hill Drive
A77 C 51511 Casa Verde Apartments 700-810 San Pedro & 701-811 Navarro
A78 C 51078 Venbury Trail Apartments 900 8th Street Southwest
A79 P 3103140 Gallery Park Apartment 1436 SW Park Avenue
A80 C 51630 Summit Crossing Apartments 3440 Boulder Park Drive
A81 C 51614 Timber Ridge Apartments 1342 North Garden Drive
A82 C 51526 Shadowbrook Apartments 145 Navajo Drive
A83 P 4541876 Glennbrook Apartments 3717 148th Street SW
A84 C 50550 Embassy Square Apartments 11230 Otsego Street
A85 C 51525 Seashore Apartments 19822 Brookhurst Street
A86 C 50395 2304 Sedgwick Ave 2304 Sedgwick Ave.
A87 C 51624 Imperial Courtyard Apartments 430 West 6th St.
A88.1 C 51164 Power Properties 3-5908 Gaston 5908 Gaston Ave
A88.2 C 51164 Power Properties 3-5808 Gaston 5808 Gaston Ave
A88.3 C 51164 Power Properties 3-4935 Junius 4935 Junius St
A88 C 51164 POWER PROPERTIES 3 (ROLL-UP)
A89 C 51532 West Oaks Club Apartments 43120 30th Street West
A90 C 51515 5400 Live Oak Apartments 5400 Live Oak St.
A91 C 51550 Buffalo Avenue Apartments 5914 Buffalo Avenue and 13545 Califa Street
A92 C 51465 Ladera Apartments 203 Ladera Street
A93 C 51629 Anderson Park Apartments 251 Anderson Ave.
A94 P 3020062 Villeurbanne Apartments 2821 Lou Ann Drive
A95 C 51195 Pelican Cove Apartments 707-709 Eaton St.
A96 C 51512 Oakley Lofts 1855 North Oakley
A97 C 51234 Del Nido Apartments 2100 South Avenue A
A98 C 51513 Balcones Apartments 1000 Balcones Drive
A99 C 51595 Bonnie Brae 236 South Bonnie Brae Street
A100 C 51535 Westwood Apts. 519 West 940 North
A101 C 50374 1065 Jerome Ave 1065 Jerome Avenue
A102 C 51379 Bethany Biltmore Apartments 1350 E. Bethany Home Road
A103 C 51596 Casa Manana Apartments 227-235 Cypress Drive
A104 C 51473 Bayshore Apartments 3224-3254 Burke Road
A105 C 50599 610 West 143rd St. 610 West 143rd St
A106 C 51539 Central Manor Apartments 2611 Central Avenue NE
A107 C 50600 213-217 West 238th St 213-217 West 238th St.
A108 C 50789 511 West 147th St. 511- 519 West 147th St.
A109 C 51667 SCI Portfolio-411 N. Akard St 411 N. Akard St
A110 C 51626 Lahser Medical Complex Buildings II, III & IV 27207-27211 Lahser Road
B111 P 3024965 75 Willow Road 75 Willow Road
A112 C 51088 Kaiser Foundation Health Plan Building 1033 Third Street
A113 C 51114 Corporate Pointe II 26901 Agoura Rd.
A114 C 50943 Brand Village 1111 N. Brand Blvd.
A115 C 51549 Harold Poll Building 110 S. Union Street
A116 C 51594 Dorsey Hall Medical Center 9501 Old Annapolis Road
A117.1 C 51627 Plantation Business Park-12 Plantation Park Dr 12 Plantation Park Dr
A117.2 C 51627 Plantation Business Park-10 Plantation Park Dr 10 Plantation Park Dr
A117.3 C 51627 Plantation Business Park-12 Sheridan Park Cir 12 Sheridan Park Cir
A117 C 51627 PLANTATION BUSINESS PARK & SHERIDAN PARK (ROLL-UP)
ORIGI-
SE- NATION LOAN ZIP PROPERTY
QUENCE GROUP NUMBER COUNTY CITY STATE CODE TYPE
- ------ ------ ------ ------ ---- ----- ---- --------
A56 C 50156 Clark Las Vegas NV 89128 Multifamily
A57 C 51520 Spotsylvania Fredericksburg VA 22407 Multifamily
A58 C 51816 Clark Laughlin NV 89029 Multifamily
A59 C 51519 St. Mary's Great Mills MD 20634 Multifamily
A60 C 50787 Bronx Bronx NY 10472 Multifamily
A61 C 51669 Dekalb Decatur GA 30032 Multifamily
A62 P 3102092 Clark Vancouver WA 98682 Multifamily
A63 C 50130 Marion Indianapolis IN 46241 Multifamily
A64 C 50295 Harris Houston TX 77067 Multifamily
A65 P 3018413 Clark Las Vegas NV 89109 Multifamily
A66 P 2006617 Fresno Fresno CA 93727 Multifamily
A67 P 3012945 Sonoma Rohnert Park CA 94928 Multifamily
A68 P 3012952 Sonoma Santa Rosa CA 95403 Multifamily
A69 C 51663 Bulloch Statesboro GA 30458 Multifamily
A70 C 51460 Santa Barbara Santa Barbara CA 93101 Multifamily
A71 P 3016946 Stanislaus Modesto CA 95355 Multifamily
A72 P 4542254 Spokane Spokane WA 99216 Multifamily
A73 P 3009552 Clark Las Vegas NV 89119 Multifamily
A74 C 51533 Harris Houston TX 77092 Multifamily
A75 P 3032679 Clark Battle Ground WA 98604 Multifamily
A76 C 51568 Dallas Dallas TX 75231 Multifamily
A77 C 51511 Brazos College Station TX 77845 Multifamily
A78 C 51078 Polk Altoona IA 50009 Multifamily
A79 P 3103140 Multnomah Portland OR 97201 Multifamily
A80 C 51630 Fulton Atlanta GA 30331 Multifamily
A81 C 51614 St. Louis St. Louis MO 63138 Multifamily
A82 C 51526 Yavapai Sedona AZ 86336 Multifamily
A83 P 4541876 Snohomish Lynnwood WA 98037 Multifamily
A84 C 50550 Los Angeles North Hollywood CA 91601 Multifamily
A85 C 51525 Orange Huntington Beach CA 92646 Multifamily
A86 C 50395 Bronx Bronx NY 10468 Multifamily
A87 C 51624 Dallas Irving TX 75060 Multifamily
A88.1 C 51164 Dallas Dallas TX 75214 Multifamily
A88.2 C 51164 Dallas Dallas TX 75214 Multifamily
A88.3 C 51164 Dallas Dallas TX 75214 Multifamily
A88 C 51164 Multifamily
A89 C 51532 Los Angeles Lancaster CA 93536 Multifamily
A90 C 51515 Dallas Dallas TX 75214 Multifamily
A91 C 51550 Los Angeles Van Nuys CA 91401 Multifamily
A92 C 51465 Santa Barbara Santa Barbara CA 93101 Multifamily
A93 C 51629 Fulton Atlanta GA 30314 Multifamily
A94 P 3020062 Stanislaus Modesto CA 95350 Multifamily
A95 C 51195 San Diego Oceanside CA 92054 Multifamily
A96 C 51512 Cook Chicago IL 60647 Multifamily
A97 C 51234 Yuma Yuma AZ 85364 Multifamily
A98 C 51513 Brazos College Station TX 77845 Multifamily
A99 C 51595 Los Angeles Los Angeles CA 90057 Multifamily
A100 C 51535 Utah Provo UT 84604 Multifamily
A101 C 50374 Bronx Bronx NY 10452 Multifamily
A102 C 51379 Maricopa Phoenix AZ 85014 Multifamily
A103 C 51596 San Diego San Ysidro CA 92173 Multifamily
A104 C 51473 Harris Pasedena TX 77504 Multifamily
A105 C 50599 New York New York NY 10031 Multifamily
A106 C 51539 Hennepin Minneapolis MN 55418 Multifamily
A107 C 50600 Bronx Bronx NY 10463 Multifamily
A108 C 50789 Bronx Bronx NY 10031 Multifamily
A109 C 51667 Dallas Dallas TX 75201 Office
A110 C 51626 Oakland Southfield MI 48034 Office
B111 P 3024965 San Mateo Menlo Park CA 94025 Office
A112 C 51088 Marin San Rafael CA 94901 Office
A113 C 51114 Los Angeles Calabasas CA 91301 Office
A114 C 50943 Los Angeles Glendale CA 91202 Office
A115 C 51549 King Seattle WA 98101 Office
A116 C 51594 Howard Ellicott City MD 21043 Office
A117.1 C 51627 Beaufort Bluffton SC 29910 Office
A117.2 C 51627 Beaufort Bluffton SC 29910 Office
A117.3 C 51627 Beaufort Bluffton SC 29910 Office
A117 C 51627 Office
ORIGI- CUT-OFF MATURITY
SE- NATION LOAN ORIGINAL DATE DATE LOAN MORTGAGE
QUENCE GROUP NUMBER BALANCE BALANCE BALANCE TYPE RATE
- ------ ----- ------ -------- ------- -------- ---- ---------
A56 C 50156 10,900,000 10,669,448 9,505,548 Balloon 8.380%
A57 C 51520 10,200,000 10,111,037 9,007,313 Balloon 7.400%
A58 C 51816 8,940,000 8,884,640 7,957,896 Balloon 7.730%
A59 C 51519 7,300,000 7,221,407 6,407,164 Balloon 7.160%
A60 C 50787 5,985,900 5,871,356 5,271,171 Balloon 7.310%
A61 C 51669 5,225,000 5,195,184 4,685,981 Balloon 8.043%
A62 P 3102092 5,300,000 5,043,966 4,081,106 Balloon 8.000%
A63 C 50130 5,075,000 4,955,950 4,528,293 Balloon 7.860%
A64 C 50295 4,900,000 4,869,188 4,355,328 Balloon 7.670%
A65 P 3018413 4,000,000 3,780,675 3,269,549 Balloon 8.370%
A66 P 2006617 4,500,000 3,706,640 3,133,424 Balloon 8.150%
A67 P 3012945 3,700,000 3,428,683 3,405,019 Balloon 7.620%
A68 P 3012952 3,450,000 3,197,016 3,174,951 Balloon 7.620%
A69 C 51663 3,212,795 3,193,104 2,862,631 Balloon 7.770%
A70 C 51460 3,000,000 2,955,729 2,621,438 Balloon 7.015%
A71 P 3016946 3,000,000 2,878,769 2,634,124 Balloon 8.000%
A72 P 4542254 3,000,000 2,812,908 2,377,485 Balloon 7.110%
A73 P 3009552 3,000,000 2,769,936 2,765,167 Balloon 7.755%
A74 C 51533 2,735,271 2,713,273 2,454,293 Balloon 8.070%
A75 P 3032679 2,700,000 2,631,720 2,337,840 Balloon 7.310%
A76 C 51568 2,600,000 2,571,815 2,147,977 Balloon 7.990%
A77 C 51511 2,600,000 2,575,249 2,295,801 Balloon 7.410%
A78 C 51078 2,600,000 2,556,896 1,990,474 Balloon 6.960%
A79 P 3103140 2,587,500 2,499,366 2,267,868 Balloon 7.875%
A80 C 51630 2,472,000 2,461,101 2,248,843 Balloon 8.690%
A81 C 51614 2,386,000 2,369,494 2,138,811 Balloon 8.030%
A82 C 51526 2,356,000 2,338,378 2,110,779 Balloon 7.990%
A83 P 4541876 2,455,000 2,298,335 1,998,667 Balloon 8.250%
A84 C 50550 2,300,000 2,249,339 1,999,398 Balloon 7.040%
A85 C 51525 2,180,000 2,162,186 1,937,359 Balloon 7.655%
A86 C 50395 2,131,800 2,085,721 1,898,633 Balloon 7.770%
A87 C 51624 2,100,000 2,085,357 1,881,108 Balloon 8.000%
A88.1 C 51164
A88.2 C 51164
A88.3 C 51164
A88 C 51164 2,050,000 2,020,003 1,802,857 Balloon 7.250%
A89 C 51532 1,950,000 1,930,506 1,713,117 Balloon 7.210%
A90 C 51515 1,800,000 1,782,818 1,599,116 Balloon 7.640%
A91 C 51550 1,746,000 1,732,371 1,558,292 Balloon 7.830%
A92 C 51465 1,600,000 1,576,974 1,402,103 Balloon 7.125%
A93 C 51629 1,542,554 1,530,537 1,297,532 Balloon 8.640%
A94 P 3020062 1,575,000 1,524,085 1,400,448 Balloon 8.625%
A95 C 51195 1,500,000 1,472,954 1,316,553 Balloon 7.178%
A96 C 51512 1,450,000 1,436,934 1,287,373 Balloon 7.630%
A97 C 51234 1,440,000 1,414,721 1,262,040 Balloon 7.127%
A98 C 51513 1,400,000 1,387,161 1,240,836 Balloon 7.560%
A99 C 51595 1,300,000 1,291,778 1,167,015 Balloon 8.100%
A100 C 51535 1,119,000 1,109,663 1,000,734 Balloon 7.930%
A101 C 50374 1,071,000 1,048,400 956,152 Balloon 7.870%
A102 C 51379 1,025,000 1,012,382 917,393 Balloon 7.963%
A103 C 51596 1,000,000 993,967 901,446 Balloon 8.280%
A104 C 51473 1,000,000 981,974 828,953 Balloon 8.125%
A105 C 50599 868,000 852,162 752,972 Balloon 7.490%
A106 C 51539 805,000 795,656 673,579 Balloon 8.420%
A107 C 50600 813,000 796,120 715,482 Balloon 7.280%
A108 C 50789 771,000 759,940 673,775 Balloon 7.750%
A109 C 51667 26,518,000 26,313,039 22,329,960 Balloon 8.680%
A110 C 51626 10,649,600 10,594,358 9,710,438 Balloon 8.080%
B111 P 3024965 8,000,000 7,583,134 6,450,062 Balloon 7.820%
A112 C 51088 7,520,000 7,399,942 6,071,108 Balloon 7.200%
A113 C 51114 $ 6,400,000 $ 6,292,452 $ 5,575,680 Balloon 6.900%
A114 C 50943 5,313,000 5,212,960 4,640,480 Balloon 6.990%
A115 C 51549 4,919,000 4,859,032 4,041,328 Balloon 7.790%
A116 C 51594 4,247,290 4,196,290 3,497,550 Balloon 7.870%
A117.1 C 51627
A117.2 C 51627
A117.3 C 51627
A117 C 51627 3,800,000 3,765,795 3,175,223 Balloon 8.380%
ORIGI- ADMINI- SUB- NET
SE- NATION LOAN STRATIVE SERVICING MORTGAGE NOTE
QUENCE GROUP NUMBER FEE RATE(i) FEE RATE RATE DATE
- ------ ----- ------ ----------- --------- -------- ----
A56 C 50156 0.269% 0.225% 8.111% 7/25/97
A57 C 51520 0.144% 0.100% 7.256% 6/21/99
A58 C 51816 0.144% 0.100% 7.586% 9/30/99
A59 C 51519 0.144% 0.100% 7.016% 4/27/99
A60 C 50787 0.144% 0.100% 7.166% 10/29/99
A61 C 51669 0.144% 0.100% 7.899% 9/30/99
A62 P 3102092 0.144% 0.100% 7.856% 8/11/95
A63 C 50130 0.194% 0.150% 7.666% 8/28/97
A64 C 50295 0.144% 0.100% 7.526% 10/7/99
A65 P 3018413 0.144% 0.100% 8.226% 7/12/96
A66 P 2006617 0.144% 0.100% 8.006% 11/1/93
A67 P 3012945 0.144% 0.100% 7.47625% 12/8/95
A68 P 3012952 0.144% 0.100% 7.476% 12/8/95
A69 C 51663 0.144% 0.100% 7.626% 9/24/99
A70 C 51460 0.144% 0.100% 6.871% 12/21/98
A71 P 3016946 0.144% 0.100% 7.856% 5/21/96
A72 P 4542254 0.144% 0.100% 6.966% 8/12/96
A73 P 3009552 0.144% 0.100% 7.611% 9/1/95
A74 C 51533 0.144% 0.100% 7.926% 5/27/99
A75 P 3032679 0.144% 0.100% 7.166% 1/26/98
A76 C 51568 0.144% 0.100% 7.846% 8/30/99
A77 C 51511 0.144% 0.100% 7.266% 5/17/99
A78 C 51078 0.144% 0.100% 6.816% 10/16/98
A79 P 3103140 0.144% 0.100% 7.731% 12/12/96
A80 C 51630 0.144% 0.100% 8.546% 10/15/99
A81 C 51614 0.144% 0.100% 7.886% 7/26/99
A82 C 51526 0.144% 0.100% 7.846% 6/28/99
A83 P 4541876 0.144% 0.100% 8.106% 3/20/96
A84 C 50550 0.144% 0.100% 6.896% 10/22/98
A85 C 51525 0.144% 0.100% 7.511% 6/1/99
A86 C 50395 0.244% 0.200% 7.526% 11/21/97
A87 C 51624 0.144% 0.100% 7.856% 7/19/99
A88.1 C 51164
A88.2 C 51164
A88.3 C 51164
A88 C 51164 0.144% 0.100% 7.106% 11/18/98
A89 C 51532 0.144% 0.100% 7.066% 5/3/99
A90 C 51515 0.144% 0.100% 7.496% 4/26/99
A91 C 51550 0.144% 0.100% 7.686% 6/7/99
A92 C 51465 0.144% 0.100% 6.981% 12/21/98
A93 C 51629 0.144% 0.100% 8.496% 10/15/99
A94 P 3020062 0.144% 0.100% 8.481% 9/17/96
A95 C 51195 0.144% 0.100% 7.034% 7/14/98
A96 C 51512 0.144% 0.100% 7.486% 5/19/99
A97 C 51234 0.144% 0.100% 6.983% 8/12/98
A98 C 51513 0.144% 0.100% 7.416% 5/17/99
A99 C 51595 0.144% 0.100% 7.956% 8/2/99
A100 C 51535 0.144% 0.100% 7.786% 5/17/99
A101 C 50374 0.294% 0.250% 7.576% 11/21/97
A102 C 51379 0.144% 0.100% 7.819% 11/4/98
A103 C 51596 0.144% 0.100% 8.136% 8/2/99
A104 C 51473 0.144% 0.100% 7.981% 1/12/99
A105 C 50599 0.294% 0.250% 7.196% 5/18/98
A106 C 51539 0.144% 0.100% 8.276% 6/23/99
A107 C 50600 0.294% 0.250% 6.986% 3/26/98
A108 C 50789 0.294% 0.250% 7.456% 9/16/98
A109 C 51667 0.144% 0.100% 8.536% 11/1/99
A110 C 51626 0.144% 0.100% 7.936% 10/13/99
B111 P 3024965 0.144% 0.100% 7.676% 12/30/96
A112 C 51088 0.144% 0.100% 7.056% 5/12/99
A113 C 51114 0.144% 0.100% 6.756% 10/29/98
A114 C 50943 0.144% 0.100% 6.846% 7/24/98
A115 C 51549 0.144% 0.100% 7.646% 7/14/99
A116 C 51594 0.144% 0.100% 7.726% 7/30/99
A117.1 C 51627
A117.2 C 51627
A117.3 C 51627
A117 C 51627 0.144% 0.100% 8.236% 9/23/99
ORIGINAL ORIGINAL
ORIGI- FIRST INTEREST TERM TO AMORTIZATION
SE- NATION LOAN PAYMENT ACCRUAL MONTHLY MATURITY TERM
QUENCE GROUP NUMBER DATE METHOD PAYMENT (MONTHS) (MONTHS) (ii)
- ------ ------ ------ ------- -------- ------- -------- -------------
A56 C 50156 9/1/97 ACT/360 82,886 144 360
A57 C 51520 8/1/99 ACT/360 70,623 120 360
A58 C 51816 11/1/99 ACT/360 63,924 120 360
A59 C 51519 6/1/99 ACT/360 49,354 120 360
A60 C 50787 11/1/99 ACT/360 41,212 102 342
A61 C 51669 11/1/99 ACT/360 38,496 120 360
A62 P 3102092 10/1/95 30/360 38,890 180 360
A63 C 50130 10/1/97 ACT/360 36,744 120 360
A64 C 50295 11/1/99 ACT/360 34,834 120 360
A65 P 3018413 9/10/96 30/360 31,859 120 300
A66 P 2006617 1/1/94 30/360 38,061 120 240
A67 P 3012945 2/1/96 30/360 27,632 60 300
A68 P 3012952 2/1/96 30/360 25,765 60 300
A69 C 51663 11/1/99 ACT/360 23,061 120 360
A70 C 51460 2/1/99 ACT/360 19,989 120 360
A71 P 3016946 7/1/96 30/360 21,996 120 360
A72 P 4542254 11/1/96 30/360 21,451 120 300
A73 P 3009552 11/1/95 30/360 22,670 60 300
A74 C 51533 7/1/99 ACT/360 20,204 120 360
A75 P 3032679 3/1/98 30/360 18,529 120 360
A76 C 51568 10/1/99 ACT/360 20,050 120 300
A77 C 51511 7/1/99 ACT/360 18,020 120 360
A78 C 51078 12/1/98 ACT/360 17,228 180 360
A79 P 3103140 2/1/97 30/360 18,761 120 360
A80 C 51630 12/1/99 ACT/360 19,341 120 360
A81 C 51614 9/1/99 ACT/360 17,558 120 360
A82 C 51526 8/1/99 ACT/360 17,271 120 360
A83 P 4541876 5/1/96 30/360 19,337 120 300
A84 C 50550 12/1/98 ACT/360 15,274 120 360
A85 C 51525 8/1/99 ACT/360 15,475 120 360
A86 C 50395 1/1/98 ACT/360 15,302 120 360
A87 C 51624 9/1/99 ACT/360 15,409 120 360
A88.1 C 51164
A88.2 C 51164
A88.3 C 51164
A88 C 51164 1/1/99 ACT/360 13,985 120 360
A89 C 51532 7/1/99 ACT/360 13,250 120 360
A90 C 51515 6/1/99 ACT/360 12,759 120 360
A91 C 51550 8/1/99 ACT/360 12,605 120 360
A92 C 51465 2/1/99 ACT/360 10,780 120 360
A93 C 51629 12/1/99 ACT/360 12,567 120 300
A94 P 3020062 11/1/96 30/360 12,248 120 360
A95 C 51195 9/1/98 ACT/360 10,159 120 360
A96 C 51512 7/1/99 ACT/360 10,268 120 360
A97 C 51234 10/1/98 ACT/360 9,703 120 360
A98 C 51513 7/1/99 ACT/360 9,847 120 360
A99 C 51595 10/1/99 ACT/360 9,630 120 360
A100 C 51535 7/1/99 ACT/360 8,156 120 360
A101 C 50374 1/1/98 ACT/360 7,762 120 360
A102 C 51379 1/1/99 ACT/360 7,495 120 360
A103 C 51596 10/1/99 ACT/360 7,534 120 360
A104 C 51473 3/1/99 ACT/360 7,801 120 300
A105 C 50599 7/1/98 ACT/360 6,063 132 360
A106 C 51539 8/1/99 ACT/360 6,439 120 300
A107 C 50600 5/1/98 ACT/360 5,563 120 360
A108 C 50789 11/1/98 ACT/360 5,524 132 360
A109 C 51667 12/1/99 ACT/360 216,756 120 300
A110 C 51626 12/1/99 ACT/360 78,738 108 360
B111 P 3024965 3/1/97 30/360 60,794 120 300
A112 C 51088 7/1/99 ACT/360 54,113 120 300
A113 C 51114 12/1/98 ACT/360 $ 42,150 120 360
A114 C 50943 9/1/98 ACT/360 35,312 120 360
A115 C 51549 9/1/99 ACT/360 37,284 120 300
A116 C 51594 9/1/99 ACT/360 32,416 120 300
A117.1 C 51627
A117.2 C 51627
A117.3 C 51627
A117 C 51627 11/1/99 ACT/360 30,292 120 300
REMAINING
ORIGI- TERM TO CROSS-
SE- NATION LOAN SEASONING MATURITY MATURITY COLLATERALIZED RELATED
QUENCE GROUP NUMBER (MONTHS) (MONTHS) DATE LOANS LOANS
- ------ ------ ------ --------- --------- -------- -------------- -------
A56 C 50156 36 108 8/1/09 No No
A57 C 51520 13 107 7/1/09 No No
A58 C 51816 10 110 10/1/09 No No
A59 C 51519 15 105 5/1/09 No No
A60 C 50787 10 92 4/1/08 No Yes(G)
A61 C 51669 10 110 10/1/09 No No
A62 P 3102092 59 121 9/1/10 No No
A63 C 50130 35 85 9/1/07 No No
A64 C 50295 10 110 10/1/09 No No
A65 P 3018413 47 73 8/10/06 No No
A66 P 2006617 80 40 12/1/03 No No
A67 P 3012945 55 5 1/1/01 No Yes(H)
A68 P 3012952 55 5 1/1/01 No Yes(H)
A69 C 51663 10 110 10/1/09 No No
A70 C 51460 19 101 1/1/09 No Yes(I)
A71 P 3016946 50 70 6/1/06 No No
A72 P 4542254 46 74 10/1/06 No No
A73 P 3009552 58 2 10/1/00 No No
A74 C 51533 14 106 6/1/09 No Yes(J)
A75 P 3032679 30 90 2/1/08 No No
A76 C 51568 11 109 9/1/09 No No
A77 C 51511 14 106 6/1/09 No Yes(K)
A78 C 51078 21 159 11/1/13 No No
A79 P 3103140 43 77 1/1/07 No No
A80 C 51630 9 111 11/1/09 No Yes(L)
A81 C 51614 12 108 8/1/09 No Yes(J)
A82 C 51526 13 107 7/1/09 No No
A83 P 4541876 52 68 4/1/06 No No
A84 C 50550 21 99 11/1/08 No No
A85 C 51525 13 107 7/1/09 No No
A86 C 50395 32 88 12/1/07 No Yes(G)
A87 C 51624 12 108 8/1/09 No No
A88.1 C 51164
A88.2 C 51164
A88.3 C 51164
A88 C 51164 20 100 12/1/08 No Yes(M)
A89 C 51532 14 106 6/1/09 No No
A90 C 51515 15 105 5/1/09 No Yes(M)
A91 C 51550 13 107 7/1/09 No No
A92 C 51465 19 101 1/1/09 No Yes(I)
A93 C 51629 9 111 11/1/09 No Yes(L)
A94 P 3020062 46 74 10/1/06 No No
A95 C 51195 24 96 8/1/08 No No
A96 C 51512 14 106 6/1/09 No No
A97 C 51234 23 97 9/1/08 No No
A98 C 51513 14 106 6/1/09 No Yes(K)
A99 C 51595 11 109 9/1/09 No No
A100 C 51535 14 106 6/1/09 No No
A101 C 50374 32 88 12/1/07 No Yes(G)
A102 C 51379 20 100 12/1/08 No No
A103 C 51596 11 109 9/1/09 No No
A104 C 51473 18 102 2/1/09 No No
A105 C 50599 26 106 6/1/09 No Yes(G)
A106 C 51539 13 107 7/1/09 No No
A107 C 50600 28 92 4/1/08 No Yes(G)
A108 C 50789 22 110 10/1/09 No Yes(G)
A109 C 51667 9 111 11/1/09 No No
A110 C 51626 9 99 11/1/08 No No
B111 P 3024965 42 78 2/1/07 No No
A112 C 51088 14 106 6/1/09 No No
A113 C 51114 21 99 11/1/08 No No
A114 C 50943 24 96 8/1/08 No No
A115 C 51549 12 108 8/1/09 No No
A116 C 51594 12 108 8/1/09 No No
A117.1 C 51627
A117.2 C 51627
A117.3 C 51627
A117 C 51627 10 110 10/1/09 No No
ORIGI- LOCKOUT
SE- NATION LOAN EXPIRATION
QUENCE GROUP NUMBER DATE PREPAYMENT PENALTY DESCRIPTION (MONTHS) YIELD MAINTENANCE TYPE
- ------ ------ ------ ---------- --------------------------------------- ----------------------
A56 C 50156 7/31/03 LO(72)/GRTR1%PPMTorYM(66)/OPEN(6) Int. Rate Diff. (Type 1A)
A57 C 51520 3/31/09 LO(116)/OPEN(4)/DEF NAP
A58 C 51816 8/1/09 LO(118)/OPEN(2)/DEF NAP
A59 C 51519 2/1/09 LO(117)/OPEN(3)/DEF NAP
A60 C 50787 1/1/08 LO(99)/OPEN(3)/DEF NAP
A61 C 51669 8/1/09 LO(118)/OPEN(2)/DEF NAP
A62 P 3102092 $250+YM(180) Int. Rate Diff. (Type 1A)
A63 C 50130 8/31/01 LO(48)/GRTR1%PPMTorYM(66)/OPEN(6) Int. Rate Diff. (Type 1A)
A64 C 50295 8/1/09 LO(118)/OPEN(2)/DEF NAP
A65 P 3018413 YM(120) Int. Rate Diff. (Type 3)
A66 P 2006617 YM(120) Int. Rate Diff. (Type 3)
A67 P 3012945 $250+YM(58)/OPEN(2) Int. Rate Diff. (Type 1A)
A68 P 3012952 $250+YM(58)/OPEN(2) Int. Rate Diff. (Type 1A)
A69 C 51663 8/1/09 LO(118)/OPEN(2)/DEF NAP
A70 C 51460 11/1/08 LO(118)/OPEN(2)/DEF NAP
A71 P 3016946 $250+YM(120) Int. Rate Diff. (Type 1A)
A72 P 4542254 YM(120) Int. Rate Diff. (Type 2A)
A73 P 3009552 YM(60) Int. Rate Diff. (Type 3)
A74 C 51533 3/1/09 LO(117)/OPEN(3)/DEF NAP
A75 P 3032679 YM(120) Int. Rate Diff. (Type 2A)
A76 C 51568 7/1/09 LO(118)/OPEN(2)/DEF NAP
A77 C 51511 3/1/09 LO(117)/OPEN(3)/DEF NAP
A78 C 51078 7/1/13 LO(176)/OPEN(4)/DEF NAP
A79 P 3103140 $250+YM(120) Int. Rate Diff. (Type 1A)
A80 C 51630 9/1/09 LO(118)/OPEN(2)/DEF NAP
A81 C 51614 6/1/09 LO(118)/OPEN(2)/DEF NAP
A82 C 51526 5/1/09 LO(118)/OPEN(2)/DEF NAP
A83 P 4541876 YM(120) Int. Rate Diff. (Type 2A)
A84 C 50550 10/31/02 LO(48)/GRTR1%PPMTorYM(66)/OPEN(6) Int. Rate Diff. (Type 1A)
A85 C 51525 4/1/09 LO(117)/OPEN(3)/DEF NAP
A86 C 50395 11/30/01 LO(48)/GRTR1%PPMTorYM(66)/OPEN(6) Int. Rate Diff. (Type 1A)
A87 C 51624 6/1/09 LO(118)/OPEN(2)/DEF NAP
A88.1 C 51164
A88.2 C 51164
A88.3 C 51164
A88 C 51164 9/1/08 LO(117)/OPEN(3)/DEF NAP
A89 C 51532 4/1/09 LO(118)/OPEN(2)/DEF NAP
A90 C 51515 2/1/09 LO(117)/OPEN(3)/DEF NAP
A91 C 51550 5/1/09 LO(118)/OPEN(2)/DEF NAP
A92 C 51465 11/1/08 LO(118)/OPEN(2)/DEF NAP
A93 C 51629 9/1/09 LO(118)/OPEN(2)/DEF NAP
A94 P 3020062 $250+YM(120) Int. Rate Diff. (Type 1A)
A95 C 51195 6/1/08 LO(118)/OPEN(2)/DEF NAP
A96 C 51512 3/1/09 LO(117)/OPEN(3)/DEF NAP
A97 C 51234 7/2/08 LO(118)/OPEN(2)/DEF NAP
A98 C 51513 3/1/09 LO(117)/OPEN(3)/DEF NAP
A99 C 51595 6/1/09 LO(117)/OPEN(3)/DEF NAP
A100 C 51535 4/1/09 LO(118)/OPEN(2)/DEF NAP
A101 C 50374 11/30/01 LO(48)/GRTR1%PPMTorYM(66)/OPEN(6) Int. Rate Diff. (Type 1A)
A102 C 51379 10/1/08 LO(118)/OPEN(2)/DEF NAP
A103 C 51596 7/1/09 LO(118)/OPEN(2)/DEF NAP
A104 C 51473 12/2/08 LO(118)/OPEN(2)/DEF NAP
A105 C 50599 5/31/03 LO(60)/GRTR1%PPMTorYM(66)/OPEN(6) Int. Rate Diff. (Type 1A)
A106 C 51539 5/1/09 LO(118)/OPEN(2)/DEF NAP
A107 C 50600 3/31/02 LO(47)/GRTR1%PPMTorYM(66)/OPEN(7) Int. Rate Diff. (Type 1A)
A108 C 50789 5/31/09 LO(127)/OPEN(5)/DEF NAP
A109 C 51667 9/1/09 LO(118)/OPEN(2)/DEF NAP
A110 C 51626 9/1/08 LO(106)/OPEN(2)/DEF NAP
B111 P 3024965 YM(120) Int. Rate Diff. (Type 3)
A112 C 51088 4/1/09 LO(118)/OPEN(2)/DEF NAP
A113 C 51114 7/1/08 LO(116)/OPEN(4)/DEF NAP
A114 C 50943 3/31/08 LO(115)/OPEN(5)/DEF NAP
A115 C 51549 6/1/09 LO(118)/OPEN(2)/DEF NAP
A116 C 51594 6/1/09 LO(118)/OPEN(2)/DEF NAP
A117.1 C 51627
A117.2 C 51627
A117.3 C 51627
A117 C 51627 8/1/09 LO(118)/OPEN(2)/DEF NAP
123
ANNEX A
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
CUT-OFF
ORIGI- DATE
NATION LOAN APPRAISAL APPRAISAL LTV YEAR BUILT/
SEQUENCE GROUP NUMBER PROPERTY NAME VALUE DATE RATIO RENOVATED
- -------- ----- -------- --------------- ----------- --------- ------- ----------
A56 C 50156 Mariner Shores Apartments 13,700,000 5/21/97 78% 1996
A57 C 51520 The Mark at Salem Station 13,000,000 3/11/99 78% 1988/1996
A58 C 51816 Oasis Vista Apartments 11,175,000 8/5/99 80% 1985
A59 C 51519 Hickory Hills Townhouses 9,125,000 3/2/99 79% 1994
A60 C 50787 1121 Morrison Ave 9,709,000 8/20/99 60% 1929/1998
A61 C 51669 North Decatur Manor Apartments 6,600,000 5/20/99 79% 1965/1999
A62 P 3102092 Alder Creek Apartments 7,000,000 6/21/95 72% 1987
A63 C 50130 Grassy Creek Apartments 6,900,000 6/24/97 72% 1972/1998
A64 C 50295 Oakridge Apartments 6,350,000 8/31/99 77% 1982/1999
A65 P 3018413 Apple Apartments 6,600,000 4/30/96 57% 1973/1995
A66 P 2006617 Kingswood Gardens Apartments 6,920,000 8/13/93 54% 1985/1996
A67 P 3012945 Golf Course Square Apartments 5,800,000 9/8/95 59% 1985
A68 P 3012952 Woodgate Oaks Apartments 4,700,000 10/2/95 68% 1985
A69 C 51663 Seasons Apartments 4,400,000 8/23/99 73% 1994/1997
A70 C 51460 Bath Street Apartments 4,500,000 10/28/98 66% 1930/1998
A71 P 3016946 Park Brighton Apartments 4,500,000 4/22/96 64% 1973
A72 P 4542254 Sunrise Village Apartments 4,000,000 1/23/96 70% 1992
A73 P 3009552 Ashton Park Apartments 5,250,000 8/11/95 53% 1977/1992
A74 C 51533 Clearbrook Apartments 4,000,000 3/4/99 68% 1971/1998
A75 P 3032679 First Place Apartments 3,050,000 8/1/97 86% 1997
A76 C 51568 Sunchase Square Apartments 4,950,000 5/20/99 52% 1978
A77 C 51511 Casa Verde Apartments 3,500,000 2/23/99 74% 1981/1995
A78 C 51078 Venbury Trail Apartments 4,250,000 7/7/98 60% 1998
A79 P 3103140 Gallery Park Apartment 3,450,000 11/4/96 72% 1989
A80 C 51630 Summit Crossing Apartments 3,400,000 8/10/99 72% 1970/1994
A81 C 51614 Timber Ridge Apartments 3,300,000 5/10/99 72% 1975
A82 C 51526 Shadowbrook Apartments 3,150,000 2/9/99 74% 1988
A83 P 4541876 Glennbrook Apartments 3,575,000 2/5/96 64% 1988
A84 C 50550 Embassy Square Apartments 2,790,000 10/31/97 81% 1987
A85 C 51525 Seashore Apartments 4,350,000 2/2/99 50% 1969
A86 C 50395 2304 Sedgwick Ave 2,742,000 9/5/97 76% 1927
A87 C 51624 Imperial Courtyard Apartments 2,800,000 6/14/99 74% 1964
A88.1 C 51164 Power Properties 3-5908 Gaston 1960/1998
A88.2 C 51164 Power Properties 3-5808 Gaston 1960/1998
A88.3 C 51164 Power Properties 3-4935 Junius 1960/1998
A88 C 51164 Power Properties 3 (Roll-Up) 2,800,000 9/18/98 72%
A89 C 51532 West Oaks Club Apartments 2,580,000 1/26/99 75% 1986
A90 C 51515 5400 Live Oak Apartments 2,600,000 2/12/99 69% 1967/1998
A91 C 51550 Buffalo Avenue Apartments 2,300,000 3/31/99 75% 1963
A92 C 51465 Ladera Apartments 2,160,000 10/28/98 73% 1963/1998
A93 C 51629 Anderson Park Apartments 2,300,000 8/10/99 67% 1974/1997
A94 P 3020062 Villeurbanne Apartments 2,150,000 11/17/95 71% 1985
A95 C 51195 Pelican Cove Apartments 2,075,000 6/12/98 71% 1963/1974
A96 C 51512 Oakley Lofts 2,200,000 2/19/99 65% 1900/1997
A97 C 51234 Del Nido Apartments 1,800,000 7/20/98 79% 1971
A98 C 51513 Balcones Apartments 1,900,000 2/23/99 73% 1981
A99 C 51595 Bonnie Brae 2,400,000 5/26/99 54% 1991
A100 C 51535 Westwood Apts. 1,630,000 10/21/98 68% 1969
A101 C 50374 1065 Jerome Ave 1,398,000 9/5/97 75% 1929
A102 C 51379 Bethany Biltmore Apartments 1,430,000 7/21/98 71% 1964
A103 C 51596 Casa Manana Apartments 1,265,000 7/8/99 79% 1978
A104 C 51473 Bayshore Apartments 1,720,000 10/15/98 57% 1974
A105 C 50599 610 West 143rd St. 1,085,000 10/20/97 79% 1924
A106 C 51539 Central Manor Apartments 1,100,000 3/19/99 72% 1965
A107 C 50600 213-217 West 238th St 1,575,000 7/7/99 51% 1930/1998
A108 C 50789 511 West 147th St. 1,120,000 5/29/98 68% 1900
A109 C 51667 SCI Portfolio-411 N. Akard St 38,300,000 8/18/99 69% 1964
A110 C 51626 Lahser Medical Complex Buildings II, III & IV 14,300,000 7/30/99 74% 1987/1993
B111 P 3024965 75 Willow Road 12,632,000 11/27/96 60% 1985
A112 C 51088 Kaiser Foundation Health Plan Building 9,400,000 4/1/99 79% 1999
A113 C 51114 Corporate Pointe II $ 8,900,000 8/1/98 71% 1998
A114 C 50943 Brand Village 7,600,000 4/16/98 69% 1989
A115 C 51549 Harold Poll Building 9,900,000 2/24/99 49% 1907/1991
A116 C 51594 Dorsey Hall Medical Center 5,900,000 6/21/99 71% 1987
A117.1 C 51627 Plantation Business Park-12 Plantation Park Dr 1998
A117.2 C 51627 Plantation Business Park-10 Plantation Park Dr 1998
A117.3 C 51627 Plantation Business Park-12 Sheridan Park Cir 1996
A117 C 51627 Plantation Business Park & Sheridan Park (Roll-Up) 5,340,000 4/20/99 71%
TOTAL SF/ LOAN
ORIGI- UNITS/ UNIT/ NET BALANCE PER
NATION LOAN ROOM/ ROOM/ RENTABLE SF/UNIT
SEQUENCE GROUP NUMBER BED BED AREA(SF) ROOM/BED
- -------- ------ ------ ------- ------- -------- -----------
A56 C 50156 192 Units 189,776 55,570
A57 C 51520 223 Units 206,674 45,341
A58 C 51816 408 Units 366,972 21,776
A59 C 51519 168 Units 120,508 42,985
A60 C 50787 305 Units 187,400 19,250
A61 C 51669 164 Units 172,000 31,678
A62 P 3102092 152 Units 149,230 33,184
A63 C 50130 198 Units 176,568 25,030
A64 C 50295 228 Units 182,513 21,356
A65 P 3018413 208 Units 184,000 18,176
A66 P 2006617 390 Units 381,252 9,504
A67 P 3012945 96 Units 80,576 35,715
A68 P 3012952 96 Units 77,424 33,302
A69 C 51663 96 Units 76,774 33,261
A70 C 51460 51 Units 25,970 57,955
A71 P 3016946 133 Units 104,650 21,645
A72 P 4542254 85 Units 83,109 33,093
A73 P 3009552 125 Units 109,308 22,159
A74 C 51533 177 Units 196,839 15,329
A75 P 3032679 60 Units 54,140 43,862
A76 C 51568 192 Units 137,640 13,395
A77 C 51511 84 Units 94,920 30,658
A78 C 51078 96 Units 81,720 26,634
A79 P 3103140 31 Units 30,554 80,625
A80 C 51630 120 Units 86,400 20,509
A81 C 51614 144 Units 90,000 16,455
A82 C 51526 54 Units 44,952 43,303
A83 P 4541876 80 Units 62,736 28,729
A84 C 50550 50 Units 37,953 44,987
A85 C 51525 64 Units 53,200 33,784
A86 C 50395 57 Units 40,350 36,592
A87 C 51624 91 Units 90,505 22,916
A88.1 C 51164 22 Units 16,700
A88.2 C 51164 18 Units 11,450
A88.3 C 51164 14 Units 10,400
A88 C 51164 54 Units 38,850 37,407
A89 C 51532 72 Units 66,480 26,813
A90 C 51515 45 Units 35,800 39,618
A91 C 51550 44 Units 39,950 39,372
A92 C 51465 28 Units 16,430 56,320
A93 C 51629 96 Units 81,600 15,943
A94 P 3020062 42 Units 43,596 36,288
A95 C 51195 24 Units 23,444 61,373
A96 C 51512 10 Units 12,600 143,693
A97 C 51234 95 Units 56,399 14,892
A98 C 51513 66 Units 50,288 21,018
A99 C 51595 65 Units 40,980 19,874
A100 C 51535 24 Units 24,880 46,236
A101 C 50374 58 Units 39,250 18,076
A102 C 51379 32 Units 28,356 31,637
A103 C 51596 31 Units 23,250 32,063
A104 C 51473 60 Units 53,235 16,366
A105 C 50599 49 Units 33,100 17,391
A106 C 51539 41 Units 23,374 19,406
A107 C 50600 59 Units 37,150 13,494
A108 C 50789 60 Units 44,600 12,666
A109 C 51667 349,810 SF 349,810 75
A110 C 51626 77,764 SF 77,764 136
B111 P 3024965 43,342 SF 43,342 175
A112 C 51088 34,025 SF 34,025 217
A113 C 51114 59,237 SF 59,237 106
A114 C 50943 54,527 SF 54,527 96
A115 C 51549 55,232 SF 55,232 88
A116 C 51594 38,081 SF 38,081 110
A117.1 C 51627 19,840 SF 19,840
A117.2 C 51627 11,148 SF 11,148
A117.3 C 51627 16,914 SF 16,914
A117 C 51627 47,902 SF 47,902 79
ORIGI- OCCUPANCY
NATION LOAN OCCUPANCY AS OF U/W U/W U/W
SEQUENCE GROUP NUMBER PERCENT DATE REVENUES EXPENSES CASH FLOW
- -------- ----- ------ --------- --------- -------- --------- ---------
A56 C 50156 95% 7/22/99 1,764,060 546,105 1,189,155
A57 C 51520 99% 6/1/99 1,792,622 682,205 1,059,737
A58 C 51816 88% 8/23/99 2,204,712 1,042,629 1,039,683
A59 C 51519 93% 6/30/99 1,256,455 473,817 744,838
A60 C 50787 90% 8/31/99 1,588,249 894,065 618,184
A61 C 51669 99% 7/13/99 1,080,351 444,346 578,113
A62 P 3102092 96% 3/29/99 1,088,865 527,922 530,543
A63 C 50130 90% 9/1/99 1,255,772 666,951 552,191
A64 C 50295 96% 10/1/99 1,211,847 636,602 523,033
A65 P 3018413 99% 9/14/99 1,204,055 672,453 479,602
A66 P 2006617 72% 3/31/99 1,149,936 462,547 570,389
A67 P 3012945 100% 9/18/99 866,238 353,618 488,620
A68 P 3012952 100% 9/19/99 818,798 312,732 482,066
A69 C 51663 100% 8/26/99 577,805 189,249 359,756
A70 C 51460 92% 11/30/98 481,555 142,126 329,229
A71 P 3016946 98% 4/25/99 713,879 352,242 328,387
A72 P 4542254 87% 9/24/99 516,801 213,080 286,721
A73 P 3009552 100% 9/14/99 825,700 371,134 423,316
A74 C 51533 92% 7/21/99 963,929 609,147 305,832
A75 P 3032679 100% 9/21/99 435,128 152,104 271,024
A76 C 51568 99% 5/12/99 1,018,060 573,825 391,435
A77 C 51511 100% 3/31/99 580,382 243,638 308,772
A78 C 51078 94% 6/30/99 617,339 326,953 271,186
A79 P 3103140 100% 9/20/99 426,616 136,866 278,046
A80 C 51630 98% 6/30/99 663,950 322,178 299,772
A81 C 51614 93% 5/31/99 642,267 357,684 252,903
A82 C 51526 98% 6/30/99 420,767 136,938 269,519
A83 P 4541876 99% 9/25/99 566,740 263,856 286,884
A84 C 50550 100% 6/30/99 475,417 215,199 230,010
A85 C 51525 100% 6/30/99 575,230 245,747 307,083
A86 C 50395 96% 6/30/99 466,224 212,406 239,568
A87 C 51624 100% 5/31/99 621,242 352,010 246,482
A88.1 C 51164 100% 10/26/98 0 0 0
A88.2 C 51164 100% 10/26/98 0 0 0
A88.3 C 51164 100% 10/26/98 0 0 0
A88 C 51164 100% 10/26/98 438,416 179,017 243,793
A89 C 51532 100% 6/30/99 499,389 225,609 255,780
A90 C 51515 100% 8/3/99 418,250 196,468 209,857
A91 C 51550 98% 5/26/99 338,527 142,609 181,618
A92 C 51465 100% 6/30/99 280,735 99,770 175,365
A93 C 51629 96% 6/30/99 497,567 270,662 188,505
A94 P 3020062 100% 9/17/99 328,206 146,072 173,734
A95 C 51195 92% 12/10/98 241,218 74,173 160,205
A96 C 51512 100% 10/1/99 251,293 97,108 152,185
A97 C 51234 97% 8/19/99 405,793 219,386 161,924
A98 C 51513 97% 6/28/99 332,644 149,092 163,752
A99 C 51595 97% 7/23/99 377,950 210,227 154,344
A100 C 51535 96% 4/1/99 223,097 88,178 127,239
A101 C 50374 98% 6/30/99 326,277 180,482 131,295
A102 C 51379 97% 8/31/98 208,500 87,604 112,896
A103 C 51596 100% 7/6/99 215,859 92,583 113,976
A104 C 51473 100% 6/30/99 332,347 195,092 122,255
A105 C 50599 100% 6/30/99 283,740 171,669 99,821
A106 C 51539 100% 6/30/99 207,378 100,430 96,698
A107 C 50600 98% 6/30/99 273,286 172,415 86,121
A108 C 50789 97% 6/30/99 290,767 192,861 82,906
A109 C 51667 100% 10/18/99 6,157,782 1,928,098 3,636,581
A110 C 51626 95% 5/14/99 2,153,867 818,886 1,181,066
B111 P 3024965 100% 4/9/99 1,594,911 519,816 951,729
A112 C 51088 100% 8/24/99 1,083,045 351,759 726,111
A113 C 51114 100% 6/28/99 $1,173,181 $ 411,244 $ 641,706
A114 C 50943 100% 7/12/99 1,165,588 544,361 534,703
A115 C 51549 100% 8/19/99 1,073,512 362,865 626,487
A116 C 51594 95% 7/26/99 874,204 312,780 505,699
A117.1 C 51627 100% 8/24/99 0 0 0
A117.2 C 51627 100% 8/24/99 0 0 0
A117.3 C 51627 100% 8/24/99
A117 C 51627 100% 8/24/99 646,810 132,390 454,869
U//W MOST
ORIGI- CASH U/W RECENT MOST
NATION LOAN FLOW U/W RESERVES END RECENT
SEQUENCE GROUP NUMBER DSCR RESERVES PER UNIT DATE REVENUES
- -------- ----- ------- ---- -------- -------- ------ ---------
A56 C 50156 1.20 28,800 150.00 12/31/98 1,636,425
A57 C 51520 1.25 50,680 227.26 12/31/98 1,803,978
A58 C 51816 1.36 122,400 300.00 12/31/98 2,301,888
A59 C 51519 1.26 37,800 225.00 12/31/99 1,397,592
A60 C 50787 1.25 76,000 249.18 12/30/99 1,660,043
A61 C 51669 1.25 57,892 353.00 0
A62 P 3102092 1.14 30,400 200.00 12/31/99 1,140,276
A63 C 50130 1.25 36,630 185.00 12/31/98 1,067,231
A64 C 50295 1.25 52,212 229.00 12/31/99 1,246,634
A65 P 3018413 1.25 52,000 250.00 12/31/99 1,256,263
A66 P 2006617 1.25 117,000 300.00 12/31/99 1,293,379
A67 P 3012945 1.47 24,000 250.00 12/31/99 928,513
A68 P 3012952 1.56 24,000 250.00 12/31/99 861,415
A69 C 51663 1.30 28,800 300.00 12/31/99 571,985
A70 C 51460 1.37 10,200 200.00 12/31/99 530,451
A71 P 3016946 1.24 33,250 250.00 12/31/99 743,733
A72 P 4542254 1.11 17,000 200.00 12/31/99 508,910
A73 P 3009552 1.56 31,250 250.00 12/31/99 874,461
A74 C 51533 1.26 48,950 276.55 12/31/99 941,307
A75 P 3032679 1.22 12,000 200.00 12/31/99 455,644
A76 C 51568 1.63 52,800 275.00 12/31/99 1,130,946
A77 C 51511 1.43 27,972 333.00 12/31/99 667,000
A78 C 51078 1.31 19,200 200.00 12/31/99 483,976
A79 P 3103140 1.24 11,704 377.55 12/31/99 454,959
A80 C 51630 1.29 42,000 350.00 12/31/99 620,524
A81 C 51614 1.20 31,680 220.00 12/31/99 611,226
A82 C 51526 1.30 14,310 265.00 12/31/99 445,412
A83 P 4541876 1.24 16,000 200.00 12/31/99 577,909
A84 C 50550 1.25 30,208 604.16 12/31/99 478,626
A85 C 51525 1.65 22,400 350.00 12/31/99 626,872
A86 C 50395 1.30 14,250 250.00 12/31/99 533,146
A87 C 51624 1.33 22,750 250.00 12/31/99 489,604
A88.1 C 51164 0 0.00
A88.2 C 51164 0 0.00
A88.3 C 51164 0 0.00
A88 C 51164 1.45 15,606 289.00 12/31/99 485,300
A89 C 51532 1.61 18,000 250.00 12/31/99 507,146
A90 C 51515 1.37 11,925 265.00 12/31/99 433,061
A91 C 51550 1.20 14,300 325.00 12/31/98 345,187
A92 C 51465 1.36 5,600 200.00 12/31/99 292,674
A93 C 51629 1.25 38,400 400.00 12/31/99 434,628
A94 P 3020062 1.18 8,400 200.00 12/31/99 346,909
A95 C 51195 1.31 6,840 285.00 12/31/99 269,810
A96 C 51512 1.24 2,000 200.00 12/31/99 252,895
A97 C 51234 1.39 24,483 257.72 12/31/99 492,218
A98 C 51513 1.39 19,800 300.00 12/31/99 340,544
A99 C 51595 1.34 13,379 205.83 12/31/99 365,687
A100 C 51535 1.30 7,680 320.00 12/31/99 212,261
A101 C 50374 1.41 14,500 250.00 12/31/99 350,516
A102 C 51379 1.26 8,000 250.00 12/31/99 196,914
A103 C 51596 1.26 9,300 300.00 12/31/98 201,543
A104 C 51473 1.31 15,000 250.00 12/31/99 313,998
A105 C 50599 1.37 12,250 250.00 12/31/99 298,117
A106 C 51539 1.25 10,250 250.00 12/31/98 209,600
A107 C 50600 1.29 14,750 250.00 12/31/99 327,474
A108 C 50789 1.25 15,000 250.00 12/31/99 302,966
A109 C 51667 1.40 87,453 0.25 12/31/99 5,983,147
A110 C 51626 1.25 15,553 0.20 12/31/99 1,677,506
B111 P 3024965 1.30 10,836 0.25 12/31/99 1,764,560
A112 C 51088 1.12 5,175 0.15
A113 C 51114 1.27 $ 6,102 $ 0.10 12/31/99 1,320,445
A114 C 50943 1.26 10,317 0.19 12/31/99 1,344,933
A115 C 51549 1.40 14,128 0.26 12/31/99 1,116,109
A116 C 51594 1.30 9,869 0.26 12/31/98 867,312
A117.1 C 51627 0 0.00
A117.2 C 51627 0 0.00
A117.3 C 51627
A117 C 51627 1.25 7,172 0.15 12/31/99 296,366
MOST 2ND
RECENT MOST 2ND 2ND 2ND
ORIGI- MOST MOST CASH RECENT MOST MOST MOST
NATION LOAN RECENT RECENT FLOW END RECENT RECENT RECENT
SEQUENCE GROUP NUMBER EXPENSES CASH FLOWS DSCR DATE REVENUES EXPENSES CASH FLOW
- -------- ----- ------- ---------- ---------- ----- -------- -------- --------- ---------
A56 C 50156 618,370 994,264 1.00 0 0 0
A57 C 51520 611,217 1,157,052 1.37 12/31/97 1,798,342 571,020 1,211,682
A58 C 51816 1,039,444 1,262,444 1.65 12/31/97 2,471,700 1,062,095 1,409,605
A59 C 51519 619,329 761,463 1.29 12/31/98 1,254,433 460,446 788,987
A60 C 50787 992,013 668,030 1.35 12/30/98 1,400,212 701,412 654,469
A61 C 51669 0 0 0.00 0 0 0
A62 P 3102092 464,539 675,737 1.45 12/31/98 1,088,865 527,771 495,569
A63 C 50130 587,053 450,897 1.02 12/31/97 869,573 602,843 219,188
A64 C 50295 618,718 627,916 1.50 12/31/98 1,207,681 629,806 525,663
A65 P 3018413 622,169 634,095 1.66 12/31/98 1,204,055 666,599 537,456
A66 P 2006617 426,815 866,564 1.90 12/31/98 1,149,936 379,470 770,466
A67 P 3012945 389,800 538,713 1.62 12/31/98 866,238 344,754 521,484
A68 P 3012952 337,095 524,320 1.70 12/31/98 818,798 300,330 518,468
A69 C 51663 163,100 380,085 1.37 12/31/98 588,946 162,792 426,154
A70 C 51460 165,928 364,523 1.52 12/31/98 427,183 143,471 283,712
A71 P 3016946 318,391 425,343 1.61 12/31/98 713,879 344,057 369,822
A72 P 4542254 219,039 289,871 1.13 12/31/98 530,863 212,417 258,147
A73 P 3009552 409,197 465,264 1.71 12/31/98 830,044 354,401 412,116
A74 C 51533 613,545 278,811 1.15 12/31/98 809,796 559,055 250,741
A75 P 3032679 140,598 315,047 1.42 12/31/98 428,007 121,627 306,380
A76 C 51568 426,269 675,877 2.81 12/31/98 1,116,865 417,727 677,512
A77 C 51511 264,767 381,515 1.76 12/31/98 589,103 238,518 324,274
A78 C 51078 208,451 256,325 1.24 0 0 0
A79 P 3103140 96,812 358,147 1.59 12/31/98 426,616 85,659 275,749
A80 C 51630 246,772 334,152 1.44 12/31/98 600,260 211,550 371,710
A81 C 51614 330,295 250,691 1.19 12/31/98 636,633 356,193 280,440
A82 C 51526 146,247 284,855 1.37 12/31/98 416,322 135,334 256,338
A83 P 4541876 268,993 308,916 1.33 12/31/98 550,233 245,575 304,658
A84 C 50550 198,978 272,898 1.49 12/31/98 412,093 194,908 158,763
A85 C 51525 275,238 329,234 1.77 12/31/98 575,373 234,323 306,768
A86 C 50395 185,166 347,980 1.90 12/31/98 518,877 186,157 332,720
A87 C 51624 254,839 234,765 1.27 12/31/98 608,443 295,250 313,193
A88.1 C 51164
A88.2 C 51164
A88.3 C 51164
A88 C 51164 222,352 247,342 1.47 0 0 0
A89 C 51532 274,720 216,791 1.36 12/31/98 518,009 215,779 283,307
A90 C 51515 194,440 226,696 1.48 0 0 0
A91 C 51550 117,050 214,084 1.42 12/31/97 332,879 119,745 199,995
A92 C 51465 125,987 166,687 1.29 12/31/98 229,782 88,215 -222,942
A93 C 51629 188,501 208,303 1.38 12/31/98 538,459 188,501 333,531
A94 P 3020062 181,589 165,320 1.12 12/31/98 335,779 133,547 195,764
A95 C 51195 144,222 118,736 0.97 12/31/97 199,437 52,101 137,629
A96 C 51512 103,870 145,755 1.18 12/31/98 237,240 66,224 171,016
A97 C 51234 310,305 157,433 1.35 12/31/98 389,492 248,066 92,299
A98 C 51513 123,915 202,736 1.72 12/31/98 340,776 146,900 187,024
A99 C 51595 195,932 156,755 1.36 12/31/98 377,438 191,374 171,921
A100 C 51535 96,557 108,024 1.10 12/31/98 236,324 86,247 127,524
A101 C 50374 167,855 182,661 1.96 12/31/98 352,663 162,168 178,992
A102 C 51379 102,051 86,863 0.97 12/31/97 186,553 90,128 65,128
A103 C 51596 66,397 124,080 1.37 12/31/97 191,531 60,520 120,454
A104 C 51473 109,963 189,035 2.02 12/31/98 326,047 144,329 181,718
A105 C 50599 172,038 126,079 1.73 12/31/98 292,271 141,932 139,184
A106 C 51539 84,836 124,764 1.61 12/31/97 199,223 90,394 108,829
A107 C 50600 133,936 193,538 2.90 12/31/98 296,708 140,151 156,557
A108 C 50789 193,670 109,297 1.65 12/31/98 281,399 168,129 113,270
A109 C 51667 1,620,452 4,004,823 1.54 12/31/98 5,697,577 1,640,285 4,057,292
A110 C 51626 234,854 1,442,652 1.53 12/31/98 2,059,962 790,510 1,269,452
B111 P 3024965 539,497 1,225,063 1.68 12/31/98 1,744,403 466,216 1,272,081
A112 C 51088 0 0 0
A113 C 51114 436,100 884,346 1.75 0 0 0
A114 C 50943 565,092 673,615 1.59 12/31/98 1,313,672 579,760 690,951
A115 C 51549 397,043 711,719 1.59 12/31/98 1,061,764 358,871 702,893
A116 C 51594 285,937 581,375 1.49 12/31/97 870,474 290,862 579,612
A117.1 C 51627
A117.2 C 51627
A117.3 C 51627
A117 C 51627 56,357 228,982 0.63 0 0 0
2ND
MOST LARGEST LARGEST
RECENT LARGEST TENANT TENANT
ORIGI- CASH TENANT % OF LEASE
NATION LOAN FLOW LEASED TOTAL EXPIRA- SECOND LARGEST
SEQUENCE GROUP NUMBER DSCR LARGEST TENANT SF SF TION TENANT
- -------- ----- ------ ---- --------------- ------- -------- --------- --------------
A56 C 50156 0.00
A57 C 51520 1.43
A58 C 51816 1.84
A59 C 51519 1.33
A60 C 50787 1.32
A61 C 51669 0.00
A62 P 3102092 1.06
A63 C 50130 0.50
A64 C 50295 1.26
A65 P 3018413 1.41
A66 P 2006617 1.69
A67 P 3012945 1.57
A68 P 3012952 1.68
A69 C 51663 1.54
A70 C 51460 1.18
A71 P 3016946 1.40
A72 P 4542254 1.00
A73 P 3009552 1.51
A74 C 51533 1.03
A75 P 3032679 1.38
A76 C 51568 2.82
A77 C 51511 1.50
A78 C 51078 0.00
A79 P 3103140 1.22
A80 C 51630 1.60
A81 C 51614 1.33
A82 C 51526 1.24
A83 P 4541876 1.31
A84 C 50550 0.87
A85 C 51525 1.65
A86 C 50395 1.81 Food Market 2,700 7% 10/31/06 Laundromat
A87 C 51624 1.69
A88.1 C 51164
A88.2 C 51164
A88.3 C 51164
A88 C 51164 0.00
A89 C 51532 1.78
A90 C 51515 0.00
A91 C 51550 1.32
A92 C 51465 -1.72
A93 C 51629 2.21
A94 P 3020062 1.33
A95 C 51195 1.13
A96 C 51512 1.39
A97 C 51234 0.79
A98 C 51513 1.58
A99 C 51595 1.49
A100 C 51535 1.30
A101 C 50374 1.92
A102 C 51379 0.72
A103 C 51596 1.33
A104 C 51473 1.94
A105 C 50599 1.91
A106 C 51539 1.41
A107 C 50600 2.35
A108 C 50789 1.71
A109 C 51667 1.56 Bank of America 347,526 99% 12/31/09 Express Grill
A110 C 51626 1.34 Detroit Medical Center 38,853 50% 10/31/08 Detroit Medical Center
B111 P 3024965 1.74 AT&T 43,342 100% 9/14/06
A112 C 51088 0.00 Kaiser Foundation 34,025 100% 3/31/09
A113 C 51114 0.00 ARCS Comm. Mort. Co. 19,880 34% 4/15/08 Astro Business So1utions
A114 C 50943 1.63 Total Woman 6,844 13% 2/28/04 Stevenson
A115 C 51549 1.57 PSAPCA 18,201 33% 3/31/07 Macabe
A116 C 51594 1.49 Medstar 22,081 58% 2/28/05 Potomac Valley Ort2,733
A117.1 C 51627 Global Auction 19,840 100% 12/31/08
A117.2 C 51627 FedFirst Financial 5,648 51% 10/31/08 Novit, Scarmanich
& Williams
A117.3 C 51627 Sofa Outlet 9,695 57% 10/31/02 Siglers
A117 C 51627 0.00 Global Auction 19,840 100% 12/31/08 Sofa Outlet
SECOND SECOND
SECOND LARGEST LARGEST
LARGEST TENANT TENANT
ORIGI- TENANT % OF LEASE
NATION LOAN LEASED TOTAL EXPIRA-
SEQUENCE GROUP NUMBER SF SF TION
- -------- ------- ------- ------- ------ --------
A56 C 50156
A57 C 51520
A58 C 51816
A59 C 51519
A60 C 50787
A61 C 51669
A62 P 3102092
A63 C 50130
A64 C 50295
A65 P 3018413
A66 P 2006617
A67 P 3012945
A68 P 3012952
A69 C 51663
A70 C 51460
A71 P 3016946
A72 P 4542254
A73 P 3009552
A74 C 51533
A75 P 3032679
A76 C 51568
A77 C 51511
A78 C 51078
A79 P 3103140
A80 C 51630
A81 C 51614
A82 C 51526
A83 P 4541876
A84 C 50550
A85 C 51525
A86 C 50395 1,050 3% 10/31/00
A87 C 51624
A88.1 C 51164
A88.2 C 51164
A88.3 C 51164
A88 C 51164
A89 C 51532
A90 C 51515
A91 C 51550
A92 C 51465
A93 C 51629
A94 P 3020062
A95 C 51195
A96 C 51512
A97 C 51234
A98 C 51513
A99 C 51595
A100 C 51535
A101 C 50374
A102 C 51379
A103 C 51596
A104 C 51473
A105 C 50599
A106 C 51539
A107 C 50600
A108 C 50789
A109 C 51667 2,284 1% 12/31/03
A110 C 51626 31,898 41% 10/31/03
B111 P 3024965
A112 C 51088
A113 C 51114 10,070 17% 7/31/03
A114 C 50943 6,025 11% 2/28/01
A115 C 51549 11,664 21% 1/31/01
A116 C 51594 7% NAV
A117.1 C 51627
A117.2 C 51627 1,875 17% 1/31/04
A117.3 C 51627 4,710 28% 9/30/01
A117 C 51627 9,695 57% 10/31/02
124
ORIGI-
SE- NATION LOAN
QUENCE GROUP NUMBER PROPERTY NAME PROPERTY ADDRESS
- ------ ------ ------ ------------- ----------------
B118 P 4537841 Lakeside Plaza 7900 Green Lake Drive North
B119 P 3054319 Silver Lake Medical Building 1920 100th ST SE
B120 P 3032737 Sherlock Building 320 SW Oak Street
B121 P 2021665 Pacifica Plaza 6101 Centinela Avenue
A122 C 51618 1750 Fifth Avenue Building 1750 Fifth Avenue and 1755 Fourth Avenue
A123 C 51593 Maracay Building 15160 North Hayden Road
A124 C 51530 West End Court 830 West End Court
B125 P 1795152 Mill Creek Clinic 15808 Mill Creek Boulevard
A126 C 51457 Century Plaza 1777 N. California Blvd.
A127.1 C 51579 Innkeepers-Summerfield Suites-Belmont 400 Concourse Drive
A127.2 C 51579 Innkeepers-Residence Inn-Tukwila(Seattle) 16201 West Valley Highway
A127.3 C 51579 Innkeepers-Summerfield Suites-Irving (Los Colinas) 5901 North McArthur Blvd
A127.4 C 51579 Innkeepers-Residence Inn-Bellevue 14455 NE 29th Place
A127.5 C 51579 Innkeepers-Summerfield Suites-W. Hollywood 1000 Westmount Drive
A127.6 C 51579 Innkeepers-Residence Inn-Lynnwood 18200 Alderwood Mall Parkway
A127.7 C 51579 Innkeepers-Residence Inn-Vancouver 8005 NE Parkway Drive
A127.8 C 51579 Innkeepers-Residence Inn-Lake Oswego(Portland) 15200 SW Bangy Road
A127 C 51579 INNKEEPERS PORTFOLIO (ROLL-UP)
A128 C 51635 Radisson Suites - Secaucus, NJ 350 Route 3 West
A129 C 51153 Hilton Garden Inn 705 Currency Circle
A130 C 51587 Biltmore Suites Hotel NC Highway 68 & Regency Drive
B131 P 2088714 Best Western Stovall's Inn 1110 West Katella Avenue
A132 C 51824 Hawthorn Suites 1502 East Central Texas Expressway
B133 P 3041985 The Voyager Hotel 501 K Street
A134 C 51637 Rosewood Care Center - Moline 7300 34th Ave
A135 C 51638 Rosewood Care Center - Peoria 1500 West Northmoor Rd
SUB-TOTAL CROSSED LOANS
B136 P 3032166 Rosewood Park Retirement 2405 SW 234th Ave
A137 C 51051 Walnut Woods of Boyertown 35 North Walnut Street
A138 C 51067 Hampshire Retirement 3460 R Street
A139 C 51560 Creekwood Care Center 830 Tamalpais Avenue
A140 C 50832 Cox Communications Building 5651 Copley Dr.
B141 P 3022381 Metrocom Building 980 University
B142 P 1202613 Koretoff Industrial Complex 15960-15983 Downey Avenue
B143 P 4548590 Baugh Construction Building 900 Poplar Place South
B144 P 3032893 SRC Vision Building 2067 Commerce Drive
A145 C 51424 C-2 Civic Center Business Park 920 E. Madison Street
B146 P 4548707 Oakridge Business Park 17965 Northeast 65th Street
B147 P 2006963 Rancho Del Oro Commerce Ctr II 4055-4065 Oceanside Blvd.
A148 C 51414 Career Guidance Foundation Center 8090 Engineer Road
A149 C 51607 Meadows Mobile Home Park 1515 Polaris Drive
A150 C 51567 Lord Calvert Mobile Home Park 21165 Great Mills Rd
B151 P 3059565 The Meadows Mobile Home Park 12493 State Highway 75
B152 P 3102464 Columbia Vista Manufactured Home Park 839 Livingston Place
A153 C 51604 Desert Classic Mobile Home Park 5250 South Campbell Avenue
B154 P 3021391 Int'l Aviation Air Cargo Term. 5975 & 6075 South Spencer Street
B155 P 3056355 Worthington Ford of Alaska 1950 Gambell Street
A156.1 C 51576 I-40 Bell-6015 Plains Blvd 6015 Plains Blvd
A156.2 C 51576 I-40 Bell-2501 Britain Drive 2501 Britain Drive
A156.3 C 51576 I-40 Bell-6101 Lawrence Blvd 6101 Lawrence Blvd
A156 C 51576 I-40 BELL (ROLL-UP)
B157 P 4542437 Evergreen Mini-Storage 17600 147th Street Southeast
B158 P 3057650 Moss Bay Self Storage 333 5th Place South
A159 C 51632 American Store & Lock #1 13304 E. Independence Blvd. and
101 Seaboard Dr.
- --------------------------------------------------------------------------------------------------------------------------
TOTALS/WEIGHTED AVERAGE 159 LOANS
==========================================================================================================================
ORIGI-
SE- NATION PROPERTY
QUENCE GROUP LOAN NUMBER COUNTY CITY STATE ZIP TYPE
- ------ ------ ----------- ------ ---- ----- --- --------
B118 P 4537841 King Seattle WA 98103 Office
B119 P 3054319 Snohomish Everett WA 98208 Office
B120 P 3032737 Multnomah Portland OR 97204 Office
B121 P 2021665 Los Angeles Culver City CA 90230 Office
A122 C 51618 San Diego San Diego CA 92101 Office
A123 C 51593 Maricopa Scottsdale AZ 85260 Office
A124 C 51530 Lake Vernon Hills IL 60061 Office
B125 P 1795152 Snohomish Mill Creek WA 98012 Office
A126 C 51457 Contra Costa Walnut Creek CA 94596 Office
A127.1 C 51579 San Mateo Belmont CA 94002 Hotel
A127.2 C 51579 King Tukwila WA 98188 Hotel
A127.3 C 51579 Dallas Irving TX 75039 Hotel
A127.4 C 51579 King Bellevue WA 98007 Hotel
A127.5 C 51579 Los Angeles West Hollywood CA 90069 Hotel
A127.6 C 51579 Snohomish Lynnwood WA 98037 Hotel
A127.7 C 51579 Clark Vancouver WA 98662 Hotel
A127.8 C 51579 Clackamas Lake Oswego OR 97035 Hotel
A127 C 51579 Hotel
A128 C 51635 Hudson Secaucus NJ 07094 Hotel
A129 C 51153 Seminole Lake Mary FL 32746 Hotel
A130 C 51587 Guilford High Point NC 27265 Hotel
B131 P 2088714 Orange Anaheim CA 92802 Hotel
A132 C 51824 Bell Killeen TX 76541 Hotel
B133 P 3041985 NAP Anchorage AK 99501 Hotel
A134 C 51637 Rock Island Moline IL 61265 Health Care
A135 C 51638 Peoria Peoria IL 61614 Health Care
B136 P 3032166 Washington Hillsboro OR 97123 Health Care
A137 C 51051 Berks Boyertown PA 19512 Health Care
A138 C 51067 Merced Merced CA 95348 Health Care
A139 C 51560 Marin Novato CA 94947 Health Care
A140 C 50832 San Diego San Diego CA 92111 Industrial
B141 P 3022381 Santa Clara Los Gatos CA 95030 Industrial
B142 P 1202613 Los Angeles Paramount CA 90723 Industrial
B143 P 4548590 King Seattle WA 98144 Industrial
B144 P 3032893 Jackson Medford OR 97504 Industrial
A145 C 51424 Maricopa Phoenix AZ 85034 Industrial
B146 P 4548707 King Redmond WA 98052 Industrial
B147 P 2006963 San Diego Oceanside CA 92054 Industrial
A148 C 51414 San Diego San Diego CA 92111 Industrial
A149 C 51607 Contra Costa Pittsburg CA 94565 Mobile Home
A150 C 51567 St. Marys Lexington Park MD 20653 Mobile Home
B151 P 3059565 Blaine Ketchum ID 83340 Mobile Home
B152 P 3102464 Multnomah Troutdale OR 97060 Mobile Home
A153 C 51604 Pima Tucson AZ 85706 Mobile Home
B154 P 3021391 Clark Las Vegas NV 89119 Special Purpose
B155 P 3056355 NAP Anchorage AK 99501 Special Purpose
A156.1 C 51576 Potter Amarillo TX 79106 Mini Storage
A156.2 C 51576 Potter Amarillo TX 79109 Mini Storage
A156.3 C 51576 Potter Amarillo TX 79106 Mini Storage
A156 C 51576 Mini Storage
B157 P 4542437 Snohomish Monroe WA 98272 Mini Storage
B158 P 3057650 King Kirkland WA 98033 Mini Storage
A159 C 51632 Union Stallings (Indian Trail) NC 28079 Mini Storage
ORIGI- CUT-OFF MATURITY
SE- NATION LOAN ORIGINAL DATE DATE LOAN MORTGAGE
QUENCE GROUP NUMBER BALANCE BALANCE BALANCE TYPE RATE
- ------ ----- ------ -------- ------- -------- ---- --------
B118 P 4537841 3,515,000 3,340,042 2,811,640 Balloon 7.500%
B119 P 3054319 2,950,000 2,861,872 2,363,524 Balloon 7.690%
B120 P 3032737 3,000,000 2,836,216 2,319,608 Balloon 7.320%
B121 P 2021665 5,200,000 2,213,015 1,414,022 Balloon 7.280%
A122 C 51618 2,523,000 2,505,546 2,261,618 Balloon 8.030%
A123 C 51593 1,987,500 1,976,801 1,791,492 Balloon 8.260%
A124 C 51530 1,775,430 1,746,621 1,429,422 Balloon 7.110%
B125 P 1795152 1,925,000 1,605,082 1,359,474 Balloon 8.625%
A126 C 51457 1,500,000 1,476,043 1,238,339 Balloon 7.955%
A127.1 C 51579
A127.2 C 51579
A127.3 C 51579
A127.4 C 51579
A127.5 C 51579
A127.6 C 51579
A127.7 C 51579
A127.8 C 51579
A127 C 51579 58,000,000 58,000,000 48,790,647 Balloon 7.160%
A128 C 51635 13,800,000 13,681,839 11,610,448 Balloon 8.630%
A129 C 51153 6,300,000 6,059,309 2,728,647 Balloon 7.550%
A130 C 51587 4,200,000 4,162,417 3,564,630 Balloon 8.973%
B131 P 2088714 4,350,000 3,413,218 2,829,029 Balloon 8.250%
A132 C 51824 2,660,000 2,638,490 2,254,860 Balloon 8.910%
B133 P 3041985 2,000,000 1,779,731 1,403,258 Balloon 8.550%
A134 C 51637 10,312,500 10,236,059 8,732,758 Balloon 8.890%
A135 C 51638 8,775,000 8,709,956 7,430,784 Balloon 8.890%
19,087,500 18,946,015 16,163,542
B136 P 3032166 10,000,000 9,614,821 8,149,990 Balloon 8.250%
A137 C 51051 7,800,000 7,570,819 6,212,258 Balloon 6.770%
A138 C 51067 7,100,000 6,891,386 5,654,749 Balloon 6.770%
A139 C 51560 2,050,000 2,026,300 1,716,276 Balloon 8.440%
A140 C 50832 12,560,000 12,415,967 10,414,028 Balloon 8.110%
B141 P 3022381 3,640,000 3,326,721 2,507,201 Balloon 7.795%
B142 P 1202613 4,000,000 3,108,296 0 Fully Amortizing 9.750%
B143 P 4548590 3,220,000 3,102,760 2,648,094 Balloon 8.625%
B144 P 3032893 3,000,000 2,908,683 2,443,310 Balloon 8.300%
A145 C 51424 1,762,500 1,741,140 1,579,782 Balloon 8.025%
B146 P 4548707 1,590,000 1,534,257 1,315,240 Balloon 8.875%
B147 P 2006963 2,000,000 1,434,310 Fully Amortizing 8.500%
A148 C 51414 465,000 456,316 386,361 Balloon 8.200%
A149 C 51607 6,400,000 6,361,079 5,706,603 Balloon 7.800%
A150 C 51567 3,500,000 3,479,819 3,167,259 Balloon 8.450%
B151 P 3059565 2,150,000 2,096,962 1,713,361 Balloon 7.375%
B152 P 3102464 2,010,000 1,871,432 1,617,663 Balloon 7.750%
A153 C 51604 1,700,000 1,682,876 1,397,325 Balloon 7.800%
B154 P 3021391 8,100,000 7,707,142 7,174,555 Balloon 8.125%
B155 P 3056355 6,000,000 5,838,229 5,224,461 Balloon 7.130%
A156.1 C 51576
A156.2 C 51576
A156.3 C 51576
A156 C 51576 5,132,000 5,098,590 4,651,306 Balloon 8.490%
B157 P 4542437 2,450,000 2,163,381 1,685,145 Balloon 8.500%
B158 P 3057650 2,250,000 2,081,378 0 Fully Amortizing 8.000%
A159 C 51632 1,160,000 1,149,076 963,065 Balloon 8.150%
- ----------------------------------------------------------------------------------------------------------------------------
$795,202,845 $771,922,444 $654,040,710 7.892%
============================================================================================================================
ADMINI-
ORIGI- STRATIVE SUB- NET
SE- NATION LOAN FEE SERVICING MORTGAGE NOTE
QUENCE GROUP NUMBER RATE(i) FEE RATE RATE DATE
- ------ ----- ------ -------- --------- -------- ----
B118 P 4537841 0.144% 0.100% 7.356% 7/6/95
B119 P 3054319 0.144% 0.100% 7.546% 6/15/98
B120 P 3032737 0.144% 0.100% 7.176% 10/28/97
B121 P 2021665 0.144% 0.100% 7.136% 11/15/93
A122 C 51618 0.144% 0.100% 7.886% 7/30/99
A123 C 51593 0.144% 0.100% 8.116% 9/27/99
A124 C 51530 0.144% 0.100% 6.966% 5/5/99
B125 P 1795152 0.144% 0.100% 8.481% 12/21/93
A126 C 51457 0.144% 0.100% 7.811% 3/4/99
A127.1 C 51579
A127.2 C 51579
A127.3 C 51579
A127.4 C 51579
A127.5 C 51579
A127.6 C 51579
A127.7 C 51579
A127.8 C 51579
A127 C 51579 0.094% 0.050% 7.066% 9/24/99
A128 C 51635 0.144% 0.100% 8.486% 9/29/99
A129 C 51153 0.144% 0.100% 7.406% 10/28/98
A130 C 51587 0.094% 0.050% 8.879% 8/13/99
B131 P 2088714 0.144% 0.100% 8.106% 6/1/93
A132 C 51824 0.144% 0.100% 8.766% 9/30/99
B133 P 3041985 0.144% 0.100% 8.406% 1/18/96
A134 C 51637 0.144% 0.100% 8.746% 10/26/99
A135 C 51638 0.144% 0.100% 8.746% 10/26/99
B136 P 3032166 0.144% 0.100% 8.106% 9/17/97
A137 C 51051 0.144% 0.100% 6.626% 8/18/98
A138 C 51067 0.144% 0.100% 6.626% 8/20/98
A139 C 51560 0.144% 0.100% 8.296% 6/3/99
A140 C 50832 0.144% 0.100% 7.966% 7/13/99
B141 P 3022381 0.144% 0.100% 7.651% 11/15/96
B142 P 1202613 0.144% 0.100% 9.606% 9/28/94
B143 P 4548590 0.144% 0.100% 8.481% 9/2/97
B144 P 3032893 0.144% 0.100% 8.156% 4/24/98
A145 C 51424 0.144% 0.100% 7.881% 11/20/98
B146 P 4548707 0.144% 0.100% 8.731% 8/27/97
B147 P 2006963 0.144% 0.100% 8.356% 1/31/94
A148 C 51414 0.144% 0.100% 8.056% 12/15/98
A149 C 51607 0.144% 0.100% 7.656% 9/20/99
A150 C 51567 0.144% 0.100% 8.306% 8/31/99
B151 P 3059565 0.144% 0.100% 7.231% 10/26/98
B152 P 3102464 0.144% 0.100% 7.606% 2/9/96
A153 C 51604 0.144% 0.100% 7.656% 9/24/99
B154 P 3021391 0.144% 0.100% 7.981% 1/23/97
B155 P 3056355 0.144% 0.100% 6.986% 9/18/98
A156.1 C 51576
A156.2 C 51576
A156.3 C 51576
A156 C 51576 0.144% 0.100% 8.346% 6/30/99
B157 P 4542437 0.144% 0.100% 8.356% 4/11/96
B158 P 3057650 0.144% 0.100% 7.856% 7/14/98
A159 C 51632 0.144% 0.100% 8.006% 9/30/99
- ----------------------------------------------------------------------------------------------------------------
7.749%
================================================================================================================
ORIGINAL ORIGINAL
ORIGI- FIRST INTEREST TERM TO AMORTIZATION
SE- NATION LOAN PAYMENT ACCRUAL MONTHLY MATURITY TERM
QUENCE GROUP NUMBER DATE METHOD PAYMENT (MONTHS) (MONTHS) (ii)
- ------ ------ ------ ------- -------- ------- -------- -------------
B118 P 4537841 8/1/95 30/360 25,986 142 300
B119 P 3054319 8/1/98 30/360 22,166 121 300
B120 P 3032737 12/15/97 30/360 21,820 120 300
B121 P 2021665 2/1/94 30/360 61,129 96 120
A122 C 51618 9/1/99 ACT/360 18,566 120 360
A123 C 51593 11/1/99 ACT/360 14,945 120 360
A124 C 51530 7/1/99 ACT/360 12,673 120 300
B125 P 1795152 2/1/94 30/360 16,858 120 240
A126 C 51457 5/1/99 ACT/360 11,533 120 300
A127.1 C 51579
A127.2 C 51579
A127.3 C 51579
A127.4 C 51579
A127.5 C 51579
A127.6 C 51579
A127.7 C 51579
A127.8 C 51579
A127 C 51579 11/1/99 ACT/360 436,918 120 264
A128 C 51635 11/1/99 ACT/360 112,333 120 300
A129 C 51153 12/1/98 ACT/360 50,945 180 240
A130 C 51587 10/1/99 ACT/360 35,169 120 300
B131 P 2088714 8/1/93 30/360 27,845 181 181
A132 C 51824 11/1/99 ACT/360 22,159 120 300
B133 P 3041985 2/1/96 ACT365/360 17,506 120 237
A134 C 51637 12/1/99 ACT/360 85,767 120 300
A135 C 51638 12/1/99 ACT/360 72,980 120 300
B136 P 3032166 11/1/97 30/360 78,845 120 300
A137 C 51051 10/1/98 ACT/360 53,990 120 300
A138 C 51067 10/1/98 ACT/360 49,144 120 300
A139 C 51560 8/1/99 ACT/360 16,424 120 300
A140 C 50832 9/1/99 ACT/360 97,857 120 300
B141 P 3022381 2/1/97 30/360 29,984 120 240
B142 P 1202613 12/15/94 30/360 42,375 180 180
B143 P 4548590 11/1/97 30/360 26,200 120 300
B144 P 3032893 6/1/98 30/360 23,754 120 300
A145 C 51424 1/1/99 ACT/360 12,963 120 360
B146 P 4548707 11/1/97 30/360 13,207 120 300
B147 P 2006963 3/1/94 ACT/360 19,695 180 180
A148 C 51414 2/1/99 ACT/360 3,651 120 300
A149 C 51607 11/1/99 ACT/360 46,072 120 360
A150 C 51567 10/1/99 ACT/360 26,788 120 360
B151 P 3059565 1/1/99 30/360 15,714 120 300
B152 P 3102464 4/1/96 30/360 15,182 120 300
A153 C 51604 11/1/99 ACT/360 12,896 120 300
B154 P 3021391 4/1/97 30/360 63,189 84 300
B155 P 3056355 12/1/98 30/360 42,906 84 300
A156.1 C 51576
A156.2 C 51576
A156.3 C 51576
A156 C 51576 8/1/99 ACT/360 39,424 120 360
B157 P 4542437 6/1/96 30/360 20,823 120 240
B158 P 3057650 9/1/98 30/360 21,502 180 180
A159 C 51632 11/1/99 ACT/360 9,069 120 300
- ------------------------------------------------------------------------------------------------------------------------
$6,035,036 123 322
========================================================================================================================
REMAINING
ORIGI- TERM TO CROSS-
SE- NATION LOAN SEASONING MATURITY MATURITY COLLATERALIZED RELATED
QUENCE GROUP NUMBER (MONTHS) MONTHS DATE LOANS LOANS
- ------ ------ ------ --------- --------- -------- -------------- -------
B118 P 4537841 61 81 5/1/07 No No
B119 P 3054319 25 96 8/1/08 No Yes(N)
B120 P 3032737 32 88 11/1/07 No No
B121 P 2021665 79 17 1/1/02 No No
A122 C 51618 12 108 8/1/09 No No
A123 C 51593 10 110 10/1/09 No No
A124 C 51530 14 106 6/1/09 No No
B125 P 1795152 79 41 1/1/04 No No
A126 C 51457 16 104 4/1/09 No No
A127.1 C 51579
A127.2 C 51579
A127.3 C 51579
A127.4 C 51579
A127.5 C 51579
A127.6 C 51579
A127.7 C 51579
A127.8 C 51579
A127 C 51579 10 110 10/1/09 No No
A128 C 51635 10 110 10/1/09 No No
A129 C 51153 21 159 11/1/13 No No
A130 C 51587 11 109 9/1/09 No No
B131 P 2088714 85 96 8/1/08 No No
A132 C 51824 10 110 10/1/09 No No
B133 P 3041985 55 65 1/1/06 No No
A134 C 51637 9 111 11/1/09 Yes(4) Yes(O)
A135 C 51638 9 111 11/1/09 Yes(4) Yes(O)
B136 P 3032166 34 86 10/1/07 No Yes(N)
A137 C 51051 23 97 9/1/08 No Yes(P)
A138 C 51067 23 97 9/1/08 No Yes(P)
A139 C 51560 13 107 7/1/09 No No
A140 C 50832 12 108 8/1/09 No No
B141 P 3022381 43 77 1/1/07 No No
B142 P 1202613 68 112 11/15/09 No No
B143 P 4548590 34 86 10/1/07 No No
B144 P 3032893 27 93 5/1/08 No No
A145 C 51424 20 100 12/1/08 No No
B146 P 4548707 34 86 10/1/07 No No
B147 P 2006963 78 102 2/1/09 No No
A148 C 51414 19 101 1/1/09 No No
A149 C 51607 10 110 10/1/09 No Yes(Q)
A150 C 51567 11 109 9/1/09 No No
B151 P 3059565 20 100 12/1/08 No No
B152 P 3102464 53 67 3/1/06 No No
A153 C 51604 10 110 10/1/09 No Yes(Q)
B154 P 3021391 41 43 3/1/04 No No
B155 P 3056355 21 63 11/1/05 No No
A156.1 C 51576
A156.2 C 51576
A156.3 C 51576
A156 C 51576 13 107 7/1/09 No No
B157 P 4542437 51 69 5/1/06 No No
B158 P 3057650 24 156 8/1/13 No No
A159 C 51632 10 110 10/1/09 No No
- ------------------------------------------------------------------------------------------------------------------------
20 102
========================================================================================================================
ORIGI- LOCKOUT
SE- NATION LOAN EXPIRATION
QUENCE NATION NUMBER DATE PREPAYMENT PENALTY DESCRIPTION (MONTHS) YIELD MAINTENANCE TYPE
- ------ ------ ------ ---------- --------------------------------------- ----------------------
B118 P 4537841 OPEN(22)/YM(120) Int. Rate Diff. (Type 2A)
B119 P 3054319 YM(117)/OPEN(4) Int. Rate Diff. (Type 2A)
B120 P 3032737 $250+YM(120) Int. Rate Diff. (Type 1A)
B121 P 2021665 YM(96) Int. Rate Diff. (Type 4)
A122 C 51618 5/1/09 LO(117)/OPEN(3)/DEF NAP
A123 C 51593 8/1/09 LO(118)/OPEN(2)/DEF NAP
A124 C 51530 3/1/09 LO(117)/OPEN(3)/DEF NAP
B125 P 1795152 YM(120) Int. Rate Diff. (Type 2B)
A126 C 51457 1/1/09 LO(117)/OPEN(3)/DEF NAP
A127.1 C 51579
A127.2 C 51579
A127.3 C 51579
A127.4 C 51579
A127.5 C 51579
A127.6 C 51579
A127.7 C 51579
A127.8 C 51579
A127 C 51579 8/1/09 LO(118)/OPEN(2)/DEF NAP
A128 C 51635 7/1/09 LO(117)/OPEN(3)/DEF NAP
A129 C 51153 7/1/13 LO(176)/OPEN(4)/DEF NAP
A130 C 51587 7/1/09 LO(118)/OPEN(2)/DEF NAP
B131 P 2088714 YM(181) Int. Rate Diff. (Type 3)
A132 C 51824 8/1/09 LO(118)/OPEN(2)/DEF NAP
B133 P 3041985 YM(120) Int. Rate Diff. (Type 2B)
A134 C 51637 9/1/09 LO(118)/OPEN(2)/DEF NAP
A135 C 51638 9/1/09 LO(118)/OPEN(2)/DEF NAP
B136 P 3032166 YM(116)/OPEN(4) Int. Rate Diff. (Type 2A)
A137 C 51051 4/30/08 LO(115)/OPEN(5)/DEF NAP
A138 C 51067 4/30/08 LO(115)/OPEN(5)/DEF NAP
A139 C 51560 4/1/09 LO(117)/OPEN(3)/DEF NAP
A140 C 50832 6/1/09 LO(118)/OPEN(2)/DEF NAP
B141 P 3022381 YM(120) Int. Rate Diff. (Type 3)
B142 P 1202613 YM(180) Int. Rate Diff. (Type 4)
B143 P 4548590 YM(120) Int. Rate Diff. (Type 2A)
B144 P 3032893 $250+YM(120) Int. Rate Diff. (Type 1A)
A145 C 51424 10/1/08 LO(118)/OPEN(2)/DEF NAP
B146 P 4548707 YM(120) Int. Rate Diff. (Type 2A)
B147 P 2006963 $250+YM(180) Int. Rate Diff. (Type 4)
A148 C 51414 11/1/08 LO(118)/OPEN(2)/DEF NAP
A149 C 51607 7/1/09 LO(117)/OPEN(3)/DEF NAP
A150 C 51567 7/1/09 LO(118)/OPEN(2)/DEF NAP
B151 P 3059565 $500+YM(120) Int. Rate Diff. (Type 1A)
B152 P 3102464 $250+YM(120) Int. Rate Diff. (Type 1A)
A153 C 51604 7/1/09 LO(117)/OPEN(3)/DEF NAP
B154 P 3021391 $250+YM(84) Int. Rate Diff. (Type 1A)
B155 P 3056355 YM(84) Int. Rate Diff. (Type 3)
A156.1 C 51576
A156.2 C 51576
A156.3 C 51576
A156 C 51576 5/1/09 LO(118)/OPEN(2)/DEF NAP
B157 P 4542437 YM(120) Int. Rate Diff. (Type 2A)
B158 P 3057650 $500+YM(180) Int. Rate Diff. (Type 1B)
A159 C 51632 8/1/09 LO(118)/OPEN(2)/DEF NAP
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
125
SE- ORIGINATION LOAN APPRAISAL APPRAISAL
QUENCE GROUP NUMBER PROPERTY NAME VALUE DATE
------ ----------- ------- ---------------------------- --------- ---------
B118 P 4537841 Lakeside Plaza 5,175,000 4/26/95
B119 P 3054319 Silver Lake Medical Building 3,950,000 5/19/98
B120 P 3032737 Sherlock Building 3,785,000 10/20/97
B121 P 2021665 Pacifica Plaza 8,200,000 10/20/93
A122 C 51618 1750 Fifth Avenue Building 3,700,000 7/1/99
A123 C 51593 Maracay Building 2,970,000 6/3/99
A124 C 51530 West End Court 3,200,000 4/1/99
B125 P 1795152 Mill Creek Clinic 3,280,000 4/7/98
A126 C 51457 Century Plaza 3,225,000 11/13/98
A127.1 C 51579 Innkeepers-Summerfield Suites-Belmont
A127.2 C 51579 Innkeepers-Residence Inn-Tukwila(Seattle)
A127.3 C 51579 Innkeepers-Summerfield Suites-Irving (Los Colinas)
A127.4 C 51579 Innkeepers-Residence Inn-Bellevue
A127.5 C 51579 Innkeepers-Summerfield Suites-W. Hollywood
A127.6 C 51579 Innkeepers-Residence Inn-Lynnwood
A127.7 C 51579 Innkeepers-Residence Inn-Vancouver
A127.8 C 51579 Innkeepers-Residence Inn-Lake Oswego(Portland)
A127 C 51579 INNKEEPERS PORTFOLIO (ROLL-UP) 131,250,000 8/2/99
A128 C 51635 Radisson Suites - Secaucus, NJ 21,300,000 7/26/99
A129 C 51153 Hilton Garden Inn 10,650,000 8/12/98
A130 C 51587 Biltmore Suites Hotel 6,100,000 7/13/99
B131 P 2088714 Best Western Stovall's Inn 9,500,000 10/1/92
A132 C 51824 Hawthorn Suites 3,800,000 9/1/99
B133 P 3041985 The Voyager Hotel 3,100,000 12/8/95
A134 C 51637 Rosewood Care Center - Moline 13,750,000 8/1/99
A135 C 51638 Rosewood Care Center - Peoria 11,700,000 8/1/99
----------
SUB-TOTAL CROSSED LOANS 25,450,000
B136 P 3032166 Rosewood Park Retirement 13,900,000 4/16/97
A137 C 51051 Walnut Woods of Boyertown 10,600,000 6/10/98
A138 C 51067 Hampshire Retirement 9,600,000 6/15/98
A139 C 51560 Creekwood Care Center 3,250,000 5/27/99
A140 C 50832 Cox Communications Building 15,700,000 5/21/99
B141 P 3022381 Metrocom Building 5,200,000 8/22/96
B142 P 1202613 Koretoff Industrial Complex 5,900,000 6/14/94
B143 P 4548590 Baugh Construction Building 4,550,000 5/30/97
B144 P 3032893 SRC Vision Building 4,100,000 3/6/98
A145 C 51424 C-2 Civic Center Business Park 2,350,000 10/26/98
B146 P 4548707 Oakridge Business Park 2,600,000 6/16/97
B147 P 2006963 Rancho Del Oro Commerce Ctr II 3,375,000 12/1/93
A148 C 51414 Career Guidance Foundation Center 620,000 9/22/98
A149 C 51607 Meadows Mobile Home Park 13,080,000 6/14/99
A150 C 51567 Lord Calvert Mobile Home Park 5,450,000 4/27/99
B151 P 3059565 The Meadows Mobile Home Park 4,540,000 9/12/98
B152 P 3102464 Columbia Vista Manufactured Home Park 2,725,000 1/13/96
A153 C 51604 Desert Classic Mobile Home Park 6,000,000 6/7/99
B154 P 3021391 Int'l Aviation Air Cargo Term. 12,285,000 10/11/96
B155 P 3056355 Worthington Ford of Alaska 8,700,000 11/25/97
A156.1 C 51576 I-40 Bell-6015 Plains Blvd
A156.2 C 51576 I-40 Bell-2501 Britain Drive
A156.3 C 51576 I-40 Bell-6101 Lawrence Blvd
A156 C 51576 I-40 BELL (ROLL-UP) 7,535,000 5/13/99
B157 P 4542437 Evergreen Mini-Storage 3,600,000 6/1/96
B158 P 3057650 Moss Bay Self Storage 4,500,000 6/5/98
A159 C 51632 American Store & Lock #1 2,000,000 8/10/99
==========================================================================================================================
TOTALS/WEIGHTED AVERAGE
==========================================================================================================================
126
CUT-OFF TOTAL SF/ LOAN
DATE UNITS UNIT NET BALANCE PER
SE- ORIGINATION LOAN LTV YEAR BUILT/ ROOM ROOM RENTABLE SF/UNIT/
QUENCE GROUP NUMBER RATIO RENOVATED BED BED AREA (SF) ROOM/BED
------ ----------- ------- ------- ----------- ------ ---- --------- -----------
B118 P 4537841 65% 1996 32,680 SF 32,680 102
B119 P 3054319 72% 1985 18,541 SF 18,541 154
B120 P 3032737 75% 1894/1981 55,694 SF 55,694 51
B121 P 2021665 27% 1981 105,837 SF 105,837 21
A122 C 51618 68% 1982 30,122 SF 30,122 83
A123 C 51593 67% 1998 20,433 SF 20,433 97
A124 C 51530 55% 1990 26,943 SF 26,943 65
B125 P 1795152 49% 1988 15,017 SF 15,017 107
A126 C 51457 46% 1979 20,731 SF 20,731 71
A127.1 C 51579 1995 132 Rooms 93,432
A127.2 C 51579 1985/1998 144 Rooms 89,349
A127.3 C 51579 1996 148 Rooms 104,616
A127.4 C 51579 1984/1997 120 Rooms 87,000
A127.5 C 51579 1973/1993 109 Rooms 127,171
A127.6 C 51579 1987/1998 120 Rooms 87,000
A127.7 C 51579 1987/1999 120 Rooms 78,500
A127.8 C 51579 1985/1998 112 Rooms 75,000
A127 C 51579 44% 1,005 Rooms 742,068 57,711
A128 C 51635 64% 1989 151 Rooms 144,347 90,608
A129 C 51153 57% 1998 123 Rooms 41,352 49,263
A130 C 51587 68% 1997 62 Rooms 34,880 67,136
B131 P 2088714 36% 1969/1993 290 Rooms 11,770
A132 C 51824 69% 1998 63 Rooms 35,521 41,881
B133 P 3041985 57% 1965/1979 38 Rooms 32,500 46,835
A134 C 51637 74% 1990 120 Beds 39,200 85,300
A135 C 51638 74% 1989 120 Beds 39,215 72,583
B136 P 3032166 69% 1995 144 Units 77,623 66,770
A137 C 51051 71% 1997 112 Units 59,466 67,597
A138 C 51067 72% 1997 113 Units 62,538 60,986
A139 C 51560 62% 1963/1998 50 Beds 14,000 40,526
A140 C 50832 79% 1992/1997 118,264 SF 118,264 105
B141 P 3022381 64% 1968/1992 66,210 SF 66,210 50
B142 P 1202613 53% 1977 192,700 SF 192,700 16
B143 P 4548590 68% 1970/1982 68,881 SF 68,881 45
B144 P 3032893 71% 1984 84,820 SF 84,820 34
A145 C 51424 74% 1982/1984 33,214 SF 33,214 52
B146 P 4548707 59% 1986 41,298 SF 41,298 37
B147 P 2006963 42% 1991 93,160 SF 93,160 15
A148 C 51414 74% 1970 8,250 SF 8,250 55
A149 C 51607 49% 1972 367 Pads 17,333
A150 C 51567 64% 1972 300 Pads 11,599
B151 P 3059565 46% 1975/1996 157 Pads 13,356
B152 P 3102464 69% 1993 77 Pads 24,304
A153 C 51604 28% 1972 276 Pads 6,097
B154 P 3021391 63% 1994 118,331 SF 118,331 65
B155 P 3056355 67% 1974/1979 74,923 SF 74,923 78
A156.1 C 51576 1958/1996 105,843 SF 105,843
A156.2 C 51576 1998 36,076 SF 36,076
A156.3 C 51576 1998 51,570 SF 51,570
A156 C 51576 68% 193,489 SF 193,489 26
B157 P 4542437 60% 1985 96,980 SF 96,980 22
B158 P 3057650 46% 1990 55,375 SF 55,375 38
A159 C 51632 57% 1972 61,530 SF 61,530 19
============================================================================================================
66%
============================================================================================================
127
U/W
OCCUPANCY CASH
SE- ORIGINATION LOAN OCCUPANCY AS OF U/W U/W U/W FLOW
QUENCE GROUP NUMBER PERCENT DATE REVENUES EXPENSES CASH FLOW DSCR
------ ----------- ------- --------- --------- -------- -------- --------- ----
B118 P 4537841 95% 4/14/99 665,541 207,543 432,604 1.39
B119 P 3054319 100% 9/21/99 418,221 77,373 303,077 1.14
B120 P 3032737 100% 9/20/99 664,903 233,653 326,591 1.25
B121 P 2021665 98% 9/11/99 2,204,103 1,022,678 965,602 1.32
A122 C 51618 100% 6/30/99 483,028 158,472 300,874 1.35
A123 C 51593 100% 9/1/99 398,681 147,355 231,140 1.29
A124 C 51530 100% 7/1/99 398,691 111,048 243,326 1.60
B125 P 1795152 100% 9/21/99 405,800 150,943 223,770 1.11
A126 C 51457 100% 7/21/99 412,245 168,391 194,730 1.41
A127.1 C 51579 82% 5/31/99
A127.2 C 51579 91% 5/31/99
A127.3 C 51579 78% 5/31/99
A127.4 C 51579 84% 5/31/99
A127.5 C 51579 81% 5/31/99
A127.6 C 51579 86% 5/31/99
A127.7 C 51579 87% 5/31/99
A127.8 C 51579 74% 5/31/99
A127 C 51579 84% 5/31/99 33,634,257 18,879,459 13,073,085 2.49
A128 C 51635 78% 6/30/99 7,568,831 5,297,407 1,968,671 1.46
A129 C 51153 70% 6/30/99 3,010,385 1,822,352 1,037,514 1.70
A130 C 51587 77% 6/30/99 1,651,321 996,225 589,043 1.40
B131 P 2088714 75% 9/1/99 4,621,478 3,858,270 532,134 1.59
A132 C 51824 75% 8/31/99 1,066,823 602,539 410,943 1.55
B133 P 3041985 95% 4/20/99 1,118,095 789,851 272,339 1.30
A134 C 51637 93% 6/30/99 6,276,689 4,543,823 1,702,866 1.65
A135 C 51638 76% 8/31/99 5,493,679 4,179,552 1,284,127 1.47
B136 P 3032166 97% 9/20/99 1,447,381 72,369 1,331,812 1.41
A137 C 51051 94% 6/30/99 1,877,352 988,615 861,737 1.33
A138 C 51067 98% 1/31/99 1,849,239 1,039,447 781,542 1.33
A139 C 51560 94% 6/1/99 1,137,148 821,310 301,638 1.53
A140 C 50832 100% 7/31/99 1,639,995 248,724 1,292,399 1.10
B141 P 3022381 100% 9/16/99 701,495 243,587 423,006 1.18
B142 P 1202613 100% 9/12/99 934,537 223,833 628,456 1.24
B143 P 4548590 100% 9/24/99 472,131 61,513 350,323 1.11
B144 P 3032893 100% 4/26/99 435,127 13,054 384,209 1.35
A145 C 51424 100% 6/30/99 328,333 103,691 202,372 1.30
B146 P 4548707 100% 9/26/99 226,298 25,466 179,449 1.13
B147 P 2006963 93% 9/12/99 745,128 204,499 499,748 2.11
A148 C 51414 100% 11/18/99 74,965 13,441 57,044 1.30
A149 C 51607 91% 9/30/99 2,005,962 1,094,766 892,846 1.62
A150 C 51567 85% 8/30/99 931,973 492,295 417,178 1.30
B151 P 3059565 100% 4/18/99 719,247 335,250 362,420 1.92
B152 P 3102464 100% 4/1/99 385,735 162,737 219,148 1.20
A153 C 51604 99% 7/19/99 847,198 417,587 415,811 2.69
B154 P 3021391 100% 4/12/99 1,672,486 554,812 1,047,050 1.38
B155 P 3056355 100% 11/25/97 810,000 40,500 710,580 1.38
A156.1 C 51576 99% 6/23/99
A156.2 C 51576 99% 6/23/99
A156.3 C 51576 98% 6/23/99
A156 C 51576 99% 6/23/99 952,408 307,760 615,096 1.30
B157 P 4542437 88% 4/15/99 551,586 209,058 327,981 1.31
B158 P 3057650 95% 9/27/99 502,250 157,456 336,488 1.30
A159 C 51632 84% 7/23/99 316,494 130,454 176,806 1.62
==================================================================================================================
1.43
==================================================================================================================
128
MOST
U/W RECENT MOST MOST MOST
SE- ORIGINATION LOAN U/W RESERVES END RECENT RECENT RECENT
QUENCE GROUP NUMBER RESERVES PER UNIT DATE REVENUES EXPENSES CASH FLOW
------ ----------- ------- -------- -------- -------- -------- -------- ---------
B118 P 4537841 6,536 0.20 12/31/99 854,549 236,156 608,783
B119 P 3054319 4,635 0.25 12/31/99 457,374 101,448 355,926
B120 P 3032737 13,924 0.25 12/31/99 820,619 275,027 522,301
B121 P 2021665 26,459 0.25 12/31/99 2,522,112 1,034,911 1,275,377
A122 C 51618 6,024 0.20
A123 C 51593 3,066 0.15 12/31/99 335,362 113,607 203,689
A124 C 51530 5,382 0.20 12/31/99 446,163 110,991 301,944
B125 P 1795152 3,754 0.25 12/31/99 475,118 158,697 316,421
A126 C 51457 3,928 0.19 12/31/99 443,167 162,041 254,726
A127.1 C 51579
A127.2 C 51579
A127.3 C 51579
A127.4 C 51579
A127.5 C 51579
A127.6 C 51579
A127.7 C 51579
A127.8 C 51579
A127 C 51579 1,681,713 1,673.35 12/31/99 35,735,579 17,494,846 16,819,745
A128 C 51635 302,753 2,004.99 12/31/99 8,109,715 4,823,905 2,983,056
A129 C 51153 150,519 1,223.73 12/31/99 3,171,745 2,110,176 987,084
A130 C 51587 66,053 1,065.37 12/31/99 1,714,954 1,082,029 632,925
B131 P 2088714 231,074 796.81 12/31/99 4,981,121 3,690,869 1,290,252
A132 C 51824 53,341 846.68
B133 P 3041985 55,905 1,471.18 12/31/99 1,110,894 628,550 482,344
A134 C 51637 30,000 250.00 6/30/99 6,368,652 4,258,242 2,110,410
A135 C 51638 30,000 250.00 6/30/99 5,724,603 3,985,029 1,739,574
B136 P 3032166 43,200 300.00 12/31/99 1,569,265 1,569,265
A137 C 51051 27,000 241.07 12/31/99 1,936,032 950,992 958,904
A138 C 51067 28,250 250.00 12/31/99 1,948,135 1,097,409 825,076
A139 C 51560 14,200 284.00 12/31/99 1,211,813 848,163 363,650
A140 C 50832 5,913 0.05 12/31/99 1,830,847 291,737 1,443,110
B141 P 3022381 13,242 0.20 12/31/99 1,231,079 182,612 1,048,466
B142 P 1202613 38,540 0.20 12/31/99 1,078,052 207,970 811,170
B143 P 4548590 13,776 0.20 12/31/99 515,918 53,350 458,648
B144 P 3032893 12,723 0.15 12/31/99 486,019 486,019
A145 C 51424 2,681 0.08 12/31/99 386,584 120,314 244,010
B146 P 4548707 8,260 0.20 12/31/99 258,751 12,396 246,355
B147 P 2006963 13,974 0.15 12/31/99 816,701 258,994 557,707
A148 C 51414 1,650 0.20 12/31/99 117,653 39,653 73,520
A149 C 51607 18,350 50.00 12/31/98 2,164,287 1,038,618 1,125,669
A150 C 51567 22,500 75.00 12/31/98 953,606 453,999 480,607
B151 P 3059565 21,577 137.43 12/31/99 770,091 366,049 404,042
B152 P 3102464 3,850 50.00 12/31/98 410,007 144,992 234,314
A153 C 51604 13,800 50.00 12/31/99 945,692 387,248 558,031
B154 P 3021391 17,750 0.15 12/31/99 1,935,002 592,600 1,342,402
B155 P 3056355 18,731 0.25
A156.1 C 51576
A156.2 C 51576
A156.3 C 51576 29,552 0.15
A156 C 51576
B157 P 4542437 14,547 0.15 12/31/99 587,008 159,168 427,840
B158 P 3057650 8,306 0.15 12/31/99 565,382 131,733 433,649
A159 C 51632 9,234 0.15 12/31/99 377,591 145,090 225,728
=======================================================================================================================
=======================================================================================================================
129
2ND
MOST 2ND MOST
RECENT MOST 2ND 2ND 2ND RECENT
CASH RECENT MOST MOST MOST CASH
SE- ORIGINATION LOAN FLOW END RECENT RECENT RECENT FLOW
QUENCE GROUP NUMBER DSCR DATE REVENUES EXPENSES CASH FLOW DSCR
------ ----------- ------- ------ -------- -------- -------- --------- ------
B118 P 4537841 1.95 12/31/98 698,765 207,291 419,219 1.34
B119 P 3054319 1.34 12/31/98 245,794 43,973 201,821 0.76
B120 P 3032737 1.99 12/31/98 761,677 222,308 98,457 0.38
B121 P 2021665 1.74 12/31/98 2,248,292 988,736 1,151,094 1.57
A122 C 51618
A123 C 51593 1.14
A124 C 51530 1.99 12/31/98 425,697 91,276 299,421 1.97
B125 P 1795152 1.56 12/31/98 468,622 130,653 310,846 1.54
A126 C 51457 1.84 12/31/98 455,054 164,890 228,118 1.65
A127.1 C 51579
A127.2 C 51579
A127.3 C 51579
A127.4 C 51579
A127.5 C 51579
A127.6 C 51579
A127.7 C 51579
A127.8 C 51579
A127 C 51579 3.21 12/31/98 35,494,380 17,829,853 17,496,542 3.34
A128 C 51635 2.21 12/31/98 7,724,530 5,202,806 2,398,620 1.78
A129 C 51153 1.61 12/31/98 2,928,343 1,702,262 1,226,081 2.01
A130 C 51587 1.50 12/31/98 1,579,710 901,828 613,922 1.45
B131 P 2088714 3.86 12/31/98 4,621,478 3,626,007 995,471 2.98
A132 C 51824
B133 P 3041985 2.30 12/31/98 1,162,747 681,855 480,892 2.29
A134 C 51637 2.05 6/30/98 5,820,466 4,188,620 1,631,846 1.59
A135 C 51638 1.99 6/30/98 5,724,603 3,985,029 1,739,574 1.99
1.66 12/31/98 1,470,401 1,470,401 1.55
B136 P 3032166 1.48
A137 C 51051 1.40
A138 C 51067 1.85 12/31/98 1,062,902 783,700 279,202 1.42
A139 C 51560 1.23 12/31/98 1,556,380 426,076 1,130,304 0.96
A140 C 50832 2.91 4/30/98 743,878 208,652 535,226 1.49
B141 P 3022381 1.60 12/31/98 970,855 163,977 775,053 1.52
B142 P 1202613 1.46 12/31/98 504,581 37,906 466,675 1.48
B143 P 4548590 1.71
B144 P 3032893 1.57 12/31/98 238,103 124,934 94,316 0.61
A145 C 51424 1.55 12/31/98 177,659 14,151 145,745 0.92
B146 P 4548707 2.36 12/31/98 749,381 190,675 556,369 2.35
B147 P 2006963 1.68 12/31/98 90,702 38,711 51,991 1.19
A148 C 51414 2.04 12/31/97 2,175,166 991,555 1,183,611 2.14
A149 C 51607 1.50 12/31/97 787,800 384,225 403,575 1.26
A150 C 51567 2.14 12/31/98 719,247 332,270 386,977 2.05
B151 P 3059565 1.29
B152 P 3102464 2.72 12/31/98 885,378 382,198 491,580 3.18
A153 C 51604 3.61 12/31/98 1,690,281 531,920 1,154,682 1.52
B154 P 3021391
B155 P 3056355
A156.1 C 51576
A156.2 C 51576
A156.3 C 51576
A156 C 51576
B157 P 4542437 1.71 12/31/98 561,948 214,208 347,740 1.39
B158 P 3057650 1.68 12/31/98 507,430 127,321 380,109 1.47
A159 C 51632 2.07 12/31/98 313,626 108,931 197,495 1.81
===========================================================================================================
===========================================================================================================
130
LARGEST LARGEST
LARGEST TENANT TENANT
TENANT % OF LEASE
SE- ORIGINATION LOAN LEASED TOTAL EXPIRA
QUENCE GROUP NUMBER LARGEST TENANT SF SF TION
------ ----------- ------- -------------------- ------- ------- -------
B118 P 4537841 Belltown Corporation 3,426 10% 1/31/04
B119 P 3054319 Silver Lake Family Medical NAV 9/30/07
B120 P 3032737 Zimmer Gunsul Frasca 24,845 45% 9/30/07
B121 P 2021665 Sizzler International 35,975 34% 10/31/01
A122 C 51618 County of San Diego 21,930 73% 6/30/04
A123 C 51593 REMax 8,896 44% 12/31/04
A124 C 51530 ENH Faculty Associates 12,367 46% 12/31/04
B125 P 1795152 Stevens/M.C. Family Practice 7,127 47% 12/31/06
A126 C 51457 Monolith 10,003 48% NAV
A127.1 C 51579
A127.2 C 51579
A127.3 C 51579
A127.4 C 51579
A127.5 C 51579
A127.6 C 51579
A127.7 C 51579
A127.8 C 51579
A127 C 51579
A128 C 51635
A129 C 51153
A130 C 51587
B131 P 2088714
A132 C 51824
B133 P 3041985
A134 C 51637
A135 C 51638
B136 P 3032166
A137 C 51051
A138 C 51067
A139 C 51560
A140 C 50832 Cox Communications 118,264 100% 10/26/07
B141 P 3022381 Metricom, Incorporated 66,210 100% 1/31/02
B142 P 1202613 The Roman Catholic Archbishop 20,470 11% 7/14/01
B143 P 4548590 Baugh Construction 22,634 33% 7/31/07
B144 P 3032893 SRC Vision, Inc. 84,820 100% NAP
A145 C 51424 AHCCCS 18,533 56% 10/31/06
B146 P 4548707 Emerald City Gymnastics 12,816 31% NAV
B147 P 2006963 New Song Community Church 13,704 15% 2/28/01
A148 C 51414 Career Guidance Foundation 8,250 100% 8/1/08
A149 C 51607
A150 C 51567
B151 P 3059565
B152 P 3102464
A153 C 51604
B154 P 3021391 Federal Express 45,422 38% 11/30/10
B155 P 3056355 Worthington Ford of Alaska Inc 74,923 100% 7/31/07
A156.1 C 51576
A156.2 C 51576
A156.3 C 51576
A156 C 51576
B157 P 4542437
B158 P 3057650
A159 C 51632
=====================================================================================================================
=====================================================================================================================
131
SECOND SECOND
SECOND LARGEST LARGEST
LARGEST TENANT TENANT
TENANT % OF LEASE
SE- ORIGINATION LOAN SECOND LARGEST LEASED TOTAL EXPIRA-
QUENCE GROUP NUMBER TENANT SF SF TION
------ ----------- ------ --------------- ------- ------- -------
B118 P 4537841 Univ of WA 2,970 9% 10/31/01
B119 P 3054319 Chris Vance NAV 4/30/01
B120 P 3032737 USWeb Corporation 8,442 15% 7/1/02
B121 P 2021665 Compaq Computer Corporation 17,485 17% 10/31/01
A122 C 51618 Scripps Health 8,192 27% 12/31/03
A123 C 51593 Maracay Homes 8,155 40% 12/31/03
A124 C 51530 Manpower, Inc. 5,730 21% 7/31/04
B125 P 1795152 Mill Creek Physical Therapy 2,704 18% 6/30/03
A126 C 51457 Gregory Bragg & Assoc. 5,377 26% 12/31/01
A127.1 C 51579
A127.2 C 51579
A127.3 C 51579
A127.4 C 51579
A127.5 C 51579
A127.6 C 51579
A127.7 C 51579
A127.8 C 51579
A127 C 51579
A128 C 51635
A129 C 51153
A130 C 51587
B131 P 2088714
A132 C 51824
B133 P 3041985
A134 C 51637
A135 C 51638
B136 P 3032166
A137 C 51051
A138 C 51067
A139 C 51560
A140 C 50832
B141 P 3022381
B142 P 1202613 Hoon Sung Kim, dba Hi! Sports 20,192 10% 8/31/02
B143 P 4548590 Newman-Burrows 13,822 20% 1/4/03
B144 P 3032893
A145 C 51424 City of Phoenix Print Shop 14,681 44% 8/31/02
B146 P 4548707 Puget Sound Envelope, Inc. 12,201 30% NAV
B147 P 2006963 Ambassador Family 11,687 13% 3/31/01
A148 C 51414
A149 C 51607
A150 C 51567
B151 P 3059565
B152 P 3102464
A153 C 51604
B154 P 3021391 U.S. Postal Service 40,446 34% 11/19/05
B155 P 3056355
A156.1 C 51576
A156.2 C 51576
A156.3 C 51576
A156 C 51576
B157 P 4542437
B158 P 3057650
A159 C 51632
=================================================================================================================
=================================================================================================================
132
PREPAYMENT LOCK-OUT/PREPAYMENT ANALYSIS
BASED ON OUTSTANDING PRINCIPAL BALANCE(1)
ALL MORTGAGE LOANS
SEP-2000 SEP-2001 SEP-2002 SEP-2003 SEP-2004 SEP-2005 SEP-2006
-------- -------- -------- -------- -------- -------- --------
Locked Out............................................ 80.49% 82.19% 82.94% 81.89% 84.15% 85.31% 88.05%
Yield Maintenance..................................... 19.51% 17.81% 17.06% 18.11% 15.85% 14.37% 11.63%
3%.................................................... 0.00% 0.00% 0.00% 0.00% 0.00% 0.32% 0.00%
2%.................................................... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.33%
1%.................................................... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
No Penalty............................................ 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
------- ------- ------- ------- ------- ------- -------
Total................................................. 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
======= ======= ======= ======= ======= ======= =======
Total Beginning Balance (in millions)(2) $771.18 $739.67 $720.95 $699.93 $671.78 $652.40 $621.44
Percent of Initial Balance(2)......................... 100.00% 95.91% 93.49% 90.76% 87.11% 84.60% 80.58%
SEP-2007 SEP-2008 SEP-2009 SEP-2010 SEP-2011 SEP-2012 SEP-2013
-------- -------- -------- -------- -------- -------- --------
Locked Out............................................ 91.39% 90.35% 12.48% 86.01% 87.99% 78.82% 45.88%
Yield Maintenance..................................... 6.76% 5.04% 4.17% 13.99% 12.01% 21.18% 20.41%
3%.................................................... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2%.................................................... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1%.................................................... 0.34% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
No Penalty............................................ 1.51% 4.61% 83.35% 0.00% 0.00% 0.00% 33.70%
------- ------- ------- ------- ------- ------- -------
Total................................................. 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
======= ======= ======= ======= ======= ======= =======
Total Beginning Balance (in millions)(2) $587.58 $523.62 $236.71 $ 33.24 $ 31.32 $ 15.34 $ 14.12
Percent of Initial Balance(2)......................... 76.19% 67.90% 30.69% 4.31% 4.06% 1.99% 1.83%
SEP-2014 SEP-2015
-------- --------
Locked Out............................................ 0.00% 0.00%
Yield Maintenance..................................... 50.48% 100.00%
3%.................................................... 0.00% 0.00%
2%.................................................... 0.00% 0.00%
1%.................................................... 0.00% 0.00%
No Penalty............................................ 49.52% 0.00%
------- -------
Total................................................. 100.00% 100.00%
======= =======
Total Beginning Balance (in millions)(2) $ 5.33 $ 2.48
Percent of Initial Balance(2)......................... 0.69% 0.32%
(1) Prepayment provisions in effect as a percentage of outstanding loan balances
as of the indicated date assuming no prepayments, or in the case of the
Group B, 6% CPR after the expiration of the applicable Lock-Out Period, if
any.
(2) As of the Commencement Date.
A-7
133
PREPAYMENT LOCK-OUT/PREPAYMENT ANALYSIS
BASED ON OUTSTANDING PRINCIPAL BALANCE(1)
GROUP A MORTGAGE LOANS
SEP-2000 SEP-2001 SEP-2002 SEP-2003 SEP-2004 SEP-2005 SEP-2006
-------- -------- -------- -------- -------- -------- --------
Locked Out............................................ 94.44% 94.75% 94.19% 91.48% 91.96% 91.97% 93.21%
Yield Maintenance..................................... 5.56% 5.25% 5.81% 8.52% 8.04% 7.69% 6.44%
3%.................................................... 0.00% 0.00% 0.00% 0.00% 0.00% 0.34% 0.00%
2%.................................................... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.35%
1%.................................................... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
No Penalty............................................ 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
------- ------- ------- ------- ------- ------- -------
Total................................................. 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
======= ======= ======= ======= ======= ======= =======
Total Beginning Balance (in millions)(2).............. $657.23 $641.62 $634.87 $626.60 $614.73 $605.17 $587.00
Percent of Initial Balance(2)......................... 100.00% 97.62% 96.60% 95.34% 93.53% 92.08% 89.31%
SEP-2007 SEP-2008 SEP-2009 SEP-2010 SEP-2011 SEP-2012 SEP-2013
-------- -------- -------- -------- -------- -------- --------
Locked Out............................................ 94.93% 91.12% 12.60% 89.44% 89.53% 79.81% 45.88%
Yield Maintenance..................................... 4.08% 4.24% 3.29% 10.56% 10.47% 20.19% 20.41%
3%.................................................... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2%.................................................... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1%.................................................... 0.35% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
No Penalty............................................ 0.63% 4.65% 84.11% 0.00% 0.00% 0.00% 33.70%
------- ------- ------- ------- ------- ------- -------
Total................................................. 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
======= ======= ======= ======= ======= ======= =======
Total Beginning Balance (in millions)(2).............. $565.65 $519.21 $234.55 $ 31.97 $ 30.78 $ 15.15 $ 14.12
Percent of Initial Balance(2)......................... 86.07% 79.00% 35.69% 4.86% 4.68% 2.31% 2.15%
SEP-2014 SEP-2015
-------- --------
Locked Out............................................ 0.00% 0.00%
Yield Maintenance..................................... 50.48% 100.00%
3%.................................................... 0.00% 0.00%
2%.................................................... 0.00% 0.00%
1%.................................................... 0.00% 0.00%
No Penalty............................................ 49.52% 0.00%
------- -------
Total................................................. 100.00% 100.00%
======= =======
Total Beginning Balance (in millions)(2).............. $ 5.33 $ 2.48
Percent of Initial Balance(2)......................... 0.81% 0.38%
(1) Prepayment provisions in effect as a percentage of outstanding loan balances
as of the indicated date assuming no prepayments, or in the case of the
Group B, 6% CPR after the expiration of the applicable Lock-Out Period, if
any.
(2) As of the Commencement Date.
A-8
134
PREPAYMENT LOCK-OUT/PREPAYMENT ANALYSIS
BASED ON OUTSTANDING PRINCIPAL BALANCE(1)
GROUP B MORTGAGE LOANS
SEP-2000 SEP-2001 SEP-2002 SEP-2003 SEP-2004 SEP-2005
-------- -------- -------- -------- -------- --------
Locked Out.................................................. 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Yield Maintenance........................................... 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
3%.......................................................... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2%.......................................................... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1%.......................................................... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
No Penalty.................................................. 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
------- ------- ------- ------- ------- -------
Total....................................................... 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
======= ======= ======= ======= ======= =======
Total Beginning Balance (in millions)(2).................... $113.95 $ 98.05 $ 86.08 $ 73.33 $ 57.05 $ 47.23
Percent of Initial Balance(2)............................... 100.00% 86.05% 75.54% 64.35% 50.06% 41.45%
SEP-2006 SEP-2007 SEP-2008 SEP-2009 SEP-2010 SEP-2011
-------- -------- -------- -------- -------- --------
Locked Out.................................................. 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Yield Maintenance........................................... 100.00% 75.90% 100.00% 100.00% 100.00% 100.00%
3%.......................................................... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2%.......................................................... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1%.......................................................... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
No Penalty.................................................. 0.00% 24.10% 0.00% 0.00% 0.00% 0.00%
------- ------- ------- ------- ------- -------
Total....................................................... 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
======= ======= ======= ======= ======= =======
Total Beginning Balance (in millions)(2).................... $ 34.44 $ 21.93 $ 4.41 $ 2.15 $ 1.28 $ 0.54
Percent of Initial Balance(2)............................... 30.22% 19.24% 3.87% 1.89% 1.12% 0.47%
SEP-2012 SEP-2013
-------- --------
Locked Out.................................................. 0.00% 0.00%
Yield Maintenance........................................... 100.00% 0.00%
3%.......................................................... 0.00% 0.00%
2%.......................................................... 0.00% 0.00%
1%.......................................................... 0.00% 0.00%
No Penalty.................................................. 0.00% 0.00%
------- -------
Total....................................................... 100.00% 0.00%
======= =======
Total Beginning Balance (in millions)(2).................... $ 0.19 $ 0.00
Percent of Initial Balance(2)............................... 0.17% 0.00%
(1) Prepayment provisions in effect as a percentage of outstanding loan balances
as of the indicated date assuming no prepayments, or in the case of the
Group B, 6% CPR after the expiration of the applicable Lock-Out Period, if
any.
(2) As of the Commencement Date.
A-9
135
PROPERTY TYPE -- ALL LOANS
% OF WEIGHTED WEIGHTED
NUMBER OF % OF AGGREGATE INITIAL AVERAGE MIN/MAX AVERAGE
MORTGAGE MORTGAGE CUT-OFF DATE POOL UNDERWRITING UNDERWRITING CUT-OFF DATE
PROPERTY TYPE PROPERTIES PROPERTIES BALANCE BALANCE DSCR DSCR LTV RATIO
------------- ---------- ---------- ------------ ------------ ------------ ------------ ------------
Retail............... 57 32.0% $265,632,751 34.4% 1.36x 1.10/2.13x 66.0%
Multifamily.......... 59 33.1% 205,168,694 26.6% 1.28x 1.11/1.65x 73.0%
Office............... 20 11.2% 96,778,240 12.5% 1.31x 1.11/1.60x 66.9%
Hotel................ 14 7.9% 89,735,004 11.6% 2.15x 1.30/2.49x 49.9%
Health Care.......... 6 3.4% 45,049,342 5.8% 1.46x 1.33/1.65x 71.9%
Industrial........... 9 5.1% 30,028,451 3.9% 1.21x 1.10/2.11x 69.6%
Mobile Home.......... 5 2.8% 15,492,168 2.0% 1.65x 1.20/2.69x 51.9%
Special Purpose...... 2 1.1% 13,545,370 1.8% 1.38x 1.38/1.38x 64.6%
Mini Storage......... 6 3.4% 10,492,425 1.4% 1.34x 1.30/1.62x 60.7%
--- ----- ------------ ----- ---- --------- ----
Total/Wtd Avg........ 178 100.0% $771,922,444 100.0% 1.43x 1.10/2.69x 66.2%
=== ===== ============ ===== ==== ========= ====
WEIGHTED
MIN/MAX AVERAGE
CUT-OFF DATE MORTGAGE
PROPERTY TYPE LTV RATIO RATE
------------- ------------ --------
Retail............... 32.1/79.5% 8.013%
Multifamily.......... 49.7/86.3% 7.723%
Office............... 27.0/78.7% 7.928%
Hotel................ 35.9/69.4% 7.615%
Health Care.......... 62.3/74.4% 8.053%
Industrial........... 42.5/79.1% 8.371%
Mobile Home.......... 28.0/68.7% 7.882%
Special Purpose...... 62.7/67.1% 7.696%
Mini Storage......... 46.3/67.7% 8.358%
--------- -----
Total/Wtd Avg........ 27.0/86.3% 7.892%
========= =====
CUT-OFF DATE BALANCES -- ALL LOANS
% OF WEIGHTED WEIGHTED WEIGHTED
RANGE OF NUMBER OF % OF AGGREGATE INITIAL AVERAGE AVERAGE AVERAGE
CUT-OFF DATE MORTGAGE MORTGAGE CUT-OFF DATE POOL UNDERWRITING CUT-OFF DATE MORTGAGE
BALANCES LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
------------ --------- -------- ------------ ------------ ------------ ------------ --------
$456,316 -- $999,999..... 8 5.0% $ 6,613,501 0.9% 1.28x 68.3% 8.146%
$1,000,000 -- $1,999,999.... 33 20.8% 51,357,116 6.7% 1.42x 61.7% 8.096%
$2,000,000 -- $2,999,999.... 45 28.3% 111,340,142 14.4% 1.38x 64.7% 7.909%
$3,000,000 -- $3,999,999.... 20 12.6% 69,653,188 9.0% 1.33x 63.1% 8.121%
$4,000,000 -- $4,999,999.... 10 6.3% 44,548,854 5.8% 1.40x 66.4% 7.821%
$5,000,000 -- $7,499,999.... 17 10.7% 100,753,434 13.1% 1.30x 68.6% 7.623%
$7,500,000 -- $9,999,999.... 8 5.0% 66,666,978 8.6% 1.38x 66.6% 7.900%
$10,000,000 -- $14,999,999.... 9 5.7% 103,232,868 13.4% 1.36x 71.8% 8.170%
$15,000,000 -- $19,999,999.... 5 3.1% 88,034,231 11.4% 1.27x 73.5% 7.677%
$20,000,000 -- $29,999,999.... 3 1.9% 71,722,131 9.3% 1.32x 71.2% 8.340%
$30,000,000 -- $58,000,000.... 1 0.6% 58,000,000 7.5% 2.49x 44.2% 7.160%
--- ----- ------------ ----- ---- ---- -----
Total/Wtd Avg................. 159 100.0% $771,922,444 100.0% 1.43x 66.2% 7.892%
=== ===== ============ ===== ==== ==== =====
A-10
136
GEOGRAPHIC DISTRIBUTION(1) -- ALL LOANS
% OF WEIGHTED WEIGHTED WEIGHTED
NUMBER OF % OF AGGREGATE INITIAL AVERAGE AVERAGE AVERAGE
MORTGAGED MORTGAGED CUT-OFF DATE POOL UNDERWRITING CUT-OFF DATE MORTGAGE
PROPERTY LOCATION PROPERTIES PROPERTIES BALANCE BALANCE DSCR LTV RATIO RATE
----------------- ---------- ---------- ------------ ------- ------------ ------------ --------
AK.................... 2 1.1% $ 7,617,960 1.0% 1.36x 64.8% 7.462%
AL.................... 1 0.6% 1,725,206 0.2% 1.84x 50.7% 7.990%
AZ.................... 11 6.2% 48,345,756 6.3% 1.32x 74.4% 7.979%
CA.................... 46 25.8% 184,857,856 23.9% 1.45x 62.1% 7.843%
Los Angeles......... 13 7.3% 46,925,182 6.1% 1.49x 61.3% 7.633%
San Bernardino...... 1 0.6% 21,895,906 2.8% 1.30x 74.9% 8.430%
San Diego........... 6 3.4% 19,279,060 2.5% 1.24x 74.1% 8.068%
San Mateo........... 2 1.1% 19,249,419 2.5% 2.02x 50.4% 7.420%
Merced.............. 2 1.1% 9,865,066 1.3% 1.26x 66.4% 7.028%
Marin............... 2 1.1% 9,426,242 1.2% 1.21x 75.2% 7.467%
Orange.............. 4 2.2% 9,417,281 1.2% 1.56x 47.6% 8.072%
Contra Costa........ 2 1.1% 7,837,121 1.0% 1.58x 48.1% 7.829%
Alameda............. 3 1.7% 7,043,570 0.9% 1.43x 55.5% 8.599%
Sonoma.............. 2 1.1% 6,625,699 0.9% 1.51x 63.4% 7.620%
Other Counties...... 9 5.1% 27,293,310 3.5% 1.34x 57.1% 8.079%
DE.................... 1 0.6% 3,966,443 0.5% 1.21x 79.3% 7.553%
FL.................... 4 2.2% 41,702,241 5.4% 1.33x 71.5% 7.943%
GA.................... 8 4.5% 20,619,799 2.7% 1.32x 70.3% 8.201%
IA.................... 2 1.1% 4,079,136 0.5% 1.51x 56.6% 7.344%
ID.................... 1 0.6% 2,096,962 0.3% 1.92x 46.2% 7.375%
IL.................... 5 2.8% 27,589,480 3.6% 1.49x 71.7% 8.674%
IN.................... 2 1.1% 6,070,800 0.8% 1.26x 72.3% 8.181%
LA.................... 3 1.7% 7,257,928 0.9% 1.91x 46.0% 7.987%
MA.................... 1 0.6% 4,290,570 0.6% 1.65x 51.7% 7.090%
MD.................... 3 1.7% 14,897,516 1.9% 1.28x 73.3% 7.661%
MI.................... 1 0.6% 10,594,358 1.4% 1.25x 74.1% 8.080%
MN.................... 1 0.6% 795,656 0.1% 1.25x 72.3% 8.420%
MO.................... 1 0.6% 2,369,494 0.3% 1.20x 71.8% 8.030%
MS.................... 1 0.6% 2,080,395 0.3% 1.84x 50.7% 7.990%
NC.................... 6 3.4% 32,020,565 4.1% 1.34x 74.4% 7.586%
NJ.................... 3 1.7% 30,278,306 3.9% 1.43x 60.1% 8.129%
NV.................... 7 3.9% 55,067,535 7.1% 1.33x 72.3% 7.753%
NY.................... 7 3.9% 14,954,554 1.9% 1.29x 66.9% 7.371%
OR.................... 8 4.5% 29,600,408 3.8% 1.50x 65.6% 8.207%
PA.................... 1 0.6% 7,570,819 1.0% 1.33x 71.4% 6.770%
SC.................... 7 3.9% 34,677,882 4.5% 1.25x 71.1% 7.928%
TX.................... 23 12.9% 90,120,768 11.7% 1.50x 63.0% 8.166%
UT.................... 1 0.6% 1,109,663 0.1% 1.30x 68.1% 7.930%
VA.................... 5 2.8% 25,223,557 3.3% 1.24x 77.6% 7.588%
WA.................... 16 9.0% 60,340,829 7.8% 1.77x 55.6% 7.606%
--- ----- ------------ ----- ---- ---- -----
Total/Weighted
Average............. 178 100.0% $771,922,444 100.0% 1.43x 66.2% 7.892%
=== ===== ============ ===== ==== ==== =====
- ---------------
(1) States or counties in which the respective Mortgaged Properties are located.
For Mortgage Loans secured by multiple properties, the Cut-Off Date Balance
is allocated.
A-11
137
UNDERWRITING DEBT SERVICE COVERAGE RATIO -- ALL LOANS
% OF WEIGHTED WEIGHTED WEIGHTED
RANGE OF NUMBER OF % OF AGGREGATE INITIAL AVERAGE AVERAGE AVERAGE
UNDERWRITING MORTGAGE MORTGAGE CUT-OFF DATE POOL UNDERWRITING CUT-OFF DATE MORTGAGE
DSCRS LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
------------ --------- -------- ------------ ------- ------------ ------------ --------
1.10x -- 1.19x....... 14 8.8% $ 52,081,133 6.7% 1.13x 69.7% 8.055%
1.20x -- 1.24x....... 18 11.3% 86,476,834 11.2% 1.21x 76.0% 8.061%
1.25x -- 1.29x....... 41 25.8% 200,625,234 26.0% 1.26x 70.7% 7.804%
1.30x -- 1.34x....... 27 17.0% 129,943,821 16.8% 1.31x 70.8% 7.763%
1.35x -- 1.39x....... 17 10.7% 59,638,496 7.7% 1.37x 65.8% 7.745%
1.40x -- 1.49x....... 15 9.4% 94,242,357 12.2% 1.43x 64.2% 8.374%
1.50x -- 1.59x....... 7 4.4% 18,719,801 2.4% 1.56x 56.5% 8.271%
1.60x -- 1.69x....... 9 5.7% 34,124,256 4.4% 1.64x 60.1% 8.137%
1.70x -- 1.79x....... 1 0.6% 6,059,309 0.8% 1.70x 56.9% 7.550%
1.80x -- 1.89x....... 2 1.3% 15,491,967 2.0% 1.84x 50.0% 8.103%
1.90x -- 1.99x....... 3 1.9% 7,196,804 0.9% 1.93x 49.5% 7.730%
2.00x -- 2.69x....... 5 3.1% 67,322,433 8.7% 2.45x 43.9% 7.281%
--- ----- ------------ ----- ---- ---- -----
Total/Wtd Avg........ 159 100.0% $771,922,444 100.0% 1.43x 66.2% 7.892%
=== ===== ============ ===== ==== ==== =====
ASSUMED DEBT SERVICE COVERAGE RATIO(1) -- ALL LOANS
% OF WEIGHTED WEIGHTED WEIGHTED
NUMBER OF % OF AGGREGATE INITIAL AVERAGE AVERAGE AVERAGE
RANGE OF MORTGAGE MORTGAGE CUT-OFF DATE POOL ASSUMED CUT-OFF DATE MORTGAGE
ASSUMED DSCRS LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
------------- --------- -------- ------------ ------- ------------ ------------ --------
1.15x -- 1.19x....... 2 1.3% $ 11,476,093 1.5% 1.17x 78.7% 7.307%
1.20x -- 1.24x....... 15 9.4% 92,346,315 12.0% 1.22x 75.9% 7.384%
1.25x -- 1.29x....... 17 10.7% 88,511,327 11.5% 1.26x 76.7% 7.671%
1.30x -- 1.34x....... 21 13.2% 114,432,660 14.8% 1.32x 72.1% 7.817%
1.35x -- 1.39x....... 23 14.5% 90,713,882 11.8% 1.37x 68.9% 8.014%
1.40x -- 1.49x....... 23 14.5% 90,240,185 11.7% 1.44x 67.0% 8.096%
1.50x -- 1.59x....... 7 4.4% 19,779,274 2.6% 1.53x 60.6% 7.857%
1.60x -- 1.69x....... 14 8.8% 84,507,113 10.9% 1.64x 63.9% 8.428%
1.70x -- 1.79x....... 5 3.1% 18,668,468 2.4% 1.76x 67.3% 8.454%
1.80x -- 1.89x....... 7 4.4% 19,450,997 2.5% 1.83x 51.9% 8.272%
1.90x -- 1.99x....... 6 3.8% 31,920,890 4.1% 1.93x 58.5% 8.191%
2.00x -- 2.99x....... 17 10.7% 106,227,916 13.8% 2.46x 47.0% 7.708%
3.00x -- 5.13x....... 2 1.3% 3,647,325 0.5% 4.73x 33.1% 7.760%
--- ----- ------------ ----- ---- ---- -----
Total/Wtd Avg........ 159 100.0% $771,922,444 100.0% 1.58x 66.2% 7.892%
=== ===== ============ ===== ==== ==== =====
- ---------------
(1) Assumed DSCR is the ratio of the Underwriting Cash Flow to a Debt Service
payment based on an 8.5% constant.
A-12
138
CUT-OFF DATE LOAN-TO-VALUE RATIO -- ALL LOANS
% OF WEIGHTED WEIGHTED WEIGHTED
RANGE OF NUMBER OF % OF AGGREGATE INITIAL AVERAGE AVERAGE AVERAGE
CUT-OFF DATE MORTGAGE MORTGAGE CUT-OFF DATE POOL UNDERWRITING CUT-OFF DATE MORTGAGE
LTV RATIO(S) LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
------------ --------- -------- ------------ ------- ------------ ------------ --------
26.99% -- 29.9%...... 2 1.3% $ 3,895,890 0.5% 1.91x 27.4% 7.505%
30.0 % -- 49.9%...... 17 10.7% 103,514,433 13.4% 2.09x 44.8% 7.560%
50.0 % -- 59.9%...... 29 18.2% 111,954,815 14.5% 1.49x 54.9% 8.111%
60.0 % -- 64.9%...... 14 8.8% 60,998,451 7.9% 1.33x 62.6% 8.095%
65.0 % -- 69.9%...... 24 15.1% 98,999,136 12.8% 1.35x 68.2% 8.249%
70.0 % -- 74.9%...... 44 27.7% 197,931,083 25.6% 1.30x 72.5% 7.931%
75.0 % -- 79.9%...... 26 16.4% 178,607,337 23.1% 1.24x 78.1% 7.659%
80.0 % -- 86.29%..... 3 1.9% 16,021,300 2.1% 1.22x 82.9% 7.731%
--- ----- ------------ ----- ---- ---- -----
Total/Wtd Avg........ 159 100.0% $771,922,444 100.0% 1.43x 66.2% 7.892%
=== ===== ============ ===== ==== ==== =====
MATURITY DATE LOAN-TO-VALUE RATIO -- ALL LOANS
WEIGHTED
% OF WEIGHTED AVERAGE WEIGHTED
RANGE OF NUMBER OF % OF AGGREGATE INITIAL AVERAGE MATURITY AVERAGE
MATURITY DATE MORTGAGE MORTGAGE CUT-OFF DATE POOL UNDERWRITING DATE MORTGAGE
LTV RATIO(S) LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
------------- --------- -------- ------------ ------- ------------ ------------ --------
0.0% -- 24.9%....... 10 6.3% $ 25,886,504 3.4% 1.59x 7.4% 8.149%
25.0% -- 49.9%....... 35 22.0% 179,788,815 23.3% 1.81x 41.2% 7.716%
50.0% -- 59.9%....... 38 23.9% 174,264,882 22.6% 1.36x 56.8% 8.141%
60.0% -- 64.9%....... 31 19.5% 132,122,710 17.1% 1.31x 62.8% 7.907%
65.0% -- 69.9%....... 32 20.1% 172,406,354 22.3% 1.27x 67.8% 7.924%
70.0% -- 74.9%....... 12 7.5% 84,821,459 11.0% 1.25x 71.0% 7.601%
75.0% -- 76.65%...... 1 0.6% 2,631,720 0.3% 1.22x 76.7% 7.310%
--- ----- ------------ ----- ---- ---- -----
Total/Wtd Avg........ 159 100.0% $771,922,444 100.0% 1.43x 56.6% 7.892%
=== ===== ============ ===== ==== ==== =====
A-13
139
MORTGAGE RATES -- ALL LOANS
WEIGHTED
WEIGHTED AVERAGE WEIGHTED
RANGE OF NUMBER OF % OF AGGREGATE % OF AVERAGE CUT-OFF AVERAGE
MORTGAGE MORTGAGE MORTGAGE CUT-OFF DATE INITIAL POOL UNDERWRITING DATE MORTGAGE
RATES LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
-------- --------- -------- ------------ ------------ ------------ ------------ --------
6.770% -- 6.999%.... 5 3.1% $ 28,524,513 3.7% 1.30x 69.8% 6.856%
7.000% -- 7.249%.... 16 10.1% 139,577,718 18.1% 1.80x 62.0% 7.141%
7.250% -- 7.499%.... 14 8.8% 43,220,843 5.6% 1.32x 69.9% 7.331%
7.500% -- 7.749%.... 17 10.7% 65,351,309 8.5% 1.37x 67.4% 7.626%
7.750% -- 7.999%.... 31 19.5% 154,313,241 20.0% 1.39x 66.2% 7.886%
8.000% -- 8.499%.... 49 30.8% 226,753,679 29.4% 1.29x 67.5% 8.192%
8.500% -- 8.999%.... 18 11.3% 93,234,055 12.1% 1.43x 67.1% 8.722%
9.000% -- 9.499%.... 6 3.8% 14,065,633 1.8% 1.41x 57.8% 9.240%
9.500% -- 9.750%.... 3 1.9% 6,881,454 0.9% 1.24x 62.0% 9.650%
--- ----- ------------ ----- ---- ---- ------
Total/Wtg Avg........ 159 100.0% $771,922,444 100.0% 1.43x 66.2% 7.892%
=== ===== ============ ===== ==== ==== ======
ORIGINAL TERM TO MATURITY -- ALL LOANS
WEIGHTED
WEIGHTED AVERAGE WEIGHTED
ORIGINAL TERM NUMBER OF % OF AGGREGATE % OF AVERAGE CUT-OFF AVERAGE
TO MATURITY MORTGAGE MORTGAGE CUT-OFF DATE INITIAL POOL UNDERWRITING DATE MORTGAGE
(MONTHS) LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
------------- --------- -------- ------------ ------------ ------------ ------------ --------
60 -- 83........... 6 3.8% $ 17,768,189 2.3% 1.53x 58.5% 8.214%
84 -- 99........... 3 1.9% 15,758,385 2.0% 1.37x 59.3% 7.638%
100 -- 119........... 4 2.5% 20,366,498 2.6% 1.33x 66.7% 7.775%
120.................. 125 78.6% 635,258,869 82.3% 1.43x 67.4% 7.883%
121 -- 179........... 7 4.4% 35,393,219 4.6% 1.55x 63.0% 8.020%
180.................. 11 6.9% 35,280,915 4.6% 1.41x 59.1% 8.019%
181 -- 239........... 3 1.9% 12,096,368 1.6% 1.51x 52.8% 7.637%
--- ----- ------------ ----- ---- ---- -----
Total/Wtd Avg........ 159 100.0% $771,922,444 100.0% 1.43x 66.2% 7.892%
=== ===== ============ ===== ==== ==== =====
ORIGINAL AMORTIZATION TERM (1) -- ALL LOANS
ORIGINAL % OF WEIGHTED WEIGHTED WEIGHTED
AMORTIZATION NUMBER OF % OF AGGREGATE INITIAL AVERAGE AVERAGE AVERAGE
TERM MORTGAGE MORTGAGE CUT-OFF DATE POOL UNDERWRITING CUT-OFF DATE MORTGAGE
(MONTHS) LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
------------ --------- -------- ------------ ------------ ------------ ------------ --------
96 -- 179........... 1 0.6% $ 2,213,015 0.3% 1.32x 27.0% 7.280%
180.................. 9 5.7% 22,448,225 2.9% 1.45x 48.3% 8.667%
181 -- 239........... 3 1.9% 8,166,628 1.1% 1.35x 47.2% 8.088%
240.................. 12 7.5% 32,280,927 4.2% 1.41x 56.7% 8.049%
241 -- 299........... 3 1.9% 66,068,925 8.6% 2.37x 46.4% 7.309%
300.................. 51 32.1% 222,868,397 28.9% 1.39x 66.8% 8.122%
301 -- 359........... 2 1.3% 7,943,536 1.0% 1.26x 64.7% 7.320%
360.................. 78 49.1% 409,932,793 53.1% 1.31x 71.4% 7.816%
--- ----- ------------ ----- ---- ---- ------
Total/Wtd Avg........ 159 100.0% $771,922,444 100.0% 1.43x 66.2% 7.892%
=== ===== ============ ===== ==== ==== ======
- ---------------
(1) For Mortgage Loans which accrue interest on the basis of actual days elapsed
during each calendar month and a 360-day year, the amortization term is the
term in which the loan would amortize if interest paid on the basis of a
30-day month and a 360-day year. The actual amortization term would be
longer.
A-14
140
REMAINING TERM TO MATURITY -- ALL LOANS
RANGE OF
REMAINING NUMBER % OF WEIGHTED WEIGHTED WEIGHTED
TERMS TO OF % OF AGGREGATE INITIAL AVERAGE AVERAGE AVERAGE
MATURITY MORTGAGED MORTGAGE CUT-OFF DATE POOL UNDERWRITING CUT-OFF DATE MORTGAGE
(MONTHS) LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
--------- --------- -------- ------------ ------- ------------ ------------ --------
2 -- 19............ 7 4.4% $ 19,981,204 2.6% 1.51x 55.0% 8.111%
20 -- 39............ 3 1.9% 9,405,411 1.2% 1.36x 50.3% 7.988%
40 -- 59............ 6 3.8% 20,780,282 2.7% 1.36x 59.5% 8.559%
60 -- 79............ 13 8.2% 40,446,055 5.2% 1.25x 63.9% 7.872%
80 -- 99............ 28 17.6% 105,036,011 13.6% 1.31x 69.1% 7.584%
100 -- 109........... 64 40.3% 290,293,079 37.6% 1.31x 70.0% 7.832%
110 -- 119........... 25 15.7% 229,649,188 29.8% 1.65x 64.8% 8.049%
120 -- 139........... 4 2.5% 27,024,477 3.5% 1.65x 53.6% 8.060%
140 -- 159........... 5 3.1% 14,874,282 1.9% 1.53x 55.4% 7.756%
160 -- 212........... 4 2.5% 14,432,455 1.9% 1.40x 66.9% 7.383%
--- ----- ------------ ----- ---- ---- -----
Total/Wtd Avg........ 159 100.0% $771,922,444 100.0% 1.43x 66.2% 7.892%
=== ===== ============ ===== ==== ==== =====
REMAINING STATED AMORTIZATION TERMS -- ALL LOANS
NUMBER % OF WEIGHTED WEIGHTED WEIGHTED
OF % OF AGGREGATE INITIAL AVERAGE AVERAGE AVERAGE
MORTGAGED MORTGAGE CUT-OFF DATE POOL UNDERWRITING CUT-OFF DATE MORTGAGE
REMAINING AMORT LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
- --------------- --------- -------- ------------ ------- ------------ ------------ --------
41 -- 149........... 8 5.0% $ 23,370,039 3.0% 1.37x 45.9% 8.544%
150 -- 174........... 8 5.0% 16,854,411 2.2% 1.43x 49.7% 8.151%
175 -- 199........... 5 3.1% 11,618,852 1.5% 1.29x 60.4% 8.384%
200 -- 224........... 3 1.9% 14,343,785 1.9% 1.63x 52.8% 7.607%
225 -- 249........... 11 6.9% 28,873,357 3.7% 1.46x 62.0% 8.197%
250 -- 274........... 13 8.2% 109,227,458 14.2% 1.95x 53.7% 7.607%
275 -- 299........... 31 19.5% 149,758,213 19.4% 1.39x 68.7% 8.136%
300 -- 324........... 5 3.1% 22,615,633 2.9% 1.19x 73.7% 8.208%
325 -- 349........... 58 36.5% 266,307,042 34.5% 1.30x 70.8% 7.661%
350 -- 351........... 17 10.7% 128,953,653 16.7% 1.36x 71.8% 8.037%
--- ----- ------------ ----- ---- ---- -----
Total/Wtd Avg........ 159 100.0% $771,922,444 100.0% 1.43x 66.2% 7.892%
=== ===== ============ ===== ==== ==== =====
SEASONING -- ALL LOANS
NUMBER % OF WEIGHTED WEIGHTED WEIGHTED
OF % OF AGGREGATE INITIAL AVERAGE AVERAGE AVERAGE
SEASONING MORTGAGED MORTGAGE CUT-OFF DATE POOL UNDERWRITING CUT-OFF DATE MORTGAGE
(MONTHS) LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
--------- --------- -------- ------------ ------- ------------ ------------ --------
9 -- 12............ 58 36.5% $441,881,546 57.2% 1.50x 66.7% 7.948%
13 -- 24............ 50 31.4% 168,826,476 21.9% 1.35x 69.0% 7.462%
25 -- 36............ 15 9.4% 51,272,095 6.6% 1.31x 70.7% 8.105%
37 -- 48............ 11 6.9% 40,321,533 5.2% 1.30x 60.3% 8.176%
49 -- 60............ 10 6.3% 27,520,538 3.6% 1.32x 63.6% 7.972%
61 -- 72............ 6 3.8% 18,895,814 2.4% 1.43x 59.0% 8.072%
73 -- 85............ 9 5.7% 23,204,442 3.0% 1.40x 46.5% 8.086%
--- ----- ------------ ----- ---- ---- -----
Total/Wtd Avg........ 159 100.0% $771,922,444 100.0% 1.43x 66.2% 7.892%
=== ===== ============ ===== ==== ==== =====
A-15
141
YEAR OF MORTGAGE ORIGINATION -- ALL LOANS
% OF WEIGHTED WEIGHTED WEIGHTED
NUMBER OF % OF AGGREGATE INITIAL AVERAGE AVERAGE AVERAGE
YEAR OF MORTGAGE MORTGAGE CUT-OFF-DATE POOL UNDERWRITING CUT-OFF DATE MORTGAGE
ORIGINATION LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
----------- --------- -------- ------------ ------- ------------ ------------ --------
1993................. 7 4.4% $ 20,343,366 2.6% 1.36x 45.8% 8.035%
1994................. 5 3.1% 12,363,364 1.6% 1.62x 55.2% 8.846%
1995................. 8 5.0% 25,922,416 3.4% 1.33x 63.1% 8.169%
1996................. 13 8.2% 39,849,023 5.2% 1.27x 60.7% 8.107%
1997................. 12 7.5% 50,270,585 6.5% 1.32x 68.6% 8.262%
1998................. 30 18.9% 109,838,736 14.2% 1.35x 68.2% 7.365%
1999................. 84 52.8% 513,334,954 66.5% 1.48x 67.2% 7.909%
--- ----- ------------ ----- ---- ---- -----
Total/Wtd Avg........ 159 100.0% $771,922,444 100.0% 1.43x 66.2% 7.892%
=== ===== ============ ===== ==== ==== =====
YEAR OF MORTGAGE MATURITY -- ALL LOANS
% OF WEIGHTED WEIGHTED WEIGHTED
NUMBER OF % OF AGGREGATE INITIAL AVERAGE AVERAGE AVERAGE
YEAR OF MORTGAGE MORTGAGE CUT-OFF DATE POOL UNDERWRITING CUT-OFF DATE MORTGAGE
MATURITY LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
-------- --------- -------- ------------ ------- ------------ ------------ --------
2000................. 1 0.6% $ 2,769,936 0.4% 1.56x 52.8% 7.755%
2001................. 5 3.1% 14,998,253 1.9% 1.52x 59.6% 8.299%
2002................. 1 0.6% 2,213,015 0.3% 1.32x 27.0% 7.280%
2003................. 4 2.5% 13,112,051 1.7% 1.33x 51.2% 8.034%
2004................. 4 2.5% 14,415,334 1.9% 1.42x 59.6% 8.482%
2005................. 2 1.3% 8,496,537 1.1% 1.33x 67.3% 7.887%
2006................. 9 5.7% 21,198,605 2.7% 1.22x 63.3% 8.107%
2007................. 12 7.5% 43,922,816 5.7% 1.29x 67.4% 8.015%
2008................. 23 14.5% 81,392,904 10.5% 1.33x 68.7% 7.391%
2009................. 85 53.5% 513,071,779 66.5% 1.46x 67.7% 7.932%
2010................. 1 0.6% 5,043,966 0.7% 1.14x 72.1% 8.000%
2011................. 1 0.6% 5,070,756 0.7% 1.35x 44.4% 8.355%
2012................. 3 1.9% 18,671,344 2.4% 1.86x 51.1% 8.085%
2013................. 4 2.5% 13,112,694 1.7% 1.53x 55.5% 7.589%
2014................. 3 1.9% 10,039,875 1.3% 1.44x 66.9% 7.247%
2018................. 1 0.6% 4,392,581 0.6% 1.30x 67.1% 7.694%
--- ----- ------------ ----- ---- ---- -----
Total/Wtd Avg........ 159 100.0% $771,922,444 100.0% 1.43x 66.2% 7.892%
=== ===== ============ ===== ==== ==== =====
A-16
142
PROPERTY TYPE -- GROUP A LOANS
% OF WEIGHTED WEIGHTED
NUMBER OF % OF AGGREGATE INITIAL AVERAGE MIN/MAX AVERAGE MIN/MAX
MORTGAGE MORTGAGE CUT-OFF DATE POOL UNDERWRITING UNDERWRITING CUT-OFF DATE CUT-OFF DATE
PROPERTY TYPE PROPERTIES PROPERTIES BALANCE BALANCE DSCR DSCR LTV RATIO LTV RATIO
------------- ---------- ---------- ------------ ------- ------------ ------------ ------------ ------------
Retail............... 42 29.6% $223,802,343 34.0% 1.35x 1.20/2.13x 68.1% 32.1/79.5%
Multifamily.......... 59 41.5% 205,168,694 31.2% 1.28x 1.11/1.65x 73.0% 49.7/86.3%
Hotel................ 12 8.5% 84,542,055 12.9% 2.19x 1.40/2.49x 50.3% 44.2/69.4%
Office............... 14 9.9% 76,338,879 11.6% 1.32x 1.12/1.60x 68.7% 45.8/78.7%
Health Care.......... 5 3.5% 35,434,521 5.4% 1.47x 1.33/1.65x 72.6% 62.3/74.4%
Industrial........... 3 2.1% 14,613,422 2.2% 1.13x 1.10/1.30x 78.3% 73.6/79.1%
Mobile Home.......... 3 2.1% 11,523,774 1.8% 1.68x 1.30/2.69x 50.2% 28.0/63.8%
Mini Storage......... 4 2.8% 6,247,666 0.9% 1.36x 1.30/1.62x 65.8% 57.5/67.7%
--- ----- ------------ ----- ---- --------- ---- ---------
142 100.0% $657,671,353 100.0% 1.44x 1.10/2.69x 67.6% 28.0/86.3%
=== ===== ============ ===== ==== ========= ==== =========
WEIGHTED
AVERAGE
MORTGAGE
PROPERTY TYPE RATE
------------- --------
Retail............... 7.909%
Multifamily.......... 7.723%
Hotel................ 7.570%
Office............... 7.993%
Health Care.......... 7.999%
Industrial........... 8.103%
Mobile Home.......... 7.996%
Mini Storage......... 8.427%
-----
7.833%
=====
CUT-OFF DATE BALANCES -- GROUP A LOANS
% OF WEIGHTED WEIGHTED WEIGHTED
RANGE OF NUMBER OF % OF AGGREGATE INITIAL AVERAGE AVERAGE AVERAGE
CUT-OFF DATE MORTGAGE MORTGAGE CUT-OFF DATE POOL UNDERWRITING CUT-OFF DATE MORTGAGE
BALANCES LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
------------ --------- -------- ------------ ------- ------------ ------------ --------
$ 456,316 -- $ 999,999...... 8 6.5% $ 6,613,501 1.0% 1.28x 68.3% 8.146%
$ 1,000,000 -- $ 1,999,999...... 25 20.3% 37,948,522 5.8% 1.44x 63.3% 7.915%
$ 2,000,000 -- $ 2,999,999...... 30 24.4% 73,668,190 11.2% 1.35x 68.5% 7.817%
$ 3,000,000 -- $ 3,999,999...... 12 9.8% 42,296,725 6.4% 1.30x 68.1% 7.817%
$ 4,000,000 -- $ 4,999,999...... 10 8.1% 44,548,854 6.8% 1.40x 66.4% 7.821%
$ 5,000,000 -- $ 7,499,999...... 15 12.2% 89,844,450 13.7% 1.29x 70.1% 7.614%
$ 7,500,000 -- $ 9,999,999...... 5 4.1% 41,761,882 6.3% 1.39x 67.9% 7.792%
$10,000,000 -- $14,999,999...... 9 7.3% 103,232,868 15.7% 1.36x 71.8% 8.170%
$15,000,000 -- $19,999,999...... 5 4.1% 88,034,231 13.4% 1.27x 73.5% 7.677%
$20,000,000 -- $29,999,999...... 3 2.4% 71,722,131 10.9% 1.32x 71.2% 8.340%
$30,000,000 -- $58,000,000...... 1 0.8% 58,000,000 8.8% 2.49x 44.2% 7.160%
--- ----- ------------ ----- ---- ---- -----
123 100.0% $657,671,353 100.0% 1.44x 67.6% 7.833%
=== ===== ============ ===== ==== ==== =====
A-17
143
GEOGRAPHIC DISTRIBUTION(1) -- GROUP A LOANS
% OF WEIGHTED WEIGHTED WEIGHTED
NUMBER OF % OF AGGREGATE INITIAL AVERAGE AVERAGE AVERAGE
MORTGAGED MORTGAGED CUT-OFF DATE POOL UNDERWRITING CUT-OFF DATE MORTGAGE
PROPERTY LOCATION PROPERTIES PROPERTIES BALANCE BALANCE DSCR LTV RATIO RATE
----------------- ---------- ---------- ------------ ------- ------------ ------------ --------
AL.................... 1 0.7% $ 1,725,206 0.3% 1.84x 50.7% 7.990%
AZ.................... 9 6.3% 43,866,520 6.7% 1.28x 76.1% 7.952%
CA.................... 29 20.4% 132,762,643 20.2% 1.48x 66.1% 7.649%
Los Angeles......... 9 6.3% 35,770,869 5.4% 1.56x 65.6% 7.275%
San Bernardino...... 1 0.7% 21,895,906 3.3% 1.30x 74.9% 8.430%
San Diego........... 5 3.5% 17,844,749 2.7% 1.17x 76.6% 8.034%
San Mateo........... 1 0.7% 11,666,286 1.8% 2.49x 44.2% 7.160%
Marin............... 2 1.4% 9,426,242 1.4% 1.21x 75.2% 7.467%
Contra Costa........ 2 1.4% 7,837,121 1.2% 1.58x 48.1% 7.829%
Merced.............. 1 0.7% 6,891,386 1.0% 1.33x 71.8% 6.770%
Sonoma.............. 2 1.4% 6,625,699 1.0% 1.51x 63.4% 7.620%
Santa Barbara....... 2 1.4% 4,532,703 0.7% 1.37x 68.2% 7.053%
Stanislaus.......... 2 1.4% 4,402,854 0.7% 1.22x 66.4% 8.216%
Other............... 2 1.4% 5,868,826 0.9% 1.40x 52.1% 7.968%
DE.................... 1 0.7% 3,966,443 0.6% 1.21x 79.3% 7.553%
FL.................... 4 2.8% 41,702,241 6.3% 1.33x 71.5% 7.943%
GA.................... 8 5.6% 20,619,799 3.1% 1.32x 70.3% 8.201%
IA.................... 2 1.4% 4,079.136 0.6% 1.51x 56.6% 7.344%
IL.................... 5 3.5% 27,589,480 4.2% 1.49x 71.7% 8.674%
IN.................... 2 1.4% 6,070,800 0.9% 1.26x 72.3% 8.181%
LA.................... 3 2.1% 7,257,928 1.1% 1.91x 46.0% 7.987%
MA.................... 1 0.7% 4,290,570 0.7% 1.65x 51.7% 7.090%
MD.................... 3 2.1% 14,897,516 2.3% 1.28x 73.3% 7.661%
MI.................... 1 0.7% 10,594,358 1.6% 1.25x 74.1% 8.080%
MN.................... 1 0.7% 795,656 0.1% 1.25x 72.3% 8.420%
MO.................... 1 0.7% 2,369,494 0.4% 1.20x 71.8% 8.030%
MS.................... 1 0.7% 2,080,395 0.3% 1.84x 50.7% 7.990%
NC.................... 6 4.2% 32,020,565 4.9% 1.34x 74.4% 7.586%
NJ.................... 3 2.1% 30,278,306 4.6% 1.43x 60.1% 8.129%
NV.................... 6 4.2% 47,360,393 7.2% 1.32x 73.8% 7.693%
NY.................... 7 4.9% 14,954,554 2.3% 1.29x 66.9% 7.371%
OR.................... 2 1.4% 6,034,604 0.9% 1.97x 55.9% 7.456%
PA.................... 1 0.7% 7,570,819 1.2% 1.33x 71.4% 6.770%
SC.................... 7 4.9% 34,677,882 5.3% 1.25x 71.1% 7.928%
TX.................... 23 16.2% 90,120,768 13.7% 1.50x 63.0% 8.166%
UT.................... 1 0.7% 1,109,663 0.2% 1.30x 68.1% 7.930%
VA.................... 5 3.5% 25,223,557 3.8% 1.24x 77.6% 7.588%
WA.................... 9 6.3% 43,652,056 6.6% 1.98x 53.2% 7.390%
--- ----- ------------ ----- ---- ---- -----
Total/Weighted
Average............. 142 100.0% $657,671,353 100.0% 1.44x 67.6% 7.833%
=== ===== ============ ===== ==== ==== =====
- ---------------
(1) States or district in which the respective Mortgaged Properties are located.
For Mortgage Loans secured by multiple properties, the Cut-Off Date Balance
is allocated.
A-18
144
UNDERWRITING DEBT SERVICE COVERAGE RATIO -- GROUP A LOANS
% OF WEIGHTED WEIGHTED WEIGHTED
RANGE OF NUMBER OF % OF AGGREGATE INITIAL AVERAGE AVERAGE AVERAGE
UNDERWRITING MORTGAGE MORTGAGE CUT-OFF DATE POOL UNDERWRITING CUT-OFF DATE MORTGAGE
DSCRS LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
------------ --------- -------- ------------ ------- ------------ ------------ --------
1.10x -- 1.19x....... 5 4.1% $ 29,196,868 4.4% 1.12x 76.5% 7.791%
1.20x -- 1.24x....... 15 12.2% 78,838,798 12.0% 1.21x 77.3% 7.951%
1.25x -- 1.29x....... 40 32.5% 197,789,018 30.1% 1.26x 70.6% 7.811%
1.30x -- 1.34x....... 22 17.9% 114,123,182 17.4% 1.31x 73.2% 7.738%
1.35x -- 1.39x....... 11 8.9% 33,346,879 5.1% 1.36x 69.6% 7.620%
1.40x -- 1.49x....... 11 8.9% 76,434,216 11.6% 1.43x 65.1% 8.393%
1.50x -- 1.59x....... 4 3.3% 10,631,742 1.6% 1.55x 63.3% 8.132%
1.60x -- 1.69x....... 8 6.5% 30,447,912 4.6% 1.64x 60.4% 8.008%
1.70x -- 1.79x....... 1 0.8% 6,059,309 0.9% 1.70x 56.9% 7.550%
1.80x -- 1.89x....... 1 0.8% 12,533,113 1.9% 1.84x 50.7% 7.990%
1.90x -- 1.99x....... 1 0.8% 2,382,193 0.4% 1.97x 41.4% 8.020%
2.00x -- 2.69x....... 4 3.3% 65,888,122 10.0% 2.46x 43.9% 7.254%
--- ----- ------------ ----- ---- ---- -----
Total/Wtd Avg........ 123 100.0% $657,671,353 100.0% 1.44x 67.6% 7.833%
=== ===== ============ ===== ==== ==== =====
CUT-OFF DATE LOAN-TO-VALUE RATIO -- GROUP A LOANS
% OF WEIGHTED WEIGHTED WEIGHTED
NUMBER OF % OF AGGREGATE INITIAL AVERAGE AVERAGE AVERAGE
RANGE OF CUT-OFF MORTGAGE MORTGAGE CUT-OFF DATE POOL UNDERWRITING CUT-OFF DATE MORTGAGE
DATE LTV RATIO(S) LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
----------------- --------- -------- ------------ ------- ------------ ------------ --------
28.05% -- 29.9%...... 1 0.8% $ 1,682,876 0.3% 2.69x 28.0% 7.800%
30.0 % -- 49.9%...... 8 6.5% 78,422,141 11.9% 2.27x 44.8% 7.345%
50.0 % -- 59.9%...... 18 14.6% 84,906,488 12.9% 1.51x 54.6% 7.906%
60.0 % -- 64.9%...... 7 5.7% 32,793,314 5.0% 1.36x 63.1% 8.151%
65.0 % -- 69.9%...... 19 15.4% 75,913,586 11.5% 1.35x 68.2% 8.286%
70.0 % -- 74.9%...... 41 33.3% 189,324,311 28.8% 1.31x 72.5% 7.938%
75.0 % -- 79.9%...... 26 21.1% 178,607,337 27.2% 1.24x 78.1% 7.659%
80.0 % -- 86.29%..... 3 2.4% 16,021,300 2.4% 1.22x 82.9% 7.731%
--- ----- ------------ ----- ---- ---- -----
Total/Wtd Avg........ 123 100.0% $657,671,353 100.0% 1.44x 67.6% 7.833%
=== ===== ============ ===== ==== ==== =====
MATURITY DATE LOAN-TO-VALUE RATIO -- GROUP A LOANS
WEIGHTED
RANGE OF % OF WEIGHTED AVERAGE WEIGHTED
MATURITY NUMBER OF % OF AGGREGATE INITIAL AVERAGE MATURITY AVERAGE
DATE LTV MORTGAGE MORTGAGE CUT-OFF DATE POOL UNDERWRITING DATE MORTGAGE
RATIO(S) LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
-------- --------- -------- ------------ ------- ------------ ------------ --------
16.81% -- 24.9%...... 3 2.4% $ 7,802,050 1.2% 1.99x 19.6% 7.452%
25.0 % -- 49.9%...... 23 18.7% 149,523,400 22.7% 1.89x 40.9% 7.630%
50.0 % -- 59.9%...... 24 19.5% 119,696,414 18.2% 1.35x 57.2% 8.065%
60.0 % -- 64.9%...... 28 22.8% 120,789,957 18.4% 1.31x 63.0% 7.922%
65.0 % -- 69.9%...... 32 26.0% 172,406,354 26.2% 1.27x 67.8% 7.924%
70.0 % -- 74.9%...... 12 9.8% 84,821,459 12.9% 1.25x 71.0% 7.601%
75.0 % -- 76.65%..... 1 0.8% 2,631,720 0.4% 1.22x 76.7% 7.310%
--- ----- ------------ ----- ---- ---- -----
Total/Wtd Avg........ 123 100.0% $657,671,353 100.0% 1.44x 58.8% 7.833%
=== ===== ============ ===== ==== ==== =====
A-19
145
MORTGAGE RATES -- GROUP A LOANS
WEIGHTED
% OF WEIGHTED AVERAGE WEIGHTED
RANGE OF NUMBER OF % OF AGGREGATE INITIAL AVERAGE CUT-OFF AVERAGE
MORTGAGE MORTGAGE MORTGAGE CUT-OFF DATE POOL UNDERWRITING DATE MORTGAGE
RATES LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
-------- --------- -------- ------------ ------- ------------ ------------ --------
6.770% -- 6.999%....... 5 4.1% $ 28,524,513 4.3% 1.30x 69.8% 6.856%
7.000% -- 7.249%....... 15 12.2% 133,739,490 20.3% 1.82x 61.8% 7.142%
7.250% -- 7.499%....... 11 8.9% 36,074,650 5.5% 1.29x 73.5% 7.332%
7.500% -- 7.749%....... 14 11.4% 56,175,716 8.5% 1.40x 68.0% 7.631%
7.750% -- 7.999%....... 27 22.0% 138,814,306 21.1% 1.39x 66.7% 7.896%
8.000% -- 8.499%....... 38 30.9% 183,594,784 27.9% 1.27x 70.0% 8.190%
8.500% -- 8.999%....... 11 8.9% 78,655,679 12.0% 1.43x 69.2% 8.744%
9.000% -- 9.499%....... 1 0.8% 977,367 0.1% 1.25x 69.3% 9.370%
9.500% -- 9.610%....... 1 0.8% 1,114,849 0.2% 1.29x 74.3% 9.610%
--- ----- ------------ ----- ---- ---- -----
Total/Wtg Avg.......... 123 100.0% $657,671,353 100.0% 1.44x 67.6% 7.833%
=== ===== ============ ===== ==== ==== =====
ORIGINAL TERM TO MATURITY -- GROUP A LOANS
WEIGHTED
% OF WEIGHTED AVERAGE WEIGHTED
ORIGINAL TERM NUMBER OF % OF AGGREGATE INITIAL AVERAGE CUT-OFF AVERAGE
TO MATURITY MORTGAGE MORTGAGE CUT-OFF DATE POOL UNDERWRITING DATE MORTGAGE
(MONTHS) LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
------------- --------- -------- ------------ ------- ------------ ------------ --------
60 -- 83............. 3 2.4% $ 9,395,635 1.4% 1.53x 60.3% 7.660%
100 -- 119............. 4 3.3% 20,366,498 3.1% 1.33x 66.7% 7.775%
120.................... 104 84.6% 570,625,289 86.8% 1.43x 68.1% 7.840%
121 -- 179............. 5 4.1% 29,191,305 4.4% 1.61x 61.9% 8.112%
180.................... 5 4.1% 19,409,475 3.0% 1.38x 67.6% 7.534%
181 -- 223............. 2 1.6% 8,683,150 1.3% 1.47x 59.5% 7.396%
--- ----- ------------ ----- ---- ---- -----
Total/Wtd Avg.......... 123 100.0% $657,671,353 100.0% 1.44x 67.6% 7.833%
=== ===== ============ ===== ==== ==== =====
ORIGINAL AMORTIZATION TERM (1) -- GROUP A LOANS
ORIGINAL % OF WEIGHTED WEIGHTED WEIGHTED
AMORTIZATION NUMBER OF % OF AGGREGATE INITIAL AVERAGE AVERAGE AVERAGE
TERM MORTGAGE MORTGAGE CUT-OFF DATE POOL UNDERWRITING CUT-OFF DATE MORTGAGE
(MONTHS) LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
------------ --------- -------- ------------ ------- ------------ ------------ --------
180.................... 2 1.6% $ 3,181,608 0.5% 1.81x 39.4% 8.129%
240.................... 5 4.1% 16,972,132 2.6% 1.51x 55.8% 7.795%
241 -- 299............. 2 1.6% 62,392,581 9.5% 2.41x 45.8% 7.198%
300.................... 34 27.6% 157,248,703 23.9% 1.38x 68.2% 8.152%
301 -- 359............. 2 1.6% 7,943,536 1.2% 1.26x 64.7% 7.320%
360.................... 78 63.4% 409,932,793 62.3% 1.31x 71.4% 7.816%
--- ----- ------------ ----- ---- ---- -----
Total/Wtd Avg.......... 123 100.0% $657,671,353 100.0% 1.44x 67.6% 7.833%
=== ===== ============ ===== ==== ==== =====
- ---------------
(1) For Mortgage Loans which accrue interest on the basis of actual days elapsed
during each calendar month and a 360-day year, the amortization term is the
term in which the loan would amortize if interest paid on the basis of a
30-day month and a 360-day year. The actual amortization term would be
longer.
A-20
146
REMAINING TERM TO MATURITY -- GROUP A LOANS
RANGE OF
REMAINING NUMBER % OF WEIGHTED WEIGHTED WEIGHTED
TERMS TO OF % OF AGGREGATE INITIAL AVERAGE AVERAGE AVERAGE
MATURITY MORTGAGED MORTGAGE CUT-OFF DATE POOL UNDERWRITING CUT-OFF DATE MORTGAGE
(MONTHS) LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
--------- --------- -------- ------------ ------- ------------ ------------ --------
2 -- 19........... 3 2.4% $ 9,395,635 1.4% 1.53x 60.3% 7.660%
40 -- 59........... 1 0.8% 3,706,640 0.6% 1.25x 53.6% 8.150%
60 -- 79........... 6 4.9% 15,794,138 2.4% 1.21x 65.6% 8.007%
80 -- 99........... 18 14.6% 70,469,861 10.7% 1.28x 71.9% 7.282%
100 -- 109........... 62 50.4% 286,761,806 43.6% 1.30x 70.3% 7.832%
110 -- 119........... 24 19.5% 226,540,891 34.4% 1.65x 65.0% 8.025%
120 -- 139........... 3 2.4% 21,953,722 3.3% 1.72x 55.7% 7.992%
140 -- 159........... 2 1.6% 8,616,205 1.3% 1.58x 57.9% 7.375%
160 -- 212........... 4 3.3% 14,432,455 2.2% 1.40x 66.9% 7.383%
--- ----- ------------ ----- ---- ---- -----
Total/Wtd Avg........ 123 100.0% $657,671,353 100.0% 1.44x 67.6% 7.833%
=== ===== ============ ===== ==== ==== =====
REMAINING STATED AMORTIZATION TERMS -- GROUP A LOANS
NUMBER % OF WEIGHTED WEIGHTED WEIGHTED
OF % OF AGGREGATE INITIAL AVERAGE AVERAGE AVERAGE
REMAINING MORTGAGED MORTGAGE CUT-OFF DATE POOL UNDERWRITING CUT-OFF DATE MORTGAGE
AMORT LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
--------- --------- -------- ------------ ------- ------------ ------------ --------
160 -- 174........... 3 2.4% $ 6,888,249 1.0% 1.51x 47.0% 8.140%
200 -- 224........... 2 1.6% 10,349,879 1.6% 1.68x 54.7% 7.359%
225 -- 249........... 6 4.9% 14,609,584 2.2% 1.43x 61.3% 7.998%
250 -- 274........... 4 3.3% 68,986,164 10.5% 2.29x 47.4% 7.258%
275 -- 299........... 28 22.8% 138,961,150 21.1% 1.39x 69.0% 8.199%
300 -- 324........... 5 4.1% 22,615,633 3.4% 1.19x 73.7% 8.208%
325 -- 349........... 58 47.2% 266,307,042 40.5% 1.30x 70.8% 7.661%
350 -- 351........... 17 13.8% 128,953,653 19.6% 1.36x 71.8% 8.037%
--- ----- ------------ ----- ---- ---- -----
Total/Wtd Avg........ 123 100.0% $657,671,353 100.0% 1.44x 67.6% 7.833%
=== ===== ============ ===== ==== ==== =====
SEASONING -- GROUP A LOANS
NUMBER % OF WEIGHTED WEIGHTED WEIGHTED
OF % OF AGGREGATE INITIAL AVERAGE AVERAGE AVERAGE
SEASONING MORTGAGED MORTGAGE CUT-OFF DATE POOL UNDERWRITING CUT-OFF DATE MORTGAGE
(MONTHS) LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
--------- --------- -------- ------------ ------- ------------ ------------ --------
9 -- 12............ 58 47.2% $441,881,546 67.2% 1.50x 66.7% 7.948%
13 -- 24............ 47 38.2% 158,809,907 24.1% 1.34x 69.6% 7.469%
25 -- 36............ 7 5.7% 23,039,521 3.5% 1.24x 76.3% 7.997%
37 -- 48............ 4 3.3% 10,617,035 1.6% 1.20x 66.3% 7.956%
49 -- 60............ 6 4.9% 19,616,705 3.0% 1.35x 64.3% 7.866%
73 -- 80............ 1 0.8% 3,706,640 0.6% 1.25x 53.6% 8.150%
--- ----- ------------ ----- ---- ---- -----
Total/Wtd Avg........ 123 100.0% $657,671,353 100.0% 1.44x 67.6% 7.833%
=== ===== ============ ===== ==== ==== =====
A-21
147
YEAR OF MORTGAGE ORIGINATION -- GROUP A LOANS
% OF WEIGHTED WEIGHTED WEIGHTED
NUMBER OF % OF AGGREGATE INITIAL AVERAGE AVERAGE AVERAGE
YEAR OF MORTGAGE MORTGAGE CUT-OFF DATE POOL UNDERWRITING CUT-OFF DATE MORTGAGE
ORIGINATION LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
----------- --------- -------- ------------ ------- ------------ ------------ --------
1993................. 1 0.8% $ 3,706,640 0.6% 1.25x 53.6% 8.150%
1995................. 4 3.3% 14,439,601 2.2% 1.39x 64.4% 7.779%
1996................. 6 4.9% 15,794,138 2.4% 1.21x 65.6% 8.007%
1997................. 4 3.3% 18,759,519 2.9% 1.23x 75.9% 8.146%
1998................. 24 19.5% 91,636,501 13.9% 1.33x 69.4% 7.309%
1999................. 84 68.3% 513,334,954 78.1% 1.48x 67.2% 7.909%
--- ----- ------------ ----- ---- ---- -----
Total/Wtd Avg........ 123 100.0% $657,671,353 100.0% 1.44x 67.6% 7.833%
=== ===== ============ ===== ==== ==== =====
YEAR OF MORTGAGE MATURITY -- GROUP A LOANS
% OF WEIGHTED WEIGHTED WEIGHTED
NUMBER OF % OF AGGREGATE INITIAL AVERAGE AVERAGE AVERAGE
YEAR OF MORTGAGE MORTGAGE CUT-OFF DATE POOL UNDERWRITING CUT-OFF DATE MORTGAGE
MATURITY LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
-------- --------- -------- ------------ ------- ------------ ------------ --------
2000................. 1 0.8% $ 2,769,936 0.4% 1.56x 52.8% 7.755%
2001................. 2 1.6% 6,625,699 1.0% 1.51x 63.4% 7.620%
2003................. 1 0.8% 3,706,640 0.6% 1.25x 53.6% 8.150%
2006................. 5 4.1% 13,294,772 2.0% 1.21x 64.3% 8.032%
2007................. 4 3.3% 10,589,437 1.6% 1.28x 73.1% 7.847%
2008................. 18 14.6% 67,153,314 10.2% 1.29x 71.8% 7.243%
2009................. 83 67.5% 508,529,173 77.3% 1.46x 67.9% 7.920%
2010................. 1 0.8% 5,043,966 0.8% 1.14x 72.1% 8.000%
2012................. 2 1.6% 16,909,756 2.6% 1.89x 50.8% 7.990%
2013................. 2 1.6% 8,616,205 1.3% 1.58x 57.9% 7.375%
2014................. 3 2.4% 10,039,875 1.5% 1.44x 66.9% 7.247%
2018................. 1 0.8% 4,392,581 0.7% 1.30x 67.1% 7.694%
--- ----- ------------ ----- ---- ---- -----
Total/Wtd Avg........ 123 100.0% $657,671,353 100.0% 1.44x 67.6% 7.833%
=== ===== ============ ===== ==== ==== =====
A-22
148
PROPERTY TYPE -- GROUP B LOANS
% OF WEIGHTED WEIGHTED
NUMBER OF % OF AGGREGATE INITIAL AVERAGE MIN/MAX AVERAGE MIN/MAX
MORTGAGE MORTGAGE CUT-OFF DATE POOL UNDERWRITING UNDERWRITING CUT-OFF DATE CUT-OFF DATE
PROPERTY TYPE PROPERTIES PROPERTIES BALANCE BALANCE DSCR DSCR LTV RATIO LTV RATIO
------------- ---------- ---------- ------------ ------- ------------ ------------ ------------ ------------
Retail............... 15 41.7% $ 41,830,408 36.6% 1.44x 1.10/1.91x 54.2% 44.4/67.7%
Office............... 6 16.7% 20,439,361 17.9% 1.27x 1.11/1.39x 60.1% 27.0/74.9%
Industrial........... 6 16.7% 15,415,029 13.5% 1.29x 1.11/2.11x 61.4% 42.5/70.9%
Special Purpose...... 2 5.6% 13,545,370 11.9% 1.38x 1.38/1.38x 64.6% 62.7/67.1%
Health Care.......... 1 2.8% 9,614,821 8.4% 1.41x 1.41/1.41x 69.2% 69.2/69.2%
Hotel................ 2 5.6% 5,192,949 4.5% 1.49x 1.30/1.59x 43.3% 35.9/57.4%
Mini Storage......... 2 5.6% 4,244,759 3.7% 1.31x 1.30/1.31x 53.3% 46.3/60.1%
Mobile Home.......... 2 5.6% 3,968,394 3.5% 1.58x 1.20/1.92x 56.8% 46.2/68.7%
-- ----- ------------ ----- ---- --------- ---- ---------
Total/ Wtd Avg....... 36 100.0% $114,251,091 100.0% 1.38x 1.10/2.11x 58.3% 27.0/74.9%
== ===== ============ ===== ==== ========= ==== =========
WEIGHTED
AVERAGE
MORTGAGE
PROPERTY TYPE RATE
------------- --------
Retail............... 8.568%
Office............... 7.685%
Industrial........... 8.625%
Special Purpose...... 7.696%
Health Care.......... 8.250%
Hotel................ 8.353%
Mini Storage......... 8.255%
Mobile Home.......... 7.552%
-----
Total/ Wtd Avg....... 8.231%
=====
CUT-OFF DATE BALANCES -- GROUP B LOANS
% OF WEIGHTED WEIGHTED WEIGHTED
RANGE OF NUMBER OF % OF AGGREGATE INITIAL AVERAGE AVERAGE AVERAGE
CUT-OFF DATE MORTGAGE MORTGAGE CUT-OFF DATE POOL UNDERWRITING CUT-OFF DATE MORTGAGE
BALANCES LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
------------ --------- -------- ------------ ------- ------------ ------------ --------
$1,426,765 -- $1,999,999........ 8 22.2% $ 13,408,595 11.7% 1.35x 57.2% 8.608%
$2,000,000 -- $2,999,999........ 15 41.7% 37,671,952 33.0% 1.42x 57.3% 8.089%
$3,000,000 -- $3,999,999........ 8 22.2% 27,356,464 23.9% 1.36x 55.3% 8.590%
$5,000,000 -- $7,499,999........ 2 5.6% 10,908,984 9.5% 1.37x 56.5% 7.699%
$7,500,000 -- $9,614,821........ 3 8.3% 24,905,096 21.8% 1.37x 64.4% 8.080%
-- ----- ------------ ----- ---- ---- -----
Total/Wtd Avg................... 36 100.0% $114,251,091 100.0% 1.38x 58.3% 8.231%
== ===== ============ ===== ==== ==== =====
A-23
149
GEOGRAPHIC DISTRIBUTION(1) -- GROUP B LOANS
% OF WEIGHTED WEIGHTED WEIGHTED
NUMBER OF % OF AGGREGATE INITIAL AVERAGE AVERAGE AVERAGE
MORTGAGE MORTGAGED CUT-OFF DATE POOL UNDERWRITING CUT-OFF DATE MORTGAGE
PROPERTY LOCATION PROPERTIES PROPERTIES BALANCE BALANCE DSCR LTV RATIO RATE
----------------- ---------- ---------- ------------ ------- ------------ ------------ --------
AK.................... 2 5.6% $ 7,617,960 6.7% 1.36x 64.8% 7.462%
AZ.................... 2 5.6% 4,479,236 3.9% 1.74x 57.3% 8.242%
CA.................... 17 47.2% 52,095,213 45.6% 1.38x 51.7% 8.336%
Los Angeles......... 4 11.1% 11,154,313 9.8% 1.29x 47.4% 8.780%
San Mateo........... 1 2.8% 7,583,134 6.6% 1.30x 60.0% 7.820%
Orange.............. 3 8.3% 7,255,095 6.4% 1.53x 47.0% 8.196%
Alameda............. 3 8.3% 7,043,570 6.2% 1.43x 55.5% 8.599%
San Francisco....... 1 2.8% 5,070,756 4.4% 1.35x 44.4% 8.355%
Sacramento.......... 1 2.8% 3,993,906 3.5% 1.49x 47.8% 8.250%
Santa Clara......... 1 2.8% 3,326,721 2.9% 1.18x 64.0% 7.795%
Merced.............. 1 2.8% 2,973,679 2.6% 1.11x 54.1% 7.625%
San Joaquin......... 1 2.8% 2,259,730 2.0% 1.59x 57.4% 9.250%
San Diego........... 1 2.8% 1,434,310 1.3% 2.11x 42.5% 8.500%
ID.................... 1 2.8% 2,096,962 1.8% 1.92x 46.2% 7.375%
NV.................... 1 2.8% 7,707,142 6.7% 1.38x 62.7% 8.125%
OR.................... 6 16.7% 23,565,805 20.6% 1.38x 68.1% 8.399%
WA.................... 7 19.4% 16,688,773 14.6% 1.22x 61.7% 8.168%
-- ----- ------------ ----- ---- ---- -----
Total/Weighted
Average............. 36 100.0% $114,251,091 100.0% 1.38x 58.3% 8.231%
== ===== ============ ===== ==== ==== =====
- ---------------
(1) States or district in which the respective Mortgaged Properties are located.
For Mortgage Loans secured by multiple properties, the Cut-Off Date Balance
is allocated.
A-24
150
UNDERWRITING DEBT SERVICE COVERAGE RATIO -- GROUP B LOANS
% OF WEIGHTED WEIGHTED WEIGHTED
RANGE OF NUMBER OF % OF AGGREGATE INITIAL AVERAGE AVERAGE AVERAGE
UNDERWRITING MORTGAGE MORTGAGE CUT-OFF DATE POOL UNDERWRITING CUT-OFF DATE MORTGAGE
DSCRS LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
------------ --------- -------- ------------ ------- ------------ ------------ --------
1.10x -- 1.19x....... 9 25.0% $ 22,884,265 20.0% 1.14x 61.0% 8.392%
1.20x -- 1.24x....... 3 8.3% 7,638,036 6.7% 1.23x 61.8% 9.190%
1.25x -- 1.29x....... 1 2.8% 2,836,216 2.5% 1.25x 74.9% 7.320%
1.30x -- 1.34x....... 5 13.9% 15,820,639 13.8% 1.30x 53.3% 7.943%
1.35x -- 1.39x....... 6 16.7% 26,291,617 23.0% 1.37x 61.2% 7.903%
1.40x -- 1.49x....... 4 11.1% 17,808,141 15.6% 1.44x 60.3% 8.290%
1.50x -- 1.59x....... 3 8.3% 8,088,059 7.1% 1.58x 47.6% 8.455%
1.60x -- 1.69x....... 1 2.8% 3,676,344 3.2% 1.64x 57.4% 9.200%
1.80x -- 1.89x....... 1 2.8% 2,958,854 2.6% 1.83x 47.0% 8.580%
1.90x -- 1.99x....... 2 5.6% 4,814,610 4.2% 1.91x 53.5% 7.587%
2.00x -- 2.11x....... 1 2.8% 1,434,310 1.3% 2.11x 42.5% 8.500%
-- ----- ------------ ----- ---- ---- -----
36 100.0% $114,251,091 100.0% 1.38x 58.3% 8.231%
== ===== ============ ===== ==== ==== =====
ASSUMED DEBT SERVICE COVERAGE RATIO(1) -- GROUP B LOANS
% OF WEIGHTED WEIGHTED WEIGHTED
NUMBER OF % OF AGGREGATE INITIAL AVERAGE AVERAGE AVERAGE
RANGE OF MORTGAGE MORTGAGE CUT-OFF DATE POOL ASSUMED CUT-OFF DATE MORTGAGE
ASSUMED DSCRS LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
------------- --------- -------- ------------ ------- ------------ ------------ --------
1.25x -- 1.29x....... 1 2.8% $ 2,861,872 2.5% 1.25x 72.5% 7.690%
1.30x -- 1.34x....... 1 2.8% 3,102,760 2.7% 1.33x 68.2% 8.625%
1.35x -- 1.39x....... 3 8.3% 6,241,906 5.5% 1.37x 69.1% 7.831%
1.40x -- 1.49x....... 4 11.1% 17,506,078 15.3% 1.46x 62.8% 7.775%
1.50x -- 1.59x....... 3 8.3% 9,575,447 8.4% 1.52x 66.3% 7.846%
1.60x -- 1.69x....... 5 13.9% 24,559,032 21.5% 1.62x 63.8% 8.300%
1.70x -- 1.79x....... 1 2.8% 2,163,381 1.9% 1.78x 60.1% 8.500%
1.80x -- 1.89x....... 3 8.3% 9,186,855 8.0% 1.84x 45.3% 8.308%
1.90x -- 1.99x....... 2 5.6% 3,508,143 3.1% 1.94x 51.8% 8.163%
2.00x -- 2.99x....... 11 30.6% 31,898,291 27.9% 2.20x 52.0% 8.653%
3.00x -- 5.13x....... 2 5.6% 3,647,325 3.2% 4.73x 33.1% 7.760%
-- ----- ------------ ----- ---- ---- -----
Total/WAV............ 36 100.0% $114,251,091 100.0% 1.85x 58.3% 8.231%
== ===== ============ ===== ==== ==== =====
- ---------------
(1) Assumed DSCR is the ratio of the Underwriting Cash Flow to a Debt Service
payment based on an 8.5% constant.
A-25
151
CUT-OFF DATE LOAN-TO-VALUE RATIO -- GROUP B LOANS
% OF WEIGHTED WEIGHTED WEIGHTED
NUMBER OF % OF AGGREGATE INITIAL AVERAGE AVERAGE AVERAGE
RANGE OF CUT-OFF MORTGAGE MORTGAGE CUT-OFF DATE POOL UNDERWRITING CUT-OFF DATE MORTGAGE
DATE LTV RATIO(S) LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
----------------- --------- -------- ------------ ------- ------------ ------------ --------
26.99% -- 29.9%...... 1 2.8% $ 2,213,015 1.9% 1.32x 27.0% 7.280%
30.0 % -- 49.9%...... 9 25.0% 25,092,292 22.0% 1.54x 45.1% 8.230%
50.0 % -- 59.9%...... 11 30.6% 27,048,327 23.7% 1.42x 56.1% 8.754%
60.0 % -- 64.9%...... 7 19.4% 28,205,136 24.7% 1.30x 62.0% 8.030%
65.0 % -- 69.9%...... 5 13.9% 23,085,550 20.2% 1.32x 68.3% 8.126%
70.0 % -- 74.93%..... 3 8.3% 8,606,772 7.5% 1.25x 72.8% 7.774%
-- ----- ------------ ----- ---- ---- -----
36 100.0% $114,251,091 100.0% 1.38x 58.3% 8.231%
== ===== ============ ===== ==== ==== =====
MATURITY DATE LOAN-TO-VALUE RATIO -- GROUP B LOANS
WEIGHTED
RANGE OF % OF WEIGHTED AVERAGE WEIGHTED
MATURITY NUMBER OF % OF AGGREGATE INITIAL AVERAGE MATURITY AVERAGE
DATE LTV MORTGAGE MORTGAGE CUT-OFF DATE POOL UNDERWRITING DATE MORTGAGE
RATIO(S) LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
-------- --------- -------- ------------ ------- ------------ ------------ --------
0.0% -- 24.9%....... 7 19.4% $ 18,084,455 15.8% 1.42x 2.1% 8.449%
25.0% -- 49.9%....... 12 33.3% 30,265,415 26.5% 1.41x 42.6% 8.144%
50.0% -- 59.9%....... 14 38.9% 54,568,468 47.8% 1.37x 56.0% 8.308%
60.0% -- 61.28%...... 3 8.3% 11,332,753 9.9% 1.31x 60.6% 7.745%
-- ----- ------------ ----- ---- ---- -----
36 100.0% $114,251,091 100.0% 1.38x 44.4% 8.231%
== ===== ============ ===== ==== ==== =====
A-26
152
MORTGAGE RATES -- GROUP B LOANS
WEIGHTED
% OF WEIGHTED AVERAGE WEIGHTED
RANGE OF NUMBER OF % OF AGGREGATE INITIAL AVERAGE CUT-OFF AVERAGE
MORTGAGE MORTGAGE MORTGAGE CUT-OFF DATE POOL UNDERWRITING DATE MORTGAGE
RATES LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
-------- --------- -------- ------------ ------- ------------ ------------ --------
7.130% -- 7.249%....... 1 2.8% $ 5,838,229 5.1% 1.38x 67.1% 7.130%
7.250% -- 7.499%....... 3 8.3% 7,146,193 6.3% 1.47x 51.7% 7.324%
7.500% -- 7.749%....... 3 8.3% 9,175,593 8.0% 1.22x 63.6% 7.600%
7.750% -- 7.999%....... 4 11.1% 15,498,935 13.6% 1.37x 61.8% 7.794%
8.000% -- 8.499%....... 11 30.6% 43,158,895 37.8% 1.40x 56.9% 8.202%
8.500% -- 8.999%....... 7 19.4% 14,578,376 12.8% 1.41x 55.8% 8.602%
9.000% -- 9.499%....... 5 13.9% 13,088,266 11.5% 1.43x 56.9% 9.230%
9.500% -- 9.750%....... 2 5.6% 5,766,604 5.0% 1.24x 59.6% 9.658%
-- ----- ------------ ----- ---- ---- -----
Total/Wtg Avg.......... 36 100.0% $114,251,091 100.0% 1.38x 58.3% 8.231%
== ===== ============ ===== ==== ==== =====
ORIGINAL TERM TO MATURITY -- GROUP B LOANS
WEIGHTED
% OF WEIGHTED AVERAGE WEIGHTED
ORIGINAL TERM NUMBER OF % OF AGGREGATE INITIAL AVERAGE CUT-OFF AVERAGE
TO MATURITY MORTGAGE MORTGAGE CUT-OFF DATE POOL UNDERWRITING DATE MORTGAGE
(MONTHS) LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
------------- --------- -------- ------------ ------- ------------ ------------ --------
60 -- 83............. 3 8.3% $ 8,372,554 7.3% 1.53x 56.6% 8.836%
84 -- 99............. 3 8.3% 15,758,385 13.8% 1.37x 59.3% 7.638%
120.................... 21 58.3% 64,633,580 56.6% 1.35x 60.8% 8.264%
121 -- 179............. 2 5.6% 6,201,914 5.4% 1.27x 68.2% 7.588%
180.................... 6 16.7% 15,871,440 13.9% 1.44x 48.8% 8.612%
181.................... 1 2.8% 3,413,218 3.0% 1.59x 35.9% 8.250%
-- ----- ------------ ----- ---- ---- -----
Total/Wtd Avg.......... 36 100.0% $114,251,091 100.0% 1.38x 58.3% 8.231%
== ===== ============ ===== ==== ==== =====
ORIGINAL AMORTIZATION TERM (1) -- GROUP B LOANS
ORIGINAL % OF WEIGHTED WEIGHTED WEIGHTED
AMORTIZATION NUMBER OF % OF AGGREGATE INITIAL AVERAGE AVERAGE AVERAGE
TERM MORTGAGE MORTGAGE CUT-OFF DATE POOL UNDERWRITING CUT-OFF DATE MORTGAGE
(MONTHS) LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
------------ --------- -------- ------------ ------- ------------ ------------ --------
96 -- 179............. 1 2.8% $ 2,213,015 1.9% 1.32x 27.0% 7.280%
180.................... 7 19.4% 19,266,617 16.9% 1.39x 49.7% 8.756%
181 -- 239............. 3 8.3% 8,166,628 7.1% 1.35x 47.2% 8.088%
240.................... 7 19.4% 15,308,794 13.4% 1.30x 57.8% 8.330%
241 -- 299............. 1 2.8% 3,676,344 3.2% 1.64x 57.4% 9.200%
300.................... 17 47.2% 65,619,693 57.4% 1.39x 63.4% 8.049%
-- ----- ------------ ----- ---- ---- -----
Total/Wtd Avg.......... 36 100.0% $114,251,091 100.0% 1.38x 58.3% 8.231%
== ===== ============ ===== ==== ==== =====
- ---------------
(1) For Mortgage Loans which accrue interest on the basis of actual days elapsed
during each calendar month and a 360-day year, the amortization term is the
term in which the loan would amortize if interest paid on the basis of a
30-day month and a 360-day year. The actual amortization term would be
longer.
A-27
153
REMAINING TERM TO MATURITY -- GROUP B LOANS
RANGE OF
REMAINING NUMBER % OF WEIGHTED WEIGHTED WEIGHTED
TERMS TO OF % OF AGGREGATE INITIAL AVERAGE AVERAGE AVERAGE
MATURITY MORTGAGED MORTGAGE CUT-OFF DATE POOL UNDERWRITING CUT-OFF DATE MORTGAGE
(MONTHS) LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
--------- --------- -------- ------------ ------- ------------ ------------ --------
11 -- 19........... 4 11.1% $ 10,585,568 9.3% 1.49x 50.4% 8.511%
20 -- 39........... 3 8.3% 9,405,411 8.2% 1.36x 50.3% 7.988%
40 -- 59........... 5 13.9% 17,073,642 14.9% 1.39x 60.8% 8.648%
60 -- 79........... 7 19.4% 24,651,917 21.6% 1.28x 62.8% 7.786%
80 -- 99........... 10 27.8% 34,566,150 30.3% 1.37x 63.5% 8.199%
100 -- 109........... 2 5.6% 3,531,273 3.1% 2.00x 44.7% 7.832%
110 -- 119........... 1 2.8% 3,108,296 2.7% 1.24x 52.7% 9.750%
120 -- 139........... 1 2.8% 5,070,756 4.4% 1.35x 44.4% 8.355%
140 -- 156........... 3 8.3% 6,258,078 5.5% 1.45x 51.9% 8.281%
-- ----- ------------ ----- ---- ---- -----
Total/Wtd Avg........ 36 100.0% $114,251,091 100.0% 1.38x 58.3% 8.231%
== ===== ============ ===== ==== ==== =====
REMAINING STATED AMORTIZATION TERMS -- GROUP B LOANS
NUMBER % OF WEIGHTED WEIGHTED WEIGHTED
OF % OF AGGREGATE INITIAL AVERAGE AVERAGE AVERAGE
REMAINING MORTGAGED MORTGAGE CUT-OFF DATE POOL UNDERWRITING CUT-OFF DATE MORTGAGE
AMORT LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
--------- --------- -------- ------------ ------- ------------ ------------ --------
41 -- 149........... 8 22.2% $ 23,370,039 20.5% 1.37x 45.9% 8.544%
150 -- 174........... 5 13.9% 9,966,163 8.7% 1.38x 51.6% 8.158%
175 -- 199........... 5 13.9% 11,618,852 10.2% 1.29x 60.4% 8.384%
200 -- 224........... 1 2.8% 3,993,906 3.5% 1.49x 47.8% 8.250%
225 -- 249........... 5 13.9% 14,263,774 12.5% 1.50x 62.8% 8.401%
250 -- 274........... 9 25.0% 40,241,294 35.2% 1.35x 64.3% 8.203%
275 -- 280........... 3 8.3% 10,797,063 9.5% 1.42x 64.5% 7.326%
-- ----- ------------ ----- ---- ---- -----
Total/Wtd Avg........ 36 100.0% $114,251,091 100.0% 1.38x 58.3% 8.231%
== ===== ============ ===== ==== ==== =====
SEASONING -- GROUP B LOANS
NUMBER % OF WEIGHTED WEIGHTED WEIGHTED
OF % OF AGGREGATE INITIAL AVERAGE AVERAGE AVERAGE
SEASONING MORTGAGED MORTGAGE CUT-OFF DATE POOL UNDERWRITING CUT-OFF DATE MORTGAGE
(MONTHS) LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
--------- --------- -------- ------------ ------- ------------ ------------ --------
20 -- 24............. 3 8.3% 10,016,569 8.8% 1.48x 58.4% 7.362%
25 -- 36............. 8 22.2% 28,232,575 24.7% 1.37x 66.1% 8.193%
37 -- 48............. 7 19.4% 29,704,498 26.0% 1.34x 58.1% 8.254%
49 -- 60............. 4 11.1% 7,903,833 6.9% 1.23x 61.7% 8.235%
61 -- 72............. 6 16.7% 18,895,814 16.5% 1.43x 59.0% 8.872%
73 -- 85............. 8 22.2% 19,497,802 17.1% 1.43x 45.2% 8.074%
-- ----- ------------ ----- ---- ---- -----
Total/Wtd Avg........ 36 100.0% $114,251,091 100.0% 1.38x 58.3% 8.231%
== ===== ============ ===== ==== ==== =====
A-28
154
YEAR OF MORTGAGE ORIGINATION -- GROUP B LOANS
% OF WEIGHTED WEIGHTED WEIGHTED
NUMBER OF % OF AGGREGATE INITIAL AVERAGE AVERAGE AVERAGE
YEAR OF MORTGAGE MORTGAGE CUT-OFF DATE POOL UNDERWRITING CUT-OFF DATE MORTGAGE
ORIGINATION LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
----------- --------- -------- ------------ ------- ------------ ------------ --------
1993................. 6 16.7% $ 16,636,726 14.6% 1.38x 44.1% 8.009%
1994................. 5 13.9% 12,363,364 10.8% 1.62x 55.2% 8.846%
1995................. 4 11.1% 11,482,815 10.1% 1.24x 61.5% 8.659%
1996................. 7 19.4% 24,054,885 21.1% 1.31x 57.5% 8.173%
1997................. 8 22.2% 31,511,066 27.6% 1.38x 64.2% 8.331%
1998................. 6 16.7% 18,202,236 15.9% 1.41x 62.1% 7.648%
-- ----- ------------ ----- ---- ---- -----
36 100.0% $114,251,091 100.0% 1.38x 58.3% 8.231%
== ===== ============ ===== ==== ==== =====
YEAR OF MORTGAGE MATURITY -- GROUP B LOANS
% OF WEIGHTED WEIGHTED WEIGHTED
NUMBER OF % OF AGGREGATE INITIAL AVERAGE AVERAGE AVERAGE
YEAR OF MORTGAGE MORTGAGE CUT-OFF DATE POOL UNDERWRITING CUT-OFF DATE MORTGAGE
MATURITY LOANS LOANS BALANCE BALANCE DSCR LTV RATIO RATE
-------- --------- -------- ------------ ------- ------------ ------------ --------
2001................. 3 8.3% 8,372,554 7.3% 1.53x 56.6% 8.836%
2002................. 1 2.8% 2,213,015 1.9% 1.32x 27.0% 7.280%
2003................. 3 8.3% 9,405,411 8.2% 1.36x 50.3% 7.988%
2004................. 4 11.1% 14,415,334 12.6% 1.42x 59.6% 8.482%
2005................. 2 5.6% 8,496,537 7.4% 1.33x 67.3% 7.887%
2006................. 4 11.1% 7,903,833 6.9% 1.23x 61.7% 8.235%
2007................. 8 22.2% 33,333,379 29.2% 1.29x 65.6% 8.069%
2008................. 5 13.9% 14,239,589 12.5% 1.55x 54.2% 8.087%
2009................. 2 5.6% 4,542,607 4.0% 1.51x 49.5% 9.355%
2011................. 1 2.8% 5,070,756 4.4% 1.35x 44.4% 8.355%
2012................. 1 2.8% 1,761,588 1.5% 1.49x 54.6% 9.000%
2013................. 2 5.6% 4,496,489 3.9% 1.43x 50.9% 8.000%
-- ----- ------------ ----- ---- ---- -----
36 100.0% $114,251,091 100.0% 1.38x 58.3% 8.231%
== ===== ============ ===== ==== ==== =====
A-29
155
PRE-MERGER BANK OF AMERICA COMMERCIAL MORTGAGE PORTFOLIO
PREPAYMENT RATE (CPR)
The historical prepayment information shown in the following table was
derived from data available on the performance, since January 31, 1998, of all
mortgage loans in the Bank of America NT&SA commercial and multifamily term real
estate loan portfolio prior to the Merger (the "Pre-Merger Bank of America
Portfolio"). In deriving such information, a sample of the Pre-Merger Bank of
America Portfolio was created to analyze fixed rate loans with characteristics
similar to those of the Portfolio Mortgage Loans. The sample excluded loans with
balances below $1.5 million dollars as of December 31, 1997, loans sold, loans
where no prepayment penalties were collected, and amongst other items floating
rate notes. Any prepayments received during the last 6 pay periods including the
maturity date of the mortgage loan were considered to be scheduled principal.
As of January 31, 1998 the sample consisted of approximately 475 mortgage
loans. In general the Portfolio Mortgage Loans that were outstanding on January
31, 1998 would compose a subset of the sample set. We cannot assure you that the
Portfolio Mortgage Loans will exhibit similar prepayment characteristics, nor
can we make any other representation regarding what the actual performance of
the Portfolio Mortgage Loans will be.
January 1998............................................. 9.7%
February 1998............................................ 4.0%
March 1998............................................... 17.0%
April 1998............................................... 10.7%
May 1998................................................. 7.8%
June 1998................................................ 3.6%
July 1998................................................ 15.4%
August 1998.............................................. 1.4%
September 1998........................................... 10.8%
October 1998............................................. 5.4%
November 1998............................................ 7.6%
December 1998............................................ 4.0%
January 1999............................................. 1.2%
February 1999............................................ 0.0%
March 1999............................................... 11.7%
April 1999............................................... 2.8%
May 1999................................................. 10.5%
June 1999................................................ 0.0%
July 1999................................................ 1.8%
August 1999.............................................. 7.0%
September 1999........................................... 6.2%
October 1999............................................. 0.0%
November 1999............................................ 6.8%
December 1999............................................ 23.6%
January 2000............................................. 0.0%
February 2000............................................ 0.0%
March 2000............................................... 5.0%
April 2000............................................... 7.7%
May 2000................................................. 6.1%
June 2000................................................ 1.4%
July 2000................................................ 2.0%
A-30
156
ANNEX B
CAPITAL IMPROVEMENT, REPLACEMENT RESERVE AND ESCROW ACCOUNTS
(CONDUIT MORTGAGE LOANS*)
INITIAL DEPOSIT CURRENT BALANCE
TO CAPITAL IN CAPITAL INITIAL DEPOSIT TO
LOAN IMPROVEMENT IMPROVEMENT REPLACEMENT
SEQUENCE NUMBER PROPERTY NAME PROPERTY TYPE RESERVES RESERVES RESERVES
- ------------------------------------------------------------------------------------------------------------------------------------
A1 51545 224-246 Worth Avenue (Palm V) Retail
A2 51546 256 Worth Avenue (Power-Love Associates) Retail
A3 51447 Dutch Square Center Retail
A4 51828 Edwards Megaplex Theater Retail
A5 51022 Huffman Mill Plaza Retail
A6 51671 Wal-Mart Stores Portfolio 2 Retail
A7 51670 Wal-Mart Stores Portfolio 1 Retail
A8 51573 Golden Triangle Mall Retail
A9 51521 Mansfield Plaza Retail $ 6,375
A10 51524 Raintree Towne Shopping Center Retail 22,838
A11 51547 175 Worth Avenue (Hals Realty Associates) Retail
A12 51605 Tinseltown Theater Complex Retail
A13 51606 Lucky Center Retail
A15 50592 Huntersville Square S/C Retail 2,125 2,239
A16 51625 Orange Village Shopping Center Retail 2,125 2,147 $66,359
A17 50889 Barnes & Noble/Chili's Land Lease Retail
A18 50998 Southside Shopping Center Retail
A20 50740 Laurel Square Shopping Center Retail 16,250
A22 51223 Wayman Court Shopping Center Retail
A23 51126 New Lake Hill Shopping Center Retail 1,375
A25 51062 Bainbridge Market Place Retail 8,650 8,977
A26 51611 Franconia Center Retail
A29 51561 Southside Commons Retail
A32 51578 Mt. Paran Shopping Center Retail 23,625 1,267
A33 51562 White Horse Commons Retail
A36 51572 Town Center Mall Shoppes Retail
A37 51551 Pecos Wigwam Commercial Retail
A38 50814 Town Center Retail
A40 50874 Cinco Village Shopping Center Retail
A42 50917 Cantrell Shopping Center Retail
A44 51564 Huffines Plaza Retail 13,750 14,338
A45 51522 Town East Center Retail 64,738 67,831
A47 51518 Centre Stage at Jonestown Shopping Center Retail
A49 51588 Windy Hill Crossing Retail
A50 51534 Harrison Ridge Retail 12,769 13,395 52,000
A51 51589 Zaragosa Retail Center Retail 8,625 1,772 10,500
A52 51842 Tiburon Apartments Multifamily
A53 51841 Farmstead Apartments Multifamily
A54 51840 Cimarron Apartments Multifamily
ANNUAL
DEPOSIT TO CURRENT BALANCE TAX AND
LOAN REPLACEMENT IN REPLACEMENT INSURANCE
SEQUENCE NUMBER PROPERTY NAME PROPERTY TYPE RESERVES RESERVES ESCROW
- --------------------------------------------------------------------------------------------------------------------------------
A1 51545 224-246 Worth Avenue (Palm V) Retail $ 8,942 $ 8,360 Yes
A2 51546 256 Worth Avenue (Power-Love Associates) Retail 2,613 2,443 Yes
A3 51447 Dutch Square Center Retail 83,189 99,811 Yes
A4 51828 Edwards Megaplex Theater Retail 33,646 22,758 Tax Only
A5 51022 Huffman Mill Plaza Retail 43,944 37,313 Yes
A6 51671 Wal-Mart Stores Portfolio 2 Retail No
A7 51670 Wal-Mart Stores Portfolio 1 Retail No
A8 51573 Golden Triangle Mall Retail Yes
A9 51521 Mansfield Plaza Retail 27,792 25,751 Yes
A10 51524 Raintree Towne Shopping Center Retail 25,000 23,164 Yes
A11 51547 175 Worth Avenue (Hals Realty Associates) Retail 1,777 1,661 Yes
A12 51605 Tinseltown Theater Complex Retail No
A13 51606 Lucky Center Retail 13,508 12,630 Yes
A15 50592 Huntersville Square S/C Retail 10,272 24,084 Yes
A16 51625 Orange Village Shopping Center Retail 16,140 6,894 Yes
A17 50889 Barnes & Noble/Chili's Land Lease Retail Yes
A18 50998 Southside Shopping Center Retail 6,884 5,249 Yes
A20 50740 Laurel Square Shopping Center Retail No
A22 51223 Wayman Court Shopping Center Retail 10,296 20,501 Yes
A23 51126 New Lake Hill Shopping Center Retail 4,686 8,077 Yes
A25 51062 Bainbridge Market Place Retail 4,644 3,541 Yes
A26 51611 Franconia Center Retail 7,306 6,203 Yes
A29 51561 Southside Commons Retail 4,115 3,850 Yes
A32 51578 Mt. Paran Shopping Center Retail 8,398 7,858 Yes
A33 51562 White Horse Commons Retail 3,698 3,460 Yes
A36 51572 Town Center Mall Shoppes Retail 2,916 2,727 Yes
A37 51551 Pecos Wigwam Commercial Retail 7,128 7,288 Yes
A38 50814 Town Center Retail 5,977 8,200 Yes
A40 50874 Cinco Village Shopping Center Retail 3,000 5,500 Yes
A42 50917 Cantrell Shopping Center Retail Yes
A44 51564 Huffines Plaza Retail 15,629 2,632 Yes
A45 51522 Town East Center Retail 24,402 12,836 Yes
A47 51518 Centre Stage at Jonestown Shopping Center Retail 7,651 9,163 Yes
A49 51588 Windy Hill Crossing Retail 7,360 6,883 Yes
A50 51534 Harrison Ridge Retail 7,071 61,777 Yes
A51 51589 Zaragosa Retail Center Retail 4,164 14,475 Yes
A52 51842 Tiburon Apartments Multifamily 92,538 32,664 Yes
A53 51841 Farmstead Apartments Multifamily 65,148 24,920 Yes
A54 51840 Cimarron Apartments Multifamily 35,700 11,682 Yes
ANNUAL CURRENT
INITIAL DEPOSIT DEPOSIT TO BALANCE IN
LOAN TO TI/LC TI/LC TI/LC
SEQUENCE NUMBER PROPERTY NAME PROPERTY TYPE ESCROW ESCROW ESCROW REPORT DATE
- -----------------------------------------------------------------------------------------------------------------------------------
A1 51545 224-246 Worth Avenue (Palm V) Retail 7/13/00
A2 51546 256 Worth Avenue (Power-Love Associates) Retail 7/13/00
A3 51447 Dutch Square Center Retail $121,144 229,895 7/13/00
A4 51828 Edwards Megaplex Theater Retail 7/13/00
A5 51022 Huffman Mill Plaza Retail 7/13/00
A6 51671 Wal-Mart Stores Portfolio 2 Retail 7/13/00
A7 51670 Wal-Mart Stores Portfolio 1 Retail 7/13/00
A8 51573 Golden Triangle Mall Retail 7/13/00
A9 51521 Mansfield Plaza Retail 7/13/00
A10 51524 Raintree Towne Shopping Center Retail 7/13/00
A11 51547 175 Worth Avenue (Hals Realty Associates) Retail 7/13/00
A12 51605 Tinseltown Theater Complex Retail 7/13/00
A13 51606 Lucky Center Retail 7/13/00
A15 50592 Huntersville Square S/C Retail 7/13/00
A16 51625 Orange Village Shopping Center Retail 7/26/00
A17 50889 Barnes & Noble/Chili's Land Lease Retail 7/14/00
A18 50998 Southside Shopping Center Retail 7/13/00
A20 50740 Laurel Square Shopping Center Retail 7/13/00
A22 51223 Wayman Court Shopping Center Retail 13,000 $ 26,484 45,711 7/13/00
A23 51126 New Lake Hill Shopping Center Retail 7/13/00
A25 51062 Bainbridge Market Place Retail 7/13/00
A26 51611 Franconia Center Retail 7/13/00
A29 51561 Southside Commons Retail 7/13/00
A32 51578 Mt. Paran Shopping Center Retail 50,000 52,320 7/13/00
A33 51562 White Horse Commons Retail 7/13/00
A36 51572 Town Center Mall Shoppes Retail 7/13/00
A37 51551 Pecos Wigwam Commercial Retail 7/13/00
A38 50814 Town Center Retail 7/13/00
A40 50874 Cinco Village Shopping Center Retail 7/12/00
A42 50917 Cantrell Shopping Center Retail 7,500 12,298 7/13/00
A44 51564 Huffines Plaza Retail 17,004 7/13/00
A45 51522 Town East Center Retail 7/13/00
A47 51518 Centre Stage at Jonestown Shopping Center Retail 7/13/00
A49 51588 Windy Hill Crossing Retail 7/13/00
A50 51534 Harrison Ridge Retail 18,000 18,765 7/13/00
A51 51589 Zaragosa Retail Center Retail 7/13/00
A52 51842 Tiburon Apartments Multifamily 7/13/00
A53 51841 Farmstead Apartments Multifamily 7/13/00
A54 51840 Cimarron Apartments Multifamily 7/13/00
* This schedule relates to the Conduit Mortage Loans.
B-1
157
ANNEX B
CAPITAL IMPROVEMENT, REPLACEMENT RESERVE AND ESCROW ACCOUNTS
(CONDUIT MORTGAGE LOANS*)
INITIAL DEPOSIT CURRENT BALANCE
TO CAPITAL IN CAPITAL INITIAL DEPOSIT TO
SEQU- LOAN PROPERTY IMPROVEMENT IMPROVEMENT REPLACEMENT
ENCE NUMBER PROPERTY NAME TYPE RESERVES RESERVES RESERVES
- ------------------------------------------------------------------------------------------------------------------------------------
A55 50927 Wellington Meadows Apartments Multifamily
A56 50156 Mariner Shores Apartments Multifamily
A57 51520 The Mark at Salem Station Multifamily 53,000 37,187
A58 51816 Oasis Vista Apartments Multifamily 165,000
A59 51519 Hickory Hills Townhouses Multifamily
A60 50787 1121 Morrison Ave Multifamily 115,900
A61 51669 North Decatur Manor Apartments Multifamily 69,063 17,796 55,000
A63 50130 Grassy Creek Apartments Multifamily
A64 50295 Oakridge Apartments Multifamily 62,500 80,000
A69 51663 Seasons Apartments Multifamily
A70 51460 Bath Street Apartments Multifamily 146,000
A74 51533 Clearbrook Apartments Multifamily
A76 51568 Sunchase Square Apartments Multifamily
A77 51511 Casa Verde Apartments Multifamily
A78 51078 Venbury Trail Apartments Multifamily
A80 51630 Summit Crossing Apartments Multifamily 11,300 38,700
A81 51614 Timber Ridge Apartments Multifamily
A82 51526 Shadowbrook Apartments Multifamily 1,193
A84 50550 Embassy Square Apartments Multifamily 47,563
A85 51525 Seashore Apartments Multifamily 4,875 5,122 30,000
A86 50395 2304 Sedgwick Ave Multifamily 34,500 30,000
A87 51624 Imperial Courtyard Apartments Multifamily 48,688
A88 51164 Power Properties 3 Multifamily 39,756 6,232 15,000
A89 51532 West Oaks Club Apartments Multifamily 15,691
A90 51515 5400 Live Oak Apartments Multifamily 14,681 15,461 45,000
A91 51550 Buffalo Avenue Apartments Multifamily $ 29,356
A92 51465 Ladera Apartments Multifamily 1,875 1,974
A93 51629 Anderson Park Apartments Multifamily 54,150 35,439 15,850
A95 51195 Pelican Cove Apartments Multifamily
A96 51512 Oakley Lofts Multifamily 1,313 1,379
A97 51234 Del Nido Apartments Multifamily
A98 51513 Balcones Apartments Multifamily
A99 51595 Bonnie Brae Multifamily 2,500 2,609
A100 51535 Westwood Apts. Multifamily 43,050 45,273
A101 50374 1065 Jerome Ave Multifamily 81,875 7,000
A102 51379 Bethany Biltmore Apartments Multifamily
A103 51596 Casa Manana Apartments Multifamily 66,563 8,500
A104 51473 Bayshore Apartments Multifamily 2,563
A105 50599 610 West 143rd St. Multifamily 67,313 18,000
ANNUAL
DEPOSIT TO CURRENT BALANCE TAX AND
SEQU- LOAN PROPERTY REPLACEMENT IN REPLACEMENT INSURANCE
ENCE NUMBER PROPERTY NAME TYPE RESERVES RESERVES ESCROW
- -----------------------------------------------------------------------------------------------------------------------------
A55 50927 Wellington Meadows Apartments Multifamily 66,400 66,400 Yes
A56 50156 Mariner Shores Apartments Multifamily 28,800 65,906 Yes
A57 51520 The Mark at Salem Station Multifamily 44,800 30,442 Yes
A58 51816 Oasis Vista Apartments Multifamily 122,400 238,850 Yes
A59 51519 Hickory Hills Townhouses Multifamily 36,960 40,896 Yes
A60 50787 1121 Morrison Ave Multifamily 76,000 89,234 Yes
A61 51669 North Decatur Manor Apartments Multifamily 49,200 91,900 Yes
A63 50130 Grassy Creek Apartments Multifamily 32,868 60,057 Yes
A64 50295 Oakridge Apartments Multifamily 45,600 30,232 Yes
A69 51663 Seasons Apartments Multifamily 28,800 21,945 Yes
A70 51460 Bath Street Apartments Multifamily 8,898 10,786 Yes
A74 51533 Clearbrook Apartments Multifamily 48,950 16,835 Yes
A76 51568 Sunchase Square Apartments Multifamily 28,800 15,415 Yes
A77 51511 Casa Verde Apartments Multifamily 20,718 4,547 Yes
A78 51078 Venbury Trail Apartments Multifamily 19,200 33,151 Yes
A80 51630 Summit Crossing Apartments Multifamily 39,600 31,875 Yes
A81 51614 Timber Ridge Apartments Multifamily 30,240 7,242 Yes
A82 51526 Shadowbrook Apartments Multifamily 14,310 15,871 Yes
A84 50550 Embassy Square Apartments Multifamily 6,750 3,319 Yes
A85 51525 Seashore Apartments Multifamily 22,400 54,413 Yes
A86 50395 2304 Sedgwick Ave Multifamily 14,250 19,608 Yes
A87 51624 Imperial Courtyard Apartments Multifamily 22,750 13,328 Yes
A88 51164 Power Properties 3 Multifamily 15,606 41,498 Yes
A89 51532 West Oaks Club Apartments Multifamily 15,635 5,248 Yes
A90 51515 5400 Live Oak Apartments Multifamily 11,925 61,665 Yes
A91 51550 Buffalo Avenue Apartments Multifamily 14,300 14,610 Yes
A92 51465 Ladera Apartments Multifamily 5,332 6,011 Yes
A93 51629 Anderson Park Apartments Multifamily 37,824 16,850 Yes
A95 51195 Pelican Cove Apartments Multifamily 6,851 7,585 Yes
A96 51512 Oakley Lofts Multifamily 3,270 3,629 Yes
A97 51234 Del Nido Apartments Multifamily 24,480 6,180 Yes
A98 51513 Balcones Apartments Multifamily 13,894 3,304 Yes
A99 51595 Bonnie Brae Multifamily 13,000 11,029 Yes
A100 51535 Westwood Apts. Multifamily 7,680 8,524 Yes
A101 50374 1065 Jerome Ave Multifamily 14,500 16,064 Yes
A102 51379 Bethany Biltmore Apartments Multifamily 8,000 2,019 Yes
A103 51596 Casa Manana Apartments Multifamily 9,300 6,330 Yes
A104 51473 Bayshore Apartments Multifamily 15,000 5,663 Yes
A105 50599 610 West 143rd St. Multifamily 12,250 16,625 Yes
ANNUAL CURRENT
INITIAL DEPOSIT DEPOSIT TO BALANCE IN
SEQU- LOAN PROPERTY TO TI/LC TI/LC TI/LC
ENCE NUMBER PROPERTY NAME TYPE ESCROW ESCROW ESCROW REPORT DATE
- -----------------------------------------------------------------------------------------------------------------------------------
A55 50927 Wellington Meadows Apartments Multifamily 7/25/00
A56 50156 Mariner Shores Apartments Multifamily 7/14/00
A57 51520 The Mark at Salem Station Multifamily 7/13/00
A58 51816 Oasis Vista Apartments Multifamily 7/13/00
A59 51519 Hickory Hills Townhouses Multifamily 7/13/00
A60 50787 1121 Morrison Ave Multifamily 7/14/00
A61 51669 North Decatur Manor Apartments Multifamily 7/26/00
A63 50130 Grassy Creek Apartments Multifamily 7/14/00
A64 50295 Oakridge Apartments Multifamily 7/14/00
A69 51663 Seasons Apartments Multifamily 7/13/00
A70 51460 Bath Street Apartments Multifamily 7/13/00
A74 51533 Clearbrook Apartments Multifamily 7/13/00
A76 51568 Sunchase Square Apartments Multifamily 7/13/00
A77 51511 Casa Verde Apartments Multifamily 7/13/00
A78 51078 Venbury Trail Apartments Multifamily 7/13/00
A80 51630 Summit Crossing Apartments Multifamily 7/13/00
A81 51614 Timber Ridge Apartments Multifamily 7/13/00
A82 51526 Shadowbrook Apartments Multifamily 7/13/00
A84 50550 Embassy Square Apartments Multifamily 7/12/00
A85 51525 Seashore Apartments Multifamily 7/13/00
A86 50395 2304 Sedgwick Ave Multifamily 7/14/00
A87 51624 Imperial Courtyard Apartments Multifamily 7/13/00
A88 51164 Power Properties 3 Multifamily 7/13/00
A89 51532 West Oaks Club Apartments Multifamily 7/13/00
A90 51515 5400 Live Oak Apartments Multifamily 7/13/00
A91 51550 Buffalo Avenue Apartments Multifamily 7/13/00
A92 51465 Ladera Apartments Multifamily 7/13/00
A93 51629 Anderson Park Apartments Multifamily 7/13/00
A95 51195 Pelican Cove Apartments Multifamily 7/13/00
A96 51512 Oakley Lofts Multifamily 7/13/00
A97 51234 Del Nido Apartments Multifamily 7/13/00
A98 51513 Balcones Apartments Multifamily 7/13/00
A99 51595 Bonnie Brae Multifamily 7/13/00
A100 51535 Westwood Apts. Multifamily 7/13/00
A101 50374 1065 Jerome Ave Multifamily 7/14/00
A102 51379 Bethany Biltmore Apartments Multifamily 7/13/00
A103 51596 Casa Manana Apartments Multifamily 7/13/00
A104 51473 Bayshore Apartments Multifamily 7/13/00
A105 50599 610 West 143rd St. Multifamily 7/14/00
* This schedule relates to the Conduit Mortage Loans.
B-2
158
ANNEX B
CAPITAL IMPROVEMENT, REPLACEMENT RESERVE AND ESCROW ACCOUNTS
(CONDUIT MORTGAGE LOANS*)
INITIAL DEPOSIT CURRENT BALANCE
TO CAPITAL IN CAPITAL INITIAL DEPOSIT TO
SEQU- LOAN PROPERTY IMPROVEMENT IMPROVEMENT REPLACEMENT
ENCE NUMBER PROPERTY NAME TYPE RESERVES RESERVES RESERVES
- ------------------------------------------------------------------------------------------------------------------------------------
A106 51539 Central Manor Apartments Multifamily 9,250
A107 50600 213-217 West 238th St Multifamily 31,875 3,500
A108 50789 511 West 147th St. Multifamily 20,000 23,500
A109 51667 SCI Portfolio-411 N. Akard St Office
A110 51626 Lahser Medical Complex Buildings II, III & IV Office 76,438
A112 51088 Kaiser Foundation Health Plan Building Office
A113 51114 Corporate Pointe II Office
A114 50943 Brand Village Office 35,740
A115 51549 Harold Poll Building Office
A116 51594 Dorsey Hall Medical Center Office 2,313 2,414
A117 51627 Plantation Business Park & Sheridan Park Office
A122 51618 1750 Fifth Avenue Building Office 5,000
A123 51593 Maracay Building Office
A124 51530 West End Court Office
A126 51457 Century Plaza Office 7,000
A127 51579 Innkeepers Portfolio Hotel 1,753,475 1,401,498
A128 51635 Radisson Suites - Secaucus, NJ Hotel
A129 51153 Hilton Garden Inn Hotel
A130 51587 Biltmore Suites Hotel Hotel
A132 51824 Hawthorn Suites Hotel 3,556
A134 51637 Rosewood Care Center - Moline Health Care
A135 51638 Rosewood Care Center - Peoria Health Care
A137 51051 Walnut Woods of Boyertown Health Care
A138 51067 Hampshire Retirement Health Care
A139 51560 Creekwood Care Center Health Care 28,250 6,613
A140 50832 Cox Communications Building Industrial
A145 51424 C-2 Civic Center Business Park Industrial 33,750
A148 51414 Career Guidance Foundation Center Industrial
A149 51607 Meadows Mobile Home Park Mobile Home 255,375 9,293
A150 51567 Lord Calvert Mobile Home Park Mobile Home 22,500 23,404
A153 51604 Desert Classic Mobile Home Park Mobile Home
A156 51576 I-40 Bell Mini Storage
A159 51632 American Store & Lock #1 Mini Storage 70,125
- ------------------------------------------------------------------------------------------------------------------------------------
TOTALS $3,350,382 $1,723,659 $866,682
ANNUAL
DEPOSIT TO CURRENT BALANCE TAX AND
SEQU- LOAN PROPERTY REPLACEMENT IN REPLACEMENT INSURANCE
ENCE NUMBER PROPERTY NAME TYPE RESERVES RESERVES ESCROW
- -----------------------------------------------------------------------------------------------------------------------------
A106 51539 Central Manor Apartments Multifamily 10,250 6,259 Yes
A107 50600 213-217 West 238th St Multifamily 14,750 21,957 Yes
A108 50789 511 West 147th St. Multifamily 15,000 22,491 Yes
A109 51667 SCI Portfolio-411 N. Akard St Office 356,806 241,272 Yes
A110 51626 Lahser Medical Complex Buildings II, III & IV Office 15,553 15,553 Yes
A112 51088 Kaiser Foundation Health Plan Building Office 5,104 5,529 Yes
A113 51114 Corporate Pointe II Office Yes
A114 50943 Brand Village Office 10,367 964 Yes
A115 51549 Harold Poll Building Office 7,347 6,866 Yes
A116 51594 Dorsey Hall Medical Center Office 7,620 7,131 Yes
A117 51627 Plantation Business Park & Sheridan Park Office 4,781 3,642 Yes
A122 51618 1750 Fifth Avenue Building Office 6,024 10,858 Yes
A123 51593 Maracay Building Office 3,066 2,339 Yes
A124 51530 West End Court Office 4,032 4,475 Yes
A126 51457 Century Plaza Office Yes
A127 51579 Innkeepers Portfolio Hotel 1,420,988 817,299 Yes
A128 51635 Radisson Suites - Secaucus, NJ Hotel 302,754 230,664 Yes
A129 51153 Hilton Garden Inn Hotel 74,485 128,478 Yes
A130 51587 Biltmore Suites Hotel Hotel 83,076 69,895 Yes
A132 51824 Hawthorn Suites Hotel 42,672 32,521 Yes
A134 51637 Rosewood Care Center - Moline Health Care Yes
A135 51638 Rosewood Care Center - Peoria Health Care Yes
A137 51051 Walnut Woods of Boyertown Health Care 26,136 49,726 Yes
A138 51067 Hampshire Retirement Health Care 25,651 48,807 Yes
A139 51560 Creekwood Care Center Health Care 14,200 12,526 Yes
A140 50832 Cox Communications Building Industrial Yes
A145 51424 C-2 Civic Center Business Park Industrial 2,676 4,377 Yes
A148 51414 Career Guidance Foundation Center Industrial 1,650 2,555 Yes
A149 51607 Meadows Mobile Home Park Mobile Home 7,846 5,979 Yes
A150 51567 Lord Calvert Mobile Home Park Mobile Home 20,400 17,297 Yes
A153 51604 Desert Classic Mobile Home Park Mobile Home 414 316 Yes
A156 51576 I-40 Bell Mini Storage 29,556 2,736 Yes
A159 51632 American Store & Lock #1 Mini Storage 6,772 77,771 Yes
- -----------------------------------------------------------------------------------------------------------------------------
TOTALS $4,153,051 $3,569,722
ANNUAL CURRENT
INITIAL DEPOSIT DEPOSIT TO BALANCE IN
SEQU- LOAN PROPERTY TO TI/LC TI/LC TI/LC
ENCE NUMBER PROPERTY NAME TYPE ESCROW ESCROW ESCROW REPORT DATE
- -----------------------------------------------------------------------------------------------------------------------------------
A106 51539 Central Manor Apartments Multifamily 7/13/00
A107 50600 213-217 West 238th St Multifamily 7/14/00
A108 50789 511 West 147th St. Multifamily 7/14/00
A109 51667 SCI Portfolio-411 N. Akard St Office 1,715,230 1,715,230 7/13/00
A110 51626 Lahser Medical Complex Buildings II, III & IV Office 7/17/00
A112 51088 Kaiser Foundation Health Plan Building Office 95,600 19,794 122,551 7/12/00
A113 51114 Corporate Pointe II Office 7/13/00
A114 50943 Brand Village Office 67,655 88,671 7/12/00
A115 51549 Harold Poll Building Office 7/13/00
A116 51594 Dorsey Hall Medical Center Office 42,228 39,518 7/13/00
A117 51627 Plantation Business Park & Sheridan Park Office 7/13/00
A122 51618 1750 Fifth Avenue Building Office 214,203 223,660 7/13/00
A123 51593 Maracay Building Office 15,000 12,738 7/13/00
A124 51530 West End Court Office 7/13/00
A126 51457 Century Plaza Office 130,000 26,400 14,458 7/13/00
A127 51579 Innkeepers Portfolio Hotel 7/13/00
A128 51635 Radisson Suites - Secaucus, NJ Hotel 7/13/00
A129 51153 Hilton Garden Inn Hotel 7/13/00
A130 51587 Biltmore Suites Hotel Hotel 7/13/00
A132 51824 Hawthorn Suites Hotel 7/13/00
A134 51637 Rosewood Care Center - Moline Health Care 7/13/00
A135 51638 Rosewood Care Center - Peoria Health Care 7/13/00
A137 51051 Walnut Woods of Boyertown Health Care 7/13/00
A138 51067 Hampshire Retirement Health Care 7/13/00
A139 51560 Creekwood Care Center Health Care 7/14/00
A140 50832 Cox Communications Building Industrial 96,000 89,763 7/13/00
A145 51424 C-2 Civic Center Business Park Industrial 19,584 32,060 7/13/00
A148 51414 Career Guidance Foundation Center Industrial 2,830 4,381 7/13/00
A149 51607 Meadows Mobile Home Park Mobile Home 7/13/00
A150 51567 Lord Calvert Mobile Home Park Mobile Home 7/13/00
A153 51604 Desert Classic Mobile Home Park Mobile Home 7/13/00
A156 51576 I-40 Bell Mini Storage 7/14/00
A159 51632 American Store & Lock #1 Mini Storage 7/13/00
- -----------------------------------------------------------------------------------------------------------------------------------
TOTALS $2,357,177 $340,479 $2,702,020
* This schedule relates to the Conduit Mortage Loans.
B-3
159
ANNEX B
MULTIFAMILY SCHEDULE
Loan
Sequence Number Property Name Cut-Off Balance Utilities Tenant Pays/Payment of Util.
- -------------------------------------------------------------------------------------------------------------
A54 51840 Cimarron Apartments 6,124,148 Electric
A53 51841 Farmstead Apartments 11,140,240 Electric
A52 51842 Tiburon Apartments 16,435,833 Electric
SUB-TOTAL CROSSED LOANS $33,700,222
A55 50927 Wellington Meadows Apartments 18,873,500 Electric, Gas, Cable TV
A56 50156 Mariner Shores Apartments 10,669,448 Cable TV, Electric
A57 51520 The Mark at Salem Station 10,111,037 Electric, Gas, Sewer, Water
A58 51816 Oasis Vista Apartments 8,884,640 Electric, Cable TV, AC
A59 51519 Hickory Hills Townhouses 7,221,407 Electric, Gas, Cable TV
A60 50787 1121 Morrison Ave 5,871,356 Electric, Gas, AC
A61 51669 North Decatur Manor Apartments 5,195,184 Electric
A62 3102092 Alder Creek Apartments 5,043,966 Unable to Determine
A63 50130 Grassy Creek Apartments 4,955,950 Electric, Sewer, Water
A64 50295 Oakridge Apartments 4,869,188 Electric
A65 3018413 Apple Apartments 3,780,675 Partial Paid by Each
A66 2006617 Kingswood Gardens Apartments 3,706,640 Partial Paid by Each
A67 3012945 Golf Course Square Apartments 3,428,683 Partial Paid by Each
A68 3012952 Woodgate Oaks Apartments 3,197,016 Partial Paid by Each
A69 51663 Seasons Apartments 3,193,104 Cable TV, Electric
A70 51460 Bath Street Apartments 2,955,729 None
A71 3016946 Park Brighton Apartments 2,878,769 Partial Paid by Each
A72 4542254 Sunrise Village Apartments 2,812,908 Partial Paid by Each
A73 3009552 Ashton Park Apartments 2,769,936 Partial Paid by Each
A74 51533 Clearbrook Apartments 2,713,273 Electric, Gas, Cable TV
A75 3032679 First Place Apartments 2,631,720 Partial Paid by Each
A76 51568 Sunchase Square Apartments 2,571,815 Cable TV, Electric
A77 51511 Casa Verde Apartments 2,575,249 Electric, Gas
A78 51078 Venbury Trail Apartments 2,556,896 Electric
A79 3103140 Gallery Park Apartment 2,499,366 Unable to Determine
A80 51630 Summit Crossing Apartments 2,461,101 Electric, Gas, Sewer, Water
A81 51614 Timber Ridge Apartments 2,369,494 Electric, Gas
A82 51526 Shadowbrook Apartments 2,338,378 Electric, Gas, Water, Cable TV
A83 4541876 Glennbrook Apartments 2,298,335 Partial Paid by Each
A84 50550 Embassy Square Apartments 2,249,339 Electric, Cable TV
A85 51525 Seashore Apartments 2,162,186 Electric, Gas
A86 50395 2304 Sedgwick Ave 2,085,721 Electric, Gas, AC
A87 51624 Imperial Courtyard Apartments 2,085,357 None
A88.1 51164 Power Properties 3-5908 Gaston Electric, Gas, Sewer, Water, Cable TV
A88.2 51164 Power Properties 3-5808 Gaston Electric, Gas, Sewer, Water, Cable TV
A88.3 51164 Power Properties 3-4935 Junius Electric, Gas, Sewer, Water, Cable TV
A88 51164 Power Properties 3 (Roll-Up) 2,020,003 Electric, Gas, Sewer, Water, Cable TV
Studio 1 Bedroom 2 Bedroom 3 Bedroom 4 Bedroom
----------------------------------------------------------------
Loan # of Avg # of Avg # of Avg # of Avg # of Avg
Sequence Number Property Name Units Rent Units Rent Units Rent Units Rent Units Rent
- ---------------------------------------------------------------------------------------------------------------------
A54 51840 Cimarron Apartments 195 492 15 632
A53 51841 Farmstead Apartments 312 483 36 620
A52 51842 Tiburon Apartments 120 433 402 476 60 595
SUB-TOTAL CROSSED LOANS
A55 50927 Wellington Meadows Apartments 140 708 172 931 20 $1,195
A56 50156 Mariner Shores Apartments 48 655 112 785 32 895
A57 51520 The Mark at Salem Station 99 648 100 720 24 835
A58 51816 Oasis Vista Apartments 96 438 232 541 80 593
A59 51519 Hickory Hills Townhouses 48 468 48 634 64 753 8 814
A60 50787 1121 Morrison Ave 25 517 216 542 59 614 5 736
A61 51669 North Decatur Manor Apartments 4 431 40 492 80 552 40 647
A62 3102092 Alder Creek Apartments 62 474 56 655 34 803
A63 50130 Grassy Creek Apartments 26 442 90 535 62 670 20 751
A64 50295 Oakridge Apartments 148 373 80 517
A65 3018413 Apple Apartments 160 537 48 625
A66 2006617 Kingswood Gardens Apartments 390 385
A67 3012945 Golf Course Square Apartments 10 595 86 692
A68 3012952 Woodgate Oaks Apartments 28 570 68 665
A69 51663 Seasons Apartments 96 523
A70 51460 Bath Street Apartments 22 749 27 881 2 1,025
A71 3016946 Park Brighton Apartments 24 385 49 456 60 550
A72 4542254 Sunrise Village Apartments 20 481 49 573 16 729
A73 3009552 Ashton Park Apartments 15 495 109 585
A74 51533 Clearbrook Apartments 107 468 66 563 4 620
A75 3032679 First Place Apartments 28 568 32 675
A76 51568 Sunchase Square Apartments 28 308 104 383 60 566
A77 51511 Casa Verde Apartments 84 609
A78 51078 Venbury Trail Apartments 24 455 48 540 24 675
A79 3103140 Gallery Park Apartment 7 24
A80 51630 Summit Crossing Apartments 120 500
A81 51614 Timber Ridge Apartments 144 390
A82 51526 Shadowbrook Apartments 26 581 22 705 6 762
A83 4541876 Glennbrook Apartments 24 575 56 685
A84 50550 Embassy Square Apartments 36 681 14 839
A85 51525 Seashore Apartments 38 759 26 914
A86 50395 2304 Sedgwick Ave 4 510 27 566 15 571 11 602
A87 51624 Imperial Courtyard Apartments 32 493 55 614 4 727
A88.1 51164 Power Properties 3-5908 Gaston 4 775 18 756
A88.2 51164 Power Properties 3-5808 Gaston 12 575 6 692
A88.3 51164 Power Properties 3-4935 Junius 10 705 4 900
A88 51164 Power Properties 3 (Roll-Up) 26 656 28 762
B-4
160
ANNEX B
MULTIFAMILY SCHEDULE
Loan
Sequence Number Property Name Cut-Off Balance Utilities Tenant Pays/Payment of Util.
- ------------------------------------------------------------------------------------------------------------------------
A89 51532 West Oaks Club Apartments 1,930,506 Electric, Gas, Cable TV
A90 51515 5400 Live Oak Apartments 1,782,818 Cable TV
A91 51550 Buffalo Avenue Apartments 1,732,371 Electric
A92 51465 Ladera Apartments 1,576,974 Each tenant pays the Landlord $50, mo.for utilities
A93 51629 Anderson Park Apartments 1,530,537 Electric, Gas, Sewer, Water
A94 3020062 Villeurbanne Apartments 1,524,085 Partial Paid by Each
A95 51195 Pelican Cove Apartments 1,472,954 Electric
A96 51512 Oakley Lofts 1,436,934 Gas, Electric
A97 51234 Del Nido Apartments 1,414,721 Electric, Cable TV
A98 51513 Balcones Apartments 1,387,161 Electric, Gas
A99 51595 Bonnie Brae 1,291,778 Electric, Cable TV
A100 51535 Westwood Apts. 1,109,663 None
A101 50374 1065 Jerome Ave 1,048,400 Electric, Gas, AC
A102 51379 Bethany Biltmore Apartments 1,012,382 Electric, Gas
A103 51596 Casa Manana Apartments 993,967 Electric, Cable TV
A104 51473 Bayshore Apartments 981,974 Electric
A105 50599 610 West 143rd St. 852,162 Electric, Gas, AC
A106 51539 Central Manor Apartments 795,656 Electric
A107 50600 213-217 West 238th St 796,120 Electric, Gas, AC
A108 50789 511 West 147th St. 759,940 Electric, Gas, AC
- ------------------------------------------------------------------------------------------------------------------------
TOTAL MULTIFAMILY LOANS $205,168,694
Studio 1 Bedroom 2 Bedroom 3 Bedroom 4 Bedroom
----------------------------------------------------------------
Loan # of Avg # of Avg # of Avg # of Avg # of Avg
Sequence Number Property Name Units Rent Units Rent Units Rent Units Rent Units Rent
- ---------------------------------------------------------------------------------------------------------------------
A89 51532 West Oaks Club Apartments 72 608
A90 51515 5400 Live Oak Apartments 4 413 26 653 14 968 1 1,000
A91 51550 Buffalo Avenue Apartments 3 517 30 647 11 771
A92 51465 Ladera Apartments 2 750 26 821
A93 51629 Anderson Park Apartments 4 415 88 449 4 513
A94 3020062 Villeurbanne Apartments 42 667
A95 51195 Pelican Cove Apartments 3 833 20 850 1 1,600
A96 51512 Oakley Lofts 5 1,537 5 1,625
A97 51234 Del Nido Apartments 30 382 64 420 1 500
A98 51513 Balcones Apartments 44 395 20 505 2 695
A99 51595 Bonnie Brae 47 510 18 659
A100 51535 Westwood Apts. 24 919
A101 50374 1065 Jerome Ave 8 494 15 503 35 540
A102 51379 Bethany Biltmore Apartments 4 499 24 571 4 575
A103 51596 Casa Manana Apartments 31 598
A104 51473 Bayshore Apartments 15 491 45 519
A105 50599 610 West 143rd St. 7 391 24 526 14 589 3 576
A106 51539 Central Manor Apartments 7 353 34 450
A107 50600 213-217 West 238th St 16 439 39 497 4 605
A108 50789 511 West 147th St. 1 808 32 555 27 586
- ---------------------------------------------------------------------------------------------------------------------
B-5
161
(WELLS FARGO LOGO)
BANC OF AMERICA COMMERCIAL MORTGAGE INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-1
PAYMENT DATE: 09/15/2000
RECORD DATE: 08/31/2000
DISTRIBUTION DATE STATEMENT
TABLE OF CONTENTS
STATEMENT SECTIONS PAGE(S)
Certificate Distribution Detail 2
Certificate Factor Detail 3
Reconciliation Detail 4
Other Required Information 5
Ratings Detail 6
Current Mortgage Loan and Property Stratification Tables 7-15
Mortgage Loan Detail 16
Principal Prepayment Detail 17
Historical Detail 18
Delinquency Loan Detail 19
Specially Serviced Loan Detail 20-21
Modified Loan Detail 22
Liquidated Loan Detail 23
PLACEMENT AGENT MASTER SERVICER SPECIAL SERVICER
Banc of America Securities LLC Midland Loan Services, Inc. GMAC Commercial Mortgage Corp.
100 North Tryon Street 210 West 10th Street 650 Dresher Road
Charlotte, NC 28255 Kansas City, MO 64105 Horsham, PA 10944-8015
Contact: David Gertner Contact: Brad Hauger Contact: Coral I. Horstmeyer
Phone Number: (704) 388-3621 Phone Number: (816) 292-8629 Phone Number: (215) 328-1790
This report has been compiled from information provided to Norwest by various
third parties, which may include the Master Servicer, Special Servicer
and others. Norwest has not independently confirmed the accuracy of information
received from these third parties and assumes no duty to do so. Norwest
expressly disclaims any responsibility for the accuracy or completeness of
information furnished by third parties.
C-1
162
(WELLS FARGO LOGO)
BANC OF AMERICA COMMERCIAL MORTGAGE INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-1
PAYMENT DATE: 09/15/2000
RECORD DATE: 08/31/2000
CERTIFICATE DISTRIBUTION DETAIL
Class CUSIP Pass-Through Original Beginning Principal Interest Prepayment Realized Loss/
Rate Balance Balance Distribution Distribution Penalties Additional Trust
Fund Expenses
A-1A 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
A-2A 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
A-1B 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
A-2B 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
A-3B 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
B 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
C 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
D 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
E 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
F 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
G 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
H 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
K 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
L 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
M 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
N 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
R-I 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
R-II 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
R-III 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
R-IIIU 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
R-IV 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
Totals 0.00 0.00 0.00 0.00 0.00 0.00
Class Total Ending Current
Distribution Balance Subordination
Level(1)
A-1A 0.00 0.00 0.00%
A-2A 0.00 0.00 0.00%
A-1B 0.00 0.00 0.00%
A-2B 0.00 0.00 0.00%
A-3B 0.00 0.00 0.00%
B 0.00 0.00 0.00%
C 0.00 0.00 0.00%
D 0.00 0.00 0.00%
E 0.00 0.00 0.00%
F 0.00 0.00 0.00%
G 0.00 0.00 0.00%
H 0.00 0.00 0.00%
K 0.00 0.00 0.00%
L 0.00 0.00 0.00%
M 0.00 0.00 0.00%
N 0.00 0.00 0.00%
R-I 0.00 0.00 0.00%
R-II 0.00 0.00 0.00%
R-III 0.00 0.00 0.00%
R-IIIU 0.00 0.00 0.00%
R-IV 0.00 0.00 0.00%
Totals 0.00 0.00
Class CUSIP Pass-Through Original Beginning Interest Prepayment Total Ending
Rate Notional Notional Distribution Penalties Distribution Notional
Amount Amount Amount
X 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
(1) Calculated by taking (A) the sum of the ending certificate balance of all
classes less (B) the sum of (i) the ending certificate balance of the designated
class and (ii) the ending certificate balance of all classes which are not
subordinate to the designated class and dividing the result by (A).
C-2
163
(WELLS FARGO LOGO)
BANC OF AMERICA COMMERCIAL MORTGAGE INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-1
PAYMENT DATE: 09/15/2000
RECORD DATE: 08/31/2000
CERTIFICATE FACTOR DETAIL
Class CUSIP Beginning Principal Interest Prepayment Realized Loss/ Ending
Balance Distribution Distribution Penalties Additional Trust Balance
Fund Expenses
A-1A 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
A-2A 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
A-1B 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
A-2B 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
A-3B 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
B 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
C 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
D 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
E 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
F 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
G 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
H 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
K 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
L 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
M 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
N 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
R-I 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
R-II 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
R-III 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
R-IIIU 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
R-IV 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
Class CUSIP Beginning Ending
Notional Interest Prepayment Notional
Amount Distribution Penalties Amount
X 0.00000000 0.00000000 0.00000000 0.00000000
C-3
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BANC OF AMERICA COMMERCIAL MORTGAGE INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-1
PAYMENT DATE: 09/15/2000
RECORD DATE: 08/31/2000
RECONCILIATION DETAIL
ADVANCE SUMMARY SERVICING FEE BREAKDOWNS
P & I Advances Outstanding 0.00 Current Period Accrued Servicing Fees 0.00
Servicing Advances Outstanding 0.00 Less Delinquent Servicing Fees 0.00
Less Reductions to Servicing Fees 0.00
Reimbursement for Interest on Advances 0.00 Plus Servicing Fees for Delinquent Payments Received 0.00
paid from general collections Plus Adjustments for Prior Servicing Calculation 0.00
Total Servicing Fees Collected 0.00
CERTIFICATE INTEREST RECONCILIATION
Accrued Net Aggregate Distributable Distributable Additional Interest Remaining Unpaid
Certificate Prepayment Certificate Certificate Interest Trust Fund Distribution Distributable
Class Interest Interest Shortfall Interest Adjustment Expenses Certificate Interest
A-1A 0.00 0.00 0.00 0.00 0.00 0.00 0.00
A-2A 0.00 0.00 0.00 0.00 0.00 0.00 0.00
A-1B 0.00 0.00 0.00 0.00 0.00 0.00 0.00
A-2B 0.00 0.00 0.00 0.00 0.00 0.00 0.00
A-3B 0.00 0.00 0.00 0.00 0.00 0.00 0.00
X 0.00 0.00 0.00 0.00 0.00 0.00 0.00
B 0.00 0.00 0.00 0.00 0.00 0.00 0.00
C 0.00 0.00 0.00 0.00 0.00 0.00 0.00
D 0.00 0.00 0.00 0.00 0.00 0.00 0.00
E 0.00 0.00 0.00 0.00 0.00 0.00 0.00
F 0.00 0.00 0.00 0.00 0.00 0.00 0.00
G 0.00 0.00 0.00 0.00 0.00 0.00 0.00
H 0.00 0.00 0.00 0.00 0.00 0.00 0.00
K 0.00 0.00 0.00 0.00 0.00 0.00 0.00
L 0.00 0.00 0.00 0.00 0.00 0.00 0.00
M 0.00 0.00 0.00 0.00 0.00 0.00 0.00
N 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total 0.00 0.00 0.00 0.00 0.00 0.00 0.00
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BANC OF AMERICA COMMERCIAL MORTGAGE INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-1
PAYMENT DATE: 09/15/2000
RECORD DATE: 08/31/2000
OTHER REQUIRED INFORMATION
Available Distribution Amount 0.00
Principal Distribution Amount 0.00
(a) Principal portion of Monthly Payments 0.00
and any Assumed Monthly Payments
(b) Principal Prepayments 0.00
(c) Collection of Principal on a Balloon 0.00
Loan after its Stated Maturity Date
(d) Liquidation Proceeds and Insurance 0.00
Proceeds received on a Mortgage Loan
(e) Liquidation Proceeds, Insurance Proceeds, 0.00
or REO Revenues received on an REO
Plus the excess of the prior Principal Distribution 0.00
Amount over the principal paid to the Sequential
Pay Certificates
Aggregate Number of Outstanding Loans 0
Aggregate Stated Principal Balance of the Mortgage Pool before distribution 0.00
Aggregate Stated Principal Balance of the Mortgage Pool after distribution 0.00
Cumulative Prepayments 0.00
Total Servicing and Special Servicing Fee paid 0.00
Servicing Fee paid 0.00
Special Servicing Fee paid 0.00
Trustee Fee paid 0.00
Additional Trust Fund Expenses 0.00
(i) Fees paid to Special Servicer 0.00
(ii) Interest on Advances 0.00
(iii) Other Expenses of the Trust 0.00
Appraisal Reduction Amount
Appraisal Date Appraisal
Loan Reduction Reduction
Number Amount Effected
NONE
TOTAL
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BANC OF AMERICA COMMERCIAL MORTGAGE INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-1
PAYMENT DATE: 09/15/2000
RECORD DATE: 08/31/2000
RATINGS DETAIL
Original Ratings Current Ratings(1)
------------------------------- -------------------------------
Class CUSIP Fitch Moody's S&P Fitch Moody's S&P
A-1A
A-2A
A-1B
A-2B
A-3B
X
B
C
D
E
F
G
H
K
L
M
N
NR - Designates that the class was not rated by the above agency at the time
of original issuance.
X - Designates that the above rating agency did not rate any classes in this
transaction at the time of original issuance.
N/A - Data not available this period.
1) For any class not rated at the time of original issuance by any particular
rating agency, no request has been made subsequent to issuance to obtain rating
information, if any, from such rating agency. The current ratings were obtained
directly from the applicable rating agency within 30 days of the payment date
listed above. The ratings may have changed since they were obtained. Because
the ratings may have changed, you may want to obtain current ratings directly
from the rating agencies.
Fitch IBCA, Inc. Moody's Investors Service Standard & Poor's Rating Services
One State Street Plaza 99 Church Street 26 Broadway
New York, New York 10004 New York, New York 10007 New York, New York 10004
(212) 908-0500 (212) 553-0300 (212) 208-8000
C-6
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BANC OF AMERICA COMMERCIAL MORTGAGE INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-1
PAYMENT DATE: 09/15/2000
RECORD DATE: 08/31/2000
CURRENT MORTGAGE LOAN AND PROPERTY STRATIFICATION TABLES
AGGREGATE POOL
SCHEDULED BALANCE
% of
Scheduled # of Scheduled Agg. WAM Weighted
Balance Loans Balance Bal. (2) WAC Avg DSCR(1)
Totals
STATE(3)
% of
# of Scheduled Agg. WAM Weighted
State Props. Balance Bal. (2) WAC Avg DSCR(1)
Totals
See footnotes on last page of this section.
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BANC OF AMERICA COMMERCIAL MORTGAGE INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-1
PAYMENT DATE: 09/15/2000
RECORD DATE: 08/31/2000
CURRENT MORTGAGE LOAN AND PROPERTY STRATIFICATION TABLES
AGGREGATE POOL
DEBT SERVICE COVERAGE RATIO
Debt Service # of Scheduled % of WAM Weighted
Coverage Ratio Loans Balance Agg. (2) WAC Avg. DSCR(1)
Bal.
Totals
PROPERTY TYPE(3)
Property # of Scheduled % of WAM Weighted
Type Props. Balance Agg. (2) WAC Avg. DSCR(1)
Bal.
Totals
NOTE RATE
Note # of Scheduled % of WAM Weighted
Rate Loans Balance Agg. (2) WAC Avg. DSCR(1)
Bal.
Totals
SEASONING
Seasoning # of Scheduled % of WAM Weighted
Loans Balance Agg. (2) WAC Avg. DSCR(1)
Bal.
Totals
See footnotes on last page of this section.
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BANC OF AMERICA COMMERCIAL MORTGAGE INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-1
PAYMENT DATE: 09/15/2000
RECORD DATE: 08/31/2000
CURRENT MORTGAGE LOAN AND PROPERTY STRATIFICATION TABLES
AGGREGATE POOL
ANTICIPATED REMAINING TERM (ARD AND BALLOON LOANS)
Anticipated Remaining # of Scheduled % of WAM Weighted
Term(2) Loans Balance Agg. (2) WAC Avg. DSCR(1)
Bal.
Totals
REMAINING STATED TERM (FULLY AMORTIZING LOANS)
Remaining Stated # of Scheduled % of WAM Weighted
Term Loans Balance Agg. (2) WAC Avg. DSCR(1)
Bal.
Totals
REMAINING AMORTIZATION TERM (ARD AND BALLOON LOANS)
Remaining Amortization # of Scheduled % of WAM Weighted
Term Loans Balance Agg. (2) WAC Avg. DSCR(1)
Bal.
Totals
AGE OF MOST RECENT NOI
Age of Most # of Scheduled % of WAM Weighted
Recent NOI Loans Balance Agg. (2) WAC Avg. DSCR(1)
Bal.
Totals
(1) Debt Service Coverage Ratios are updated periodically as new NOI figures
become available from borrowers on an asset level. In all cases the most current
DSCR provided by the Servicer is used. To the extent that no DSCR is provided by
the Servicer, information from the offering document is used. The Trustee makes
no representations as to the accuracy of the data provided by the borrower for
this calculation.
(2) Anticipated Remaining Term and WAM are each calculated based upon the term
from the current month to the earlier of the Anticipated Repayment Date, if
applicable, and the maturity date.
(3) Data in this table was calculated by allocating pro-rata the current loan
information to the properties based upon the Cut-off Date Balance of the related
mortgage loan as disclosed in the offering document.
Note: (i) "Scheduled Balance" has the meaning assigned thereto in the CMSA
Standard Information Package.
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BANC OF AMERICA COMMERCIAL MORTGAGE INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-1
PAYMENT DATE: 09/15/2000
RECORD DATE: 08/31/2000
CURRENT MORTGAGE LOAN AND PROPERTY STRATIFICATION TABLES
LOAN GROUP 1
SCHEDULED BALANCE
% of
Scheduled # of Scheduled Agg. WAM Weighted
Balance Loans Balance Bal. (2) WAC Avg DSCR(1)
Totals
STATE(3)
% of
# of Scheduled Agg. WAM Weighted
State Props. Balance Bal. (2) WAC Avg DSCR(1)
Totals
See footnotes on last page of this section.
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BANC OF AMERICA COMMERCIAL MORTGAGE INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-1
PAYMENT DATE: 09/15/2000
RECORD DATE: 08/31/2000
CURRENT MORTGAGE LOAN AND PROPERTY STRATIFICATION TABLES
LOAN GROUP 1
DEBT SERVICE COVERAGE RATIO
Debt Service # of Scheduled % of WAM Weighted
Coverage Ratio Loans Balance Agg. (2) WAC Avg. DSCR(1)
Bal.
Totals
PROPERTY TYPE(3)
Property # of Scheduled % of WAM Weighted
Type Props. Balance Agg. (2) WAC Avg. DSCR(1)
Bal.
Totals
NOTE RATE
Note # of Scheduled % of WAM Weighted
Rate Loans Balance Agg. (2) WAC Avg. DSCR(1)
Bal.
Totals
SEASONING
Seasoning # of Scheduled % of WAM Weighted
Loans Balance Agg. (2) WAC Avg. DSCR(1)
Bal.
Totals
See footnotes on last page of this section.
C-11
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BANC OF AMERICA COMMERCIAL MORTGAGE INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-1
PAYMENT DATE: 09/15/2000
RECORD DATE: 08/31/2000
CURRENT MORTGAGE LOAN AND PROPERTY STRATIFICATION TABLES
Loan Group 1
ANTICIPATED REMAINING TERM (ARD AND BALLOON LOANS)
Anticipated Remaining # of Scheduled % of WAM Weighted
Term(2) Loans Balance Agg. (2) WAC Avg. DSCR(1)
Bal.
Totals
REMAINING STATED TERM (FULLY AMORTIZING LOANS)
Remaining Stated # of Scheduled % of WAM Weighted
Term Loans Balance Agg. (2) WAC Avg. DSCR(1)
Bal.
Totals
REMAINING AMORTIZATION TERM (ARD AND BALLOON LOANS)
Remaining Amortization # of Scheduled % of WAM Weighted
Term Loans Balance Agg. (2) WAC Avg. DSCR(1)
Bal.
Totals
AGE OF MOST RECENT NOI
Age of Most # of Scheduled % of WAM Weighted
Recent NOI Loans Balance Agg. (2) WAC Avg. DSCR(1)
Bal.
Totals
(1) Debt Service Coverage Ratios are updated periodically as new NOI figures
become available from borrowers on an asset level. In all cases the most current
DSCR provided by the Servicer is used. To the extent that no DSCR is provided by
the Servicer, information from the offering document is used. The Trustee makes
no representations as to the accuracy of the data provided by the borrower for
this calculation.
(2) Anticipated Remaining Term and WAM are each calculated based upon the term
from the current month to the earlier of the Anticipated Repayment Date, if
applicable, and the maturity date.
(3) Data in this table was calculated by allocating pro-rata the current loan
information to the properties based upon the Cut-off Date Balance of the related
mortgage loan as disclosed in the offering document.
Note: (i) "Scheduled Balance" has the meaning assigned thereto in the CMSA
Standard Information Package.
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BANC OF AMERICA COMMERCIAL MORTGAGE INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-1
PAYMENT DATE: 09/15/2000
RECORD DATE: 08/31/2000
CURRENT MORTGAGE LOAN AND PROPERTY STRATIFICATION TABLES
LOAN GROUP 2
SCHEDULED BALANCE
% of
Scheduled # of Scheduled Agg. WAM Weighted
Balance Loans Balance Bal. (2) WAC Avg DSCR(1)
Totals
STATE(3)
% of
# of Scheduled Agg. WAM Weighted
State Props. Balance Bal. (2) WAC Avg DSCR(1)
Totals
See footnotes on last page of this section.
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BANC OF AMERICA COMMERCIAL MORTGAGE INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-1
PAYMENT DATE: 09/15/2000
RECORD DATE: 08/31/2000
CURRENT MORTGAGE LOAN AND PROPERTY STRATIFICATION TABLES
LOAN GROUP 2
DEBT SERVICE COVERAGE RATIO
Debt Service # of Scheduled % of WAM Weighted
Coverage Ratio Loans Balance Agg. (2) WAC Avg. DSCR(1)
Bal.
Totals
PROPERTY TYPE(3)
Property # of Scheduled % of WAM Weighted
Type Props. Balance Agg. (2) WAC Avg. DSCR(1)
Bal.
Totals
NOTE RATE
Note # of Scheduled % of WAM Weighted
Rate Loans Balance Agg. (2) WAC Avg. DSCR(1)
Bal.
Totals
SEASONING
Seasoning # of Scheduled % of WAM Weighted
Loans Balance Agg. (2) WAC Avg. DSCR(1)
Bal.
Totals
See footnotes on last page of this section.
C-14
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BANC OF AMERICA COMMERCIAL MORTGAGE INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-1
PAYMENT DATE: 09/15/2000
RECORD DATE: 08/31/2000
CURRENT MORTGAGE LOAN AND PROPERTY STRATIFICATION TABLES
LOAN GROUP 2
ANTICIPATED REMAINING TERM (ARD AND BALLOON LOANS)
Anticipated Remaining # of Scheduled % of WAM Weighted
Term(2) Loans Balance Agg. (2) WAC Avg. DSCR(1)
Bal.
Totals
REMAINING STATED TERM (FULLY AMORTIZING LOANS)
Remaining Stated # of Scheduled % of WAM Weighted
Term Loans Balance Agg. (2) WAC Avg. DSCR(1)
Bal.
Totals
REMAINING AMORTIZATION TERM (ARD AND BALLOON LOANS)
Remaining Amortization # of Scheduled % of WAM Weighted
Term Loans Balance Agg. (2) WAC Avg. DSCR(1)
Bal.
Totals
AGE OF MOST RECENT NOI
Age of Most # of Scheduled % of WAM Weighted
Recent NOI Loans Balance Agg. (2) WAC Avg. DSCR(1)
Bal.
Totals
(1) Debt Service Coverage Ratios are updated periodically as new NOI figures
become available from borrowers on an asset level. In all cases the most current
DSCR provided by the Servicer is used. To the extent that no DSCR is provided by
the Servicer, information from the offering document is used. The Trustee makes
no representations as to the accuracy of the data provided by the borrower for
this calculation.
(2) Anticipated Remaining Term and WAM are each calculated based upon the term
from the current month to the earlier of the Anticipated Repayment Date, if
applicable, and the maturity date.
(3) Data in this table was calculated by allocating pro-rata the current loan
information to the properties based upon the Cut-off Date Balance of the related
mortgage loan as disclosed in the offering document.
Note: (i) "Scheduled Balance" has the meaning assigned thereto in the CMSA
Standard Information Package.
C-15
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BANC OF AMERICA COMMERCIAL MORTGAGE INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-1
PAYMENT DATE: 09/15/2000
RECORD DATE: 08/31/2000
MORTGAGE LOAN DETAIL
Anticipated Neg.
Loan Property Interest Principal Gross Repayment Maturity Amort.
Number ODCR Type(1) City State Payment Payment Coupon Date Date (Y/N)
Totals
Beginning Ending Paid Appraisal Appraisal Res. Mod.
Scheduled Scheduled Thru Reduction Reduction Strat. Code
Balance Balance Date Date Amount (2) (3)
Totals
(1) Property Type Code (2) Resolution Strategy Code
MF - Multi-Family OF - Office 1 - Modification 7 - REO 10 - Deed in Lieu of
RT - Retail MU - Mixed Use 2 - Foreclosure 8 - Resolved Foreclosure
HC - Health Care LO - Lodging 3 - Bankruptcy 9 - Pending Return 11 - Full Payoff
IN - Industrial SS - Self Storage 4 - Extension to Master Servicer 12 - Reps and Warranties
WH - Warehouse OT - Other 5 - Note Sale 13 - Other or TBD
MH - Mobile Home Park 6 - DPO
(3) Modification Code
1 - Maturity Date Extension
2 - Amortization Change
3 - Principal Write-Off
4 - Combination
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BANC OF AMERICA COMMERCIAL MORTGAGE INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-1
PAYMENT DATE: 09/15/2000
RECORD DATE: 08/31/2000
PRINCIPAL PREPAYMENT DETAIL
Principal Prepayment Amount Prepayment Penalties
Offering Document ---------------------------------- ----------------------------------------------
Loan Number Cross-Reference Payoff Amount Curtailment Amount Prepayment Premium Yield Maintenance Premium
Totals
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BANC OF AMERICA COMMERCIAL MORTGAGE INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-1
PAYMENT DATE: 09/15/2000
RECORD DATE: 08/31/2000
HISTORICAL DETAIL
Delinquencies Prepayments
- ------------------------------------------------------------------------------------------------------- ------------------------
Distribution 30-59 Days 60-89 Days 90 Days or More Foreclosure REO Modifications Curtailments Payoff
Date # Balance # Balance # Balance # Balance # Balance # Balance # Amount # Amount
Rate and Maturities
- -----------------------------
Next Weighted Avg.
Coupon Remit WAM
Note: Foreclosure and REO Totals are excluded from the delinquencies aging
categories.
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BANC OF AMERICA COMMERCIAL MORTGAGE INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-1
PAYMENT DATE: 09/15/2000
RECORD DATE: 08/31/2000
DELINQUENCY LOAN DETAIL
Offering # of Current Outstanding Status of Resolution
Loan Number Document Months Paid Through P&I P&I Mortgage Strategy Servicing
Cross-Reference Delinq. Date Advances Advances** Loan(1) Code(2) Transfer Date
Totals
Current Outstanding REO
Foreclosure Servicing Servicing Bankruptcy Date Date
Date Advances Advances
Totals
(1) Status of Mortgage Loan (2) Resolution Strategy Code
1 - Modification 6 - DPO 10 - Deed In Lieu of 1 - Modification 7 - REO
2 - Foreclosure 7 - REO Foreclosure 2 - Foreclosure 8 - Resolved
3 - Bankruptcy 8 - Resolved 11 - Full Payoff 3 - Bankruptcy 9 - Pending Return
4 - Extension 9 - Pending Return 12 - Reps and Warranties 4 - Extension to Master Servicer
5 - Note Sale to Master Servicer 13 - Other or TBD 5 - Note Sale 10- Deed in Lieu Of
6 - DPO Foreclosure
** Outstanding P&I Advances include the current period advance
C-19
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BANC OF AMERICA COMMERCIAL MORTGAGE INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-1
PAYMENT DATE: 09/15/2000
RECORD DATE: 08/31/2000
SPECIALLY SERVICED LOAN DETAIL - PART 2
Offering Servicing Resolution
Distribution Loan Document Transfer Strategy Scheduled Property State Interest Actual
Date Number Cross-Reference Date Code(1) Balance Type(2) Rate Balance
Net Remaining
Operating NOI DSCR Note Maturity Amortization
Income Date Date Date Term
(1) Resolution Strategy Code (2) Property Type Code
1 - Modification 7 - REO MF - Multi-Family OF - Office
2 - Foreclosure 8 - Resolved RT - Retail MU - Mixed Use
3 - Bankruptcy 9 - Pending Return HC - Health Care LO - Lodging
4 - Extension to Master Servicer IN - Industrial SS - Self Storage
5 - Note Sale 10 - Deed in Lieu Of WH - Warehouse OT - Other
6 - DPO Foreclosure MH - Mobile Home Park
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BANC OF AMERICA COMMERCIAL MORTGAGE INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-1
PAYMENT DATE: 09/15/2000
RECORD DATE: 08/31/2000
SPECIALLY SERVICED LOAN DETAIL - PART 2
Offering Resolution Site
Distribution Loan Document Strategy Inspection Phase 1 Date Appraisal Appraisal Other REO Comment
Date Number Cross-Reference Code(1) Date Date Value Property Revenue
(1) Resolution Strategy Code
1 - Modification 6 - DPO 10 - Deed in Lieu Of
2 - Foreclosure 7 - REO Foreclosure
3 - Bankruptcy 8 - Resolved 11 - Full Payoff
4 - Extension 9 - Pending Return 12 - Reps and Warranties
5 - Note Sale to Master Servicer 13 - Other or TBD
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BANC OF AMERICA COMMERCIAL MORTGAGE INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-1
PAYMENT DATE: 09/15/2000
RECORD DATE: 08/31/2000
MODIFIED LOAN DETAIL
Offering
Loan Document Pre-Modification
Number Cross-Reference Balance Modification Date Modification Description
Total
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BANC OF AMERICA COMMERCIAL MORTGAGE INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2000-1
PAYMENT DATE: 09/15/2000
RECORD DATE: 08/31/2000
LIQUIDATED LOAN DETAIL
Final Recovery Offering Gross Proceeds
Loan Determination Document Appraisal Appraisal Actual Gross as a % of
Number Date Cross-Reference Date Value Balance Proceeds Actual Balance
Current Total
Cumulative Total
Aggregate Net Net Proceeds Repurchased
Liquidation Liquidation as a % of Realized by Seller
Expenses* Proceeds Actual Balance Loss (Y/N)
Current Total
Cumulative Total
* Aggregate liquidation expenses also include outstanding P & I advances and
unpaid fees (servicing, trustee, etc.).
C-23
184
Prospectus
BANC OF AMERICA COMMERCIAL MORTGAGE INC.
(FORMERLY KNOWN AS NATIONSLINK FUNDING CORPORATION)
DEPOSITOR
MORTGAGE PASS-THROUGH CERTIFICATES
CONSIDER CAREFULLY THE RISK FACTORS THE TRUST --
BEGINNING ON PAGE 10 IN THIS - may periodically issue mortgage pass-through
PROSPECTUS. certificates in one or more series with one or more
Neither the certificates nor the classes; and
underlying mortgage loans are insured - will own --
by any governmental agency. - multifamily and commercial mortgage loans;
The certificates will represent - mortgage-backed securities; and
interests only in the related trust - other property described and in the accompanying
only and will not represent interests prospectus supplement.
in or obligations of Banc of America THE CERTIFICATES --
Commercial Mortgage Inc. or any of - will represent interests in the trust and will be
its affiliates, including Bank of paid only from the trust assets;
America Corporation. - provide for the accrual of interest based on a fixed,
This prospectus may be used to offer variable or adjustable interest rate;
and sell any series of certificates - may be offered through underwriters, which may
only if accompanied by the prospectus include Banc of America Securities LLC, an affiliate of
supplement for that series. Banc of America Commercial Mortgage Inc.; and
- will not be listed on any securities exchange.
THE CERTIFICATEHOLDERS --
- will receive interest and principal payments based on
the rate of payment of principal and the timing of
receipt of payments on mortgage loans.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED THESE
CERTIFICATES OR DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
September 14, 2000
185
FOR MORE INFORMATION
Banc of America Commercial
Mortgage Inc. (formerly known
as NationsLink Funding
Corporation) has filed with
the SEC additional
registration materials
relating to the certificates.
You may read and copy any of
these materials at the SEC's
Public Reference Room at the
following locations:
- SEC Public Reference
Section
450 Fifth Street, N.W.
Room 1204
Washington, D.C. 20549
- SEC Midwest Regional
Offices Citicorp Center
500 West Madison Street
Suite 1400
Chicago, Illinois
60661-2511
- SEC Northeast Regional
Office
7 World Trade Center
Suite 1300
New York, New York 10048
You may obtain information on
the operation of the Public
Reference Room by calling the
SEC at 1-800-SEC-0330. The
SEC also maintains an
Internet site that contains
reports, proxy and
information statements, and
other information that has
been filed electronically
with the SEC. The Internet
address is
http://www.sec.gov.
You may also contact Banc of
America Commercial Mortgage
Inc. in writing at Bank of
America
Corporate Center, 100 North
Tryon Street, Charlotte, North
Carolina 28255, or by
telephone at
(704) 386-2400.
See also the sections
captioned "Available
Information" and
"Incorporation of Certain
Information by Reference"
appearing at the end of this
prospectus.
TABLE OF CONTENTS
PAGE
----
SUMMARY OF PROSPECTUS.......................... 5
RISK FACTORS................................... 10
Limited Liquidity of Certificates............ 10
Limited Assets............................... 10
Credit Support Limitations................... 11
Effect of Prepayments on Average Life of
Certificates.............................. 11
Effect of Prepayments on Yield of
Certificates.............................. 12
Limited Nature of Ratings.................... 12
Certain Factors Affecting Delinquency,
Foreclosure and Loss of the Mortgage
Loans..................................... 13
Inclusion of Delinquent Mortgage Loans in a
Mortgage Asset Pool....................... 16
PROSPECTUS SUPPLEMENT.......................... 16
DESCRIPTION OF THE TRUST FUNDS................. 18
General...................................... 18
Mortgage Loans............................... 18
MBS.......................................... 22
Certificate Accounts......................... 23
Credit Support............................... 23
Cash Flow Agreements......................... 23
YIELD AND MATURITY CONSIDERATIONS.............. 23
General...................................... 23
Pass-Through Rate............................ 24
Payment Delays............................... 24
Certain Shortfalls in Collections of
Interest.................................. 24
Yield and Prepayment Considerations.......... 24
Weighted Average Life and Maturity........... 26
Other Factors Affecting Yield, Weighted
Average Life and Maturity................. 27
THE DEPOSITOR.................................. 28
DESCRIPTION OF THE CERTIFICATES................ 29
General...................................... 29
Distributions................................ 30
Distributions of Interest on the
Certificates.............................. 30
Distributions of Principal of the
Certificates.............................. 31
Distributions on the Certificates Concerning
Prepayment Premiums or Concerning Equity
Participations............................ 32
Allocation of Losses and Shortfalls.......... 32
Advances in Respect of Delinquencies......... 32
Reports to Certificateholders................ 33
Voting Rights................................ 34
Termination.................................. 35
Book-Entry Registration and Definitive
Certificates.............................. 35
THE POOLING AND SERVICING AGREEMENTS........... 36
General...................................... 36
Assignment of Mortgage Loans; Repurchases.... 37
Representations and Warranties;
Repurchases............................... 39
Collection and Other Servicing Procedures.... 39
Sub-Servicers................................ 41
Certificate Account.......................... 42
Modifications, Waivers and Amendments of
Mortgage Loans............................ 44
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PAGE
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Realization upon Defaulted Mortgage Loans.... 44
Hazard Insurance Policies.................... 46
Due-on-Sale and Due-on-Encumbrance
Provisions................................ 47
Servicing Compensation and Payment of
Expenses.................................. 47
Evidence as to Compliance.................... 47
Certain Matters Regarding the Master
Servicer, the Special Servicer, the REMIC
Administrator and the Depositor........... 48
Events of Default............................ 49
Rights Upon Event of Default................. 50
Amendment.................................... 51
List of Certificateholders................... 52
The Trustee.................................. 52
Duties of the Trustee........................ 52
Certain Matters Regarding the Trustee........ 52
Resignation and Removal of the Trustee....... 53
DESCRIPTION OF CREDIT SUPPORT.................. 53
General...................................... 53
Subordinate Certificates..................... 53
Insurance or Guarantees Concerning to
Mortgage Loans............................ 54
Letter of Credit............................. 54
Certificate Insurance and Surety Bonds....... 54
Reserve Funds................................ 54
Cash Collateral Account...................... 55
Credit Support with respect to MBS........... 55
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS........ 55
General...................................... 55
Types of Mortgage Instruments................ 56
Leases and Rents............................. 56
Personalty................................... 57
Foreclosure.................................. 57
Bankruptcy Laws.............................. 60
Environmental Considerations................. 61
Due-on-Sale and Due-on-Encumbrance
Provisions................................ 63
Junior Liens; Rights of Holders of Senior
Liens..................................... 63
Subordinate Financing........................ 64
Default Interest and Limitations on
Prepayments............................... 65
Applicability of Usury Laws.................. 65
Certain Laws and Regulations................. 65
Americans with Disabilities Act.............. 65
Soldiers' and Sailors' Civil Relief Act of
1940...................................... 66
Forfeitures in Drug and RICO Proceedings..... 66
CERTAIN FEDERAL INCOME TAX CONSEQUENCES........ 66
General...................................... 66
REMICs....................................... 67
Grantor Trust Funds.......................... 84
STATE AND OTHER TAX CONSEQUENCES............... 92
CERTAIN ERISA CONSIDERATIONS................... 93
General...................................... 93
Plan Asset Regulations....................... 93
Insurance Company General Accounts........... 94
Consultation With Counsel.................... 95
Tax Exempt Investors......................... 95
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PAGE
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LEGAL INVESTMENT............................... 95
USE OF PROCEEDS................................ 97
METHOD OF DISTRIBUTION......................... 97
LEGAL MATTERS.................................. 98
FINANCIAL INFORMATION.......................... 99
RATING......................................... 99
AVAILABLE INFORMATION.......................... 99
INCORPORATION OF CERTAIN INFORMATION BY
REFERENCE.................................... 100
INDEX OF PRINCIPAL DEFINITIONS................. 101
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SUMMARY OF PROSPECTUS
This summary highlights selected information from this prospectus. It does not
contain all the information you need to consider in making your investment
decision. You should carefully review this prospectus and the related prospectus
supplement in their entirety before making any investment in the certificates of
any series. As used in this prospectus, "you" refers to a prospective investor
in certificates, and "we" refers to the Depositor, Banc of America Commercial
Mortgage Inc. An Index of Principal Definitions appears at the end of this
Prospectus.
SECURITIES OFFERED
Mortgage pass-through certificates.
DEPOSITOR
Banc of America Commercial Mortgage Inc., a Delaware corporation and a
subsidiary of Bank of America, N.A., formerly known as NationsLink Funding
Corporation. Banc of America Commercial Mortgage Inc. has its principal
executive offices at Bank of America Corporate Center, 100 North Tryon Street,
Charlotte, North Carolina 28255, and its telephone number is (704) 386-2400.
TRUSTEE
The trustee for each series of certificates will be named in the related
prospectus supplement.
MASTER SERVICER
If the trust includes mortgage loans, the master servicer for the corresponding
series of certificates will be named in the prospectus supplement.
SPECIAL SERVICER
If the trust includes mortgage loans, the special servicer for the corresponding
series of certificates will be named, or the circumstances under which a special
servicer may be appointed, will be described in the prospectus supplement.
MBS ADMINISTRATOR
If the trust includes mortgage-backed securities, the entity responsible for
administering the mortgage-backed securities will be named in the prospectus
supplement.
REMIC ADMINISTRATOR
The person responsible for the various tax-related administration duties for a
series of certificates concerning real estate mortgage investment conduits will
be named in the prospectus supplement.
THE MORTGAGE LOANS
Each series of certificates will, in general, consist of a pool of mortgage
loans (a "Mortgage Asset Pool") secured by first or junior liens on --
- - residential properties consisting of five or more rental or
cooperatively-owned dwelling units in high-rise, mid-rise or garden apartment
buildings or other residential structures; or
- - office buildings, retail stores, hotels or motels, nursing homes, hospitals or
other health care-related facilities, recreational vehicle and mobile home
parks, warehouse facilities, mini-warehouse facilities, self-storage
facilities, industrial plants, parking lots, entertainment or sports arenas,
restaurants, marinas, mixed use or various other types of income-producing
properties or unimproved land.
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However, no one of the following types of properties will be overly-represented
in the trust at the time the trust is formed: (1) restaurants; (2) entertainment
or sports arenas; (3) marinas; or (4) nursing homes, hospitals or other health
care-related facilities.
The mortgage loans will not be guaranteed or insured by Banc of America
Commercial Mortgage Inc. or any of its affiliates or, unless otherwise provided
in the prospectus supplement, by any governmental agency or by any other person.
If specified in the prospectus supplement, some mortgage loans may be delinquent
as of the date the trust is formed.
As described in the prospectus supplement, a mortgage loan may --
- - provide for no accrual of interest or for accrual of interest at an interest
rate that is fixed over its term or that adjusts from time to time, or that
may be converted at the borrower's election from an adjustable to a fixed
mortgage rate, or from a fixed to an adjustable mortgage rate;
- - provide for level payments to maturity or for payments that adjust from time
to time to accommodate changes in the mortgage rate or to reflect the
occurrence of certain events, and may permit negative amortization;
- - be fully amortizing or may be partially amortizing or nonamortizing, with a
balloon payment due on its stated maturity date;
- - may prohibit over its term or for a certain period prepayments and/or require
payment of a premium or a yield maintenance payment in connection with certain
prepayments; and
- - provide for payments of principal, interest or both, on due dates that occur
monthly, quarterly, semi-annually or at such other interval as specified in
the prospectus supplement.
Each mortgage loan will have had an original term to maturity of not more than
40 years. No mortgage loan will have been originated by Banc of America
Commercial Mortgage Inc., although one of its affiliates may have originated
some of the mortgage loans.
If any mortgage loan, or group of related mortgage loans, involves unusual
credit risk, financial statements or other financial information concerning the
related mortgaged property will be included in the related prospectus
supplement.
As described in the prospectus supplement, the trust may also consist of
mortgage participations, mortgage pass-through certificates and/or other
mortgage-backed securities that evidence an interest in, or are secured by a
pledge of, one or more mortgage loans similar to the other mortgage loans in the
trust and which may or may not be issued, insured or guaranteed by the United
States or any governmental agency.
THE CERTIFICATES
Each series of certificates will be issued in one or more classes pursuant to a
pooling and servicing agreement or other agreement specified in the prospectus
supplement and will represent in total the entire beneficial ownership interest
in the trust.
As described in the prospectus supplement, the certificates of each series may
consist of one or more classes that --
- - are senior (collectively, "Senior Certificates") or subordinate (collectively,
"Subordinate Certificates")to one or more other classes of certificates in
entitlement to certain distributions on the certificates;
- - are "stripped principal certificates" entitled to distributions of principal,
with disproportionate, nominal or no distributions of interest;
- - are "stripped interest certificates" entitled to distributions of interest,
with disproportionate, nominal or no distributions of principal;
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- - provide for distributions of interest or principal that commence only after
the occurrence of certain events, such as the retirement of one or more other
classes of certificates of such series;
- - provide for distributions of principal to be made, from time to time or for
designated periods, at a rate that is faster (and, in some cases,
substantially faster) or slower (and, in some cases, substantially slower)
than the rate at which payments or other collections of principal are received
on the mortgage assets in the trust;
- - provide for distributions of principal to be made, subject to available funds,
based on a specified principal payment schedule or other methodology; or
- - provide for distribution based on collections on the mortgage assets in the
trust attributable to prepayment premiums, yield maintenance payments or
equity participations.
If specified in the prospectus supplement, a series of certificates may include
one or more "controlled amortization classes," which will entitle the holders to
receive principal distributions according to a specified principal payment
schedule. Although prepayment risk cannot be eliminated entirely for any class
of certificates, a controlled amortization class will generally provide a
relatively stable cash flow so long as the actual rate of prepayment on the
mortgage loans in the trust remains relatively constant at the rate of
prepayment used to establish the specific principal payment schedule for such
certificates. Prepayment risk with respect to a given mortgage asset pool does
not disappear, however, and the stability afforded to a controlled amortization
class comes at the expense of one or more other classes of the same series.
Each class of certificates, other than certain classes of stripped interest
certificates and certain classes of real estate mortgage investment conduit
residual certificates (also known as "REMIC residual certificates"), will have
an initial stated principal amount (a "Certificate Balance"). Each class of
certificates, other than certain classes of stripped principal certificates and
certain classes of REMIC residual certificates, will accrue interest on its
certificate balance or, in the case of certain classes of stripped interest
certificates, on a notional amount, based on a pass-through rate (a
"Pass-Through Rate") which may be fixed, variable or adjustable. The prospectus
supplement will specify the certificate balance, notional amount and/or pass-
through rate for each class of certificates.
DISTRIBUTIONS OF INTEREST ON THE CERTIFICATES
Interest on each class of certificates (other than certain classes of stripped
principal certificates and certain classes of REMIC residual certificates) of
each series will accrue at the applicable pass-through rate on the certificate
balance and will paid on a distribution date. However, in the case of certain
classes of stripped interest certificates, the notional amount outstanding from
time to time will be paid to certificateholders as provided in the prospectus
supplement on a specified distribution date (each of the specified dates on
which distributions are to be made, a "Distribution Date").
Distributions of interest concerning one or more classes of certificates
(collectively, "Accrual Certificates") may not commence until the occurrence of
certain events, such as the retirement of one or more other classes of
certificates. Interest accrued concerning a class of accrual certificates prior
to the occurrence of such an event will either be added to the certificate
balance or otherwise deferred as described in the prospectus supplement.
Distributions of interest concerning one or more classes of certificates may be
reduced to the extent of certain delinquencies, losses and other contingencies
described in this prospectus and in the prospectus supplement.
DISTRIBUTIONS OF PRINCIPAL OF THE CERTIFICATES
Each class of certificates of each series (other than certain classes of
stripped interest certificates and certain classes of REMIC residual
certificates) will have a certificate balance. The certificate balance of a
class of certificates outstanding from time to time will represent the maximum
amount that the holders are then entitled to receive in respect of principal
from future cash flow on the assets in the trust. The initial total certificate
balance of all classes of a series of certificates will not be greater than the
outstanding principal balance of the related mortgage assets as of a specified
cut-off date, after application of scheduled payments
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due on or before such date, whether or not received. As described in the
prospectus supplement, distributions of principal with respect to the related
series of certificates will be made on each distribution date to the holders of
the class certificates of such series then entitled until the certificate
balances of such certificates have been reduced to zero. Distributions of
principal with respect to one or more classes of certificates --
- - may be made at a rate that is faster (and, in some cases, substantially
faster) or slower (and, in some cases, substantially slower) than the rate at
which payments or other collections of principal are received on the assets in
the trust;
- - may not commence until the occurrence of certain events, such as the
retirement of one or more other classes of certificates of the same series;
- - may be made, subject to certain limitations, based on a specified principal
payment schedule; or
- - may be contingent on the specified principal payment schedule for another
class of the same series and the rate at which payments and other collections
of principal on the mortgage assets in the trust are received. Unless
otherwise specified in the prospectus supplement, distributions of principal
of any class of certificates will be made on a pro rata basis among all of the
certificates of such class.
CREDIT SUPPORT AND CASH FLOW AGREEMENTS
If specified in the prospectus supplement, partial or full protection against
certain defaults and losses on the assets in the trust may be provided to one or
more classes of certificates by (1) subordination of one or more other classes
of certificates to classes in the same series, or by (2) of such series, one or
more other types of credit support, such as a letter of credit, insurance
policy, guarantee, reserve fund, cash collateral account or
overcollateralization (any such coverage with respect to the Certificates of any
series, "Credit Support"). If so provided in the prospectus supplement, the
trust may include --
- - guaranteed investment contracts pursuant to which moneys held in the funds and
accounts established for the related series will be invested at a specified
rate; or
- - certain other agreements, such as interest rate exchange agreements, interest
rate cap or floor agreements, or other agreements designed to reduce the
effects of interest rate fluctuations on the mortgage assets or on one or more
classes of certificates.
Certain relevant information regarding any applicable credit support or cash
flow agreement will be set forth in the prospectus supplement for a series of
certificates.
ADVANCES
As specified in the prospectus supplement, if the trust includes mortgage loans,
the master servicer, the special servicer, the trustee, any provider of credit
support, and/or another specified person may be obligated to make, or have the
option of making, certain advances concerning delinquent scheduled payments of
principal and/or interest on mortgage loans. Any advances made concerning a
particular mortgage loan will be reimbursable from subsequent recoveries
relating to the particular mortgage loan and as described in the prospectus
supplement. If specified in the prospectus supplement, any entity making such
advances may be entitled to receive interest for a specified period during which
certain or all of such advances are outstanding, payable from amounts in the
trust. If the trust includes mortgaged-backed securities, any comparable
advancing obligation of a party to the related pooling and servicing agreement,
or of a party to the related mortgage-backed securities agreement, will be
described in the prospectus supplement.
OPTIONAL TERMINATION
If specified in the prospectus supplement, a series of certificates may be
subject to optional early termination through the repurchase of the mortgage
assets in the trust. If provided in the related prospectus supplement, upon the
reduction of the certificate balance of a specified class or classes of
certificates by a specified percentage or amount, a specified party may be
authorized or required to solicit bids for the purchase of all of the assets of
the trust, or of a sufficient portion of such assets to retire such class or
classes.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The certificates of each series will constitute or evidence ownership of
either --
- - "regular interests" ("REMIC Regular Certificates") and "residual interests"
("REMIC Residual Certificates") in the trust, or a designated portion thereof,
treated as a REMIC under Sections 860A through 860G of the Internal Revenue
Code of 1986; or
- - certificates ("Grantor Trust Certificates") in a trust treated as a grantor
trust (or a partnership) under applicable provisions of the Internal Revenue
Code of 1986.
Investors are advised to consult their tax advisors and to review "Certain
Federal Income Tax Consequences" in this prospectus and in the prospectus
supplement.
CERTAIN ERISA CONSIDERATIONS
Fiduciaries of retirement plans and certain other employee benefit plans and
arrangements, including individual retirement accounts, annuities, Keogh plans,
and collective investment funds and separate accounts in which such plans,
accounts, annuities or arrangements are invested, that are subject to the
Employee Retirement Income Security Act of 1974, as amended, or Section 4975 of
the Internal Revenue Code of 1986, should review with their legal advisors
whether the purchase or holding of certificates could give rise to a transaction
that is prohibited.
LEGAL INVESTMENT
The certificates will constitute "mortgage related securities" for purposes of
the Secondary Mortgage Market Enhancement Act of 1984, as amended ("SMMEA"),
only if specified in the prospectus supplement. Investors whose investment
authority is subject to legal restrictions should consult their legal advisors
to determine whether and to what extent the certificates constitute legal
investments for them.
RATING
At their respective dates of issuance, each class of certificates will be rated
as of investment grade by one or more nationally recognized statistical rating
agencies (each, a "Rating Agency").
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RISK FACTORS
In considering an investment in the certificates of any series, you should
consider carefully the following risk factors and the risk factors in the
prospectus supplement.
LIMITED LIQUIDITY OF CERTIFICATES
General. The certificates of any series may have limited or no liquidity.
You may be forced to bear the risk of investing in the certificates for an
indefinite period of time. In addition, you may have no redemption rights, and
the certificates are subject to early retirement only under certain
circumstances.
Lack of a Secondary Market. We cannot assure you that a secondary market
for the certificates will develop or, if it does develop, that it will provide
certificateholders with liquidity of investment or that it will continue for as
long as the certificates remain outstanding.
The prospectus supplement may indicate that an underwriter intends to
establish a secondary market in the certificates, although no underwriter will
be obligated to do so. Any secondary market may provide less liquidity to
investors than any comparable market for securities relating to single-family
mortgage loans. Unless specified in the prospectus supplement, the certificates
will not be listed on any securities exchange.
Limited Ongoing Information. The primary source of ongoing information
regarding the certificates, including information regarding the status of the
related mortgage assets and any credit support for the certificates, will be the
periodic reports to certificateholders to be delivered pursuant to the related
pooling and servicing agreement.
We cannot assure you that any additional ongoing information regarding the
certificates will be available through any other source. The limited nature of
such information concerning a series of certificates may adversely affect
liquidity, even if a secondary market for the certificates does develop.
Sensitivity to Interest Rates. If a secondary market does develop for the
certificates, the market value of the certificates will be affected by several
factors, including (1) perceived liquidity, (2) the anticipated cash flow (which
may vary widely depending upon the prepayment and default assumptions concerning
the underlying mortgage loans) and (3) prevailing interest rates.
The price payable at any given time for certain classes of certificates may
be extremely sensitive to small fluctuations in prevailing interest rates. The
relative change in price for a certificate in response to an upward or downward
movement in prevailing interest rates may not necessarily equal the relative
change in price for the certificate in response to an equal but opposite
movement in such rates. Therefore, the sale of certificates by a holder in any
secondary market that may develop may be at a discount from the price paid by
such holder. We are not aware of any source through which price information
about the certificates will be generally available on an ongoing basis.
LIMITED ASSETS
Unless specified in the prospectus supplement, neither the certificates nor
the mortgage assets in the trust will be guaranteed or insured by Banc of
America Commercial Mortgage Inc. or any of its affiliates, by any governmental
agency or by any other person or entity. No certificate will represent a claim
against or security interest in the trust funds for any other series. Therefore,
if the related trust fund has insufficient assets to make payments, no other
assets will be available for payment of the deficiency, and the holders of one
or more classes of the certificates will be required to bear the consequent
loss.
Certain amounts on deposit from time to time in certain funds or accounts
constituting part of the trust, including the certificate account and any
accounts maintained as credit support, may be withdrawn under certain
conditions, for purposes other than the payment of principal of or interest on
the related series of certificates. On any distribution occurring after losses
or shortfalls in collections on the mortgage assets have been incurred, all or a
portion of the amount of losses or shortfalls in collections on the mortgage
assets will be borne on a disproportionate basis among classes of certificates.
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CREDIT SUPPORT LIMITATIONS
Limitations Regarding Types of Losses Covered. The prospectus supplement
for a series of certificates will describe any credit support. Such credit
support may not cover all potential losses. For example, credit support may or
may not cover loss by reason of fraud or negligence by a mortgage loan
originator or other parties. Any such losses not covered by credit support may,
at least in part, be allocated to one or more classes of certificates.
Disproportionate Benefits to Certain Classes and Series. A series of
certificates may include one or more classes of subordinate certificates, if
provided in the prospectus supplement. Although subordination is intended to
reduce the likelihood of temporary shortfalls and ultimate losses to holders of
senior certificates, the amount of subordination will be limited and may decline
under certain circumstances. In addition, if principal payments on one or more
classes of certificates of a series are made in a specified order of priority,
any related credit support may be exhausted before the principal of the
later-paid classes of certificates of such series has been repaid in full.
The impact of losses and shortfalls experienced with respect to the
mortgage assets may fall primarily upon those classes of certificates having a
later right of payment.
If a form of credit support covers the certificates of more than one series
and losses on the related mortgage assets exceed the amount of such credit
support, it is possible that the holders of certificates of one (or more) such
series such credit support will disproportionately benefit, to the detriment of
the holders of certificates of one (or more) other such series.
Limitations Regarding the Amount of Credit Support. The amount of any
applicable credit support supporting one or more classes of certificates will be
determined on the basis of criteria established by each rating agency rating
such classes of certificates based on an assumed level of defaults,
delinquencies and losses on the underlying mortgage assets and certain other
factors. However, we cannot assure you that the loss experience on the related
mortgage assets will not exceed such assumed levels. If the losses on the
related mortgage assets do exceed such assumed levels, the holders of one or
more classes of certificates will be required to bear such additional losses.
EFFECT OF PREPAYMENTS ON AVERAGE LIFE OF CERTIFICATES
As a result of prepayments on the mortgage loans in the trust, the amount
and timing of distributions of principal and/or interest on the certificates of
the related series may be highly unpredictable. Prepayments on the mortgage
loans in the trust will result in a faster rate of principal payments on one or
more classes of the related series of certificates than if payments on such
mortgage loans were made as scheduled. Therefore, the prepayment experience on
the mortgage loans in the trust may affect the average life of one or more
classes of certificates of the related series.
The rate of principal payments on pools of mortgage loans varies among
pools and from time to time is influenced by a variety of economic, demographic,
geographic, social, tax and legal factors. For example, if prevailing interest
rates fall significantly below the mortgage rates borne by the mortgage loans
included in the trust, principal prepayments on such mortgage loans are likely
to be higher than if prevailing interest rates remain at or above the rates
borne by those mortgage loans. Conversely, if prevailing interest rates rise
significantly above the mortgage rates borne by the mortgage loans included in
the trust, then principal prepayments on such mortgage loans are likely to be
lower than if prevailing interest rates remain at or below the mortgage rates
borne by those mortgage loans.
We cannot assure you what as to the actual rate of prepayment on the
mortgage loans in the trust will be, or that such rate of prepayment will
conform to any model in any prospectus supplement. As a result, depending on the
anticipated rate of prepayment for the mortgage loans in the trust, the
retirement of any class of certificates of the related series could occur
significantly earlier or later, and its average life could be significantly
shorter or longer, than expected.
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The extent to which prepayments on the mortgage loans in trust ultimately
affect the average life of any class of certificates of the related series will
depend on the terms and provisions of the certificates. A class of certificates
may provide that on any distribution date the holders of the certificates are
entitled to a pro rata share of the prepayments on the mortgage loans in the
trust fund that are distributable on such date.
A class of certificates that entitles the holders to a disproportionately
large share of the prepayments on the mortgage loans in the trust increases the
likelihood of early retirement of such class if the rate of prepayment is
relatively fast. This type of early retirement risk is sometimes referred to as
"call risk."
A class of certificates that entitles the holders thereof to a
disproportionately small share of the prepayments on the mortgage loans in the
trust increases the likelihood of an extended average life of such class if the
rate of prepayment is relatively slow. This type of prolonged retirement risk is
sometimes referred to as "extension risk."
As described in the prospectus supplement, the respective entitlements of
the various classes of certificateholders of any series to receive payments
(and, in particular, prepayments) of principal of the mortgage loans in the
trust may vary based on the occurrence of certain events (e.g., the retirement
of one or more classes of certificates of such series) or subject to certain
contingencies (e.g., prepayment and default rates with respect to such mortgage
loans).
A series of certificates may include one or more controlled amortization
classes, which will entitle the holders to receive principal distributions
according to a specified principal payment schedule. Although prepayment risk
cannot be eliminated entirely for any class of certificates, a controlled
amortization class will generally provide a relatively stable cash flow so long
as the actual rate of prepayment on the mortgage loans in the trust remains
relatively constant at the rate of prepayment used to establish the specific
principal payment schedule for the certificates. Prepayment risk concerning a
given mortgage asset pool does not disappear, however, and the stability
afforded to a controlled amortization class comes at the expense of one or more
companion classes of the same series.
As described in the prospectus supplement, a companion class may entitle
the holders to a disproportionately large share of prepayments on the mortgage
loans in the trust when the rate of prepayment is relatively fast, and/or may
entitle the holders to a disproportionately small share of prepayments on the
mortgage loans in the trust when the rate of prepayment is relatively slow. A
companion class absorbs some (but not all) of the call risk and/or extension
risk that would otherwise belong to the related controlled amortization class if
all payments of principal of the mortgage loans in the trust were allocated on a
pro rata basis.
EFFECT OF PREPAYMENTS ON YIELD OF CERTIFICATES
A series of certificates may include one or more classes offered at a
premium or discount. Yields on such classes of certificates will be sensitive,
and in some cases extremely sensitive, to prepayments on the mortgage loans in
the trust fund. If the amount of interest payable with respect to a class is
disproportionately large as compared to the amount of principal, as with certain
classes of stripped interest certificates, a holder might fail to recover its
original investment under some prepayment scenarios. The yield to maturity of
any class of certificates may vary from the anticipated yield due to the degree
to which the certificates are purchased at a discount or premium and the amount
and timing of distributions.
You should consider, in the case of any certificate purchased at a
discount, the risk that a slower than anticipated rate of principal payments on
the mortgage loans could result in an actual yield to such investor that is
lower than the anticipated yield. In the case of any certificate purchased at a
premium, you should consider the risk that a faster than anticipated rate of
principal payments could result in an actual yield to such investor that is
lower than the anticipated yield.
LIMITED NATURE OF RATINGS
Any rating assigned by a rating agency to a class of certificates will
reflect only its assessment of the likelihood that holders of the certificates
will receive payments to which the certificateholders are entitled under the
related pooling and servicing agreement. Such rating will not constitute an
assessment of the
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likelihood that principal prepayments on the related mortgage loans will be
made, the degree to which the rate of such prepayments might differ from that
originally anticipated, or the likelihood of early optional termination of the
trust. Any rating will not address the possibility that prepayment of the
mortgage loans at a higher or lower rate than anticipated by an investor may
cause such investor to experience a lower than anticipated yield or that an
investor purchasing a certificate at a significant premium might fail to recover
its initial investment under certain prepayment scenarios. Therefore, a rating
assigned by a rating agency does not guarantee or ensure the realization of any
anticipated yield on a class of certificates.
The amount, type and nature of credit support given a series of
certificates will be determined on the basis of criteria established by each
rating agency rating classes of the certificates of such series. Those criteria
are sometimes based upon an actuarial analysis of the behavior of mortgage loans
in a larger group. There can be no assurance that the historical data supporting
any such actuarial analysis will accurately reflect future experience, or that
the data derived from a large pool of mortgage loans will accurately predict the
delinquency, foreclosure or loss experience of any particular pool of mortgage
loans. In other cases, such criteria may be based upon determinations of the
values of the properties that provide security for the mortgage loans. However,
we cannot assure you that those values will not decline in the future. As a
result, the credit support required in respect of the certificates of any series
may be insufficient to fully protect the holders thereof from losses on the
related mortgage asset pool.
CERTAIN FACTORS AFFECTING DELINQUENCY, FORECLOSURE AND LOSS OF THE MORTGAGE
LOANS
Mortgage loans made on the security of multifamily or commercial property
may have a greater likelihood of delinquency and foreclosure, and a greater
likelihood of loss than loans made on the security of an owner-occupied
single-family property. The ability of a borrower to repay a loan secured by an
income-producing property typically is dependent primarily upon the successful
operation of such property rather than upon the existence of independent income
or assets of the borrower. Therefore, the value of an income-producing property
is directly related to the net operating income derived from such property.
If the net operating income of the property is reduced (for example, if
rental or occupancy rates decline or real estate tax rates or other operating
expenses increase), the borrower's ability to repay the loan may be impaired. A
number of the mortgage loans may be secured by liens on owner-occupied
properties or on properties leased to a single tenant or in which only a few
tenants produce a material amount of the rental income. As the primary component
of the net operating income of a property, rental income (and maintenance
payments from tenant stockholders of a Cooperative) and the value of any
property are subject to the vagaries of the applicable real estate market and/or
business climate. Properties typically leased, occupied or used on a short-term
basis, such as health care-related facilities, hotels and motels, and mini-
warehouse and self-storage facilities, tend to be affected more rapidly by
changes in market or business conditions than do properties leased, occupied or
used for longer periods, such as (typically) warehouses, retail stores, office
buildings and industrial plants. Commercial Properties may be secured by
owner-occupied properties or properties leased to a single tenant. Therefore, a
decline in the financial condition of the borrower or a single tenant may have a
disproportionately greater effect on the net operating income from such
properties than would be the case with respect to properties with multiple
tenants.
Changes in the expense components of the net operating income of a property
due to the general economic climate or economic conditions in a locality or
industry segment, such as (1) increases in interest rates, real estate and
personal property tax rates and other operating expenses including energy costs,
(2) changes in governmental rules, regulations and fiscal policies, including
environmental legislation, and (3) acts of God may also affect the net operating
income and the value of the property and the risk of default on the related
mortgage loan. In some cases leases of properties may provide that the lessee,
rather than the mortgagor, is responsible for payment of certain of these
expenses ("Net Leases"). However, because leases are subject to default risks as
well as when a tenant's income is insufficient to cover its rent and operating
expenses, the existence of such "net of expense" provisions will only temper,
not eliminate, the impact of expense increases on the performance of the related
mortgage loan.
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Additional considerations may be presented by the type and use of a
particular property. For instance, properties that operate as hospitals and
nursing homes are subject to significant governmental regulation of the
ownership, operation, maintenance and financing of health care institutions.
Hotel, motel and restaurant properties are often operated pursuant to franchise,
management or operating agreements that may be terminable by the franchisor or
operator. The transferability of a hotel's or restaurant's operating, liquor and
other licenses upon a transfer of the hotel or the restaurant, whether through
purchase or foreclosure, is subject to local law requirements.
In addition, the concentration of default, foreclosure and loss risks in
mortgage loans in the trust will generally be greater than for pools of
single-family loans because mortgage loans in the trust generally will consist
of a smaller number of higher balance loans than would a pool of single-family
loans of comparable aggregate unpaid principal balance.
Limited Recourse Nature of the Mortgage Loans. We anticipate that some or
all of the mortgage loans included in any trust fund will be nonrecourse loans
or loans for which recourse may be restricted or unenforceable. In this type of
mortgage loan, recourse in the event of borrower default will be limited to the
specific real property and other assets that were pledged to secure the mortgage
loan. However, even with respect to those mortgage loans that provide for
recourse against the borrower and its assets, we cannot assure you that
enforcement of such recourse provisions will be practicable, or that the assets
of the borrower will be sufficient to permit a recovery concerning a defaulted
mortgage loan in excess of the liquidation value of the related property.
Limitations on Enforceability of Cross-Collateralization. A mortgage pool
may include groups of mortgage loans which are cross-collateralized and
cross-defaulted. These arrangements are designed primarily to ensure that all of
the collateral pledged to secure the respective mortgage loans in a
cross-collateralized group. Cash flows generated on these type of mortgage loans
are available to support debt service on, and ultimate repayment of, the total
indebtedness. These arrangements seek to reduce the risk that the inability of
one or more of the mortgaged properties securing any such group of mortgage
loans to generate net operating income sufficient to pay debt service will
result in defaults and ultimate losses.
If the properties securing a group of mortgage loans which are
cross-collateralized are not all owned by the same entity, creditors of one or
more of the related borrowers could challenge the cross-collateralization
arrangement as a fraudulent conveyance. Under federal and state fraudulent
conveyance statutes, the incurring of an obligation or the transfer of property
by a person will be subject to avoidance under certain circumstances if the
person did not receive fair consideration or reasonably equivalent value in
exchange for such obligation or transfer and was then insolvent, was rendered
insolvent by such obligation or transfer or had unreasonably small capital for
its business. A creditor seeking to enforce remedies against a property subject
to such cross-collateralization to repay such creditor's claim against the
related borrower could assert that (1) such borrower was insolvent at the time
the cross-collateralized mortgage loans were made and (2) such borrower did not,
when it allowed its property to be encumbered by a lien securing the
indebtedness represented by the other mortgage loans in the group of
cross-collateralized mortgage loans, receive fair consideration or reasonably
equivalent value for, in effect, "guaranteeing" the performance of the other
borrowers. Although the borrower making such "guarantee" will be receiving
"guarantees" from each of the other borrowers in return, we cannot assure you
that such exchanged "guarantees" would be found to constitute fair consideration
or be of reasonably equivalent value.
The cross-collateralized mortgage loans may be secured by mortgage liens on
properties located in different states. Because of various state laws governing
foreclosure or the exercise of a power of sale and because foreclosure actions
are usually brought in state court, and the courts of one state cannot exercise
jurisdiction over property in another state, it may be necessary upon a default
under any such mortgage loan to foreclose on the related mortgaged properties in
a particular order rather than simultaneously in order to ensure that the lien
of the related mortgages is not impaired or released.
Increased Risk of Default Associated With Balloon Payments. Some of the
mortgage loans included in the trust may be nonamortizing or only partially
amortizing over their terms to maturity. These types of mortgage loans will
require substantial payments of principal and interest (that is, balloon
payments) at their
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stated maturity. These loans involve a greater likelihood of default than
self-amortizing loans because the ability of a borrower to make a balloon
payment typically will depend upon its ability either to refinance the loan or
to sell the related property. The ability of a borrower to accomplish either of
these goals will be affected by --
- - the value of the related property;
- - the level of available mortgage rates at the time of sale or refinancing;
- - the borrower's equity in the related property;
- - the financial condition and operating history of the borrower and the related
property;
- - tax laws;
- - rent control laws (pertaining to certain residential properties);
- - Medicaid and Medicare reimbursement rates (pertaining to hospitals and nursing
homes);
- - prevailing general economic conditions; and
- - the availability of credit for loans secured by multifamily or commercial
property.
Neither Banc of America Commercial Mortgage Inc. nor any of its affiliates
will be required to refinance any mortgage loan.
As specified in the prospectus supplement, the master servicer or the
special servicer will be permitted (within prescribed limits) to extend and
modify mortgage loans that are in default or as to which a payment default is
imminent. Although the master servicer or the special servicer generally will be
required to determine that any such extension or modification is reasonably
likely to produce a greater recovery than liquidation, taking into account the
time value of money, we cannot assure you that any such extension or
modification will in fact increase the present value of receipts from or
proceeds of the affected mortgage loans.
Lender Difficulty in Collecting Rents Upon the Default and/or Bankruptcy of
Borrower. Each mortgage loan included in the trust secured by property that is
subject to leases typically will be secured by an assignment of leases and
rents. Under such an assignment, the mortgagor assigns to the mortgagee its
right, title and interest as lessor under the leases of the related property,
and the income derived, as further security for the related mortgage loan, while
retaining a license to collect rents for so long as there is no default. If the
borrower defaults, the license terminates and the lender is entitled to collect
rents. Some state laws may require that the lender take possession of the
property and obtain a judicial appointment of a receiver before becoming
entitled to collect the rents. In addition, if bankruptcy or similar proceedings
are commenced by or in respect of the borrower, the lender's ability to collect
the rents may be adversely affected.
Limitations on Enforceability of Due-on-Sale and Debt-Acceleration
Clauses. Mortgages may contain a due-on-sale clause, which permits the lender
to accelerate the maturity of the mortgage loan if the borrower sells, transfers
or conveys the related property or its interest in the property. Mortgages also
may include a debt-acceleration clause, which permits the lender to accelerate
the debt upon a monetary or nonmonetary default of the mortgagor. Such clauses
are generally enforceable subject to certain exceptions. The courts of all
states will enforce clauses providing for acceleration in the event of a
material payment default. The equity courts of any state, however, may refuse
the foreclosure of a mortgage or deed of trust when an acceleration of the
indebtedness would be inequitable or unjust or the circumstances would render
the acceleration unconscionable.
Risk of Liability Arising From Environmental Conditions. Under the laws of
certain states, contamination of real property may give rise to a lien on the
property to assure the costs of cleanup. In several states, such a lien has
priority over an existing mortgage lien on such property. In addition, under the
laws of some states and under the federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, a lender may be liable, as
an "owner" or "operator", for costs of addressing releases or threatened
releases of hazardous substances at a property, if agents or employees of the
lender have become sufficiently involved in the operations of the borrower,
regardless of whether the environmental damage or
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threat was caused by the borrower or a prior owner. A lender also risks such
liability on foreclosure of the mortgage.
Lack of Insurance Coverage for Certain Special Hazard Losses. Unless
otherwise specified in a prospectus supplement, the master servicer and special
servicer for the trust will be required to cause the borrower on each mortgage
loan in the trust to maintain such insurance coverage in respect of the property
as is required under the related mortgage, including hazard insurance. As
described in the prospectus supplement, the master servicer and the special
servicer may satisfy its obligation to cause hazard insurance to be maintained
with respect to any property through acquisition of a blanket policy.
In general, the standard form of fire and extended coverage policy covers
physical damage to or destruction of the improvements of the property by fire,
lightning, explosion, smoke, windstorm and hail, and riot, strike and civil
commotion, subject to the conditions and exclusions specified in each policy.
Although the policies covering the properties will be underwritten by different
insurers under different state laws in accordance with different applicable
state forms, and therefore will not contain identical terms and conditions, most
such policies typically do not cover any physical damage resulting from war,
revolution, governmental actions, floods and other water-related causes, earth
movement (including earthquakes, landslides and mudflows), wet or dry rot,
vermin, domestic animals and certain other kinds of risks. Unless the mortgage
specifically requires the mortgagor to insure against physical damage arising
from such causes, then, to the extent any consequent losses are not covered by
credit support, such losses may be borne, at least in part, by the holders of
one or more classes of certificates of the related series.
INCLUSION OF DELINQUENT MORTGAGE LOANS IN A MORTGAGE ASSET POOL
If provided in the prospectus supplement, the trust fund for a particular
series of certificates may include mortgage loans that are past due. As
specified in the related prospectus supplement, the servicing of such mortgage
loans will be performed by the special servicer. The same entity may act as both
master servicer and special servicer. Credit support provided with respect to a
particular series of certificates may not cover all losses related to such
delinquent mortgage loans, and investors should consider the risk that the
inclusion of such mortgage loans in the trust fund may adversely affect the rate
of defaults and prepayments concerning the subject mortgage asset pool and the
yield on the certificates of such series.
PROSPECTUS SUPPLEMENT
To the extent appropriate, the prospectus supplement relating to each
series of offered certificates will contain:
- - a description of the class or classes of such offered certificates, including
the payment provisions with respect to each such class, the aggregate
principal amount (if any) of each such class, the rate at which interest
accrues from time to time (if at all), with respect to each such class or the
method of determining such rate, and whether interest with respect to each
such class will accrue from time to time on its aggregate principal amount (if
any) or on a specified notional amount (if at all);
- - information with respect to any other classes of Certificates of the same
series;
- - the respective dates on which distributions are to be made;
- - information as to the assets, including the Mortgage Assets, constituting the
related Trust Fund (all such assets, with respect to the Certificates of any
series, the "Trust Assets");
- - the circumstances, if any, under which the related Trust Fund may be subject
to early termination;
- - additional information with respect to the method of distribution of such
offered certificates;
- - whether one or more REMIC elections will be made and the designation of the
"regular interests" and "residual interests" in each REMIC to be created and
the identity of the person (the "REMIC Administrator") responsible for the
various tax-related duties in respect of each REMIC to be created;
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- - the initial percentage ownership interest in the related Trust Fund to be
evidenced by each class of Certificates of such series;
- - information concerning the Trustee (as defined herein) of the related Trust
Fund;
- - if the related Trust Fund includes Mortgage Loans, information concerning the
Master Servicer and any Special Servicer (each as defined herein) of such
Mortgage Loans and the circumstances under which all or a portion, as
specified, of the servicing of a Mortgage Loan would transfer from the Master
Servicer to the Special Servicer;
- - information as to the nature and extent of subordination of any class of
Certificates of such series, including a class of offered certificates; and
- - whether such offered certificates will be initially issued in definitive or
book-entry form.
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DESCRIPTION OF THE TRUST FUNDS
GENERAL
The primary assets of each trust (the "Trust Fund") will consist of (i)
various types of multifamily or commercial mortgage loans ("Mortgage Loans"),
(ii) mortgage participations, pass-through certificates or other mortgage-backed
securities ("MBS") that evidence interests in, or that are secured by pledges
of, one or more of various types of multifamily or commercial mortgage loans or
(iii) a combination of Mortgage Loans and MBS (collectively, "Mortgage Assets").
Each Trust Fund will be established by the Depositor. Each Mortgage Asset will
be selected by Banc of America Commercial Mortgage Inc. (the "Depositor") for
inclusion in a Trust Fund from among those purchased, either directly or
indirectly, from a prior holder thereof (a "Mortgage Asset Seller"), which prior
holder may or may not be the originator of such Mortgage Loan or the issuer of
such MBS and may be an affiliate of the Depositor. The Mortgage Assets will not
be guaranteed or insured by the Depositor or any of its affiliates or, unless
otherwise provided in the related Prospectus Supplement, by any governmental
agency or instrumentality or by any other person. The discussion below under the
heading "-- Mortgage Loans", unless otherwise noted, applies equally to mortgage
loans underlying any MBS included in a particular Trust Fund.
MORTGAGE LOANS
General. The Mortgage Loans will be evidenced by promissory notes (the
"Mortgage Notes") secured by mortgages, deeds of trust or similar security
instruments (the "Mortgages") that create first or junior liens on fee or
leasehold estates in properties (the "Mortgaged Properties") consisting of (i)
residential properties consisting of five or more rental or cooperatively-owned
dwelling units in high-rise, mid-rise or garden apartment buildings or other
residential structures ("Multifamily Properties") or (ii) office buildings,
retail stores and establishments, hotels or motels, nursing homes, hospitals or
other health care-related facilities, recreational vehicle and mobile home
parks, warehouse facilities, mini-warehouse facilities, self-storage facilities,
industrial plants, parking lots, entertainment or sports arenas, restaurants,
marinas, mixed use or various other types of income-producing properties or
unimproved land ("Commercial Properties"). The Multifamily Properties may
include mixed commercial and residential structures and apartment buildings
owned by private cooperative housing corporations ("Cooperatives"). However, no
one of the following types of Commercial Properties will represent security for
a material concentration of the Mortgage Loans in any Trust Fund, based on
principal balance at the time such Trust Fund is formed: (1) restaurants; (2)
entertainment or sports arenas; (3) marinas; or (4) nursing homes, hospitals or
other health care-related facilities. Unless otherwise specified in the related
Prospectus Supplement, each Mortgage will create a first priority mortgage lien
on a borrower's fee estate in a Mortgaged Property. If a Mortgage creates a lien
on a borrower's leasehold estate in a property, then, unless otherwise specified
in the related Prospectus Supplement, the term of any such leasehold will exceed
the term of the Mortgage Note by at least ten years. Unless otherwise specified
in the related Prospectus Supplement, each Mortgage Loan will have been
originated by a person (the "Originator") other than the Depositor; however, the
Originator may be or may have been an affiliate of the Depositor.
If so provided in the related Prospectus Supplement, Mortgage Assets for a
series of Certificates may include Mortgage Loans secured by junior liens, and
the loans secured by the related senior liens ("Senior Liens") may not be
included in the Mortgage Pool. The primary risk to holders of Mortgage Loans
secured by junior liens is the possibility that adequate funds will not be
received in connection with a foreclosure of the related Senior Liens to satisfy
fully both the Senior Liens and the Mortgage Loan. In the event that a holder of
a Senior Lien forecloses on a Mortgaged Property, the proceeds of the
foreclosure or similar sale will be applied first to the payment of court costs
and fees in connection with the foreclosure, second to real estate taxes, third
in satisfaction of all principal, interest, prepayment or acceleration
penalties, if any, and any other sums due and owing to the holder of the Senior
Liens. The claims of the holders of the Senior Liens will be satisfied in full
out of proceeds of the liquidation of the related Mortgage Property, if such
proceeds are sufficient, before the Trust Fund as holder of the junior lien
receives any payments in respect of the Mortgage Loan. If the Master Servicer
were to foreclose on any Mortgage Loan, it would do so subject to any related
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Senior Liens. In order for the debt related to such Mortgage Loan to be paid in
full at such sale, a bidder at the foreclosure sale of such Mortgage Loan would
have to bid an amount sufficient to pay off all sums due under the Mortgage Loan
and any Senior Liens or purchase the Mortgaged Property subject to such Senior
Liens. In the event that such proceeds from a foreclosure or similar sale of the
related Mortgaged Property are insufficient to satisfy all Senior Liens and the
Mortgage Loan in the aggregate, the Trust Fund, as the holder of the junior
lien, and, accordingly, holders of one or more classes of the Certificates of
the related series bear (1) the risk of delay in distributions while a
deficiency judgment against the borrower is obtained and (2) the risk of loss if
the deficiency judgment is not obtained and satisfied. Moreover, deficiency
judgments may not be available in certain jurisdictions, or the particular
Mortgage Loan may be a nonrecourse loan, which means that, absent special facts,
recourse in the case of default will be limited to the Mortgaged Property and
such other assets, if any, that were pledged to secure repayment of the Mortgage
Loan.
If so specified in the related Prospectus Supplement, the Mortgage Assets
for a particular series of Certificates may include Mortgage Loans that are
delinquent as of the date such Certificates are issued. In that case, the
related Prospectus Supplement will set forth, as to each such Mortgage Loan,
available information as to the period of such delinquency, any forbearance
arrangement then in effect, the condition of the related Mortgaged Property and
the ability of the Mortgaged Property to generate income to service the mortgage
debt.
Default and Loss Considerations with Respect to the Mortgage
Loans. Mortgage loans secured by liens on income-producing properties are
substantially different from loans made on the security of owner-occupied
single-family homes. The repayment of a loan secured by a lien on an
income-producing property is typically dependent upon the successful operation
of such property (that is, its ability to generate income). Moreover, as noted
above, some or all of the Mortgage Loans included in a particular Trust Fund may
be nonrecourse loans.
Lenders typically look to the Debt Service Coverage Ratio of a loan secured
by income-producing property as an important factor in evaluating the likelihood
of default on such a loan. Unless otherwise defined in the related Prospectus
Supplement, the "Debt Service Coverage Ratio" of a Mortgage Loan at any given
time is the ratio of (1) the Net Operating Income derived from the related
Mortgaged Property for a twelve-month period to (2) the annualized scheduled
payments of principal and/or interest on the Mortgage Loan and any other loans
senior thereto that are secured by the related Mortgaged Property. Unless
otherwise defined in the related Prospectus Supplement, "Net Operating Income"
means, for any given period, the total operating revenues derived from a
Mortgaged Property during such period, minus the total operating expenses
incurred in respect of such Mortgaged Property during such period other than (1)
noncash items such as depreciation and amortization, (2) capital expenditures
and (3) debt service on the related Mortgage Loan or on any other loans that are
secured by such Mortgaged Property. The Net Operating Income of a Mortgaged
Property will generally fluctuate over time and may or may not be sufficient to
cover debt service on the related Mortgage Loan at any given time. As the
primary source of the operating revenues of a nonowner occupied,
income-producing property, rental income (and, with respect to a Mortgage Loan
secured by a Cooperative apartment building, maintenance payments from
tenant-stockholders of a Cooperative) may be affected by the condition of the
applicable real estate market and/or area economy. In addition, properties
typically leased, occupied or used on a short-term basis, such as certain health
care-related facilities, hotels and motels, and mini-warehouse and self-storage
facilities, tend to be affected more rapidly by changes in market or business
conditions than do properties typically leased for longer periods, such as
warehouses, retail stores, office buildings and industrial plants. Commercial
Properties may be owner-occupied or leased to a small number of tenants. Thus,
the Net Operating Income of such a Mortgaged Property may depend substantially
on the financial condition of the borrower or a tenant, and Mortgage Loans
secured by liens on such properties may pose a greater likelihood of default and
loss than loans secured by liens on Multifamily Properties or on multi-tenant
Commercial Properties.
Increases in operating expenses due to the general economic climate or
economic conditions in a locality or industry segment, such as increases in
interest rates, real estate tax rates, energy costs, labor costs and other
operating expenses, and/or to changes in governmental rules, regulations and
fiscal policies, may also affect the likelihood of default on a Mortgage Loan.
As may be further described in the related Prospectus
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Supplement, in some cases leases of Mortgaged Properties may provide that the
lessee, rather than the borrower/landlord, is responsible for payment of
operating expenses ("Net Leases"). However, the existence of such "net of
expense" provisions will result in stable Net Operating Income to the
borrower/landlord only to the extent that the lessee is able to absorb operating
expense increases while continuing to make rent payments.
Lenders also look to the Loan-to-Value Ratio of a mortgage loan as a factor
in evaluating the likelihood of loss if a property must be liquidated following
a default. Unless otherwise defined in the related Prospectus Supplement, the
"Loan-to-Value Ratio" of a Mortgage Loan at any given time is the ratio
(expressed as a percentage) of (1) the then outstanding principal balance of the
Mortgage Loan and any other loans senior thereto that are secured by the related
Mortgaged Property to (2) the Value of the related Mortgaged Property. Unless
otherwise specified in the related Prospectus Supplement, the "Value" of a
Mortgaged Property will be its fair market value as determined by an appraisal
of such property conducted by or on behalf of the Originator in connection with
the origination of such loan. The lower the Loan-to-Value Ratio, the greater the
percentage of the borrower's equity in a Mortgaged Property, and thus (a) the
greater the incentive of the borrower to perform under the terms of the related
Mortgage Loan (in order to protect such equity) and (b) the greater the cushion
provided to the lender against loss on liquidation following a default.
Loan-to-Value Ratios will not necessarily constitute an accurate measure of
the likelihood of liquidation loss in a pool of Mortgage Loans. For example, the
value of a Mortgaged Property as of the date of initial issuance of the related
series of Certificates may be less than the Value determined at loan
origination, and will likely continue to fluctuate from time to time based upon
certain factors including changes in economic conditions and the real estate
market. Moreover, even when current, an appraisal is not necessarily a reliable
estimate of value. Appraised values of income-producing properties are generally
based on the market comparison method (recent resale value of comparable
properties at the date of the appraisal), the cost replacement method (the cost
of replacing the property at such date), the income capitalization method (a
projection of value based upon the property's projected net cash flow), or upon
a selection from or interpolation of the values derived from such methods. Each
of these appraisal methods can present analytical difficulties. It is often
difficult to find truly comparable properties that have recently been sold; the
replacement cost of a property may have little to do with its current market
value; and income capitalization is inherently based on inexact projections of
income and expense and the selection of an appropriate capitalization rate and
discount rate. Where more than one of these appraisal methods are used and
provide significantly different results, an accurate determination of value and,
correspondingly, a reliable analysis of the likelihood of default and loss, is
even more difficult.
Although there may be multiple methods for determining the value of a
Mortgaged Property, value will in all cases be affected by property performance.
As a result, if a Mortgage Loan defaults because the income generated by the
related Mortgaged Property is insufficient to cover operating costs and expenses
and pay debt service, then the value of the Mortgaged Property will reflect such
and a liquidation loss may occur.
While the Depositor believes that the foregoing considerations are
important factors that generally distinguish loans secured by liens on
income-producing real estate from single-family mortgage loans, there can be no
assurance that all of such factors will in fact have been prudently considered
by the Originators of the Mortgage Loans, or that, for a particular Mortgage
Loan, they are complete or relevant. See "Risk Factors -- Certain Factors
Affecting Delinquency, Foreclosure and Loss of the Mortgage Loans -- General"
and "-- Certain Factors Affecting Delinquency, Foreclosure and Loss of the
Mortgage Loans -- Increased Risk of Default Associated With Balloon Payments".
Payment Provisions of the Mortgage Loans. All of the Mortgage Loans will
(1) have had original terms to maturity of not more than 40 years and (2)
provide for scheduled payments of principal, interest or both, to be made on
specified dates ("Due Dates") that occur monthly, quarterly, semi-annually or
annually. A Mortgage Loan (1) may provide for no accrual of interest or for
accrual of interest thereon at an interest rate (a "Mortgage Rate") that is
fixed over its term or that adjusts from time to time, or that may be converted
at the borrower's election from an adjustable to a fixed Mortgage Rate, or from
a fixed to an adjustable Mortgage Rate, (2) may provide for level payments to
maturity or for payments that adjust from time to time to accommodate changes in
the Mortgage Rate or to reflect the occurrence of certain events, and may permit
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negative amortization, (3) may be fully amortizing or may be partially
amortizing or nonamortizing, with a balloon payment due on its stated maturity
date, and (4) may prohibit over its term or for a certain period prepayments
(the period of such prohibition, a "Lock-out Period" and its date of expiration,
a "Lock-out Date") and/or require payment of a premium or a yield maintenance
payment (a "Prepayment Premium") in connection with certain prepayments, in each
case as described in the related Prospectus Supplement. A Mortgage Loan may also
contain a provision that entitles the lender to a share of appreciation of the
related Mortgaged Property, or profits realized from the operation or
disposition of such Mortgaged Property or the benefit, if any, resulting from
the refinancing of the Mortgage Loan (any such provision, an "Equity
Participation"), as described in the related Prospectus Supplement. See "Certain
Legal Aspects of the Mortgage Loans -- Default Interest and Limitations on
Prepayments" in the Prospectus regarding the enforceability of Prepayment
Premiums.
Mortgage Loan Information in Prospectus Supplements. Each Prospectus
Supplement will contain certain information pertaining to the Mortgage Loans in
the related Trust Fund, which, to the extent then applicable, will generally
include the following:
- the aggregate outstanding principal balance and the largest, smallest
and average outstanding principal balance of the Mortgage Loans,
- the type or types of property that provide security for repayment of
the Mortgage Loans,
- the earliest and latest origination date and maturity date of the
Mortgage Loans,
- the original and remaining terms to maturity of the Mortgage Loans, or
the respective ranges thereof, and the weighted average original and
remaining terms to maturity of the Mortgage Loans,
- the Loan-to-Value Ratios of the Mortgage Loans (either at origination
or as of a more recent date), or the range thereof, and the weighted
average of such Loan-to-Value Ratios,
- the Mortgage Rates borne by the Mortgage Loans, or the range thereof,
and the weighted average Mortgage Rate borne by the Mortgage Loans,
- with respect to Mortgage Loans with adjustable Mortgage Rates ("ARM
Loans"), the index or indices upon which such adjustments are based,
the adjustment dates, the range of gross margins and the weighted
average gross margin, and any limits on Mortgage Rate adjustments at
the time of any adjustment and over the life of the ARM Loan,
- information regarding the payment characteristics of the Mortgage
Loans, including, without limitation, balloon payment and other
amortization provisions, Lock-out Periods and Prepayment Premiums,
- the Debt Service Coverage Ratios of the Mortgage Loans (either at
origination or as of a more recent date), or the range thereof, and
the weighted average of such Debt Service Coverage Ratios, and
- the geographic distribution of the Mortgaged Properties on a
state-by-state basis. In appropriate cases, the related Prospectus
Supplement will also contain certain information available to the
Depositor that pertains to the provisions of leases and the nature of
tenants of the Mortgaged Properties. If the Depositor is unable to
provide the specific information described above at the time Offered
Certificates of a series are initially offered, more general
information of the nature described above will be provided in the
related Prospectus Supplement, and specific information will be set
forth in a report which will be available to purchasers of those
Certificates at or before the initial issuance thereof and will be
filed as part of a Current Report on Form 8-K with the Commission
within fifteen days following such issuance.
If any Mortgage Loan, or group of related Mortgage Loans, constitutes a
concentration of credit risk, financial statements or other financial
information with respect to the related Mortgaged Property or Mortgaged
Properties will be included in the related Prospectus Supplement.
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If and to the extent available and relevant to an investment decision in
the Offered Certificates of the related series, information regarding the
prepayment experience of a Master Servicer's multifamily and/or commercial
mortgage loan servicing portfolio will be included in the related Prospectus
Supplement. However, many servicers do not maintain records regarding such
matters or, at least, not in a format that can be readily aggregated. In
addition, the relevant characteristics of a Master Servicer's servicing
portfolio may be so materially different from those of the related Mortgage
Asset Pool that such prepayment experience would not be meaningful to an
investor. For example, differences in geographic dispersion, property type
and/or loan terms (e.g., mortgage rates, terms to maturity and/or prepayment
restrictions) between the two pools of loans could render the Master Servicer's
prepayment experience irrelevant. Because of the nature of the assets to be
serviced and administered by a Special Servicer, no comparable prepayment
information will be presented with respect to the Special Servicer's multifamily
and/or commercial mortgage loan servicing portfolio.
MBS
MBS may include (1) private-label (that is, not issued, insured or
guaranteed by the United States or any agency or instrumentality thereof)
mortgage participations, mortgage pass-through certificates or other
mortgage-backed securities or (2) certificates issued and/or insured or
guaranteed by the Federal Home Loan Mortgage Corporation ("FHLMC"), the Federal
National Mortgage Association ("FNMA"), the Governmental National Mortgage
Association ("GNMA") or the Federal Agricultural Mortgage Corporation ("FAMC"),
provided that, unless otherwise specified in the related Prospectus Supplement,
each MBS will evidence an interest in, or will be secured by a pledge of,
mortgage loans that conform to the descriptions of the Mortgage Loans contained
herein.
Except in the case of a pro rata mortgage participation in a single
mortgage loan or a pool of mortgage loans, each MBS included in a Mortgage Asset
Pool: (a) either will (1) have been previously registered under the Securities
Act of 1933, as amended, (2) be exempt from such registration requirements or
(3) have been held for at least the holding period specified in Rule 144(k)
under the Securities Act of 1933, as amended; and (b) will have been acquired
(other than from the Depositor or an affiliate thereof) in bona fide secondary
market transactions.
Any MBS will have been issued pursuant to a participation and servicing
agreement, a pooling and servicing agreement, an indenture or similar agreement
(an "MBS Agreement"). The issuer of the MBS (the "MBS Issuer") and/or the
servicer of the underlying mortgage loans (the "MBS Servicer") will be parties
to the MBS Agreement, generally together with a trustee (the "MBS Trustee") or,
in the alternative, with the original purchaser or purchasers of the MBS.
The MBS may have been issued in one or more classes with characteristics
similar to the classes of Certificates described herein. Distributions in
respect of the MBS will be made by the MBS Issuer, the MBS Servicer or the MBS
Trustee on the dates specified in the related Prospectus Supplement. The MBS
Issuer or the MBS Servicer or another person specified in the related Prospectus
Supplement may have the right or obligation to repurchase or substitute assets
underlying the MBS after a certain date or under other circumstances specified
in the related Prospectus Supplement.
Reserve funds, subordination or other credit support similar to that
described for the Certificates under "Description of Credit Support" may have
been provided with respect to the MBS. The type, characteristics and amount of
such credit support, if any, will be a function of the characteristics of the
underlying mortgage loans and other factors and generally will have been
established on the basis of the requirements of any rating agency that may have
assigned a rating to the MBS, or by the initial purchasers of the MBS.
The Prospectus Supplement for a series of Certificates that evidence
interests in MBS will specify, to the extent available,
- the aggregate approximate initial and outstanding principal amount(s)
and type of the MBS to be included in the Trust Fund,
- the original and remaining term(s) to stated maturity of the MBS, if
applicable,
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- the pass-through or bond rate(s) of the MBS or the formula for
determining such rate(s),
- the payment characteristics of the MBS,
- the MBS Issuer, MBS Servicer and MBS Trustee, as applicable, of each
of the MBS,
- a description of the related credit support, if any,
- the circumstances under which the related underlying mortgage loans,
or the MBS themselves, may be purchased prior to their maturity,
- the terms on which mortgage loans may be substituted for those
originally underlying the MBS,
- the type of mortgage loans underlying the MBS and, to the extent
available to the Depositor and appropriate under the circumstances,
such other information in respect of the underlying mortgage loans
described under "-- Mortgage Loans -- Mortgage Loan Information in
Prospectus Supplements", and
- the characteristics of any cash flow agreements that relate to the
MBS.
CERTIFICATE ACCOUNTS
Each Trust Fund will include one or more accounts (collectively, the
"Certificate Account") established and maintained on behalf of the
Certificateholders into which all payments and collections received or advanced
with respect to the Mortgage Assets and other assets in the Trust Fund will be
deposited to the extent described herein and in the related Prospectus
Supplement. See "The Pooling and Servicing Agreements -- Certificate Account".
CREDIT SUPPORT
If so provided in the Prospectus Supplement for a series of Certificates,
partial or full protection against certain defaults and losses on the Mortgage
Assets in the related Trust Fund may be provided to one or more classes of
Certificates of such series in the form of subordination of one or more other
classes of Certificates of such series or by one or more other types of Credit
Support, such as a letter of credit, insurance policy, guarantee or reserve
fund, among others, or a combination thereof. The amount and types of Credit
Support, the identity of the entity providing it (if applicable) and related
information with respect to each type of Credit Support, if any, will be set
forth in the Prospectus Supplement for a series of Certificates. See "Risk
Factors -- Credit Support Limitations" and "Description of Credit Support".
CASH FLOW AGREEMENTS
If so provided in the Prospectus Supplement for a series of Certificates,
the related Trust Fund may include guaranteed investment contracts pursuant to
which moneys held in the funds and accounts established for such series will be
invested at a specified rate. The Trust Fund may also include certain other
agreements, such as interest rate exchange agreements, interest rate cap or
floor agreements, or other agreements designed to reduce the effects of interest
rate fluctuations on the Mortgage Assets on one or more classes of Certificates.
The principal terms of any such cash flow agreement (any such agreement, a "Cash
Flow Agreement"), including, without limitation, provisions relating to the
timing, manner and amount of payments thereunder and provisions relating to the
termination thereof, will be described in the related Prospectus Supplement. The
related Prospectus Supplement will also identify the obligor under the Cash Flow
Agreement.
YIELD AND MATURITY CONSIDERATIONS
GENERAL
The yield on any Offered Certificate will depend on the price paid by the
Certificateholder, the Pass-Through Rate of the Certificate and the amount and
timing of distributions on the Certificate. See "Risk Factors -- Effect of
Prepayments on Average Life of Certificates". The following discussion
contemplates a
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Trust Fund that consists solely of Mortgage Loans. While the characteristics and
behavior of mortgage loans underlying an MBS can generally be expected to have
the same effect on the yield to maturity and/or weighted average life of a class
of Certificates as will the characteristics and behavior of comparable Mortgage
Loans, the effect may differ due to the payment characteristics of the MBS. If a
Trust Fund includes MBS, the related Prospectus Supplement will discuss the
effect, if any, that the payment characteristics of the MBS may have on the
yield to maturity and weighted average lives of the Offered Certificates of the
related series.
PASS-THROUGH RATE
The Certificates of any class within a series may have a fixed, variable or
adjustable Pass-Through Rate, which may or may not be based upon the interest
rates borne by the Mortgage Loans in the related Trust Fund. The Prospectus
Supplement with respect to any series of Certificates will specify the
Pass-Through Rate for each class of Offered Certificates of such series or, in
the case of a class of Offered Certificates with a variable or adjustable
Pass-Through Rate, the method of determining the Pass-Through Rate; the effect,
if any, of the prepayment of any Mortgage Loan on the Pass-Through Rate of one
or more classes of Offered Certificates; and whether the distributions of
interest on the Offered Certificates of any class will be dependent, in whole or
in part, on the performance of any obligor under a Cash Flow Agreement.
PAYMENT DELAYS
With respect to any series of Certificates, a period of time will elapse
between the date upon which payments on the Mortgage Loans in the related Trust
Fund are due and the Distribution Date on which such payments are passed through
to Certificateholders. That delay will effectively reduce the yield that would
otherwise be produced if payments on such Mortgage Loans were distributed to
Certificateholders on the date they were due.
CERTAIN SHORTFALLS IN COLLECTIONS OF INTEREST
When a principal prepayment in full or in part is made on a Mortgage Loan,
the borrower is generally charged interest on the amount of such prepayment only
through the date of such prepayment, instead of through the Due Date for the
next succeeding scheduled payment. However, interest accrued on any series of
Certificates and distributable thereon on any Distribution Date will generally
correspond to interest accrued on the Mortgage Loans to their respective Due
Dates during the related Due Period. A "Due Period" will be a specified time
period (generally corresponding in length to the period between Distribution
Dates) and all scheduled payments on the Mortgage Loans in the related Trust
Fund that are due during a given Due Period will, to the extent received by a
specified date (the "Determination Date") or otherwise advanced by the related
Master Servicer, Special Servicer or other specified person, be distributed to
the holders of the Certificates of such series on the next succeeding
Distribution Date. Consequently, if a prepayment on any Mortgage Loan is
distributable to Certificateholders on a particular Distribution Date, but such
prepayment is not accompanied by interest thereon to the Due Date for such
Mortgage Loan in the related Due Period, then the interest charged to the
borrower (net of servicing and administrative fees) may be less (such shortfall,
a "Prepayment Interest Shortfall") than the corresponding amount of interest
accrued and otherwise payable on the Certificates of the related series. If and
to the extent that any such shortfall is allocated to a class of Offered
Certificates, the yield thereon will be adversely affected. The Prospectus
Supplement for each series of Certificates will describe the manner in which any
such shortfalls will be allocated among the classes of such Certificates. The
related Prospectus Supplement will also describe any amounts available to offset
such shortfalls.
YIELD AND PREPAYMENT CONSIDERATIONS
A Certificate's yield to maturity will be affected by the rate of principal
payments on the Mortgage Loans in the related Trust Fund and the allocation
thereof to reduce the principal balance (or notional amount, if applicable) of
such Certificate. The rate of principal payments on the Mortgage Loans in any
Trust Fund will in turn be affected by the amortization schedules thereof
(which, in the case of ARM Loans, may change periodically to accommodate
adjustments to the Mortgage Rates thereon), the dates on which any balloon
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payments are due, and the rate of principal prepayments thereon (including for
this purpose, voluntary prepayments by borrowers and also prepayments resulting
from liquidations of Mortgage Loans due to defaults, casualties or condemnations
affecting the related Mortgaged Properties, or purchases of Mortgage Loans out
of the related Trust Fund). Because the rate of principal prepayments on the
Mortgage Loans in any Trust Fund will depend on future events and a variety of
factors (as described below), no assurance can be given as to such rate.
The extent to which the yield to maturity of a class of Offered
Certificates of any series may vary from the anticipated yield will depend upon
the degree to which they are purchased at a discount or premium and when, and to
what degree, payments of principal on the Mortgage Loans in the related Trust
Fund are in turn distributed on such Certificates (or, in the case of a class of
Stripped Interest Certificates, result in the reduction of the Notional Amount
thereof). An investor should consider, in the case of any Offered Certificate
purchased at a discount, the risk that a slower than anticipated rate of
principal payments on the Mortgage Loans in the related Trust Fund could result
in an actual yield to such investor that is lower than the anticipated yield
and, in the case of any Offered Certificate purchased at a premium, the risk
that a faster than anticipated rate of principal payments on such Mortgage Loans
could result in an actual yield to such investor that is lower than the
anticipated yield. In addition, if an investor purchases an Offered Certificate
at a discount (or premium), and principal payments are made in reduction of the
principal balance or notional amount of such investor's Offered Certificates at
a rate slower (or faster) than the rate anticipated by the investor during any
particular period, any consequent adverse effects on such investor's yield would
not be fully offset by a subsequent like increase (or decrease) in the rate of
principal payments.
In general, the Notional Amount of a class of Stripped Interest
Certificates will either (1) be based on the principal balances of some or all
of the Mortgage Assets in the related Trust Fund or (2) equal the Certificate
Balances of one or more of the other classes of Certificates of the same series.
Accordingly, the yield on such Stripped Interest Certificates will be inversely
related to the rate at which payments and other collections of principal are
received on such Mortgage Assets or distributions are made in reduction of the
Certificate Balances of such classes of Certificates, as the case may be.
Consistent with the foregoing, if a class of Certificates of any series
consists of Stripped Interest Certificates or Stripped Principal Certificates, a
lower than anticipated rate of principal prepayments on the Mortgage Loans in
the related Trust Fund will negatively affect the yield to investors in Stripped
Principal Certificates, and a higher than anticipated rate of principal
prepayments on such Mortgage Loans will negatively affect the yield to investors
in Stripped Interest Certificates. If the Offered Certificates of a series
include any such Certificates, the related Prospectus Supplement will include a
table showing the effect of various constant assumed levels of prepayment on
yields on such Certificates. Such tables will be intended to illustrate the
sensitivity of yields to various constant assumed prepayment rates and will not
be intended to predict, or to provide information that will enable investors to
predict, yields or prepayment rates.
The extent of prepayments of principal of the Mortgage Loans in any Trust
Fund may be affected by a number of factors, including, without limitation, the
availability of mortgage credit, the relative economic vitality of the area in
which the Mortgaged Properties are located, the quality of management of the
Mortgaged Properties, the servicing of the Mortgage Loans, possible changes in
tax laws and other opportunities for investment. In general, those factors which
increase the attractiveness of selling a Mortgaged Property or refinancing a
Mortgage Loan or which enhance a borrower's ability to do so, as well as those
factors which increase the likelihood of default under a Mortgage Loan, would be
expected to cause the rate of prepayment in respect of any Mortgage Asset Pool
to accelerate. In contrast, those factors having an opposite effect would be
expected to cause the rate of prepayment of any Mortgage Asset Pool to slow.
The rate of principal payments on the Mortgage Loans in any Trust Fund may
also be affected by the existence of Lock-out Periods and requirements that
principal prepayments be accompanied by Prepayment Premiums, and by the extent
to which such provisions may be practicably enforced. To the extent enforceable,
such provisions could constitute either an absolute prohibition (in the case of
a Lock-out Period) or a disincentive (in the case of a Prepayment Premium) to a
borrower's voluntarily prepaying its Mortgage Loan, thereby slowing the rate of
prepayments.
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The rate of prepayment on a pool of mortgage loans is likely to be affected
by prevailing market interest rates for mortgage loans of a comparable type,
term and risk level. When the prevailing market interest rate is below a
mortgage coupon, a borrower may have an increased incentive to refinance its
mortgage loan. Even in the case of ARM Loans, as prevailing market interest
rates decline, and without regard to whether the Mortgage Rates on such ARM
Loans decline in a manner consistent therewith, the related borrowers may have
an increased incentive to refinance for purposes of either (1) converting to a
fixed rate loan and thereby "locking in" such rate or (2) taking advantage of a
different index, margin or rate cap or floor on another adjustable rate mortgage
loan. Therefore, as prevailing market interest rates decline, prepayment speeds
would be expected to accelerate.
Depending on prevailing market interest rates, the outlook for market
interest rates and economic conditions generally, some borrowers may sell
Mortgaged Properties in order to realize their equity therein, to meet cash flow
needs or to make other investments. In addition, some borrowers may be motivated
by federal and state tax laws (which are subject to change) to sell Mortgaged
Properties prior to the exhaustion of tax depreciation benefits. The Depositor
makes no representation as to the particular factors that will affect the
prepayment of the Mortgage Loans in any Trust Fund, as to the relative
importance of such factors, as to the percentage of the principal balance of
such Mortgage Loans that will be paid as of any date or as to the overall rate
of prepayment on such Mortgage Loans.
WEIGHTED AVERAGE LIFE AND MATURITY
The rate at which principal payments are received on the Mortgage Loans in
any Trust Fund will affect the ultimate maturity and the weighted average life
of one or more classes of the Certificates of such series. Unless otherwise
specified in the related Prospectus Supplement, weighted average life refers to
the average amount of time that will elapse from the date of issuance of an
instrument until each dollar allocable as principal of such instrument is repaid
to the investor.
The weighted average life and maturity of a class of Certificates of any
series will be influenced by the rate at which principal on the related Mortgage
Loans, whether in the form of scheduled amortization or prepayments (for this
purpose, the term "prepayment" includes voluntary prepayments by borrowers and
also prepayments resulting from liquidations of Mortgage Loans due to default,
casualties or condemnations affecting the related Mortgaged Properties and
purchases of Mortgage Loans out of the related Trust Fund), is paid to such
class. Prepayment rates on loans are commonly measured relative to a prepayment
standard or model, such as the Constant Prepayment Rate ("CPR") prepayment model
or the Standard Prepayment Assumption ("SPA") prepayment model. CPR represents
an assumed constant rate of prepayment each month (expressed as an annual
percentage) relative to the then outstanding principal balance of a pool of
mortgage loans for the life of such loans. SPA represents an assumed variable
rate of prepayment each month (expressed as an annual percentage) relative to
the then outstanding principal balance of a pool of mortgage loans, with
different prepayment assumptions often expressed as percentages of SPA. For
example, a prepayment assumption of 100% of SPA assumes prepayment rates of 0.2%
per annum of the then outstanding principal balance of such loans in the first
month of the life of the loans and an additional 0.2% per annum in each month
thereafter until the thirtieth month. Beginning in the thirtieth month, and in
each month thereafter during the life of the loans, 100% of SPA assumes a
constant prepayment rate of 6% per annum each month.
Neither CPR nor SPA nor any other prepayment model or assumption purports
to be a historical description of prepayment experience or a prediction of the
anticipated rate of prepayment of any particular pool of mortgage loans.
Moreover, the CPR and SPA models were developed based upon historical prepayment
experience for single-family mortgage loans. Thus, it is unlikely that the
prepayment experience of the Mortgage Loans included in any Trust Fund will
conform to any particular level of CPR or SPA.
The Prospectus Supplement with respect to each series of Certificates will
contain tables, if applicable, setting forth the projected weighted average life
of each class of Offered Certificates of such series with a Certificate Balance,
and the percentage of the initial Certificate Balance of each such class that
would be outstanding on specified Distribution Dates, based on the assumptions
stated in such Prospectus Supplement, including assumptions that prepayments on
the related Mortgage Loans are made at rates corresponding to
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various percentages of CPR or SPA, or at such other rates specified in such
Prospectus Supplement. Such tables and assumptions will illustrate the
sensitivity of the weighted average lives of the Certificates to various assumed
prepayment rates and will not be intended to predict, or to provide information
that will enable investors to predict, the actual weighted average lives of the
Certificates.
OTHER FACTORS AFFECTING YIELD, WEIGHTED AVERAGE LIFE AND MATURITY
Balloon Payments; Extensions of Maturity. Some or all of the Mortgage
Loans included in a particular Trust Fund may require that balloon payments be
made at maturity. Because the ability of a borrower to make a balloon payment
typically will depend upon its ability either to refinance the loan or to sell
the related Mortgaged Property, there is a possibility that Mortgage Loans that
require balloon payments may default at maturity, or that the maturity of such a
Mortgage Loan may be extended in connection with a workout. In the case of
defaults, recovery of proceeds may be delayed by, among other things, bankruptcy
of the borrower or adverse conditions in the market where the property is
located. In order to minimize losses on defaulted Mortgage Loans, the Master
Servicer or the Special Servicer, to the extent and under the circumstances set
forth herein and in the related Prospectus Supplement, may be authorized to
modify Mortgage Loans that are in default or as to which a payment default is
imminent. Any defaulted balloon payment or modification that extends the
maturity of a Mortgage Loan may delay distributions of principal on a class of
Offered Certificates and thereby extend the weighted average life of such
Certificates and, if such Certificates were purchased at a discount, reduce the
yield thereon.
Negative Amortization. The weighted average life of a class of
Certificates can be affected by Mortgage Loans that permit negative amortization
to occur (that is, Mortgage Loans that provide for the current payment of
interest calculated at a rate lower than the rate at which interest accrues
thereon, with the unpaid portion of such interest being added to the related
principal balance). Negative amortization on one or more Mortgage Loans in any
Trust Fund may result in negative amortization on the Offered Certificates of
the related series. The related Prospectus Supplement will describe, if
applicable, the manner in which negative amortization in respect of the Mortgage
Loans in any Trust Fund is allocated among the respective classes of
Certificates of the related series. The portion of any Mortgage Loan negative
amortization allocated to a class of Certificates may result in a deferral of
some or all of the interest payable thereon, which deferred interest may be
added to the Certificate Balance thereof. In addition, an ARM Loan that permits
negative amortization would be expected during a period of increasing interest
rates to amortize at a slower rate (and perhaps not at all) than if interest
rates were declining or were remaining constant. Such slower rate of Mortgage
Loan amortization would correspondingly be reflected in a slower rate of
amortization for one or more classes of Certificates of the related series.
Accordingly, the weighted average lives of Mortgage Loans that permit negative
amortization (and that of the classes of Certificates to which any such negative
amortization would be allocated or that would bear the effects of a slower rate
of amortization on such Mortgage Loans) may increase as a result of such
feature.
Negative amortization may occur in respect of an ARM Loan that (1) limits
the amount by which its scheduled payment may adjust in response to a change in
its Mortgage Rate, (2) provides that its scheduled payment will adjust less
frequently than its Mortgage Rate or (3) provides for constant scheduled
payments notwithstanding adjustments to its Mortgage Rate. Accordingly, during a
period of declining interest rates, the scheduled payment on such a Mortgage
Loan may exceed the amount necessary to amortize the loan fully over its
remaining amortization schedule and pay interest at the then applicable Mortgage
Rate, thereby resulting in the accelerated amortization of such Mortgage Loan.
Any such acceleration in amortization of its principal balance will shorten the
weighted average life of such Mortgage Loan and, correspondingly, the weighted
average lives of those classes of Certificates entitled to a portion of the
principal payments on such Mortgage Loan.
The extent to which the yield on any Offered Certificate will be affected
by the inclusion in the related Trust Fund of Mortgage Loans that permit
negative amortization, will depend upon (1) whether such Offered Certificate was
purchased at a premium or a discount and (2) the extent to which the payment
characteristics of such Mortgage Loans delay or accelerate the distributions of
principal on such Certificate (or, in the case of
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a Stripped Interest Certificate, delay or accelerate the reduction of the
notional amount thereof). See "-- Yield and Prepayment Considerations" above.
Foreclosures and Payment Plans. The number of foreclosures and the
principal amount of the Mortgage Loans that are foreclosed in relation to the
number and principal amount of Mortgage Loans that are repaid in accordance with
their terms will affect the weighted average lives of those Mortgage Loans and,
accordingly, the weighted average lives of and yields on the Certificates of the
related series. Servicing decisions made with respect to the Mortgage Loans,
including the use of payment plans prior to a demand for acceleration and the
restructuring of Mortgage Loans in bankruptcy proceedings or otherwise, may also
have an effect upon the payment patterns of particular Mortgage Loans and thus
the weighted average lives of and yields on the Certificates of the related
series.
Losses and Shortfalls on the Mortgage Assets. The yield to holders of the
Offered Certificates of any series will directly depend on the extent to which
such holders are required to bear the effects of any losses or shortfalls in
collections arising out of defaults on the Mortgage Loans in the related Trust
Fund and the timing of such losses and shortfalls. In general, the earlier that
any such loss or shortfall occurs, the greater will be the negative effect on
yield for any class of Certificates that is required to bear the effects
thereof.
The amount of any losses or shortfalls in collections on the Mortgage
Assets in any Trust Fund (to the extent not covered or offset by draws on any
reserve fund or under any instrument of Credit Support) will be allocated among
the respective classes of Certificates of the related series in the priority and
manner, and subject to the limitations, specified in the related Prospectus
Supplement. As described in the related Prospectus Supplement, such allocations
may be effected by (1) a reduction in the entitlements to interest and/or the
Certificate Balances of one or more such classes of Certificates and/or (2)
establishing a priority of payments among such classes of Certificates.
The yield to maturity on a class of Subordinate Certificates may be
extremely sensitive to losses and shortfalls in collections on the Mortgage
Loans in the related Trust Fund.
Additional Certificate Amortization. In addition to entitling the holders
thereof to a specified portion (which may during specified periods range from
none to all) of the principal payments received on the Mortgage Assets in the
related Trust Fund, one or more classes of Certificates of any series, including
one or more classes of Offered Certificates of such series, may provide for
distributions of principal thereof from (1) amounts attributable to interest
accrued but not currently distributable on one or more classes of Accrual
Certificates, (2) Excess Funds or (3) any other amounts described in the related
Prospectus Supplement. Unless otherwise specified in the related Prospectus
Supplement, "Excess Funds" will, in general, represent that portion of the
amounts distributable in respect of the Certificates of any series on any
Distribution Date that represent (A) interest received or advanced on the
Mortgage Assets in the related Trust Fund that is in excess of the interest
currently accrued on the Certificates of such series, or (B) Prepayment
Premiums, payments from Equity Participations or any other amounts received on
the Mortgage Assets in the related Trust Fund that do not constitute interest
thereon or principal thereof.
The amortization of any class of Certificates out of the sources described
in the preceding paragraph would shorten the weighted average life of such
Certificates and, if such Certificates were purchased at a premium, reduce the
yield thereon. The related Prospectus Supplement will discuss the relevant
factors to be considered in determining whether distributions of principal of
any class of Certificates out of such sources is likely to have any material
effect on the rate at which such Certificates are amortized and the consequent
yield with respect thereto.
THE DEPOSITOR
Banc of America Commercial Mortgage Inc., a Delaware corporation (the
"Depositor"), formerly known as NationsLink Funding Corporation, was organized
on December 13, 1995 for the limited purpose of acquiring, owning and
transferring Mortgage Assets and selling interests therein or bonds secured
thereby. The Depositor is a subsidiary of Bank of America, N.A. The Depositor
maintains its principal office at Bank of America Corporate Center, Charlotte,
North Carolina 28255. Its telephone number is (704) 386-2400.
Unless otherwise noted in the related Prospectus Supplement, neither the
Depositor nor any of the Depositor's affiliates will insure or guarantee
distributions on the Certificates of any series.
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DESCRIPTION OF THE CERTIFICATES
GENERAL
Each series of Certificates will represent the entire beneficial ownership
interest in the Trust Fund created pursuant to the related Pooling and Servicing
Agreement. As described in the related Prospectus Supplement, the Certificates
of each series, including the Certificates of such series being offered for sale
(the "Offered Certificates"), may consist of one or more classes of Certificates
that, among other things:
- provide for the accrual of interest on the Certificate Balance or
Notional Amount thereof at a fixed, variable or adjustable rate;
- constitute Senior Certificates or Subordinate Certificates;
- constitute Stripped Interest Certificates or Stripped Principal
Certificates;
- provide for distributions of interest thereon or principal thereof
that commence only after the occurrence of certain events, such as the
retirement of one or more other classes of Certificates of such
series;
- provide for distributions of principal thereof to be made, from time
to time or for designated periods, at a rate that is faster (and, in
some cases, substantially faster) or slower (and, in some cases,
substantially slower) than the rate at which payments or other
collections of principal are received on the Mortgage Assets in the
related Trust Fund;
- provide for distributions of principal thereof to be made, subject to
available funds, based on a specified principal payment schedule or
other methodology; or
- provide for distributions based on collections on the Mortgage Assets
in the related Trust Fund attributable to Prepayment Premiums and
Equity Participations.
If so specified in the related Prospectus Supplement, a class of
Certificates may have two or more component parts, each having characteristics
that are otherwise described herein as being attributable to separate and
distinct classes. For example, a class of Certificates may have a Certificate
Balance on which it accrues interest at a fixed, variable or adjustable rate.
Such class of Certificates may also have certain characteristics attributable to
Stripped Interest Certificates insofar as it may also entitle the holders
thereof to distributions of interest accrued on a Notional Amount at a different
fixed, variable or adjustable rate. In addition, a class of Certificates may
accrue interest on one portion of its Certificate Balance at one fixed, variable
or adjustable rate and on another portion of its Certificate Balance at a
different fixed, variable or adjustable rate.
Each class of Offered Certificates of a series will be issued in minimum
denominations corresponding to the principal balances or, in case of certain
classes of Stripped Interest Certificates or REMIC Residual Certificates,
notional amounts or percentage interests, specified in the related Prospectus
Supplement. As provided in the related Prospectus Supplement, one or more
classes of Offered Certificates of any series may be issued in fully registered,
definitive form (such Certificates, "Definitive Certificates") or may be offered
in book-entry format (such Certificates, "Book-Entry Certificates") through the
facilities of DTC. The Offered Certificates of each series (if issued as
Definitive Certificates) may be transferred or exchanged, subject to any
restrictions on transfer described in the related Prospectus Supplement, at the
location specified in the related Prospectus Supplement, without the payment of
any service charges, other than any tax or other governmental charge payable in
connection therewith. Interests in a class of Book-Entry Certificates will be
transferred on the book-entry records of DTC and its participating
organizations. If so specified in the related Prospectus Supplement,
arrangements may be made for clearance and settlement through CEDEL Bank,
Societe Anonyme, or the Euroclear System (in Europe) if they are participants in
DTC.
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DISTRIBUTIONS
Distributions on the Certificates of each series will be made on each
Distribution Date from the Available Distribution Amount for such series and
such Distribution Date. Unless otherwise provided in the related Prospectus
Supplement, the "Available Distribution Amount" for any series of Certificates
and any Distribution Date will refer to the total of all payments or other
collections (or advances in lieu thereof) on, under or in respect of the
Mortgage Assets and any other assets included in the related Trust Fund that are
available for distribution to the holders of Certificates of such series on such
date. The particular components of the Available Distribution Amount for any
series and Distribution Date will be more specifically described in the related
Prospectus Supplement. In general, the Distribution Date for a series of
Certificates will be the 20th day of each month (or, if any such 20th day is not
a business day, the next succeeding business day), commencing in the month
immediately following the month in which such series of Certificates is issued.
Except as otherwise specified in the related Prospectus Supplement,
distributions on the Certificates of each series (other than the final
distribution in retirement of any such Certificate) will be made to the persons
in whose names such Certificates are registered at the close of business on the
last business day of the month preceding the month in which the applicable
Distribution Date occurs (the "Record Date"), and the amount of each
distribution will be determined as of the close of business on the date (the
"Determination Date") specified in the related Prospectus Supplement. All
distributions with respect to each class of Certificates on each Distribution
Date will be allocated pro rata among the outstanding Certificates in such class
in proportion to the respective Percentage Interests evidenced thereby unless
otherwise specified in the related Prospectus Supplement. Payments will be made
either by wire transfer in immediately available funds to the account of a
Certificateholder at a bank or other entity having appropriate facilities
therefor, if such Certificateholder has provided the person required to make
such payments with wiring instructions no later than the related Record Date or
such other date specified in the related Prospectus Supplement (and, if so
provided in the related Prospectus Supplement, such Certificateholder holds
Certificates in the requisite amount or denomination specified therein), or by
check mailed to the address of such Certificateholder as it appears on the
Certificate Register; provided, however, that the final distribution in
retirement of any class of Certificates (whether Definitive Certificates or
Book-Entry Certificates) will be made only upon presentation and surrender of
such Certificates at the location specified in the notice to Certificateholders
of such final distribution. The undivided percentage interest (the "Percentage
Interest") represented by an Offered Certificate of a particular class will be
equal to the percentage obtained by dividing the initial principal balance or
notional amount of such Certificate by the initial Certificate Balance or
Notional Amount of such class.
DISTRIBUTIONS OF INTEREST ON THE CERTIFICATES
Each class of Certificates of each series (other than certain classes of
Stripped Principal Certificates and certain classes of REMIC Residual
Certificates that have no Pass-Through Rate) may have a different Pass-Through
Rate, which in each case may be fixed, variable or adjustable. The related
Prospectus Supplement will specify the Pass-Through Rate or, in the case of a
variable or adjustable Pass-Through Rate, the method for determining the
Pass-Through Rate, for each class of Offered Certificates. Unless otherwise
specified in the related Prospectus Supplement, interest on the Certificates of
each series will be calculated on the basis of a 360-day year consisting of
twelve 30-day months.
Distributions of interest in respect of any class of Certificates (other
than a class of Accrual Certificates, which will be entitled to distributions of
accrued interest commencing only on the Distribution Date or under the
circumstances specified in the related Prospectus Supplement, and other than any
class of Stripped Principal Certificates or REMIC Residual Certificates that is
not entitled to any distributions of interest) will be made on each Distribution
Date based on the Accrued Certificate Interest for such class and such
Distribution Date, subject to the sufficiency of that portion, if any, of the
Available Distribution Amount allocable to such class on such Distribution Date.
Prior to the time interest is distributable on any class of Accrual
Certificates, the amount of Accrued Certificate Interest otherwise distributable
on such class will be added to the Certificate Balance thereof on each
Distribution Date or otherwise deferred as described in the related Prospectus
Supplement. With respect to each class of Certificates (other than certain
classes of Stripped Interest Certificates and certain classes of REMIC Residual
Certificates), the "Accrued Certificate
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Interest" for each Distribution Date will be equal to interest at the applicable
Pass-Through Rate accrued for a specified period (generally the most recently
ended calendar month) on the outstanding Certificate Balance of such class of
Certificates immediately prior to such Distribution Date. Unless otherwise
provided in the related Prospectus Supplement, the Accrued Certificate Interest
for each Distribution Date on a class of Stripped Interest Certificates will be
similarly calculated except that it will accrue on a notional amount (a
"Notional Amount") that is either (1) based on the principal balances of some or
all of the Mortgage Assets in the related Trust Fund or (2) equal to the
Certificate Balances of one or more other classes of Certificates of the same
series. Reference to a Notional Amount with respect to a class of Stripped
Interest Certificates is solely for convenience in making certain calculations
and does not represent the right to receive any distributions of principal. If
so specified in the related Prospectus Supplement, the amount of Accrued
Certificate Interest that is otherwise distributable on (or, in the case of
Accrual Certificates, that may otherwise be added to the Certificate Balance of)
one or more classes of the Certificates of a series may be reduced to the extent
that any Prepayment Interest Shortfalls, as described under "Yield and Maturity
Considerations -- Certain Shortfalls in Collections of Interest", exceed the
amount of any sums that are applied to offset the amount of such shortfalls. The
particular manner in which such shortfalls will be allocated among some or all
of the classes of Certificates of that series will be specified in the related
Prospectus Supplement. The related Prospectus Supplement will also describe the
extent to which the amount of Accrued Certificate Interest that is otherwise
distributable on (or, in the case of Accrual Certificates, that may otherwise be
added to the Certificate Balance of) a class of Offered Certificates may be
reduced as a result of any other contingencies, including delinquencies, losses
and deferred interest on or in respect of the Mortgage Assets in the related
Trust Fund. Unless otherwise provided in the related Prospectus Supplement, any
reduction in the amount of Accrued Certificate Interest otherwise distributable
on a class of Certificates by reason of the allocation to such class of a
portion of any deferred interest on or in respect of the Mortgage Assets in the
related Trust Fund will result in a corresponding increase in the Certificate
Balance of such class. See "Risk Factors -- Effect of Prepayments on Average
Life of Certificates" and "-- Effect of Prepayments on Yield of Certificates"
and "Yield and Maturity Considerations -- Certain Shortfalls in Collections of
Interest".
DISTRIBUTIONS OF PRINCIPAL OF THE CERTIFICATES
Each class of Certificates of each series (other than certain classes of
Stripped Interest Certificates and certain classes of REMIC Residual
Certificates) will have a Certificate Balance, which, at any time, will equal
the then maximum amount that the holders of Certificates of such class will be
entitled to receive as principal out of the future cash flow on the Mortgage
Assets and other assets included in the related Trust Fund. The outstanding
Certificate Balance of a class of Certificates will be reduced by distributions
of principal made thereon from time to time and, if and to the extent so
provided in the related Prospectus Supplement, further by any losses incurred in
respect of the related Mortgage Assets allocated thereto from time to time. In
turn, the outstanding Certificate Balance of a class of Certificates may be
increased as a result of any deferred interest on or in respect of the related
Mortgage Assets being allocated thereto from time to time, and will be
increased, in the case of a class of Accrual Certificates prior to the
Distribution Date on which distributions of interest thereon are required to
commence, by the amount of any Accrued Certificate Interest in respect thereof
(reduced as described above). The initial aggregate Certificate Balance of all
classes of a series of Certificates will not be greater than the aggregate
outstanding principal balance of the related Mortgage Assets as of a specified
date (the "Cut-off Date"), after application of scheduled payments due on or
before such date, whether or not received. The initial Certificate Balance of
each class of a series of Certificates will be specified in the related
Prospectus Supplement. As and to the extent described in the related Prospectus
Supplement, distributions of principal with respect to a series of Certificates
will be made on each Distribution Date to the holders of the class or classes of
Certificates of such series entitled thereto until the Certificate Balances of
such Certificates have been reduced to zero. Distributions of principal with
respect to one or more classes of Certificates may be made at a rate that is
faster (and, in some cases, substantially faster) than the rate at which
payments or other collections of principal are received on the Mortgage Assets
in the related Trust Fund. Distributions of principal with respect to one or
more classes of Certificates may not commence until the occurrence of certain
events, such as the retirement of one or more other classes of Certificates of
the same series, or may be made at a rate that is slower (and, in some cases,
substantially slower) than the rate at
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which payments or other collections of principal are received on the Mortgage
Assets in the related Trust Fund. Distributions of principal with respect to one
or more classes of Certificates (each such class, a "Controlled Amortization
Class") may be made, subject to available funds, based on a specified principal
payment schedule. Distributions of principal with respect to one or more other
classes of Certificates (each such class, a "Companion Class") may be contingent
on the specified principal payment schedule for a Controlled Amortization Class
of the same series and the rate at which payments and other collections of
principal on the Mortgage Assets in the related Trust Fund are received. Unless
otherwise specified in the related Prospectus Supplement, distributions of
principal of any class of Offered Certificates will be made on a pro rata basis
among all of the Certificates of such class.
DISTRIBUTIONS ON THE CERTIFICATES CONCERNING PREPAYMENT PREMIUMS OR CONCERNING
EQUITY PARTICIPATIONS
If so provided in the related Prospectus Supplement, Prepayment Premiums or
payments in respect of Equity Participations received on or in connection with
the Mortgage Assets in any Trust Fund will be distributed on each Distribution
Date to the holders of the class of Certificates of the related series entitled
thereto in accordance with the provisions described in such Prospectus
Supplement. Alternatively, such items may be retained by the Depositor or any of
its affiliates or by any other specified person and/or may be excluded as Trust
Assets.
ALLOCATION OF LOSSES AND SHORTFALLS
The amount of any losses or shortfalls in collections on the Mortgage
Assets in any Trust Fund (to the extent not covered or offset by draws on any
reserve fund or under any instrument of Credit Support) will be allocated among
the respective classes of Certificates of the related series in the priority and
manner, and subject to the limitations, specified in the related Prospectus
Supplement. As described in the related Prospectus Supplement, such allocations
may be effected by (1) a reduction in the entitlements to interest and/or the
Certificate Balances of one or more such classes of Certificates and/or (2)
establishing a priority of payments among such classes of Certificates. See
"Description of Credit Support".
ADVANCES IN RESPECT OF DELINQUENCIES
If and to the extent provided in the related Prospectus Supplement, if a
Trust Fund includes Mortgage Loans, the Master Servicer, the Special Servicer,
the Trustee, any provider of Credit Support and/or any other specified person
may be obligated to advance, or have the option of advancing, on or before each
Distribution Date, from its or their own funds or from excess funds held in the
related Certificate Account that are not part of the Available Distribution
Amount for the related series of Certificates for such Distribution Date, an
amount up to the aggregate of any payments of principal (other than the
principal portion of any balloon payments) and interest that were due on or in
respect of such Mortgage Loans during the related Due Period and were delinquent
on the related Determination Date.
Advances are intended to maintain a regular flow of scheduled interest and
principal payments to holders of the class or classes of Certificates entitled
thereto, rather than to guarantee or insure against losses. Accordingly, all
advances made out of a specific entity's own funds will be reimbursable out of
related recoveries on the Mortgage Loans (including amounts drawn under any fund
or instrument constituting Credit Support) respecting which such advances were
made (as to any Mortgage Loan, "Related Proceeds") and such other specific
sources as may be identified in the related Prospectus Supplement, including, in
the case of a series that includes one or more classes of Subordinate
Certificates, if so identified, collections on other Mortgage Assets in the
related Trust Fund that would otherwise be distributable to the holders of one
or more classes of such Subordinate Certificates. No advance will be required to
be made by a Master Servicer, Special Servicer or Trustee if, in the judgment of
the Master Servicer, Special Servicer or Trustee, as the case may be, such
advance would not be recoverable from Related Proceeds or another specifically
identified source (any such advance, a "Nonrecoverable Advance"); and, if
previously made by a Master Servicer, Special Servicer or Trustee, a
Nonrecoverable Advance will be reimbursable thereto from any amounts in the
related Certificate Account prior to any distributions being made to the related
series of Certificateholders.
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If advances have been made by a Master Servicer, Special Servicer, Trustee
or other entity from excess funds in a Certificate Account, such Master
Servicer, Special Servicer, Trustee or other entity, as the case may be, will be
required to replace such funds in such Certificate Account on or prior to any
future Distribution Date to the extent that funds in such Certificate Account on
such Distribution Date are less than payments required to be made to the related
series of Certificateholders on such date. If so specified in the related
Prospectus Supplement, the obligation of a Master Servicer, Special Servicer,
Trustee or other entity to make advances may be secured by a cash advance
reserve fund or a surety bond. If applicable, information regarding the
characteristics of, and the identity of any obligor on, any such surety bond,
will be set forth in the related Prospectus Supplement.
If and to the extent so provided in the related Prospectus Supplement, any
entity making advances will be entitled to receive interest on certain or all of
such advances for a specified period during which such advances are outstanding
at the rate specified in such Prospectus Supplement, and such entity will be
entitled to payment of such interest periodically from general collections on
the Mortgage Loans in the related Trust Fund prior to any payment to the related
series of Certificateholders or as otherwise provided in the related Pooling and
Servicing Agreement and described in such Prospectus Supplement.
The Prospectus Supplement for any series of Certificates evidencing an
interest in a Trust Fund that includes MBS will describe any comparable
advancing obligation of a party to the related Pooling and Servicing Agreement
or of a party to the related MBS Agreement.
REPORTS TO CERTIFICATEHOLDERS
On each Distribution Date, together with the distribution to the holders of
each class of the Offered Certificates of a series, a Master Servicer, Manager
or Trustee, as provided in the related Prospectus Supplement, will forward to
each such holder, a statement (a "Distribution Date Statement") that, unless
otherwise provided in the related Prospectus Supplement, will set forth, among
other things, in each case to the extent applicable:
- the amount of such distribution to holders of such class of Offered
Certificates that was applied to reduce the Certificate Balance thereof;
- the amount of such distribution to holders of such class of Offered
Certificates that was applied to pay Accrued Certificate Interest;
- the amount, if any, of such distribution to holders of such class of
Offered Certificates that was allocable to (A) Prepayment Premiums and
(B) payments on account of Equity Participations;
- the amount, if any, by which such distribution is less than the amounts
to which holders of such class of Offered Certificates are entitled;
- if the related Trust Fund includes Mortgage Loans, the aggregate amount
of advances included in such distribution;
- if the related Trust Fund includes Mortgage Loans, the amount of
servicing compensation received by the related Master Servicer (and, if
payable directly out of the related Trust Fund, by any Special Servicer
and any Sub-Servicer) and, if the related Trust Fund includes MBS, the
amount of administrative compensation received by the MBS Administrator;
- information regarding the aggregate principal balance of the related
Mortgage Assets on or about such Distribution Date;
- if the related Trust Fund includes Mortgage Loans, information regarding
the number and aggregate principal balance of such Mortgage Loans that
are delinquent;
- if the related Trust Fund includes Mortgage Loans, information regarding
the aggregate amount of losses incurred and principal prepayments made
with respect to such Mortgage Loans during the related "Prepayment
Period" (that is, the specified period, generally corresponding in length
to the period between Distribution Dates, during which prepayments and
other unscheduled collections on
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the Mortgage Loans in the related Trust Fund must be received in order to
be distributed on a particular Distribution Date);
- the Certificate Balance or Notional Amount, as the case may be, of such
class of Certificates at the close of business on such Distribution Date,
separately identifying any reduction in such Certificate Balance or
Notional Amount due to the allocation of any losses in respect of the
related Mortgage Assets, any increase in such Certificate Balance or
Notional Amount due to the allocation of any negative amortization in
respect of the related Mortgage Assets and any increase in the
Certificate Balance of a class of Accrual Certificates, if any, in the
event that Accrued Certificate Interest has been added to such balance;
- if such class of Offered Certificates has a variable Pass-Through Rate or
an adjustable Pass-Through Rate, the Pass-Through Rate applicable thereto
for such Distribution Date and, if determinable, for the next succeeding
Distribution Date;
- the amount deposited in or withdrawn from any reserve fund on such
Distribution Date, and the amount remaining on deposit in such reserve
fund as of the close of business on such Distribution Date;
- if the related Trust Fund includes one or more instruments of Credit
Support, such as a letter of credit, an insurance policy and/or a surety
bond, the amount of coverage under each such instrument as of the close
of business on such Distribution Date; and
- the amount of Credit Support being afforded by any classes of Subordinate
Certificates.
In the case of information furnished pursuant to the first 3 bulleted items
above, the amounts will be expressed as a dollar amount per specified
denomination of the relevant class of Offered Certificates or as a percentage.
The Prospectus Supplement for each series of Certificates may describe
additional information to be included in reports to the holders of the Offered
Certificates of such series.
Within a reasonable period of time after the end of each calendar year, the
Master Servicer, Manager or Trustee for a series of Certificates, as the case
may be, will be required to furnish to each person who at any time during the
calendar year was a holder of an Offered Certificate of such series a statement
containing the information set forth in the first 3 bulleted items above,
aggregated for such calendar year or the applicable portion thereof during which
such person was a Certificateholder. Such obligation will be deemed to have been
satisfied to the extent that substantially comparable information is provided
pursuant to any requirements of the Code as are from time to time in force. See,
however, "-- Book-Entry Registration and Definitive Certificates" below.
If the Trust Fund for a series of Certificates includes MBS, the ability of
the related Master Servicer, Manager or Trustee, as the case may be, to include
in any Distribution Date Statement information regarding the mortgage loans
underlying such MBS will depend on the reports received with respect to such
MBS. In such cases, the related Prospectus Supplement will describe the
loan-specific information to be included in the Distribution Date Statements
that will be forwarded to the holders of the Offered Certificates of that series
in connection with distributions made to them.
VOTING RIGHTS
The voting rights evidenced by each series of Certificates (as to such
series, the "Voting Rights") will be allocated among the respective classes of
such series in the manner described in the related Prospectus Supplement.
Certificateholders will generally not have a right to vote, except with
respect to required consents to certain amendments to the related Pooling and
Servicing Agreement and as otherwise specified in the related Prospectus
Supplement. See "The Pooling and Servicing Agreements -- Amendment". The holders
of specified amounts of Certificates of a particular series will have the right
to act as a group to remove the related Trustee and also upon the occurrence of
certain events which if continuing would constitute an Event of Default on the
part of the related Master Servicer, Special Servicer or REMIC Administrator.
See "The
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Pooling and Servicing Agreements -- Events of Default", "-- Rights Upon Event of
Default" and "-- Resignation and Removal of the Trustee".
TERMINATION
The obligations created by the Pooling and Servicing Agreement for each
series of Certificates will terminate following (1) the final payment or other
liquidation of the last Mortgage Asset subject thereto or the disposition of all
property acquired upon foreclosure of any Mortgage Loan subject thereto and (2)
the payment (or provision for payment) to the Certificateholders of that series
of all amounts required to be paid to them pursuant to such Pooling and
Servicing Agreement. Written notice of termination of a Pooling and Servicing
Agreement will be given to each Certificateholder of the related series, and the
final distribution will be made only upon presentation and surrender of the
Certificates of such series at the location to be specified in the notice of
termination.
If so specified in the related Prospectus Supplement, a series of
Certificates may be subject to optional early termination through the repurchase
of the Mortgage Assets in the related Trust Fund by the party or parties
specified therein, under the circumstances and in the manner set forth therein.
If so provided in the related Prospectus Supplement upon the reduction of the
Certificate Balance of a specified class or classes of Certificates by a
specified percentage or amount or upon a specified date, a party designated
therein may be authorized or required to solicit bids for the purchase of all
the Mortgage Assets of the related Trust Fund, or of a sufficient portion of
such Mortgage Assets to retire such class or classes, under the circumstances
and in the manner set forth therein.
BOOK-ENTRY REGISTRATION AND DEFINITIVE CERTIFICATES
If so provided in the Prospectus Supplement for a series of Certificates,
one or more classes of the Offered Certificates of such series will be offered
in book-entry format through the facilities of DTC, and each such class will be
represented by one or more global Certificates registered in the name of DTC or
its nominee.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking corporation" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
was created to hold securities for its participating organizations
("Participants") and facilitate the clearance and settlement of securities
transactions between Participants through electronic computerized book-entry
changes in their accounts, thereby eliminating the need for physical movement of
securities certificates. "Direct Participants", which maintain accounts with
DTC, include securities brokers and dealers, banks, trust companies and clearing
corporations and may include certain other organizations. DTC is owned by a
number of its Direct Participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Access to the DTC system also is available to others such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Direct Participant, either directly or indirectly
("Indirect Participants"). The rules applicable to DTC and its Participants are
on file with the Commission.
Purchases of Book-Entry Certificates under the DTC system must be made by
or through Direct Participants, which will receive a credit for the Book-Entry
Certificates on DTC's records. The ownership interest of each actual purchaser
of a Book-Entry Certificate (a "Certificate Owner") is in turn to be recorded on
the Direct and Indirect Participants' records. Certificate Owners will not
receive written confirmation from DTC of their purchases, but Certificate Owners
are expected to receive written confirmations providing details of such
transactions, as well as periodic statements of their holdings, from the Direct
or Indirect Participant through which each Certificate Owner entered into the
transaction. Transfers of ownership interests in the Book-Entry Certificates are
to be accomplished by entries made on the books of Participants acting on behalf
of Certificate Owners. Certificate Owners will not receive certificates
representing their ownership interests in the Book-Entry Certificates, except in
the event that use of the book-entry system for the Book-Entry Certificates of
any series is discontinued as described below.
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DTC has no knowledge of the actual Certificate Owners of the Book-Entry
Certificates; DTC's records reflect only the identity of the Direct Participants
to whose accounts such Certificates are credited, which may or may not be the
Certificate Owners. The Participants will remain responsible for keeping account
of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Certificate Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Distributions on the Book-Entry Certificates will be made to DTC. DTC's
practice is to credit Direct Participants' accounts on the related Distribution
Date in accordance with their respective holdings shown on DTC's records unless
DTC has reason to believe that it will not receive payment on such date.
Disbursement of such distributions by Participants to Certificate Owners will be
governed by standing instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or registered in
"street name", and will be the responsibility of each such Participant (and not
of DTC, the Depositor or any Trustee, Master Servicer, Special Servicer or
Manager), subject to any statutory or regulatory requirements as may be in
effect from time to time. Accordingly, under a book-entry system, Certificate
Owners may receive payments after the related Distribution Date.
Unless otherwise provided in the related Prospectus Supplement, the only
"Certificateholder" (as such term is used in the related Pooling and Servicing
Agreement) of Book-Entry Certificates will be the nominee of DTC, and the
Certificate Owners will not be recognized as Certificateholders under the
Pooling and Servicing Agreement. Certificate Owners will be permitted to
exercise the rights of Certificateholders under the related Pooling and
Servicing Agreement only indirectly through the Participants who in turn will
exercise their rights through DTC. The Depositor has been informed that DTC will
take action permitted to be taken by a Certificateholder under a Pooling and
Servicing Agreement only at the direction of one or more Direct Participants to
whose account with DTC interests in the Book-Entry Certificates are credited.
Because DTC can act only on behalf of Direct Participants, who in turn act
on behalf of Indirect Participants and certain Certificate Owners, the ability
of a Certificate Owner to pledge its interest in Book-Entry Certificates to
persons or entities that do not participate in the DTC system, or otherwise take
actions in respect of its interest in Book-Entry Certificates, may be limited
due to the lack of a physical certificate evidencing such interest.
Unless otherwise specified in the related Prospectus Supplement,
Certificates initially issued in book-entry form will be issued as Definitive
Certificates to Certificate Owners or their nominees, rather than to DTC or its
nominee, only if (1) the Depositor advises the Trustee in writing that DTC is no
longer willing or able to discharge properly its responsibilities as depository
with respect to such Certificates and the Depositor is unable to locate a
qualified successor or (2) the Depositor, at its option, elects to terminate the
book-entry system through DTC with respect to such Certificates. Upon the
occurrence of either of the events described in the preceding sentence, DTC will
be required to notify all Direct Participants of the availability through DTC of
Definitive Certificates. Upon surrender by DTC of the certificate or
certificates representing a class of Book-Entry Certificates, together with
instructions for registration, the Trustee for the related series or other
designated party will be required to issue to the Certificate Owners identified
in such instructions the Definitive Certificates to which they are entitled, and
thereafter the holders of such Definitive Certificates will be recognized as
"Certificateholders" under and within the meaning of the related Pooling and
Servicing Agreement.
THE POOLING AND SERVICING AGREEMENTS
GENERAL
The Certificates of each series will be issued pursuant to a pooling and
servicing agreement or other agreement specified in the related Prospectus
Supplement (in any case, a "Pooling and Servicing Agreement"). In general, the
parties to a Pooling and Servicing Agreement will include the Depositor, the
Trustee,
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the Master Servicer, the Special Servicer and, if one or more REMIC elections
have been made with respect to the Trust Fund, the REMIC Administrator. However,
a Pooling and Servicing Agreement that relates to a Trust Fund that includes MBS
may include a Manager as a party, but may not include a Master Servicer, Special
Servicer or other servicer as a party. All parties to each Pooling and Servicing
Agreement under which Certificates of a series are issued will be identified in
the related Prospectus Supplement. If so specified in the related Prospectus
Supplement, an affiliate of the Depositor, or the Mortgage Asset Seller or an
affiliate thereof, may perform the functions of Master Servicer, Special
Servicer, Manager or REMIC Administrator. If so specified in the related
Prospectus Supplement, the Master Servicer may also perform the duties of
Special Servicer, and the Master Servicer, the Special Servicer or the Trustee
may also perform the duties of REMIC Administrator. Any party to a Pooling and
Servicing Agreement or any affiliate thereof may own Certificates issued
thereunder; however, unless other specified in the related Prospectus
Supplement, except with respect to required consents to certain amendments to a
Pooling and Servicing Agreement, Certificates issued thereunder that are held by
the Master Servicer or Special Servicer for the related Series will not be
allocated Voting Rights.
A form of a pooling and servicing agreement has been filed as an exhibit to
the Registration Statement of which this Prospectus is a part. However, the
provisions of each Pooling and Servicing Agreement will vary depending upon the
nature of the Certificates to be issued thereunder and the nature of the related
Trust Fund. The following summaries describe certain provisions that may appear
in a Pooling and Servicing Agreement under which Certificates that evidence
interests in Mortgage Loans will be issued. The Prospectus Supplement for a
series of Certificates will describe any provision of the related Pooling and
Servicing Agreement that materially differs from the description thereof
contained in this Prospectus and, if the related Trust Fund includes MBS, will
summarize all of the material provisions of the related Pooling and Servicing
Agreement. The summaries herein do not purport to be complete and are subject
to, and are qualified in their entirety by reference to, all of the provisions
of the Pooling and Servicing Agreement for each series of Certificates and the
description of such provisions in the related Prospectus Supplement. The
Depositor will provide a copy of the Pooling and Servicing Agreement (without
exhibits) that relates to any series of Certificates without charge upon written
request of a holder of a Certificate of such series addressed to it at its
principal executive offices specified herein under "The Depositor".
ASSIGNMENT OF MORTGAGE LOANS; REPURCHASES
At the time of issuance of any series of Certificates, the Depositor will
assign (or cause to be assigned) to the designated Trustee the Mortgage Loans to
be included in the related Trust Fund, together with, unless otherwise specified
in the related Prospectus Supplement, all principal and interest to be received
on or with respect to such Mortgage Loans after the Cut-off Date, other than
principal and interest due on or before the Cut-off Date. The Trustee will,
concurrently with such assignment, deliver the Certificates to or at the
direction of the Depositor in exchange for the Mortgage Loans and the other
assets to be included in the Trust Fund for such series. Each Mortgage Loan will
be identified in a schedule appearing as an exhibit to the related Pooling and
Servicing Agreement. Such schedule generally will include detailed information
that pertains to each Mortgage Loan included in the related Trust Fund, which
information will typically include the address of the related Mortgaged Property
and type of such property; the Mortgage Rate and, if applicable, the applicable
index, gross margin, adjustment date and any rate cap information; the original
and remaining term to maturity; the amortization term; and the original and
outstanding principal balance.
In addition, unless otherwise specified in the related Prospectus
Supplement, the Depositor will, as to each Mortgage Loan to be included in a
Trust Fund, deliver, or cause to be delivered, to the related Trustee (or to a
custodian appointed by the Trustee as described below) the Mortgage Note
endorsed, without recourse, either in blank or to the order of such Trustee (or
its nominee), the Mortgage with evidence of recording indicated thereon (except
for any Mortgage not returned from the public recording office), an assignment
of the Mortgage in blank or to the Trustee (or its nominee) in recordable form,
together with any intervening assignments of the Mortgage with evidence of
recording thereon (except for any such assignment not returned from the public
recording office), and, if applicable, any riders or modifications to such
Mortgage Note and Mortgage, together with certain other documents at such times
as set forth in the related Pooling
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and Servicing Agreement. Such assignments may be blanket assignments covering
Mortgages on Mortgaged Properties located in the same county, if permitted by
law. Notwithstanding the foregoing, a Trust Fund may include Mortgage Loans
where the original Mortgage Note is not delivered to the Trustee if the
Depositor delivers, or causes to be delivered, to the related Trustee (or such
custodian) a copy or a duplicate original of the Mortgage Note, together with an
affidavit certifying that the original thereof has been lost or destroyed. In
addition, if the Depositor cannot deliver, with respect to any Mortgage Loan,
the Mortgage or any intervening assignment with evidence of recording thereon
concurrently with the execution and delivery of the related Pooling and
Servicing Agreement because of a delay caused by the public recording office,
the Depositor will deliver, or cause to be delivered, to the related Trustee (or
such custodian) a true and correct photocopy of such Mortgage or assignment as
submitted for recording. The Depositor will deliver, or cause to be delivered,
to the related Trustee (or such custodian) such Mortgage or assignment with
evidence of recording indicated thereon after receipt thereof from the public
recording office. If the Depositor cannot deliver, with respect to any Mortgage
Loan, the Mortgage or any intervening assignment with evidence of recording
thereon concurrently with the execution and delivery of the related Pooling and
Servicing Agreement because such Mortgage or assignment has been lost, the
Depositor will deliver, or cause to be delivered, to the related Trustee (or
such custodian) a true and correct photocopy of such Mortgage or assignment with
evidence of recording thereon. Unless otherwise specified in the related
Prospectus Supplement, assignments of Mortgage to the Trustee (or its nominee)
will be recorded in the appropriate public recording office, except in states
where, in the opinion of counsel acceptable to the Trustee, such recording is
not required to protect the Trustee's interests in the Mortgage Loan against the
claim of any subsequent transferee or any successor to or creditor of the
Depositor or the originator of such Mortgage Loan.
The Trustee (or a custodian appointed by the Trustee) for a series of
Certificates will be required to review the Mortgage Loan documents delivered to
it within a specified period of days after receipt thereof, and the Trustee (or
such custodian) will hold such documents in trust for the benefit of the
Certificateholders of such series. Unless otherwise specified in the related
Prospectus Supplement, if any such document is found to be missing or defective,
and such omission or defect, as the case may be, materially and adversely
affects the interests of the Certificateholders of the related series, the
Trustee (or such custodian) will be required to notify the Master Servicer, the
Special Servicer and the Depositor, and one of such persons will be required to
notify the relevant Mortgage Asset Seller. In that case, and if the Mortgage
Asset Seller cannot deliver the document or cure the defect within a specified
number of days after receipt of such notice, then, except as otherwise specified
below or in the related Prospectus Supplement, the Mortgage Asset Seller will be
obligated to repurchase the related Mortgage Loan from the Trustee at a price
generally equal to the unpaid principal balance thereof, together with accrued
but unpaid interest through a date on or about the date of purchase, or at such
other price as will be specified in the related Prospectus Supplement (in any
event, the "Purchase Price"). If so provided in the Prospectus Supplement for a
series of Certificates, a Mortgage Asset Seller, in lieu of repurchasing a
Mortgage Loan as to which there is missing or defective loan documentation, will
have the option, exercisable upon certain conditions and/or within a specified
period after initial issuance of such series of Certificates, to replace such
Mortgage Loan with one or more other mortgage loans, in accordance with
standards that will be described in the Prospectus Supplement. Unless otherwise
specified in the related Prospectus Supplement, this repurchase or substitution
obligation will constitute the sole remedy to holders of the Certificates of any
series or to the related Trustee on their behalf for missing or defective
Mortgage Loan documentation, and neither the Depositor nor, unless it is the
Mortgage Asset Seller, the Master Servicer or the Special Servicer will be
obligated to purchase or replace a Mortgage Loan if a Mortgage Asset Seller
defaults on its obligation to do so.
The Trustee will be authorized at any time to appoint one or more
custodians pursuant to a custodial agreement to hold title to the Mortgage Loans
in any Trust Fund and to maintain possession of and, if applicable, to review
the documents relating to such Mortgage Loans, in any case as the agent of the
Trustee. The identity of any such custodian to be appointed on the date of
initial issuance of the Certificates will be set forth in the related Prospectus
Supplement. Any such custodian may be an affiliate of the Depositor.
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REPRESENTATIONS AND WARRANTIES; REPURCHASES
Unless otherwise provided in the Prospectus Supplement for a series of
Certificates, the Depositor will, with respect to each Mortgage Loan in the
related Trust Fund, make or assign, or cause to be made or assigned, certain
representations and warranties (the person making such representations and
warranties, the "Warranting Party") covering, by way of example: (1) the
accuracy of the information set forth for such Mortgage Loan on the schedule of
Mortgage Loans appearing as an exhibit to the related Pooling and Servicing
Agreement; (2) the enforceability of the related Mortgage Note and Mortgage and
the existence of title insurance insuring the lien priority of the related
Mortgage; (3) the Warranting Party's title to the Mortgage Loan and the
authority of the Warranting Party to sell the Mortgage Loan; and (4) the payment
status of the Mortgage Loan. It is expected that in most cases the Warranting
Party will be the Mortgage Asset Seller; however, the Warranting Party may also
be an affiliate of the Mortgage Asset Seller, the Depositor or an affiliate of
the Depositor, the Master Servicer, the Special Servicer or another person
acceptable to the Depositor. The Warranting Party, if other than the Mortgage
Asset Seller, will be identified in the related Prospectus Supplement.
Unless otherwise provided in the related Prospectus Supplement, each
Pooling and Servicing Agreement will provide that the Master Servicer and/or
Trustee will be required to notify promptly any Warranting Party of any breach
of any representation or warranty made by it in respect of a Mortgage Loan that
materially and adversely affects the interests of the Certificateholders of the
related series. If such Warranting Party cannot cure such breach within a
specified period following the date on which it was notified of such breach,
then, unless otherwise provided in the related Prospectus Supplement, it will be
obligated to repurchase such Mortgage Loan from the Trustee at the applicable
Purchase Price. If so provided in the Prospectus Supplement for a series of
Certificates, a Warranting Party, in lieu of repurchasing a Mortgage Loan as to
which a breach has occurred, will have the option, exercisable upon certain
conditions and/or within a specified period after initial issuance of such
series of Certificates, to replace such Mortgage Loan with one or more other
mortgage loans, in accordance with standards that will be described in the
Prospectus Supplement. Unless otherwise specified in the related Prospectus
Supplement, this repurchase or substitution obligation will constitute the sole
remedy available to holders of the Certificates of any series or to the related
Trustee on their behalf for a breach of representation and warranty by a
Warranting Party, and neither the Depositor nor the Master Servicer, in either
case unless it is the Warranting Party, will be obligated to purchase or replace
a Mortgage Loan if a Warranting Party defaults on its obligation to do so.
In some cases, representations and warranties will have been made in
respect of a Mortgage Loan as of a date prior to the date upon which the related
series of Certificates is issued, and thus may not address events that may occur
following the date as of which they were made. However, the Depositor will not
include any Mortgage Loan in the Trust Fund for any series of Certificates if
anything has come to the Depositor's attention that would cause it to believe
that the representations and warranties made in respect of such Mortgage Loan
will not be accurate in all material respects as of the date of issuance. The
date as of which the representations and warranties regarding the Mortgage Loans
in any Trust Fund were made will be specified in the related Prospectus
Supplement.
COLLECTION AND OTHER SERVICING PROCEDURES
Unless otherwise specified in the related Prospectus Supplement, the Master
Servicer and the Special Servicer for any Mortgage Pool, directly or through
Sub-Servicers, will each be obligated under the related Pooling and Servicing
Agreement to service and administer the Mortgage Loans in such Mortgage Pool for
the benefit of the related Certificateholders, in accordance with applicable law
and further in accordance with the terms of such Pooling and Servicing
Agreement, such Mortgage Loans and any instrument of Credit Support included in
the related Trust Fund. Subject to the foregoing, the Master Servicer and the
Special Servicer will each have full power and authority to do any and all
things in connection with such servicing and administration that it may deem
necessary and desirable.
As part of its servicing duties, each of the Master Servicer and the
Special Servicer will be required to make reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage
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Loans that it services and will be obligated to follow such collection
procedures as it would follow with respect to mortgage loans that are comparable
to such Mortgage Loans and held for its own account, provided (1) such
procedures are consistent with the terms of the related Pooling and Servicing
Agreement and (2) do not impair recovery under any instrument of Credit Support
included in the related Trust Fund. Consistent with the foregoing, the Master
Servicer and the Special Servicer will each be permitted, in its discretion,
unless otherwise specified in the related Prospectus Supplement, to waive any
Prepayment Premium, late payment charge or other charge in connection with any
Mortgage Loan.
The Master Servicer and the Special Servicer for any Trust Fund, either
separately or jointly, directly or through Sub-Servicers, will also be required
to perform as to the Mortgage Loans in such Trust Fund various other customary
functions of a servicer of comparable loans, including maintaining escrow or
impound accounts, if required under the related Pooling and Servicing Agreement,
for payment of taxes, insurance premiums, ground rents and similar items, or
otherwise monitoring the timely payment of those items; attempting to collect
delinquent payments; supervising foreclosures; negotiating modifications;
conducting property inspections on a periodic or other basis; managing (or
overseeing the management of) Mortgaged Properties acquired on behalf of such
Trust Fund through foreclosure, deed-in-lieu of foreclosure or otherwise (each,
an "REO Property"); and maintaining servicing records relating to such Mortgage
Loans. The related Prospectus Supplement will specify when and the extent to
which servicing of a Mortgage Loan is to be transferred from the Master Servicer
to the Special Servicer. In general, and subject to the discussion in the
related Prospectus Supplement, a Special Servicer will be responsible for the
servicing and administration of: (1) Mortgage Loans that are delinquent in
respect of a specified number of scheduled payments; (2) Mortgage Loans as to
which the related borrower has entered into or consented to bankruptcy,
appointment of a receiver or conservator or similar insolvency proceeding, or
the related borrower has become the subject of a decree or order for such a
proceeding which shall have remained in force undischarged or unstayed for a
specified number of days; and (3) REO Properties. If so specified in the related
Prospectus Supplement, a Pooling and Servicing Agreement also may provide that
if a default on a Mortgage Loan has occurred or, in the judgment of the related
Master Servicer, a payment default is reasonably foreseeable, the related Master
Servicer may elect to transfer the servicing thereof, in whole or in part, to
the related Special Servicer. Unless otherwise provided in the related
Prospectus Supplement, when the circumstances no longer warrant a Special
Servicer's continuing to service a particular Mortgage Loan (e.g., the related
borrower is paying in accordance with the forbearance arrangement entered into
between the Special Servicer and such borrower), the Master Servicer will resume
the servicing duties with respect thereto. If and to the extent provided in the
related Pooling and Servicing Agreement and described in the related Prospectus
Supplement, a Special Servicer may perform certain limited duties in respect of
Mortgage Loans for which the Master Servicer is primarily responsible
(including, if so specified, performing property inspections and evaluating
financial statements); and a Master Servicer may perform certain limited duties
in respect of any Mortgage Loan for which the Special Servicer is primarily
responsible (including, if so specified, continuing to receive payments on such
Mortgage Loan (including amounts collected by the Special Servicer)), making
certain calculations with respect to such Mortgage Loan and making remittances
and preparing certain reports to the Trustee and/or Certificateholders with
respect to such Mortgage Loan. Unless otherwise specified in the related
Prospectus Supplement, the Master Servicer will be responsible for filing and
settling claims in respect of particular Mortgage Loans under any applicable
instrument of Credit Support. See "Description of Credit Support".
A mortgagor's failure to make required Mortgage Loan payments may mean that
operating income is insufficient to service the mortgage debt, or may reflect
the diversion of that income from the servicing of the mortgage debt. In
addition, a mortgagor that is unable to make Mortgage Loan payments may also be
unable to make timely payment of taxes and otherwise to maintain and insure the
related Mortgaged Property. In general, the related Special Servicer will be
required to monitor any Mortgage Loan that is in default, evaluate whether the
causes of the default can be corrected over a reasonable period without
significant impairment of the value of the related Mortgaged Property, initiate
corrective action in cooperation with the Mortgagor if cure is likely, inspect
the related Mortgaged Property and take such other actions as it deems necessary
and appropriate. A significant period of time may elapse before the Special
Servicer is able to assess the success of any such corrective action or the need
for additional initiatives. The time within which the Special Servicer can make
the initial determination of appropriate action, evaluate the success of
corrective action, develop
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additional initiatives, institute foreclosure proceedings and actually foreclose
(or accept a deed to a Mortgaged Property in lieu of foreclosure) on behalf of
the Certificateholders of the related series may vary considerably depending on
the particular Mortgage Loan, the Mortgaged Property, the mortgagor, the
presence of an acceptable party to assume the Mortgage Loan and the laws of the
jurisdiction in which the Mortgaged Property is located. If a mortgagor files a
bankruptcy petition, the Special Servicer may not be permitted to accelerate the
maturity of the Mortgage Loan or to foreclose on the related Mortgaged Property
for a considerable period of time. See "Certain Legal Aspects of Mortgage
Loans -- Bankruptcy Laws."
Mortgagors may, from time to time, request partial releases of the
Mortgaged Properties, easements, consents to alteration or demolition and other
similar matters. In general, the Master Servicer may approve such a request if
it has determined, exercising its business judgment in accordance with the
applicable servicing standard, that such approval will not adversely affect the
security for, or the timely and full collectibility of, the related Mortgage
Loan. Any fee collected by the Master Servicer for processing such request will
be retained by the Master Servicer as additional servicing compensation.
In the case of Mortgage Loans secured by junior liens on the related
Mortgaged Properties, unless otherwise provided in the related Prospectus
Supplement, the Master Servicer will be required to file (or cause to be filed)
of record a request for notice of any action by a superior lienholder under the
Senior Lien for the protection of the related Trustee's interest, where
permitted by local law and whenever applicable state law does not require that a
junior lienholder be named as a party defendant in foreclosure proceedings in
order to foreclose such junior lienholder's equity of redemption. Unless
otherwise specified in the related Prospectus Supplement, the Master Servicer
also will be required to notify any superior lienholder in writing of the
existence of the Mortgage Loan and request notification of any action (as
described below) to be taken against the mortgagor or the Mortgaged Property by
the superior lienholder. If the Master Servicer is notified that any superior
lienholder has accelerated or intends to accelerate the obligations secured by
the related Senior Lien, or has declared or intends to declare a default under
the mortgage or the promissory note secured thereby, or has filed or intends to
file an election to have the related Mortgaged Property sold or foreclosed,
then, unless otherwise specified in the related Prospectus Supplement, the
Master Servicer and the Special Servicer will each be required to take, on
behalf of the related Trust Fund, whatever actions are necessary to protect the
interests of the related Certificateholders and/or to preserve the security of
the related Mortgage Loan, subject to the application of the REMIC Provisions.
Unless otherwise specified in the related Prospectus Supplement, the Master
Servicer or Special Servicer, as applicable, will be required to advance the
necessary funds to cure the default or reinstate the Senior Lien, if such
advance is in the best interests of the related Certificateholders and the
Master Servicer or Special Servicer, as applicable, determines such advances are
recoverable out of payments on or proceeds of the related Mortgage Loan.
SUB-SERVICERS
A Master Servicer or Special Servicer may delegate its servicing
obligations in respect of the Mortgage Loans serviced thereby to one or more
third-party servicers (each, a "Sub-Servicer"); provided that, unless otherwise
specified in the related Prospectus Supplement, such Master Servicer or Special
Servicer will remain obligated under the related Pooling and Servicing
Agreement. A Sub-Servicer for any series of Certificates may be an affiliate of
the Depositor. Unless otherwise provided in the related Prospectus Supplement,
each sub-servicing agreement between a Master Servicer and a Sub-Servicer (a
"Sub-Servicing Agreement") must provide for servicing of the applicable Mortgage
Loans consistent with the related Pooling and Servicing Agreement. Unless
otherwise provided in the related Prospectus Supplement, the Master Servicer and
Special Servicer in respect of any Mortgage Asset Pool will each be required to
monitor the performance of Sub-Servicers retained by it and will have the right
to remove a Sub-Servicer retained by it at any time it considers such removal to
be in the best interests of Certificateholders.
Unless otherwise provided in the related Prospectus Supplement, a Master
Servicer or Special Servicer will be solely liable for all fees owed by it to
any Sub-Servicer, irrespective of whether the Master Servicer's or Special
Servicer's compensation pursuant to the related Pooling and Servicing Agreement
is sufficient to pay such fees. Each Sub-Servicer will be reimbursed by the
Master Servicer or Special Servicer, as the case may be, that retained it for
certain expenditures which it makes, generally to the same extent such Master
Servicer
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or Special Servicer would be reimbursed under a Pooling and Servicing Agreement.
See "-- Certificate Account" and "-- Servicing Compensation and Payment of
Expenses".
CERTIFICATE ACCOUNT
General. The Master Servicer, the Trustee and/or the Special Servicer
will, as to each Trust Fund that includes Mortgage Loans, establish and maintain
or cause to be established and maintained the corresponding Certificate Account,
which will be established so as to comply with the standards of each Rating
Agency that has rated any one or more classes of Certificates of the related
series. A Certificate Account may be maintained as an interest-bearing or a
noninterest-bearing account and the funds held therein may be invested pending
each succeeding Distribution Date in United States government securities and
other obligations that are acceptable to each Rating Agency that has rated any
one or more classes of Certificates of the related series ("Permitted
Investments"). Unless otherwise provided in the related Prospectus Supplement,
any interest or other income earned on funds in a Certificate Account will be
paid to the related Master Servicer, Trustee or Special Servicer as additional
compensation. A Certificate Account may be maintained with the related Master
Servicer, Special Servicer, Trustee or Mortgage Asset Seller or with a
depository institution that is an affiliate of any of the foregoing or of the
Depositor, provided that it complies with applicable Rating Agency standards. If
permitted by the applicable Rating Agency or Agencies, a Certificate Account may
contain funds relating to more than one series of mortgage pass-through
certificates and may contain other funds representing payments on mortgage loans
owned by the related Master Servicer or Special Servicer or serviced by either
on behalf of others.
Deposits. Unless otherwise provided in the related Pooling and Servicing
Agreement and described in the related Prospectus Supplement, the following
payments and collections received or made by the Master Servicer, the Trustee or
the Special Servicer subsequent to the Cut-off Date (other than payments due on
or before the Cut-off Date) are to be deposited in the Certificate Account for
each Trust Fund that includes Mortgage Loans, within a certain period following
receipt (in the case of collections on or in respect of the Mortgage Loans) or
otherwise as provided in the related Pooling and Servicing Agreement:
- all payments on account of principal, including principal prepayments, on
the Mortgage Loans;
- all payments on account of interest on the Mortgage Loans, including any
default interest collected, in each case net of any portion thereof
retained by the Master Servicer or the Special Servicer as its servicing
compensation or as compensation to the Trustee;
- all proceeds received under any hazard, title or other insurance policy
that provides coverage with respect to a Mortgaged Property or the
related Mortgage Loan or in connection with the full or partial
condemnation of a Mortgaged Property (other than proceeds applied to the
restoration of the property or released to the related borrower)
(collectively, "Insurance and Condemnation Proceeds") and all other
amounts received and retained in connection with the liquidation of
defaulted Mortgage Loans or property acquired in respect thereof, by
foreclosure or otherwise (such amounts, together with those amounts
listed in the seventh bulleted item listed below, "Liquidation
Proceeds"), together with the net operating income (less reasonable
reserves for future expenses) derived from the operation of any Mortgaged
Properties acquired by the Trust Fund through foreclosure or otherwise;
- any amounts paid under any instrument or drawn from any fund that
constitutes Credit Support for the related series of Certificates;
- any advances made with respect to delinquent scheduled payments of
principal and interest on the Mortgage Loans;
- any amounts paid under any Cash Flow Agreement;
- all proceeds of the purchase of any Mortgage Loan, or property acquired
in respect thereof, by the Depositor, any Mortgage Asset Seller or any
other specified person as described under "-- Assignment of Mortgage
Loans; Repurchases" and "-- Representations and Warranties; Repurchases",
all proceeds of the purchase of any defaulted Mortgage Loan as described
under "-- Realization Upon
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Defaulted Mortgage Loans", and all proceeds of any Mortgage Asset
purchased as described under "Description of the
Certificates -- Termination";
- to the extent that any such item does not constitute additional servicing
compensation to the Master Servicer or the Special Servicer and is not
otherwise retained by the Depositor or another specified person, any
payments on account of modification or assumption fees, late payment
charges, Prepayment Premiums or Equity Participations with respect to the
Mortgage Loans;
- all payments required to be deposited in the Certificate Account with
respect to any deductible clause in any blanket insurance policy as
described under "-- Hazard Insurance Policies";
- any amount required to be deposited by the Master Servicer, the Special
Servicer or the Trustee in connection with losses realized on investments
for the benefit of the Master Servicer, the Special Servicer or the
Trustee, as the case may be, of funds held in the Certificate Account;
and
- any other amounts required to be deposited in the Certificate Account as
provided in the related Pooling and Servicing Agreement and described in
the related Prospectus Supplement.
Withdrawals. Unless otherwise provided in the related Pooling and
Servicing Agreement and described in the related Prospectus Supplement, a Master
Servicer, Trustee or Special Servicer may make withdrawals from the Certificate
Account for each Trust Fund that includes Mortgage Loans for any of the
following purposes:
- to make distributions to the Certificateholders on each Distribution
Date;
- to pay the Master Servicer or the Special Servicer any servicing fees not
previously retained thereby, such payment to be made out of payments and
other collections of interest on the particular Mortgage Loans as to
which such fees were earned;
- to reimburse the Master Servicer, the Special Servicer or any other
specified person for unreimbursed advances of delinquent scheduled
payments of principal and interest made by it, and certain unreimbursed
servicing expenses incurred by it, with respect to Mortgage Loans in the
Trust Fund and properties acquired in respect thereof, such reimbursement
to be made out of amounts that represent late payments collected on the
particular Mortgage Loans, Liquidation Proceeds and Insurance and
Condemnation Proceeds collected on the particular Mortgage Loans and
properties, and net income collected on the particular properties, with
respect to which such advances were made or such expenses were incurred
or out of amounts drawn under any form of Credit Support with respect to
such Mortgage Loans and properties, or if in the judgment of the Master
Servicer, the Special Servicer or such other person, as applicable, such
advances and/or expenses will not be recoverable from such amounts, such
reimbursement to be made from amounts collected on other Mortgage Loans
in the same Trust Fund or, if and to the extent so provided by the
related Pooling and Servicing Agreement and described in the related
Prospectus Supplement, only from that portion of amounts collected on
such other Mortgage Loans that is otherwise distributable on one or more
classes of Subordinate Certificates of the related series;
- if and to the extent described in the related Prospectus Supplement, to
pay the Master Servicer, the Special Servicer or any other specified
person interest accrued on the advances and servicing expenses described
in the bulleted clause immediately listed above incurred by it while such
remain outstanding and unreimbursed;
- to pay for costs and expenses incurred by the Trust Fund for
environmental site assessments performed with respect to Mortgaged
Properties that constitute security for defaulted Mortgage Loans, and for
any containment, clean-up or remediation of hazardous wastes and
materials present on such Mortgaged Properties, as described under
"-- Realization Upon Defaulted Mortgage Loans";
- to reimburse the Master Servicer, the Special Servicer, the REMIC
Administrator, the Depositor, the Trustee, or any of their respective
directors, officers, employees and agents, as the case may be, for
certain expenses, costs and liabilities incurred thereby, as and to the
extent described under
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"-- Certain Matters Regarding the Master Servicer, the Special Servicer,
the REMIC Administrator and the Depositor" and "-- Certain Matters
Regarding the Trustee";
- if and to the extent described in the related Prospectus Supplement, to
pay the fees of the Trustee, the REMIC Administrator and any provider of
Credit Support;
- if and to the extent described in the related Prospectus Supplement, to
reimburse prior draws on any form of Credit Support;
- to pay the Master Servicer, the Special Servicer or the Trustee, as
appropriate, interest and investment income earned in respect of amounts
held in the Certificate Account as additional compensation;
- to pay any servicing expenses not otherwise required to be advanced by
the Master Servicer, the Special Servicer or any other specified person;
- if one or more elections have been made to treat the Trust Fund or
designated portions thereof as a REMIC, to pay any federal, state or
local taxes imposed on the Trust Fund or its assets or transactions, as
and to the extent described under "Certain Federal Income Tax
Consequences -- REMICs -- Prohibited Transactions Tax and Other Taxes";
- to pay for the cost of various opinions of counsel obtained pursuant to
the related Pooling and Servicing Agreement for the benefit of
Certificateholders;
- to make any other withdrawals permitted by the related Pooling and
Servicing Agreement and described in the related Prospectus Supplement;
and
- to clear and terminate the Certificate Account upon the termination of
the Trust Fund.
MODIFICATIONS, WAIVERS AND AMENDMENTS OF MORTGAGE LOANS
The Master Servicer and the Special Servicer may each agree to modify,
waive or amend any term of any Mortgage Loan serviced by it in a manner
consistent with the applicable Servicing Standard; provided that, unless
otherwise set forth in the related Prospectus Supplement, the modification,
waiver or amendment (1) will not affect the amount or timing of any scheduled
payments of principal or interest on the Mortgage Loan, (2) will not, in the
judgment of the Master Servicer or the Special Servicer, as the case may be,
materially impair the security for the Mortgage Loan or reduce the likelihood of
timely payment of amounts due thereon and (3) will not adversely affect the
coverage under any applicable instrument of Credit Support. Unless otherwise
provided in the related Prospectus Supplement, the Special Servicer also may
agree to any other modification, waiver or amendment if, in its judgment, (1) a
material default on the Mortgage Loan has occurred or a payment default is
imminent, (2) such modification, waiver or amendment is reasonably likely to
produce a greater recovery with respect to the Mortgage Loan, taking into
account the time value of money, than would liquidation and (3) such
modification, waiver or amendment will not adversely affect the coverage under
any applicable instrument of Credit Support.
REALIZATION UPON DEFAULTED MORTGAGE LOANS
If a default on a Mortgage Loan has occurred, the Special Servicer, on
behalf of the Trustee, may at any time institute foreclosure proceedings,
exercise any power of sale contained in the related Mortgage, obtain a deed in
lieu of foreclosure, or otherwise acquire title to the related Mortgaged
Property, by operation of law or otherwise. Unless otherwise specified in the
related Prospectus Supplement, the Special Servicer may not, however, acquire
title to any Mortgaged Property, have a receiver of rents appointed with respect
to any Mortgaged Property or take any other action with respect to any Mortgaged
Property that would cause the Trustee, for the benefit of the related series of
Certificateholders, or any other specified person to be considered to hold title
to, to be a "mortgagee-in-possession" of, or to be an "owner" or an "operator"
of such Mortgaged Property within the meaning of certain federal environmental
laws, unless the Special Servicer has
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previously received a report prepared by a person who regularly conducts
environmental audits (which report will be an expense of the Trust Fund) and
either:
(1) such report indicates that (a) the Mortgaged Property is in
compliance with applicable environmental laws and regulations and (b) there
are no circumstances or conditions present at the Mortgaged Property that
have resulted in any contamination for which investigation, testing,
monitoring, containment, clean-up or remediation could be required under
any applicable environmental laws and regulations; or
(2) the Special Servicer, based solely (as to environmental matters
and related costs) on the information set forth in such report, determines
that taking such actions as are necessary to bring the Mortgaged Property
into compliance with applicable environmental laws and regulations and/or
taking the actions contemplated by clause (1)(b) above, is reasonably
likely to produce a greater recovery, taking into account the time value of
money, than not taking such actions. See "Certain Legal Aspects of Mortgage
Loans -- Environmental Considerations".
A Pooling and Servicing Agreement may grant to the Master Servicer, the
Special Servicer, a provider of Credit Support and/or the holder or holders of
certain classes of the related series of Certificates a right of first refusal
to purchase from the Trust Fund, at a predetermined price (which, if less than
the Purchase Price, will be specified in the related Prospectus Supplement), any
Mortgage Loan as to which a specified number of scheduled payments are
delinquent. In addition, unless otherwise specified in the related Prospectus
Supplement, the Special Servicer may offer to sell any defaulted Mortgage Loan
if and when the Special Servicer determines, consistent with its normal
servicing procedures, that such a sale would produce a greater recovery, taking
into account the time value of money, than would liquidation of the related
Mortgaged Property. In the absence of any such sale, the Special Servicer will
generally be required to proceed against the related Mortgaged Property, subject
to the discussion above.
Unless otherwise provided in the related Prospectus Supplement, if title to
any Mortgaged Property is acquired by a Trust Fund as to which a REMIC election
has been made, the Special Servicer, on behalf of the Trust Fund, will be
required to sell the Mortgaged Property before the close of the third calendar
year following the year of acquisition, unless (1) the Internal Revenue Service
(the "IRS") grants an extension of time to sell such property or (2) the Trustee
receives an opinion of independent counsel to the effect that the holding of the
property by the Trust Fund for longer than such period will not result in the
imposition of a tax on the Trust Fund or cause the Trust Fund (or any designated
portion thereof) to fail to qualify as a REMIC under the Code at any time that
any Certificate is outstanding. Subject to the foregoing and any other tax-
related limitations, the Special Servicer will generally be required to attempt
to sell any Mortgaged Property so acquired on the same terms and conditions it
would if it were the owner. Unless otherwise provided in the related Prospectus
Supplement, if title to any Mortgaged Property is acquired by a Trust Fund as to
which a REMIC election has been made, the Special Servicer will also be required
to ensure that the Mortgaged Property is administered so that it constitutes
"foreclosure property" within the meaning of Code Section 860G(a)(8) at all
times, that the sale of such property does not result in the receipt by the
Trust Fund of any income from nonpermitted assets as described in Code Section
860F(a)(2)(B), and that the Trust Fund does not derive any "net income from
foreclosure property" within the meaning of Code Section 860G(c)(2), with
respect to such property unless the method of operation that produces such
income would produce a greater after-tax return than a different method of
operation of such property. If the Trust Fund acquires title to any Mortgaged
Property, the Special Servicer, on behalf of the Trust Fund, may retain an
independent contractor to manage and operate such property. The retention of an
independent contractor, however, will not relieve the Special Servicer of its
obligation to manage such Mortgaged Property as required under the related
Pooling and Servicing Agreement.
If Liquidation Proceeds collected with respect to a defaulted Mortgage Loan
are less than the outstanding principal balance of the defaulted Mortgage Loan
plus interest accrued thereon plus the aggregate amount of reimbursable expenses
incurred by the Special Servicer and/or the Master Servicer in connection with
such Mortgage Loan, then, to the extent that such shortfall is not covered by
any instrument or fund constituting Credit Support, the Trust Fund will realize
a loss in the amount of such shortfall. The Special Servicer and/or
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the Master Servicer will be entitled to reimbursement out of the Liquidation
Proceeds recovered on any defaulted Mortgage Loan, prior to the distribution of
such Liquidation Proceeds to Certificateholders, any and all amounts that
represent unpaid servicing compensation in respect of the Mortgage Loan,
unreimbursed servicing expenses incurred with respect to the Mortgage Loan and
any unreimbursed advances of delinquent payments made with respect to the
Mortgage Loan. In addition, if and to the extent set forth in the related
Prospectus Supplement, amounts otherwise distributable on the Certificates may
be further reduced by interest payable to the Master Servicer and/or Special
Servicer on such servicing expenses and advances.
Except as otherwise provided in the Prospectus Supplement, if any Mortgaged
Property suffers damage such that the proceeds, if any, of the related hazard
insurance policy are insufficient to restore fully the damaged property, neither
the Special Servicer nor the Master Servicer will be required to expend its own
funds to effect such restoration.
HAZARD INSURANCE POLICIES
Unless otherwise specified in the related Prospectus Supplement, each
Pooling and Servicing Agreement will require the Master Servicer (or the Special
Servicer with respect to Mortgage Loans serviced thereby) to use reasonable
efforts to cause each Mortgage Loan borrower to maintain a hazard insurance
policy that provides for such coverage as is required under the related Mortgage
or, if the Mortgage permits the holder thereof to dictate to the borrower the
insurance coverage to be maintained on the related Mortgaged Property, such
coverage as is consistent with the Master Servicer's (or Special Servicer's)
normal servicing procedures. Unless otherwise specified in the related
Prospectus Supplement, such coverage generally will be in an amount equal to the
lesser of the principal balance owing on such Mortgage Loan and the replacement
cost of the related Mortgaged Property. The ability of a Master Servicer (or
Special Servicer) to assure that hazard insurance proceeds are appropriately
applied may be dependent upon its being named as an additional insured under any
hazard insurance policy and under any other insurance policy referred to below,
or upon the extent to which information concerning covered losses is furnished
by borrowers. All amounts collected by a Master Servicer (or Special Servicer)
under any such policy (except for amounts to be applied to the restoration or
repair of the Mortgaged Property or released to the borrower in accordance with
the Master Servicer's (or Special Servicer's) normal servicing procedures and/or
to the terms and conditions of the related Mortgage and Mortgage Note) will be
deposited in the related Certificate Account. The Pooling and Servicing
Agreement may provide that the Master Servicer (or Special Servicer) may satisfy
its obligation to cause each borrower to maintain such a hazard insurance policy
by maintaining a blanket policy insuring against hazard losses on the Mortgage
Loans in a Trust Fund. If such blanket policy contains a deductible clause, the
Master Servicer (or Special Servicer) will be required, in the event of a
casualty covered by such blanket policy, to deposit in the related Certificate
Account all additional sums that would have been deposited therein under an
individual policy but were not because of such deductible clause.
In general, the standard form of fire and extended coverage policy covers
physical damage to or destruction of the improvements of the property by fire,
lightning, explosion, smoke, windstorm and hail, and riot, strike and civil
commotion, subject to the conditions and exclusions specified in each policy.
Although the policies covering the Mortgaged Properties will be underwritten by
different insurers under different state laws in accordance with different
applicable state forms, and therefore will not contain identical terms and
conditions, most such policies typically do not cover any physical damage
resulting from war, revolution, governmental actions, floods and other
water-related causes, earth movement (including earthquakes, landslides and
mudflows), wet or dry rot, vermin and domestic animals. Accordingly, a Mortgaged
Property may not be insured for losses arising from any such cause unless the
related Mortgage specifically requires, or permits the holder thereof to
require, such coverage.
The hazard insurance policies covering the Mortgaged Properties will
typically contain co-insurance clauses that in effect require an insured at all
times to carry insurance of a specified percentage (generally 80% to 90%) of the
full replacement value of the improvements on the property in order to recover
the full amount of any partial loss. If the insured's coverage falls below this
specified percentage, such clauses generally provide that the insurer's
liability in the event of partial loss does not exceed the lesser of (1) the
replacement
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cost of the improvements less physical depreciation and (2) such proportion of
the loss as the amount of insurance carried bears to the specified percentage of
the full replacement cost of such improvements.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE PROVISIONS
Certain of the Mortgage Loans may contain a due-on-sale clause that
entitles the lender to accelerate payment of the Mortgage Loan upon any sale or
other transfer of the related Mortgaged Property made without the lender's
consent. Certain of the Mortgage Loans may also contain a due-on-encumbrance
clause that entitles the lender to accelerate the maturity of the Mortgage Loan
upon the creation of any other lien or encumbrance upon the Mortgaged Property.
Unless otherwise provided in the related Prospectus Supplement, the Master
Servicer (or Special Servicer) will determine whether to exercise any right the
Trustee may have under any such provision in a manner consistent with the Master
Servicer's (or Special Servicer's) normal servicing procedures. Unless otherwise
specified in the related Prospectus Supplement, the Master Servicer or Special
Servicer, as applicable, will be entitled to retain as additional servicing
compensation any fee collected in connection with the permitted transfer of a
Mortgaged Property. See "Certain Legal Aspects of Mortgage Loans -- Due-on-Sale
and Due-on-Encumbrance Provisions".
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
Unless otherwise specified in the related Prospectus Supplement, a Master
Servicer's primary servicing compensation with respect to a series of
Certificates will come from the periodic payment to it of a specified portion of
the interest payments on each Mortgage Loan in the related Trust Fund, including
Mortgage Loans serviced by the related Special Servicer. If and to the extent
described in the related Prospectus Supplement, a Special Servicer's primary
compensation with respect to a series of Certificates may consist of any or all
of the following components: (1) a specified portion of the interest payments on
each Mortgage Loan in the related Trust Fund, whether or not serviced by it; (2)
an additional specified portion of the interest payments on each Mortgage Loan
then currently serviced by it; and (3) subject to any specified limitations, a
fixed percentage of some or all of the collections and proceeds received with
respect to each Mortgage Loan which was at any time serviced by it, including
Mortgage Loans for which servicing was returned to the Master Servicer. Insofar
as any portion of the Master Servicer's or Special Servicer's compensation
consists of a specified portion of the interest payments on a Mortgage Loan,
such compensation will generally be based on a percentage of the principal
balance of such Mortgage Loan outstanding from time to time and, accordingly,
will decrease with the amortization of the Mortgage Loan. As additional
compensation, a Master Servicer or Special Servicer may be entitled to retain
all or a portion of late payment charges, Prepayment Premiums, modification fees
and other fees collected from borrowers and any interest or other income that
may be earned on funds held in the related Certificate Account. A more detailed
description of each Master Servicer's and Special Servicer's compensation will
be provided in the related Prospectus Supplement. Any Sub-Servicer will receive
as its sub-servicing compensation a portion of the servicing compensation to be
paid to the Master Servicer or Special Servicer that retained such Sub-Servicer.
In addition to amounts payable to any Sub-Servicer, a Master Servicer or
Special Servicer may be required, to the extent provided in the related
Prospectus Supplement, to pay from amounts that represent its servicing
compensation certain expenses incurred in connection with the administration of
the related Trust Fund, including, without limitation, payment of the fees and
disbursements of independent accountants, payment of fees and disbursements of
the Trustee and any custodians appointed thereby and payment of expenses
incurred in connection with distributions and reports to Certificateholders.
Certain other expenses, including certain expenses related to Mortgage Loan
defaults and liquidations and, to the extent so provided in the related
Prospectus Supplement, interest on such expenses at the rate specified therein,
may be required to be borne by the Trust Fund.
EVIDENCE AS TO COMPLIANCE
Unless otherwise specified in the related Prospectus Supplement, each
Pooling and Servicing Agreement will provide that on or before a specified date
in each year, beginning the first such date that is at least a specified number
of months after the Cut-off Date, there will be furnished to the related Trustee
a report of a
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firm of independent certified public accountants stating that (1) it has
obtained a letter of representation regarding certain matters from the
management of the Master Servicer which includes an assertion that the Master
Servicer has complied with certain minimum mortgage loan servicing standards (to
the extent applicable to commercial and multifamily mortgage loans), identified
in the Uniform Single Attestation Program for Mortgage Bankers established by
the Mortgage Bankers Association of America, with respect to the Master
Servicer's servicing of commercial and multifamily mortgage loans during the
most recently completed calendar year and (2) on the basis of an examination
conducted by such firm in accordance with standards established by the American
Institute of Certified Public Accountants, such representation is fairly stated
in all material respects, subject to such exceptions and other qualifications
that, in the opinion of such firm, such standards require it to report. In
rendering its report such firm may rely, as to the matters relating to the
direct servicing of commercial and multifamily mortgage loans by Sub-Servicers,
upon comparable reports of firms of independent public accountants rendered on
the basis of examinations conducted in accordance with the same standards
(rendered within one year of such report) with respect to those Sub-Servicers.
The Prospectus Supplement may provide that additional reports of independent
certified public accountants relating to the servicing of mortgage loans may be
required to be delivered to the Trustee.
Each Pooling and Servicing Agreement will also provide that, on or before a
specified date in each year, beginning the first such date that is at least a
specified number of months after the Cut-off Date, the Master Servicer and
Special Servicer shall each deliver to the related Trustee an annual statement
signed by one or more officers of the Master Servicer or the Special Servicer,
as the case may be, to the effect that, to the best knowledge of each such
officer, the Master Servicer or the Special Servicer, as the case may be, has
fulfilled in all material respects its obligations under the Pooling and
Servicing Agreement throughout the preceding year or, if there has been a
material default in the fulfillment of any such obligation, such statement shall
specify each such known default and the nature and status thereof. Such
statement may be provided as a single form making the required statements as to
more than one Pooling and Servicing Agreement.
Unless otherwise specified in the related Prospectus Supplement, copies of
the annual accountants' statement and the annual statement of officers of a
Master Servicer or Special Servicer may be obtained by Certificateholders upon
written request to the Trustee.
CERTAIN MATTERS REGARDING THE MASTER SERVICER, THE SPECIAL SERVICER, THE REMIC
ADMINISTRATOR AND THE DEPOSITOR
Any entity serving as Master Servicer, Special Servicer or REMIC
Administrator under a Pooling and Servicing Agreement may be an affiliate of the
Depositor and may have other normal business relationships with the Depositor or
the Depositor's affiliates. Unless otherwise specified in the Prospectus
Supplement for a series of Certificates, the related Pooling and Servicing
Agreement will permit the Master Servicer, the Special Servicer and any REMIC
Administrator to resign from its obligations thereunder only upon a
determination that such obligations 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. No such resignation will become effective until the
Trustee or other successor has assumed the obligations and duties of the
resigning Master Servicer, Special Servicer or REMIC Administrator, as the case
may be, under the Pooling and Servicing Agreement. The Master Servicer and
Special Servicer for each Trust Fund will be required to maintain a fidelity
bond and errors and omissions policy or their equivalent that provides coverage
against losses that may be sustained as a result of an officer's or employee's
misappropriation of funds or errors and omissions, subject to certain
limitations as to amount of coverage, deductible amounts, conditions, exclusions
and exceptions permitted by the related Pooling and Servicing Agreement.
Unless otherwise specified in the related Prospectus Supplement, each
Pooling and Servicing Agreement will further provide that none of the Master
Servicer, the Special Servicer, the REMIC Administrator, the Depositor, any
extension adviser or any director, officer, employee or agent of any of them
will be under any liability to the related Trust Fund or Certificateholders for
any action taken, or not taken, in good faith pursuant to the Pooling and
Servicing Agreement or for errors in judgment; provided, however, that none of
the Master Servicer, the Special Servicer, the REMIC Administrator, the
Depositor, any extension adviser or any such person will be protected against
any liability that would otherwise be imposed by reason of willful
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misfeasance, bad faith or gross negligence in the performance of obligations or
duties thereunder or by reason of reckless disregard of such obligations and
duties. Unless otherwise specified in the related Prospectus Supplement, each
Pooling and Servicing Agreement will further provide that the Master Servicer,
the Special Servicer, the REMIC Administrator, the Depositor, any extension
adviser and any director, officer, employee or agent of any of them will be
entitled to indemnification by the related Trust Fund against any loss,
liability or expense incurred in connection with any legal action that relates
to such Pooling and Servicing Agreement or the related series of Certificates;
provided, however, that such indemnification will not extend to any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
negligence in the performance of obligations or duties under such Pooling and
Servicing Agreement, or by reason of reckless disregard of such obligations or
duties. In addition, each Pooling and Servicing Agreement will provide that none
of the Master Servicer, the Special Servicer, the REMIC Administrator, any
extension adviser or the Depositor will be under any obligation to appear in,
prosecute or defend any legal action that is not incidental to its respective
responsibilities under the Pooling and Servicing Agreement and that in its
opinion may involve it in any expense or liability. However, each of the Master
Servicer, the Special Servicer, the REMIC Administrator, any extension adviser
and the Depositor will be permitted, in the exercise of its discretion, to
undertake any such action that it may deem necessary or desirable with respect
to the enforcement and/or protection of the rights and duties of the parties to
the Pooling and Servicing Agreement and the interests of the related series of
Certificateholders thereunder. In such event, the legal expenses and costs of
such action, and any liability resulting therefrom, will be expenses, costs and
liabilities of the related series of Certificateholders, and the Master
Servicer, the Special Servicer, the REMIC Administrator, any extension adviser
or the Depositor, as the case may be, will be entitled to charge the related
Certificate Account therefor.
Any person into which the Master Servicer, the Special Servicer, the REMIC
Administrator or the Depositor may be merged or consolidated, or any person
resulting from any merger or consolidation to which the Master Servicer, the
Special Servicer, the REMIC Administrator or the Depositor is a party, or any
person succeeding to the business of the Master Servicer, the Special Servicer,
the REMIC Administrator or the Depositor, will be the successor of the Master
Servicer, the Special Servicer, the REMIC Administrator or the Depositor, as the
case may be, under the related Pooling and Servicing Agreement.
Unless otherwise specified in the related Prospectus Supplement, a REMIC
Administrator will be entitled to perform any of its duties under the related
Pooling and Servicing Agreement either directly or by or through agents or
attorneys, and the REMIC Administrator will not be responsible for any willful
misconduct or gross negligence on the part of any such agent or attorney
appointed by it with due care.
EVENTS OF DEFAULT
Unless otherwise provided in the Prospectus Supplement for a series of
Certificates, "Events of Default" under the related Pooling and Servicing
Agreement will include, without limitation,
- any failure by the Master Servicer to distribute or cause to be
distributed to the Certificateholders of such series, or to remit to
the Trustee for distribution to such Certificateholders, any amount
required to be so distributed or remitted, pursuant to, and at the
time specified by, the terms of the Pooling and Servicing Agreement,
- any failure by the Special Servicer to remit to the Master Servicer
or the Trustee, as applicable, any amount required to be so
remitted, pursuant to, and at the time specified by, the terms of
the Pooling and Servicing Agreement;
- any failure by the Master Servicer or the Special Servicer duly to
observe or perform in any material respect any of its other
covenants or obligations under the related Pooling and Servicing
Agreement, which failure continues unremedied for thirty days after
written notice thereof has been given to the Master Servicer or the
Special Servicer, as the case may be, by any other party to the
related Pooling and Servicing Agreement, or to the Master Servicer
or the Special Servicer, as the case may be, with a copy to each
other party to the related Pooling and Servicing Agreement, by
Certificateholders entitled to not less than 25% (or such other
percentage specified in the related Prospectus Supplement) of the
Voting Rights for such series; provided, however,
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that if such covenant or agreement is capable of being cured and the
Master Servicer or Special Servicer, as applicable, is diligently
pursuing such cure, such 30 day period shall be extended, only once,
for an additional 30 days;
- any failure by a REMIC Administrator (if other than the Trustee)
duly to observe or perform in any material respect any of its
covenants or obligations under the related Pooling and Servicing
Agreement, which failure continues unremedied for thirty days after
written notice thereof has been given to the REMIC Administrator by
any other party to the related Pooling and Servicing Agreement, or
to the REMIC Administrator, with a copy to each other party to the
related Pooling and Servicing Agreement, by Certificateholders
entitled to not less than 25% (or such other percentage specified in
the related Prospectus Supplement) of the Voting Rights for such
series; provided, however, that if such covenant or agreement is
capable of being cured and the Master Servicer or Special Servicer,
as applicable, is diligently pursuing such cure, such 30 day period
shall be extended, only once, for an additional 30 days;
- certain events involving a determination by a Rating Agency that the
Master Servicer or the Special Servicer is no longer approved by
such Rating Agency to serve in such capacity; and
- certain events of insolvency, readjustment of debt, marshaling of
assets and liabilities, or similar proceedings in respect of or
relating to the Master Servicer, the Special Servicer or the REMIC
Administrator (if other than the Trustee), and certain actions by or
on behalf of the Master Servicer, the Special Servicer or the REMIC
Administrator (if other than the Trustee) indicating its insolvency
or inability to pay its obligations.
Material variations to the foregoing Events of Default (other than to add
thereto or shorten cure periods or eliminate notice requirements) will be
specified in the related Prospectus Supplement. Unless otherwise specified in
the related Prospectus Supplement, when a single entity acts as Master Servicer,
Special Servicer and REMIC Administrator, or in any two of the foregoing
capacities, for any Trust Fund, an Event of Default in one capacity will (except
where related only to a Rating Agency's evaluation of the acceptability of such
entity to act in a particular capacity) constitute an Event of Default in each
capacity.
RIGHTS UPON EVENT OF DEFAULT
If an Event of Default occurs with respect to the Master Servicer, the
Special Servicer or a REMIC Administrator under a Pooling and Servicing
Agreement, then, in each and every such case, so long as the Event of Default
remains unremedied, the Depositor or the Trustee will be authorized, and at the
direction of Certificateholders of the related series entitled to not less than
51% (or such other percentage specified in the related Prospectus Supplement) of
the Voting Rights for such series, the Trustee will be required, to terminate
all of the rights and obligations of the defaulting party as Master Servicer,
Special Servicer or REMIC Administrator, as applicable, under the Pooling and
Servicing Agreement, whereupon the Trustee will succeed to all of the
responsibilities, duties and liabilities of the defaulting party as Master
Servicer, Special Servicer or REMIC Administrator, as applicable, under the
Pooling and Servicing Agreement (except that if the defaulting party is required
to make advances thereunder regarding delinquent Mortgage Loans, but the Trustee
is prohibited by law from obligating itself to make such advances, or if the
related Prospectus Supplement so specifies, the Trustee will not be obligated to
make such advances) and will be entitled to similar compensation arrangements.
Unless otherwise specified in the related Prospectus Supplement, if the Trustee
is unwilling or unable so to act, it may (or, at the written request of
Certificateholders of the related series entitled to not less than 51% (or such
other percentage specified in the related Prospectus Supplement) of the Voting
Rights for such series, it will be required to) appoint, or petition a court of
competent jurisdiction to appoint, a loan servicing institution or other entity
that (unless otherwise provided in the related Prospectus Supplement) is
acceptable to each applicable Rating Agency to act as successor to the Master
Servicer, Special Servicer or REMIC Administrator, as the case may be, under the
Pooling and Servicing Agreement. Pending such appointment, the Trustee will be
obligated to act in such capacity.
If the same entity is acting as both Trustee and REMIC Administrator, it
may be removed in both such capacities as described under "-- Resignation and
Removal of the Trustee" below.
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No Certificateholder will have any right under a Pooling and Servicing
Agreement to institute any proceeding with respect to such Pooling and Servicing
Agreement unless such holder previously has given to the Trustee written notice
of default and the continuance thereof and unless the holders of Certificates of
any class evidencing not less than 25% of the aggregate Percentage Interests
constituting such class have made written request upon the Trustee to institute
such proceeding in its own name as Trustee thereunder and have offered to the
Trustee reasonable indemnity and the Trustee for sixty days after receipt of
such request and indemnity has neglected or refused to institute any such
proceeding. However, the Trustee will be under no obligation to exercise any of
the trusts or powers vested in it by the Pooling and Servicing Agreement or to
institute, conduct or defend any litigation thereunder or in relation thereto at
the request, order or direction of any of the holders of Certificates covered by
such Pooling and Servicing Agreement, unless such Certificateholders have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby.
AMENDMENT
Except as otherwise specified in the related Prospectus Supplement, each
Pooling and Servicing Agreement may be amended by the parties thereto, without
the consent of any of the holders of Certificates covered by such Pooling and
Servicing Agreement, (1) to cure any ambiguity, (2) to correct or supplement any
provision therein which may be inconsistent with any other provision therein or
to correct any error, (3) to change the timing and/or nature of deposits in the
Certificate Account, provided that (A) such change would not adversely affect in
any material respect the interests of any Certificateholder, as evidenced by an
opinion of counsel, and (B) such change would not result in the withdrawal,
downgrade or qualification of any of the then-current ratings on the
Certificates, as evidenced by a letter from each applicable Rating Agency, (4)
if a REMIC election has been made with respect to the related Trust Fund, to
modify, eliminate or add to any of its provisions (A) to such extent as shall be
necessary to maintain the qualification of the Trust Fund (or any designated
portion thereof) as a REMIC or to avoid or minimize the risk of imposition of
any tax on the related Trust Fund, provided that the Trustee has received an
opinion of counsel to the effect that (1) such action is necessary or desirable
to maintain such qualification or to avoid or minimize such risk, and (2) such
action will not adversely affect in any material respect the interests of any
holder of Certificates covered by the Pooling and Servicing Agreement, or (B) to
restrict the transfer of the REMIC Residual Certificates, provided that the
Depositor has determined that the then-current ratings of the classes of the
Certificates that have been rated will not be withdrawn, downgraded or
qualified, as evidenced by a letter from each applicable Rating Agency, and that
any such amendment will not give rise to any tax with respect to the transfer of
the REMIC Residual Certificates to a non-permitted transferee (See "Certain
Federal Income Tax Consequences -- REMICs -- Tax and Restrictions on Transfers
of REMIC Residual Certificates to Certain Organizations" herein), (5) to make
any other provisions with respect to matters or questions arising under such
Pooling and Servicing Agreement or any other change, provided that such action
will not adversely affect in any material respect the interests of any
Certificateholder, or (6) to amend specified provisions that are not material to
holders of any class of Certificates offered hereunder.
The Pooling and Servicing Agreement may also be amended by the parties
thereto with the consent of the holders of Certificates of each class affected
thereby evidencing, in each case, not less than 66 2/3% (or such other
percentage specified in the related Prospectus Supplement) of the aggregate
Percentage Interests constituting such class for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
such Pooling and Servicing Agreement or of modifying in any manner the rights of
the holders of Certificates covered by such Pooling and Servicing Agreement,
except that no such amendment may (1) reduce in any manner the amount of, or
delay the timing of, payments received on Mortgage Loans which are required to
be distributed on a Certificate of any class without the consent of the holder
of such Certificate or (2) reduce the aforesaid percentage of Certificates of
any class the holders of which are required to consent to any such amendment
without the consent of the holders of all Certificates of such class covered by
such Pooling and Servicing Agreement then outstanding.
Notwithstanding the foregoing, if one or more REMIC elections have been
made with respect to the related Trust Fund, the Trustee will not be required to
consent to any amendment to a Pooling and Servicing
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Agreement without having first received an opinion of counsel to the effect that
such amendment or the exercise of any power granted to the Master Servicer, the
Special Servicer, the Depositor, the Trustee or any other specified person in
accordance with such amendment will not result in the imposition of a tax on the
related Trust Fund or cause such Trust Fund (or any designated portion thereof)
to fail to qualify as a REMIC.
LIST OF CERTIFICATEHOLDERS
Unless otherwise specified in the related Prospectus Supplement, upon
written request of three or more Certificateholders of record made for purposes
of communicating with other holders of Certificates of the same series with
respect to their rights under the related Pooling and Servicing Agreement, the
Trustee or other specified person will afford such Certificateholders access
during normal business hours to the most recent list of Certificateholders of
that series held by such person. If such list is as of a date more than 90 days
prior to the date of receipt of such Certificateholders' request, then such
person, if not the registrar for such series of Certificates, will be required
to request from such registrar a current list and to afford such requesting
Certificateholders access thereto promptly upon receipt.
THE TRUSTEE
The Trustee under each Pooling and Servicing Agreement will be named in the
related Prospectus Supplement. The commercial bank, national banking
association, banking corporation or trust company that serves as Trustee may
have typical banking relationships with the Depositor and its affiliates and
with any Master Servicer, Special Servicer or REMIC Administrator and its
affiliates.
DUTIES OF THE TRUSTEE
The Trustee for each series of Certificates will make no representation as
to the validity or sufficiency of the related Pooling and Servicing Agreement,
such Certificates or any underlying Mortgage Asset or related document and will
not be accountable for the use or application by or on behalf of any Master
Servicer or Special Servicer of any funds paid to the Master Servicer or Special
Servicer in respect of the Certificates or the underlying Mortgage Assets. If no
Event of Default has occurred and is continuing, the Trustee for each series of
Certificates will be required to perform only those duties specifically required
under the related Pooling and Servicing Agreement. However, upon receipt of any
of the various certificates, reports or other instruments required to be
furnished to it pursuant to the related Pooling and Servicing Agreement, a
Trustee will be required to examine such documents and to determine whether they
conform to the requirements of such agreement.
CERTAIN MATTERS REGARDING THE TRUSTEE
As and to the extent described in the related Prospectus Supplement, the
fees and normal disbursements of any Trustee may be the expense of the related
Master Servicer or other specified person or may be required to be borne by the
related Trust Fund.
Unless otherwise specified in the related Prospectus Supplement, the
Trustee for each series of Certificates will be entitled to indemnification,
from amounts held in the Certificate Account for such series, for any loss,
liability or expense incurred by the Trustee in connection with the Trustee's
acceptance or administration of its trusts under the related Pooling and
Servicing Agreement; provided, however, that such indemnification will not
extend to any loss liability or expense incurred by reason of willful
misfeasance, bad faith or gross negligence on the part of the Trustee in the
performance of its obligations and duties thereunder, or by reason of its
reckless disregard of such obligations or duties.
Unless otherwise specified in the related Prospectus Supplement, the
Trustee for each series of Certificates will be entitled to execute any of its
trusts or powers under the related Pooling and Servicing Agreement or perform
any of its duties thereunder either directly or by or through agents or
attorneys, and the Trustee will not be responsible for any willful misconduct or
negligence on the part of any such agent or attorney appointed by it with due
care.
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RESIGNATION AND REMOVAL OF THE TRUSTEE
The Trustee may resign at any time, in which event the Depositor will be
obligated to appoint a successor Trustee. The Depositor may also remove the
Trustee if the Trustee ceases to be eligible to continue as such under the
Pooling and Servicing Agreement or if the Trustee becomes insolvent. Upon
becoming aware of such circumstances, the Depositor will be obligated to appoint
a successor Trustee. The Trustee may also be removed at any time by the holders
of Certificates of the applicable series evidencing not less than 33 1/3% (or
such other percentage specified in the related Prospectus Supplement) of the
Voting Rights for such series. Any resignation or removal of the Trustee and
appointment of a successor Trustee will not become effective until acceptance of
the appointment by the successor Trustee. Notwithstanding anything herein to the
contrary, if any entity is acting as both Trustee and REMIC Administrator, then
any resignation or removal of such entity as the Trustee will also constitute
the resignation or removal of such entity as REMIC Administrator, and the
successor trustee will serve as successor to the REMIC Administrator as well.
DESCRIPTION OF CREDIT SUPPORT
GENERAL
Credit Support may be provided with respect to one or more classes of the
Certificates of any series or with respect to the related Mortgage Assets.
Credit Support may be in the form of a letter of credit, the subordination of
one or more classes of Certificates, the use of a pool insurance policy or
guarantee insurance, the establishment of one or more reserve funds and/or cash
collateral accounts, overcollateralization, or another method of Credit Support
described in the related Prospectus Supplement, or any combination of the
foregoing. If and to the extent so provided in the related Prospectus
Supplement, any of the foregoing forms of Credit Support may provide credit
enhancement for more than one series of Certificates.
Unless otherwise provided in the related Prospectus Supplement for a series
of Certificates, the Credit Support will not provide protection against all
risks of loss and will not guarantee payment to Certificateholders of all
amounts to which they are entitled under the related Pooling and Servicing
Agreement. If losses or shortfalls occur that exceed the amount covered by the
related Credit Support or that are of a type not covered by such Credit Support,
Certificateholders will bear their allocable share of deficiencies. Moreover, if
a form of Credit Support covers the Offered Certificates of more than one series
and losses on the related Mortgage Assets exceed the amount of such Credit
Support, it is possible that the holders of Offered Certificates of one (or
more) such series will be disproportionately benefited by such Credit Support to
the detriment of the holders of Offered Certificates of one (or more) other such
series.
If Credit Support is provided with respect to one or more classes of
Certificates of a series, or with respect to the related Mortgage Assets, the
related Prospectus Supplement will include a description of (1) the nature and
amount of coverage under such Credit Support, (2) any conditions to payment
thereunder not otherwise described herein, (3) the conditions (if any) under
which the amount of coverage under such Credit Support may be reduced and under
which such Credit Support may be terminated or replaced and (4) the material
provisions relating to such Credit Support. Additionally, the related Prospectus
Supplement will set forth certain information with respect to the obligor, if
any, under any instrument of Credit Support. See "Risk Factors -- Credit Support
Limitations".
SUBORDINATE CERTIFICATES
If so specified in the related Prospectus Supplement, one or more classes
of Certificates of a series may be Subordinate Certificates. To the extent
specified in the related Prospectus Supplement, the rights of the holders of
Subordinate Certificates to receive distributions from the Certificate Account
on any Distribution Date will be subordinated to the corresponding rights of the
holders of Senior Certificates. If so provided in the related Prospectus
Supplement, the subordination of a class may apply only in the event of certain
types of losses or shortfalls. The related Prospectus Supplement will set forth
information concerning the method and amount of subordination provided by a
class or classes of Subordinate Certificates in a series and the circumstances
under which such subordination will be available.
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If the Mortgage Assets in any Trust Fund are divided into separate groups,
each supporting a separate class or classes of Certificates of the related
series, Credit Support may be provided by cross-support provisions requiring
that distributions be made on Senior Certificates evidencing interests in one
group of Mortgage Assets prior to distributions on Subordinate Certificates
evidencing interests in a different group of Mortgage Assets within the Trust
Fund. The Prospectus Supplement for a series that includes a cross-support
provision will describe the manner and conditions for applying such provisions.
INSURANCE OR GUARANTEES CONCERNING TO MORTGAGE LOANS
If so provided in the Prospectus Supplement for a series of Certificates,
Mortgage Loans included in the related Trust Fund will be covered for certain
default risks by insurance policies or guarantees. The related Prospectus
Supplement will describe the nature of such default risks and the extent of such
coverage.
LETTER OF CREDIT
If so provided in the Prospectus Supplement for a series of Certificates,
deficiencies in amounts otherwise payable on such Certificates or certain
classes thereof will be covered by one or more letters of credit, issued by a
bank or other financial institution (which may be an affiliate of the Depositor)
specified in such Prospectus Supplement (the "Letter of Credit Bank"). Under a
letter of credit, the Letter of Credit Bank will be obligated to honor draws
thereunder in an aggregate fixed dollar amount, net of unreimbursed payments
thereunder, generally equal to a percentage specified in the related Prospectus
Supplement of the aggregate principal balance of some or all of the related
Mortgage Assets on the related Cut-off Date or of the initial aggregate
Certificate Balance of one or more classes of Certificates. If so specified in
the related Prospectus Supplement, the letter of credit may permit draws only in
the event of certain types of losses and shortfalls. The amount available under
the letter of credit will, in all cases, be reduced to the extent of the
unreimbursed payments thereunder and may otherwise be reduced as described in
the related Prospectus Supplement. The obligations of the Letter of Credit Bank
under the letter of credit for each series of Certificates will expire at the
earlier of the date specified in the related Prospectus Supplement or the
termination of the Trust Fund.
CERTIFICATE INSURANCE AND SURETY BONDS
If so provided in the Prospectus Supplement for a series of Certificates,
deficiencies in amounts otherwise payable on such Certificates or certain
classes thereof will be covered by insurance policies or surety bonds provided
by one or more insurance companies or sureties. Such instruments may cover, with
respect to one or more classes of Certificates of the related series, timely
distributions of interest or distributions of principal on the basis of a
schedule of principal distributions set forth in or determined in the manner
specified in the related Prospectus Supplement. The related Prospectus
Supplement will describe any limitations on the draws that may be made under any
such instrument.
RESERVE FUNDS
If so provided in the Prospectus Supplement for a series of Certificates,
deficiencies in amounts otherwise payable on such Certificates or certain
classes thereof will be covered (to the extent of available funds) by one or
more reserve funds in which cash, a letter of credit, Permitted Investments, a
demand note or a combination thereof will be deposited, in the amounts specified
in such Prospectus Supplement. If so specified in the related Prospectus
Supplement, the reserve fund for a series may also be funded over time by a
specified amount of certain collections received on the related Mortgage Assets.
Amounts on deposit in any reserve fund for a series will be applied for the
purposes, in the manner, and to the extent specified in the related Prospectus
Supplement. If so specified in the related Prospectus Supplement, reserve funds
may be established to provide protection only against certain types of losses
and shortfalls. Following each Distribution Date, amounts in a reserve fund in
excess of any amount required to be maintained therein may be released from the
reserve fund under the conditions and to the extent specified in the related
Prospectus Supplement.
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If so specified in the related Prospectus Supplement, amounts deposited in
any reserve fund will be invested in Permitted Investments. Unless otherwise
specified in the related Prospectus Supplement, any reinvestment income or other
gain from such investments will be credited to the related reserve fund for such
series, and any loss resulting from such investments will be charged to such
reserve fund. However, such income may be payable to any related Master Servicer
or another service provider as additional compensation for its services. The
reserve fund, if any, for a series will not be a part of the Trust Fund unless
otherwise specified in the related Prospectus Supplement.
CASH COLLATERAL ACCOUNT
If so specified in the related Prospectus Supplement, all or any portion of
credit enhancement for a series of Certificates may be provided by the
establishment of a cash collateral account. A cash collateral account will be
similar to a reserve fund except that generally a cash collateral account is
funded initially by a loan from a cash collateral lender, the proceeds of which
are invested with the cash collateral lender or other eligible institution. The
loan from the cash collateral lender will be repaid from such amounts as are
specified in the related Prospectus Supplement. Amounts on deposit in the cash
collateral account will be available in generally the same manner described
above with respect to a reserve fund. As specified in the related Prospectus
Supplement, a cash collateral account may be deemed to be part of the assets of
the related Trust, may be deemed to be part of the assets of a separate cash
collateral trust or may be deemed to be property of the party specified in the
related Prospectus Supplement and pledged for the benefit of the holders of one
or more classes of Certificates of a series.
CREDIT SUPPORT WITH RESPECT TO MBS
If so provided in the Prospectus Supplement for a series of Certificates,
any MBS included in the related Trust Fund and/or the related underlying
mortgage loans may be covered by one or more of the types of Credit Support
described herein. The related Prospectus Supplement will specify, as to each
such form of Credit Support, the information indicated above with respect
thereto, to the extent such information is material and available.
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS
The following discussion contains general summaries of certain legal
aspects of mortgage loans secured by commercial and multifamily residential
properties. Because such legal aspects are governed by applicable state law
(which laws may differ substantially), the summaries do not purport to be
complete, to reflect the laws of any particular state, or to encompass the laws
of all states in which the security for the Mortgage Loans (or mortgage loans
underlying any MBS) is situated. Accordingly, the summaries are qualified in
their entirety by reference to the applicable laws of those states. See
"Description of the Trust Funds -- Mortgage Loans". For purposes of the
following discussion, "Mortgage Loan" includes a mortgage loan underlying an
MBS.
GENERAL
Each Mortgage Loan will be evidenced by a note or bond and secured by an
instrument granting a security interest in real property, which may be a
mortgage, deed of trust or a deed to secure debt, depending upon the prevailing
practice and law in the state in which the related Mortgaged Property is
located. Mortgages, deeds of trust and deeds to secure debt are herein
collectively referred to as "mortgages". A mortgage creates a lien upon, or
grants a title interest in, the real property covered thereby, and represents
the security for the repayment of the indebtedness customarily evidenced by a
promissory note. The priority of the lien created or interest granted will
depend on the terms of the mortgage and, in some cases, on the terms of separate
subordination agreements or intercreditor agreements with others that hold
interests in the real property, the knowledge of the parties to the mortgage
and, generally, the order of recordation of the mortgage in the appropriate
public recording office. However, the lien of a recorded mortgage will generally
be
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subordinate to later-arising liens for real estate taxes and assessments and
other charges imposed under governmental police powers.
TYPES OF MORTGAGE INSTRUMENTS
There are two parties to a mortgage: a mortgagor (the borrower and usually
the owner of the subject property) and a mortgagee (the lender). In contrast, a
deed of trust is a three-party instrument, among a trustor (the equivalent of a
borrower), a trustee to whom the real property is conveyed, and a beneficiary
(the lender) for whose benefit the conveyance is made. Under a deed of trust,
the trustor grants the property, irrevocably until the debt is paid, in trust
and generally with a power of sale, to the trustee to secure repayment of the
indebtedness evidenced by the related note. A deed to secure debt typically has
two parties, pursuant to which the borrower, or grantor, conveys title to the
real property to the grantee, or lender, generally with a power of sale, until
such time as the debt is repaid. In a case where the borrower is a land trust,
there would be an additional party because legal title to the property is held
by a land trustee under a land trust agreement for the benefit of the borrower.
At origination of a mortgage loan involving a land trust, the borrower may
execute a separate undertaking to make payments on the mortgage note. In no
event is the land trustee personally liable for the mortgage note obligation.
The mortgagee's authority under a mortgage, the trustee's authority under a deed
of trust and the grantee's authority under a deed to secure debt are governed by
the express provisions of the related instrument, the law of the state in which
the real property is located, certain federal laws and, in some deed of trust
transactions, the directions of the beneficiary.
LEASES AND RENTS
Mortgages that encumber income-producing property often contain an
assignment of rents and leases and/or may be accompanied by a separate
assignment of rents and leases, pursuant to which the borrower assigns to the
lender the borrower's right, title and interest as landlord under each lease and
the income derived therefrom, while (unless rents are to be paid directly to the
lender) retaining a revocable license to collect the rents for so long as there
is no default. If the borrower defaults, the license terminates and the lender
is entitled to collect the rents. Local law may require that the lender take
possession of the property and/or obtain a court-appointed receiver before
becoming entitled to collect the rents.
In most states, hotel and motel room rates are considered accounts
receivable under the Uniform Commercial Code ("UCC"); in cases where hotels or
motels constitute loan security, the rates are generally pledged by the borrower
as additional security for the loan. In general, the lender must file financing
statements in order to perfect its security interest in the room rates and must
file continuation statements, generally every five years, to maintain perfection
of such security interest. In certain cases, Mortgage Loans secured by hotels or
motels may be included in a Trust Fund even if the security interest in the room
rates was not perfected or the requisite UCC filings were allowed to lapse. Even
if the lender's security interest in room rates is perfected under applicable
nonbankruptcy law, it will generally be required to commence a foreclosure
action or otherwise take possession of the property in order to enforce its
rights to collect the room rates following a default. In the bankruptcy setting,
however, the lender will be stayed from enforcing its rights to collect room
rates, but those room rates (in light of certain revisions to the Bankruptcy
Code which are effective for all bankruptcy cases commenced on or after October
22, 1994) constitute "cash collateral" and therefore cannot be used by the
bankruptcy debtor without lender's consent or a hearing at which the lender's
interest in the room rates is given adequate protection (e.g., the lender
receives cash payments from otherwise unencumbered funds or a replacement lien
on unencumbered property, in either case equal in value to the amount of room
rates that the debtor proposes to use, or other similar relief). See
"-- Bankruptcy Laws".
In the case of office and retail properties, the bankruptcy or insolvency
of a major tenant or a number of smaller tenants may have an adverse impact on
the Mortgaged Properties affected and the income produced by such Mortgaged
Properties. Under bankruptcy law, a tenant has the option of assuming
(continuing), or rejecting (terminating) or, subject to certain conditions,
assigning to a third party any unexpired lease. If the tenant assumes its lease,
the tenant must cure all defaults under the lease and provide the landlord with
adequate assurance of its future performance under the lease. If the tenant
rejects the lease, the landlord's claim for breach of the lease would (absent
collateral securing the claim) be treated as a general unsecured
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claim. The amount of the claim would be limited to the amount owed for unpaid
pre-petition lease payments unrelated to the rejection, plus the greater of one
year's lease payments or 15% of the remaining lease payments payable under the
lease (but not to exceed three years' lease payments). If the tenant assigns its
lease, the tenant must cure all defaults under the lease and the proposed
assignee must demonstrate adequate assurance of future performance under the
lease.
PERSONALTY
In the case of certain types of mortgaged properties, such as hotels,
motels and nursing homes, personal property (to the extent owned by the borrower
and not previously pledged) may constitute a significant portion of the
property's value as security. The creation and enforcement of liens on personal
property are governed by the UCC. Accordingly, if a borrower pledges personal
property as security for a mortgage loan, the lender generally must file UCC
financing statements in order to perfect its security interest therein, and must
file continuation statements, generally every five years, to maintain that
perfection. In certain cases, Mortgage Loans secured in part by personal
property may be included in a Trust Fund even if the security interest in such
personal property was not perfected or the requisite UCC filings were allowed to
lapse.
FORECLOSURE
General. Foreclosure is a legal procedure that allows the lender to
recover its mortgage debt by enforcing its rights and available legal remedies
under the mortgage. If the borrower defaults in payment or performance of its
obligations under the note or mortgage, the lender has the right to institute
foreclosure proceedings to sell the real property at public auction to satisfy
the indebtedness.
Foreclosure procedures vary from state to state. Two primary methods of
foreclosing a mortgage are judicial foreclosure, involving court proceedings,
and nonjudicial foreclosure pursuant to a power of sale granted in the mortgage
instrument. Other foreclosure procedures are available in some states, but they
are either infrequently used or available only in limited circumstances.
A foreclosure action is subject to most of the delays and expenses of other
lawsuits if defenses are raised or counterclaims are interposed, and sometimes
requires several years to complete.
Judicial Foreclosure. A judicial foreclosure proceeding is conducted in a
court having jurisdiction over the mortgaged property. Generally, the action is
initiated by the service of legal pleadings upon all parties having a
subordinate interest of record in the real property and all parties in
possession of the property, under leases or otherwise, whose interests are
subordinate to the mortgage. Delays in completion of the foreclosure may
occasionally result from difficulties in locating defendants. When the lender's
right to foreclose is contested, the legal proceedings can be time-consuming.
Upon successful completion of a judicial foreclosure proceeding, the court
generally issues a judgment of foreclosure and appoints a referee or other
officer to conduct a public sale of the mortgaged property, the proceeds of
which are used to satisfy the judgment. Such sales are made in accordance with
procedures that vary from state to state.
Equitable and Other Limitations on Enforceability of Certain
Provisions. United States courts have traditionally imposed general equitable
principles to limit the remedies available to lenders in foreclosure actions.
These principles are generally designed to relieve borrowers from the effects of
mortgage defaults perceived as harsh or unfair. Relying on such principles, a
court may alter the specific terms of a loan to the extent it considers
necessary to prevent or remedy an injustice, undue oppression or overreaching,
or may require the lender to undertake affirmative actions to determine the
cause of the borrower's default and the likelihood that the borrower will be
able to reinstate the loan. In some cases, courts have substituted their
judgment for the lender's and have required that lenders reinstate loans or
recast payment schedules in order to accommodate borrowers who are suffering
from a temporary financial disability. In other cases, courts have limited the
right of the lender to foreclose in the case of a nonmonetary default, such as a
failure to adequately maintain the mortgaged property or an impermissible
further encumbrance of the mortgaged property. Finally, some courts have
addressed the issue of whether federal or state constitutional provisions
reflecting due process concerns for adequate notice require that a borrower
receive notice in addition to statutorily-prescribed minimum notice. For the
most part, these cases have upheld the reasonableness of the notice provisions
or
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have found that a public sale under a mortgage providing for a power of sale
does not involve sufficient state action to trigger constitutional protections.
In addition, some states may have statutory protection such as the right of
the borrower to reinstate mortgage loans after commencement of foreclosure
proceedings but prior to a foreclosure sale.
Nonjudicial Foreclosure/Power of Sale. In states permitting nonjudicial
foreclosure proceedings, foreclosure of a deed of trust is generally
accomplished by a nonjudicial trustee's sale pursuant to a power of sale
typically granted in the deed of trust. A power of sale may also be contained in
any other type of mortgage instrument if applicable law so permits. A power of
sale under a deed of trust allows a nonjudicial public sale to be conducted
generally following a request from the beneficiary/lender to the trustee to sell
the property upon default by the borrower and after notice of sale is given in
accordance with the terms of the mortgage and applicable state law. In some
states, prior to such sale, the trustee under the deed of trust must record a
notice of default and notice of sale and send a copy to the borrower and to any
other party who has recorded a request for a copy of a notice of default and
notice of sale. In addition, in some states the trustee must provide notice to
any other party having an interest of record in the real property, including
junior lienholders. A notice of sale must be posted in a public place and, in
most states, published for a specified period of time in one or more newspapers.
The borrower or junior lienholder may then have the right, during a
reinstatement period required in some states, to cure the default by paying the
entire actual amount in arrears (without regard to the acceleration of the
indebtedness), plus the lender's expenses incurred in enforcing the obligation.
In other states, the borrower or the junior lienholder is not provided a period
to reinstate the loan, but has only the right to pay off the entire debt to
prevent the foreclosure sale. Generally, state law governs the procedure for
public sale, the parties entitled to notice, the method of giving notice and the
applicable time periods.
Public Sale. A third party may be unwilling to purchase a mortgaged
property at a public sale because of the difficulty in determining the exact
status of title to the property (due to, among other things, redemption rights
that may exist) and because of the possibility that physical deterioration of
the property may have occurred during the foreclosure proceedings. Therefore, it
is common for the lender to purchase the mortgaged property for an amount equal
to the secured indebtedness and accrued and unpaid interest plus the expenses of
foreclosure, in which event the borrower's debt will be extinguished, or for a
lesser amount in order to preserve its right to seek a deficiency judgment if
such is available under state law and under the terms of the Mortgage Loan
documents. (The Mortgage Loans, however, may be nonrecourse. See "Risk
Factors -- Certain Factors Affecting Delinquency, Foreclosure and Loss of the
Mortgage Loans -- Limited Recourse Nature of the Mortgage Loans".) Thereafter,
subject to the borrower's right in some states to remain in possession during a
redemption period, the lender will become the owner of the property and have
both the benefits and burdens of ownership, including the obligation to pay debt
service on any senior mortgages, to pay taxes, to obtain casualty insurance and
to make such repairs as are necessary to render the property suitable for sale.
The costs of operating and maintaining a commercial or multifamily residential
property may be significant and may be greater than the income derived from that
property. The lender also will commonly obtain the services of a real estate
broker and pay the broker's commission in connection with the sale or lease of
the property. Depending upon market conditions, the ultimate proceeds of the
sale of the property may not equal the lender's investment in the property.
Moreover, because of the expenses associated with acquiring, owning and selling
a mortgaged property, a lender could realize an overall loss on a mortgage loan
even if the mortgaged property is sold at foreclosure, or resold after it is
acquired through foreclosure, for an amount equal to the full outstanding
principal amount of the loan plus accrued interest.
The holder of a junior mortgage that forecloses on a mortgaged property
does so subject to senior mortgages and any other prior liens, and may be
obliged to keep senior mortgage loans current in order to avoid foreclosure of
its interest in the property. In addition, if the foreclosure of a junior
mortgage triggers the enforcement of a "due-on-sale" clause contained in a
senior mortgage, the junior mortgagee could be required to pay the full amount
of the senior mortgage indebtedness or face foreclosure.
Rights of Redemption. The purposes of a foreclosure action are to enable
the lender to realize upon its security and to bar the borrower, and all persons
who have interests in the property that are subordinate to that of the
foreclosing lender, from exercise of their "equity of redemption". The doctrine
of equity of redemption
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provides that, until the property encumbered by a mortgage has been sold in
accordance with a properly conducted foreclosure and foreclosure sale, those
having interests that are subordinate to that of the foreclosing lender have an
equity of redemption and may redeem the property by paying the entire debt with
interest. Those having an equity of redemption must generally be made parties
and joined in the foreclosure proceeding in order for their equity of redemption
to be terminated.
The equity of redemption is a common-law (nonstatutory) right which should
be distinguished from post-sale statutory rights of redemption. In some states,
after sale pursuant to a deed of trust or foreclosure of a mortgage, the
borrower and foreclosed junior lienors are given a statutory period in which to
redeem the property. In some states, statutory redemption may occur only upon
payment of the foreclosure sale price. In other states, redemption may be
permitted if the former borrower pays only a portion of the sums due. The effect
of a statutory right of redemption is to diminish the ability of the lender to
sell the foreclosed property because the exercise of a right of redemption would
defeat the title of any purchaser through a foreclosure. Consequently, the
practical effect of the redemption right is to force the lender to maintain the
property and pay the expenses of ownership until the redemption period has
expired. In some states, a post-sale statutory right of redemption may exist
following a judicial foreclosure, but not following a trustee's sale under a
deed of trust.
Anti-Deficiency Legislation. Some or all of the Mortgage Loans may be
nonrecourse loans, as to which recourse in the case of default will be limited
to the Mortgaged Property and such other assets, if any, that were pledged to
secure the Mortgage Loan. However, even if a mortgage loan by its terms provides
for recourse to the borrower's other assets, a lender's ability to realize upon
those assets may be limited by state law. For example, in some states a lender
cannot obtain a deficiency judgment against the borrower following foreclosure
or sale under a deed of trust. A deficiency judgment is a personal judgment
against the former borrower equal to the difference between the net amount
realized upon the public sale of the real property and the amount due to the
lender. Other statutes may require the lender to exhaust the security afforded
under a mortgage before bringing a personal action against the borrower. In
certain other states, the lender has the option of bringing a personal action
against the borrower on the debt without first exhausting such security;
however, in some of those states, the lender, following judgment on such
personal action, may be deemed to have elected a remedy and thus may be
precluded from foreclosing upon the security. Consequently, lenders in those
states where such an election of remedy provision exists will usually proceed
first against the security. Finally, other statutory provisions, designed to
protect borrowers from exposure to large deficiency judgments that might result
from bidding at below-market values at the foreclosure sale, limit any
deficiency judgment to the excess of the outstanding debt over the fair market
value of the property at the time of the sale.
Leasehold Considerations. Mortgage Loans may be secured by a mortgage on
the borrower's leasehold interest in a ground lease. Leasehold mortgage loans
are subject to certain risks not associated with mortgage loans secured by a
lien on the fee estate of the borrower. The most significant of these risks is
that if the borrower's leasehold were to be terminated upon a lease default, the
leasehold mortgagee could lose its security. This risk may be lessened if the
ground lease requires the lessor to give the leasehold mortgagee notices of
lessee defaults and an opportunity to cure them, requires the lessor to grant
the mortgagee a new lease if the existing lease is rejected in a bankruptcy
proceeding, permits the leasehold estate to be assigned to and by the leasehold
mortgagee or the purchaser at a foreclosure sale, and contains certain other
protective provisions typically included in a "mortgageable" ground lease.
Certain Mortgage Loans, however, may be secured by ground leases which do not
contain these provisions.
Cooperative Shares. Mortgage Loans may be secured by a security interest
on the borrower's ownership interest in shares, and the proprietary leases
appurtenant thereto, allocable to cooperative dwelling units that may be vacant
or occupied by nonowner tenants. Such loans are subject to certain risks not
associated with mortgage loans secured by a lien on the fee estate of a borrower
in real property. Such a loan typically is subordinate to the mortgage, if any,
on the Cooperative's building which, if foreclosed, could extinguish the equity
in the building and the proprietary leases of the dwelling units derived from
ownership of the shares of the Cooperative. Further, transfer of shares in a
Cooperative are subject to various regulations as well as to restrictions under
the governing documents of the Cooperative, and the shares may be canceled in
the event that associated maintenance charges due under the related proprietary
leases are not paid. Typically, a
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recognition agreement between the lender and the Cooperative provides, among
other things, the lender with an opportunity to cure a default under a
proprietary lease.
Under the laws applicable in many states, "foreclosure" on Cooperative
shares is accomplished by a sale in accordance with the provisions of Article 9
of the UCC and the security agreement relating to the shares. Article 9 of the
UCC requires that a sale be conducted in a "commercially reasonable" manner,
which may be dependent upon, among other things, the notice given the debtor and
the method, manner, time, place and terms of the sale. Article 9 of the UCC
provides that the proceeds of the sale will be applied first to pay the costs
and expenses of the sale and then to satisfy the indebtedness secured by the
lender's security interest. A recognition agreement, however, generally provides
that the lender's right to reimbursement is subject to the right of the
Cooperative to receive sums due under the proprietary leases.
BANKRUPTCY LAWS
Operation of the Bankruptcy Code and related state laws may interfere with
or affect the ability of a lender to realize upon collateral and/or to enforce a
deficiency judgment. For example, under the Bankruptcy Code, virtually all
actions (including foreclosure actions and deficiency judgment proceedings) to
collect a debt are automatically stayed upon the filing of the bankruptcy
petition and, often, no interest or principal payments are made during the
course of the bankruptcy case. The delay and the consequences thereof caused by
such automatic stay can be significant. Also, under the Bankruptcy Code, the
filing of a petition in bankruptcy by or on behalf of a junior lienor may stay
the senior lender from taking action to foreclose out such junior lien.
Under the Bankruptcy Code, provided certain substantive and procedural
safeguards protective of the lender are met, the amount and terms of a mortgage
loan secured by a lien on property of the debtor may be modified under certain
circumstances. For example, the outstanding amount of the loan may be reduced to
the then-current value of the property (with a corresponding partial reduction
of the amount of lender's security interest) pursuant to a confirmed plan or
lien avoidance proceeding, thus leaving the lender a general unsecured creditor
for the difference between such value and the outstanding balance of the loan.
Other modifications may include the reduction in the amount of each scheduled
payment, by means of a reduction in the rate of interest and/or an alteration of
the repayment schedule (with or without affecting the unpaid principal balance
of the loan), and/or by an extension (or shortening) of the term to maturity.
Some bankruptcy courts have approved plans, based on the particular facts of the
reorganization case, that effected the cure of a mortgage loan default by paying
arrearages over a number of years. Also, a bankruptcy court may permit a debtor,
through its rehabilitative plan, to reinstate a loan mortgage payment schedule
even if the lender has obtained a final judgment of foreclosure prior to the
filing of the debtor's petition.
Federal bankruptcy law may also have the effect of interfering with or
affecting the ability of a secured lender to enforce the borrower's assignment
of rents and leases related to the mortgaged property. Under the Bankruptcy
Code, a lender may be stayed from enforcing the assignment, and the legal
proceedings necessary to resolve the issue could be time-consuming, with
resulting delays in the lender's receipt of the rents. Recent amendments to the
Bankruptcy code, however, may minimize the impairment of the lender's ability to
enforce the borrower's assignment of rents and leases. In addition to the
inclusion of hotel revenues within the definition of "cash collateral" as noted
previously in the section entitled "-- Leases and Rents", the amendments provide
that a pre-petition security interest in rents or hotel revenues extends (unless
the bankruptcy court orders otherwise based on the equities of the case) to such
post-petition rents or revenues and is intended to overrule those cases that
held that a security interest in rents is unperfected under the laws of certain
states until the lender has taken some further action, such as commencing
foreclosure or obtaining a receiver prior to activation of the assignment of
rents.
If a borrower's ability to make payment on a mortgage loan is dependent on
its receipt of rent payments under a lease of the related property, that ability
may be impaired by the commencement of a bankruptcy case relating to a lessee
under such lease. Under the Bankruptcy Code, the filing of a petition in
bankruptcy by or on behalf of a lessee results in a stay in bankruptcy against
the commencement or continuation of any state court proceeding for past due
rent, for accelerated rent, for damages or for a summary eviction order with
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respect to a default under the lease that occurred prior to the filing of the
lessee's petition. In addition, the Bankruptcy Code generally provides that a
trustee or debtor-in-possession may, subject to approval of the court, (1)
assume the lease and retain it or assign it to a third party or (2) reject the
lease. If the lease is assumed, the trustee or debtor-in-possession (or
assignee, if applicable) must cure any defaults under the lease, compensate the
lessor for its losses and provide the lessor with "adequate assurance" of future
performance. Such remedies may be insufficient, and any assurances provided to
the lessor may, in fact, be inadequate. If the lease is rejected, the lessor
will be treated as an unsecured creditor with respect to its claim for damages
for termination of the lease. The Bankruptcy Code also limits a lessor's damages
for lease rejection to the rent reserved by the lease (without regard to
acceleration) for the greater of one year, or 15%, not to exceed three years, of
the remaining term of the lease.
Pursuant to the federal doctrine of "substantive consolidation" or to the
(predominantly state law) doctrine of "piercing the corporate veil", a
bankruptcy court, in the exercise of its equitable powers, also has the
authority to order that the assets and liabilities of a related entity be
consolidated with those of an entity before it. Thus, property ostensibly the
property of one entity may be determined to be the property of a different
entity in bankruptcy, the automatic stay applicable to the second entity
extended to the first and the rights of creditors of the first entity impaired
in the fashion set forth above in the discussion of ordinary bankruptcy
principles. Depending on facts and circumstances not wholly in existence at the
time a loan is originated or transferred to the Trust Fund, the application of
any of these doctrines to one or more of the mortgagors in the context of the
bankruptcy of one or more of their affiliates could result in material
impairment of the rights of the Certificateholders.
For each mortgagor that is described as a "special purpose entity", "single
purpose entity" or bankruptcy remote entity" in the Prospectus Supplement, the
activities that may be conducted by such mortgagor and its ability to incur debt
are restricted by the applicable Mortgage or the organizational documents of
such mortgagor in such manner as is intended to make the likelihood of a
bankruptcy proceeding being commenced by or against such mortgagor remote, and
such mortgagor has been organized and is designed to operate in a manner such
that its separate existence should be respected notwithstanding a bankruptcy
proceeding in respect of one or more affiliated entities of such mortgagor.
However, the Depositor makes no representation as to the likelihood of the
institution of a bankruptcy proceeding by or in respect of any mortgagor or the
likelihood that the separate existence of any mortgagor would be respected if
there were to be a bankruptcy proceeding in respect of any affiliated entity of
a mortgagor.
ENVIRONMENTAL CONSIDERATIONS
General. A lender may be subject to environmental risks when taking a
security interest in real property. Of particular concern may be properties that
are or have been used for industrial, manufacturing, military or disposal
activity. Such environmental risks include the possible diminution of the value
of a contaminated property or, as discussed below, potential liability for
clean-up costs or other remedial actions that could exceed the value of the
property or the amount of the lender's loan. In certain circumstances, a lender
may decide to abandon a contaminated mortgaged property as collateral for its
loan rather than foreclose and risk liability for clean-up costs.
Superlien Laws. Under the laws of many states, contamination on a property
may give rise to a lien on the property for clean-up costs. In several states,
such a lien has priority over all existing liens, including those of existing
mortgages. In these states, the lien of a mortgage may lose its priority to such
a "superlien".
CERCLA. The federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), imposes strict liability on
present and past "owners" and "operators" of contaminated real property for the
costs of clean-up. A secured lender may be liable as an "owner" or "operator" of
a contaminated mortgaged property if agents or employees of the lender have
become sufficiently involved in the management of such mortgaged property or the
operations of the borrower. Such liability may exist even if the lender did not
cause or contribute to the contamination and regardless of whether or not the
lender has actually taken possession of a mortgaged property through
foreclosure, deed in lieu of foreclosure or otherwise. Moreover, such liability
is not limited to the original or unamortized principal
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balance of a loan or to the value of the property securing a loan. Excluded from
CERCLA's definition of "owner" or "operator", however, is a person "who without
participating in the management of the facility, holds indicia of ownership
primarily to protect his security interest". This is the so-called "secured
creditor exemption."
The Asset Conservation, Lender Liability and Deposit Insurance Act of 1996
(the "Act") amended, among other things, the provisions of CERCLA with respect
to lender liability and the secured creditor exemption. The Act offers
substantial protection of lenders by defining the activities in which a lender
can engage and still have the benefit of the secured creditor exemption. In
order for a lender to be deemed to have participated in the management of a
mortgaged property, the lender must actually participate in the operational
affairs of the property of the borrower. The Act provides that "merely having
the capacity to influence, or unexercised right to control" operations does not
constitute participation in management. A lender will lose the protection of the
secured creditor exemption only if it exercises decision making control over the
borrower's environmental compliance and hazardous substance handling and
disposal practices, or assumes day-to-day management of operational functions of
the mortgaged property. The Act also provides that a lender will continue to
have the benefit of the secured-creditor exemption even if it forecloses on a
mortgaged property, purchases it at a foreclosure sale or accepts a deed-in-lieu
of foreclosure provided that the lender seeks to sell the mortgaged property at
the earliest practicable commercially reasonable time on commercially reasonable
terms.
Certain Other Federal and State Laws. Many states have statutes similar to
CERCLA, and not all those statutes provide for a secured creditor exemption. In
addition, under federal law, there is potential liability relating to hazardous
wastes and underground storage tanks under the federal Resource Conservation and
Recovery Act ("RCRA").
In addition, the definition of "hazardous substances" under CERCLA
specifically excludes petroleum products. Subtitle I of RCRA governs underground
petroleum storage tanks. Under the Act, the protections accorded to lenders
under CERCLA are also accorded to the holders of security interests in
underground storage tanks. It should be noted, however, that liability for
cleanup of petroleum contamination may be governed by state law, which may not
provide for any specific protection of secured creditors.
In a few states, transfers of some types of properties are conditioned upon
cleanup of contamination prior to transfer. In these cases, a lender that
becomes the owner of a property through foreclosure, deed in lieu of foreclosure
or otherwise, may be required to clean up the contamination before selling or
otherwise transferring the property.
Beyond statute-based environmental liability, there exist common law causes
of action (for example, actions based on nuisance or on toxic tort resulting in
death, personal injury or damage to property) related to hazardous environmental
conditions on a property. While it may be more difficult to hold a lender liable
in such cases, unanticipated or uninsured liabilities of the borrower may
jeopardize the borrower's ability to meet its loan obligations.
Additional Considerations. The cost of remediating hazardous substance
contamination at a property can be substantial. If a lender becomes liable, it
can bring an action for contribution against the owner or operator who created
the environmental hazard, but that individual or entity may be without
substantial assets. Accordingly, it is possible that such costs could become a
liability of the Trust Fund and occasion a loss to the Certificateholders of the
related series.
To reduce the likelihood of such a loss, unless otherwise specified in the
related Prospectus Supplement, the Pooling and Servicing Agreement will provide
that neither the Master Servicer nor the Special Servicer, acting on behalf of
the Trustee, may acquire title to a Mortgaged Property or take over its
operation unless the Special Servicer, based solely (as to environmental
matters) on a report prepared by a person who regularly conducts environmental
audits, has made the determination that it is appropriate to do so, as described
under "The Pooling and Servicing Agreements -- Realization Upon Defaulted
Mortgage Loans".
If a lender forecloses on a mortgage secured by a property, the operations
on which are subject to environmental laws and regulations, the lender will be
required to operate the property in accordance with
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those laws and regulations. Such compliance may entail substantial expense,
especially in the case of industrial or manufacturing properties.
In addition, a lender may be obligated to disclose environmental conditions
on a property to government entities and/or to prospective buyers (including
prospective buyers at a foreclosure sale or following foreclosure). Such
disclosure may decrease the amount that prospective buyers are willing to pay
for the affected property, sometimes substantially, and thereby decrease the
ability of the lender to recoup its investment in a loan upon foreclosure.
Environmental Site Assessments. In most cases, an environmental site
assessment of each Mortgaged Property will have been performed in connection
with the origination of the related Mortgage Loan or at some time prior to the
issuance of the related Certificates. Environmental site assessments, however,
vary considerably in their content, quality and cost. Even when adhering to good
professional practices, environmental consultants will sometimes not detect
significant environmental problems because to do an exhaustive environmental
assessment would be far too costly and time-consuming to be practical.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE PROVISIONS
Certain of the Mortgage Loans may contain "due-on-sale" and
"due-on-encumbrance" clauses that purport to permit the lender to accelerate the
maturity of the loan if the borrower transfers or encumbers the related
Mortgaged Property. In recent years, court decisions and legislative actions
placed substantial restrictions on the right of lenders to enforce such clauses
in many states. However, the Garn-St Germain Depository Institutions Act of 1982
(the "Garn Act") generally preempts state laws that prohibit the enforcement of
due-on-sale clauses and permits lenders to enforce these clauses in accordance
with their terms, subject to certain limitations as set forth in the Garn Act
and the regulations promulgated thereunder. Accordingly, a Master Servicer may
nevertheless have the right to accelerate the maturity of a Mortgage Loan that
contains a "due-on-sale" provision upon transfer of an interest in the property,
without regard to the Master Servicer's ability to demonstrate that a sale
threatens its legitimate security interest.
JUNIOR LIENS; RIGHTS OF HOLDERS OF SENIOR LIENS
If so provided in the related Prospectus Supplement, Mortgage Assets for a
series of Certificates may include Mortgage Loans secured by junior liens, and
the loans secured by the related Senior Liens may not be included in the
Mortgage Pool. In addition to the risks faced by the holder of a first lien,
holders of Mortgage Loans secured by junior liens also face the risk that
adequate funds will not be received in connection with a foreclosure on the
related Mortgaged Property to satisfy fully both the Senior Liens and the
Mortgage Loan. In the event that a holder of a Senior Lien forecloses on a
Mortgaged Property, the proceeds of the foreclosure or similar sale will be
applied first to the payment of court costs and fees in connection with the
foreclosure, second to real estate taxes, third in satisfaction of all
principal, interest, prepayment or acceleration penalties, if any, and any other
sums due and owing to the holder of the Senior Liens. The claims of the holders
of the Senior Liens will be satisfied in full out of proceeds of the liquidation
of the related Mortgaged Property, if such proceeds are sufficient, before the
Trust Fund as holder of the junior lien receives any payments in respect of the
Mortgage Loan. In the event that such proceeds from a foreclosure or similar
sale of the related Mortgaged Property are insufficient to satisfy all Senior
Liens and the Mortgage Loan in the aggregate, the Trust Fund, as the holder of
the junior lien, and, accordingly, holders of one or more classes of the
Certificates of the related series bear (1) the risk of delay in distributions
while a deficiency judgment against the borrower is obtained and (2) the risk of
loss if the deficiency judgment is not realized upon. Moreover, deficiency
judgments may not be available in certain jurisdictions or the Mortgage Loan may
be nonrecourse.
The rights of the Trust Fund (and therefore the Certificateholders), as
beneficiary under a junior deed of trust or as mortgagee under a junior
mortgage, are subordinate to those of the mortgagee or beneficiary under the
senior mortgage or deed of trust, including the prior rights of the senior
mortgagee or beneficiary to receive rents, hazard insurance and condemnation
proceeds and to cause the property securing the Mortgage Loan to be sold upon
default of the mortgagor or trustor, thereby extinguishing the junior
mortgagee's or junior beneficiary's lien unless the Master Servicer asserts its
subordinate interest in a property in foreclosure
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litigation or satisfies the defaulted senior loan. As discussed more fully
below, in many states a junior mortgagee or beneficiary may satisfy a defaulted
senior loan in full, adding the amounts expended to the balance due on the
junior loan. Absent a provision in the senior mortgage, no notice of default is
required to be given to the junior mortgagee.
The form of the mortgage or deed of trust used by many institutional
lenders confers on the mortgagee or beneficiary the right both to receive all
proceeds collected under any hazard insurance policy and all awards made in
connection with any condemnation proceedings, and to apply such proceeds and
awards to any indebtedness secured by the mortgage or deed of trust, in such
order as the mortgage or beneficiary may determine. Thus, in the event
improvements on the property are damaged or destroyed by fire or other casualty,
or in the event the property is taken by condemnation, the mortgagee or
beneficiary under the senior mortgage or deed of trust will have the prior right
to collect any insurance proceeds payable under a hazard insurance policy and
any award of damages in connection with the condemnation and to apply the same
to the indebtedness secured by the senior mortgage or deed of trust. Proceeds in
excess of the amount of senior mortgage indebtedness will, in most cases, be
applied to the indebtedness of a junior mortgage or trust deed to the extent the
junior mortgage or deed of trust so provides. The laws of certain states may
limit the ability of mortgagees or beneficiaries to apply the proceeds of hazard
insurance and partial condemnation awards to the secured indebtedness. In such
states, the mortgagor or trustor must be allowed to use the proceeds of hazard
insurance to repair the damage unless the security of the mortgagee or
beneficiary has been impaired. Similarly, in certain states, the mortgagee or
beneficiary is entitled to the award for a partial condemnation of the real
property security only to the extent that its security is impaired.
The form of mortgage or deed of trust used by many institutional lenders
typically contains a "future advance" clause, which provides, in essence, that
additional amounts advanced to or on behalf of the mortgagor or trustor by the
mortgagee or beneficiary are to be secured by the mortgage or deed of trust.
While such a clause is valid under the laws of most states, the priority of any
advance made under the clause depends, in some states, on whether the advance
was an "obligatory" or "optional" advance. If the mortgagee or beneficiary is
obligated to advance the additional amounts, the advance may be entitled to
receive the same priority as amounts initially made under the mortgage or deed
of trust, notwithstanding that there may be intervening junior mortgages or
deeds of trust and other liens between the date of recording of the mortgage or
deed of trust and the date of the future advance, and notwithstanding that the
mortgagee or beneficiary had actual knowledge of such intervening junior
mortgages or deeds of trust and other liens at the time of the advance. Where
the mortgagee or beneficiary is not obligated to advance the additional amounts
and has actual knowledge of the intervening junior mortgages or deeds of trust
and other liens, the advance may be subordinate to such intervening junior
mortgages or deeds of trust and other liens. Priority of advances under a
"future advance" clause rests, in many other states, on state law giving
priority to all advances made under the loan agreement up to a "credit limit"
amount stated in the recorded mortgage.
SUBORDINATE FINANCING
The terms of certain of the Mortgage Loans may not restrict the ability of
the borrower to use the Mortgaged Property as security for one or more
additional loans, or such restrictions may be unenforceable. Where a borrower
encumbers a mortgaged property with one or more junior liens, the senior lender
is subjected to additional risk. First, the borrower may have difficulty
servicing and repaying multiple loans. Moreover, if the subordinate financing
permits recourse to the borrower (as is frequently the case) and the senior loan
does not, a borrower may have more incentive to repay sums due on the
subordinate loan. Second, acts of the senior lender that prejudice the junior
lender or impair the junior lender's security may create a superior equity in
favor of the junior lender. For example, if the borrower and the senior lender
agree to an increase in the principal amount of or the interest rate payable on
the senior loan, the senior lender may lose its priority to the extent any
existing junior lender is harmed or the borrower is additionally burdened.
Third, if the borrower defaults on the senior loan and/or any junior loan or
loans, the existence of junior loans and actions taken by junior lenders can
impair the security available to the senior lender and can interfere with or
delay the taking of action by the senior lender. Moreover, the bankruptcy of a
junior lender may operate to stay foreclosure or similar proceedings by the
senior lender.
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DEFAULT INTEREST AND LIMITATIONS ON PREPAYMENTS
Forms of notes and mortgages used by lenders may contain provisions
obligating the mortgagor to pay a late charge or additional interest if payments
are not timely made, and in some circumstances may provide for prepayment fees
or yield maintenance penalties if the obligation is paid prior to maturity or
prohibit such prepayment for a specified period. In certain states, there are or
may be specific limitations upon the late charges which a lender may collect
from a mortgagor for delinquent payments. Certain states also limit the amounts
that a lender may collect from a mortgagor as an additional charge if the loan
is prepaid. The enforceability under the laws of a number of states and the
Bankruptcy Code of provisions providing for prepayment fees of penalties upon,
or prohibition of, an involuntary prepayment is unclear, and no assurance can be
given that, at the time a prepayment premium is required to be made on a
Mortgage Loan in connection with an involuntary prepayment, the obligation to
make such payment, or the provisions of any such prohibition, will be
enforceable under applicable state law. The absence of a restraint on
prepayment, particularly with respect to Mortgage Loans having higher Mortgage
Rates, may increase the likelihood of refinancing or other early retirements of
the Mortgage Loans.
APPLICABILITY OF USURY LAWS
Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980 ("Title V") provides that state usury limitations shall not apply to
certain types of residential (including multifamily) first mortgage loans
originated by certain lenders after March 31, 1980. Title V authorized any state
to reimpose interest rate limits by adopting, before April 1, 1983, a law or
constitutional provision that expressly rejects application of the federal law.
In addition, even where Title V is not so rejected, any state is authorized by
the law to adopt a provision limiting discount points or other charges on
mortgage loans covered by Title V. Certain states have taken action to reimpose
interest rate limits and/or to limit discount points or other charges.
No Mortgage Loan originated in any state in which application of Title V
has been expressly rejected or a provision limiting discount points or other
charges has been adopted, will (if originated after that rejection or adoption)
be eligible for inclusion in a Trust Fund unless (i) such Mortgage Loan provides
for such interest rate, discount points and charges as are permitted in such
state or (ii) such Mortgage Loan provides that the terms thereof are to be
construed in accordance with the laws of another state under which such interest
rate, discount points and charges would not be usurious and the borrower's
counsel has rendered an opinion that such choice of law provision would be given
effect.
CERTAIN LAWS AND REGULATIONS
The Mortgaged Properties will be subject to compliance with various
federal, state and local statutes and regulations. Failure to comply (together
with an inability to remedy any such failure) could result in material
diminution in the value of a Mortgaged Property which could, together with the
possibility of limited alternative uses for a particular Mortgaged Property
(i.e., a nursing or convalescent home or hospital), result in a failure to
realize the full principal amount of the related Mortgage Loan.
AMERICANS WITH DISABILITIES ACT
Under Title III of the Americans with Disabilities Act of 1990 and rules
promulgated thereunder (collectively, the "ADA"), in order to protect
individuals with disabilities, public accommodations (such as hotels,
restaurants, shopping centers, hospitals, schools and social service center
establishments) must remove architectural and communication barriers which are
structural in nature from existing places of public accommodation to the extent
"readily achievable." In addition, under the ADA, alterations to a place of
public accommodation or a commercial facility are to be made so that, to the
maximum extent feasible, such altered portions are readily accessible to and
usable by disabled individuals. The "readily achievable" standard takes into
account, among other factors, the financial resources of the affected site,
owner, landlord or other applicable person. In addition to imposing a possible
financial burden on the borrower in its capacity as owner or landlord, the ADA
may also impose such requirements on a foreclosing lender who succeeds to the
interest
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of the borrower as owner or landlord. Furthermore, since the "readily
achievable" standard may vary depending on the financial condition of the owner
or landlord, a foreclosing lender who is financially more capable than the
borrower of complying with the requirements of the ADA may be subject to more
stringent requirements than those to which the borrower is subject.
SOLDIERS' AND SAILORS' CIVIL RELIEF ACT OF 1940
Under the terms of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended (the "Relief Act"), a borrower who enters military service after the
origination of such borrower's mortgage loan (including a borrower who was in
reserve status and is called to active duty after origination of the Mortgage
Loan), may not be charged interest (including fees and charges) above an annual
rate of 6% during the period of such borrower's active duty status, unless a
court orders otherwise upon application of the lender. The Relief Act applies to
individuals who are members of the Army, Navy, Air Force, Marines, National
Guard, Reserves, Coast Guard and officers of the U.S. Public Health Service
assigned to duty with the military. Because the Relief Act applies to
individuals who enter military service (including reservists who are called to
active duty) after origination of the related mortgage loan, no information can
be provided as to the number of loans with individuals as borrowers that may be
affected by the Relief Act. Application of the Relief Act would adversely
affect, for an indeterminate period of time, the ability of a Master Servicer or
Special Servicer to collect full amounts of interest on certain of the Mortgage
Loans. Any shortfalls in interest collections resulting from the application of
the Relief Act would result in a reduction of the amounts distributable to the
holders of the related series of Certificates, and would not be covered by
advances or, unless otherwise specified in the related Prospectus Supplement,
any form of Credit Support provided in connection with such Certificates. In
addition, the Relief Act imposes limitations that would impair the ability of
the Master Servicer or Special Servicer to foreclose on an affected Mortgage
Loan during the borrower's period of active duty status, and, under certain
circumstances, during an additional three month period thereafter.
FORFEITURES IN DRUG AND RICO PROCEEDINGS
Federal law provides that property owned by persons convicted of
drug-related crimes or of criminal violations of the Racketeer Influenced and
Corrupt Organizations ("RICO") statute can be seized by the government if the
property was used in, or purchased with the proceeds of, such crimes. Under
procedures contained in the comprehensive Crime Control Act of 1984 (the "Crime
Control Act"), the government may seize the property even before conviction. The
government must publish notice of the forfeiture proceeding and may give notice
to all parties "known to have an alleged interest in the property", including
the holders of mortgage loans.
A lender may avoid forfeiture of its interest in the property if it
establishes that: (1) its mortgage was executed and recorded before commission
of the crime upon which the forfeiture is based, or (2) the lender was, at the
time of execution of the mortgage, "reasonably without cause to believe" that
the property was used in, or purchased with the proceeds of, illegal drug or
RICO activities.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following general discussion of the anticipated material federal income
tax consequences of the purchase, ownership and disposition of Offered
Certificates of any series thereof, to the extent it relates to matters of law
or legal conclusions with respect thereto, represents the opinion of counsel to
the Depositor with respect to that series on the material matters associated
with such consequences, subject to any qualifications set forth herein. Counsel
to the Depositor for each series will be Cadwalader, Wickersham & Taft, and a
copy of the legal opinion of such counsel rendered in connection with any series
of Certificates will be filed by the Depositor with the Commission on a Current
Report on Form 8-K within 15 days after the Closing Date for such series of
Certificates. This discussion is directed primarily to Certificateholders that
hold the Certificates as "capital assets" within the meaning of Section 1221 of
the Internal Revenue Code of 1986, as amended (the "Code") (although portions
thereof may also apply to Certificateholders who do not hold Certificates as
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"capital assets") and it does not purport to discuss all federal income tax
consequences that may be applicable to the individual circumstances of
particular investors, some of which (such as banks, insurance companies and
foreign investors) may be subject to special treatment under the Code. Further,
the authorities on which this discussion, and the opinion referred to below, are
based are subject to change or differing interpretations, which could apply
retroactively. Prospective investors should note that no rulings have been or
will be sought from the Internal Revenue Service (the "IRS") with respect to any
of the federal income tax consequences discussed below, and no assurance can be
given the IRS will not take contrary positions. In addition to the federal
income tax consequences described herein, potential investors are advised to
consider the state and local tax consequences, if any, of the purchase,
ownership and disposition of Offered Certificates. See "State and Other Tax
Consequences". Certificateholders are advised to consult their tax advisors
concerning the federal, state, local or other tax consequences to them of the
purchase, ownership and disposition of Offered Certificates.
The following discussion addresses securities of two general types: (1)
certificates ("REMIC Certificates") representing interests in a Trust Fund, or a
portion thereof, that the REMIC Administrator will elect to have treated as a
real estate mortgage investment conduit ("REMIC") under Sections 860A through
860G (the "REMIC Provisions") of the Code, and (2) Grantor Trust Certificates
representing interests in a Trust Fund ("Grantor Trust Fund") as to which no
such election will be made. The Prospectus Supplement for each series of
Certificates will indicate whether a REMIC election (or elections) will be made
for the related Trust Fund and, if such an election is to be made, will identify
all "regular interests" and "residual interests" in the REMIC. For purposes of
this tax discussion, references to a "Certificateholder" or a "holder" are to
the beneficial owner of a Certificate.
The following discussion is limited in applicability to Offered
Certificates. Moreover, this discussion applies only to the extent that Mortgage
Assets held by a Trust Fund consist solely of Mortgage Loans. To the extent that
other Mortgage Assets, including REMIC certificates and mortgage pass-through
certificates, are to be held by a Trust Fund, the tax consequences associated
with the inclusion of such assets will be disclosed in the related Prospectus
Supplement. In addition, if Cash Flow Agreements other than guaranteed
investment contracts are included in a Trust Fund, the anticipated material tax
consequences associated with such Cash Flow Agreements also will be discussed in
the related Prospectus Supplement. See "Description of the Trust Funds -- Cash
Flow Agreements".
Furthermore, the following discussion is based in part upon the rules
governing original issue discount that are set forth in Sections 1271-1273 and
1275 of the Code and in the Treasury regulations issued thereunder (the "OID
Regulations"), and in part upon the REMIC Provisions and the Treasury
regulations issued thereunder (the "REMIC Regulations"). The OID Regulations do
not adequately address certain issues relevant to, and in some instances provide
that they are not applicable to, securities such as the Certificates.
REMICS
Classification of REMICs. Upon the issuance of each series of REMIC
Certificates, counsel to the Depositor will give its opinion generally to the
effect that, assuming compliance with all provisions of the related Pooling and
Servicing Agreement, the related Trust Fund (or each applicable portion thereof)
will qualify as one or more REMICs and the REMIC Certificates offered with
respect thereto will be considered to evidence ownership of REMIC Regular
Certificates or REMIC Residual Certificates in a REMIC within the meaning of the
REMIC Provisions. The following general discussion of the anticipated federal
income tax consequences of the purchase, ownership and disposition of REMIC
Certificates, to the extent it relates to matters of law or legal conclusions
with respect thereto, represents the opinion of counsel to the Depositor for the
applicable series as specified in the related Prospectus Supplement, subject to
any qualifications set forth herein. In addition, counsel to the Depositor have
prepared or reviewed the statements in this Prospectus under the heading
"Certain Federal Income Tax Consequences -- REMICs," and are of the opinion that
such statements are correct in all material respects. Such statements are
intended as an explanatory discussion of the possible effects of the
classification of any Trust Fund (or applicable portion thereof) as one or more
REMICs for federal income tax purposes on investors generally and of related tax
matters affecting investors
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generally, but do not purport to furnish information in the level of detail or
with the attention to an investor's specific tax circumstances that would be
provided by an investor's own tax advisor. Accordingly, each investor is advised
to consult its own tax advisors with regard to the tax consequences to it of
investing in REMIC Certificates.
If an entity electing to be treated as a REMIC fails to comply with one or
more of the ongoing requirements of the Code for such status during any taxable
year, the Code provides that the entity will not be treated as a REMIC for such
year and thereafter. In that event, such entity may be taxable as a corporation
under Treasury regulations, and the related REMIC Certificates may not be
accorded the status or given the tax treatment described below. Although the
Code authorizes the Treasury Department to issue regulations providing relief in
the event of an inadvertent termination of REMIC status, no such regulations
have been issued. Any such relief, moreover, may be accompanied by sanctions,
such as the imposition of a corporate tax on all or a portion of the Trust
Fund's income for the period in which the requirements for such status are not
satisfied. The Pooling and Servicing Agreement with respect to each REMIC will
include provisions designed to maintain the Trust Fund's status as a REMIC under
the REMIC Provisions. It is not anticipated that the status of any Trust Fund as
a REMIC will be inadvertently terminated.
Characterization of Investments in REMIC Certificates. In general, unless
otherwise provided in the related Prospectus Supplement, the REMIC Certificates
will be "real estate assets" within the meaning of Section 856(c)(4)(A) of the
Code and assets described in Section 7701(a)(19)(C) of the Code in the same
proportion that the assets of the REMIC underlying such Certificates would be so
treated. However, to the extent that the REMIC assets constitute mortgages on
property not used for residential or certain other prescribed purposes, the
REMIC Certificates will not be treated as assets qualifying under Section
7701(a)(19)(C). Moreover, if 95% or more of the assets of the REMIC qualify for
any of the foregoing characterizations at all times during a calendar year, the
REMIC Certificates will qualify for the corresponding status in their entirety
for that calendar year. Interest (including original issue discount) on the
REMIC Regular Certificates and income allocated to the REMIC Residual
Certificates will be interest described in Section 856(c)(3)(B) of the Code to
the extent that such Certificates are treated as "real estate assets" within the
meaning of Section 856(c)(4)(A) of the Code. In addition, the REMIC Regular
Certificates will be "qualified mortgages" for a REMIC within the meaning of
Section 860G(a)(3) of the Code and "permitted assets" for a financial asset
securitization investment trust within the meaning of Section 860L(c) of the
Code. The determination as to the percentage of the REMIC's assets that
constitute assets described in the foregoing sections of the Code will be made
with respect to each calendar quarter based on the average adjusted basis of
each category of the assets held by the REMIC during such calendar quarter. The
REMIC Administrator will report those determinations to Certificateholders in
the manner and at the times required by applicable Treasury regulations.
Tiered REMIC Structures. For certain series of REMIC Certificates, two or
more separate elections may be made to treat designated portions of the related
Trust Fund as REMICs ("Tiered REMICs") for federal income tax purposes. As to
each such series of REMIC Certificates, in the opinion of counsel to the
Depositor, assuming compliance with all provisions of the related Pooling and
Servicing Agreement, the Tiered REMICs will each qualify as a REMIC and the
REMIC Certificates issued by the Tiered REMICs, will be considered to evidence
ownership of REMIC Regular Certificates or REMIC Residual Certificates in the
related REMIC within the meaning of the REMIC Provisions.
Solely for purposes of determining whether the REMIC Certificates will be
"real estate assets" within the meaning of Section 856(c)(4)(A) of the Code and
"loans secured by an interest in real property" under Section 7701(a)(19)(C) of
the Code, and whether the income on such Certificates is interest described in
Section 856(c)(3)(B) of the Code, the Tiered REMICs will be treated as one
REMIC.
Taxation of Owners of REMIC Regular Certificates.
General. Except as otherwise stated in this discussion, REMIC Regular
Certificates will be treated for federal income tax purposes as debt instruments
issued by the REMIC and not as ownership interests in the REMIC or its assets.
Moreover, holders of REMIC Regular Certificates that otherwise report income
under a
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cash method of accounting will be required to report income with respect to
REMIC Regular Certificates under an accrual method.
Original Issue Discount. Certain REMIC Regular Certificates may be issued
with "original issue discount" within the meaning of Section 1273(a) of the
Code. Any holders of REMIC Regular Certificates issued with original issue
discount generally will be required to include original issue discount in income
as it accrues, in accordance with the "constant yield" method described below,
in advance of the receipt of the cash attributable to such income. In addition,
Section 1272(a)(6) of the Code provides special rules applicable to REMIC
Regular Certificates and certain other debt instruments issued with original
issue discount. Regulations have not been issued under that section.
The Code requires that a reasonable prepayment assumption be used with
respect to Mortgage Loans held by a REMIC in computing the accrual of original
issue discount on REMIC Regular Certificates issued by that REMIC, and that
adjustments be made in the amount and rate of accrual of such discount to
reflect differences between the actual prepayment rate and the prepayment
assumption. The prepayment assumption is to be determined in a manner prescribed
in Treasury regulations; as noted above, those regulations have not been issued.
The Conference Committee Report accompanying the Tax Reform Act of 1986 (the
"Committee Report") indicates that the regulations will provide that the
prepayment assumption used with respect to a REMIC Regular Certificate must be
the same as that used in pricing the initial offering of such REMIC Regular
Certificate. The prepayment assumption (the "Prepayment Assumption") used in
reporting original issue discount for each series of REMIC Regular Certificates
will be consistent with this standard and will be disclosed in the related
Prospectus Supplement. However, neither the Depositor nor any other person will
make any representation that the Mortgage Loans will in fact prepay at a rate
conforming to the Prepayment Assumption or at any other rate.
The original issue discount, if any, on a REMIC Regular Certificate will be
the excess of its stated redemption price at maturity over its issue price. The
issue price of a particular class of REMIC Regular Certificates will be the
first cash price at which a substantial amount of REMIC Regular Certificates of
that class is sold (excluding sales to bond houses, brokers and underwriters).
If less than a substantial amount of a particular class of REMIC Regular
Certificates is sold for cash on or prior to the date of their initial issuance
(the "Closing Date"), the issue price for such class will be the fair market
value of such class on the Closing Date. Under the OID Regulations, the stated
redemption price of a REMIC Regular Certificate is equal to the total of all
payments to be made on such Certificate other than "qualified stated interest".
"Qualified stated interest" is interest that is unconditionally payable at least
annually (during the entire term of the instrument) at a single fixed rate, or,
as discussed below under "Variable Rate REMIC Regular Certificates," at a
qualified variable rate.
Certain classes of the REMIC Regular Certificates may provide for the first
interest payment with respect to such Certificates to be made more than one
month after the date of issuance, a period which is longer than the subsequent
monthly intervals between interest payments. Assuming the "accrual period" (as
defined below) for original issue discount is each monthly period that ends on
the day prior to a Distribution Date, in some cases, as a consequence of this
"long first accrual period", some or all interest payments may be required to be
included in the stated redemption price of the REMIC Regular Certificate and
accounted for as original issue discount. Because interest on REMIC Regular
Certificates must in any event be accounted for under an accrual method,
applying this analysis would result in only a slight difference in the timing of
the inclusion in income of the yield on the REMIC Regular Certificates.
In addition, if the accrued interest to be paid on the first Distribution
Date is computed with respect to a period that begins prior to the Closing Date,
a portion of the purchase price paid for a REMIC Regular Certificate will
reflect such accrued interest. In such cases, information returns provided to
the Certificateholders and the IRS will be based on the position that the
portion of the purchase price paid for the interest accrued with respect to
periods prior to the Closing Date is treated as part of the overall cost of such
REMIC Regular Certificate (and not as a separate asset the cost of which is
recovered entirely out of interest received on the next Distribution Date) and
that portion of the interest paid on the first Distribution Date in excess of
interest accrued for a number of days corresponding to the number of days from
the Closing Date to the first
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Distribution Date should be included in the stated redemption price of such
REMIC Regular Certificate. However, the OID Regulations state that all or some
portion of such accrued interest may be treated as a separate asset the cost of
which is recovered entirely out of interest paid on the first Distribution Date.
It is unclear how an election to do so would be made under the OID Regulations
and whether such an election could be made unilaterally by a Certificateholder.
Notwithstanding the general definition of original issue discount, original
issue discount on a REMIC Regular Certificate will be considered to be de
minimis if it is less than 0.25% of the stated redemption price of the REMIC
Regular Certificate multiplied by its weighted average maturity. For this
purpose, the weighted average maturity of the REMIC Regular Certificate is
computed as the sum of the amounts determined, as to each payment included in
the stated redemption price of such REMIC Regular Certificate, by multiplying
(i) the number of complete years (rounding down for partial years) from the
issue date until such payment is expected to be made (presumably taking into
account the Prepayment Assumption) by (ii) a fraction, the numerator of which is
the amount of the payment, and the denominator of which is the stated redemption
price at maturity of such REMIC Regular Certificate. Under the OID Regulations,
original issue discount of only a de minimis amount (other than de minimis
original issue discount attributable to a so-called "teaser" interest rate or an
initial interest holiday) will be included in income as each payment of stated
principal is made, based on the product of the total amount of such de minimis
original issue discount and a fraction, the numerator of which is the amount of
such principal payment and the denominator of which is the outstanding stated
principal amount of the REMIC Regular Certificate. The OID Regulations also
would permit a Certificateholder to elect to accrue de minimis original issue
discount into income currently based on a constant yield method. See
"-- Taxation of Owners of REMIC Regular Certificates -- Market Discount" below
for a description of such election under the OID Regulations.
If original issue discount on a REMIC Regular Certificate is in excess of a
de minimis amount, the holder of such Certificate must include in ordinary gross
income the sum of the "daily portions" of original issue discount for each day
during its taxable year on which it held such REMIC Regular Certificate,
including the purchase date but excluding the disposition date. In the case of
an original holder of a REMIC Regular Certificate, the daily portions of
original issue discount will be determined as follows.
As to each "accrual period", that is, unless otherwise stated in the
related Prospectus Supplement, each period that begins on a date that
corresponds to a Distribution Date (or in the case of the first such period,
begins on the Closing Date) and ends on the day preceding the immediately
following Distribution Date, a calculation will be made of the portion of the
original issue discount that accrued during such accrual period. The portion of
original issue discount that accrues in any accrual period will equal the
excess, if any, of (1) the sum of (a) the present value, as of the end of the
accrual period, of all of the distributions remaining to be made on the REMIC
Regular Certificate, if any, in future periods and (b) the distributions made on
such REMIC Regular Certificate during the accrual period of amounts included in
the stated redemption price, over (2) the adjusted issue price of such REMIC
Regular Certificate at the beginning of the accrual period. The present value of
the remaining distributions referred to in the preceding sentence will be
calculated (1) assuming that distributions on the REMIC Regular Certificate will
be received in future periods based on the Mortgage Loans being prepaid at a
rate equal to the Prepayment Assumption, (2) using a discount rate equal to the
original yield to maturity of the Certificate and (3) taking into account events
(including actual prepayments) that have occurred before the close of the
accrual period. For these purposes, the original yield to maturity of the
Certificate will be calculated based on its issue price and assuming that
distributions on the Certificate will be made in all accrual periods based on
the Mortgage Loans being prepaid at a rate equal to the Prepayment Assumption.
The adjusted issue price of a REMIC Regular Certificate at the beginning of any
accrual period will equal the issue price of such Certificate, increased by the
aggregate amount of original issue discount that accrued with respect to such
Certificate in prior accrual periods, and reduced by the amount of any
distributions made on such REMIC Regular Certificate in prior accrual periods of
amounts included in the stated redemption price. The original issue discount
accruing during any accrual period, computed as described above, will be
allocated ratably to each day during the accrual period to determine the daily
portion of original issue discount for such day.
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A subsequent purchaser of a REMIC Regular Certificate that purchases such
Certificate at a cost (excluding any portion of such cost attributable to
accrued qualified stated interest) less than its remaining stated redemption
price will also be required to include in gross income the daily portions of any
original issue discount with respect to such Certificate. However, each such
daily portion will be reduced, if such cost is in excess of its "adjusted issue
price", in proportion to the ratio such excess bears to the aggregate original
issue discount remaining to be accrued on such REMIC Regular Certificate. The
adjusted issue price of a REMIC Regular Certificate on any given day equals the
sum of (1) the adjusted issue price (or, in the case of the first accrual
period, the issue price) of such Certificate at the beginning of the accrual
period which includes such day and (2) the daily portions of original issue
discount for all days during such accrual period prior to such day.
Variable Rate REMIC Regular Certificates. REMIC Regular Certificates may
provide for interest based on a variable rate. Under the OID Regulations,
interest is treated as payable at a variable rate if, generally, (1) the issue
price does not exceed the original principal balance by more than a specified
amount and (2) the interest compounds or is payable at least annually at current
values of (a) one or more "qualified floating rates", (b) a single fixed rate
and one or more qualified floating rates, (c) a single "objective rate", or (d)
a single fixed rate and a single objective rate that is a "qualified inverse
floating rate". A floating rate is a qualified floating rate if variations in
the rate can reasonably be expected to measure contemporaneous variations in the
cost of newly borrowed funds, where the rate is subject to a fixed multiple that
is greater than 0.65, but not more than 1.35. The rate may also be increased or
decreased by a fixed spread or subject to a fixed cap or floor, or a cap or
floor that is not reasonably expected as of the issue date to affect the yield
of the instrument significantly. An objective rate (other than a qualified
floating rate) is a rate that is determined using a single fixed formula and
that is based on objective financial or economic information, provided that the
information is not (1) within the control of the issuer or a related party or
(2) unique to the circumstances of the issuer or a related party. A qualified
inverse floating rate is a rate equal to a fixed rate minus a qualified floating
rate that inversely reflects contemporaneous variations in the cost of newly
borrowed funds; an inverse floating rate that is not a qualified floating rate
may nevertheless be an objective rate. A class of REMIC Regular Certificates may
be issued under this Prospectus that does not have a variable rate under the OID
Regulations, for example, a class that bears different rates at different times
during the period it is outstanding so that it is considered significantly
"front-loaded" or "back-loaded" within the meaning of the OID Regulations. It is
possible that a class of this type may be considered to bear "contingent
interest" within the meaning of the OID Regulations. The OID Regulations, as
they relate to the treatment of contingent interest, are by their terms not
applicable to REMIC Regular Certificates. However, if final regulations dealing
with contingent interest with respect to REMIC Regular Certificates apply the
same principles as the OID Regulations, those regulations may lead to different
timing of income inclusion than would be the case under the OID Regulations.
Furthermore, application of those principles could lead to the characterization
of gain on the sale of contingent interest REMIC Regular Certificates as
ordinary income. Investors should consult their tax advisors regarding the
appropriate treatment of any REMIC Regular Certificate that does not pay
interest at a fixed rate or variable rate as described in this paragraph.
Under the REMIC Regulations, a REMIC Regular Certificate (1) bearing a rate
that qualifies as a variable rate under the OID Regulations that is tied to
current values of a variable rate (or the highest, lowest or average of two or
more variable rates), including a rate based on the average cost of funds of one
or more financial institutions, or a positive or negative multiple of a rate
(plus or minus a specified number of basis points), or that represents a
weighted average of rates on some or all of the mortgage loans, including a rate
that is subject to one or more caps or floors, or (2) bearing one or more of
these variable rates for one or more periods or one or more fixed rates for one
or more periods, and a different variable rate or fixed rate for other periods
qualifies as a regular interest in a REMIC. Accordingly, unless otherwise
indicated in the applicable prospectus supplement, REMIC Regular Certificates
that qualify as regular interests under this rule will be treated in the same
manner as obligations bearing a variable rate for original issue discount
reporting purposes.
The amount of original issue discount with respect to a REMIC Regular
Certificate bearing a variable rate of interest will accrue in the manner
described above under "-- Original Issue Discount" with the yield to maturity
and future payments on that REMIC Regular Certificate generally to be determined
by assuming
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that interest will be payable for the life of the REMIC Regular Certificate
based on the initial rate (or, if different, the value of the applicable
variable rate as of the pricing date) for the relevant class. Unless otherwise
specified in the applicable prospectus supplement, variable interest will be
treated as qualified stated interest, other than variable interest on an
interest-only class, which will be treated as non-qualified stated interest
includible in the stated redemption price at maturity. Ordinary income
reportable for any period will be adjusted based on subsequent changes in the
applicable interest rate index.
Although unclear under the OID Regulations, unless required otherwise by
applicable final regulations, REMIC Regular Certificates bearing an interest
rate that is a weighted average of the net interest rates on mortgage loans
having fixed or adjustable rates, will be treated as having qualified stated
interest, except to the extent that initial "teaser" rates cause sufficiently
"back-loaded" interest to create more than de minimis original issue discount.
The yield on those REMIC Regular Certificates for purposes of accruing original
issue discount will be a hypothetical fixed rate based on the fixed rates, in
the case of fixed rate mortgage loans, and initial "teaser rates" followed by
fully indexed rates, in the case of adjustable rate mortgage loans. In the case
of adjustable rate mortgage loans, the applicable index used to compute interest
on the mortgage loans in effect on the pricing date (or possibly the issue date)
will be deemed to be in effect beginning with the period in which the first
weighted average adjustment date occurring after the issue date occurs.
Adjustments will be made in each accrual period either increasing or decreasing
the amount of ordinary income reportable to reflect the actual pass-through
interest rate on the REMIC Regular Certificates.
Market Discount. A Certificateholder that purchases a REMIC Regular
Certificate at a market discount, that is, in the case of a REMIC Regular
Certificate issued without original issue discount, at a purchase price less
than its remaining stated principal amount, or in the case of a REMIC Regular
Certificate issued with original issue discount, at a purchase price less than
its adjusted issue price will recognize gain upon receipt of each distribution
representing stated redemption price. In particular, under Section 1276 of the
Code such a Certificateholder generally will be required to allocate the portion
of each such distribution representing stated redemption price first to accrued
market discount not previously included in income, and to recognize ordinary
income to that extent. A Certificateholder may elect to include market discount
in income currently as it accrues rather than including it on a deferred basis
in accordance with the foregoing. If made, such election will apply to all
market discount bonds acquired by such Certificateholder on or after the first
day of the first taxable year to which such election applies. In addition, the
OID Regulations permit a Certificateholder to elect to accrue all interest and
discount (including de minimis market or original issue discount) in income as
interest, and to amortize premium, based on a constant yield method. If such an
election were made with respect to a REMIC Regular Certificate with market
discount, the Certificateholder would be deemed to have made an election to
include currently market discount in income with respect to all other debt
instruments having market discount that such Certificateholder acquires during
the taxable year of the election or thereafter, including de minimis market
discount discussed in the following paragraph. Similarly, a Certificateholder
that made this election for a Certificate that is acquired at a premium would be
deemed to have made an election to amortize bond premium with respect to all
debt instruments having amortizable bond premium that such Certificateholder
owns or acquires. See "-- Taxation of Owners of REMIC Regular
Certificates -- Premium" below. Each of these elections to accrue interest,
discount and premium with respect to a Certificate on a constant yield method or
as interest would be irrevocable except with the approval of the IRS.
However, market discount with respect to a REMIC Regular Certificate will
be considered to be de minimis for purposes of Section 1276 of the Code if such
market discount is less than 0.25% of the remaining stated redemption price of
such REMIC Regular Certificate multiplied by the number of complete years to
maturity remaining after the date of its purchase. In interpreting a similar
rule with respect to original issue discount on obligations payable in
installments, the OID Regulations refer to the weighted average maturity of
obligations, and it is likely that the same rule will be applied with respect to
market discount, presumably taking into account the Prepayment Assumption. If
market discount is treated as de minimis under this rule, it appears that the
actual discount would be treated in a manner similar to original issue discount
of a de minimis amount. See "-- Taxation of Owners of REMIC Regular
Certificates -- Original Issue Discount" above. Such treatment would result in
discount being included in income at a slower rate than discount would be
required to be included in income using the method described above.
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Section 1276(b)(3) of the Code specifically authorizes the Treasury
Department to issue regulations providing for the method for accruing market
discount on debt instruments, the principal of which is payable in more than one
installment. Until regulations are issued by the Treasury Department, certain
rules described in the Committee Report apply. The Committee Report indicates
that in each accrual period market discount on REMIC Regular Certificates should
accrue, at the Certificateholder's option: (1) on the basis of a constant yield
method, (2) in the case of a REMIC Regular Certificate issued without original
issue discount, in an amount that bears the same ratio to the total remaining
market discount as the stated interest paid in the accrual period bears to the
total amount of stated interest remaining to be paid on the REMIC Regular
Certificate as of the beginning of the accrual period, or (3) in the case of a
REMIC Regular Certificate issued with original issue discount, in an amount that
bears the same ratio to the total remaining market discount as the original
issue discount accrued in the accrual period bears to the total original issue
discount remaining on the REMIC Regular Certificate at the beginning of the
accrual period. Moreover, the Prepayment Assumption used in calculating the
accrual of original issue discount is also used in calculating the accrual of
market discount. Because the regulations referred to in this paragraph have not
been issued, it is not possible to predict what effect such regulations might
have on the tax treatment of a REMIC Regular Certificate purchased at a discount
in the secondary market.
To the extent that REMIC Regular Certificates provide for monthly or other
periodic distributions throughout their term, the effect of these rules may be
to require market discount to be includible in income at a rate that is not
significantly slower than the rate at which such discount would accrue if it
were original issue discount. Moreover, in any event a holder of a REMIC Regular
Certificate generally will be required to treat a portion of any gain on the
sale or exchange of such Certificate as ordinary income to the extent of the
market discount accrued to the date of disposition under one of the foregoing
methods, less any accrued market discount previously reported as ordinary
income.
Further, under Section 1277 of the Code a holder of a REMIC Regular
Certificate may be required to defer a portion of its interest deductions for
the taxable year attributable to any indebtedness incurred or continued to
purchase or carry a REMIC Regular Certificate purchased with market discount.
For these purposes, the de minimis rule referred to above applies. Any such
deferred interest expense would not exceed the market discount that accrues
during such taxable year and is, in general, allowed as a deduction not later
than the year in which such market discount is includible in income. If such
holder elects to include market discount in income currently as it accrues on
all market discount instruments acquired by such holder in that taxable year or
thereafter, the interest deferral rule described above will not apply.
Premium. A REMIC Regular Certificate purchased at a cost (excluding any
portion of such cost attributable to accrued qualified stated interest) greater
than its remaining stated redemption price will be considered to be purchased at
a premium. The holder of such a REMIC Regular Certificate may elect under
Section 171 of the Code to amortize such premium under the constant yield method
over the life of the Certificate. If made, such an election will apply to all
debt instruments having amortizable bond premium that the holder owns or
subsequently acquires. Amortizable premium will be treated as an offset to
interest income on the related debt instrument, rather than as a separate
interest deduction. The OID Regulations also permit Certificateholders to elect
to include all interest, discount and premium in income based on a constant
yield method, further treating the Certificateholder as having made the election
to amortize premium generally. See "-- Taxation of Owners of REMIC Regular
Certificates -- Market Discount" above. Although final Treasury regulations
issued under Section 171 of the Code do not by their terms apply to prepayable
obligations such as REMIC Regular Certificates, the Committee Report states that
the same rules that apply to accrual of market discount (which rules will
require use of a Prepayment Assumption in accruing market discount with respect
to REMIC Regular Certificates without regard to whether such Certificates have
original issue discount) will also apply in amortizing bond premium.
Realized Losses. Under Section 166 of the Code, both corporate holders of
the REMIC Regular Certificates and noncorporate holders of the REMIC Regular
Certificates that acquire such Certificates in connection with a trade or
business should be allowed to deduct, as ordinary losses, any losses sustained
during a taxable year in which their Certificates become wholly or partially
worthless as the result of one or more realized losses on the Mortgage Loans.
However, it appears that a noncorporate holder that does not acquire a
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REMIC Regular Certificate in connection with a trade or business will not be
entitled to deduct a loss under Section 166 of the Code until such holder's
Certificate becomes wholly worthless (i.e., until its Certificate Balance has
been reduced to zero) and that the loss will be characterized as a short-term
capital loss.
Each holder of a REMIC Regular Certificate will be required to accrue
interest and original issue discount with respect to such Certificate, without
giving effect to any reductions in distributions attributable to defaults or
delinquencies on the Mortgage Loans or the Underlying Certificates until it can
be established that any such reduction ultimately will not be recoverable. As a
result, the amount of taxable income reported in any period by the holder of a
REMIC Regular Certificate could exceed the amount of economic income actually
realized by the holder in such period. Although the holder of a REMIC Regular
Certificate eventually will recognize a loss or reduction in income attributable
to previously accrued and included income that, as the result of a realized
loss, ultimately will not be realized, the law is unclear with respect to the
timing and character of such loss or reduction in income.
Taxation of Owners of REMIC Residual Certificates.
General. Although a REMIC is a separate entity for federal income tax
purposes, a REMIC generally is not subject to entity-level taxation, except with
regard to prohibited transactions and certain other transactions. See
"-- Prohibited Transactions Tax and Other Taxes" below. Rather, the taxable
income or net loss of a REMIC is generally taken into account by the holder of
the REMIC Residual Certificates. Accordingly, the REMIC Residual Certificates
will be subject to tax rules that differ significantly from those that would
apply if the REMIC Residual Certificates were treated for federal income tax
purposes as direct ownership interests in the Mortgage Loans or as debt
instruments issued by the REMIC.
A holder of a REMIC Residual Certificate (a "REMIC Residual
Certificateholder") generally will be required to report its daily portion of
the taxable income or, subject to the limitations noted in this discussion, the
net loss of the REMIC for each day during a calendar quarter that such holder
owned such REMIC Residual Certificate. For this purpose, the taxable income or
net loss of the REMIC will be allocated to each day in the calendar quarter
ratably using a "30 days per month/90 days per quarter/360 days per year"
convention unless otherwise disclosed in the related Prospectus Supplement. The
daily amounts so allocated will then be allocated among the REMIC Residual
Certificateholders in proportion to their respective ownership interests on such
day. Any amount included in the gross income or allowed as a loss of any REMIC
Residual Certificateholder by virtue of this paragraph will be treated as
ordinary income or loss. The taxable income of the REMIC will be determined
under the rules described below in "-- Taxable Income of the REMIC" and will be
taxable to the REMIC Residual Certificateholders without regard to the timing or
amount of cash distributions by the REMIC until the REMIC's termination.
Ordinary income derived from REMIC Residual Certificates will be "portfolio
income" for purposes of the taxation of taxpayers subject to limitations under
Section 469 of the Code on the deductibility of "passive losses".
A holder of a REMIC Residual Certificate that purchased such Certificate
from a prior holder of such Certificate also will be required to report on its
federal income tax return amounts representing its daily share of the taxable
income (or net loss) of the REMIC for each day that it holds such REMIC Residual
Certificate. Those daily amounts generally will equal the amounts of taxable
income or net loss determined as described above. The Committee Report indicates
that certain modifications of the general rules may be made, by regulations,
legislation or otherwise to reduce (or increase) the income of a REMIC Residual
Certificateholder that purchased such REMIC Residual Certificate from a prior
holder of such Certificate at a price greater than (or less than) the adjusted
basis (as defined below) such REMIC Residual Certificate would have had in the
hands of an original holder of such Certificate. The REMIC Regulations, however,
do not provide for any such modifications.
Any payments received by a holder of a REMIC Residual Certificate from the
seller of such Certificate in connection with the acquisition of such REMIC
Residual Certificate will be taken into account in determining the income of
such holder for federal income tax purposes. Although it appears likely that any
such payment would be includible in income immediately upon its receipt, the IRS
might assert that such payment should be included in income over time according
to an amortization schedule or according to some
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other method. Because of the uncertainty concerning the treatment of such
payments, holders of REMIC Residual Certificates should consult their tax
advisors concerning the treatment of such payments for income tax purposes.
The amount of income REMIC Residual Certificateholders will be required to
report (or the tax liability associated with such income) may exceed the amount
of cash distributions received from the REMIC for the corresponding period.
Consequently, REMIC Residual Certificateholders should have other sources of
funds sufficient to pay any federal income taxes due as a result of their
ownership of REMIC Residual Certificates or unrelated deductions against which
income may be offset, subject to the rules relating to "excess inclusions" and
"noneconomic" residual interests discussed below. The fact that the tax
liability associated with the income allocated to REMIC Residual
Certificateholders may exceed the cash distributions received by such REMIC
Residual Certificateholders for the corresponding period may significantly
adversely affect such REMIC Residual Certificateholders' after-tax rate of
return. Such disparity between income and distributions may not be offset by
corresponding losses or reductions of income attributable to the REMIC Residual
Certificateholder until subsequent tax years and, then, may not be completely
offset due to changes in the Code, tax rates or character of the income or loss.
Taxable Income of the REMIC. The taxable income of the REMIC will equal
the income from the Mortgage Loans (including interest, market discount and, if
applicable, original issue discount and less premium) and other assets of the
REMIC plus any cancellation of indebtedness income due to the allocation of
realized losses to REMIC Regular Certificates, less the deductions allowed to
the REMIC for interest (including original issue discount and reduced by any
premium on issuance) on the REMIC Regular Certificates (and any other class of
REMIC Certificates constituting "regular interests" in the REMIC not offered
hereby), amortization of any premium on the Mortgage Loans, bad debt losses with
respect to the Mortgage Loans and, except as described below, for servicing,
administrative and other expenses.
For purposes of determining its taxable income, the REMIC will have an
initial aggregate basis in its assets equal to the sum of the issue prices of
all REMIC Certificates (or, if a class of REMIC Certificates is not sold
initially, such Class's fair market value). Such aggregate basis will be
allocated among the Mortgage Loans and the other assets of the REMIC in
proportion to their respective fair market values. The issue price of any REMIC
Certificates offered hereby will be determined in the manner described above
under "-- Taxation of Owners of REMIC Regular Certificates -- Original Issue
Discount". The issue price of a REMIC Certificate received in exchange for an
interest in the Mortgage Loans or other property will equal the fair market
value of such interests in the Mortgage Loans or other property. Accordingly, if
one or more classes of REMIC Certificates are retained initially rather than
sold, the REMIC Administrator may be required to estimate the fair market value
of such interests in order to determine the basis of the REMIC in the Mortgage
Loans and other property held by the REMIC.
The method of accrual by the REMIC of original issue discount income and
market discount income with respect to Mortgage Loans that it holds will be
equivalent to the method for accruing original issue discount income for holders
of REMIC Regular Certificates (that is, under the constant yield method taking
into account the Prepayment Assumption), but without regard to the de minimis
rule applicable to REMIC Regular Certificates. However, a REMIC that acquires
loans at a market discount must include such market discount in income
currently, as it accrues, on a constant yield basis. See "-- Taxation of Owners
of REMIC Regular Certificates" above, which describes a method for accruing such
discount income that is analogous to that required to be used by a REMIC as to
Mortgage Loans with market discount that it holds.
A Mortgage Loan will be deemed to have been acquired with discount (or
premium) to the extent that the REMIC's basis therein, determined as described
in the preceding paragraph, is less than (or greater than) its stated redemption
price. Any such discount will be includible in the income of the REMIC as it
accrues, in advance of receipt of the cash attributable to such income, under a
method similar to the method described above for accruing original issue
discount on the REMIC Regular Certificates. It is anticipated that each REMIC
will elect under Section 171 of the Code to amortize any premium on the Mortgage
Loans. Premium on any Mortgage Loan to which such election applies may be
amortized under a constant yield method, presumably taking into account a
Prepayment Assumption. Further, such an election would not apply to any
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Mortgage Loan originated on or before September 27, 1985. Instead, premium on
such a Mortgage Loan should be allocated among the principal payments thereon
and be deductible by the REMIC as those payments become due or upon the
prepayment of such Mortgage Loan.
A REMIC will be allowed deductions for interest (including original issue
discount) on the REMIC Regular Certificates (including any other class of REMIC
Certificates constituting "regular interests" in the REMIC not offered hereby)
equal to the deductions that would be allowed if the REMIC Regular Certificates
(including any other class of REMIC Certificates constituting "regular
interests" in the REMIC not offered hereby) were indebtedness of the REMIC.
Original issue discount will be considered to accrue for this purpose as
described above under "-- Taxation of Owners of REMIC Regular
Certificates -- Original Issue Discount", except that the de minimis rule and
the adjustments for subsequent holders of REMIC Regular Certificates (including
any other class of REMIC Certificates constituting "regular interests" in the
REMIC not offered hereby) described therein will not apply.
If a class of REMIC Regular Certificates is issued at a price in excess of
the stated redemption price of such class (such excess "Issue Premium"), the
REMIC will have additional income in each taxable year in an amount equal to the
portion of the Issue Premium that is considered to be amortized or repaid in
that year. Although the matter is not entirely certain, it is likely that Issue
Premium would be amortized under a constant yield method in a manner analogous
to the method of accruing original issue discount described above under
"-- Taxation of Owners of REMIC Regular Certificates -- Original Issue
Discount".
As a general rule, the taxable income of a REMIC will be determined in the
same manner as if the REMIC were an individual having the calendar year as its
taxable year and using the accrual method of accounting. However, no item of
income, gain, loss or deduction allocable to a prohibited transaction will be
taken into account. See "-- Prohibited Transactions Tax and Other Taxes" below.
Further, the limitation on miscellaneous itemized deductions imposed on
individuals by Section 67 of the Code (which allows such deductions only to the
extent they exceed in the aggregate two percent of the taxpayer's adjusted gross
income) will not be applied at the REMIC level so that the REMIC will be allowed
deductions for servicing, administrative and other noninterest expenses in
determining its taxable income. All such expenses will be allocated as a
separate item to the holders of REMIC Certificates, subject to the limitation of
Section 67 of the Code. See "-- Possible Pass-Through of Miscellaneous Itemized
Deductions" below. If the deductions allowed to the REMIC exceed its gross
income for a calendar quarter, such excess will be the net loss for the REMIC
for that calendar quarter.
Basis Rules, Net Losses and Distributions. The adjusted basis of a REMIC
Residual Certificate will be equal to the amount paid for such REMIC Residual
Certificate, increased by amounts included in the income of the REMIC Residual
Certificateholder and decreased (but not below zero) by distributions made, and
by net losses allocated, to such REMIC Residual Certificateholder.
A REMIC Residual Certificateholder is not allowed to take into account any
net loss for any calendar quarter to the extent such net loss exceeds such REMIC
Residual Certificateholder's adjusted basis in its REMIC Residual Certificate as
of the close of such calendar quarter (determined without regard to such net
loss). Any loss that is not currently deductible by reason of this limitation
may be carried forward indefinitely to future calendar quarters and, subject to
the same limitation, may be used only to offset income from the REMIC Residual
Certificate. The ability of REMIC Residual Certificateholders to deduct net
losses may be subject to additional limitations under the Code, as to which
REMIC Residual Certificateholders should consult their tax advisors.
Any distribution on a REMIC Residual Certificate will be treated as a
nontaxable return of capital to the extent it does not exceed the holder's
adjusted basis in such REMIC Residual Certificate. To the extent a distribution
on a REMIC Residual Certificate exceeds such adjusted basis, it will be treated
as gain from the sale of such REMIC Residual Certificate. Holders of certain
REMIC Residual Certificates may be entitled to distributions early in the term
of the related REMIC under circumstances in which their bases in such REMIC
Residual Certificates will not be sufficiently large that such distributions
will be treated as nontaxable returns of capital. Their bases in such REMIC
Residual Certificates will initially equal the amount paid for such REMIC
Residual Certificates and will be increased by their allocable shares of taxable
income of the
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REMIC. However, such bases increases may not occur until the end of the calendar
quarter, or perhaps the end of the calendar year, with respect to which such
REMIC taxable income is allocated to the REMIC Residual Certificateholders. To
the extent such REMIC Residual Certificateholders' initial bases are less than
the distributions to such REMIC Residual Certificateholders, and increases in
such initial bases either occur after such distributions or (together with their
initial bases) are less than the amount of such distributions, gain will be
recognized to such REMIC Residual Certificateholders on such distributions and
will be treated as gain from the sale of their REMIC Residual Certificates.
The effect of these rules is that a REMIC Residual Certificateholder may
not amortize its basis in a REMIC Residual Certificate, but may only recover its
basis through distributions, through the deduction of any net losses of the
REMIC or upon the sale of its REMIC Residual Certificate. See "-- Sales of REMIC
Certificates" below. For a discussion of possible modifications of these rules
that may require adjustments to income of a holder of a REMIC Residual
Certificate other than an original holder in order to reflect any difference
between the cost of such REMIC Residual Certificate to such REMIC Residual
Certificateholder and the adjusted basis such REMIC Residual Certificate would
have in the hands of an original holder see "-- Taxation of Owners of REMIC
Residual Certificates -- General" above.
Excess Inclusions. Any "excess inclusions" with respect to a REMIC
Residual Certificate will be subject to federal income tax in all events. In
general, the "excess inclusions" with respect to a REMIC Residual Certificate
for any calendar quarter will be the excess, if any, of (1) the daily portions
of REMIC taxable income allocable to such REMIC Residual Certificate over (2)
the sum of the "daily accruals" (as defined below) for each day during such
quarter that such REMIC Residual Certificate was held by such REMIC Residual
Certificateholder. The daily accruals of a REMIC Residual Certificateholder will
be determined by allocating to each day during a calendar quarter its ratable
portion of the product of the "adjusted issue price" of the REMIC Residual
Certificate at the beginning of the calendar quarter and 120% of the "long-term
Federal rate" in effect on the Closing Date. For this purpose, the adjusted
issue price of a REMIC Residual Certificate as of the beginning of any calendar
quarter will be equal to the issue price of the REMIC Residual Certificate,
increased by the sum of the daily accruals for all prior quarters and decreased
(but not below zero) by any distributions made with respect to such REMIC
Residual Certificate before the beginning of such quarter. The issue price of a
REMIC Residual Certificate is the initial offering price to the public
(excluding bond houses and brokers) at which a substantial amount of the REMIC
Residual Certificates were sold. The "long-term Federal rate" is an average of
current yields on Treasury securities with a remaining term of greater than nine
years, computed and published monthly by the IRS.
For REMIC Residual Certificateholders, an excess inclusion (1) will not be
permitted to be offset by deductions, losses or loss carryovers from other
activities, (2) will be treated as "unrelated business taxable income" to an
otherwise tax-exempt organization and (3) will not be eligible for any rate
reduction or exemption under any applicable tax treaty with respect to the 30%
United States withholding tax imposed on distributions to REMIC Residual
Certificateholders that are foreign investors. See, however, "-- Foreign
Investors in REMIC Certificates" below.
In the case of any REMIC Residual Certificates held by a real estate
investment trust, the aggregate excess inclusions with respect to such REMIC
Residual Certificates, reduced (but not below zero) by the real estate
investment trust taxable income (within the meaning of Section 857(b)(2) of the
Code, excluding any net capital gain), will be allocated among the shareholders
of such trust in proportion to the dividends received by such shareholders from
such trust, and any amount so allocated will be treated as an excess inclusion
with respect to a REMIC Residual Certificate as if held directly by such
shareholder. Treasury regulations yet to be issued could apply a similar rule to
regulated investment companies, common trust funds and certain cooperatives; the
REMIC Regulations currently do not address this subject.
Noneconomic REMIC Residual Certificates. Under the REMIC Regulations,
transfers of "noneconomic" REMIC Residual Certificates will be disregarded for
all federal income tax purposes if "a significant purpose of the transfer was to
enable the transferor to impede the assessment or collection of tax". If such
transfer is disregarded, the purported transferor will continue to remain liable
for any taxes due with respect to the income on such "noneconomic" REMIC
Residual Certificate. The REMIC Regulations
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provide that a REMIC Residual Certificate is noneconomic unless, based on the
Prepayment Assumption and on any required or permitted clean up calls, or
required liquidation provided for in the REMIC's organizational documents, (1)
the present value of the expected future distributions (discounted using the
"applicable Federal rate" for obligations whose term ends on the close of the
last quarter in which excess inclusions are expected to accrue with respect to
the REMIC Residual Certificate, which rate is computed and published monthly by
the IRS) on the REMIC Residual Certificate equals at least the present value of
the expected tax on the anticipated excess inclusions, and (2) the transferor
reasonably expects that the transferee will receive distributions with respect
to the REMIC Residual Certificate at or after the time the taxes accrue on the
anticipated excess inclusions in an amount sufficient to satisfy the accrued
taxes. Accordingly, all transfers of REMIC Residual Certificates that may
constitute noneconomic residual interests will be subject to certain
restrictions under the terms of the related Pooling and Servicing Agreement that
are intended to reduce the possibility of any such transfer being disregarded.
Such restrictions will require each party to a transfer to provide an affidavit
that no purpose of such transfer is to impede the assessment or collection of
tax, including certain representations as to the financial condition of the
prospective transferee, as to which the transferor is also required to make a
reasonable investigation to determine such transferee's historic payment of its
debts and ability to continue to pay its debts as they come due in the future.
In addition to these conditions for the transferor of a noneconomic residual
interest to be presumed not to have knowledge that the transferee would be
unwilling or unable to pay taxes due on its share of the taxable income of the
REMIC, recently proposed Treasury regulations (the "Proposed Regulations") would
add a third condition for the transferor to be presumed to lack such knowledge.
This third condition would require that the present value of the anticipated tax
liabilities associated with holding the noneconomic residual interest not exceed
the sum of:
(i) the present value of any consideration given to the transferee to
acquire the interest;
(ii) the present value of the expected future distributions on the
interest; and
(iii) the present value of the anticipated tax savings associated with
holding the interest as the REMIC generates losses.
For purposes of the computations under this third condition, the transferee is
assumed to pay tax at the highest rate of tax specified in Section 11(b)(1) of
the Code (currently 35%). Further, present values generally are computed using a
discount rate equal to the applicable federal rate set forth in Section 1274(d)
of the Code compounded semiannually. However, a lower rate may be used if the
transferee can demonstrate that it regularly borrows, in the course of its trade
or business, substantial funds at such lower rate from unrelated third parties.
If adopted, the Proposed Regulations may apply to the transfer of a noneconomic
residual interest made as early as February 4, 2000 and thereafter.
Prior to purchasing a REMIC Residual Certificate, prospective purchasers
should consider the applicability and effect of the Proposed Regulations and
should consider the possibility that a purported transfer of such REMIC Residual
Certificate by such a purchaser to another purchaser at some future date may be
disregarded in accordance with the above-described rules which would result in
the retention of tax liability by such purchaser.
The related Prospectus Supplement will disclose whether offered REMIC
Residual Certificates may be considered "noneconomic" residual interests under
the REMIC Regulations; provided, however, that any disclosure that a REMIC
Residual Certificate will not be considered "noneconomic" will be based upon
certain assumptions, and the Depositor will make no representation that a REMIC
Residual Certificate will not be considered "noneconomic" for purposes of the
above-described rules. See "-- Foreign Investors in REMIC Certificates" below
for additional restrictions applicable to transfers of certain REMIC Residual
Certificates to foreign persons.
Mark-to-Market Rules. On January 4, 1995, the IRS issued final regulations
(the "Mark-to-Market Regulations") relating to the requirement that a securities
dealer mark to market securities held for sale to customers. This mark-to-market
requirement applies to all securities owned by a dealer, except to the extent
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that the dealer has specifically identified a security as held for investment.
The Mark-to-Market Regulations provide that for purposes of this mark-to-market
requirement, any REMIC Residual Certificate acquired on or after January 4, 1995
will not be treated as a security and thus generally may not be marked to
market.
Possible Pass-Through of Miscellaneous Itemized Deductions. Fees and
expenses of a REMIC generally will be allocated to certain types of holders of
the related REMIC Residual Certificates. The applicable Treasury regulations
indicate, however, that in the case of a REMIC that is similar to a single class
grantor trust, all or a portion of such fees and expenses should be allocated to
such types of holders of the related REMIC Regular Certificates. Unless
otherwise stated in the related Prospectus Supplement, such fees and expenses
will be allocated to the related REMIC Residual Certificates in their entirety
and not to the holders of the related REMIC Regular Certificates.
With respect to REMIC Residual Certificates or REMIC Regular Certificates
the holders of which receive an allocation of fees and expenses in accordance
with the preceding discussion, if any holder thereof is an individual, estate or
trust, or a "pass-through entity" beneficially owned by one or more individuals,
estates or trusts, (1) an amount equal to such individual's, estate's or trust's
share of such fees and expenses will be added to the gross income of such holder
and (2) such individual's, estate's or trust's share of such fees and expenses
will be treated as a miscellaneous itemized deduction allowable subject to the
limitation of Section 67 of the Code, which permits such deductions only to the
extent they exceed in the aggregate 2% of a taxpayer's adjusted gross income. In
addition, Section 68 of the Code provides that the amount of itemized deductions
otherwise allowable for an individual whose adjusted gross income exceeds a
specified amount will be reduced by the lesser of (1) 3% of the excess of the
individual's adjusted gross income over such amount or (2) 80% of the amount of
itemized deductions otherwise allowable for the taxable year. The amount of
additional taxable income reportable by REMIC Certificateholders that are
subject to the limitations of either Section 67 or Section 68 of the Code may be
substantial. Furthermore, in determining the alternative minimum taxable income
of such a holder of a REMIC Certificate that is an individual, estate or trust,
or a "pass-through entity" beneficially owned by one or more individuals,
estates or trusts, no deduction will be allowed for such holder's allocable
portion of servicing fees and other miscellaneous itemized deductions of the
REMIC, even though an amount equal to the amount of such fees and other
deductions will be included in such holder's gross income. Accordingly, such
REMIC Certificates may not be appropriate investments for individuals, estates,
or trusts, or pass-through entities beneficially owned by one or more
individuals, estates or trusts. Such prospective investors should consult with
their tax advisors prior to making an investment in such Certificates.
Sales of REMIC Certificates. If a REMIC Certificate is sold, the selling
Certificateholder will recognize gain or loss equal to the difference between
the amount realized on the sale and its adjusted basis in the REMIC Certificate.
The adjusted basis of a REMIC Regular Certificate generally will equal the cost
of such REMIC Regular Certificate to such Certificateholder, increased by income
reported by such Certificateholder with respect to such REMIC Regular
Certificate (including original issue discount and market discount income) and
reduced (but not below zero) by distributions on such REMIC Regular Certificate
received by such Certificateholder and by any amortized premium. The adjusted
basis of a REMIC Residual Certificate will be determined as described above
under "-- Taxation of Owners of REMIC Residual Certificates -- Basis Rules, Net
Losses and Distributions". Except as provided in the following four paragraphs,
any such gain or loss will be capital gain or loss, provided such REMIC
Certificate is held as a capital asset (generally, property held for investment)
within the meaning of Section 1221 of the Code. The Code as of the date of this
Prospectus provides for a top marginal tax rate of 39.6% for individuals and a
maximum marginal rate for long-term capital gains of individuals of 20% for
property held for more than one year. No such rate differential exists for
corporations. In addition, the distinction between a capital gain or loss and
ordinary income or loss remains relevant for other purposes.
Gain from the sale of a REMIC Regular Certificate that might otherwise be a
capital gain will be treated as ordinary income to the extent such gain does not
exceed the excess, if any, of (1) the amount that would have been includible in
the seller's income with respect to such REMIC Regular Certificate assuming that
income had accrued thereon at a rate equal to 110% of the "applicable Federal
rate" (generally, a rate based on an average of current yields on Treasury
securities having a maturity comparable to that of the Certificate
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based on the application of the Prepayment Assumption to such Certificate),
determined as of the date of purchase of such REMIC Regular Certificate, over
(2) the amount of ordinary income actually includible in the seller's income
prior to such sale. In addition, gain recognized on the sale of a REMIC Regular
Certificate by a seller who purchased such REMIC Regular Certificate at a market
discount will be taxable as ordinary income in an amount not exceeding the
portion of such discount that accrued during the period such REMIC Certificate
was held by such holder, reduced by any market discount included in income under
the rules described above under "-- Taxation of Owners of REMIC Regular
Certificates -- Market Discount" and "-- Premium".
REMIC Certificates will be "evidences of indebtedness" within the meaning
of Section 582(c)(1) of the Code, so that gain or loss recognized from the sale
of a REMIC Certificate by a bank or thrift institution to which such section
applies will be ordinary income or loss.
A portion of any gain from the sale of a REMIC Regular Certificate that
might otherwise be capital gain may be treated as ordinary income to the extent
that such Certificate is held as part of a "conversion transaction" within the
meaning of Section 1258 of the Code. A conversion transaction generally is one
in which the taxpayer has taken two or more positions in the same or similar
property that reduce or eliminate market risk, if substantially all of the
taxpayer's return is attributable to the time value of the taxpayer's net
investment in such transaction. The amount of gain so realized in a conversion
transaction that is recharacterized as ordinary income generally will not exceed
the amount of interest that would have accrued on the taxpayer's net investment
at 120% of the appropriate "applicable Federal rate" at the time the taxpayer
enters into the conversion transaction, subject to appropriate reduction for
prior inclusion of interest and other ordinary income items from the
transaction.
Finally, a taxpayer may elect to have net capital gain taxed at ordinary
income rates rather than capital gains rates in order to include such net
capital gain in total net investment income for the taxable year, for purposes
of the rule that limits the deduction of interest on indebtedness incurred to
purchase or carry property held for investment to a taxpayer's net investment
income.
Except as may be provided in Treasury regulations yet to be issued, if the
seller of a REMIC Residual Certificate reacquires such REMIC Residual
Certificate, or acquires any other residual interest in a REMIC or any similar
interest in a "taxable mortgage pool" (as defined in Section 7701(i) of the
Code) during the period beginning six months before, and ending six months
after, the date of such sale, such sale will be subject to the "wash sale" rules
of Section 1091 of the Code. In that event, any loss realized by the REMIC
Residual Certificateholder on the sale will not be deductible, but instead will
be added to such REMIC Residual Certificateholder's adjusted basis in the
newly-acquired asset.
Prohibited Transactions Tax and Other Taxes. The Code imposes a tax on
REMICs equal to 100% of the net income derived from "prohibited transactions" (a
"Prohibited Transactions Tax"). In general, subject to certain specified
exceptions a prohibited transaction means the disposition of a Mortgage Loan,
the receipt of income from a source other than a Mortgage Loan or certain other
permitted investments, the receipt of compensation for services, or gain from
the disposition of an asset purchased with the payments on the Mortgage Loans
for temporary investment pending distribution on the REMIC Certificates. It is
not anticipated that any REMIC will engage in any prohibited transactions in
which it would recognize a material amount of net income.
In addition, certain contributions to a REMIC made after the day on which
the REMIC issues all of its interests could result in the imposition of a tax on
the REMIC equal to 100% of the value of the contributed property (a
"Contributions Tax"). Each Pooling and Servicing Agreement will include
provisions designed to prevent the acceptance of any contributions that would be
subject to such tax.
REMICs also are subject to federal income tax at the highest corporate rate
on "net income from foreclosure property", determined by reference to the rules
applicable to real estate investment trusts. "Net income from foreclosure
property" generally means gain from the sale of a foreclosure property that is
inventory property and gross income from foreclosure property other than
qualifying rents and other qualifying income for a real estate investment trust.
As provided in each Pooling and Servicing Agreement, a REMIC
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may recognize "net income from foreclosure property" subject to federal income
tax to the extent that the REMIC Administrator determines that such method of
operation will result in a greater after-tax return to the Trust Fund than any
other method of operation.
Unless otherwise disclosed in the related Prospectus Supplement, it is not
anticipated that any material state or local income or franchise tax will be
imposed on any REMIC.
Unless otherwise stated in the related Prospectus Supplement, and to the
extent permitted by then applicable laws, any Prohibited Transactions Tax or
Contributions Tax will be borne by the related REMIC Administrator, Master
Servicer, Special Servicer, Manager or Trustee, in any case out of its own
funds, provided that such person has sufficient assets to do so, and provided
further that such tax arises out of a breach of such person's obligations under
the related Pooling and Servicing Agreement and in respect of compliance with
applicable laws and regulations. Any such tax not borne by a REMIC
Administrator, a Master Servicer, Special Servicer, Manager or Trustee will be
charged against the related Trust Fund resulting in a reduction in amounts
payable to holders of the related REMIC Certificates.
Tax and Restrictions on Transfers of REMIC Residual Certificates to Certain
Organizations. If a REMIC Residual Certificate is transferred to a
"disqualified organization" (as defined below), a tax would be imposed in an
amount (determined under the REMIC Regulations) equal to the product of (1) the
present value (discounted using the "applicable Federal rate" for obligations
whose term ends on the close of the last quarter in which excess inclusions are
expected to accrue with respect to the REMIC Residual Certificate) of the total
anticipated excess inclusions with respect to such REMIC Residual Certificate
for periods after the transfer and (2) the highest marginal federal income tax
rate applicable to corporations. The anticipated excess inclusions must be
determined as of the date that the REMIC Residual Certificate is transferred and
must be based on events that have occurred up to the time of such transfer, the
Prepayment Assumption and any required or permitted clean up calls or required
liquidation provided for in the REMIC's organizational documents. Such a tax
generally would be imposed on the transferor of the REMIC Residual Certificate,
except that where such transfer is through an agent for a disqualified
organization, the tax would instead be imposed on such agent. However, a
transferor of a REMIC Residual Certificate would in no event be liable for such
tax with respect to a transfer if the transferee furnishes to the transferor an
affidavit that the transferee is not a disqualified organization and, as of the
time of the transfer, the transferor does not have actual knowledge that such
affidavit is false. Moreover, an entity will not qualify as a REMIC unless there
are reasonable arrangements designed to ensure that (1) residual interests in
such entity are not held by disqualified organizations and (2) information
necessary for the application of the tax described herein will be made
available. Restrictions on the transfer of REMIC Residual Certificates and
certain other provisions that are intended to meet this requirement will be
included in each Pooling and Servicing Agreement, and will be discussed in any
Prospectus Supplement relating to the offering of any REMIC Residual
Certificate.
In addition, if a "pass-through entity" (as defined below) includes in
income excess inclusions with respect to a REMIC Residual Certificate, and a
disqualified organization is the record holder of an interest in such entity,
then a tax will be imposed on such entity equal to the product of (1) the amount
of excess inclusions on the REMIC Residual Certificate that are allocable to the
interest in the pass-through entity held by such disqualified organization and
(2) the highest marginal federal income tax rate imposed on corporations. A
pass-through entity will not be subject to this tax for any period, however, if
each record holder of an interest in such pass-through entity furnishes to such
pass-through entity (1) such holder's social security number and a statement
under penalties of perjury that such social security number is that of the
record holder or (2) a statement under penalties of perjury that such record
holder is not a disqualified organization.
For taxable years beginning on or after January 1, 1998, if an "electing
large partnership" holds a REMIC Residual Certificate, all interests in the
electing large partnership are treated as held by disqualified organizations for
purposes of the tax imposed upon a pass-through entity by Section 860E(c) of the
Code. An exception to this tax, otherwise available to a pass-through entity
that is furnished certain affidavits by record holders of interests in the
entity and that does not know such affidavits are false, is not available to an
electing large partnership.
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For these purposes, a "disqualified organization" means (1) the United
States, any State or political subdivision thereof, any foreign government, any
international organization, or any agency or instrumentality of the foregoing
(but would not include instrumentalities described in Section 168(h)(2)(D) of
the Code or the Federal Home Loan Mortgage Corporation), (2) any organization
(other than a cooperative described in Section 521 of the Code) that is exempt
from federal income tax, unless it is subject to the tax imposed by Section 511
of the Code or (3) any organization described in Section 1381(a)(2)(C) of the
Code. In addition, a "pass-through entity" means any regulated investment
company, real estate investment trust, trust, partnership or certain other
entities described in Section 860E(e)(6) of the Code. In addition, a person
holding an interest in a pass-through entity as a nominee for another person
will, with respect to such interest, be treated as a pass-through entity. For
these purposes, an "electing large partnership" means a partnership (other than
a service partnership or certain commodity pools) having more than 100 members
that has elected to apply certain simplified reporting provisions under the
Code.
Termination. A REMIC will terminate immediately after the Distribution
Date following receipt by the REMIC of the final payment in respect of the
Mortgage Loans or upon a sale of the REMIC's assets following the adoption by
the REMIC of a plan of complete liquidation. The last distribution on a REMIC
Regular Certificate will be treated as a payment in retirement of a debt
instrument. In the case of a REMIC Residual Certificate, if the last
distribution on such REMIC Residual Certificate is less than the REMIC Residual
Certificateholder's adjusted basis in such Certificate, such REMIC Residual
Certificateholder should (but may not) be treated as realizing a loss equal to
the amount of such difference, and such loss may be treated as a capital loss.
Reporting and Other Administrative Matters. Solely for purposes of the
administrative provisions of the Code, the REMIC will be treated as a
partnership and REMIC Residual Certificateholders will be treated as partners.
Unless otherwise stated in the related Prospectus Supplement, the holder of the
largest percentage interest in a class of REMIC Residual Certificates will be
the "tax matters person" with respect to the related REMIC, and the REMIC
Administrator will file REMIC federal income tax returns on behalf of the
related REMIC, and will be designated as and will act as agent of, and
attorney-in-fact for, the tax matters person with respect to the REMIC in all
respects.
As the tax matters person, the REMIC Administrator, subject to certain
notice requirements and various restrictions and limitations, generally will
have the authority to act on behalf of the REMIC and the REMIC Residual
Certificateholders in connection with the administrative and judicial review of
items of income, deduction, gain or loss of the REMIC, as well as the REMIC's
classification. REMIC Residual Certificateholders generally will be required to
report such REMIC items consistently with their treatment on the related REMIC's
tax return and may in some circumstances be bound by a settlement agreement
between the REMIC Administrator, as tax matters person, and the IRS concerning
any such REMIC item. Adjustments made to the REMIC tax return may require a
REMIC Residual Certificateholder to make corresponding adjustments on its
return, and an audit of the REMIC's tax return, or the adjustments resulting
from such an audit, could result in an audit of a REMIC Residual
Certificateholder's return. No REMIC will be registered as a tax shelter
pursuant to Section 6111 of the Code because it is not anticipated that any
REMIC will have a net loss for any of the first five taxable years of its
existence. Any person that holds a REMIC Residual Certificate as a nominee for
another person may be required to furnish to the related REMIC, in a manner to
be provided in Treasury regulations, the name and address of such person and
other information.
Reporting of interest income, including any original issue discount, with
respect to REMIC Regular Certificates is required annually, and may be required
more frequently under Treasury regulations. These information reports generally
are required to be sent to individual holders of REMIC Regular Interests and the
IRS; holders of REMIC Regular Certificates that are corporations, trusts,
securities dealers and certain other nonindividuals will be provided interest
and original issue discount income information and the information set forth in
the following paragraph upon request in accordance with the requirements of the
applicable regulations. The information must be provided by the later of 30 days
after the end of the quarter for which the information was requested, or two
weeks after the receipt of the request. Reporting with respect to REMIC Residual
Certificates, including income, excess inclusions, investment expenses and
relevant
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information regarding qualification of the REMIC's assets will be made as
required under the Treasury regulations, generally on a quarterly basis.
As applicable, the REMIC Regular Certificate information reports will
include a statement of the adjusted issue price of the REMIC Regular Certificate
at the beginning of each accrual period. In addition, the reports will include
information required by regulations with respect to computing the accrual of any
market discount. Because exact computation of the accrual of market discount on
a constant yield method would require information relating to the holder's
purchase price that the REMIC may not have, such regulations only require that
information pertaining to the appropriate proportionate method of accruing
market discount be provided. See "-- Taxation of Owners of REMIC Regular
Certificates -- Market Discount".
Unless otherwise specified in the related Prospectus Supplement, the
responsibility for complying with the foregoing reporting rules will be borne by
the REMIC Administrator.
Backup Withholding with Respect to REMIC Certificates. Payments of
interest and principal, as well as payments of proceeds from the sale of REMIC
Certificates, may be subject to the "backup withholding tax" under Section 3406
of the Code at a rate of 31% if recipients of such payments fail to furnish to
the payor certain information, including their taxpayer identification numbers,
or otherwise fail to establish an exemption from such tax. Any amounts deducted
and withheld from a distribution to a recipient would be allowed as a credit
against such recipient's federal income tax. Furthermore, certain penalties may
be imposed by the IRS on a recipient of payments that is required to supply
information but that does not do so in the proper manner. The New Regulations,
as described below, will change certain of the rules relating to certain
presumptions currently available relating to information reporting and backup
withholding. Non-U.S. Persons are urged to contact their own tax advisors
regarding the application to them of backup withholding and information
reporting.
Foreign Investors in REMIC Certificates. A REMIC Regular Certificateholder
that is not a U.S. Person (as defined below) and is not subject to federal
income tax as a result of any direct or indirect connection to the United States
in addition to its ownership of a REMIC Regular Certificate will not, unless
otherwise disclosed in the related Prospectus Supplement, be subject to United
States federal income or withholding tax in respect of a distribution on a REMIC
Regular Certificate, provided that the holder complies to the extent necessary
with certain identification requirements (including delivery of a statement,
signed by the Certificateholder under penalties of perjury, certifying that such
Certificateholder is not a U.S. Person and providing the name and address of
such Certificateholder). For these purposes, "U.S. Person" means a citizen or
resident of the United States, a corporation, partnership (except to the extent
provided in applicable Treasury regulations) or other entity created or
organized in, or under the laws of, the United States, any state or the District
of Columbia (including any entity treated as a corporation or partnership for
federal income tax purposes) or any political subdivision thereof, an estate the
income of which is subject to United States federal income tax regardless of its
source, or a trust if a court within the United States is able to exercise
primary supervision over the administration of such trust, and one or more such
U.S. Persons have the authority to control all substantial decisions of such
trust (or, to the extent provided in applicable Treasury regulations, certain
trusts in existence on August 20, 1996 which are eligible to elect to be treated
as U.S. Persons). It is possible that the IRS may assert that the foregoing tax
exemption should not apply with respect to a REMIC Regular Certificate held by a
REMIC Residual Certificateholder that owns directly or indirectly a 10% or
greater interest in the REMIC Residual Certificates. If the holder does not
qualify for exemption, distributions of interest, including distributions in
respect of accrued original issue discount, to such holder may be subject to a
tax rate of 30%, subject to reduction under any applicable tax treaty.
In addition, the foregoing rules will not apply to exempt a United States
shareholder of a controlled foreign corporation from taxation on such United
States shareholder's allocable portion of the interest income received by such
controlled foreign corporation.
Further, it appears that a REMIC Regular Certificate would not be included
in the estate of a nonresident alien individual and would not be subject to
United States estate taxes. However, Certificateholders who are nonresident
alien individuals should consult their tax advisors concerning this question.
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The IRS has issued final regulations (the "New Regulations") which would
provide alternative methods of satisfying the beneficial ownership certification
requirement described above. The New Regulations will be effective January 1,
2001. Current withholding certificates remain valid until the earlier of
December 31, 2000 or the due date of expiration of the certificate under the
rules as currently in effect. The New Regulations would require, in the case of
Regular Certificates held by a foreign partnership, that (x) the certification
described above be provided by the partners rather than by the foreign
partnership and (y) the partnership provide certain information, including a
United States taxpayer identification number. A look-through rule would apply in
the case of tiered partnerships. Non-U.S. Persons should consult their own tax
advisors concerning the application of the certification requirements in the New
Regulations.
Unless otherwise stated in the related Prospectus Supplement, transfers of
REMIC Residual Certificates to investors that are not United States Persons will
be prohibited under the related Pooling and Servicing Agreement.
GRANTOR TRUST FUNDS
Classification of Grantor Trust Funds. With respect to each series of
Grantor Trust Certificates, in the opinion of counsel to the Depositor for such
series, assuming compliance with all provisions of the related Pooling and
Servicing Agreement, the related Grantor Trust Fund will be classified as a
grantor trust under subpart E, part I of subchapter J of the Code and not as a
partnership or an association taxable as a corporation. The following general
discussion of the anticipated federal income tax consequences of the purchase,
ownership and disposition of Grantor Trust Certificates, to the extent it
relates to matters of law or legal conclusions with respect thereto, represents
the opinion of counsel to the Depositor for the applicable series as specified
in the related Prospectus Supplement, subject to any qualifications set forth
herein. In addition, counsel to the Depositor have prepared or reviewed the
statements in this Prospectus under the heading "Certain Federal Income Tax
Consequences -- Grantor Trust Funds," and are of the opinion that such
statements are correct in all material respects. Such statements are intended as
an explanatory discussion of the possible effects of the classification of any
Grantor Trust Fund as a grantor trust for federal income tax purposes on
investors generally and of related tax matters affecting investors generally,
but do not purport to furnish information in the level of detail or with the
attention to an investor's specific tax circumstances that would be provided by
an investor's own tax advisor. Accordingly, each investor is advised to consult
its own tax advisors with regard to the tax consequences to it of investing in
Grantor Trust Certificates.
For purposes of the following discussion, a Grantor Trust Certificate
representing an undivided equitable ownership interest in the principal of the
Mortgage Loans constituting the related Grantor Trust Fund, together with
interest thereon at a pass-through rate, will be referred to as a "Grantor Trust
Fractional Interest Certificate". A Grantor Trust Certificate representing
ownership of all or a portion of the difference between interest paid on the
Mortgage Loans constituting the related Grantor Trust Fund (net of normal
administration fees) and interest paid to the holders of Grantor Trust
Fractional Interest Certificates issued with respect to such Grantor Trust Fund
will be referred to as a "Grantor Trust Strip Certificate". A Grantor Trust
Strip Certificate may also evidence a nominal ownership interest in the
principal of the Mortgage Loans constituting the related Grantor Trust Fund.
Characterization of Investments in Grantor Trust Certificates.
Grantor Trust Fractional Interest Certificates. In the case of Grantor
Trust Fractional Interest Certificates, unless otherwise disclosed in the
related Prospectus Supplement, counsel to the Depositor will deliver an opinion
that, in general, Grantor Trust Fractional Interest Certificates will represent
interests in (1) "loans . . . secured by an interest in real property" within
the meaning of Section 7701(a)(19)(C)(v) of the Code; (2) "obligation[s]
(including any participation or Certificate of beneficial ownership therein)
which . . . [are] principally secured by an interest in real property" within
the meaning of Section 860G(a)(3) of the Code; and (3) "real estate assets"
within the meaning of Section 856(c)(4)(A) of the Code. In addition, counsel to
the Depositor will deliver an opinion that interest on Grantor Trust Fractional
Interest Certificates will to the same extent be considered "interest on
obligations secured by mortgages on real property or on interests in real
property" within the meaning of Section 856(c)(3)(B) of the Code.
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Grantor Trust Strip Certificates. Even if Grantor Trust Strip Certificates
evidence an interest in a Grantor Trust Fund consisting of Mortgage Loans that
are "loans . . . secured by an interest in real property" within the meaning of
Section 7701(a)(19)(C)(v) of the Code and "real estate assets" within the
meaning of Section 856(c)(4)(A) of the Code, and the interest on which is
"interest on obligations secured by mortgages on real property" within the
meaning of Section 856(c)(3)(B) of the Code, it is unclear whether the Grantor
Trust Strip Certificates, and the income therefrom, will be so characterized.
However, the policies underlying such sections (namely, to encourage or require
investments in mortgage loans by thrift institutions and real estate investment
trusts) may suggest that such characterization is appropriate. Counsel to the
Depositor will not deliver any opinion on these questions. Prospective
purchasers to which such characterization of an investment in Grantor Trust
Strip Certificates is material should consult their tax advisors regarding
whether the Grantor Trust Strip Certificates, and the income therefrom, will be
so characterized.
The Grantor Trust Strip Certificates will be "obligation[s] (including any
participation or Certificate of beneficial ownership therein) which . . . [are]
principally secured by an interest in real property" within the meaning of
Section 860G(a)(3)(A) of the Code.
Taxation of Owners of Grantor Trust Fractional Interest Certificates.
General. Holders of a particular series of Grantor Trust Fractional
Interest Certificates generally will be required to report on their federal
income tax returns their shares of the entire income from the Mortgage Loans
(including amounts used to pay reasonable servicing fees and other expenses) and
will be entitled to deduct their shares of any such reasonable servicing fees
and other expenses. Because of stripped interests, market or original issue
discount, or premium, the amount includible in income on account of a Grantor
Trust Fractional Interest Certificate may differ significantly from the amount
distributable thereon representing interest on the Mortgage Loans. Under Section
67 of the Code, an individual, estate or trust holding a Grantor Trust
Fractional Interest Certificate directly or through certain pass-through
entities will be allowed a deduction for such reasonable servicing fees and
expenses only to the extent that the aggregate of such holder's miscellaneous
itemized deductions exceeds two percent of such holder's adjusted gross income.
In addition, Section 68 of the Code provides that the amount of itemized
deductions otherwise allowable for an individual whose adjusted gross income
exceeds a specified amount will be reduced by the lesser of (1) 3% of the excess
of the individual's adjusted gross income over such amount or (2) 80% of the
amount of itemized deductions otherwise allowable for the taxable year. The
amount of additional taxable income reportable by holders of Grantor Trust
Fractional Interest Certificates who are subject to the limitations of either
Section 67 or Section 68 of the Code may be substantial. Further,
Certificateholders (other than corporations) subject to the alternative minimum
tax may not deduct miscellaneous itemized deductions in determining such
holder's alternative minimum taxable income. Although it is not entirely clear,
it appears that in transactions in which multiple classes of Grantor Trust
Certificates (including Grantor Trust Strip Certificates) are issued, such fees
and expenses should be allocated among the classes of Grantor Trust Certificates
using a method that recognizes that each such class benefits from the related
services. In the absence of statutory or administrative clarification as to the
method to be used, it currently is intended to base information returns or
reports to the IRS and Certificateholders on a method that allocates such
expenses among classes of Grantor Trust Certificates with respect to each period
based on the distributions made to each such class during that period.
The federal income tax treatment of Grantor Trust Fractional Interest
Certificates of any series will depend on whether they are subject to the
"stripped bond" rules of Section 1286 of the Code. Grantor Trust Fractional
Interest Certificates may be subject to those rules if (1) a class of Grantor
Trust Strip Certificates is issued as part of the same series of Certificates or
(2) the Depositor or any of its affiliates retains (for its own account or for
purposes of resale) a right to receive a specified portion of the interest
payable on a Mortgage Asset. Further, the IRS has ruled that an unreasonably
high servicing fee retained by a seller or servicer will be treated as a
retained ownership interest in mortgages that constitutes a stripped coupon. The
related Prospectus Supplement will include information regarding servicing fees
paid to a Master Servicer, a Special Servicer, any Sub-Servicer or their
respective affiliates.
If Stripped Bond Rules Apply. If the stripped bond rules apply, each
Grantor Trust Fractional Interest Certificate will be treated as having been
issued with "original issue discount" within the meaning of
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Section 1273(a) of the Code, subject, however, to the discussion below regarding
the treatment of certain stripped bonds as market discount bonds and the
discussion regarding de minimis market discount. See "-- Taxation of Owners of
Grantor Trust Fractional Interest Certificates -- Market Discount" below. Under
the stripped bond rules, the holder of a Grantor Trust Fractional Interest
Certificate (whether a cash or accrual method taxpayer) will be required to
report interest income from its Grantor Trust Fractional Interest Certificate
for each month in an amount equal to the income that accrues on such Certificate
in that month calculated under a constant yield method, in accordance with the
rules of the Code relating to original issue discount.
The original issue discount on a Grantor Trust Fractional Interest
Certificate will be the excess of such Certificate's stated redemption price
over its issue price. The issue price of a Grantor Trust Fractional Interest
Certificate as to any purchaser will be equal to the price paid by such
purchaser of the Grantor Trust Fractional Interest Certificate. The stated
redemption price of a Grantor Trust Fractional Interest Certificate will be the
sum of all payments to be made on such Certificate, other than "qualified stated
interest", if any, as well as such Certificate's share of reasonable servicing
fees and other expenses. See "-- Taxation of Owners of Grantor Trust Fractional
Interest Certificates -- If Stripped Bond Rules Do Not Apply" for a definition
of "qualified stated interest". In general, the amount of such income that
accrues in any month would equal the product of such holder's adjusted basis in
such Grantor Trust Fractional Interest Certificate at the beginning of such
month (see "-- Sales of Grantor Trust Certificates" below) and the yield of such
Grantor Trust Fractional Interest Certificate to such holder. Such yield would
be computed as the rate (compounded based on the regular interval between
payment dates) that, if used to discount the holder's share of future payments
on the Mortgage Loans, would cause the present value of those future payments to
equal the price at which the holder purchased such Certificate. In computing
yield under the stripped bond rules, a Certificateholder's share of future
payments on the Mortgage Loans will not include any payments made in respect of
any ownership interest in the Mortgage Loans retained by the Depositor, the
Master Servicer, the Special Servicer, any Sub-Servicer or their respective
affiliates, but will include such Certificateholder's share of any reasonable
servicing fees and other expenses.
Section 1272(a)(6) of the Code requires (1) the use of a reasonable
prepayment assumption in accruing original issue discount and (2) adjustments in
the accrual of original issue discount when prepayments do not conform to the
prepayment assumption, with respect to certain categories of debt instruments,
and regulations could be adopted applying those provisions to the Grantor Trust
Fractional Interest Certificates. It is unclear whether those provisions would
be applicable to the Grantor Trust Fractional Interest Certificates or whether
use of a reasonable prepayment assumption may be required or permitted without
reliance on these rules. It is also uncertain, if a prepayment assumption is
used, whether the assumed prepayment rate would be determined based on
conditions at the time of the first sale of the Grantor Trust Fractional
Interest Certificate or, with respect to any holder, at the time of purchase of
the Grantor Trust Fractional Interest Certificate by that holder.
Certificateholders are advised to consult their tax advisors concerning
reporting original issue discount in general and, in particular, whether a
prepayment assumption should be used in reporting original issue discount with
respect to Grantor Trust Fractional Interest Certificates.
In the case of a Grantor Trust Fractional Interest Certificate acquired at
a price equal to the principal amount of the Mortgage Loans allocable to such
Certificate, the use of a prepayment assumption generally would not have any
significant effect on the yield used in calculating accruals of interest income.
In the case, however, of a Grantor Trust Fractional Interest Certificate
acquired at a discount or premium (that is, at a price less than or greater than
such principal amount, respectively), the use of a reasonable prepayment
assumption would increase or decrease such yield, and thus accelerate or
decelerate, respectively, the reporting of income.
If a prepayment assumption is not used, then when a Mortgage Loan prepays
in full, the holder of a Grantor Trust Fractional Interest Certificate acquired
at a discount or a premium generally will recognize ordinary income or loss
equal to the difference between the portion of the prepaid principal amount of
the Mortgage Loan that is allocable to such Certificate and the portion of the
adjusted basis of such Certificate that is allocable to such Certificateholder's
interest in the Mortgage Loan. If a prepayment assumption is used, it appears
that no separate item of income or loss should be recognized upon a prepayment.
Instead, a
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prepayment should be treated as a partial payment of the stated redemption price
of the Grantor Trust Fractional Interest Certificate and accounted for under a
method similar to that described for taking account of original issue discount
on REMIC Regular Certificates. See "-- REMICs -- Taxation of Owners of REMIC
Regular Certificates -- Original Issue Discount" above. It is unclear whether
any other adjustments would be required to reflect differences between an
assumed prepayment rate and the actual rate of prepayments.
In the absence of statutory or administrative clarification, it is
currently intended to base information reports or returns to the IRS and
Certificateholders in transactions subject to the stripped bond rules on a
Prepayment Assumption that will be disclosed in the related Prospectus
Supplement and on a constant yield computed using a representative initial
offering price for each class of Certificates. However, neither the Depositor
nor any other person will make any representation that the Mortgage Loans will
in fact prepay at a rate conforming to such Prepayment Assumption or any other
rate and Certificateholders should bear in mind that the use of a representative
initial offering price will mean that such information returns or reports, even
if otherwise accepted as accurate by the IRS, will in any event be accurate only
as to the initial Certificateholders of each series who bought at that price.
Under Treasury regulations Section 1.1286-1, certain stripped bonds are to
be treated as market discount bonds and, accordingly, any purchaser of such a
bond is to account for any discount on the bond as market discount rather than
original issue discount. This treatment only applies, however, if immediately
after the most recent disposition of the bond by a person stripping one or more
coupons from the bond and disposing of the bond or coupon (1) there is no
original issue discount (or only a de minimis amount of original issue discount)
or (2) the annual stated rate of interest payable on the original bond is no
more than one percentage point lower than the gross interest rate payable on the
original mortgage loan (before subtracting any servicing fee or any stripped
coupon). If interest payable on a Grantor Trust Fractional Interest Certificate
is more than one percentage point lower than the gross interest rate payable on
the Mortgage Loans, the related Prospectus Supplement will disclose that fact.
If the original issue discount or market discount on a Grantor Trust Fractional
Interest Certificate determined under the stripped bond rules is less than 0.25%
of the stated redemption price multiplied by the weighted average maturity of
the Mortgage Loans, then such original issue discount or market discount will be
considered to be de minimis. Original issue discount or market discount of only
a de minimis amount will be included in income in the same manner as de minimis
original issue and market discount described in "-- Taxation of Owners of
Grantor Trust Fractional Interest Certificates -- If Stripped Bond Rules Do Not
Apply" and "-- Market Discount" below.
If Stripped Bond Rules Do Not Apply. Subject to the discussion below on
original issue discount, if the stripped bond rules do not apply to a Grantor
Trust Fractional Interest Certificate, the Certificateholder will be required to
report its share of the interest income on the Mortgage Loans in accordance with
such Certificateholder's normal method of accounting. The original issue
discount rules will apply, even if the stripped bond rules do not apply, to a
Grantor Trust Fractional Interest Certificate to the extent it evidences an
interest in Mortgage Loans issued with original issue discount.
The original issue discount, if any, on the Mortgage Loans will equal the
difference between the stated redemption price of such Mortgage Loans and their
issue price. For a definition of "stated redemption price," see "-- Taxation of
Owners of REMIC Regular Certificates -- Original Issue Discount" above. In
general, the issue price of a Mortgage Loan will be the amount received by the
borrower from the lender under the terms of the Mortgage Loan, less any "points"
paid by the borrower, and the stated redemption price of a Mortgage Loan will
equal its principal amount, unless the Mortgage Loan provides for an initial
"teaser," or below-market interest rate. The determination as to whether
original issue discount will be considered to be de minimis will be calculated
using the same test as in the REMIC discussion. See "-- Taxation of Owners of
REMIC Regular Certificates -- Original Issue Discount" above.
In the case of Mortgage Loans bearing adjustable or variable interest
rates, the related Prospectus Supplement will describe the manner in which such
rules will be applied with respect to those Mortgage Loans by the Trustee or
Master Servicer, as applicable, in preparing information returns to the
Certificateholders and the IRS.
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If original issue discount is in excess of a de minimis amount, all
original issue discount with respect to a Mortgage Loan will be required to be
accrued and reported in income each month, based on a constant yield. The OID
Regulations suggest that no prepayment assumption is appropriate in computing
the yield on prepayable obligations issued with original issue discount. In the
absence of statutory or administrative clarification, it currently is not
intended to base information reports or returns to the IRS and
Certificateholders on the use of a prepayment assumption in transactions not
subject to the stripped bond rules. However, Section 1272(a)(6) of the Code may
require that a prepayment assumption be made in computing yield with respect to
all mortgage-backed securities. Certificateholders are advised to consult their
own tax advisors concerning whether a prepayment assumption should be used in
reporting original issue discount with respect to Grantor Trust Fractional
Interest Certificates. Certificateholders should refer to the related Prospectus
Supplement with respect to each series to determine whether and in what manner
the original issue discount rules will apply to Mortgage Loans in such series.
A purchaser of a Grantor Trust Fractional Interest Certificate that
purchases such Grantor Trust Fractional Interest Certificate at a cost less than
such Certificate's allocable portion of the aggregate remaining stated
redemption price of the Mortgage Loans held in the related Trust Fund will also
be required to include in gross income such Certificate's daily portions of any
original issue discount with respect to such Mortgage Loans. However, each such
daily portion will be reduced, if the cost of such Grantor Trust Fractional
Interest Certificate to such purchaser is in excess of such Certificate's
allocable portion of the aggregate "adjusted issue prices" of the Mortgage Loans
held in the related Trust Fund, approximately in proportion to the ratio such
excess bears to such Certificate's allocable portion of the aggregate original
issue discount remaining to be accrued on such Mortgage Loans. The adjusted
issue price of a Mortgage Loan on any given day equals the sum of (1) the
adjusted issue price (or, in the case of the first accrual period, the issue
price) of such Mortgage Loan at the beginning of the accrual period that
includes such day and (2) the daily portions of original issue discount for all
days during such accrual period prior to such day. The adjusted issue price of a
Mortgage Loan at the beginning of any accrual period will equal the issue price
of such Mortgage Loan, increased by the aggregate amount of original issue
discount with respect to such Mortgage Loan that accrued in prior accrual
periods, and reduced by the amount of any payments made on such Mortgage Loan in
prior accrual periods of amounts included in its stated redemption price.
Unless otherwise provided in the related Prospectus Supplement, the Trustee
or Master Servicer, as applicable, will provide to any holder of a Grantor Trust
Fractional Interest Certificate such information as such holder may reasonably
request from time to time with respect to original issue discount accruing on
Grantor Trust Fractional Interest Certificates. See "-- Grantor Trust Reporting"
below.
Market Discount. If the stripped bond rules do not apply to a Grantor
Trust Fractional Interest Certificate, a Certificateholder may be subject to the
market discount rules of Sections 1276 through 1278 of the Code to the extent an
interest in a Mortgage Loan is considered to have been purchased at a "market
discount", that is, in the case of a Mortgage Loan issued without original issue
discount, at a purchase price less than its remaining stated redemption price
(as defined above), or in the case of a Mortgage Loan issued with original issue
discount, at a purchase price less than its adjusted issue price (as defined
above). If market discount is in excess of a de minimis amount (as described
below), the holder generally will be required to include in income in each month
the amount of such discount that has accrued (under the rules described in the
next paragraph) through such month that has not previously been included in
income, but limited, in the case of the portion of such discount that is
allocable to any Mortgage Loan, to the payment of stated redemption price on
such Mortgage Loan that is received by (or, in the case of accrual basis
Certificateholders, due to) the Trust Fund in that month. A Certificateholder
may elect to include market discount in income currently as it accrues (under a
constant yield method based on the yield of the Certificate to such holder)
rather than including it on a deferred basis in accordance with the foregoing
under rules similar to those described in "-- Taxation of Owners of REMIC
Regular Interests -- Market Discount" above.
Section 1276(b)(3) of the Code authorized the Treasury Department to issue
regulations providing for the method for accruing market discount on debt
instruments, the principal of which is payable in more than one installment.
Until such time as regulations are issued by the Treasury Department, certain
rules described in the Committee Report apply. Under those rules, in each
accrual period market discount on the Mortgage
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Loans should accrue, at the holder's option: (1) on the basis of a constant
yield method, (2) in the case of a Mortgage Loan issued without original issue
discount, in an amount that bears the same ratio to the total remaining market
discount as the stated interest paid in the accrual period bears to the total
stated interest remaining to be paid on the Mortgage Loan as of the beginning of
the accrual period, or (3) in the case of a Mortgage Loan issued with original
issue discount, in an amount that bears the same ratio to the total remaining
market discount as the original issue discount accrued in the accrual period
bears to the total original issue discount remaining at the beginning of the
accrual period. The prepayment assumption, if any, used in calculating the
accrual of original issue discount is to be used in calculating the accrual of
market discount. The effect of using a prepayment assumption could be to
accelerate the reporting of such discount income. Because the regulations
referred to in this paragraph have not been issued, it is not possible to
predict what effect such regulations might have on the tax treatment of a
Mortgage Loan purchased at a discount in the secondary market.
Because the Mortgage Loans will provide for periodic payments of stated
redemption price, such discount may be required to be included in income at a
rate that is not significantly slower than the rate at which such discount would
be included in income if it were original issue discount.
Market discount with respect to Mortgage Loans may be considered to be de
minimis and, if so, will be includible in income under de minimis rules similar
to those described above in "-- REMICs -- Taxation of Owners of REMIC Regular
Certificates -- Original Issue Discount" above within the exception that it is
less likely that a prepayment assumption will be used for purposes of such rules
with respect to the Mortgage Loans.
Further, under the rules described above in "-- REMICs -- Taxation of
Owners of REMIC Regular Certificates -- Market Discount", any discount that is
not original issue discount and exceeds a de minimis amount may require the
deferral of interest expense deductions attributable to accrued market discount
not yet includible in income, unless an election has been made to report market
discount currently as it accrues. This rule applies without regard to the
origination dates of the Mortgage Loans.
Premium. If a Certificateholder is treated as acquiring the underlying
Mortgage Loans at a premium, that is, at a price in excess of their remaining
stated redemption price, such Certificateholder may elect under Section 171 of
the Code to amortize using a constant yield method the portion of such premium
allocable to Mortgage Loans originated after September 27, 1985. Amortizable
premium is treated as an offset to interest income on the related debt
instrument, rather than as a separate interest deduction. However, premium
allocable to Mortgage Loans originated before September 28, 1985 or to Mortgage
Loans for which an amortization election is not made, should be allocated among
the payments of stated redemption price on the Mortgage Loan and be allowed as a
deduction as such payments are made (or, for a Certificateholder using the
accrual method of accounting, when such payments of stated redemption price are
due).
It is unclear whether a prepayment assumption should be used in computing
amortization of premium allowable under Section 171 of the Code. If premium is
not subject to amortization using a prepayment assumption and a Mortgage Loan
prepays in full, the holder of a Grantor Trust Fractional Interest Certificate
acquired at a premium should recognize a loss equal to the difference between
the portion of the prepaid principal amount of the Mortgage Loan that is
allocable to the Certificate and the portion of the adjusted basis of the
Certificate that is allocable to the Mortgage Loan. If a prepayment assumption
is used to amortize such premium, it appears that such a loss would be
unavailable. Instead, if a prepayment assumption is used, a prepayment should be
treated as a partial payment of the stated redemption price of the Grantor Trust
Fractional Interest Certificate and accounted for under a method similar to that
described for taking account of original issue discount on REMIC Regular
Certificates. See "-- REMICs -- Taxation of Owners of REMIC Regular
Certificates -- Original Issue Discount" above. It is unclear whether any other
adjustments would be required to reflect differences between the prepayment
assumption and the actual rate of prepayments.
Taxation of Owners of Grantor Trust Strip Certificates. The "stripped
coupon" rules of Section 1286 of the Code will apply to the Grantor Trust Strip
Certificates. Except as described above in "-- Taxation of Owners of Grantor
Trust Fractional Interest Certificates -- If Stripped Bond Rules Apply", no
regulations or
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published rulings under Section 1286 of the Code have been issued and some
uncertainty exists as to how it will be applied to securities such as the
Grantor Trust Strip Certificates. Accordingly, holders of Grantor Trust Strip
Certificates should consult their tax advisors concerning the method to be used
in reporting income or loss with respect to such Certificates.
The OID Regulations do not apply to "stripped coupons", although they
provide general guidance as to how the original issue discount sections of the
Code will be applied. In addition, the discussion below is subject to the
discussion under "-- Possible Application of Proposed Contingent Payment Rules"
below and assumes that the holder of a Grantor Trust Strip Certificate will not
own any Grantor Trust Fractional Interest Certificates.
Under the stripped coupon rules, it appears that original issue discount
will be required to be accrued in each month on the Grantor Trust Strip
Certificates based on a constant yield method. In effect, each holder of Grantor
Trust Strip Certificates would include as interest income in each month an
amount equal to the product of such holder's adjusted basis in such Grantor
Trust Strip Certificate at the beginning of such month and the yield of such
Grantor Trust Strip Certificate to such holder. Such yield would be calculated
based on the price paid for that Grantor Trust Strip Certificate by its holder
and the payments remaining to be made thereon at the time of the purchase, plus
an allocable portion of the servicing fees and expenses to be paid with respect
to the Mortgage Loans. See "-- Taxation of Owners of Grantor Trust Fractional
Interest Certificates -- If Stripped Bond Rules Apply" above.
As noted above, Section 1272(a)(6) of the Code requires that a prepayment
assumption be used in computing the accrual of original issue discount with
respect to certain categories of debt instruments, and that adjustments be made
in the amount and rate of accrual of such discount when prepayments do not
conform to such prepayment assumption. Regulations could be adopted applying
those provisions to the Grantor Trust Strip Certificates. It is unclear whether
those provisions would be applicable to the Grantor Trust Strip Certificates or
whether use of a prepayment assumption may be required or permitted in the
absence of such regulations. It is also uncertain, if a prepayment assumption is
used, whether the assumed prepayment rate would be determined based on
conditions at the time of the first sale of the Grantor Trust Strip Certificate
or, with respect to any subsequent holder, at the time of purchase of the
Grantor Trust Strip Certificate by that holder.
The accrual of income on the Grantor Trust Strip Certificates will be
significantly slower if a prepayment assumption is permitted to be made than if
yield is computed assuming no prepayments. In the absence of statutory or
administrative clarification, it currently is intended to base information
returns or reports to the IRS and Certificateholders on the Prepayment
Assumption disclosed in the related Prospectus Supplement and on a constant
yield computed using a representative initial offering price for each class of
Certificates. However, neither the Depositor nor any other person will make any
representation that the Mortgage Loans will in fact prepay at a rate conforming
to the Prepayment Assumption or at any other rate and Certificateholders should
bear in mind that the use of a representative initial offering price will mean
that such information returns or reports, even if otherwise accepted as accurate
by the IRS, will in any event be accurate only as to the initial
Certificateholders of each series who bought at that price. Prospective
purchasers of the Grantor Trust Strip Certificates should consult their tax
advisors regarding the use of the Prepayment Assumption.
It is unclear under what circumstances, if any, the prepayment of a
Mortgage Loan will give rise to a loss to the holder of a Grantor Trust Strip
Certificate. If a Grantor Trust Strip Certificate is treated as a single
instrument (rather than an interest in discrete mortgage loans) and the effect
of prepayments is taken into account in computing yield with respect to such
Grantor Trust Strip Certificate, it appears that no loss may be available as a
result of any particular prepayment unless prepayments occur at a rate faster
than the Prepayment Assumption. However, if a Grantor Trust Strip Certificate is
treated as an interest in discrete Mortgage Loans, or if the Prepayment
Assumption is not used, then when a Mortgage Loan is prepaid, the holder of a
Grantor Trust Strip Certificate should be able to recognize a loss equal to the
portion of the adjusted issue price of the Grantor Trust Strip Certificate that
is allocable to such Mortgage Loan.
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Possible Application of Contingent Payment Rules. The coupon stripping
rules' general treatment of stripped coupons is to regard them as newly issued
debt instruments in the hands of each purchaser. To the extent that payments on
the Grantor Trust Strip Certificates would cease if the Mortgage Loans were
prepaid in full, the Grantor Trust Strip Certificates could be considered to be
debt instruments providing for contingent payments. Under the OID Regulations,
debt instruments providing for contingent payments are not subject to the same
rules as debt instruments providing for noncontingent payments. Regulations have
been promulgated regarding contingent payment debt instruments (the "Contingent
Payment Regulations"), but it appears that Grantor Trust Strip Certificates, due
to their similarity to other mortgage-backed securities (such as REMIC regular
interests and debt instruments subject to Section 1272(a)(6) of the Code) that
are expressly excepted from the application of the Contingent Payment
Regulations, may be excepted from such regulations. Like the OID Regulations,
the Contingent Payment Regulations do not specifically address securities, such
as the Grantor Trust Strip Certificates, that are subject to the stripped bond
rules of Section 1286 of the Code.
If the contingent payment rules similar to those under the OID Regulations
were to apply, the holder of a Grantor Trust Strip Certificate would be required
to apply a "noncontingent bond method." Under the "noncontingent bond method,"
the issuer of a Grantor Trust Strip Certificate determines a projected payment
schedule. Holders of Grantor Trust Strip Certificates are bound by the issuer's
projected payment schedule. The projected payment schedule consists of all
noncontingent payments and a projected amount for each contingent payment based
on the comparable yield (as described below) of the Grantor Trust Strip
Certificate. The projected amount of each payment is determined so that the
projected payment schedule reflects the projected yield. The projected amount of
each payment must reasonably reflect the relative expected values of the
payments to be received by the holders of a Grantor Trust Strip Certificate. The
comparable yield referred to above is a rate that, as of the issue date,
reflects the yield at which the issuer would issue a fixed rate debt instrument
with terms and conditions similar to the contingent payment debt instrument,
including general market conditions, the credit quality of the issuer, and the
terms and conditions of the Mortgage Loans. The holder of a Grantor Trust Strip
Certificate would be required to include as interest income in each month the
adjusted issue price of the Grantor Trust Strip Certificate at the beginning of
the period multiplied by the comparable yield.
Certificateholders should consult their tax advisors concerning the
possible application of the contingent payment rules to the Grantor Trust Strip
Certificates.
Sales of Grantor Trust Certificates. Any gain or loss, equal to the
difference between the amount realized on the sale or exchange of a Grantor
Trust Certificate and its adjusted basis, recognized on such sale or exchange of
a Grantor Trust Certificate by an investor who holds such Grantor Trust
Certificate as a capital asset, will be capital gain or loss, except to the
extent of accrued and unrecognized market discount, which will be treated as
ordinary income, and (in the case of banks and other financial institutions)
except as provided under Section 582(c) of the Code. The adjusted basis of a
Grantor Trust Certificate generally will equal its cost, increased by any income
reported by the seller (including original issue discount and market discount
income) and reduced (but not below zero) by any previously reported losses, any
amortized premium and by any distributions with respect to such Grantor Trust
Certificate. The Code as of the date of this Prospectus generally provides for
maximum tax rates of noncorporate taxpayers of 39.6% on ordinary income and 20%
on long-term capital gains (generally, property held for more than one year). No
such rate differential exists for corporations. In addition, the distinction
between a capital gain or loss and ordinary income or loss remains relevant for
other purposes.
Gain or loss from the sale of a Grantor Trust Certificate may be partially
or wholly ordinary and not capital in certain circumstances. Gain attributable
to accrued and unrecognized market discount will be treated as ordinary income,
as will gain or loss recognized by banks and other financial institutions
subject to Section 582(c) of the Code. Furthermore, a portion of any gain that
might otherwise be capital gain may be treated as ordinary income to the extent
that the Grantor Trust Certificate is held as part of a "conversion transaction"
within the meaning of Section 1258 of the Code. A conversion transaction
generally is one in which the taxpayer has taken two or more positions in the
same or similar property that reduce or eliminate market risk, if substantially
all of the taxpayer's return is attributable to the time value of the taxpayer's
net
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investment in such transaction. The amount of gain realized in a conversion
transaction that is recharacterized as ordinary income generally will not exceed
the amount of interest that would have accrued on the taxpayer's net investment
at 120% of the appropriate "applicable Federal rate" (which rate is computed and
published monthly by the IRS) at the time the taxpayer enters into the
conversion transaction, subject to appropriate reduction for prior inclusion of
interest and other ordinary income items from the transaction.
Finally, a taxpayer may elect to have net capital gain taxed at ordinary
income rates rather than capital gains rates in order to include such net
capital gain in total net investment income for that taxable year, for purposes
of the rule that limits the deduction of interest on indebtedness incurred to
purchase or carry property held for investment to a taxpayer's net investment
income.
Grantor Trust Reporting. Unless otherwise provided in the related
Prospectus Supplement, the Trustee or Master Servicer, as applicable, will
furnish to each holder of a Grantor Trust Certificate with each distribution a
statement setting forth the amount of such distribution allocable to principal
on the underlying Mortgage Loans and to interest thereon at the related
Pass-Through Rate. In addition, the Trustee or Master Servicer, as applicable,
will furnish, within a reasonable time after the end of each calendar year, to
each holder of a Grantor Trust Certificate who was such a holder at any time
during such year, information regarding the amount of servicing compensation
received by the Master Servicer, the Special Servicer or any Sub-Servicer, and
such other customary factual information as the Depositor or the reporting party
deems necessary or desirable to enable holders of Grantor Trust Certificates to
prepare their tax returns and will furnish comparable information to the IRS as
and when required by law to do so. Because the rules for accruing discount and
amortizing premium with respect to the Grantor Trust Certificates are uncertain
in various respects, there is no assurance the IRS will agree with the Trustee's
or Master Servicer's, as the case may be, information reports of such items of
income and expense. Moreover, such information reports, even if otherwise
accepted as accurate by the IRS, will in any event be accurate only as to the
initial Certificateholders that bought their Certificates at the representative
initial offering price used in preparing such reports.
Backup Withholding. In general, the rules described above in
"-- REMICs -- Backup Withholding with Respect to REMIC Certificates" will also
apply to Grantor Trust Certificates.
Foreign Investors. In general, the discussion with respect to REMIC
Regular Certificates in "-- REMICs -- Foreign Investors in REMIC Certificates"
above applies to Grantor Trust Certificates except that Grantor Trust
Certificates will, unless otherwise disclosed in the related Prospectus
Supplement, be eligible for exemption from U.S. withholding tax, subject to the
conditions described in such discussion, only to the extent the related Mortgage
Loans were originated after July 18, 1984.
To the extent that interest on a Grantor Trust Certificate would be exempt
under Sections 871(h)(1) and 881(c) of the Code from United States withholding
tax, and the Grantor Trust Certificate is not held in connection with a
Certificateholder's trade or business in the United States, such Grantor Trust
Certificate will not be subject to United States estate taxes in the estate of a
nonresident alien individual.
STATE AND OTHER TAX CONSEQUENCES
In addition to the federal income tax consequences described in "Certain
Federal Income Tax Consequences," potential investors should consider the state
and local tax consequences of the acquisition, ownership, and disposition of the
Offered Certificates. State tax law may differ substantially from the
corresponding federal law, and the discussion above does not purport to describe
any aspect of the tax laws of any state or other jurisdiction. Therefore,
prospective investors should consult their tax advisors with respect to the
various tax consequences of investments in the Offered Certificates.
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CERTAIN ERISA CONSIDERATIONS
GENERAL
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and the Code impose certain requirements on retirement plans, and on certain
other employee benefit plans and arrangements, including individual retirement
accounts and annuities, Keogh plans and collective investment funds and separate
accounts (and as applicable, insurance company general accounts) in which such
plans, accounts or arrangements are invested that are subject to the fiduciary
responsibility provisions of ERISA and Section 4975 of the Code ("Plans"), and
on persons who are fiduciaries with respect to such Plans, in connection with
the investment of Plan assets. Certain employee benefit plans, such as
governmental plans (as defined in ERISA Section 3(32)), and, if no election has
been made under Section 410(d) of the Code, church plans (as defined in Section
3(33) of ERISA) are not subject to ERISA requirements. Accordingly, assets of
such plans may be invested in Offered Certificates without regard to the ERISA
considerations described below, subject to the provisions of other applicable
federal and state law. Any such plan which is qualified and exempt from taxation
under Sections 401(a) and 501(a) of the Code, however, is subject to the
prohibited transaction rules set forth in Section 503 of the Code.
ERISA generally imposes on Plan fiduciaries certain general fiduciary
requirements, including those of investment prudence and diversification and the
requirement that a Plan's investments be made in accordance with the documents
governing the Plan. In addition, Section 406 of ERISA and Section 4975 of the
Code prohibit a broad range of transactions involving assets of a Plan and
persons ("parties in interest" within the meaning of ERISA and "disqualified
persons" within the meaning of the Code; collectively, "Parties in Interest")
who have certain specified relationships to the Plan, unless a statutory or
administrative exemption is available. Certain Parties in Interest that
participate in a prohibited transaction may be subject to an excise tax imposed
pursuant to Section 4975 of the Code or a penalty imposed pursuant to Section
502(i) of ERISA, unless a statutory or administrative exemption is available.
These prohibited transactions generally are set forth in Section 406 of ERISA
and Section 4975 of the Code.
PLAN ASSET REGULATIONS
A Plan's investment in Offered Certificates may cause the underlying
Mortgage Assets and other assets included in a related Trust Fund to be deemed
assets of such Plan. Section 2510.3-101 of the regulations (the "Plan Asset
Regulations") of the United States Department of Labor (the "DOL") provides that
when a Plan acquires an equity interest in an entity, the Plan's assets include
both such equity interest and an undivided interest in each of the underlying
assets of the entity, unless certain exceptions not applicable here apply, or
unless the equity participation in the entity by "benefit plan investors" (i.e.,
Plans and certain employee benefit plans not subject to ERISA) is not
"significant", both as defined therein. For this purpose, in general, equity
participation by benefit plan investors will be "significant" on any date if 25%
or more of the value of any class of equity interests in the entity is held by
benefit plan investors. Equity participation in a Trust Fund will be significant
on any date if immediately after the most recent acquisition of any Certificate,
25% or more of any class of Certificates is held by benefit plan investors.
Any person who has discretionary authority or control respecting the
management or disposition of Plan assets, and any person who provides investment
advice with respect to such assets for a fee, is a fiduciary of the investing
Plan. If the Mortgage Assets and other assets included in a Trust Fund
constitute Plan assets, then any party exercising management or discretionary
control regarding those assets, such as the Master Servicer, any Special
Servicer, any Sub-Servicer, the Trustee, the obligor under any credit
enhancement mechanism, or certain affiliates thereof may be deemed to be a Plan
"fiduciary" and thus subject to the fiduciary responsibility provisions and
prohibited transaction provisions of ERISA and the Code with respect to the
investing Plan. In addition, if the Mortgage Assets and other assets included in
a Trust Fund constitute Plan assets, the purchase of Certificates by a Plan, as
well as the operation of the Trust Fund, may constitute or involve a prohibited
transaction under ERISA or the Code.
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The Plan Asset Regulations provide that where a Plan acquires a "guaranteed
governmental mortgage pool certificate", the Plan's assets include such
certificate but do not solely by reason of the Plan's holdings of such
certificate include any of the mortgages underlying such certificate. The Plan
Asset Regulations include in the definition of a "guaranteed governmental
mortgage pool certificate" FHLMC Certificates, GNMA Certificates and FNMA
Certificates. Accordingly, even if such MBS included in a Trust Fund were deemed
to be assets of Plan investors, the mortgages underlying such MBS would not be
treated as assets of such Plans. Private label mortgage participations, mortgage
pass-through certificates or other mortgage-backed securities are not
"guaranteed governmental mortgage pool certificates" within the meaning of the
Plan Asset Regulations; potential Plan investors should consult their counsel
and review the ERISA discussion in the related Prospectus Supplement before
purchasing Certificates if such MBS are included in the Trust Fund.
In considering an investment in the Offered Certificates, a Plan fiduciary
should consider the availability of prohibited transaction exemptions
promulgated by the DOL including, among others, Prohibited Transaction Class
Exemption ("PTCE") 75-1, which exempts certain transactions involving Plans and
certain broker-dealers, reporting dealers and banks; PTCE 90-1, which exempts
certain transactions between insurance company separate accounts and Parties in
Interest; PTCE 91-38, which exempts certain transactions between bank collective
investment funds and Parties in Interest; PTCE 84-14, which exempts certain
transactions effected on behalf of a Plan by a "qualified professional asset
manager"; PTCE 95-60, which exempts certain transactions between insurance
company general accounts and Parties in Interest; and PTCE 96-23, which exempts
certain transactions effected on behalf of a Plan by an "in-house asset
manager." There can be no assurance that any of these class exemptions will
apply with respect to any particular Plan investment in the Certificates or,
even if it were deemed to apply, that any such exemption would apply to all
prohibited transactions that may occur in connection with such investment. The
Prospectus Supplement with respect to a series of Certificates may contain
additional information regarding the availability of other exemptions with
respect to the Certificates offered thereby.
The DOL has granted to certain underwriters administrative exemptions,
referred to herein as the "Exemptions", for certain mortgage-backed and
asset-backed certificates underwritten in whole or in part by the underwriters.
An Exemption might be applicable to the initial purchase, the holding, and the
subsequent resale by a Plan of certain certificates, such as the Offered
Certificates, underwritten by the underwriters, representing interests in
pass-through trusts that consist of certain receivables, loans and other
obligations, provided that the conditions and requirements of the Exemption are
satisfied. The loans described in the Exemptions include mortgage loans such as
the Mortgage Assets. However, it should be noted that in issuing the Exemptions,
the DOL may not have considered interests in pools of the exact nature as some
of the Offered Certificates. If all of the conditions of an Exemption are met,
whether or not a Plan's assets would be deemed to include an ownership interest
in the Mortgage Assets, the acquisition, holding and resale of the Offered
Certificates by Plans would be exempt from certain of the prohibited transaction
provisions of ERISA and the Code.
INSURANCE COMPANY GENERAL ACCOUNTS
Section III of Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60")
exempts from the application of the prohibited transaction provisions of
Sections 406(a), 406(b) and 407(a) of ERISA and Section 4975 of the Code
transactions in connection with the servicing, management and operation of a
trust (such as the Trust) in which an insurance company general account has an
interest as a result of its acquisition of certificates issued by the trust,
provided that certain conditions are satisfied. If these conditions are met,
insurance company general accounts would be allowed to purchase certain Classes
of Certificates which do not meet the requirements of any of the Exemptions
solely because they (1) are subordinated to other Classes of Certificates in the
Trust and/or (2) have not received a rating at the time of the acquisition in
one of the three highest rating categories from S&P, Moody's, DCR or Fitch. All
other conditions of one of the Exemptions would have to be satisfied in order
for PTCE 95-60 to be available. Before purchasing such Class of Certificates, an
insurance company general account seeking to rely on Section III of PTCE 95-60
should itself confirm that all applicable conditions and other requirements have
been satisfied.
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The Small Business Job Protection Act of 1996 added a new Section 401(c) to
ERISA, which provides certain exemptive relief from the provisions of Part 4 of
Title I of ERISA and Section 4975 of the Code, including the prohibited
transaction restrictions imposed by ERISA and the related excise taxes imposed
by the Code, for transactions involving an insurance company general account.
Pursuant to Section 401(c) of ERISA, the DOL is required to issue final
regulations ("401(c) Regulations") no later than December 31, 1997 which are to
provide guidance for the purpose of determining, in cases where insurance
policies supported by an insurer's general account are issued to or for the
benefit of a Plan on or before December 31, 1998, which general account assets
constitute Plan Assets. On December 22, 1997, the DOL proposed such regulations.
Section 401(c) of ERISA generally provides that, until the date which is 18
months after the 401(c) Regulations become final, no person shall be subject to
liability under Part 4 of Title I of ERISA and Section 4975 of the Code on the
basis of a claim that the assets of an insurance company general account
constitute Plan Assets, unless (1) as otherwise provided by the Secretary of
Labor in the 401(c) Regulations to prevent avoidance of the regulations or (2)
an action is brought by the Secretary of Labor for certain breaches of fiduciary
duty which would also constitute a violation of federal or state criminal law.
Any assets of an insurance company general account which support insurance
policies issued to a Plan after December 31, 1998 or issued to Plans on or
before December 31, 1998 for which the insurance company does not comply with
the 401(c) Regulations may be treated as Plan Assets. In addition, because
Section 401(c) does not relate to insurance company separate accounts, separate
account assets are still treated as Plan Assets of any Plan invested in such
separate account. Insurance companies contemplating the investment of general
account assets in the Offered Certificates should consult with their legal
counsel with respect to the applicability of Section 401(c) of ERISA, including
the general account's ability to continue to hold the Offered Certificates after
the date which is 18 months after the date the 401(c) Regulations become final.
CONSULTATION WITH COUNSEL
Any Plan fiduciary which proposes to purchase Offered Certificates on
behalf of or with assets of a Plan should consider its general fiduciary
obligations under ERISA and should consult with its counsel with respect to the
potential applicability of ERISA and the Code to such investment and the
availability of any prohibited transaction exemption in connection therewith.
TAX EXEMPT INVESTORS
A Plan that is exempt from federal income taxation pursuant to Section 501
of the Code (a "Tax Exempt Investor") nonetheless will be subject to federal
income taxation to the extent that its income is "unrelated business taxable
income" ("UBTI") within the meaning of Section 512 of the Code. All "excess
inclusions" of a REMIC allocated to a REMIC Residual Certificate held by a
Tax-Exempt Investor will be considered UBTI and thus will be subject to federal
income tax. See "Certain Federal Income Tax Consequences -- REMICs -- Taxation
of Owners of REMIC Residual Certificates -- Excess Inclusions".
LEGAL INVESTMENT
If so specified in the related Prospectus Supplement, the Offered
Certificates will constitute "mortgage related securities" for purposes of
SMMEA. The appropriate characterization of those Offered Certificates not
qualifying as "mortgage related securities" ("Non-SMMEA Certificates") under
various legal investment restrictions, and thus the ability of investors subject
to these restrictions to purchase such Offered Certificates, may be subject to
significant interpretive uncertainties. Accordingly, investors whose investment
authority is subject to legal restrictions should consult their own legal
advisors to determine whether and to what extent the Non-SMMEA Certificates
constitute legal investments for them.
Generally, only classes of Offered Certificates that (1) are rated in one
of the two highest rating categories by one or more Rating Agencies and (2) are
part of a series evidencing interests in a Trust Fund consisting of loans
originated by certain types of Originators specified in SMMEA and secured by
first liens on real estate, will be "mortgage related securities" for purposes
of SMMEA. Classes of Offered Certificates qualifying as "mortgage related
securities" will constitute legal investments for persons, trusts, corporations,
partnerships, associations, business trusts and business entities (including
depository institutions, insurance
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companies and pension funds) created pursuant to or existing under the laws of
the United States or of any state (including the District of Columbia and Puerto
Rico) whose authorized investments are subject to state regulation, to the same
extent that, under applicable law, obligations issued by or guaranteed as to
principal and interest by the United States or any agency or instrumentality
thereof constitute legal investments for such entities. Under SMMEA, a number of
states enacted legislation, on or before the October 3, 1991 cutoff for such
enactments, limiting to varying extents the ability of certain entities (in
particular, insurance companies) to invest in "mortgage related securities"
secured by liens on residential, or mixed residential and commercial properties,
in most cases by requiring the affected investors to rely solely upon existing
state law, and not SMMEA. Pursuant to Section 347 of the Riegle Community
Development and Regulatory Improvement Act of 1994, which amended the definition
of "mortgage related security" (effective December 31, 1996) to include, in
relevant part, Offered Certificates satisfying the rating and qualified
Originator requirements for "mortgage related securities," but evidencing
interests in a Trust Fund consisting, in whole or in part, of first liens on one
or more parcels of real estate upon which are located one or more commercial
structures, states were authorized to enact legislation, on or before September
23, 2001, specifically referring to Section 347 and prohibiting or restricting
the purchase, holding or investment by state-regulated entities in such types of
Offered Certificates. Section 347 also provides that the enactment by a state of
any such legislative restrictions shall not affect the validity of any
contractual commitment to purchase, hold or invest in securities qualifying as
"mortgage related securities" solely by reason of Section 347 that was made, and
shall not require the sale or disposition of any securities acquired, prior to
the enactment of such state legislation. Accordingly, the investors affected by
any such state legislation, when and if enacted, will be authorized to invest in
Offered Certificates qualifying as "mortgage related securities" only to the
extent provided in such legislation.
SMMEA also amended the legal investment authority of federally-chartered
depository institutions as follows: federal savings and loan associations and
federal savings banks may invest in, sell or otherwise deal in "mortgage related
securities" without limitation as to the percentage of their assets represented
thereby, federal credit unions may invest in such securities, and national banks
may purchase such securities for their own account without regard to the
limitations generally applicable to investment securities set forth in 12 U.S.C.
sec. 24 (Seventh), subject in each case to such regulations as the applicable
federal regulatory authority may prescribe. In this connection, the Office of
the Comptroller of the Currency (the "OCC") has amended 12 C.F.R. Part 1 to
authorize national banks to purchase and sell for their own account, without
limitation as to a percentage of the bank's capital and surplus (but subject to
compliance with certain general standards in 12 C.F.R. sec. 1.5 concerning
"safety and soundness" and retention of credit information), certain "Type IV
securities," defined in 12 C.F.R. sec. 1.2(1) to include certain "commercial
mortgage-related securities" and "residential mortgage-related securities." As
so defined, "commercial mortgage-related security" and "residential
mortgage-related security" mean, in relevant part, "mortgage related security"
within the meaning of SMMEA, provided that, in the case of a "commercial
mortgage-related security," it "represents ownership of a promissory note or
certificate of interest or participation that is directly secured by a first
lien on one or more parcels of real estate upon which one or more commercial
structures are located and that is fully secured by interests in a pool of loans
to numerous obligors." In the absence of any rule or administrative
interpretation by the OCC defining the term "numerous obligors," no
representation is made as to whether any class of Offered Certificates will
qualify as "commercial mortgage-related securities," and thus as "Type IV
securities," for investment by national banks. The National Credit Union
Administration ("NCUA") has adopted rules, codified at 12 C.F.R. Part 703, which
permit federal credit unions to invest in "mortgage related securities" under
certain limited circumstances, other than stripped mortgage related securities,
residual interests in mortgage related securities, and commercial mortgage
related securities, unless the credit union has obtained written approval from
the NCUA to participate in the "investment pilot program" described in 12 C.F.R.
sec. 703.140. The Office of Thrift Supervision (the "OTS") has issued Thrift
Bulletin 13a (December 1, 1998), "Management of Interest Rate Risk, Investment
Securities, and Derivative Activities," which thrift institutions subject to the
jurisdiction of the OTS should consider before investing in any of the Offered
Certificates.
All depository institutions considering an investment in the Offered
Certificates should review the "Supervisory Policy Statement on Investment
Securities and End-User Derivatives Activities" (the "1998 Policy Statement") of
the Federal Financial Institutions Examination Council, which has been adopted
by the
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Board of Governors of the Federal Reserve System, the Federal Deposit Insurance
Corporation, the OCC and the OTS effective May 26, 1998, and by the NCUA
effective October 1, 1998. The 1998 Policy Statement sets forth general
guidelines which depository institutions must follow in managing risks
(including market, credit, liquidity, operational (transaction), and legal
risks) applicable to all securities (including mortgage pass-through securities
and mortgage-derivative products) used for investment purposes.
Institutions whose investment activities are subject to regulation by
federal or state authorities should review rules, policies and guidelines
adopted from time to time by such authorities before purchasing any Offered
Certificates, as certain series or classes may be deemed unsuitable investments,
or may otherwise be restricted, under such rules, policies or guidelines (in
certain instances irrespective of SMMEA).
The foregoing does not take into consideration the applicability of
statutes, rules, regulations, orders, guidelines or agreements generally
governing investments made by a particular investor, including, but not limited
to, "prudent investor" provisions, percentage-of-assets limits, provisions which
may restrict or prohibit investment in securities which are not "interest
bearing" or "income paying," and, with regard to any Offered Certificates issued
in book-entry form, provisions which may restrict or prohibit investments in
securities which are issued in book-entry form.
Except as to the status of certain classes of Offered Certificates as
"mortgage related securities," no representations are made as to the proper
characterization of the Offered Certificates for legal investment purposes,
financial institution regulatory purposes, or other purposes, or as to the
ability of particular investors to purchase Offered Certificates under
applicable legal investment restrictions. The uncertainties described above (and
any unfavorable future determinations concerning legal investment or financial
institution regulatory characteristics of the Offered Certificates) may
adversely affect the liquidity of the Offered Certificates.
Accordingly, all investors whose investment activities are subject to legal
investment laws and regulations, regulatory capital requirements or review by
regulatory authorities should consult with their legal advisors in determining
whether and to what extent the Offered Certificates of any class constitute
legal investments or are subject to investment, capital or other restrictions
and, if applicable, whether SMMEA has been overridden in any jurisdiction
relevant to such investor.
USE OF PROCEEDS
The net proceeds to be received from the sale of the Certificates of any
series will be applied by the Depositor to the purchase of Trust Assets or will
be used by the Depositor to cover expenses related thereto. The Depositor
expects to sell the Certificates from time to time, but the timing and amount of
offerings of Certificates will depend on a number of factors, including the
volume of Mortgage Assets acquired by the Depositor, prevailing interest rates,
availability of funds and general market conditions.
METHOD OF DISTRIBUTION
The Certificates offered hereby and by the related Prospectus Supplements
will be offered in series through one or more of the methods described below.
The Prospectus Supplement prepared for each series will describe the method of
offering being utilized for that series and will state the net proceeds to the
Depositor from such sale.
The Depositor intends that Offered Certificates will be offered through the
following methods from time to time and that offerings may be made concurrently
through more than one of these methods or that an offering of the Offered
Certificates of a particular series may be made through a combination of two or
more of these methods. Such methods are as follows:
1. By negotiated firm commitment or best efforts underwriting and
public re-offering by underwriters, which may include Banc of America
Securities LLC, an affiliate of the Depositor;
2. By placements by the Depositor with institutional investors through
dealers; and
3. By direct placements by the Depositor with institutional investors.
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In addition, if specified in the related Prospectus Supplement, the Offered
Certificates of a series may be offered in whole or in part to the seller of the
related Mortgage Assets that would comprise the Trust Fund for such
Certificates.
If underwriters are used in a sale of any Offered Certificates (other than
in connection with an underwriting on a best efforts basis), such Certificates
will be acquired by the underwriters for their own account and may be resold
from time to time in one or more transactions, including negotiated
transactions, at fixed public offering prices or at varying prices to be
determined at the time of sale or at the time of commitment therefor. Such
underwriters may be broker-dealers affiliated with the Depositor whose
identities and relationships to the Depositor will be as set forth in the
related Prospectus Supplement. The managing underwriter or underwriters with
respect to the offer and sale of Offered Certificates of a particular series
will be set forth on the cover of the Prospectus Supplement relating to such
series and the members of the underwriting syndicate, if any, will be named in
such Prospectus Supplement.
In connection with the sale of Offered Certificates, underwriters may
receive compensation from the Depositor or from purchasers of the Offered
Certificates in the form of discounts, concessions or commissions. Underwriters
and dealers participating in the distribution of the Offered Certificates may be
deemed to be underwriters in connection with such Certificates, and any
discounts or commissions received by them from the Depositor and any profit on
the resale of Offered Certificates by them may be deemed to be underwriting
discounts and commissions under the Securities Act of 1933, as amended.
It is anticipated that the underwriting agreement pertaining to the sale of
the Offered Certificates of any series will provide that the obligations of the
underwriters will be subject to certain conditions precedent, that the
underwriters will be obligated to purchase all such Certificates if any are
purchased (other than in connection with an underwriting on a best efforts
basis) and that, in limited circumstances, the Depositor will indemnify the
several underwriters and the underwriters will indemnify the Depositor against
certain civil liabilities, including liabilities under the Securities Act of
1933, as amended, or will contribute to payments required to be made in respect
thereof.
The Prospectus Supplement with respect to any series offered by placements
through dealers will contain information regarding the nature of such offering
and any agreements to be entered into between the Depositor and purchasers of
Offered Certificates of such series.
The Depositor anticipates that the Offered Certificates will be sold
primarily to institutional investors. Purchasers of Offered Certificates,
including dealers, may, depending on the facts and circumstances of such
purchases, be deemed to be "underwriters" within the meaning of the Securities
Act of 1933, as amended, in connection with reoffers and sales by them of
Offered Certificates. Holders of Offered Certificates should consult with their
legal advisors in this regard prior to any such reoffer or sale.
If and to the extent required by applicable law or regulation, this
Prospectus will be used by Banc of America Securities LLC in connection with
offers and sales related to market-making transactions in Offered Certificates
previously offered hereunder in transactions with respect to which Banc of
America Securities LLC acts as principal. Banc of America Securities LLC may
also act as agent in such transactions. Sales may be made at negotiated prices
determined at the time of sale.
LEGAL MATTERS
Certain legal matters relating to the Certificates will be passed upon for
the Depositor by Robert W. Long, Jr., Assistant General Counsel of Bank of
America Corporation. Certain legal matters relating to the Certificates will be
passed upon for the underwriter or underwriters by Cadwalader, Wickersham &
Taft. Certain federal income tax matters and other matters will be passed upon
for the Depositor by Cadwalader, Wickersham & Taft.
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FINANCIAL INFORMATION
A new Trust Fund will be formed with respect to each series of
Certificates, and no Trust Fund will engage in any business activities or have
any assets or obligations prior to the issuance of the related series of
Certificates. Accordingly, no financial statements with respect to any Trust
Fund will be included in this Prospectus or in the related Prospectus
Supplement. The Depositor has determined that its financial statements will not
be material to the offering of any Offered Certificates.
RATING
It is a condition to the issuance of any class of Offered Certificates that
they shall have been rated not lower than investment grade, that is, in one of
the four highest rating categories, by at least one Rating Agency.
Ratings on mortgage pass-through certificates address the likelihood of
receipt by the holders thereof of all collections on the underlying mortgage
assets to which such holders are entitled. These ratings address the structural,
legal and issuer-related aspects associated with such certificates, the nature
of the underlying mortgage assets and the credit quality of the guarantor, if
any. Ratings on mortgage pass-through certificates do not represent any
assessment of the likelihood of principal prepayments by borrowers or of the
degree by which such prepayments might differ from those originally anticipated.
As a result, Certificateholders might suffer a lower than anticipated yield,
and, in addition, holders of Stripped Interest Certificates might, in extreme
cases fail to recoup their initial investments. Furthermore, ratings on mortgage
pass-through certificates do not address the price of such certificates or the
suitability of such certificates to the investor.
A security rating is not a recommendation to buy, sell or hold securities
and may be subject to revision or withdrawal at any time by the assigning rating
organization. Each security rating should be evaluated independently of any
other security rating.
AVAILABLE INFORMATION
The Depositor has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (of which this Prospectus forms a part)
under the Securities Act of 1933, as amended, with respect to the Offered
Certificates. This Prospectus and the Prospectus Supplement relating to each
series of Offered Certificates contain summaries of the material terms of the
documents referred to in this Prospectus or in such Prospectus Supplement, but
do not contain all of the information set forth in the Registration Statement
pursuant to the rules and regulations of the Commission. For further
information, reference is made to such Registration Statement and the exhibits
thereto. Such Registration Statement and exhibits can be inspected and copied at
prescribed rates at the public reference facilities maintained by the Commission
at its Public Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549,
and at its Midwest Regional Offices located as follows: Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and Northeast
Regional Office, Seven World Trade Center, Suite 1300, New York, New York 10048.
You may obtain information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330. The SEC also maintains an internet site that
contains reports, proxy and information statements, and other information that
has been filed electronically with the SEC. The Internet address is
http://www.sec.gov.
No dealer, salesman, or other person has been authorized to give any
information, or to make any representations, other than those contained in this
Prospectus or any related Prospectus Supplement, and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Depositor or any other person. Neither the delivery of this Prospectus or
any related Prospectus Supplement nor any sale made hereunder or thereunder
shall under any circumstances create an implication that there has been no
change in the information in this Prospectus since the date hereof or in such
Prospectus Supplement since the date thereof. This Prospectus and any related
Prospectus Supplement are not an offer to sell or a solicitation of an offer to
buy any security in any jurisdiction in which it is unlawful to make such offer
or solicitation.
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The Master Servicer, the Trustee or another specified person will cause to
be provided to registered holders of the Offered Certificates of each series
periodic unaudited reports concerning the related Trust Fund. If beneficial
interests in a class or series of Offered Certificates are being held and
transferred in book-entry format through the facilities of The Depository Trust
Company ("DTC") as described in this Prospectus, then unless otherwise provided
in the related Prospectus Supplement, such reports will be sent on behalf of the
related Trust Fund to a nominee of DTC as the registered holder of the Offered
Certificates. Conveyance of notices and other communications by DTC to its
participating organizations, and directly or indirectly through such
participating organizations to the beneficial owners of the applicable Offered
Certificates, will be governed by arrangements among them, subject to any
statutory or regulatory requirements as may be in effect from time to time. See
"Description of the Certificates -- Reports to Certificateholders" and
"-- Book-Entry Registration and Definitive Certificates".
The Depositor will file or cause to be filed with the Commission such
periodic reports with respect to each Trust Fund as are required under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations of the Commission thereunder. The Depositor intends to make a
written request to the staff of the Commission that the staff either (1) issue
an order pursuant to Section 12(h) of the Exchange Act exempting the Depositor
from certain reporting requirements under the Exchange Act with respect to each
Trust Fund or (2) state that the staff will not recommend that the Commission
take enforcement action if the Depositor fulfills its reporting obligations as
described in its written request. If such request is granted, the Depositor will
file or cause to be filed with the Commission as to each Trust Fund the periodic
unaudited reports to holders of the Offered Certificates referenced in the
preceding paragraph; however, because of the nature of the Trust Funds, it is
unlikely that any significant additional information will be filed. In addition,
because of the limited number of Certificateholders expected for each series,
the Depositor anticipates that a significant portion of such reporting
requirements will be permanently suspended following the first fiscal year for
the related Trust Fund.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Depositor hereby incorporates by reference all documents and reports
filed or caused to be filed by the Depositor with respect to a Trust Fund
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act of 1934, as
amended, prior to the termination of an offering of offered certificates
evidencing interests therein. The Depositor will provide or cause to be provided
without charge to each person to whom this prospectus is delivered in connection
with the offering of one or more classes of offered certificates, upon written
or oral request of such person, a copy of any or all documents or reports
incorporated in this Prospectus by reference, in each case to the extent such
documents or reports relate to one or more of such classes of such offered
certificates, other than the exhibits to such documents (unless such exhibits
are specifically incorporated by reference in such documents). Such requests to
the Depositor should be directed in writing to its principal executive offices
at the Bank of America Corporate Center, Charlotte, North Carolina 28255, or by
telephone at (704) 386-2400.
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INDEX OF PRINCIPAL DEFINITIONS
1998 Policy Statement......... 96
401(c) Regulations............ 95
Accrual Certificates.......... 7
Accrued Certificate
Interest.................... 30
Act........................... 62
ADA........................... 65
ARM Loans..................... 21
Available Distribution
Amount...................... 30
Book-Entry Certificates....... 29
Call Risk..................... 12
Cash Flow Agreement........... 23
CERCLA........................ 61
Certificate Account........... 23
Certificate Balance........... 7
Certificate Owner............. 35
Certificateholder............. 36
Closing Date.................. 69
Code.......................... 66
Commercial Properties......... 18
Commission.................... 99
Committee Report.............. 69
Companion Class............... 32
Contingent Payment
Regulations................. 91
Contributions Tax............. 80
Controlled Amortization
Class....................... 32
Cooperatives.................. 18
CPR........................... 26
Credit Support................ 8
Crime Control Act............. 66
Cut-off Date.................. 31
Debt Service Coverage Ratio... 19
Definitive Certificates....... 29
Depositor..................... 18, 28
Determination Date............ 24, 30
Direct Participants........... 35
Distribution Date............. 7
Distribution Date Statement... 33
DOL........................... 93
DTC........................... 100
Due Dates..................... 20
Due Period.................... 24
Equity Participation.......... 21
ERISA......................... 93
Events of Default............. 49
Excess Funds.................. 28
Exchange Act.................. 100
Exemptions.................... 94
extension risk................ 12
FAMC.......................... 22
FHLMC......................... 22
FNMA.......................... 22
GNMA.......................... 22
Garn Act...................... 63
Grantor Trust Certificates.... 9
Grantor Trust Fractional
Interest Certificate........ 84
Grantor Trust Fund............ 67
Grantor Trust Strip
Certificate................. 84
Indirect Participants......... 35
Insurance and Condemnation
Proceeds.................... 42
IRS........................... 45, 67
Issue Premium................. 76
Letter of Credit Bank......... 54
Liquidation Proceeds.......... 42
Loan-to-Value Ratio........... 20
Lock-out Date................. 21
Lock-out Period............... 21
Mark-to-Market Regulations.... 78
Master Servicer............... 5
MBS........................... 18
MBS Administrator............. 5
MBS Agreement................. 22
MBS Issuer.................... 22
MBS Servicer.................. 22
MBS Trustee................... 22
Mortgages..................... 18
Mortgage Asset Seller......... 18
Mortgage Asset Pool........... 5
Mortgage Assets............... 18
Mortgage Loans................ 18
Mortgage Notes................ 18
Mortgage Rate................. 20
Mortgaged Properties.......... 18
Multifamily Properties........ 18
NCUA.......................... 96
Net Leases.................... 13, 20
Net Operating Income.......... 19
New Regulations............... 84
Non-SMMEA Certificates........ 95
Nonrecoverable Advance........ 32
Notional Amount............... 31
OCC........................... 96
OID Regulations............... 67
Offered Certificates.......... 29
Originator.................... 18
OTS........................... 96
Participants.................. 35
Parties in Interest........... 93
Pass-Through Rate............. 7
Percentage Interest........... 30
Permitted Investments......... 42
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Plan Asset Regulations........ 93
Plans......................... 93
Pooling and Servicing
Agreement................... 36
Prepayment Assumption......... 69
Prepayment Interest
Shortfall................... 24
Prepayment Period............. 33
Prepayment Premium............ 21
Prohibited Transactions Tax... 80
Proposed Regulations.......... 78
Prospectus Supplement......... cover
PTCE.......................... 94
PTCE 95-60.................... 94
Purchase Price................ 38
Rating Agency................. 9
RCRA.......................... 62
Record Date................... 30
Related Proceeds.............. 32
Relief Act.................... 66
REMIC......................... 67
REMIC Administrator........... 16
REMIC Certificates............ 67
REMIC Provisions.............. 67
REMIC Regular Certificates.... 9
REMIC Regulations............. 67
REMIC Residual
Certificateholder........... 74
REMIC Residual Certificates... 7, 9
REO Property.................. 40
RICO.......................... 66
Senior Certificates........... 6
Senior Liens.................. 18
SMMEA......................... 9
SPA........................... 26
Special Servicer.............. 5
stripped interest
certificates................ 6
stripped principal
certificates................ 6
Subordinate Certificates...... 6, 53
Sub-Servicer.................. 41
Sub-Servicing Agreement....... 41
Tax Exempt Investor........... 95
Tiered REMICs................. 68
Title V....................... 65
Trust Assets.................. 16
Trust Fund.................... 18
Trustee....................... 5
UBTI.......................... 95
UCC........................... 56
U.S. Person................... 83
Value......................... 20
Voting Rights................. 34
Warranting Party.............. 39
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NOTES CONCERNING INFORMATION
PRESENTED IN THE ATTACHED
COMPUTER DISKETTE
[DISKETTE]
This diskette contains a spreadsheet file that can be put on a
user-specified hard drive or network drive. The file is "BACM2000_1.xls" The
file "BACM2000_1.xls" is a Microsoft Excel(1), Version 5.0 spreadsheet. The file
provides, in electronic format, certain loan level information shown in ANNEX A
of the Prospectus Supplement.
Open the file as you would normally open any spreadsheet in Microsoft
Excel. After the file is opened, a securities law legend will be displayed. READ
THE LEGEND CAREFULLY. To view the ANNEX A data, "click" on the worksheet labeled
"ANNEX A."
- ---------------
(1) Microsoft Excel is a registered trademark of Microsoft Corporation.
287
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YOU SHOULD RELY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS. WE HAVE NOT
AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION.
WE ARE NOT OFFERING THE CERTIFICATES IN ANY STATE WHERE THE OFFER IS NOT
PERMITTED.
WE DO NOT CLAIM THE ACCURACY OF THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS AS OF ANY DATE OTHER THAN THE DATES STATED ON
THEIR RESPECTIVE COVERS.
DEALERS WILL DELIVER A PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
WHEN ACTING AS UNDERWRITERS OF THE CERTIFICATES AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS. IN ADDITION, ALL DEALERS SELLING THE CERTIFICATES
WILL DELIVER A PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS UNTIL
DECEMBER 20, 2000.
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TABLE OF CONTENTS
PAGE
----
PROSPECTUS SUPPLEMENT
Table of Contents......................... S-1
Important Notice About Information
Presented in this Prospectus Supplement
and the Accompanying Prospectus......... S-5
Executive Summary......................... S-6
Summary of Prospectus Supplement.......... S-8
Risk Factors.............................. S-18
Description of the Mortgage Pool.......... S-35
Servicing of the Mortgage Loans........... S-59
Description of the Certificates........... S-72
Yield and Maturity Considerations......... S-91
Use of Proceeds........................... S-101
Certain Federal Income Tax Consequences... S-101
Certain ERISA Considerations.............. S-103
Legal Investment.......................... S-106
Method of Distribution.................... S-106
Legal Matters............................. S-107
Ratings................................... S-107
Index of Principal Definitions............ S-109
Annex A................................... A-1
Annex B................................... B-1
Annex C................................... C-1
PROSPECTUS
Summary of Prospectus..................... 5
Risk Factors.............................. 10
Description of the Trust Funds............ 18
Yield and Maturity Considerations......... 23
The Depositor............................. 28
Description of the Certificates........... 29
The Pooling and Servicing Agreements...... 36
Description of Credit Support............. 53
Certain Legal Aspects of Mortgage Loans... 55
Certain Federal Income Tax Consequences... 66
State and Other Tax Consequences.......... 92
Certain ERISA Considerations.............. 93
Legal Investment.......................... 95
Use of Proceeds........................... 97
Method of Distribution.................... 97
Legal Matters............................. 98
Financial Information..................... 99
Rating.................................... 99
Available Information..................... 99
Incorporation of Certain Information by
Reference............................... 100
Index of Principal Definitions............ 101
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$693,084,792
(APPROXIMATE)
BANC OF AMERICA
COMMERCIAL
MORTGAGE INC.
(FORMERLY KNOWN AS
NATIONSLINK FUNDING CORPORATION)
DEPOSITOR
CLASS A-1A, CLASS A-2A,
CLASS A-1B, CLASS A-2B,
CLASS A-3B,
CLASS X, CLASS B,
CLASS C, CLASS D,
CLASS E AND CLASS F
BANC OF AMERICA
COMMERCIAL MORTGAGE INC.
COMMERCIAL MORTGAGE
PASS-THROUGH CERTIFICATES
SERIES 2000-1
-------------------------------------------
PROSPECTUS SUPPLEMENT
-------------------------------------------
BANC OF AMERICA
SECURITIES LLC
September 14, 2000
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