IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
Information about the certificates offered to you 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 certificates offered to you; and (b) this prospectus supplement, which
describes the specific terms of the certificates offered to you.
You should rely only on the information contained in this prospectus
supplement and the accompanying prospectus. The depositor has not authorized
anyone to provide you with information that is different from that contained in
this prospectus supplement and the prospectus.
----------
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 prospectus identify the pages where these sections are located.
In this prospectus supplement, the terms "depositor," "we," "our" and
"us" refer to Bear Stearns Commercial Mortgage Securities Inc.
All appendices, schedules and exhibits to this prospectus supplement
are a part of this prospectus supplement.
----------
Until ninety days after the date of this prospectus supplement, all
dealers that buy, sell or trade the certificates offered by this prospectus
supplement, 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.
EUROPEAN ECONOMIC AREA
In relation to each Member State of the European Economic Area which
has implemented the Prospectus Directive, each underwriter has represented and
agreed that with effect from and including the date on which the Prospectus
Directive is implemented in that relevant member state it has not made and will
not make an offer of certificates to the public in that relevant member state
prior to the publication of a prospectus in relation to the certificates which
has been approved by the competent authority in that relevant member state or,
where appropriate, approved in another relevant member state and notified to the
competent authority in that relevant member state, all in accordance with the
Prospectus Directive, except that it may, with effect from and including the
relevant implementation date, make an offer of certificates to the public in
that relevant member state at any time:
(a) to legal entities which are authorized or regulated to operate in the
financial markets or, if not so authorized or regulated, whose
corporate purpose is solely to invest in securities;
(b) to any legal entity which has two or more of (1) an average of at
least 250 employees during the last financial year; (2) a total
balance sheet of more than (euro)43,000,000 and (3) an annual net
turnover of more than (euro)50,000,000, as SHOWN in its last annual or
consolidated accounts; or
(c) in any other circumstances which do not require the publication by the
issuer of a prospectus pursuant to Article 3 of the Prospectus
Directive.
For the purposes of this provision, the expression an "offer of
certificates to the public" in relation to any certificates in any relevant
member state means the communication in any form and by any means of sufficient
information on the terms of the offer and the certificates to be offered so as
to enable an investor to decide to purchase or subscribe the certificates, as
the same may be varied in that member state by any measure implementing the
Prospectus Directive in that member state and the expression "Prospectus
Directive" means Directive 2003/71/EC and includes any relevant implementing
measure in each relevant member state.
S-3
UNITED KINGDOM
Each underwriter has represented and agreed that:
(a) (i) it is a person whose ordinary activities involve it in
acquiring, holding, managing or disposing of investments (as principal or agent)
for the purposes of its business and (ii) it has not offered or sold and will
not offer or sell the certificates other than to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their businesses or who
it is reasonable to expect will acquire, hold, manage or dispose of investments
(as principal or agent) for the purposes of their businesses where the issue of
the certificates would otherwise constitute a contravention of Section 19 of the
Financial Services and Markets Act 2000 ("FSMA");
(b) it has only communicated or caused to be communicated and will
only communicate or cause to be communicated an invitation or inducement to
engage in investment activity (within the meaning of Section 21 of the FSMA)
received by it in connection with the issue or sale of the certificates in
circumstances in which Section 21(1) of the FSMA does not apply to the
Depositor; and
(c) it has complied and will comply with all applicable provisions of
the FSMA with respect to anything done by it in relation to the certificates in,
from or otherwise involving the United Kingdom.
NOTICE TO UNITED KINGDOM INVESTORS
The distribution of this prospectus supplement if made by a person who
is not an authorized person under the FSMA, is being made only to, or directed
only at persons who (1) are outside the United Kingdom, or (2) have professional
experience in matters relating to investments, or (3) are persons falling within
Articles 49(2)(a) through (d) ("high net worth companies, unincorporated
associations, etc.") or 19 (Investment Professionals) of the Financial Services
and Market Act 2000 (Financial Promotion) Order 2005 (all such persons together
being referred to as the "Relevant Persons"). This prospectus supplement must
not be acted on or relied on by persons who are not Relevant Persons. Any
investment or investment activity to which this prospectus supplement relates,
including the offered certificates, is available only to Relevant Persons and
will be engaged in only with Relevant Persons.
Potential investors in the United Kingdom are advised that all, or
most, of the protections afforded by the United Kingdom regulatory system will
not apply to an investment in the trust and that compensation will not be
available under the United Kingdom Financial Services Compensation Scheme.
S-4
TABLE OF CONTENTS
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS ........................ S-3
Executive Summary .................................................... S-6
Summary of Prospectus Supplement ..................................... S-8
What You Will Own ................................................. S-8
Relevant Parties and Dates ........................................ S-10
Offered Certificates .............................................. S-15
Information About The Mortgage Pool ............................... S-23
Additional Aspects of Certificates ................................ S-36
Risk Factors ......................................................... S-41
Transaction Parties .................................................. S-94
The Sponsors, Mortgage Loan Sellers and Originators ............... S-94
The Depositor ..................................................... S-102
The Issuing Entity ................................................ S-102
The Trustee and the Custodian ..................................... S-104
The Paying Agent, Certificate Registrar and Authenticating Agent .. S-106
Master Servicer ................................................... S-108
Primary Servicer .................................................. S-109
The Special Servicer .............................................. S-110
Description of the Offered Certificates .............................. S-112
General ........................................................... S-112
Certificate Balances .............................................. S-113
Pass-Through Rates ................................................ S-115
Distributions ..................................................... S-117
Optional Termination .............................................. S-129
Advances .......................................................... S-129
Reports to Certificateholders; Available Information .............. S-132
Example of Distributions .......................................... S-137
Expected Final Distribution Date; Rated Final Distribution Date ... S-138
Amendments to the Pooling and Servicing Agreement ................. S-138
Evidence as to Compliance ......................................... S-139
Yield, Prepayment and Maturity Considerations ........................ S-140
General ........................................................... S-140
Pass-Through Rates ................................................ S-141
Rate and Timing of Principal Payments ............................. S-141
Unpaid Distributable Certificate Interest ......................... S-142
Losses and Shortfalls ............................................. S-143
Relevant Factors .................................................. S-143
Weighted Average Life ............................................. S-144
Description of the Mortgage Pool ..................................... S-148
General ........................................................... S-148
Material Terms and Characteristics of the Mortgage Loans .......... S-149
Assessments of Property Value and Condition ....................... S-161
Environmental Insurance ........................................... S-162
Additional Mortgage Loan Information .............................. S-163
Standard Hazard Insurance ......................................... S-166
Sale of the Mortgage Loans ........................................ S-167
Representations and Warranties .................................... S-168
Repurchases and Other Remedies .................................... S-170
Changes In Mortgage Pool Characteristics .......................... S-171
Mortgage Electronic Registration Systems .......................... S-171
Servicing of the Mortgage Loans ...................................... S-171
General ........................................................... S-171
The Master Servicer ............................................... S-174
Events of Default ................................................. S-174
The Operating Adviser ............................................. S-177
Mortgage Loan Modifications ....................................... S-178
Sale of Defaulted Mortgage Loans .................................. S-179
Foreclosures ...................................................... S-179
Material Federal Income Tax Consequences ............................. S-181
General ........................................................... S-181
Original Issue Discount and Premium ............................... S-182
Prepayment Premiums and Yield Maintenance Charges ................. S-182
Additional Considerations ......................................... S-182
Certain Legal Aspects of Mortgage Loans .............................. S-183
New York .......................................................... S-183
California ........................................................ S-183
Certain ERISA Considerations ......................................... S-184
Plan Assets and Prohibited Transactions ........................... S-184
Special Exemption Applicable to the Offered Certificates .......... S-184
Insurance Company General Accounts ................................ S-186
General Investment Considerations ................................. S-186
Legal Investment ..................................................... S-187
Use of Proceeds ...................................................... S-187
Plan of Distribution ................................................. S-188
Legal Matters ........................................................ S-189
Ratings .............................................................. S-190
Glossary of Terms .................................................... S-191
APPENDIX I - Mortgage Pool Information (Tables), Loan Group 1 (Tables)
and Loan Group 2 (Tables) ......................................... I-1
APPENDIX II - Certain Characteristics of the Mortgage Loans .......... II-1
APPENDIX III - Certain Characteristics of the Multifamily and
Manufactured Housing Community Loans .............................. III-1
APPENDIX IV - Significant Loan
Summaries ......................................................... IV-1
APPENDIX V - Form of Statement to Certificateholders ................. V-1
SCHEDULE A - Class A-AB Planned Principal Balance .................... A-1
SCHEDULE B - Rates Used in Determination of Class X Pass-Through
Rates ............................................................. B-1
S-5
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EXECUTIVE SUMMARY
This Executive Summary highlights selected information regarding the
certificates. It does not contain all of the information you need to consider in
making your investment decision. TO UNDERSTAND ALL OF THE TERMS OF THIS OFFERING
AND THE UNDERLYING MORTGAGE LOANS, YOU SHOULD READ THIS ENTIRE PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS CAREFULLY.
CERTIFICATE STRUCTURE
APPROXIMATE APPROXIMATE
INITIAL CERTIFICATE INITIAL APPROXIMATE WEIGHTED PRINCIPAL
APPROXIMATE BALANCE OR PASS-THROUGH RATINGS PERCENT OF TOTAL AVERAGE WINDOW
CREDIT SUPPORT CLASS NOTIONAL AMOUNT RATE (FITCH/S&P/DBRS) CERTIFICATES LIFE (YRS.) (MONTHS)
-------------- ---------- ------------------- ------------ ------------------- ---------------- ----------- ---------
27.000% CLASS A-1 $ 75,000,000 5.145% AAA/AAA/AAA 3.561% 3.39 1-57
27.000% CLASS A-2 $ 177,000,000 5.330% AAA/AAA/AAA 8.405% 4.81 57-59
27.000% CLASS A-3 $ 65,400,000 5.432% AAA/AAA/AAA 3.105% 6.80 78-90
27.000% CLASS A-AB $ 78,000,000 5.429% AAA/AAA/AAA 3.704% 7.57 59-115
27.000% CLASS A-4 $ 991,880,000 5.471% AAA/AAA/AAA 47.098% 9.77 115-119
27.000% CLASS A-1A $ 150,102,000 5.446% AAA/AAA/AAA 7.127% 8.73 1-119
17.000% CLASS A-M $ 210,601,000 5.513% AAA/AAA/AAA 10.000% 9.90 119-119
9.375% CLASS A-J $ 160,583,000 5.566% AAA/AAA/AAA 7.625% 10.03 119-129
* 7.375% CLASS B $ 42,120,000 5.601% AA/AA/AA 2.000% 11.56 129-177
* 6.500% CLASS C $ 18,427,000 5.638% AA-/AA-/AA(low) 0.875% 14.81 177-178
* 5.125% CLASS D $ 28,958,000 5.638% A/A/A 1.375% 14.82 178-178
* 4.375% CLASS E $ 15,795,000 5.638% A-/A-/A(low) 0.750% 14.82 178-178
* 3.500% CLASS F $ 18,427,000 5.638% BBB+/BBB+/BBB(high) 0.875% 14.82 178-178
* 2.625% CLASS G $ 18,428,000 5.638% BBB/BBB/BBB 0.875% 14.82 178-178
* 1.750% CLASS H $ 18,427,000 5.638% BBB-/BBB-/BBB(low) 0.875% 14.82 178-178
* -- CLASS J-P $ 36,855,971 5.152% -- -- -- --
* -- CLASS X-1 $2,106,003,971 0.036% AAA/AAA/AAA -- -- --
* -- CLASS X-2 $2,069,863,000 0.144% AAA/AAA/AAA -- -- --
o The notional amount of the Class X-1 Certificates initially will be
$2,106,003,971 and the notional amount of the Class X-2 Certificates
initially will be $2,069,863,000. The Class X-1 Certificates and the Class
X-2 Certificates are not offered pursuant to the prospectus and this
prospectus supplement. Any information provided in this prospectus
supplement regarding the characteristics of these certificates is provided
only to enhance your understanding of the offered certificates.
o The percentages indicated under the column "Approximate Credit Support"
with respect to the Class A-1, Class A-2, Class A-3. Class A-AB, Class A-4
and Class A-1A Certificates represent the approximate credit support for
the Class A-1, Class A-2, Class A-3, Class A-AB, Class A-4 and Class A-1A
Certificates in the aggregate.
o The initial certificate balance on the closing date may vary by up to 5%.
Mortgage loans may be removed from or added to the mortgage pool prior to
the closing date within such maximum permitted variance. Any reduction or
increase in the number of mortgage loans within these parameters will
result in consequential changes to the initial certificate balance of each
class of offered certificates and to the other statistical data contained
in this prospectus supplement. No changes in the statistical data will be
made in the final prospectus supplement unless such changes are material.
o The Class X-1 Certificates and the Class X-2 Certificates (together, the
"Class X Certificates") and the Class B, Class C, Class D, Class E, Class
F, Class G, Class H, Class J, Class K, Class L, Class M, Class N, Class O
and Class P Certificates are not offered pursuant to this prospectus
supplement. We sometimes refer to these certificates collectively as the
"privately offered certificates."
o For purposes of making distributions to the Class A-1, Class A-2, Class
A-3, Class A-AB, Class A-4 and Class A-1A Certificates, the pool of
mortgage loans will be deemed to consist of two distinct loan groups, loan
group 1 and loan group 2. Loan group 1 will consist of 213 mortgage loans,
representing approximately 92.9% of the initial outstanding pool balance.
Loan group 2 will consist of 24 mortgage loans, representing approximately
7.1% of the initial outstanding pool balance, and approximately 100% of the
principal balance of all the mortgage loans secured by multifamily and
manufactured housing community properties.
o So long as funds are sufficient on any distribution date to make
distributions of all interest on that distribution date to the Class A-1,
Class A-2, Class A-3, Class A-AB, Class A-4, Class A-1A and Class X
Certificates, interest distributions on the Class A-1, Class A-2, Class
A-3, Class A-AB and Class A-4 Certificates will be based upon amounts
available relating to mortgage loans in loan group 1, interest
distributions on the Class A-1A Certificates will be based upon amounts
available relating to mortgage loans in loan group 2 and interest
distributions on the Class X Certificates will be based upon amounts
available relating to all the mortgage loans in the mortgage pool. However,
if on any distribution date, funds are insufficient to make distributions
of all interest on that distribution date to the Class A-1, Class A-2,
Class A-3, Class A-AB, Class A-4, Class A-1A or Class X Certificates,
available funds will be allocated among all these classes pro rata in
accordance with their interest entitlements for that distribution date,
without regard to loan group.
o Generally, the Class A-1, Class A-2, Class A-3, Class A-AB and Class A-4
Certificates will only be entitled to receive distributions of principal
collected or advanced in respect of mortgage loans in loan group 1 until
the certificate principal balance of the Class A-1A Certificates has been
reduced to zero, and the Class A-1A Certificates will only be entitled to
receive distributions of principal collected or advanced in respect of
mortgage loans in loan group 2 until the certificate principal balance of
the Class A-4 Certificates has been reduced to zero. However, on and after
any distribution date on which the certificate principal balances of the
Class A-M
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S-6
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through Class P Certificates have been reduced to zero, distributions of
principal collected or advanced in respect of the pool of mortgage loans
will be distributed to the Class A-1, Class A-2, Class A-3, Class A-AB,
Class A-4 and Class A-1A Certificates, pro rata, without regard to loan
group.
o The pass-through rates for the Class A-1, Class A-2, Class A-3 and Class
A-AB Certificates will, at all times, be fixed at their initial rate of
5.145%, 5.330%, 5.432% and 5.429%, respectively. The pass-through rates for
the Class A-4, Class A-1A, Class A-M and Class A-J Certificates will, at
all times, be a per annum rate equal to the lesser of 5.471%, 5.446%,
5.513% and 5.566%, respectively, and the weighted average net mortgage
rate.
o The principal window is expressed in months following the closing date and
reflects the period during which distributions of principal would be
received under the assumptions set forth in the following sentence. The
weighted average life and principal window figures set forth above are
based on the following assumptions, among others: (i) no defaults or
subsequent losses on the underlying mortgage loans; (ii) no extensions of
maturity dates of mortgage loans that do not have "anticipated repayment
dates"; (iii) payment in full on the anticipated repayment date or stated
maturity date of each mortgage loan having an anticipated repayment date or
stated maturity date; and (iv) 0% CPR. See the assumptions set forth under
"Yield, Prepayment and Maturity Considerations" in this prospectus
supplement and under "Structuring Assumptions" in the "Glossary of Terms."
o Each Class P Certificate is an investment unit consisting of a REMIC
regular interest and beneficial ownership of certain excess interest in
respect of mortgage loans having anticipated repayment dates.
o The Class R-I, R-II and R-III Certificates also represent ownership
interests in the trust. These certificates are not represented in this
table and are not offered pursuant to this prospectus supplement.
o It is a condition to the issuance of the certificates that the certificates
receive the ratings set forth above.
[_] Offered certificates.
[*] Certificates not offered pursuant to this prospectus supplement.
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S-7
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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
CERTIFICATES OFFERED PURSUANT TO THIS PROSPECTUS SUPPLEMENT, WHICH WE GENERALLY
REFER TO AS THE "OFFERED CERTIFICATES," YOU SHOULD READ THIS ENTIRE DOCUMENT AND
THE ACCOMPANYING PROSPECTUS CAREFULLY.
WHAT YOU WILL OWN
GENERAL....................... Your certificates (along with the privately
offered certificates) will represent beneficial
interests in a trust created by us on the
closing date. All payments to you will come
only from the amounts received in connection
with the assets of the trust. The trust's
assets will primarily consist of 237 fixed rate
mortgage loans secured by first mortgage liens
on 247 commercial, manufactured housing
community and multifamily properties.
TITLE OF CERTIFICATES......... Commercial Mortgage Pass-Through Certificates,
Series 2007-TOP26.
MORTGAGE POOL................. The mortgage pool consists of 237 mortgage
loans with an aggregate principal balance of
all mortgage loans as of the cut-off date, of
approximately $2,106,003,972, which may vary on
the closing date by up to 5%. Each mortgage
loan requires scheduled payments of principal
and/or interest to be made monthly. For
purposes of those mortgage loans that have a
due date on a date other than the first of the
month, we have assumed that those mortgage
loans are due on the first of the month for
purposes of determining their cut-off dates and
cut-off date balances.
As of the cut-off date, the balances of the
mortgage loans in the mortgage pool ranged from
approximately $548,850 to approximately
$150,000,000 and the mortgage loans had an
approximate average balance of $8,886,093.
For purposes of calculating distributions on
certain classes of certificates, the mortgage
loans in the mortgage pool backing the offered
certificates will be divided into a loan group
1 and a loan group 2.
Loan group 1 will consist of all of the
mortgage loans other than twenty-two (22)
mortgage loans that are secured by multifamily
properties and two (2) mortgage loans that are
secured by manufactured housing community
properties. Loan group 1 will consist of two
hundred thirteen (213) mortgage loans, with an
initial outstanding loan group 1 balance of
$1,955,901,313, which may vary up to 5%. Loan
group 1 represents approximately 92.9% of the
initial outstanding pool balance.
Loan group 2 will consist of twenty-two (22) of
the mortgage loans that are secured by
multifamily properties and two (2) mortgage
loans that are secured by manufactured housing
community properties and have an initial
outstanding loan group 2 balance of
$150,102,659. Loan group 2 represents
approximately 7.1% of the initial outstanding
pool balance and approximately 100% of the
principal balance of all the mortgage loans
secured by multifamily and manufactured housing
community.
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S-8
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As of the cut-off date, the balances of the
mortgage loans in loan group 1 ranged from
approximately $548,850 to approximately
$150,000,000 and the mortgage loans in loan
group 1 had an approximate average balance of
$9,182,635. As of the cut-off date, the
balances of the mortgage loans in loan group 2
ranged from approximately $894,281 to
approximately $24,000,000 and the mortgage
loans in loan group 2 had an approximate
average balance of $6,254,277.
The transfers of the mortgage loans from the
mortgage loan sellers to the depositor and from
the depositor to the issuing entity in exchange
for the certificates are illustrated below:
-------------- --------------
| | | |
| MORTGAGE | | INVESTORS |
| LOAN SELLERS | | |
| | | |
-------------- --------------
| /|\ | /|\
| | | |
MORTGAGE | | | |
LOANS | | CASH CASH | | CERTIFICATES
| | | |
\|/ | \|/ |
-------------- --------------
| | / CASH | |
| DEPOSITOR | ----------------- | UNDERWRITERS |
| | \ \ | |
| | ----------------- | |
-------------- / --------------
| /|\ CERTIFICATES
| |
| |
MORTGAGE | | CERTIFICATES
LOANS | |
\|/ |
--------------
| |
| ISSUING |
| ENTITY |
| |
--------------
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S-9
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RELEVANT PARTIES AND DATES
ISSUING ENTITY................ Bear Stearns Commercial Mortgage Securities
Trust 2007-TOP26, a New York common law trust,
will issue the certificates. The trust will be
formed pursuant to the pooling and servicing
agreement among the depositor, the master
servicer, the special servicer, the trustee and
the paying agent. See "Transaction Parties--The
Issuing Entity" in this prospectus supplement.
DEPOSITOR..................... Bear Stearns Commercial Mortgage Securities
Inc., a Delaware corporation, is the depositor.
As depositor, Bear Stearns Commercial Mortgage
Securities Inc. will acquire the mortgage loans
from the mortgage loan sellers and deposit them
into the trust. Bear Stearns Commercial
Mortgage Securities Inc. is an affiliate of
Bear Stearns Commercial Mortgage, Inc., a
sponsor of this transaction and a mortgage loan
seller, and Bear, Stearns & Co. Inc., one of
the underwriters. See "Transaction Parties--The
Depositor" in this prospectus supplement.
MASTER SERVICER............... Wells Fargo Bank, National Association, a
national banking association, will act as
master servicer with respect to all of the
mortgage loans in the trust. Wells Fargo will
acquire the right to master service the
mortgage loans that are sold to the trust by
the other sponsors as a result of entering into
servicing rights purchase agreements with such
sponsors. See "Servicing of the Mortgage
Loans--General" and "Transaction
Parties--Master Servicer" in this prospectus
supplement. The master servicer will be
primarily responsible for servicing and
administering, directly or through
sub-servicers, mortgage loans (a) as to which
there is no default or reasonably foreseeable
default that would give rise to a transfer of
servicing to the special servicer and (b) as to
which any such default or reasonably
foreseeable default has been corrected,
including as part of a work-out. In addition,
the master servicer will be primarily
responsible for making principal and interest
advances and servicing advances under the
pooling and servicing agreement.
The master servicing fee in any month is an
amount equal to the product of the portion of
the per annum master servicing fee rate
applicable to that month, determined in the
same manner as the applicable mortgage rate is
determined for each mortgage loan for that
month, and the scheduled principal balance of
each mortgage loan. The master servicing fee
rate for Wells Fargo Bank, National Association
will range, on a loan-by-loan basis, from 0.01%
per annum to 0.02% per annum. In addition, the
master servicer will be entitled to retain
certain borrower-paid fees and certain income
from investment of certain accounts maintained
as part of the trust fund, as additional
servicing compensation.
PRIMARY SERVICERS............. Principal Global Investors, LLC will act as
primary servicer with respect to those mortgage
loans, representing 21.3% of the initial
outstanding pool balance, sold to the trust by
Principal Commercial Funding II, LLC. Principal
Global Investors, LLC is the parent of
Principal Commercial Funding, LLC, which owns a
49% interest in Principal Commercial Funding
II, LLC. In addition, Wells Fargo Bank,
National Association will act as primary
servicer with respect to those mortgage loans
sold to the trust by Wells Fargo Bank, National
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S-10
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Association, Bear Stearns Commercial Mortgage,
Inc. and Morgan Stanley Mortgage Capital Inc.
See "Servicing of the Mortgage Loans--General"
and "Transaction Parties--Primary Servicer" in
this prospectus supplement. Each of Principal
Global Investors, LLC and Wells Fargo Bank,
National Association will be entitled to
receive a primary servicing fee on each
mortgage loan for which it is the primary
servicer in an amount equal to the product of
the applicable primary servicing fee rate and
the scheduled principal balance of the
applicable mortgage loan immediately before the
related due date (prorated for the number of
days during the calendar month for that
mortgage loan for which interest actually
accrues on that mortgage loan). The primary
servicing fee is payable only from collections
on the related mortgage loan. The primary
servicing fee rate for Principal Global
Investors, LLC is 0.01% per annum. The primary
servicing fee rate (including any subservicing
fees) for Wells Fargo Bank, National
Association will range, on a loan-by-loan
basis, from 0.01% per annum to 0.10% per annum.
SPECIAL SERVICER.............. Centerline Servicing Inc. (formerly known as
ARCap Servicing, Inc.), a Delaware corporation,
will act as special servicer with respect to
all of the mortgage loans in the trust.
Generally, the special servicer will service a
mortgage loan upon the occurrence of certain
events that cause that mortgage loan to become
a "specially serviced mortgage loan." The
special servicer's principal compensation for
its special servicing activities will be the
special servicing fee, the workout fee and the
liquidation fee. See "Servicing of the Mortgage
Loans--General" and "Transaction Parties--The
Special Servicer" in this prospectus
supplement.
The special servicing fee is an amount equal
to, in any month, the product of the portion of
a rate equal to 0.25% per annum applicable to
that month, determined in the same manner as
the applicable mortgage rate is determined for
each specially serviced mortgage loan for that
month, and the scheduled principal balance of
each specially serviced mortgage loan.
The liquidation fee means, generally, 1.0% of
the liquidation proceeds received in connection
with a final disposition of a specially
serviced mortgage loan or REO property or
portion thereof and any condemnation proceeds
and insurance proceeds received by the trust
(net of any expenses incurred by the special
servicer on behalf of the trust in connection
with the collection of the condemnation
proceeds and insurance proceeds) including in
connection with a repurchase of an A Note by
the holder of the related B Note, unless
otherwise provided in the related intercreditor
agreement.
The workout fee is a fee payable with respect
to any rehabilitated mortgage loan (which means
a specially serviced mortgage loan as to which
three consecutive scheduled payments have been
made, there is no other event causing it to
constitute a specially serviced mortgage loan,
and certain other conditions have been met),
serviced companion mortgage loan or B Note,
equal to 1.0% of the amount of each collection
of interest (other than default interest and
any excess interest) and principal received
(including any condemnation proceeds received
and applied as a collection of the interest and
principal) on
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such mortgage loan, serviced companion mortgage
loan or B Note for so long as it remains a
rehabilitated mortgage loan.
In addition, the special servicer will be
entitled to retain certain borrower paid fees
and certain income from investment of certain
accounts maintained as part of the trust fund,
as additional servicing compensation.
TRUSTEE AND CUSTODIAN......... LaSalle Bank National Association, a national
banking association, will act as trustee of the
trust on behalf of the Series 2007-TOP26
certificateholders and as custodian. See
"Transaction Parties--The Trustee" in this
prospectus supplement. In addition, the trustee
will be primarily responsible for back-up
advancing if the master servicer fails to
perform its advancing obligations. Following
the transfer of the underlying mortgage loans
into the trust, the trustee, on behalf of the
trust, will become the holder of each mortgage
loan transferred to the trust.
The trustee fee is an amount equal to, in any
month, the product of the portion of a rate
equal to 0.00117% per annum applicable to that
month, determined in the same manner as the
applicable mortgage rate is determined for each
mortgage loan for that month, and the scheduled
principal balance of each mortgage loan. A
portion of the trustee fee is payable to the
paying agent.
PAYING AGENT.................. Wells Fargo Bank, National Association will act
as the paying agent, certificate registrar and
authenticating agent for the certificates.
Wells Fargo Bank, National Association is also
the master servicer, a sponsor and a mortgage
loan seller. The paying agent will also have,
or be responsible for appointing an agent to
perform, additional duties with respect to tax
administration of the issuing entity. A portion
of the trustee fee is payable to the paying
agent. See "Transaction Parties--The Paying
Agent, Certificate Registrar and Authenticating
Agent" in this prospectus supplement.
OPERATING ADVISER............. The holders of certificates representing more
than 50% of the aggregate certificate balance
of the most subordinate class of certificates,
outstanding at any time of determination, or,
if the certificate balance of that class of
certificates is less than 25% of the initial
certificate balance of that class, the next
most subordinate class of certificates, may
appoint a representative to act as operating
adviser for the purposes described in this
prospectus supplement; provided, that with
respect to any A/B Mortgage Loan, a holder of
the related B Note will, to the extent set
forth in the related intercreditor agreement,
instead be entitled to the rights and powers
granted to the operating adviser under the
pooling and servicing agreement to the extent
such rights and powers relate to the related
A/B Mortgage Loan (but only so long as the
holder of the related B Note is the directing
holder). The initial operating adviser will be
Centerline REIT Inc. (formerly known as ARCap
REIT, Inc.), an affiliate of the special
servicer.
SPONSORS...................... Bear Stearns Commercial Mortgage, Inc., a New
York corporation, Morgan Stanley Mortgage
Capital Inc., a New York corporation, Wells
Fargo Bank, National Association, a national
banking association, and Principal Commercial
Funding II, LLC, a Delaware corporation, are
sponsors of this transaction. As sponsors, Bear
Stearns Commercial Mortgage, Inc., Morgan
Stanley Mortgage Capital Inc., Wells Fargo
Bank, National Association, and Principal
Commercial Funding II,
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LLC have organized and initiated the
transactions in which the certificates will be
issued and will sell mortgage loans to the
depositor. The depositor will transfer the
mortgage loans to the trust, and the trust will
then issue the certificates. Bear Stearns
Commercial Mortgage, Inc. is an affiliate of
the depositor and Bear, Stearns & Co. Inc., one
of the underwriters. Morgan Stanley Mortgage
Capital Inc. is an affiliate of Morgan Stanley
& Co. Incorporated, one of the underwriters.
Wells Fargo Bank, National Association is also
the master servicer, paying agent, certificate
registrar and authenticating agent with respect
to the mortgage loans and the trust. Principal
Global Investors, LLC, the primary servicer
with respect to those mortgage loans sold to
the trust by Principal Commercial Funding II,
LLC, is the parent of Principal Commercial
Funding, LLC, which owns a 49% interest in
Principal Commercial Funding II, LLC. See
"Transaction Parties--The Sponsors, Mortgage
Loan Sellers and Originators" in this
prospectus supplement.
MORTGAGE LOAN SELLERS......... Bear Stearns Commercial Mortgage, Inc., will
sell us forty-two (42) mortgage loans (which
includes 41 mortgage loans in loan group 1 and
1 mortgage loan in loan group 2), representing
37.9% of the initial outstanding pool balance
(and representing 39.9% of the initial
outstanding loan group 1 balance and 11.7% of
the initial outstanding loan group 2 balance).
Morgan Stanley Mortgage Capital Inc., will sell
us fifty-five (55) mortgage loans (which
includes 47 mortgage loans in loan group 1 and
8 mortgage loans in loan group 2), representing
21.9% of the initial outstanding pool balance
(and representing 20.0% of the initial
outstanding loan group 1 balance and 46.3% of
the initial outstanding loan group 2 balance).
Principal Commercial Funding II, LLC, will sell
us fifty-two (52) mortgage loans (which
includes 44 mortgage loans in loan group 1 and
8 mortgage loans in loan group 2), representing
21.3% of the initial outstanding pool balance
(and representing 20.2% of the initial
outstanding loan group 1 balance and 34.9% of
the initial outstanding loan group 2 balance).
Wells Fargo Bank, National Association, will
sell us eighty-eight (88) mortgage loans (which
includes 81 mortgage loans in loan group 1 and
7 mortgage loans in loan group 2), representing
19.0% of the initial outstanding pool balance
(and representing 19.9% of the initial
outstanding loan group 1 balance and 7.0% of
the initial outstanding loan group 2 balance).
See "Transaction Parties--The Sponsors,
Mortgage Loan Sellers and Originators" in this
prospectus supplement.
ORIGINATORS................... Each mortgage loan seller or its affiliate
originated or acquired the mortgage loans as to
which it is acting as mortgage loan seller. See
"Transaction Parties--The Sponsors, Mortgage
Loan Sellers and Originators" in this
prospectus supplement.
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UNDERWRITERS.................. Bear, Stearns & Co. Inc. and Morgan Stanley &
Co. Incorporated. Bear, Stearns & Co. Inc. is
an affiliate of Bear Stearns Commercial
Mortgage, Inc., one of the sponsors, and of the
depositor. Morgan Stanley & Co. Incorporated is
an affiliate of Morgan Stanley Mortgage Capital
Inc., one of the sponsors.
CUT-OFF DATE.................. April 1, 2007. For purposes of the information
contained in this prospectus supplement
(including the appendices to this prospectus
supplement), scheduled payments due in April
2007 with respect to mortgage loans not having
payment dates on the first day of each month
have been deemed received on April 1, 2007, not
the actual day on which such scheduled payments
were due.
CLOSING DATE.................. On or about April 18, 2007.
DISTRIBUTION DATE............. The 12th day of each month, or, if such 12th
day is not a business day, the next succeeding
business day, commencing in May 2007.
RECORD DATE................... With respect to each distribution date, the
close of business on the last business day of
the preceding calendar month.
EXPECTED FINAL DISTRIBUTION
DATES...................... Class A-1 January 12, 2012
Class A-2 March 12, 2012
Class A-3 October 12, 2014
Class A-AB November 12, 2016
Class A-4 March 12, 2017
Class A-1A March 12, 2017
Class A-M March 12, 2017
Class A-J January 12, 2018
The Expected Final Distribution Date for each
class of certificates is the date on which that
class is expected to be paid in full, assuming
no delinquencies, losses, modifications,
extensions of maturity dates, repurchases or
prepayments of the mortgage loans after the
initial issuance of the certificates and
according to the "Structuring Assumptions." Any
mortgage loans with anticipated repayment dates
are assumed to repay in full on those dates.
The actual final distribution date for any
class may be earlier or later (and could be
substantially later) than the expected final
distribution date.
RATED FINAL DISTRIBUTION
DATE....................... As to each class of certificates, the
distribution date in January 2045, which is the
first distribution date that follows, by at
least 60 months, the maturity date for the
mortgage loan having an anticipated repayment
date that, as of the cut-off date, has the
latest final maturity date.
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OFFERED CERTIFICATES
GENERAL....................... We are offering the following eight (8) classes
of our Series 2007-TOP26 Commercial Mortgage
Pass-Through Certificates:
o Class A-1
o Class A-2
o Class A-3
o Class A-AB
o Class A-4
o Class A-1A
o Class A-M
o Class A-J
The entire series will consist of a total of
twenty-seven (27) classes, the following
nineteen (19) of which are not being offered by
this prospectus supplement and the accompanying
prospectus: Class X-1, Class X-2, Class B,
Class C, Class D, Class E, Class F, Class G,
Class H, Class J, Class K, Class L, Class M,
Class N, Class O, Class P, Class R-I, Class
R-II and Class R-III.
CERTIFICATE BALANCE........... Your certificates will have the approximate
aggregate initial certificate balance presented
on the cover page of this prospectus
supplement, and this balance may vary by up to
5% on the closing date. Mortgage loans may be
removed from or added to the mortgage pool
prior to the closing date within this maximum
permitted variance. Any reduction or increase
in the number of mortgage loans within these
parameters will result in consequential changes
to the initial certificate balance of each
class of offered certificates and to the other
statistical data contained in this prospectus
supplement. No changes in the statistical data
will be made in the final prospectus supplement
unless such changes are material.
The certificate balance at any time is the
maximum amount of principal distributable to a
class and is subject to adjustment on each
distribution date to reflect any reductions
resulting from distributions of principal to
that class or any allocations of losses to the
certificate balance of that class.
The Class X-1 Certificates and the Class X-2
Certificates, which are private certificates,
will not have certificate balances; each such
class of certificates will instead represent
the right to receive distributions of interest
accrued as described in this prospectus
supplement on a notional amount. The notional
amount of the Class X-1 Certificates will be
equal to the aggregate of the certificate
balances of the classes of certificates (other
than the Class X-1, Class X-2, Class R-I, Class
R-II and Class R-III Certificates) outstanding
from time to time. Any information provided in
this prospectus supplement regarding the
characteristics of the Class X-1 Certificates
and Class X-2 Certificates, which are not
offered pursuant to this prospectus supplement,
is provided only to enhance your understanding
of the offered certificates.
The notional amount of the Class X-2
Certificates will equal:
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o during the period from the closing date
through and including the distribution
date occurring in April 2008, the sum of
(a) the lesser of $65,735,000 and the
certificate balance of the Class A-1
Certificates outstanding from time to
time, (b) the lesser of $149,552,000 and
the certificate balance of the Class A-1A
Certificates outstanding from time to time
and (c) the aggregate of the certificate
balances of the Class A-2, Class A-3,
Class A-AB, Class A-4, Class A-M, Class
A-J, Class B, Class C, Class D, Class E,
Class F, Class G, Class H, Class J, Class
K and Class L Certificates outstanding
from time to time;
o during the period following the
distribution date occurring in April 2008
through and including the distribution
date occurring in April 2009, the sum of
(a) the lesser of $165,278,000 and the
certificate balance of the Class A-2
Certificates outstanding from time to
time, (b) the lesser of $143,598,000 and
the certificate balance of the Class A-1A
Certificates outstanding from time to
time, (c) the aggregate of the certificate
balances of the Class A-3, Class A-AB,
Class A-4, Class A-M, Class A-J, Class B,
Class C, Class D, Class E, Class F and
Class G Certificates outstanding from time
to time and (d) the lesser of $14,744,000
and the certificate balance of the Class H
Certificates outstanding from time to
time;
o during the period following the
distribution date occurring in April 2009
through and including the distribution
date occurring in April 2010, the sum of
(a) the lesser of $85,080,000 and the
certificate balance of the Class A-2
Certificates outstanding from time to
time, (b) the lesser of $137,488,000 and
the certificate balance of the Class A-1A
Certificates outstanding from time to
time, (c) the aggregate of the certificate
balances of the Class A-3, Class A-AB,
Class A-4, Class A-M, Class A-J, Class B,
Class C, Class D and Class E Certificates
outstanding from time to time and (d) the
lesser of $10,082,000 and the certificate
balance of the Class F Certificates
outstanding from time to time;
o during the period following the
distribution date occurring in April 2010
through and including the distribution
date occurring in April 2011, the sum of
(a) the lesser of $3,497,000 and the
certificate balance of the Class A-2
Certificates outstanding from time to
time, (b) the lesser of $131,491,000 and
the certificate balance of the Class A-1A
Certificates outstanding from time to
time, (c) the aggregate of the certificate
balances of the Class A-3, Class A-AB,
Class A-4, Class A-M, Class A-J, Class B
and Class C Certificates outstanding from
time to time and (d) the lesser of
$15,989,000 and the certificate balance of
the Class D Certificates outstanding from
time to time;
o during the period following the
distribution date occurring in April 2011
through and including the distribution
date occurring in April 2012, the sum of
(a) the lesser of $914,107,000 and the
certificate balance of the Class A-4
Certificates outstanding from time to
time, (b) the lesser of $107,425,000 and
the certificate balance of the Class A-1A
Certificates outstanding from time to
time, (c) the aggregate of the certificate
balances of the Class A-M and Class A-
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J Certificates outstanding from time to
time and (d) the lesser of $40,660,000 and
the certificate balance of the Class B
Certificates outstanding from time to
time;
o during the period following the
distribution date occurring in April 2012
through and including the distribution
date occurring in April 2013, the sum of
(a) the lesser of $834,026,000 and the
certificate balance of the Class A-4
Certificates outstanding from time to
time, (b) the lesser of $102,821,000 and
the certificate balance of the Class A-1A
Certificates outstanding from time to
time, (c) the aggregate of the certificate
balances of the Class A-M and Class A-J
Certificates outstanding from time to time
and (d) the lesser of $10,441,000 and the
certificate balance of the Class B
Certificates outstanding from time to
time;
o during the period following the
distribution date occurring in April 2013
through and including the distribution
date occurring in April 2014, the sum of
(a) the lesser of $758,203,000 and the
certificate balance of the Class A-4
Certificates outstanding from time to
time, (b) the lesser of $98,435,000 and
the certificate balance of the Class A-1A
Certificates outstanding from time to
time, (c) the aggregate of the certificate
balances of the Class A-M Certificates
outstanding from time to time and (d) the
lesser of $143,051,000 and the certificate
balance of the Class A-J Certificates
outstanding from time to time; and
o following the distribution date occurring
in April 2014, $0.
Accordingly, the notional amount of the Class
X-1 Certificates will be reduced on each
distribution date by any distributions of
principal actually made on, and any losses
actually allocated to the certificate balance
of, any class of certificates (other than the
Class X-1, Class X-2, Class R-I, Class R-II and
Class R-III Certificates) outstanding from time
to time. The notional amount of the Class X-2
Certificates will be reduced on each
distribution date by any distributions of
principal actually made on, and any losses
actually allocated to the certificate balance
of any component and any class of certificates
included in the calculation of the notional
amount for the Class X-2 Certificates on such
distribution date, as described above. Holders
of the Class X-2 Certificates will not be
entitled to distributions of interest at any
time following the distribution date occurring
in April 2014.
PASS-THROUGH RATES............ Your certificates will accrue interest at an
annual rate called a pass-through rate. The
approximate initial pass-through rates for each
class of offered certificates are set forth on
the cover page of this prospectus supplement.
Interest on your certificates will be
calculated on the basis of a 360-day year
consisting of twelve 30-day months, also
referred to in this prospectus supplement as a
30/360 basis.
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The pass-through rates for the Class A-1, Class
A-2, Class A-3 and Class A-AB Certificates
will, at all times, be fixed at their initial
rate of 5.145%, 5.330%, 5.432% and 5.429%,
respectively. The pass-through rates for the
Class A-4, Class A-1A, Class A-M and Class A-J
Certificates will, at all times, be a per annum
rate equal to the lesser of 5.471%, 5.446%,
5.513% and 5.566%, respectively, and the
weighted average net mortgage rate.
The weighted average net mortgage rate for a
particular distribution date is a weighted
average of the interest rates on the mortgage
loans minus a weighted average annual
administrative cost rate, which includes the
master servicing fee rate, any excess servicing
fee rate, the primary servicing fee rate, and
the trustee fee rate. The relevant weighting is
based upon the respective principal balances of
the mortgage loans as in effect immediately
prior to the relevant distribution date. For
purposes of calculating the weighted average
net mortgage rate, the mortgage loan interest
rates will not include any default interest
rate. The mortgage loan interest rates will
also be determined without regard to any loan
term modifications agreed to by the special
servicer or resulting from any borrower's
bankruptcy or insolvency. In addition, for
purposes of calculating the weighted average
net mortgage rate, if a mortgage loan does not
accrue interest on a 30/360 basis, its interest
rate for any month will, in general, be deemed
to be the rate per annum that, when calculated
on a 30/360 basis, will produce the amount of
interest that actually accrues on that mortgage
loan in that month.
The pass-through rate applicable to the Class
X-2 Certificates for the initial distribution
date will equal approximately 0.144% per annum.
The pass-through rate applicable to the Class
X-2 Certificates for each distribution date
subsequent to the initial distribution date and
on or before the distribution date in April
2014 will equal the weighted average of the
respective strip rates (the "Class X-2 Strip
Rates") at which interest accrues from time to
time on the respective components of the total
notional amount of the Class X-2 Certificates
outstanding immediately prior to the related
distribution date (weighted on the basis of the
respective balances of such components
outstanding immediately prior to such
distribution date). Each of those components
will be comprised of all or a designated
portion of the certificate balance of a
specified class of certificates with a
principal balance. If all or a designated
portion of the certificate balance of any class
of certificates with a principal balance is
identified under "--Certificate Balance" above
as being part of the total notional amount of
the Class X-2 Certificates immediately prior to
any distribution date, then that certificate
balance (or designated portion of it) will
represent one or more separate components of
the total notional amount of the Class X-2
Certificates for purposes of calculating the
accrual of interest for the related
distribution date. For any distribution date
occurring in or before April 2014, on any
particular component of the total notional
amount of the Class X-2 Certificates
immediately prior to the related distribution
date, the applicable Class X-2 Strip Rate will
equal the excess, if any, of:
o the lesser of (a) the rate per annum
corresponding to such distribution date as
set forth on Schedule B attached to this
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prospectus supplement and (b) the weighted
average net mortgage rate for such
distribution date, over
o the pass-through rate for such
distribution date for the class of
certificates with a principal balance
whose certificate balance, or a designated
portion of it, comprises such component.
Under no circumstances will any Class X-2 Strip
Rate be less than zero.
The pass-through rate applicable to the Class
X-1 Certificates for the initial distribution
date will equal approximately 0.036% per annum.
The pass-through rate applicable to the Class
X-1 Certificates for each distribution date
subsequent to the initial distribution date
will equal the weighted average of the
respective strip rates (the "Class X-1 Strip
Rates") at which interest accrues from time to
time on the respective components of the total
notional amount of the Class X-1 Certificates
outstanding immediately prior to the related
distribution date (weighted on the basis of the
respective balances of such components
outstanding immediately prior to such
distribution date). Each of those components
will be comprised of all or a designated
portion of the certificate balance of one of
the classes of the certificates with a
principal balance. In general, the certificate
balance of each class of certificates with a
principal balance will constitute a separate
component of the total notional amount of the
Class X-1 Certificates; provided that, if a
portion, but not all, of the certificate
balance of any particular class of certificates
with a principal balance is identified under
"--Certificate Balance" above as being part of
the total notional amount of the Class X-2
Certificates immediately prior to any
distribution date, then that identified portion
of such certificate balance will also represent
one or more separate components of the total
notional amount of the Class X-1 Certificates
for purposes of calculating the accrual of
interest for the related distribution date, and
the remaining portion of such certificate
balance will represent one or more other
separate components of the Class X-1
Certificates for purposes of calculating the
accrual of interest for the related
distribution date. For any distribution date
occurring in or before April 2014, on any
particular component of the total notional
amount of the Class X-1 Certificates
immediately prior to the related distribution
date, the applicable Class X-1 Strip Rate will
be calculated as follows:
o if such particular component consists of
the entire certificate balance (or a
designated portion of that certificate
balance) of any class of certificates with
a principal balance, and if such entire
certificate balance (or that designated
portion) also constitutes a component of
the total notional amount of the Class X-2
Certificates immediately prior to the
related distribution date, then the
applicable Class X-1 Strip Rate will equal
the excess, if any, of (a) the weighted
average net mortgage rate for such
distribution date, over (b) the greater of
(i) the rate per annum corresponding to
such distribution date as set forth on
Schedule B attached to this prospectus
supplement and (ii) the pass-through rate
for such distribution date for such class
of certificates with a principal balance;
and
o if such particular component consists of
the entire certificate balance (or a
designated portion of that certificate
balance) of any
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class of certificates with a principal
balance, and if such entire certificate
balance (or that designated portion) does
not also constitute a component of the
total notional amount of the Class X-2
Certificates immediately prior to the
related distribution date, then the
applicable Class X-1 Strip Rate will equal
the excess, if any, of (a) the weighted
average net mortgage rate for such
distribution date, over (b) the
pass-through rate for such distribution
date for such class of certificates with a
principal balance.
For any distribution date occurring after April
2014, the certificate balance of each class of
certificates with a principal balance will
constitute a separate component of the total
notional amount of the Class X-1 Certificates,
and the applicable Class X-1 Strip Rate with
respect to each such component for each such
distribution date will equal the excess, if
any, of (a) the weighted average net mortgage
rate for such distribution date, over (b) the
pass-through rate for such distribution date
for such class of certificates with a principal
balance. Under no circumstances will any Class
X-1 Strip Rate be less than zero.
The Class B Certificates will, at all times,
accrue interest at a per annum rate equal to
the weighted average net mortgage rate less
0.037%. The Class C, Class D, Class E, Class F,
Class G and Class H Certificates will, at all
times, accrue interest at a per annum rate
equal to the weighted average net mortgage
rate. The Class J, Class K, Class L, Class M,
Class N, Class O and Class P Certificates will,
at all times, accrue interest at a per annum
rate equal to the lesser of 5.152% and the
weighted average net mortgage rate.
DISTRIBUTIONS
A. AMOUNT AND ORDER
OF DISTRIBUTIONS.. On each distribution date, you will be entitled
to receive interest and principal distributed
from funds available for distribution from the
mortgage loans. These distributions may be
based on amounts relating to mortgage loans in
loan group 1, mortgage loans in loan group 2 or
a combination of these loan groups, as
described further in this prospectus
supplement. Funds available for distribution to
the certificates will be net of excess
interest, excess liquidation proceeds and
specified trust expenses, including all
servicing fees, trustee fees and related
compensation. Distributions to you will be in
an amount equal to your certificate's interest
and principal entitlement, subject to:
(i) payment of the respective interest
entitlement for any class of certificates
bearing an earlier alphabetical
designation (except in respect of the
distribution of interest among the Class
A-1, Class A-2, Class A-3, Class A-AB,
Class A-4, Class A-1A, Class X-1 and Class
X-2 Certificates, which will have the same
senior priority and be distributed pro
rata and except that distributions to the
Class A-M Certificates will be paid after
distributions to the foregoing classes and
except that the Class A-J Certificates
will be paid after distributions to the
Class A-M Certificates), and
(ii) if applicable, payment of the respective
principal entitlement for the distribution
date to the outstanding classes of
certificates having an earlier
alphabetical designation (and, in the case
of the Class A-1/Class A-1A, Class A-2,
Class A-3, Class A-AB and
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Class A-4 Certificates, generally in that
order and with respect to principal from
the mortgage loans in loan group 1 or loan
group 2, as applicable, as more fully
described in this prospectus supplement)
until the principal balance of each such
class has been reduced to zero; provided,
however, that the Class A-AB Certificates
have certain priority with respect to
reducing the principal balance of those
certificates to their planned principal
balance, as described in this prospectus
supplement; and provided that the Class
A-M Certificates receive distributions of
principal only after distributions of
principal are made to the Class A-1, Class
A-2, Class A-3, Class A-AB, Class A-4,
Class A-1A Certificates and that the Class
A-J Certificates receive distributions of
principal only after distributions are
made to the Class A-M Certificates.
Each certificateholder will receive its share
of distributions on its class of certificates
on a pro rata basis with all other holders of
certificates of the same class. See
"Description of the Offered
Certificates--Distributions" in this prospectus
supplement.
Generally, the Class A-1, Class A-2, Class A-3,
Class A-AB and Class A-4 Certificates will have
priority with respect to payments received in
respect of mortgage loans included in loan
group 1. Generally, the Class A-1A Certificates
will have priority with respect to payments
received in respect of mortgage loans included
in loan group 2.
B. INTEREST AND
PRINCIPAL
ENTITLEMENTS...... A description of the interest entitlement
payable to each class can be found in
"Description of the Offered
Certificates--Distributions" in this prospectus
supplement. As described in that section, there
are circumstances relating to the timing of
prepayments 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 balance. In
addition, the right of the master servicer, the
special servicer and the trustee to
reimbursement for payment of nonrecoverable
advances, payment of compensation and
reimbursement of certain costs and expenses
will be prior to your right to receive
distributions of principal or interest.
The Class R-I, Class R-II, Class R-III and
Class X Certificates will not be entitled to
principal distributions. The amount of
principal required to be distributed on the
classes entitled to principal on a particular
distribution date will, in general, be equal to
the sum of:
o the principal portion of all scheduled
payments, other than balloon payments, to
the extent received or advanced by the
master servicer or other party (in
accordance with the pooling and servicing
agreement) during the related collection
period;
o all principal prepayments and the
principal portion of balloon payments
received during the related collection
period;
o the principal portion of other collections
on the mortgage loans received during the
related collection period, for example
liquidation proceeds, condemnation
proceeds, insurance proceeds and income on
"real estate owned"; and
o the principal portion of proceeds of
mortgage loan repurchases received during
the related collection period;
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subject, however, to the adjustments described
in this prospectus supplement. See the
definition of "Principal Distribution Amount"
in the "Glossary of Terms."
C. PREPAYMENT
PREMIUMS/YIELD
MAINTENANCE
CHARGES........... The manner in which any prepayment premiums and
yield maintenance charges received during a
particular collection period will be allocated
to the Class X Certificates, on the one hand
and the classes of certificates entitled to
principal, on the other hand, is described in
"Description of the Offered
Certificates--Distributions" in this prospectus
supplement.
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 (other than
excess liquidation proceeds and certain excess
interest in connection with any mortgage loan
having an anticipated repayment date) on any
distribution date is depicted in descending
order. The manner in which mortgage loan losses
(including interest losses other than losses
with respect to certain excess interest in
connection with any mortgage loan having an
anticipated repayment date) are allocated is
depicted in ascending order.
--------------------------------
Class A-l, Class A-2, Class A-3,
Class A-AB*, Class A-4, Class
A-1A**, Class X-1***
and Class X-2***
--------------------------------
|
|
--------------------------------
Class A-M
--------------------------------
|
|
--------------------------------
Class A-J
--------------------------------
|
|
--------------------------------
Classes B-P
--------------------------------
NO OTHER FORM OF CREDIT ENHANCEMENT WILL BE
AVAILABLE TO YOU AS A HOLDER OF OFFERED
CERTIFICATES.
*The Class A-AB Certificates have priority with
respect to receiving distributions of principal
from the portion of those amounts attributable
to loan group 1 and, after the principal
balance of the Class A-1A Certificates has been
reduced to zero, the portion of those amounts
attributable to loan group 2, in either case,
to reduce the Certificate Balance of the Class
A-AB Certificates to the Planned Principal
Balance, as described in this prospectus
supplement.
**The Class A-1A Certificates generally have a
priority entitlement to principal payments
received in respect of mortgage loans included
in
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loan group 2. The Class A-1, Class A-2, Class
A-3, Class A-AB and Class A-4 Certificates
generally have a priority entitlement to
principal payments received in respect of
mortgage loans included in loan group 1. See
"Description of the Offered
Certificates--Distributions" in this prospectus
supplement.
***Interest only certificates. No principal
payments or realized loan losses in respect of
principal will be allocated to the Class X-1 or
Class X-2 Certificates. However, any mortgage
loan losses will reduce the notional amount of
the Class X-1 Certificates and mortgage loan
losses allocated to any component and any class
of certificates included in the calculation of
the notional amount for the Class X-2
Certificates will reduce the notional amount of
the Class X-2 Certificates.
B. SHORTFALLS IN
AVAILABLE FUNDS... The following types of shortfalls in available
funds will reduce amounts available for
distribution and will be allocated in the same
manner as mortgage loan losses. Among the
causes of these shortfalls are the following:
o shortfalls resulting from compensation
which the special servicer is entitled to
receive;
o shortfalls resulting from interest on
advances made by the master servicer or
the trustee, to the extent not covered by
default interest and late payment charges
paid by the borrower; and
o shortfalls resulting from a reduction of a
mortgage loan's interest rate by a
bankruptcy court or other modification or
from other unanticipated, extraordinary or
default-related expenses of the trust.
Shortfalls in mortgage loan interest as a
result of the timing of voluntary and
involuntary prepayments (net of certain amounts
required to be used by the master servicer to
offset those shortfalls) will be allocated to
each class of certificates in accordance with
their respective interest entitlements as
described in this prospectus supplement.
INFORMATION ABOUT THE MORTGAGE POOL
CHARACTERISTICS OF THE MORTGAGE POOL
A. GENERAL.............. All numerical information in this prospectus
supplement concerning the mortgage loans is
approximate. All weighted average information
regarding the mortgage loans reflects the
weighting of the mortgage loans based upon
their outstanding principal balances as of the
cut-off date. With respect to mortgage loans
not having due dates on the first day of each
month, scheduled payments due in April 2007
have been deemed received on April 1, 2007.
When information presented in this prospectus
supplement with respect to mortgaged properties
is expressed as a percentage of the initial
pool balance, the percentages are based upon
the cut-off date principal balances of the
related mortgage loans or, with respect to an
individual property securing a multi-property
mortgage loan, the portions of those loan
balances allocated to such properties. The
allocated loan amount
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for each mortgaged property securing a
multi-property mortgage loan is set forth on
Appendix II to this prospectus supplement.
B. PRINCIPAL BALANCES.... The trust's primary assets will be two hundred
thirty-seven (237) mortgage loans (which
include 213 mortgage loans in loan group 1 and
24 mortgage loans in loan group 2) with an
aggregate principal balance as of the cut-off
date of approximately $2,106,003,972 (which
includes $1,955,901,313 in loan group 1 and
$150,102,659 in loan group 2). It is possible
that the aggregate mortgage loan balance, the
initial outstanding loan group 1 balance and
the initial outstanding loan group 2 balance,
will vary by up to 5% on the closing date. As
of the cut-off date, the principal balance of
the mortgage loans in the mortgage pool ranged
from approximately $548,850 to approximately
$150,000,000 (and the balances of the mortgage
loans ranged from $548,850 to $150,000,000 in
loan group 1 and from $894,281 to $24,000,000
in loan group 2) and the mortgage loans had an
approximate average balance of $8,886,093 (and
an approximate average balance of $9,182,635 in
loan group 1 and $6,254,277 in loan group 2).
C. FEE SIMPLE/LEASEHOLD.. Two hundred thirty-seven (237) mortgaged
properties, securing mortgage loans
representing 94.7% of the initial outstanding
pool balance (which include two hundred
fourteen (214) mortgaged properties in loan
group 1, securing mortgage loans representing
94.3% of the initial outstanding loan group 1
balance, and twenty-three (23) mortgaged
properties in loan group 2, securing mortgage
loans representing 99.3% of the initial
outstanding loan group 2 balance), are subject
to a mortgage, deed of trust or similar
security instrument that creates a first
mortgage lien on a fee simple estate in those
mortgaged properties.
Six (6) mortgaged properties, securing mortgage
loans representing 3.5% of the initial
outstanding pool balance (which include five
(5) mortgaged properties in loan group 1,
securing mortgage loans representing 3.7% of
the initial outstanding loan group 1 balance,
and one (1) mortgaged property in loan group 2,
securing a mortgage loan representing 0.7% of
the initial outstanding loan group 2 balance),
are subject to a mortgage, deed of trust or
similar security instrument that creates a
first mortgage lien on a fee interest in a
portion of those mortgaged properties and a
leasehold interest in the remaining portion of
those mortgaged properties.
Four (4) mortgaged properties, securing
mortgage loans representing 1.9% of the initial
outstanding pool balance (and representing 2.0%
of the initial outstanding loan group 1
balance), are subject to a mortgage, deed of
trust or similar security instrument that
creates a first mortgage lien on a leasehold
interest in the mortgaged properties.
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S-24
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D. PROPERTY TYPES........ The following table shows how the mortgage
loans are secured by collateral which is
distributed among different types of
properties.
Percentage of Number of
Initial Outstanding Mortgaged
Property Type Pool Balance Properties
-------------------- ------------------- ----------
Office 40.8% 42
Retail 23.6% 97
Industrial 11.6% 36
Hospitality 7.6% 15
Multifamily 6.9% 22
Mixed Use 5.5% 16
Other 2.4% 8
Self Storage 1.3% 9
Manufactured Housing
Community 0.2% 2
For information regarding the types of
properties securing the mortgage loans included
in loan group 1 or loan group 2, see Appendix I
to this prospectus supplement.
E. PROPERTY LOCATION..... The number of mortgaged properties, and the
approximate percentage of the aggregate
principal balance of the mortgage loans secured
by mortgaged properties located in the five (5)
geographic areas with the highest
concentrations of mortgaged properties, are as
described in the table below:
Percentage of
Initial Number of
Outstanding Mortgaged
Geographic Area Pool Balance Properties
--------------- ------------- ----------
New York 16.0% 24
California 12.6% 49
Southern 8.3% 31
Northern 4.4% 18
Texas 9.5% 22
New Jersey 7.0% 13
Missouri 5.7% 3
The remaining mortgaged properties are located
throughout thirty-eight (38) other states. None
of these property locations has a concentration
of mortgaged properties that represents
security for more than 3.9% of the initial
outstanding pool balance, as of the cut-off
date. Northern California includes areas with
zip codes above 93600 and Southern California
includes areas with zip codes of 93600 and
below.
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For information regarding the location of
properties securing the mortgage loans included
in loan group 1 or loan group 2, see Appendix I
to this prospectus supplement.
F. OTHER MORTGAGE LOAN
FEATURES........... As of the cut-off date, the mortgage loans had
the following characteristics:
o The most recent scheduled payment of
principal and interest on any mortgage
loan was not thirty days or more past due,
and no mortgage loan had been thirty days
or more past due in the past year;
o Twenty (20) groups of mortgage loans were
made to the same borrower or to borrowers
that are affiliated with one another
through partial or complete direct or
indirect common ownership (which include
eighteen (18) groups of mortgage loans in
loan group 1, representing 40.0% of the
initial loan group 1 balance and two (2)
groups of mortgage loans in loan group 2,
representing 7.8% of the initial loan
group 2 balance). Of these twenty (20)
groups, the three (3) largest groups
represent 8.5%, 7.3% and 6.2%,
respectively, of the initial outstanding
pool balance. See Appendix II attached to
this prospectus supplement. The related
borrower concentrations of the three (3)
largest groups in loan group 1 represent
9.1%, 7.9% and 6.7%, respectively, of the
initial outstanding loan group 1 balance;
the two (2) groups in loan group 2
represent 5.8% and 2.0%, respectively, of
the initial outstanding loan group 2
balance;
o Eighty-seven (87) mortgaged properties,
securing mortgage loans representing 27.2%
of the initial outstanding pool balance
(and representing 29.3% of the initial
outstanding loan group 1 balance) are each
100% leased to a single tenant;
o All of the mortgage loans bear interest at
fixed rates;
o Fixed periodic payments on the mortgage
loans are generally determined assuming
interest is calculated on a 30/360 basis,
but interest actually accrues and is
applied on certain mortgage loans on an
actual/360 basis. Accordingly, there will
be less amortization of the principal
balance during the term of these mortgage
loans, resulting in a higher final payment
on these mortgage loans; and
o No mortgage loan permits negative
amortization or the deferral of accrued
interest (except excess interest that
would accrue in the case of any mortgage
loan having an anticipated repayment date
after the applicable anticipated repayment
date for the related mortgage loan).
G. BALLOON LOANS/ARD
LOANS.............. As of the cut-off date, the mortgage loans had
the following additional characteristics:
o Two hundred thirty-three (233) mortgage
loans, representing 99.6% of the initial
outstanding pool balance, are "balloon
loans" (which include two hundred ten
(210) mortgage loans in loan group 1,
representing 99.7% of the initial
outstanding loan group 1 balance, and
twenty-three (23) mortgage loans in loan
group 2, representing 98.8% of the initial
outstanding loan group 2
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balance). For purposes of this prospectus
supplement, we consider a mortgage loan to
be a "balloon loan" if its principal
balance is not scheduled to be fully or
substantially amortized by the loan's
stated maturity date or anticipated
repayment date, as applicable. Thirty-nine
(39) of these mortgage loans, representing
30.7% of the initial outstanding pool
balance (and representing 33.0% of the
initial outstanding loan group 1 balance),
are mortgage loans that have an
anticipated repayment date that provide
for an increase in the mortgage rate
and/or principal amortization at a
specified date prior to stated maturity.
These mortgage loans are structured to
encourage the borrower to repay the
mortgage loan in full by the specified
date (which is prior to the mortgage
loan's stated maturity date) upon which
these increases occur; and
o The remaining four (4) mortgage loans,
representing 0.4% of the initial
outstanding pool balance (which include
three (3) mortgage loans in loan group 1,
representing 0.3% of the initial
outstanding loan group 1 balance, and one
(1) mortgage loan in loan group 2,
representing 1.2% of the initial
outstanding loan group 2 balance), are
fully amortizing and are expected to have
less than 5% of the original principal
balance outstanding as of their related
stated maturity dates.
H. INTEREST ONLY LOANS... As of the cut-off date, the mortgage loans had
the following additional characteristics:
o Sixty (60) mortgage loans, representing
53.7% of the initial outstanding pool
balance (which include fifty-six (56)
mortgage loans in loan group 1,
representing 55.4% of the initial
outstanding loan group 1 balance, and four
(4) mortgage loans in loan group 2,
representing 31.8% of the initial
outstanding loan group 2 balance),
currently provide for monthly payments of
interest only for their entire respective
terms; and
o Fifty-seven (57) mortgage loans,
representing 19.9% of the initial
outstanding pool balance (which include
fifty-one (51) mortgage loans in loan
group 1, representing 18.4% of the initial
outstanding loan group 1 balance, and six
(6) mortgage loans in loan group 2,
representing 39.7% of the initial
outstanding loan group 2 balance),
currently provide for monthly payments of
interest only for a portion of their
respective terms and then provide for the
monthly payment of principal and interest
over their respective remaining terms.
I. PREPAYMENT/DEFEASANCE
PROVISIONS......... As of the cut-off date, all of the mortgage
loans restricted voluntary principal
prepayments as follows:
o One hundred thirty-five (135) mortgage
loans, representing 54.3% of the initial
outstanding pool balance (which include
one hundred twenty (120) mortgage loans in
loan group 1, representing 54.2% of the
initial outstanding loan group 1 balance,
and fifteen (15) mortgage loans in loan
group 2, representing 56.0% of the initial
outstanding loan group 2 balance),
prohibit voluntary principal prepayments
for a period ending on a date determined
by the related mortgage note (which may be
the maturity date), which period is
referred to in this prospectus supplement
as a lock-out period, but permit the
related borrower, after an initial period
of at
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least two years following the date of
issuance of the certificates, to defease
the mortgage loan by pledging "government
securities" as defined in the Investment
Company Act of 1940 that provide for
payment on or prior to each due date
through and including the maturity date
(or such earlier due date on which the
mortgage loan first becomes freely
prepayable) of amounts at least equal to
the amounts that would have been payable
on those dates under the terms of the
mortgage loans and obtaining the release
of the mortgaged property from the lien of
the mortgage;
o Forty-four (44) mortgage loans,
representing 20.9% of the initial
outstanding pool balance (which include
forty (40) mortgage loans in loan group 1,
representing 20.6% of the initial
outstanding loan group 1 balance, and four
(4) mortgage loans in loan group 2,
representing 24.9% of the initial
outstanding loan group 2 balance),
prohibit voluntary principal prepayments
during a lock-out period, and following
the lock-out period provide for a
prepayment premium or yield maintenance
charge calculated on the basis of the
greater of a yield maintenance formula and
1.0% of the amount prepaid, and also
permit the related borrower, after an
initial period of at least two years
following the date of the issuance of the
certificates, to defease the mortgage loan
by pledging "government securities" as
defined above;
o Forty-six (46) mortgage loans,
representing 19.8% of the initial
outstanding pool balance (which include
forty-one (41) mortgage loans in loan
group 1, representing 19.9% of the initial
outstanding loan group 1 balance, and five
(5) mortgage loans in loan group 2,
representing 19.1% of the initial
outstanding loan group 2 balance),
prohibit voluntary principal prepayments
during a lock-out period, and following
the lock-out period provide for a
prepayment premium or yield maintenance
charge calculated on the basis of the
greater of a yield maintenance formula and
1.0% of the amount prepaid;
o Five (5) mortgage loans, representing 2.7%
of the initial outstanding pool balance
(and representing 2.9% of the initial
outstanding loan group 1 balance),
prohibit voluntary principal prepayments
during a lock-out period, and following
the lock-out period permit the prepayment
of the related mortgage loan without the
payment of any prepayment premium;
o Two (2) mortgage loans, representing 1.1%
of the initial outstanding pool balance
(and representing 1.2% of the initial
outstanding loan group 1 balance), have no
lock-out period and permit voluntary
principal prepayments for the first 28
payment periods if accompanied by a
prepayment premium or yield maintenance
charge calculated on the basis of the
greater of a yield maintenance formula and
1.0% of the amount prepaid, and following
such payment periods provide for a
prepayment premium or yield maintenance
charge calculated on the basis of the
greater of a yield maintenance formula and
1.0% of the amount prepaid, and also
permit the related borrower, after an
initial period of at least two years
following the date of the issuance of the
certificates, to defease the mortgage loan
by pledging "government securities" as
defined above;
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o One (1) mortgage loan, representing 0.7%
of the initial outstanding pool balance
(and representing 0.8% of the initial
outstanding loan group 1 balance), has no
lock-out period and permits voluntary
principal prepayments if accompanied by a
prepayment premium or yield maintenance
charge calculated on the basis of the
greater of a yield maintenance formula and
(i) 3.0% of the amount prepaid with
respect to a prepayment made prior to
March 1, 2009 or (ii) 1.0% of the amount
prepaid with respect to a prepayment made
on or after March 1, 2009;
o Two (2) mortgage loans, representing 0.3%
of the initial outstanding pool balance
(and representing 0.3% of the initial
outstanding loan group 1 balance), have no
lock-out period and permit voluntary
principal prepayments if accompanied by a
prepayment premium or yield maintenance
charge calculated on the basis of the
greater of a yield maintenance formula and
1.0% of the amount prepaid;
o One (1) mortgage loan, representing 0.1%
of the initial outstanding pool balance
(and representing 0.2% of the initial
outstanding loan group 1 balance),
prohibits voluntary principal prepayments
during a lock-out period, and following
the lock-out period provides for a
prepayment premium or yield maintenance
charge calculated on the basis of the
greater of a yield maintenance formula and
0.5% of the amount prepaid; and
o One (1) mortgage loan, representing 0.1%
of the initial outstanding pool balance
(and representing 0.1% of the initial
outstanding loan group 1 balance), has no
lock-out period and permits the related
borrower to prepay all or a portion of the
mortgage loan subject to the prepayment
premium calculated on the basis of 3.0% of
the amount prepaid with respect to any
prepayment made on or prior to January 1,
2008; 2.0% of the amount prepaid with
respect to any prepayment made thereafter
through January 1, 2009; and 1.0% of the
amount prepaid with respect to any
prepayment made thereafter.
Notwithstanding the above, the mortgage loans
generally (i) permit prepayment in connection
with casualty or condemnation and certain other
matters without payment of a prepayment premium
or yield maintenance charge and (ii) provide
for a specified period commencing prior to and
including the maturity date or the anticipated
repayment date during which the related
borrower may prepay the mortgage loan without
payment of a prepayment premium or yield
maintenance charge. See the footnotes to
Appendix II attached to this prospectus
supplement for more details about the various
yield maintenance formulas.
With respect to the prepayment and defeasance
provisions set forth above, certain of the
mortgage loans also include provisions
described below:
o One (1) mortgage loan, representing 3.2%
of the initial outstanding pool balance
(and representing 3.5% of the initial
outstanding loan group 1 balance), is
secured by multiple parcels and permits
the release of up to two (2) of the
parcels from the lien of the related
mortgage subject to the satisfaction of
certain conditions including,
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but not limited to, (i) the payment of
$379,500 with respect to the parcel
identified as Tract 3 and $796,950 with
respect to the parcel identified as Tract
4 plus a prepayment premium equal to the
greater of a yield maintenance formula and
3.0% of the amount prepaid, (ii) the
aggregate debt service coverage ratio with
respect to the remaining parcels following
the release being equal to or greater than
the greater of (a) 1.62x and (b) the
aggregate debt service coverage ratio
immediately prior to the release, (iii)
the loan-to-value ratio of the remaining
parcels following the release being equal
to or less than the lesser of (a) 66% and
(b) the loan-to-value ratio immediately
prior to the release and (iv) borrower
having provided to lender written notice
of the release no later than (a) September
29, 2011 with respect to the parcel
identified as Tract 3 and (b) April 10,
2008 with respect to the parcel identified
as Tract 4;
o Two (2) mortgage loans, representing 1.3%
of the initial outstanding pool balance
(and representing 1.4% of the initial
outstanding loan group 1 balance) are
cross-collateralized with each other and
permit the release of either mortgaged
property from the lien of the
cross-collateralized loan after the
applicable lock-out period subject to the
satisfaction of certain conditions
including, but not limited to, (i) payment
of the entire outstanding principal
balance of the related mortgage loan plus
a prepayment premium equal to the greater
of 1% and a yield maintenance formula,
(ii) the remaining mortgaged property
following such release having a
loan-to-value ratio no greater than 70%
and (iii) the debt service coverage ratio
of the remaining mortgaged property
following such release being no less than
1.50x with respect to one mortgaged
property and 1.65x with respect to the
other mortgaged property;
o One (1) mortgage loan, representing 0.9%
of the initial outstanding pool balance
(and representing 0.9% of the initial
outstanding loan group 1 balance), is
secured by multiple parcels and permits
the release of one (1) of those parcels
from the lien of the mortgage following
the related lock-out period subject to the
satisfaction of certain conditions
including, but not limited to, (i) payment
of release price and accompanying
prepayment premium equal to lesser of (a)
minimum amount necessary to satisfy
loan-to-value and net cash flow release
criteria or (b) $1,000,000; (ii) trailing
12 month net cash flow for the remaining
property must be at least $1,361,600; and
(iii) the remaining property's
loan-to-value ratio (after payment of
release fee) is not greater than 75%;
o Two (2) mortgage loans, representing 0.9%
of the initial outstanding pool balance
(and representing 0.9% of the initial
outstanding loan group 1 balance) are
cross-collateralized with each other and
permit the release of either mortgaged
property from the lien of the
cross-collateralized loan after the
applicable lock-out period subject to the
satisfaction of certain conditions
including, but not limited to, (i) (a)
payment of the entire outstanding
principal balance of the related mortgage
loan plus applicable prepayment charges;
(b) the loan-to-value ratio of the
remaining mortgaged property being not
greater than 80%; and (c) the debt service
coverage ratio of the remaining mortgaged
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property not being less than 0.97x based
on a 10% loan constant; or (ii) (a)
payment of the entire outstanding
principal balance of the related mortgage
loan plus applicable prepayment charges;
(b) payment of 25% of original principal
balance of the other mortgage loan as
principal reduction, together with
applicable prepayment charges; (c) the
loan-to-value ratio of the remaining
mortgaged property following such payment
not being greater than 60%; and (d) the
debt service coverage ratio of the
remaining mortgaged property following
such payment not being less than 1.29x
with respect to one of the mortgaged
properties and 1.30x with respect to the
release of the other mortgage property,
based on a 10% mortgage constant;
o One (1) mortgage loan, representing 0.5%
of the initial outstanding pool balance
(and representing 0.6% of the initial
outstanding loan group 1 balance), is
secured by multiple parcels and permits
the release of two (2) of the parcels from
the lien of the related mortgage following
the related lock-out period subject to the
satisfaction of certain conditions
including, but not limited to, with
respect to one parcel, the payment of a
release price equal to the greater of
$350,000 and 85% of the related net sales
proceeds from the sale of such parcel and
with respect to the other parcel the
payment of a release price equal to the
greater of $50,000 and 85% of the related
net sales proceeds from the sale of such
parcel plus, in each case, a prepayment
premium;
o One (1) mortgage loan, representing 0.5%
of the initial outstanding pool balance
(and representing 0.5% of the initial
outstanding loan group 1 balance), is
secured by multiple parcels and permits
the release of a parcel from the lien of
the mortgage at any time subject to the
satisfaction of certain conditions
including, but not limited to, a
prepayment of an amount equal to 110% of
the allocated loan amount of the property
being released, plus a prepayment premium,
if, in each case, the debt service
coverage ratio with respect to the
remaining parcels following the release is
at least 1.20x;
o One (1) mortgage loan, representing 0.4%
of the initial outstanding pool balance
(and representing 0.4% of the initial
outstanding loan group 1 balance), is
secured by multiple mortgaged properties
and permits the release of a portion of
only one of the mortgaged properties at
any time subject to the satisfaction of
certain conditions including, but not
limited to, a prepayment of an amount
equal to 125% of the allocated loan amount
of the property being released, plus a
prepayment premium, if, in each case, the
debt service coverage ratio with respect
to the remaining mortgaged property
following the release is at least 1.20x;
o One (1) mortgage loan, representing 0.3%
of the initial outstanding pool balance
(and representing 0.3% of the initial
outstanding loan group 1 balance), is
secured by multiple mortgaged properties
and permits the release of one or more of
the related mortgaged properties from the
lien of the related mortgage loan after
the applicable lock-out period if certain
conditions are satisfied, including, but
not limited to, (i) the partial defeasance
of the mortgage loan in an amount equal to
115% of the allocated loan amount of the
mortgaged property being released, (ii)
the
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aggregate debt service coverage ratio with
respect to the remaining mortgaged
properties following the release being
equal to or greater than the greater of
(a) 1.86x (assuming a debt service
constant of 5.77%) and (b) the aggregate
debt service coverage ratio existing
immediately prior to the release, (iii)
the loan-to-value ratio of the remaining
mortgaged properties following the release
being not greater than 55%, and (iv) the
mortgaged property located in Livingston,
Texas must be the first mortgaged property
released;
o Two (2) mortgage loans, representing 0.5%
of the initial outstanding pool balance
(and representing 0.5% of the initial
outstanding loan group 1 balance), are
each secured by multiple parcels and
permit the release of one of the parcels
from the lien of the related mortgage at
any time subject to the satisfaction of
certain conditions including, but not
limited to, (i) the payment of an amount
equal to 105% and 110%, respectively, of
the allocated mortgage loan amount of the
parcel being released plus a prepayment
premium, (ii) the loan-to-value of
remaining portion of the mortgaged
property following the release being not
greater than 65% and 80%, respectively,
and (iii) the debt service coverage ratio
with respect to the remaining portion of
the mortgaged property following the
release being not less than 1.30x and
1.25x, respectively; and
o One (1) mortgage loan, representing 0.2%
of the initial outstanding pool balance
(and representing 0.2% of the initial
outstanding loan group 1 balance), is
secured by multiple mortgaged properties
and permits the release of either of the
mortgaged properties after the applicable
lock-out period subject to the
satisfaction of certain conditions
including, but not limited to, the partial
defeasance of the mortgage loan in an
amount equal to 120% of the allocated loan
amount of the mortgaged property being
released, and, with respect to the
remaining mortgaged properties, (i) the
debt service coverage ratio (assuming a
debt service constant of 10%) following
the release being not less than the
greater of (a) 1.52x and (b) the debt
service coverage ratio immediately prior
to the release, and (ii) the loan-to-value
ratio being not greater than the lesser of
(a) 63.51% and (b) the loan-to-value ratio
immediately prior to the release.
See Appendix II attached to this prospectus
supplement for specific yield maintenance
provisions with respect to the prepayment and
defeasance provisions set forth above.
Notwithstanding the above, the mortgage loans
generally provide that the related borrower may
prepay the mortgage loan without prepayment
premium or defeasance requirements commencing
one (1) to fourteen (14) payment dates prior to
and including the maturity date or the
anticipated repayment date.
In addition, certain mortgage loans provide for
the release, without prepayment or defeasance,
of outparcels or other portions of the related
mortgaged property that were given no value or
minimal value in the underwriting process,
subject to the satisfaction of certain
conditions.
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In addition, certain of the mortgage loans
may permit the related borrower to substitute
collateral under certain circumstances.
See the footnotes to Appendix II attached to
this prospectus supplement for more details
concerning certain of the foregoing
provisions including the method of
calculation of any prepayment premium or
yield maintenance charge, which will vary for
any mortgage loan.
J. MORTGAGE LOAN RANGES
AND WEIGHTED AVERAGES.. As of the cut-off date, the mortgage loans
had the following additional characteristics:
i. MORTGAGE INTEREST
RATES Mortgage interest rates ranging from 4.980%
per annum to 6.640% per annum (and ranging
from 4.980% per annum to 6.640% per annum for
loan group 1 and from 5.300% per annum to
6.320% per annum for loan group 2), and a
weighted average mortgage interest rate of
5.672% per annum (and 5.675% per annum for
loan group 1 and 5.629% per annum for loan
group 2);
ii. ORIGINAL TERMS Original terms to scheduled maturity ranging
from sixty (60) months to two hundred forty
(240) months (and ranging from sixty (60)
months to two hundred forty (240) months for
loan group 1 and from sixty (60) months to
one hundred eighty (180) months for loan
group 2), and a weighted average original
term to scheduled maturity of one hundred
eighteen (118) months (and weighted average
remaining term to scheduled maturity of one
hundred nineteen (119) months for loan group
1 and one hundred eleven (111) months for
loan group 2);
iii. REMAINING TERMS Remaining terms to scheduled maturity ranging
from fifty-six (56) months to two hundred
thirty-nine (239) months (and ranging from
fifty-six (56) months to two hundred
thirty-nine (239) months for loan group 1 and
from fifty-eight (58) months to one hundred
seventy-nine (179) months for loan group 2),
and a weighted average remaining term to
scheduled maturity of one hundred fifteen
(115) months (and weighted average remaining
term to scheduled maturity of one hundred
sixteen (116) months for loan group 1 and one
hundred nine (109) months for loan group 2);
iv. REMAINING
AMORTIZATION TERMS Remaining amortization terms (excluding loans
which provide for interest only payments for
the entire loan term) ranging from one
hundred forty-three (143) months to three
hundred sixty (360) months (and ranging from
one hundred forty-three (143) months to three
hundred sixty (360) months for loan group 1
and from one hundred seventy-nine (179)
months to three hundred sixty (360) months
for loan group 2), and a weighted average
remaining amortization term of three hundred
forty-seven (347) months (and three hundred
forty-six (346) months for loan group 1 and
three hundred fifty-five (355) months for
loan group 2);
v. LOAN-TO-VALUE RATIOS Loan-to-value ratios, calculated as described
in this prospectus supplement, range from
7.7% to 80.0% (and range from 23.2% to 80.0%
for loan group 1 and from 7.7% to 80.0% for
loan group 2), and a weighted average
loan-to-value ratio, calculated as described
in this prospectus supplement, of 59.6% (and
59.5% for loan group 1 and 59.9% for loan
group 2);
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For each of the mortgage loans, the
loan-to-value ratio was calculated according
to the methodology set forth in this
prospectus supplement based on the estimate
of value from a third-party appraisal, which
was generally conducted between December 27,
2005 and April 1, 2007;
For detailed methodologies, see "Description
of the Mortgage Pool--Assessments of Property
Value and Condition--Appraisals" in this
prospectus supplement;
vi. DEBT SERVICE
COVERAGE RATIOS Debt service coverage ratios, determined
according to the methodology presented in
this prospectus supplement, ranging from
1.12x to 10.05x (and ranging from 1.12x to
3.00x for loan group 1 and from 1.20x to
10.05x for loan group 2), and a weighted
average debt service coverage ratio,
calculated as described in this prospectus
supplement, of 1.82x (and 1.79x for loan
group 1 and 2.17x for loan group 2). These
calculations are based on underwritable cash
flow and actual debt service of the related
mortgage loans as described in this
prospectus supplement; and
With respect to three (3) mortgage loans
(Mortgage Loan Nos. 72, 111, 152),
representing 0.8% of the initial outstanding
pool balance, the mortgage loans are secured
by residential cooperative properties that
have debt service coverage ratios of 4.22x,
9.88x and 10.05x, respectively. Excluding
these mortgage loans, the pool of mortgage
loans has a weighted average debt service
coverage ratio of 1.78x;
vii. DEBT SERVICE COVERAGE
RATIOS POST IO PERIOD Debt Service Coverage Ratio Post IO Period,
determined according to the methodology
presented in this prospectus supplement,
ranging from 1.12x to 10.05x (and ranging
from 1.12x to 3.00x for loan group 1 and from
1.15x to 10.05x for loan group 2), and a
weighted average Debt Service Coverage Ratio
Post IO Period, calculated as described in
this prospectus supplement, of 1.77x (and
1.74x for loan group 1 and 2.07x for loan
group 2). Excluding Mortgage Loan Nos. 72,
111, 152, which are secured by residential
cooperative properties, and have Debt Service
Coverage Ratios Post IO Period of 4.22x,
9.88x and 10.05x, respectively, the pool of
mortgage loans has a weighted average Debt
Service Coverage Ratio Post IO Period of
1.73x;
"Debt Service Coverage Ratio Post IO Period"
or "DSCR Post IO Period" means, with respect
to the related mortgage loan that has an
interest-only period that has not expired as
of the cut-off date but will expire prior to
maturity, a debt service coverage ratio
calculated in the same manner as debt service
coverage ratios except that the amount of the
monthly debt service payment considered in
the calculation is the amount of the monthly
debt service payment that is due in the first
month following the expiration of the
applicable interest-only period. See
"Description of the Mortgage Pool--Additional
Mortgage Loan Information" in this prospectus
supplement.
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ADVANCES
A. PRINCIPAL AND
INTEREST ADVANCES...... Subject to a recoverability determination
described in this prospectus supplement, the
master servicer (and the trustee, if
applicable) will be required to advance
delinquent monthly mortgage loan payments for
the mortgage loans that are part of the
trust. The master servicer and the trustee
will not be required to advance any
additional interest accrued as a result of
the imposition of any default rate or any
rate increase after an anticipated repayment
date. The master servicer and the trustee
also are not required to advance prepayment
or yield maintenance premiums, excess
interest or balloon payments. With respect to
any balloon payment, the master servicer (and
the trustee, if applicable) will instead be
required to advance an amount equal to the
scheduled payment that would have been due if
the related balloon payment had not become
due. If a principal and interest advance is
made, the master servicer will defer rather
than advance its master servicing fee, the
excess servicing fee and the primary
servicing fee, but will advance the trustee
fee.
For an REO Property, subject to a
recoverability determination described in
this prospectus supplement, the advance will
equal the scheduled payment that would have
been due if the predecessor mortgage loan had
remained outstanding and continued to
amortize in accordance with its amortization
schedule in effect immediately before the REO
Property was acquired.
B. SERVICING ADVANCES........ Subject to a recoverability determination
described in this prospectus supplement, the
master servicer, the special servicer and the
trustee may also make servicing advances to
pay delinquent real estate taxes, insurance
premiums and similar expenses necessary to
maintain and protect the mortgaged property,
to maintain the lien on the mortgaged
property or to enforce the mortgage loan
documents, and subject to a substantially
similar recoverability determination set
forth in the related non-serviced mortgage
loan pooling and servicing agreement, if any,
each of such parties under that agreement
will be required to make servicing advances
of such type with respect to any non-serviced
mortgage loans.
C. INTEREST ON ADVANCES...... All advances made by the master servicer, the
special servicer or the trustee will accrue
interest at a rate equal to the "prime rate"
as reported in The Wall Street Journal.
D. BACK-UP ADVANCES.......... Pursuant to the requirements of the pooling
and servicing agreement, if the master
servicer fails to make a required advance,
the trustee will be required to make the
advance, subject to the same limitations, and
with the same rights of the master servicer.
E. RECOVERABILITY............ None of the master servicer, the special
servicer or the trustee will be required to
make any advance if the master servicer, the
special servicer (or another master servicer,
special servicer, trustee or any fiscal agent
with respect to a non-serviced pari passu
companion mortgage loan) or the trustee, as
the case may be, reasonably determines that
the advance would not be recoverable in
accordance with the servicing standard (in
the case of the master servicer or special
servicer) or in accordance with its business
judgment (in the case of the trustee). The
trustee may rely on any such determination
made by the master servicer or the special
servicer.
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F. ADVANCES DURING AN
APPRAISAL REDUCTION
EVENT.............. The occurrence of certain adverse events
affecting a mortgage loan will require the
special servicer to obtain a new appraisal or
other valuation of the related mortgaged
property. In general, if the principal amount
of a mortgage loan plus all other amounts due
under the mortgage loan and interest on
advances made with respect to the mortgage loan
exceeds 90% of the value of the mortgaged
property determined by an appraisal or other
valuation, an appraisal reduction may be
created in the amount of the excess as
described in this prospectus supplement. If
there exists an appraisal reduction for any
mortgage loan, the interest portion of the
amount required to be advanced on that mortgage
loan will be proportionately reduced to the
extent of the appraisal reduction. This will
reduce the funds available to pay interest on
the most subordinate class or classes of
certificates then outstanding.
See "Description of the Offered
Certificates--Advances" in this prospectus
supplement.
ADDITIONAL ASPECTS OF CERTIFICATES
RATINGS....................... The certificates offered to you will not be
issued unless each of the classes of
certificates being offered by this prospectus
supplement receives the following ratings from
Fitch, Inc., Standard & Poor's Ratings
Services, a division of The McGraw-Hill
Companies, Inc. and Dominion Bond Rating
Service, Inc.
Ratings
Class Fitch/S&P/DBRS
------------------------------ --------------
Classes A-1, A-2, A-3, A-AB,
A-4, A-1A AAA/AAA/AAA
Class A-M AAA/AAA/AAA
Class A-J AAA/AAA/AAA
A rating agency may lower or withdraw a
security rating at any time. Each of the rating
agencies identified above is expected to
perform ratings surveillance with respect to
its ratings for so long as the offered
certificates remain outstanding, except that a
rating agency may stop performing ratings
surveillance at any time if, among other
reasons, that rating agency does not have
sufficient information to allow it to continue
to perform ratings surveillance on the
certificates. The depositor has no ability to
ensure that the rating agencies perform ratings
surveillance.
See "Ratings" in this prospectus supplement and
"Ratings" in the prospectus for a discussion of
the basis upon which ratings are given, the
limitations of and restrictions on the ratings,
and the conclusions that should not be drawn
from a rating.
OPTIONAL TERMINATION.......... On any distribution date on which the aggregate
principal balance of the mortgage loans is less
than or equal to 1.0% of the initial
outstanding pool balance, the holders of a
majority of the controlling class, the special
servicer, the master servicer and any holder of
a majority interest in the Class R-I
Certificates, in that order of priority, will
have the option to purchase all of the
remaining mortgage loans, and all property
acquired through exercise of remedies in
respect of any
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mortgage loan, at the price specified in this
prospectus supplement. Exercise of this option
would terminate the trust and retire the then
outstanding certificates at par plus accrued
interest.
REPURCHASE OR SUBSTITUTION.... Each mortgage loan seller will make certain
representations and warranties with respect to
the mortgage loans sold by it, as described
under "Description of the Mortgage
Pool--Representations and Warranties" and
"--Repurchases and Other Remedies." If a
mortgage loan seller has been notified of a
material breach of any of its representations
and warranties or a material defect in the
documentation of any mortgage loan as described
under "Description of the Mortgage
Pool--Repurchases and Other Remedies", then
that mortgage loan seller will be required to
either cure the breach, repurchase the affected
mortgage loan from the trust fund or substitute
the affected mortgage loan with another
mortgage loan. If the related mortgage loan
seller decides to repurchase the affected
mortgage loan, the repurchase would have the
same effect on the offered certificates as a
prepayment in full of such mortgage loan,
except that the purchase will not be
accompanied by any prepayment premium or yield
maintenance charge. In addition, certain
mortgage loans may be purchased from the trust
fund by the holders of a B Note or mezzanine
loan under certain circumstances. See
"Description of the Mortgage Pool-- Subordinate
and Other Financing" in this prospectus
supplement.
SALE OF DEFAULTED LOANS....... Pursuant to the pooling and servicing
agreement, (i) the holder of the certificates
representing the greatest percentage interest
in the controlling class of certificates, (ii)
the special servicer, and (iii) any mortgage
loan seller (other than Wells Fargo Bank,
National Association), with respect to each
mortgage loan it sold to the Depositor, in that
order, has the option to purchase from the
trust any defaulted mortgage loan that is at
least sixty (60) days delinquent as to any
monthly debt service payment (or is delinquent
as to its balloon payment) at a price equal to
the fair value of such mortgage loan as
determined by the special servicer for such
mortgage loan (provided, that if such mortgage
loan is being purchased by the special servicer
or by a holder of certificates of the
controlling class, the trustee will be required
to verify that such price is equal to fair
value). In addition, certain of the mortgage
loans are subject to a purchase option upon
certain events of default in favor of a
subordinate lender or mezzanine lender. For
more information relating to the sale of
defaulted mortgage loans, see "Servicing of the
Mortgage Loans--Sale of Defaulted Mortgage
Loans" in this prospectus supplement.
DENOMINATIONS................. The Class A-1, Class A-2, Class A-3, Class
A-AB, Class A-4, Class A-1A, Class A-M and
Class A-J Certificates will be offered in
minimum denominations of $25,000. Investments
in excess of the minimum denominations may be
made in multiples of $1.
REGISTRATION, CLEARANCE
AND SETTLEMENT............. Your certificates will be registered in the
name of Cede & Co., as nominee of The
Depository Trust Company, and will not be
registered in your name. You will not receive a
definitive certificate representing your
ownership interest, except in very limited
circumstances described in this prospectus
supplement. As a result, you will hold your
certificates only in book-entry form and will
not be a certificateholder
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S-37
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of record. You will receive distributions on
your certificates and reports relating to
distributions only through The Depository Trust
Company, Clearstream Banking, societe anonyme
or the Euroclear System or through participants
in The Depository Trust Company, Clearstream
Banking or Euroclear.
You may hold your certificates through:
o The Depository Trust Company in the United
States; or
o Clearstream Banking or Euroclear in
Europe.
Transfers within The Depository Trust Company,
Clearstream Banking or Euroclear will be made
in accordance with the usual rules and
operating procedures of those systems.
Cross-market transfers between persons holding
directly through The Depository Trust Company,
Clearstream Banking or Euroclear will be
effected in The Depository Trust Company
through the relevant depositories of
Clearstream Banking or Euroclear.
All or any portion of the certificates offered
to you may be converted to definitive
certificates and reissued to beneficial owners
or their nominees, rather than to The
Depository Trust Company or its nominee, if we
notify The Depository Trust Company of our
intent to terminate the book-entry system and,
upon receipt of notice of such intent from The
Depository Trust Company, the participants
holding beneficial interests in the
certificates agree to initiate such
termination.
We expect that the certificates offered to you
will be delivered in book-entry form through
the facilities of The Depository Trust Company,
Clearstream Banking or Euroclear on or about
the closing date.
TAX STATUS.................... Elections will be made to treat designated
portions of the trust as three separate "real
estate mortgage investment conduits"--REMIC I,
REMIC II and REMIC III--for federal income tax
purposes. In the opinion of counsel, each such
designated portion of the trust will qualify
for this treatment and each class of offered
certificates will evidence "regular interests"
in REMIC III. The portion of the trust
consisting of the right to excess interest
(interest on each mortgage loan with an
anticipated repayment date accruing after such
date at a rate in excess of the rate that
applied prior to such date) and the related
sub-accounts will be treated as a grantor trust
for federal income tax purposes.
Pertinent federal income tax consequences of an
investment in the offered certificates include:
o The regular interests will be treated as
newly originated debt instruments for
federal income tax purposes.
o Beneficial owners of offered certificates
will be required to report income on the
certificates in accordance with the
accrual method of accounting.
o It is anticipated that the classes of
offered certificates will be issued at a
premium for federal income tax purposes.
See "Material Federal Income Tax Consequences"
in this prospectus supplement.
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S-38
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CONSIDERATIONS RELATED TO
TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT
OF 1974....................... Subject to the satisfaction of important
conditions described under "Certain ERISA
Considerations" in this prospectus supplement
and in the accompanying prospectus, the offered
certificates may be purchased by persons
investing assets of employee benefit plans or
individual retirement accounts.
LEGAL INVESTMENT.............. The offered certificates will not constitute
"mortgage related securities" for purposes of
the Secondary Mortgage Market Enhancement Act
of 1984, as amended. If your investment
activities are subject to legal investment laws
and regulations, regulatory capital
requirements or review by regulatory
authorities, then you may be subject to
restrictions on investment in the offered
certificates. You should consult your own legal
advisors for assistance in determining the
suitability of and consequences to you of the
purchase, ownership and sale of the offered
certificates. See "Legal Investment" in this
prospectus supplement.
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S-40
RISK FACTORS
You should carefully consider the risks involved in owning a
certificate before purchasing a certificate. Among other risks, the timing of
payments and payments you receive on your certificates will depend on payments
received on and other recoveries with respect to the mortgage loans. Therefore,
you should carefully consider both the risk factors relating to the mortgage
loans and the mortgaged properties and the other risks relating to the
certificates.
The risks and uncertainties described in this section, together with
those risks described in the prospectus under "Risk Factors", summarize material
risks relating to your certificates. Your investment could be materially and
adversely affected by the actual and potential circumstances that we describe in
those sections.
YOUR INVESTMENT IS NOT INSURED
OR GUARANTEED AND YOUR SOURCE
FOR REPAYMENTS IS LIMITED TO
PAYMENTS UNDER THE MORTGAGE
LOANS Payments under the mortgage loans are not
insured or guaranteed by any governmental
entity or mortgage insurer. Accordingly, the
sources for repayment of your certificates are
limited to amounts due with respect to the
mortgage loans.
You should consider all of the mortgage loans
to be nonrecourse loans. Even in those cases
where recourse to a borrower or guarantor is
permitted under the related loan documents, we
have not necessarily undertaken an evaluation
of the financial condition of any of these
persons. If a default occurs, the lender's
remedies generally are limited to foreclosing
against the specific properties and other
assets that have been pledged to secure the
loan. Such remedies may be insufficient to
provide a full return on your investment.
Payment of amounts due under a mortgage loan
prior to its maturity or anticipated repayment
date is dependent primarily on the sufficiency
of the net operating income of the related
mortgaged property. Payment of those mortgage
loans that are balloon loans at maturity or on
its anticipated repayment date is primarily
dependent upon the borrower's ability to sell
or refinance the property for an amount
sufficient to repay the loan.
In limited circumstances, the related mortgage
loan seller may be obligated to repurchase or
replace a mortgage loan that it sold to us if
the applicable mortgage loan seller's
representations and warranties concerning that
mortgage loan are materially breached or if
there are material defects in the documentation
for that mortgage loan. However, there can be
no assurance that any of these entities will be
in a financial position to effect a repurchase
or substitution. The representations and
warranties address the characteristics of the
mortgage loans and mortgaged properties as of
the date of issuance of the certificates. They
do not relieve you or the trust of the risk of
defaults and losses on the mortgage loans.
S-41
THE REPAYMENT OF A COMMERCIAL
MORTGAGE LOAN IS DEPENDENT ON
THE CASH FLOW PRODUCED BY THE
PROPERTY WHICH CAN BE VOLATILE
AND INSUFFICIENT TO ALLOW
TIMELY PAYMENT ON YOUR
CERTIFICATES The mortgage loans are secured by various types
of income-producing commercial, multifamily and
manufactured housing community properties.
Commercial lending is generally thought to
expose a lender to greater risk than
one-to-four family residential lending because,
among other things, it typically involves
larger loans.
Two hundred thirty-three (233) mortgage loans,
representing 98.0% of the initial outstanding
pool balance (which include two hundred nine
(209) mortgage loans in loan group 1,
representing 97.9% of the initial outstanding
loan group 1 balance, and twenty-four (24)
mortgage loans in loan group 2, representing
100% of the initial outstanding loan group 2
balance), were originated within twelve (12)
months prior to the cut-off date. Consequently,
these mortgage loans do not have a
long-standing payment history.
The repayment of a commercial mortgage loan is
typically dependent upon the ability of the
applicable property to produce cash flow. Even
the liquidation value of a commercial property
is determined, in substantial part, by the
amount of the property's cash flow (or its
potential to generate cash flow). However, net
operating income and cash flow can be volatile
and may be insufficient to cover debt service
on the loan at any given time.
The net operating income, cash flow and
property value of the mortgaged properties may
be adversely affected, among other things, by
any one or more of the following factors:
o the age, design and construction quality
of the property;
o the lack of any operating history in the
case of a newly built or renovated
mortgaged property;
o perceptions regarding the safety,
convenience and attractiveness of the
property;
o the proximity and attractiveness of
competing properties;
o the adequacy of the property's management
and maintenance;
o increases in operating expenses (including
common area maintenance charges) at the
property and in relation to competing
properties;
o an increase in the capital expenditures
needed to maintain the property or make
improvements;
o the dependence upon a single tenant, or a
concentration of tenants in a particular
business or industry;
o a decline in the financial condition of a
major tenant;
o an increase in vacancy rates; and
S-42
o a decline in rental rates as leases are
renewed or entered into with new tenants.
Other factors are more general in nature, such
as:
o national, regional or local economic
conditions (including plant closings,
military base closings, industry slowdowns
and unemployment rates);
o local real estate conditions (such as an
oversupply of competing properties, rental
space or multifamily housing);
o demographic factors;
o decreases in consumer confidence (caused
by events such as threatened or continuing
military action, recent disclosures of
wrongdoing or financial misstatements by
major corporations and financial
institutions and other factors);
o changes in consumer tastes and
preferences; and
o retroactive changes in building codes.
The volatility of net operating income will be
influenced by many of the foregoing factors, as
well as by:
o the length of tenant leases;
o the creditworthiness of tenants;
o the level of tenant defaults;
o the ability to convert an unsuccessful
property to an alternative use;
o new construction in the same market as the
mortgaged property;
o rent control and stabilization laws or
other laws impacting operating costs;
o the number and diversity of tenants;
o the rate at which new rentals occur;
o the property's operating leverage (which
is the percentage of total property
expenses in relation to revenue), the
ratio of fixed operating expenses to those
that vary with revenues, and the level of
capital expenditures required to maintain
the property and to retain or replace
tenants; and
o in the case of residential cooperative
properties, the payments received by the
cooperative corporation from its
tenants/shareholders, including any
special assessments against the property.
A decline in the real estate market or in the
financial condition of a major tenant will tend
to have a more immediate effect on the net
operating income of properties with short-term
revenue sources (such as short-term or
month-to-month leases) and may lead to higher
rates of delinquency or defaults under mortgage
loans secured by such properties.
S-43
THE PROSPECTIVE PERFORMANCE OF
THE COMMERCIAL AND MULTIFAMILY
MORTGAGE LOANS INCLUDED IN THE
TRUST FUND SHOULD BE EVALUATED
SEPARATELY FROM THE
PERFORMANCE OF THE MORTGAGE
LOANS IN ANY OF OUR OTHER
TRUSTS While there may be certain common factors
affecting the performance and value of
income-producing real properties in general,
those factors do not apply equally to all
income-producing real properties and, in many
cases, there are unique factors that will
affect the performance and/or value of a
particular income-producing real property.
Moreover, the effect of a given factor on a
particular real property will depend on a
number of variables, including but not limited
to property type, geographic location,
competition, sponsorship and other
characteristics of the property and the related
mortgage loan. Each income-producing real
property represents a separate and distinct
business venture; and, as a result, each of the
multifamily and commercial mortgage loans
included in one of the depositor's trusts
requires a unique underwriting analysis.
Furthermore, economic and other conditions
affecting real properties, whether worldwide,
national, regional or local, vary over time.
The performance of a pool of mortgage loans
originated and outstanding under a given set of
economic conditions may vary significantly from
the performance of an otherwise comparable
mortgage pool originated and outstanding under
a different set of economic conditions.
Accordingly, investors should evaluate the
mortgage loans underlying the offered
certificates independently from the performance
of mortgage loans underlying any other series
of certificates.
As a result of the distinct nature of each pool
of commercial mortgage loans, and the separate
mortgage loans within the pool, this prospectus
supplement does not include disclosure
concerning the delinquency and loss experience
of static pools of periodic originations by the
sponsors of commercial mortgage loans (known as
"static pool information"). Because of the
highly heterogeneous nature of the assets in
commercial mortgage backed securities
transactions, static pool information for prior
securitized pools, even those involving the
same property types (e.g., hotels or office
buildings), may be misleading, since the
economics of the properties and terms of the
loans may be materially different. In
particular, static pool information showing a
low level of delinquencies and defaults would
not be indicative of the performance of this
pool or any other pools of mortgage loans
originated by the same sponsor or sponsors.
Therefore, investors should evaluate this
offering on the basis of the information set
forth in this prospectus supplement with
respect to the mortgage loans, and not on the
basis of any successful performance of other
pools of securitized commercial mortgage loans.
S-44
CERTAIN MORTGAGE LOANS MAY
HAVE A LIMITED OPERATING
HISTORY The properties securing certain of the mortgage
loans are newly constructed and/or recently
opened and, as such, have a limited operating
history. There can be no assurance that any of
the properties, whether newly constructed
and/or recently opened or otherwise, will
perform as anticipated.
CONVERTING COMMERCIAL
PROPERTIES TO ALTERNATIVE USES
MAY REQUIRE SIGNIFICANT
EXPENSES WHICH COULD REDUCE
PAYMENTS ON YOUR CERTIFICATES Some of the mortgaged properties may not be
readily convertible to alternative uses if
those properties were to become unprofitable
for any reason. This is because:
o converting commercial properties to
alternate uses or converting single-tenant
commercial properties to multi-tenant
properties generally requires substantial
capital expenditures; and
o zoning or other restrictions also may
prevent alternative uses.
The liquidation value of a mortgaged property
not readily convertible to an alternative use
may be substantially less than would be the
case if the mortgaged property were readily
adaptable to other uses. In addition, certain
properties that are legally permitted to be
used in a non-conforming manner may be subject
to restrictions that would require compliance
with current zoning laws under certain
circumstances such as non-operation for a
period in excess of certain timeframes. If this
type of mortgaged property was liquidated and a
lower liquidation value was obtained, less
funds would be available for distributions on
your certificates. See "Mortgaged Properties
Securing The Mortgage Loans That Are Not In
Compliance With Zoning And Building Code
Requirements And Use Restrictions Could
Adversely Affect Payments On Your
Certificates."
PROPERTY VALUE MAY BE
ADVERSELY AFFECTED EVEN WHEN
THERE IS NO CHANGE IN CURRENT
OPERATING INCOME Various factors may adversely affect the value
of the mortgaged properties without affecting
the properties' current net operating income.
These factors include, among others:
o changes in the local, regional or national
economy;
o changes in governmental regulations,
fiscal policy, zoning or tax laws;
o potential environmental legislation or
liabilities or other legal liabilities;
o proximity and attractiveness of competing
properties;
o new construction of competing properties
in the same market;
o convertibility of a property to an
alternative use;
o the availability of refinancing;
o changes in interest rate levels;
S-45
o the age, quality, functionality and design
of the project;
o increases in operating costs;
o an increase in the capital expenditures
needed to maintain the properties or make
improvements; and
o increase in vacancy rates.
TENANT CONCENTRATION INCREASES
THE RISK THAT CASH FLOW WILL
BE INTERRUPTED WHICH COULD
REDUCE PAYMENTS ON YOUR
CERTIFICATES A deterioration in the financial condition of a
tenant can be particularly significant if a
mortgaged property is leased to a single or
large tenant or a small number of tenants,
because rent payable by such tenants generally
will represent all or a significant portion of
the cash flow available to the borrower to pay
its obligations to the lender. We cannot
provide assurances that any major tenant will
continue to perform its obligations under its
lease. Eighty-seven (87) of the mortgaged
properties, securing 27.2% of the initial
outstanding pool balance (securing mortgage
loans representing 29.3% of the initial
outstanding loan group 1 balance) are leased to
single tenants, and with respect to eight (8)
of those mortgaged properties, securing 1.9% of
the initial outstanding pool balance (securing
2.0% of the initial outstanding loan group 1
balance), the sole tenant is related to the
borrower.
In some cases the sole tenant or major tenant
related to the borrower is physically occupying
space related to its business; in other cases,
the affiliated tenant is a tenant under a
master lease with the borrower, under which the
borrower tenant is obligated to make rent
payments but does not occupy any space at the
mortgaged property. These master leases are
typically used to bring occupancy to a
"stabilized" level but may not provide
additional economic support for the mortgage
loan. There can be no assurance the space
"leased" by this borrower affiliate will
eventually be occupied by third party tenants.
Mortgaged properties leased to a single tenant
or a small number of tenants are more
susceptible to interruptions of cash flow if a
tenant fails to renew its lease or defaults
under its lease. This is so because:
o the financial effect of the absence of
rental income may be severe;
o more time may be required to re-lease the
space; and
o substantial capital costs may be incurred
to make the space appropriate for
replacement tenants.
Additionally, some of the tenants at the
mortgaged properties (including sole tenants or
other significant tenants) have lease
termination option dates or lease expiration
dates that are prior to or shortly after the
related maturity date or anticipated repayment
date. See Appendix II attached to this
prospectus supplement for the lease expiration
date for each of the top three (3) tenants at
each mortgaged property. There are a number of
other mortgaged properties that similarly have
a significant amount of scheduled lease
expirations or potential terminations before
the maturity of the related mortgage loan,
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although those circumstances were generally
addressed by escrow requirements or other
mitigating provisions.
Another factor that you should consider is that
retail, industrial and office properties also
may be adversely affected if there is a
concentration of tenants or of tenants in the
same or similar business or industry.
In some cases, the sole or a significant tenant
is related to the subject borrower or an
affiliate of that borrower.
For further information with respect to tenant
concentrations, see Appendix II attached to
this prospectus supplement.
LEASING MORTGAGED PROPERTIES
TO MULTIPLE TENANTS MAY RESULT
IN HIGHER RE-LEASING COSTS
WHICH COULD REDUCE PAYMENTS ON
YOUR CERTIFICATES If a mortgaged property has multiple tenants,
re-leasing costs and costs of enforcing
remedies against defaulting tenants may be more
frequent than in the case of mortgaged
properties with fewer tenants, thereby reducing
the cash flow available for debt service
payments. These costs may cause a borrower to
default in its obligations to a lender which
could reduce cash flow available for debt
service payments. Multi-tenanted mortgaged
properties also may experience higher
continuing vacancy rates and greater volatility
in rental income and expenses.
RE-LEASING RISKS Repayment of mortgage loans secured by retail,
office and industrial properties will be
affected by the expiration of leases and the
ability of the related borrowers and property
managers to renew the leases or to relet the
space on comparable terms. Certain mortgaged
properties may be leased in whole or in part to
government sponsored tenants who have the right
to cancel their leases at any time because of
lack of appropriations.
In addition, certain properties may have
tenants that are paying rent but are not in
occupancy or may have vacant space that is not
leased. Any "dark" space may cause the property
to be less desirable to other potential tenants
or the related tenant may be more likely to
default in its obligations under the lease. We
cannot assure you that those tenants will
continue to fulfill their lease obligations or
that the space will be relet.
Certain tenants at the retail properties,
including without limitation anchor tenants,
may have the right to terminate their leases if
certain other tenants are not operating, or if
their sales at the property do not reach a
specified level. Even if vacated space is
successfully relet, the costs associated with
reletting, including tenant improvements and
leasing commissions, could be substantial and
could reduce cash flow from the related
mortgaged properties. Forty-two (42) of the
mortgaged properties, securing mortgage loans
representing approximately 20.1% of the initial
outstanding pool balance (excluding
multifamily, manufactured housing community,
self storage, hospitality and certain other
property types) (and representing 20.1% of the
initial outstanding loan group 1 balance), as
of the cut-off date, have reserves
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for tenant improvements and leasing commissions
which may serve to defray those costs. We
cannot assure you, however, that the funds (if
any) held in those reserves for tenant
improvements and leasing commissions will be
sufficient to cover the costs and expenses
associated with tenant improvements or leasing
commission obligations. In addition, if a
tenant defaults in its obligations to a
borrower, the borrower may incur substantial
costs and experience significant delays
associated with enforcing rights and protecting
its investment, including costs incurred in
renovating or reletting the property.
THE CONCENTRATION OF LOANS
WITH THE SAME OR RELATED
BORROWERS INCREASES THE
POSSIBILITY OF LOSS ON THE
LOANS WHICH COULD REDUCE
PAYMENTS ON YOUR CERTIFICATES The effect of mortgage pool loan losses will be
more severe:
o if the pool is comprised of a small number
of loans, each with a relatively large
principal amount; or
o if the losses relate to loans that account
for a disproportionately large percentage
of the pool's aggregate principal balance
of all mortgage loans.
Mortgage loans with the same borrower or
related borrowers pose additional risks. Among
other things, financial difficulty at one
mortgaged real property could cause the owner
to defer maintenance at another mortgaged real
property in order to satisfy current expenses
with respect to the troubled mortgaged real
property; and the owner could attempt to avert
foreclosure on one mortgaged real property by
filing a bankruptcy petition that might have
the effect of interrupting monthly payments for
an indefinite period on all of the related
mortgage loans.
Twenty (20) groups of mortgage loans, including
eighteen (18) groups or mortgage loans that
contain mortgage loans in loan group 1 and two
(2) groups of mortgage loans that contain
mortgage loans in loan group 2 representing
40.0% and 7.8%, of the initial loan group 1
balance and initial loan group 2 balance,
respectively, were made to the same borrower or
borrowers related through common ownership and
where, in general, the related mortgaged
properties are commonly managed. The related
borrower concentrations of the three (3)
largest groups represent 8.5%, 7.3% and 6.2%,
respectively, of the initial outstanding pool
balance. The related borrower concentrations of
the three (3) largest groups in loan group 1
represent 9.1%, 7.9% and 6.7%, respectively, of
the initial outstanding loan group 1 balance.
The related borrower concentrations of the two
(2) groups in loan group 2 represent 5.8% and
2.0%, respectively, of the initial outstanding
loan group 2 balance.
The ten (10) largest mortgage loans in the
aggregate represent 33.7% of the initial
outstanding pool balance. Each of the other
mortgage loans represents no greater than 1.4%
of the initial outstanding pool balance.
The largest mortgage loan represents 7.1% of
the initial outstanding pool balance. The
second largest mortgage loan represents 5.4% of
the
S-48
initial outstanding pool balance. The third
largest mortgage loan represents 4.2% of the
initial outstanding pool balance. Each of the
other mortgage loans represents no greater than
3.3% of the initial outstanding pool balance.
The largest mortgage loan in loan group 1
represents 7.7% of the initial outstanding loan
group 1 balance. The second largest mortgage
loan in loan group 1 represents 5.8% of the
initial outstanding loan group 1 balance. The
third largest mortgage loan in loan group 1
represents 4.6% of the initial outstanding loan
group 1 balance. Each of the other mortgage
loans represents no greater than to 3.6% of the
initial outstanding loan group 1 balance.
The largest mortgage loan in loan group 2
represents 16.0% of the initial outstanding
loan group 2 balance. The second largest
mortgage loan in loan group 2 represents 15.3%
of the initial outstanding loan group 2
balance. The next largest mortgage loan in loan
group 2 represents 11.7% of the initial
outstanding loan group 2 balance. Each of the
other mortgage loans represents no greater than
8.3% of the initial outstanding loan group 2
balance.
In some cases, the sole or significant tenant
is related to the subject borrower. In the case
of Mortgage Loan Nos. 26, 27, 73, 74, 106, 153,
168 and 196, the tenant at all of the related
mortgaged properties is the parent of the
related borrower. For further information with
respect to tenant concentrations, see Appendix
II attached to this prospectus supplement.
A CONCENTRATION OF LOANS WITH
THE SAME PROPERTY TYPES
INCREASES THE POSSIBILITY OF
LOSS ON THE LOANS WHICH COULD
REDUCE PAYMENTS ON YOUR
CERTIFICATES A concentration of mortgaged property types
also can pose increased risks. A concentration
of mortgage loans secured by the same property
type can increase the risk that a decline in a
particular industry will have a
disproportionately large impact on the pool of
mortgage loans or a particular loan group. The
following property types represent the
indicated percentage of the initial outstanding
pool balance:
o office properties represent 40.8%;
o retail properties represent 23.6%;
o industrial properties represent 11.6%;
o hospitality properties represent 7.6%;
o multifamily properties represent 6.9%;
o mixed use properties represent 5.5%;
o other properties represent 2.4%;
o self storage properties represent 1.3%;
and
o manufactured housing community properties
represent 0.2%.
S-49
For information regarding the types of
properties securing the mortgage loans included
in loan group 1 or loan group 2, see Appendix I
to this prospectus supplement.
A CONCENTRATION OF MORTGAGED
PROPERTIES IN A LIMITED NUMBER
OF LOCATIONS MAY ADVERSELY
AFFECT PAYMENTS ON YOUR
CERTIFICATES Concentrations of mortgaged properties in
geographic areas may increase the risk that
adverse economic or other developments or a
natural disaster or act of terrorism affecting
a particular region of the country could
increase the frequency and severity of losses
on mortgage loans secured by those properties.
In the past, several regions of the United
States have experienced significant real estate
downturns at times when other regions have not.
Regional economic declines or adverse
conditions in regional real estate markets
could adversely affect the income from, and
market value of, the mortgaged properties
located in the region. Other regional
factors--e.g., earthquakes, floods or
hurricanes or changes in governmental rules or
fiscal policies--also may adversely affect
those mortgaged properties.
The mortgaged properties are located in
forty-three (43) different states (which
include 43 states for loan group 1 and 12
states for loan group 2). In particular,
investors should note that approximately 12.6%
of the mortgaged properties, based on the
initial outstanding pool balance (12.4% of the
initial outstanding loan group 1 balance and
15.9% of the initial outstanding loan group 2
balance), are located in California. Mortgaged
properties located in California may be more
susceptible to some types of special hazards
that may not be adequately covered by insurance
(such as earthquakes and flooding) than
properties located in other parts of the
country. If a borrower does not have insurance
against such risks and a severe casualty occurs
at a mortgaged property, the borrower may be
unable to generate income from the mortgaged
property in order to make payments on the
related mortgage loan. The mortgage loans
generally do not require any borrowers to
maintain earthquake insurance.
In addition, 16.0%, 9.5%, 7.0%, and 5.7% of the
mortgaged properties, based on the initial
outstanding pool balance, are located in New
York, Texas, New Jersey and Missouri,
respectively, and concentrations of mortgaged
properties, in each case, representing less
than or equal to 3.9% of the initial
outstanding pool balance, also exist in several
other states.
For information regarding the location of the
properties securing the mortgage loans included
in loan group 1 and loan group 2, see Appendix
I to this prospectus supplement.
S-50
A LARGE CONCENTRATION OF
RETAIL PROPERTIES IN THE
MORTGAGE POOL WILL SUBJECT
YOUR INVESTMENT TO THE SPECIAL
RISKS OF RETAIL PROPERTIES Ninety-seven (97) of the mortgaged properties,
securing mortgage loans representing 23.6% of
the initial outstanding pool balance (and
representing 25.4% of the initial outstanding
loan group 1 balance), are retail properties.
The quality and success of a retail property's
tenants significantly affect the property's
value. The success of retail properties can be
adversely affected by local competitive
conditions and changes in consumer spending
patterns. A borrower's ability to make debt
service payments can be adversely affected if
rents are based on a percentage of the tenant's
sales and sales decline or if the closure of
one store gives rise to lease provisions
permitting the closure of another store.
An "anchor tenant" is proportionately larger in
size than other tenants at a retail property
and is considered to be vital in attracting
customers to a retail property, whether or not
the anchor tenant's premises are part of the
mortgaged property. Sixty-eight (68) of the
mortgaged properties, securing 18.6% of the
initial outstanding pool balance (and securing
20.0% of the initial outstanding loan group 1
balance), are properties considered by the
applicable mortgage loan seller to be leased to
or are adjacent to or are occupied by anchor
tenants.
The presence or absence of an anchor store in a
shopping center also can be important because
anchor stores play a key role in generating
customer traffic and making a center desirable
for other tenants. Consequently, the economic
performance of an anchored retail property will
be adversely affected by:
o an anchor store's failure to renew its
lease;
o termination of an anchor store's lease;
o the bankruptcy or economic decline of an
anchor store or self-owned anchor or its
parent company; or
o the cessation of the business of an anchor
store at the shopping center, even if, as
a tenant, it continues to pay rent.
There may be retail properties with anchor
stores that are permitted to cease operating at
any time if certain other stores are not
operated at those locations. Furthermore, there
may be non-anchor tenants that are permitted to
offset all or a portion of their rent, pay rent
based solely on a percentage of their sales or
to terminate their leases if certain anchor
stores and/or major tenants are either not
operated or fail to meet certain business
objectives.
Retail properties also face competition from
sources outside a given real estate market. For
example, all of the following compete with more
traditional retail properties for consumer
dollars: factory outlet centers, discount
shopping centers and clubs, catalogue
retailers, home shopping networks, internet web
sites and telemarketing. Continued growth of
these alternative retail outlets, which often
have lower operating costs, could adversely
affect the rents collectible at the retail
S-51
properties included in the mortgage pool, as
well as the income from, and market value of,
the mortgaged properties. Moreover, additional
competing retail properties may be built in the
areas where the retail properties are located,
which could adversely affect the rents
collectible at the retail properties included
in the mortgage pool, as well as the income
from, and market value of, the mortgaged
properties.
A LARGE CONCENTRATION OF
OFFICE PROPERTIES IN THE
MORTGAGE POOL WILL SUBJECT
YOUR INVESTMENT TO THE SPECIAL
RISKS OF OFFICE PROPERTIES Forty-two (42) of the mortgaged properties,
securing mortgage loans representing 40.8% of
the initial outstanding pool balance (and
representing 43.9% of the initial outstanding
loan group 1 balance), are office properties.
A large number of factors may affect the value
of these office properties, including:
o the quality of an office building's
tenants;
o the diversity of an office building's
tenants, reliance on a single or dominant
tenant or tenants in a volatile industry
(e.g., technology and internet companies
that have experienced or may in the future
experience circumstances that make their
businesses volatile);
o the physical attributes of the building in
relation to competing buildings, e.g.,
age, condition, design, location, access
to transportation and ability to offer
certain amenities, such as sophisticated
building systems;
o the desirability of the area as a business
location;
o the strength and nature of the local
economy (including labor costs and
quality, tax environment and quality of
life for employees); and
o the suitability of a space for re-leasing
without significant build-out costs.
Moreover, the cost of refitting office space
for a new tenant is often higher than the cost
of refitting other types of property.
Some or all of the tenants in certain of the
office properties referenced above are medical
offices. Four (4) mortgage loans, representing
2.2% of the initial outstanding pool balance
(and representing 2.4% of the initial
outstanding loan group 1 balance), are medical
offices. The performance of a property with
significant medical office tenants may depend
on the proximity of such property to a hospital
or other health care establishment and on
reimbursements for patient fees from private or
government-sponsored insurance companies. The
sudden closure of a nearby hospital may
adversely affect the value of a property with
significant medical office tenants. In
addition, the performance of a property with
significant medical office tenants may depend
on reimbursements for patient fees from private
or government-sponsored insurers and issues
related to reimbursement (ranging from non
payment to delays in payment) from such
insurers could adversely impact cash flow at
such mortgaged properties. Moreover, properties
with significant medical office tenants may
appeal to a narrow market
S-52
of tenants and the value of such a property may
be adversely affected by the availability of
competing office properties.
A LARGE CONCENTRATION OF
HOSPITALITY PROPERTIES IN THE
MORTGAGE POOL WILL SUBJECT
YOUR INVESTMENT TO THE SPECIAL
RISKS OF HOSPITALITY
PROPERTIES Fifteen (15) of the mortgaged properties,
securing mortgage loans representing 7.6% of
the initial outstanding pool balance (and
representing 8.2% of the initial outstanding
loan group 1 balance), are hospitality
properties. Various factors may adversely
affect the economic performance of a
hospitality property, including:
o adverse economic and social conditions,
either local, regional, national or
international which may limit the amount
that can be charged for a room and reduce
occupancy levels;
o the construction of competing hotels or
resorts;
o continuing expenditures for modernizing,
refurbishing, and maintaining existing
facilities prior to the expiration of
their anticipated useful lives;
o franchise affiliation (or lack thereof);
o a deterioration in the financial strength
or managerial capabilities of the owner
and/or operator of a hotel; and
o changes in travel patterns, terrorist
attacks, increases in energy prices,
strikes, relocation of highways or the
construction of additional highways.
Because hotel rooms generally are rented for
short periods of time, the financial
performance of hotels tends to be affected by
adverse economic conditions and competition
more quickly than are other types of commercial
properties.
Moreover, the hotel and lodging industry is
generally seasonal in nature. This seasonality
can be expected to cause periodic fluctuations
in a hotel property's revenues, occupancy
levels, room rates and operating expenses.
The laws and regulations relating to liquor
licenses generally prohibit the transfer of
those liquor licenses to any other person. In
the event of a foreclosure of a hotel property
with a liquor license, the special servicer on
behalf of the trustee or a purchaser in a
foreclosure sale would likely have to apply for
a new license. There can be no assurance that a
new liquor license could be obtained promptly
or at all. The lack of a liquor license in a
full service hotel could have an adverse impact
on the revenue generated by the hotel.
A mortgage loan secured by hotel property may
be affiliated with a franchise company through
a franchise agreement or a hotel management
company through a management agreement. The
performance of a hotel property affiliated with
a franchise or hotel management company depends
in part on the continued existence, reputation
and financial strength of the franchisor or
hotel management company and;
S-53
o the public perception of the franchise or
management company or hotel chain service
mark;
o the duration of the franchise licensing
agreement or management agreement; and
o which in certain cases may have a term
that expires prior to the loan maturity.
Any provision in a franchise agreement
providing for termination because of the
bankruptcy of a franchisor generally will not
be enforceable. Replacement franchises may
require significantly higher fees. The
transferability of franchise license agreements
is restricted. In the event of a foreclosure,
the lender or its agent would not have the
right to use the franchise license without the
franchisor's consent.
A LARGE CONCENTRATION OF
MULTIFAMILY PROPERTIES IN THE
MORTGAGE POOL WILL SUBJECT
YOUR INVESTMENT TO THE SPECIAL
RISKS OF MULTIFAMILY
PROPERTIES Twenty-two (22) of the mortgaged properties,
securing mortgage loans representing 6.9% of
the initial outstanding pool balance (and
representing 96.9% of the initial outstanding
loan group 2 balance), are multifamily
properties.
A large number of factors may affect the value
and successful operation of these multifamily
properties, including:
o the physical attributes of the apartment
building, such as its age, appearance and
construction quality;
o the location of the property;
o the ability of management to provide
adequate maintenance and insurance;
o the types of services and amenities
provided at the property;
o the property's reputation;
o the level of mortgage interest rates and
favorable income and economic conditions
(which may encourage tenants to purchase
rather than rent housing);
o the presence of competing properties;
o adverse local or national economic
conditions which may limit the rent that
may be charged and which may result in
increased vacancies;
o the tenant mix (such as tenants being
predominantly students or military
personnel or employees of a particular
business or industry) and requirements
that tenants meet certain criteria (such
as age restrictions for senior housing);
o in the case of any student housing
facilities, which may be more susceptible
to damage or wear and tear than other
types of multifamily housing, the reliance
on the financial well-being of the college
or university to which it relates,
competition from on-campus housing units
(which may adversely affect occupancy),
the physical layout of the housing (which
may not be readily
S-54
convertible to traditional multifamily
use), and student tenants having a higher
turnover rate than other types of
multifamily tenants, which in certain
cases is compounded by the fact that
student leases are available for periods
of less than 12 months;
o state and local regulations (which may
limit the ability to increase rents); and
o government assistance/rent subsidy
programs (which may influence tenant
mobility).
In addition to state regulation of the landlord
tenant relationship, certain counties and
municipalities impose rent control on apartment
buildings. These ordinances may limit rent
increases to fixed percentages, to percentages
of increases in the consumer price index, to
increases set or approved by a governmental
agency, or to increases determined through
mediation or binding arbitration. Any
limitations on a borrower's ability to raise
property rents may impair such borrower's
ability to repay its multifamily loan from its
net operating income or the proceeds of a sale
or refinancing of the related multifamily
property.
Certain of the mortgage loans are secured or
may be secured in the future by mortgaged
properties that are subject to certain
affordable housing covenants and other
covenants and restrictions with respect to
various tax credit, city, state and federal
housing subsidies, rent stabilization or
similar programs, in respect of various units
within the mortgaged properties. Generally, the
related mortgaged property must satisfy certain
requirements, the borrower must observe certain
leasing practices and/or the tenant(s) must
regularly meet certain income requirements or
the borrower or mortgaged property must have
certain other characteristics consistent with
the government policy related to the applicable
program. The limitations and restrictions
imposed by these programs could result in
losses on the mortgage loans. In addition, in
the event that the program is cancelled, it
could result in less income for the project. In
certain cases, housing assistance program
contracts may not be assigned to the related
borrower or purchaser of the property until
after the origination date of the mortgage
loan. We cannot assure you that these contracts
will ultimately be assigned. These programs may
include, among others:
o rent limitations that would adversely
affect the ability of borrower to increase
rents to maintain the condition of their
mortgaged properties and satisfy operating
expense; and
o tenant income restrictions that may reduce
the number of eligible tenants in those
mortgaged properties and result in a
reduction in occupancy rates.
The difference in rents between subsidized or
supported properties and other multifamily
rental properties in the same area may not be a
sufficient economic incentive for some eligible
tenants to reside at a subsidized or supported
property that may have fewer amenities or be
less attractive as a residence. As a result,
occupancy levels at a subsidized or supported
property may decline, which may adversely
affect the value and successful operation of
such property.
S-55
A LARGE CONCENTRATION OF
INDUSTRIAL PROPERTIES IN THE
MORTGAGE POOL WILL SUBJECT
YOUR INVESTMENT TO THE SPECIAL
RISKS OF INDUSTRIAL PROPERTIES Thirty-six (36) of the mortgaged properties,
securing mortgage loans representing 11.6% of
the initial outstanding pool balance (and
representing 12.5% of the initial outstanding
loan group 1 balance), are industrial
properties. Various factors may adversely
affect the economic performance of these
industrial properties, which could adversely
affect payments on your certificates,
including:
o reduced demand for industrial space
because of a decline in a particular
industry segment;
o increased supply of competing industrial
space because of relative ease in
constructing buildings of this type;
o a property becoming functionally obsolete;
o insufficient supply of labor to meet
demand;
o changes in access to the property, energy
prices, strikes, relocation of highways or
the construction of additional highways;
o location of the property in relation to
access to transportation;
o suitability for a particular tenant;
o building design and adaptability;
o a change in the proximity of supply
sources; and
o environmental hazards.
A LARGE CONCENTRATION OF SELF
STORAGE FACILITIES IN THE
MORTGAGE POOL WILL SUBJECT
YOUR INVESTMENT TO THE SPECIAL
RISKS OF SELF STORAGE
FACILITIES Nine (9) of the mortgaged properties, securing
mortgage loans representing 1.3% of the initial
outstanding pool balance (and representing 1.4%
of the initial outstanding loan group 1
balance), are self storage facilities. Various
factors may adversely affect the value and
successful operation of a self storage facility
including:
o competition, because both acquisition and
development costs and break-even occupancy
are relatively low;
o conversion of a self storage facility to
an alternative use generally requires
substantial capital expenditures;
o security concerns; and
o user privacy and ease of access to
individual storage space may increase
environmental risks (although lease
agreements generally prohibit users from
storing hazardous substances in the
units).
The environmental assessments discussed in this
prospectus supplement did not include an
inspection of the contents of the self storage
units of the self storage properties.
Accordingly, there is no
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assurance that all of the units included in the
self storage properties are free from hazardous
substances or will remain so in the future.
A LARGE CONCENTRATION OF
MANUFACTURED HOUSING COMMUNITY
PROPERTIES IN THE MORTGAGE
POOL WILL SUBJECT YOUR
INVESTMENT TO THE SPECIAL
RISKS OF MANUFACTURED HOUSING
COMMUNITY PROPERTIES Two (2) mortgaged properties, securing mortgage
loans representing 0.2% of the initial
outstanding pool balance (and representing 3.1%
of the initial outstanding loan group 2
balance), are manufactured housing community
properties. Various factors may adversely
affect the economic performance of manufactured
housing community properties, which could
adversely affect payments on your certificates,
including:
o the physical attributes of the community
(e.g., age, condition and design);
o the location of the community;
o the services and amenities provided by the
community and its management (including
maintenance and insurance);
o the strength and nature of the local
economy (which may limit the amount that
may be charged, the timely payments of
those amounts, and may reduce occupancy
levels);
o state and local regulations (which may
affect the property owner's ability to
increase amounts charged or limit the
owner's ability to convert the property to
an alternate use);
o competing residential developments in the
local market, such as other manufactured
housing communities, apartment buildings
and single family homes;
o the property's reputation;
o the availability of public water and sewer
facilities, or the adequacy of any such
privately-owned facilities; and
o the property may not be readily
convertible to an alternate use.
THEATER PROPERTIES HAVE
PARTICULAR RISKS Three (3) of the mortgaged properties, securing
mortgage loans representing 1.3% of the initial
outstanding pool balance (and representing 1.4%
of the initial outstanding loan group 1
balance), are megaplex movie theaters leased to
a theater operator. Operators of these types of
properties are exposed to certain unique risks.
Significant factors determining the value of a
theater property include:
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o the ability to secure film license
agreements for first-run movies;
o the ability to maintain high attendance
levels;
o the ability to achieve sales of food and
beverages to attendees; and
o the strength and experience of the
operator.
Certain physical attributes of the building may
also impact property value. These physical
attributes include:
o location, visibility and accessibility to
transportation arteries;
o number of screens and seating capacity;
o adequacy of patron parking; and
o quality and modernity of sound and
projection systems.
The performance of a theater property can also
be impacted by the quality, size and proximity
of competitive theater properties and the
relative appeal of films being screened at
other theater properties within the market. The
theater industry is highly dependent on the
quality and popularity of films being produced
by film production companies both in the United
States and overseas. A slowdown in movie
production or decrease in the appeal of films
being produced can negatively impact the value
of a theater property.
In recent years, the theater industry has
experienced a high level of construction of new
theaters and an increase in competition among
theater operators.
Movie theater properties are also subject to
the risk that because they are "special
purpose" properties they may not be immediately
converted to a new use.
All of these factors may increase the
possibility that the related borrower will be
unable to meet its obligations under the
mortgage loan.
MORTGAGED PROPERTIES WITH
CONDOMINIUM OWNERSHIP COULD
ADVERSELY AFFECT PAYMENTS ON
YOUR CERTIFICATES One or more of the mortgage loans in the pool
may be primarily secured by the related
borrower's fee simple ownership in one or more
condominium units.
The management and operation of a condominium
is generally controlled by a condominium board
representing the owners of the individual
condominium units, subject to the terms of the
related condominium rules or by-laws.
Generally, the consent of a majority of the
board members is required for any actions of
the condominium board. The condominium
interests described above in some cases may
constitute less than a majority of such voting
rights and/or may not entail an ability to
prevent adverse changes in the governing
organizational document for the condominium
entity. The condominium board is generally
responsible for administration of the affairs
of the condominium, including providing for
maintenance and
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repair of common areas, adopting rules and
regulations regarding common areas, and
obtaining insurance and repairing and restoring
the common areas of the property after a
casualty. There can be no assurance that the
borrower under a mortgage loan secured by one
or more interests in that condominium will have
any control over decisions made by the related
condominium board. There can be no assurance
that the related condominium board will always
act in the best interests of the borrower under
those mortgage loans. Notwithstanding the
insurance and casualty provisions of the
related mortgage loan documents, the
condominium board may have the right to control
the use of casualty proceeds. In addition, the
condominium board generally has the right to
assess individual unit owners for their share
of expenses related to the operation and
maintenance of the common elements. In the
event that an owner of another unit fails to
pay its allocated assessments, the related
borrower may be required to pay those
assessments in order to properly maintain and
operate the common elements of the property.
Although the condominium board generally may
obtain a lien against any unit owner for common
expenses that are not paid, the lien generally
is extinguished if a mortgagee takes possession
pursuant to a foreclosure. Each unit owner is
responsible for maintenance of its respective
unit and retains essential operational control
over its unit.
Due to the nature of condominiums and a
borrower's ownership interest therein, a
default on a loan secured by the borrower's
interest in one or more condominium units may
not allow the holder of the mortgage loan the
same flexibility in realizing upon the
underlying real property as is generally
available with respect to properties that are
not condominiums. The rights of any other unit
owners, the governing documents of the owners'
association and state and local laws applicable
to condominiums must be considered and
respected. Consequently, servicing and
realizing upon such collateral could subject
the trust to greater delay, expense and risk
than servicing and realizing upon collateral
for other loans that are not condominiums.
A TENANT BANKRUPTCY MAY
ADVERSELY AFFECT THE INCOME
PRODUCED BY THE PROPERTY AND
MAY ADVERSELY AFFECT THE
PAYMENTS ON YOUR CERTIFICATES Certain of the tenants at some of the mortgaged
properties may have been, may currently be, or
may in the future become a party in a
bankruptcy proceeding. The bankruptcy or
insolvency of a major tenant, or a number of
smaller tenants, in retail, industrial and
office properties may adversely affect the
income produced by the property. Under the
federal bankruptcy code, a tenant/debtor has
the option of affirming or rejecting any
unexpired lease. If the tenant rejects the
lease, the landlord's claim for breach of the
lease would be a general unsecured claim
against the tenant, absent collateral securing
the claim. The claim would be limited to the
unpaid rent under the lease for the periods
prior to the bankruptcy petition, or earlier
surrender of the leased premises, plus the rent
under the lease for the greater of one year, or
15%, not to exceed three years, of the
remaining term of the lease and the actual
amount of the recovery could be less than the
amount of the claim.
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ENVIRONMENTAL LAWS ENTAIL
RISKS THAT MAY ADVERSELY
AFFECT PAYMENTS ON YOUR
CERTIFICATES Various environmental laws may make a current
or previous owner or operator of real property
liable for the costs of removal or remediation
of hazardous or toxic substances on, under or
adjacent to the property. Those laws often
impose liability whether or not the owner or
operator knew of, or was responsible for, the
presence of the hazardous or toxic substances.
For example, certain laws impose liability for
release of asbestos-containing materials into
the air or require the removal or containment
of asbestos-containing materials. In some
states, contamination of a property may give
rise to a lien on the property to assure
payment of the costs of cleanup. In some
states, this lien has priority over the lien of
a pre-existing mortgage. Additionally, third
parties may seek recovery from owners or
operators of real properties for cleanup costs,
property damage or personal injury associated
with releases of, or other exposure to
hazardous substances related to the properties.
The owner's liability for any required
remediation generally is not limited by law and
could, accordingly, exceed the value of the
property and/or the aggregate assets of the
owner. The presence of hazardous or toxic
substances also may adversely affect the
owner's ability to refinance the property or to
sell the property to a third party. The
presence of, or strong potential for
contamination by, hazardous substances
consequently can have a materially adverse
effect on the value of the property and a
borrower's ability to repay its mortgage loan.
In addition, under certain circumstances, a
lender (such as the trust) could be liable for
the costs of responding to an environmental
hazard. Any potential environmental liability
could reduce or delay payments on the offered
certificates.
ENVIRONMENTAL RISKS RELATING
TO SPECIFIC MORTGAGED
PROPERTIES MAY ADVERSELY
AFFECT PAYMENTS ON YOUR
CERTIFICATES Except for mortgaged properties securing
mortgage loans that are the subject of a
secured creditor impaired property policy, all
of the mortgaged properties securing the
mortgage loans have been subject to
environmental site assessments, or in some
cases an update of a previous assessment, in
connection with the origination or
securitization of the loans. In all cases, the
environmental site assessment was a Phase I
environmental assessment, although in some
cases a Phase II site assessment was also
performed. With respect to the mortgaged
properties securing the mortgage loans that
were not the subject of an environmental site
assessment within eighteen months prior to the
cut-off date, the applicable mortgage loan
seller either (a) represented that with respect
to each such mortgaged property (i) no
hazardous material is present on the mortgaged
property and (ii) the mortgaged property is in
material compliance with all applicable
federal, state and local laws pertaining to
hazardous materials or environmental hazards,
in each case subject to limitations of
materiality and the other qualifications set
forth in the representation, or (b) provided
secured creditor impaired property policies
providing
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coverage for certain losses that may arise from
adverse environmental conditions that may exist
at the related mortgaged property. These
reports generally did not disclose the presence
or risk of environmental contamination that is
considered material and adverse to the
interests of the holders of the certificates;
however, in certain cases, these assessments
did reveal conditions that resulted in
requirements that the related borrowers
establish operations and maintenance plans,
monitor the mortgaged property or nearby
properties, abate or remediate the condition,
and/or provide additional security such as
letters of credit, reserves or stand-alone
secured creditor impaired property policies.
Forty-nine (49) of the mortgaged properties,
securing mortgage loans representing 4.9% of
the initial outstanding pool balance (which
include forty-three (43) mortgaged properties
in loan group 1, representing 5.0% of the
initial outstanding loan group 1 balance, and
six (6) mortgaged properties in loan group 2,
representing 4.9% of the initial outstanding
loan group 2 balance), are the subject of a
group secured creditor impaired property policy
providing coverage for certain losses that may
arise from adverse environmental conditions
that may exist at the related mortgaged
properties. Four (4) of the mortgaged
properties, securing mortgage loans
representing 9.0% of the initial outstanding
pool balance (and representing 9.7% of the
initial outstanding loan group 1 balance), have
the benefit of a stand-alone secured creditor
impaired property policy or pollution legal
liability policy that provides coverage for
selected environmental matters with respect to
those properties. Such stand-alone policies may
contain additional limitations and exclusions,
including but not limited to exclusions from
coverage for mold and other microbial
contamination, coverage limits that are less
than the related loan amount, or policy
durations which do not extend to or beyond the
maturity of the related loan. We describe each
policy under "Description of the Mortgage
Pool--Environmental Insurance" in this
prospectus supplement. Generally, environmental
site assessments were not performed with
respect to those mortgaged properties covered
by the group secured creditor impaired property
policy.
We cannot assure you, however, that the
environmental assessments revealed all existing
or potential environmental risks or that all
adverse environmental conditions have been
completely abated or remediated or that any
reserves, insurance or operations and
maintenance plans will be sufficient to
remediate the environmental conditions.
Moreover, we cannot assure you that:
o future laws, ordinances or regulations
will not impose any material environmental
liability; or
o the current environmental condition of the
mortgaged properties will not be adversely
affected by tenants or by the condition of
land or operations in the vicinity of the
mortgaged properties (such as underground
storage tanks).
In addition, some borrowers under the mortgage
loans may not have satisfied or may not satisfy
all post-closing obligations required by the
related mortgage loan documents with respect to
environmental matters. There can be no
assurance that recommended operations and
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maintenance plans have been implemented or will
continue to be complied with.
Portions of some of the mortgaged properties
securing the mortgage loans may include tenants
that operate as, were previously operated as,
or are located near other properties currently
or previously operated as on-site dry-cleaners
or gasoline stations. Both types of operations
involve the use and storage of hazardous
materials, leading to an increased risk of
liability to the tenant, the landowner and,
under certain circumstances, a lender (such as
the trust) under environmental laws.
Dry-cleaners and gasoline station operators may
be required to obtain various environmental
permits or licenses in connection with their
operations and activities and to comply with
various environmental laws, including those
governing the use and storage of hazardous
materials. These operations incur ongoing costs
to comply with environmental laws governing,
among other things, containment systems and
underground storage tank systems. In addition,
any liability to borrowers under environmental
laws, especially in connection with releases
into the environment of gasoline, dry-cleaning
solvents or other hazardous substances from
underground storage tank systems or otherwise,
could adversely impact the related borrower's
ability to repay the related mortgage loan.
Certain of the mortgaged properties may have
environmental contamination that has been
remediated and for which no-further action
letters have been issued or may be the subject
of ongoing remediation.
In addition, problems associated with mold may
pose risks to real property and may also be the
basis for personal injury claims against a
borrower. Although the mortgaged properties are
required to be inspected periodically, there
are no generally accepted standards for the
assessment of any existing mold. If left
unchecked, problems associated with mold could
result in the interruption of cash flow,
remediation expenses and litigation which could
adversely impact collections from a mortgaged
property. In addition, many of the insurance
policies presently covering the mortgaged
properties may specifically exclude losses due
to mold.
Before the special servicer acquires title to a
mortgaged property on behalf of the trust or
assumes operation of the property, it must
obtain an environmental assessment of the
property, or rely on a recent environmental
assessment. This requirement will decrease the
likelihood that the trust will become liable
under any environmental law. However, this
requirement may effectively preclude
foreclosure until a satisfactory environmental
assessment is obtained, or until any required
remedial action is thereafter taken. There is
accordingly some risk that the mortgaged
property will decline in value while this
assessment is being obtained. Moreover, we
cannot assure you that this requirement will
effectively insulate the trust from potential
liability under environmental laws. Any such
potential liability could reduce or delay
payments to certificateholders.
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IF A BORROWER IS UNABLE TO
REPAY ITS LOAN ON ITS MATURITY
DATE, YOU MAY EXPERIENCE A
LOSS Two hundred thirty-three (233) mortgage loans,
representing 99.6% of the initial outstanding
pool balance (which include two hundred ten
(210) mortgage loans in loan group 1,
representing 99.7% of the initial outstanding
loan group 1 balance, and twenty-three (23)
mortgage loans in loan group 2, representing
98.8% of the initial outstanding loan group 2
balance), are balloon loans. Thirty-nine (39)
of these mortgage loans, representing 30.7% of
the initial outstanding pool balance (and
representing 33.0% of the initial outstanding
loan group 1 balance), are mortgage loans,
which are also referred to in this prospectus
supplement as "ARD Loans", that have an
anticipated repayment date that provide for an
increase in the mortgage rate and/or principal
amortization at a specified date prior to
stated maturity. These ARD Loans are structured
to encourage the borrower to repay the mortgage
loan in full by the specified date (which is
prior to the mortgage loan's stated maturity
date) upon which these increases occur. Also
included in these balloon loans are sixty (60)
mortgage loans, representing 53.7% of the
initial outstanding pool balance (which include
fifty-six (56) mortgage loans in loan group 1,
representing 55.4% of the initial outstanding
loan group 1 balance, and four (4) mortgage
loans in loan group 2, representing 31.8% of
the initial outstanding loan group 2 balance),
that provide for monthly payments of interest
only for their entire respective terms and
fifty-seven (57) mortgage loans, representing
19.9% of the initial outstanding pool balance
(which include fifty-one (51) mortgage loans in
loan group 1, representing 18.4% of the initial
outstanding loan group 1 balance, and six (6)
mortgage loans in loan group 2, representing
39.7% of the initial outstanding loan group 2
balance), that currently provide for monthly
payments of interest only for a portion of
their respective terms ranging from 12 months
to 84 months and then provide for the monthly
payment of principal and interest over their
respective remaining terms. For purposes of
this prospectus supplement, we consider a
mortgage loan to be a "balloon loan" if its
principal balance is not scheduled to be fully
or substantially amortized by the loan's
respective anticipated repayment date (in the
case of a loan having an anticipated repayment
date) or maturity date. We cannot assure you
that each borrower will have the ability to
repay the principal balance outstanding on the
pertinent date, especially under a scenario
where interest rates have increased from the
historically low interest rates in effect at
the time that most of the mortgage loans were
originated. Balloon loans involve greater risk
than fully amortizing loans because a
borrower's ability to repay the loan on its
anticipated repayment date or stated maturity
date typically will depend upon its ability
either to refinance the loan or to sell the
mortgaged property at a price sufficient to
permit repayment. A borrower's ability to
achieve either of these goals will be affected
by a number of factors, including:
o the availability of, and competition for,
credit for commercial real estate
projects;
o prevailing interest rates;
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o the fair market value of the related
mortgaged property;
o the borrower's equity in the related
mortgaged property;
o the borrower's financial condition;
o the operating history and occupancy level
of the mortgaged property; o tax laws; and
o prevailing general and regional economic
conditions.
The availability of funds in the credit markets
fluctuates over time.
No mortgage loan seller or any of its
respective affiliates is under any obligation
to refinance any mortgage loan.
A BORROWER'S OTHER LOANS MAY
REDUCE THE CASH FLOW AVAILABLE
TO THE MORTGAGED PROPERTY
WHICH MAY ADVERSELY AFFECT
PAYMENTS ON YOUR CERTIFICATES Two (2) mortgage loans, representing 0.4% of
the initial outstanding pool balance (and
representing 0.4% of the initial outstanding
loan group 1 balance), currently has additional
financing in place that is secured by the
mortgaged property related to such mortgage
loan. See "Description of the Mortgage Pool--
Subordinate and Other Financing" in this
prospectus supplement.
In addition to the foregoing, the borrower
under one (1) mortgage loan, Mortgage Loan No.
18, representing 1.1% of the initial
outstanding pool balance (and representing
16.0% of the initial outstanding loan group 2
balance), has entered into additional related
mezzanine financing that is not secured by the
related mortgaged property.
In general, borrowers that have not agreed to
certain special purpose covenants in the
related mortgage loan documents may have also
incurred additional financing that is not
secured by the mortgaged property.
Nineteen (19) of the mortgage loans,
representing 14.7% of the initial outstanding
pool balance (which includes seventeen (17)
mortgage loans in loan group 1, representing
15.1% of the initial outstanding loan group 1
balance, and two (2) mortgage loans in loan
group 2, representing 9.4% of the initial
outstanding loan group 2 balance), permit the
owners of the borrower to enter into additional
financing that is secured by a pledge of some
or all of the equity interests in the borrower,
provided that certain debt service coverage
ratio and loan-to-value ratio tests are
satisfied as further discussed in the footnotes
of Appendix II to this prospectus supplement.
One (1) of the mortgage loans, representing
7.1% of the initial outstanding pool balance
(and representing 7.7% of the initial
outstanding loan group 1 balance), permits the
borrower to enter into both additional
financing that is secured by a pledge of equity
interests in the borrower and additional
unsecured financing of up to $10,000,000 from
the borrower's direct or indirect owners or
affiliates,
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provided that, in each case, certain debt
service coverage ratio and loan-to-value ratio
tests are satisfied as further discussed in the
footnotes of Appendix II to this prospectus
supplement.
Two (2) of the mortgage loans, representing
3.4% of the initial outstanding pool balance
(and representing 3.6% of the initial
outstanding loan group 1 balance), permit the
borrower to enter into additional subordinate
financing that is secured by the mortgaged
property, provided that, in each case, certain
debt service coverage ratio and loan-to-value
ratio tests are satisfied as further discussed
in the footnotes of Appendix II to this
prospectus supplement.
Two (2) of the mortgage loans, representing
1.6% of the initial outstanding pool balance
(which include one (1) mortgage loans in loan
group 1, representing 1.5% of the initial
outstanding loan group 1 balance, and one (1)
mortgage loan in loan group 2, representing
2.1% of the initial outstanding loan group 2
balance), permit the borrower to enter into
both additional subordinate financing that is
secured by the related mortgaged property and
additional subordinate financing that is not
secured by the related mortgaged property,
provided that, in each case, certain debt
service coverage ratio and loan-to-value ratio
tests are satisfied as further discussed in the
footnotes of Appendix II to this prospectus
supplement.
One (1) of the mortgage loans, representing
0.5% of the initial outstanding pool balance
(and representing 0.5% of the initial
outstanding loan group 1 balance), permits the
borrower to enter into both additional
subordinate financing that is secured by the
related mortgaged property or additional
financing that is secured by a pledge of equity
interests in the borrower, provided that, in
each case, certain debt service coverage ratio
and loan-to-value ratio tests are satisfied as
further discussed in the footnotes of Appendix
II to this prospectus supplement.
In general, borrowers that have not agreed to
certain special purpose covenants in the
related mortgage loan documents may also be
permitted to incur additional financing that is
not secured by the mortgaged property.
In the case of some or all of the mortgage
loans with existing subordinate or mezzanine
debt, the holder of the subordinate or
mezzanine loan has the right to cure certain
defaults occurring on the mortgage loan and/or
the right to purchase the mortgage loan from
the trust if certain defaults on the mortgage
loan occur. The purchase price required to be
paid in connection with such a purchase is
generally equal to the outstanding principal
balance of the mortgage loan, together with
accrued and unpaid interest on, and all unpaid
servicing expenses and advances relating to,
the mortgage loan. Such purchase price
generally does not include a yield maintenance
charge or prepayment premium. Accordingly, such
purchase (if made prior to the maturity date or
anticipated repayment date) will have the
effect of a prepayment made without payment of
a yield maintenance charge or prepayment
premium.
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We make no representation as to whether any
other secured subordinate financing currently
encumbers any mortgaged property or whether a
third-party holds debt secured by a pledge of
equity ownership interests in a related
borrower. Debt that is incurred by the owner of
equity in one or more borrowers and is secured
by a guaranty of the borrower or by a pledge of
the equity ownership interests in such
borrowers effectively reduces the equity
owners' economic stake in the related mortgaged
property. The existence of such debt may reduce
cash flow on the related borrower's mortgaged
property after the payment of debt service and
may increase the likelihood that the owner of a
borrower will permit the value or income
producing potential of a mortgaged property to
suffer by not making capital infusions to
support the mortgaged property.
Generally, all of the mortgage loans also
permit the related borrower to incur other
unsecured indebtedness, including but not
limited to trade payables, in the ordinary
course of business and to incur indebtedness
secured by equipment or other personal property
located at the mortgaged property.
When a mortgage loan borrower, or its
constituent members, also has one or more other
outstanding loans, even if the loans are
subordinated or are mezzanine loans not
directly secured by the mortgaged property, the
trust is subjected to certain risks. For
example, the borrower may have difficulty
servicing and repaying multiple loans. Also,
the existence of another loan generally will
make it more difficult for the borrower to
obtain refinancing of the mortgage loan and may
thus jeopardize the borrower's ability to repay
any balloon payment due under the mortgage loan
at maturity or to repay the mortgage loan on
its anticipated repayment date. Moreover, the
need to service additional debt may reduce the
cash flow available to the borrower to operate
and maintain the mortgaged property.
Additionally, if the borrower, or its
constituent members, is obligated to another
lender, actions taken by other lenders could
impair the security available to the trust. If
a junior lender files an involuntary bankruptcy
petition against the borrower, or the borrower
files a voluntary bankruptcy petition to stay
enforcement by a junior lender, the trust's
ability to foreclose on the property will be
automatically stayed, and principal and
interest payments might not be made during the
course of the bankruptcy case. The bankruptcy
of a junior lender also may operate to stay
foreclosure by the trust.
Further, if another loan secured by the
mortgaged property is in default, the other
lender may foreclose on the mortgaged property,
absent an agreement to the contrary, thereby
causing a delay in payments and/or an
involuntary repayment of the mortgage loan
prior to maturity. The trust may also be
subject to the costs and administrative burdens
of involvement in foreclosure proceedings or
related litigation.
Even if a subordinate lender has agreed not to
take any direct actions with respect to the
related subordinate debt, including any actions
relating to the bankruptcy of the borrower, and
that the holder of the mortgage loan will have
all rights to direct all such actions, there
can be no assurance that in the event of the
borrower's bankruptcy, a court will enforce
such restrictions against a subordinate lender.
In its decision in
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In re 203 North LaSalle Street Partnership, 246
B.R. 325 (Bankr. N.D. Ill. March 10, 2000), the
United States Bankruptcy Court for the Northern
District of Illinois refused to enforce a
provision of a subordination agreement that
allowed a first mortgagee to vote a second
mortgagee's claim with respect to a Chapter 11
reorganization plans on the grounds
prebankruptcy contracts cannot override rights
expressly provided by the Bankruptcy Code. This
holding, which at least one court has already
followed, potentially limits the ability of a
senior lender to accept or reject a
reorganization plan or to control the
enforcement of remedies against a common
borrower over a subordinated lender's
objections.
For further information with respect to
subordinate debt, mezzanine debt and other
financing, see Appendix II attached to this
prospectus supplement.
BANKRUPTCY PROCEEDINGS
RELATING TO A BORROWER CAN
RESULT IN DISSOLUTION OF THE
BORROWER AND THE ACCELERATION
OF THE RELATED MORTGAGE LOAN
AND CAN OTHERWISE ADVERSELY
IMPACT REPAYMENT OF THE
RELATED MORTGAGE LOAN Under the federal bankruptcy code, the filing
of a bankruptcy petition by or against a
borrower will stay 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 reduce the amount of
secured indebtedness to the then current value
of the mortgaged property. Such an action would
make the lender a general unsecured creditor
for the difference between the then current
value and the amount of its outstanding
mortgage indebtedness. A bankruptcy court also
may:
o grant a debtor a reasonable time to cure a
payment default on a mortgage loan;
o reduce monthly payments due under a
mortgage loan;
o change the rate of interest due on a
mortgage loan; or
o otherwise alter the terms of the mortgage
loan, including the repayment schedule.
Additionally, the trustee of the borrower's
bankruptcy or the borrower, as
debtor-in-possession, has special powers to
avoid, subordinate or disallow debts. In some
circumstances, the claims of the mortgage
lender may be subordinated to financing
obtained by a debtor-in-possession subsequent
to its bankruptcy.
The filing of a bankruptcy petition will also
stay the lender from enforcing a borrower's
assignment of rents and leases. The federal
bankruptcy code also may interfere with the
trustee's ability to enforce any lockbox
requirements. The legal proceedings necessary
to resolve these issues can be time consuming
and costly and may significantly delay or
reduce the lender's receipt of rents. A
bankruptcy court may also permit rents
otherwise subject to an assignment and/or
lockbox
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arrangement to be used by the borrower to
maintain the mortgaged property or for other
court authorized expenses.
As a result of the foregoing, the 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.
A number of the borrowers under the mortgage
loans are limited or general partnerships.
Under some circumstances, the bankruptcy of a
general partner of the partnership may result
in the dissolution of that partnership. The
dissolution of a borrower partnership, the
winding up of its affairs and the distribution
of its assets could result in an early
repayment of the related mortgage loan.
BANKRUPTCY OR OTHER
PROCEEDINGS RELATED TO THE
SPONSOR OF A BORROWER MAY
ADVERSELY AFFECT THE
PERFORMANCE OF THE RELATED
MORTGAGE LOAN Certain of the mortgage loans may have sponsors
that have previously filed bankruptcy or have
been subject to foreclosure actions, which in
some cases may have involved the same property
that currently secures the mortgage loan. In
each case, the related entity or person has
emerged from bankruptcy or, in the case of
previous foreclosure actions, is not permitted
to directly or indirectly manage the related
borrower. However, we cannot assure you that
such sponsors will not be more likely than
other sponsors to utilize their rights in
bankruptcy in the event of any threatened
action by the mortgagee to enforce its rights
under the related loan documents.
CERTAIN OF THE MORTGAGE LOANS
LACK CUSTOMARY PROVISIONS Certain of the mortgage loans lack many
provisions that are customary in mortgage loans
intended for securitization. Generally, the
borrowers with respect to these mortgage loans
are not required to make payments to lockboxes
or to maintain reserves for certain expenses,
such as taxes, insurance premiums, capital
expenditures, tenant improvements and leasing
commissions, and the lenders under these
mortgage loans do not have the right to
terminate the related property manager upon the
occurrence of certain events or require lender
approval of a replacement property manager.
BORROWERS THAT ARE NOT SPECIAL
PURPOSE ENTITIES MAY BE MORE
LIKELY TO FILE BANKRUPTCY
PETITIONS AND THIS MAY
ADVERSELY AFFECT PAYMENTS ON
YOUR CERTIFICATES While many of the borrowers have agreed to
certain special purpose covenants to limit the
bankruptcy risk arising from activities
unrelated to the operation of the property,
some borrowers are not special purpose
entities. The loan documents and organizational
documents of these borrowers that are not
special purpose entities generally do not limit
the purpose of the borrowers to owning the
mortgaged properties and do not contain the
representations, warranties and covenants
customarily employed to ensure that a borrower
is a special purpose
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entity (such as limitations on indebtedness,
affiliate transactions and the conduct of other
businesses, restrictions on the borrower's
ability to dissolve, liquidate, consolidate,
merge or sell all of its assets and
restrictions upon amending its organizational
documents). Consequently, these borrowers may
have other monetary obligations, and certain of
the loan documents provide that a default under
any such other obligations constitutes a
default under the related mortgage loan. In
addition, many of the borrowers and their
owners do not have an independent director
whose consent would be required to file a
bankruptcy petition on behalf of the borrower.
One of the purposes of an independent director
is to avoid a bankruptcy petition filing that
is intended solely to benefit a borrower's
affiliate and is not justified by the
borrower's own economic circumstances.
Therefore, the borrowers described above may be
more likely to file or be subject to voluntary
or involuntary bankruptcy petitions which may
adversely affect payments on your certificates.
THE OPERATION OF COMMERCIAL
PROPERTIES IS DEPENDENT UPON
SUCCESSFUL MANAGEMENT The successful operation of a real estate
project depends upon the property manager's
performance and viability. The property manager
is generally responsible for:
o responding to changes in the local market;
o planning and implementing the rental
structure;
o operating the property and providing
building services;
o managing operating expenses; and
o assuring that maintenance and capital
improvements are carried out in a timely
fashion.
Properties deriving revenues primarily from
short-term sources are generally more
management-intensive than properties leased to
creditworthy tenants under long-term leases.
A property manager, by controlling costs,
providing appropriate service to tenants and
seeing to property maintenance and general
upkeep, can improve cash flow, reduce vacancy,
leasing and repair costs and preserve building
value. On the other hand, management errors
can, in some cases, impair short-term cash flow
and the long-term viability of an income
producing property.
We make no representation or warranty as to the
skills of any present or future managers of the
mortgaged properties. Additionally, we cannot
assure you that the property managers will be
in a financial condition to fulfill their
management responsibilities throughout the
terms of their respective management
agreements.
PROVISIONS REQUIRING YIELD
MAINTENANCE CHARGES OR
DEFEASANCE PROVISIONS MAY NOT
BE ENFORCEABLE Provisions prohibiting prepayment during a
lock-out period or requiring the payment of
prepayment premiums or yield maintenance
charges may not be enforceable in some states
and under federal bankruptcy law. Provisions
requiring the payment of prepayment
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premiums or yield maintenance charges also may
be interpreted as constituting the collection
of interest for usury purposes. Accordingly, we
cannot assure you that the obligation to pay
any prepayment premium or yield maintenance
charge will be enforceable either in whole or
in part, regardless of whether the prepayment
is voluntary or involuntary. Also, we cannot
assure you that foreclosure proceeds will be
sufficient to pay an enforceable prepayment
premium or yield maintenance charge.
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 yield
maintenance charge. In certain jurisdictions,
collateral substitution provisions might be
deemed unenforceable under applicable law or
public policy, or usurious.
THE ABSENCE OF LOCKBOXES
ENTAILS RISKS THAT COULD
ADVERSELY AFFECT PAYMENTS ON
YOUR CERTIFICATES The mortgage loans generally do not require the
related borrower to cause rent and other
payments to be made into a lockbox account
maintained on behalf of the lender. If rental
payments are not required to be made directly
into a lockbox account, there is a risk that
the borrower will divert such funds for
purposes other than the payment of the mortgage
loan and maintaining the mortgaged property.
ENFORCEABILITY OF CROSS-
COLLATERALIZATION PROVISIONS
MAY BE CHALLENGED AND THE
BENEFITS OF THESE PROVISIONS
MAY OTHERWISE BE LIMITED AND
MAY ADVERSELY AFFECT PAYMENTS
ON YOUR CERTIFICATES The mortgage pool includes three (3) groups of
mortgage loans, representing 2.5% of the
initial outstanding pool balance (and
representing 2.7% of the initial outstanding
loan group 1 balance), under which an aggregate
amount of indebtedness is secured by multiple
real properties, through
cross-collateralization with other mortgage
loans or otherwise. This arrangement attempts
to reduce the risk that one mortgaged real
property may not generate enough net operating
income to pay debt service. However,
arrangements of this type involving more than
one borrower (i.e. in the case of
cross-collateralized mortgage loans) could be
challenged as fraudulent conveyances if:
o one of the borrowers were to become a
debtor in a bankruptcy case, or were to
become subject to an action brought by one
or more of its creditors outside a
bankruptcy case;
o the related borrower did not receive fair
consideration or reasonably equivalent
value when it allowed its mortgaged real
property or properties to be encumbered by
a lien benefiting the other borrowers; and
o the borrower was insolvent when it granted
the lien, was rendered insolvent by the
granting of the lien or was left with
inadequate capital, or was unable to pay
its debts as they matured.
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Among other things, a legal challenge to the
granting of the liens may focus on:
o the benefits realized by such borrower
entity from the respective mortgage loan
proceeds as compared to the value of its
respective property; and
o the overall cross-collateralization.
If a court were to conclude that the granting
of the liens was an avoidable fraudulent
conveyance, that court could subordinate all or
part of the borrower's respective mortgage loan
to existing or future indebtedness of that
borrower. The court also could recover payments
made under that mortgage loan or take other
actions detrimental to the holders of the
certificates, including, under certain
circumstances, invalidating the loan or the
related mortgages that are subject to
cross-collateralization.
Furthermore, when multiple real properties
secure a mortgage loan or group of
cross-collateralized mortgage loans, the amount
of the mortgage encumbering any particular one
of those properties may be less than the full
amount of the related mortgage loan or group of
cross-collateralized mortgage loans, generally,
to minimize recording tax. This mortgage amount
may equal the appraised value or allocated loan
amount for the mortgaged real property and will
limit the extent to which proceeds from the
property will be available to offset declines
in value of the other properties securing the
same mortgage loan or group of
cross-collateralized mortgage loans.
Moreover, three (3) groups of multi-property
mortgage loans or crossed loan groups,
representing 0.6% of the initial outstanding
pool balance (and representing 0.7% of the
initial outstanding loan group 1 balance), are
secured by mortgaged properties located in
various states. Foreclosure actions are brought
in state court and the courts of one state
cannot exercise jurisdiction over property in
another state. Upon a default under any of
these mortgage loans, it may not be possible to
foreclose on the related mortgaged real
properties simultaneously.
RESERVES TO FUND CAPITAL
EXPENDITURES MAY BE
INSUFFICIENT AND THIS MAY
ADVERSELY AFFECT PAYMENTS ON
YOUR CERTIFICATES Many of the mortgage loans do not require the
borrowers to set aside funds for specific
reserves controlled by the lender. Even to the
extent that the mortgage loans require any
reserves, we cannot assure you that any reserve
amounts will be sufficient to cover the actual
costs of items such as taxes, insurance
premiums, capital expenditures, tenant
improvements and leasing commissions (or other
items for which the reserves were established)
or that borrowers under the related mortgage
loans will put aside sufficient funds to pay
for those items. We also cannot assure you that
cash flow from the properties will be
sufficient to fully fund the ongoing monthly
reserve requirements or to enable the borrowers
under the related mortgage loans to fully pay
for those items.
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INADEQUACY OF TITLE INSURERS
MAY ADVERSELY AFFECT PAYMENTS
ON YOUR CERTIFICATES Title insurance for a mortgaged property
generally insures a lender against risks
relating to a lender not having a first lien
with respect to a mortgaged property, and in
some cases can insure a lender against specific
other risks. The protection afforded by title
insurance depends on the ability of the title
insurer to pay claims made upon it. We cannot
assure you that:
o a title insurer will have the ability to
pay title insurance claims made upon it;
o the title insurer will maintain its
present financial strength; or
o a title insurer will not contest claims
made upon it.
MORTGAGED PROPERTIES SECURING
THE MORTGAGE LOANS THAT ARE
NOT IN COMPLIANCE WITH ZONING
AND BUILDING CODE REQUIREMENTS
AND USE RESTRICTIONS COULD
ADVERSELY AFFECT PAYMENTS ON
YOUR CERTIFICATES Noncompliance with zoning and building codes
may cause the borrower to experience cash flow
delays and shortfalls that would reduce or
delay the amount of proceeds available for
distributions on your certificates. At
origination of the mortgage loans, the mortgage
loan sellers took steps to establish that the
use and operation of the mortgaged properties
securing the mortgage loans were in compliance
in all material respects with all applicable
zoning, land-use and building ordinances,
rules, regulations, and orders. Evidence of
this compliance may be in the form of legal
opinions, confirmations from government
officials, title policy endorsements,
appraisals, zoning consultants' reports and/or
representations by the related borrower in the
related mortgage loan documents. These steps
may not have revealed all possible violations
and certain mortgaged properties that were in
compliance may not remain in compliance.
Some violations of zoning, land use and
building regulations may be known to exist at
any particular mortgaged property, but the
mortgage loan sellers generally do not consider
those defects known to them to be material or
have obtained policy endorsements and/or law
and ordinance insurance to mitigate the risk of
loss associated with any material violation or
noncompliance. In some cases, the use,
operation and/or structure of a mortgaged
property constitutes a permitted nonconforming
use and/or structure as a result of changes in
zoning laws after such mortgaged properties
were constructed and the structure may not be
rebuilt to its current state or be used for its
current purpose if a material casualty event
occurs. Insurance proceeds may not be
sufficient to pay the mortgage loan in full if
a material casualty event were to occur, or the
mortgaged property, as rebuilt for a conforming
use, may not generate sufficient income to
service the mortgage loan and the value of the
mortgaged property or its revenue producing
potential may not be the same as it was before
the casualty. If a mortgaged property could not
be rebuilt to its current state or its current
use were no longer permitted due to building
violations or changes in
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zoning or other regulations, then the borrower
might experience cash flow delays and
shortfalls or be subject to penalties that
would reduce or delay the amount of proceeds
available for distributions on your
certificates.
Certain mortgaged properties may be subject to
use restrictions pursuant to reciprocal
easement or operating agreements which could
limit the borrower's right to operate certain
types of facilities within a prescribed radius.
These limitations could adversely affect the
ability of the borrower to lease the mortgaged
property on favorable terms.
CONDEMNATIONS WITH RESPECT TO
MORTGAGED PROPERTIES SECURING
THE MORTGAGE LOANS COULD
ADVERSELY AFFECT PAYMENTS ON
YOUR CERTIFICATES From time to time, there may be condemnations
pending or threatened against one or more of
the mortgaged properties. There can be no
assurance that the proceeds payable in
connection with a total condemnation will be
sufficient to restore the related mortgaged
property or to satisfy the remaining
indebtedness of the related mortgage loan. The
occurrence of a partial condemnation may have a
material adverse effect on the continued use of
the affected mortgaged property, or on an
affected borrower's ability to meet its
obligations under the related mortgage loan.
Therefore, we cannot assure you that the
occurrence of any condemnation will not have a
negative impact upon the distributions on your
certificates.
IMPACT OF TERRORIST ATTACKS
AND MILITARY OPERATIONS ON THE
FINANCIAL MARKETS AND YOUR
INVESTMENT On September 11, 2001, the United States was
subjected to multiple terrorist attacks,
resulting in the loss of many lives and massive
property damage and destruction in New York
City, the Washington, D.C. area and
Pennsylvania. In its aftermath, there was
considerable uncertainty in the world financial
markets. It is impossible to predict whether,
or the extent to which, future terrorist
activities may occur in the United States.
According to publicly available reports, the
financial markets have in the past responded to
the uncertainty with regard to the scope,
nature and timing of current and possible
future military responses led by the United
States, as well as to the disruptions in air
travel, substantial losses reported by various
companies including airlines, insurance
providers and aircraft makers, the need for
heightened security across the country and
decreases in consumer confidence that can cause
a general slowdown in economic growth.
It is impossible to predict the duration of the
current military involvement of the United
States in Iraq or Afghanistan and whether the
United States will be involved in any other
future military actions. The continued presence
of United States military personnel in Iraq and
Afghanistan may prompt further terrorist
attacks against the United States.
It is uncertain what effects the aftermath of
such military operations of the United States
in Iraq, any future terrorist activities in the
United States or abroad and/or any consequent
actions on the part of the
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United States Government and others, including
military action, will have on: (a) United
States and world financial markets, (b) local,
regional and national economies, (c) real
estate markets across the United States, (d)
particular business segments, including those
that are important to the performance of the
mortgaged properties that secure the mortgage
loans and/or (e) insurance costs and the
availability of insurance coverage for
terrorist acts, particularly for large
mortgaged properties, which could adversely
affect the cash flow at such mortgaged
properties. In particular, the decrease in air
travel may have a negative effect on certain of
the mortgaged properties, including hospitality
mortgaged properties and those mortgaged
properties in tourist areas which could reduce
the ability of such mortgaged properties to
generate cash flow. As a result, the ability of
the mortgaged properties to generate cash flow
may be adversely affected. These disruptions
and uncertainties could materially and
adversely affect the value of, and your ability
to resell, your certificates.
THE ABSENCE OF OR INADEQUACY
OF INSURANCE COVERAGE ON THE
PROPERTY MAY ADVERSELY AFFECT
PAYMENTS ON YOUR CERTIFICATES The mortgaged properties may suffer casualty
losses due to risks that are not covered by
insurance (including acts of terrorism) or for
which insurance coverage is not adequate or
available at commercially reasonable rates. In
addition, some of the mortgaged properties are
located in California and in other coastal
areas of certain states, which are areas that
have historically been at greater risk of acts
of nature, including earthquakes, fires,
hurricanes and floods. The mortgage loans
generally do not require borrowers to maintain
earthquake, hurricane or flood insurance and we
cannot assure you that borrowers will attempt
or be able to obtain adequate insurance against
such risks. If a borrower does not have
insurance against such risks and a casualty
occurs at a mortgaged property, the borrower
may be unable to generate income from the
mortgaged property in order to make payments on
the related mortgage loan.
Moreover, if reconstruction or major repairs
are required following a casualty, changes in
laws that have occurred since the time of
original construction may materially impair the
borrower's ability to effect such
reconstruction or major repairs or may
materially increase their cost.
As a result of these factors, the amount
available to make distributions on your
certificates could be reduced.
In light of the September 11, 2001 terrorist
attacks in New York City, the Washington, D.C.
area and Pennsylvania, the comprehensive
general liability and business interruption or
rent loss insurance policies required by
typical mortgage loans (which are generally
subject to periodic renewals during the term of
the related mortgage loans) have been affected.
To give time for private markets to develop a
pricing mechanism and to build capacity to
absorb future losses that may occur due to
terrorism, on November 26, 2002 the Terrorism
Risk Insurance Act of 2002 was enacted, which
established the Terrorism Insurance Program.
The Terrorism Insurance Program is a temporary
program intended to ensure that commercial
property and casualty insurance for terrorism
risk is widely available and affordable by
providing a federal risk sharing program to
spread the risk of losses in the event of
future
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terrorist attacks among the federal government,
issuers and policyholders. Substantially all
property and casualty insurers doing business
in the United States are required to
participate in the program established by the
Terrorism Risk Insurance Act of 2002 and all
terrorism exclusions in effect on the date of
the enactment of the statute are void to the
extent they would exclude losses covered by it.
The Terrorism Insurance Program was originally
scheduled to expire on December 31, 2005.
However, on December 22, 2005, the Terrorism
Risk Insurance Extension Act of 2005 was
enacted, which extended the duration of the
Terrorism Insurance Program until December 31,
2007.
The Terrorism Insurance Program is administered
by the Secretary of the Treasury and through
December 31, 2007 will provide some financial
assistance from the United States Government to
insurers in the event of another terrorist
attack that results in an insurance claim. The
program applies to United States risks only and
to acts that are committed by an individual or
individuals acting on behalf of a foreign
person or foreign interest as an effort to
influence or coerce United States civilians or
the United States Government.
In addition, with respect to any act of
terrorism occurring after January 1, 2007, no
compensation will be paid under the Terrorism
Insurance Program unless the aggregate industry
losses relating to such act of terror exceed
$100 million. As a result, unless the borrowers
obtain separate coverage for events that do not
meet these thresholds (which coverage may not
be required by the respective loan documents
and may not otherwise be obtainable), such
events would not be covered.
The Treasury Department has established
procedures for the program under which the
federal share of compensation will be equal to
85% of that portion of insured losses that
exceeds an applicable insurer deductible
required to be paid during each program year.
The federal share in the aggregate in any
program year may not exceed $100 billion (and
the insurers will not be liable for any amount
that exceeds this cap).
Through December 2007, insurance carriers are
required under the program to provide terrorism
coverage in their basic "all-risk" policies.
Any commercial property and casualty terrorism
insurance exclusion that was in force on
November 26, 2002 is automatically voided to
the extent that it excludes losses that would
otherwise be insured losses. Any state approval
of those types of exclusions in force on
November 26, 2002 are also voided.
There can be no assurance that upon the
expiration of the Terrorism Insurance Program,
subsequent terrorism insurance legislation will
be passed. Because it is a temporary program,
there is no assurance that it will create any
long-term changes in the availability and cost
of such insurance.
To the extent that uninsured or underinsured
casualty losses occur with respect to the
related mortgaged properties, losses on
mortgage loans may result. In addition, the
failure to maintain that type of insurance may
constitute a default under a mortgage loan,
which could result in
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the acceleration and foreclosure of that
mortgage loan. Alternatively, the increased
costs of maintaining that type of insurance
could have an adverse effect on the financial
condition of the mortgage loan borrowers.
Certain of the mortgage loans are secured by
mortgaged properties that are not insured for
acts of terrorism. If those casualty losses are
not covered by standard casualty insurance
policies, then in the event of a casualty from
an act of terrorism, the amount available to
make distributions on your certificates could
be reduced.
CERTAIN OTHER RISKS RELATED TO
CASUALTY AND CASUALTY
INSURANCE The loan documents for each mortgage loan
generally require that (A) "all risk" insurance
policies be maintained in an amount equal to
either (i) not less than the full replacement
cost of the related mortgaged property or (ii)
the lesser of the full replacement cost of each
related mortgaged property and the outstanding
principal balance of the mortgage loan or (B)
the related borrower will maintain such
insurance coverages in such amounts as the
lender may reasonably require. Notwithstanding
such requirement, however, under insurance law,
if an insured property is not rebuilt,
insurance companies are generally required to
pay only the "actual cash value" of the
property, which is defined under state law but
is generally equal to the replacement cost of
the property less depreciation. The
determination of "actual cash value" is both
inexact and heavily dependent on facts and
circumstances. Notwithstanding the requirements
of the loan documents, an insurer may refuse to
insure a mortgaged property for the loan amount
if it determines that the "actual cash value"
of the mortgaged property would be a lower
amount, and even if it does insure a mortgaged
property for the full loan amount, if at the
time of casualty the "actual cash value" is
lower, and the mortgaged property is not
restored, only the "actual cash value" will be
paid. Accordingly, if a borrower does not meet
the conditions to restore a mortgaged property
and the mortgagee elects to require the
borrower to apply the insurance proceeds to
repay the mortgage loan, rather than toward
restoration, there can be no assurance that
such proceeds will be sufficient to repay the
mortgage loan.
Certain leases may provide that such leases are
terminable in connection with a casualty or
condemnation including in the event the leased
premises are not repaired or restored within a
specified time period.
CLAIMS UNDER BLANKET INSURANCE
POLICIES MAY ADVERSELY AFFECT
PAYMENTS ON YOUR CERTIFICATES Some of the mortgaged properties are covered by
blanket insurance policies which also cover
other properties of the related borrower or its
affiliates. In the event that such policies are
drawn on to cover losses on such other
properties, the amount of insurance coverage
available under such policies may thereby be
reduced and could be insufficient to cover each
mortgaged property's insurable risks.
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PROPERTY INSPECTIONS AND
ENGINEERING REPORTS MAY NOT
REFLECT ALL CONDITIONS THAT
REQUIRE REPAIR ON THE PROPERTY Licensed engineers or consultants generally
inspected the mortgaged properties and prepared
engineering reports in connection with the
origination or securitization of the mortgage
loans to assess items such as structure,
exterior walls, roofing, interior construction,
mechanical and electrical systems and general
condition of the site, buildings and other
improvements. However, we cannot assure you
that all conditions requiring repair or
replacement were identified. In those cases
where a material condition was disclosed, such
condition has been or is required to be
remedied to the mortgage loan seller's
satisfaction, or funds as deemed necessary by
the mortgage loan seller, or the related
engineer or consultant have been reserved to
remedy the material condition. No additional
property inspections were conducted by us in
connection with the issuance of the
certificates.
VALUATION ESTIMATES MAY
INACCURATELY REFLECT THE VALUE
OF THE MORTGAGED PROPERTIES An appraisal certified by the applicable
appraiser to be in compliance with FIRREA was
conducted in respect of each mortgaged property
in connection with the origination or
securitization of the related mortgage loan.
The resulting estimated property values
represent the analysis and opinion of the
person performing the appraisal and are not
guarantees of present or future values. The
person performing the appraisal may have
reached a different conclusion of value than
the conclusion that would be reached by a
different appraiser appraising the same
property. Moreover, the values of the mortgaged
properties may have changed significantly since
the appraisal was performed. 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. The estimates of
value reflected in the appraisals and the
related loan-to-value ratios are presented for
illustrative purposes only in Appendix I and
Appendix II to this prospectus supplement. In
each case the estimate presented is the one set
forth in the most recent appraisal available to
us as of the cut-off date, although we
generally have not obtained updates to the
appraisals. There is no assurance that the
appraisal values indicated accurately reflect
past, present or future market values of the
mortgaged properties.
THE TIMING OF MORTGAGE LOAN
AMORTIZATION MAY CAUSE
INCREASED POOL CONCENTRATION,
WHICH MAY ADVERSELY AFFECT
PAYMENTS ON YOUR CERTIFICATES As principal payments or prepayments are made
on mortgage loans, the remaining mortgage pool
may be subject to increased concentrations of
property types, geographic locations and other
pool characteristics of the mortgage loans and
the mortgaged properties, some of which may be
unfavorable. Classes of certificates that have
a lower payment priority are more likely to be
exposed to this concentration risk than are
certificate classes with a higher payment
priority. This occurs because
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realized losses are allocated to the class
outstanding at any time with the lowest payment
priority and principal on the certificates
entitled to principal is generally payable in
sequential order or alphabetical order
(provided that the Class A-M Certificates will
be senior in right to the Class A-J
Certificates), with such classes generally not
being entitled to receive principal until the
preceding class or classes entitled to receive
principal have been retired.
SUBORDINATION OF SOME
CERTIFICATES MAY AFFECT THE
TIMING OF PAYMENTS AND THE
APPLICATION OF LOSSES ON YOUR
CERTIFICATES As described in this prospectus supplement, the
rights of the holders of each class of
subordinate certificates to receive payments of
principal and interest otherwise payable on
their certificates will be subordinated to such
rights of the holders of the more senior
certificates having an earlier alphabetical
class designation (provided that the Class A-M
Certificates will be senior in right to the
Class A-J Certificates). Losses on the mortgage
loans will be allocated to the Class P, Class
O, Class N, Class M, Class L, Class K, Class J,
Class H, Class G, Class F, Class E, Class D,
Class C, Class B, Class A-J and Class A-M
Certificates, in that order, reducing amounts
otherwise payable to each class. Any remaining
losses would then be allocated or cause
shortfalls to the Class A-1, Class A-2, Class
A-3, Class A-AB, Class A-4, Class A-1A
Certificates, pro rata, and, solely with
respect to losses of interest, to the Class X
Certificates, in proportion to the amounts of
interest or principal distributable on those
certificates.
THE OPERATION OF THE MORTGAGED
PROPERTY FOLLOWING FORECLOSURE
OF THE MORTGAGE LOAN MAY
AFFECT THE TAX STATUS OF THE
TRUST AND MAY ADVERSELY AFFECT
PAYMENTS ON YOUR CERTIFICATES If the trust acquires a mortgaged property as a
result of a foreclosure or deed in lieu of
foreclosure, the special servicer will
generally retain an independent contractor to
operate the property. Any net income from
operations other than qualifying "rents from
real property", or any rental income based on
the net profits derived by any person from such
property or allocable to a non-customary
service, will subject the trust to a federal
tax on such income at the highest marginal
corporate tax rate, which is currently 35%,
and, in addition, possible state or local tax.
In this event, the net proceeds available for
distribution on your certificates will be
reduced. The special servicer may permit the
trust to earn such above described "net income
from foreclosure property" but only if it
determines that the net after-tax benefit to
certificateholders is greater than under
another method of operating or leasing the
mortgaged property. In addition, if the trust
were to acquire one or more mortgaged
properties pursuant to a foreclosure or deed in
lieu of foreclosure, upon acquisition of those
mortgaged properties, the trust may in certain
jurisdictions, particularly in New York, be
required to pay state or local transfer or
excise taxes upon liquidation of such mortgaged
properties. Such state or local taxes may
reduce net proceeds available for distribution
to the certificateholders.
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STATE LAWS APPLICABLE TO
FORECLOSURE ACTIONS MAY AFFECT
THE TIMING OF PAYMENTS ON YOUR
CERTIFICATES Some states, including California, have laws
prohibiting more than one "judicial action" to
enforce a mortgage obligation. Some courts have
construed the term "judicial action" broadly.
In the case of any mortgage loan secured by
mortgaged properties located in multiple
states, the master servicer or special servicer
may be required to foreclose first on mortgaged
properties located in states where these "one
action" rules apply (and where non-judicial
foreclosure is permitted) before foreclosing on
properties located in states where judicial
foreclosure is the only permitted method of
foreclosure. As a result, the ability to
realize upon the mortgage loans may be
significantly delayed and otherwise limited by
the application of state laws.
THE BANKRUPTCY OR INSOLVENCY
OF ANY AFFILIATED BORROWERS
MAY ADVERSELY AFFECT PAYMENTS
ON YOUR CERTIFICATES Twenty (20) groups of mortgage loans (which
include eighteen (18) groups of mortgage loans
in loan group 1, representing 40.0% of the
initial loan group 1 balance, and two (2)
groups of mortgage loans in loan group 2,
representing 7.8% of the initial loan group 2
balance), the three (3) largest of which
represent 8.5%, 7.3% and 6.2%, respectively, of
the initial outstanding pool balance, were made
to borrowers that are affiliated through common
ownership of partnership or other equity
interests and where, in general, the related
mortgaged properties are commonly managed. The
related borrower concentrations of the three
(3) largest groups in loan group 1 represent
9.1%, 7.9% and 6.7%, respectively, of the
initial outstanding loan group 1 balance, the
two (2) groups in loan group 2 represent 5.8%
and 2.0% of the initial outstanding loan group
2 balance.
The bankruptcy or insolvency of any such
borrower 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 controls several
mortgaged properties experiences financial
difficulty at one such 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, or it could
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.
TENANT LEASES MAY HAVE
PROVISIONS THAT COULD
ADVERSELY AFFECT PAYMENTS ON
YOUR CERTIFICATES In certain jurisdictions, if tenant leases are
subordinate to the liens created by the
mortgage and do not contain attornment
provisions which require the tenant to
recognize a successor owner, following
foreclosure, as landlord under the lease, the
leases may terminate upon the transfer of the
property to a foreclosing lender or purchaser
at foreclosure. Not all leases were reviewed to
ascertain the existence of
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these provisions. Accordingly, if a mortgaged
property is located in such a jurisdiction and
is leased to one or more desirable tenants
under leases that are subordinate to the
mortgage and do not contain attornment
provisions, such mortgaged property could
experience a further decline in value if such
tenants' leases were terminated. This is
particularly likely if such tenants were paying
above-market rents or could not be replaced.
Some of the leases at the mortgaged properties
securing the mortgage loans included in the
trust may not be subordinate to the related
mortgage. If a lease is not subordinate to a
mortgage, the trust will not possess the right
to dispossess the tenant upon foreclosure of
the mortgaged property unless it has otherwise
agreed with the tenant. If the lease contains
provisions inconsistent with the mortgage, for
example, provisions relating to application of
insurance proceeds or condemnation awards, or
which could affect the enforcement of the
lender's rights, for example, an option to
purchase the mortgaged property or a right of
first refusal to purchase the mortgaged
property, the provisions of the lease will take
precedence over the provisions of the mortgage.
Additionally, with respect to certain of the
mortgage loans, the related borrower may have
granted certain tenants a right of first
refusal in the event a sale is contemplated or
a purchase option to purchase all or a portion
of the mortgaged property. Such provisions, if
not waived or subordinated, may impede the
lender's ability to sell the related mortgaged
property at foreclosure or adversely affect the
foreclosure bid price.
TENANCIES IN COMMON MAY HINDER
RECOVERY Borrowers under seventeen (17) mortgage loans,
representing 5.7% of the initial outstanding
pool balance (which include fifteen (15)
mortgage loans in loan group 1, representing
5.2% of the initial outstanding loan group 1
balance, and two (2) mortgage loan in loan
group 2, representing 12.4% of the initial
outstanding loan group 2 balance, and which
include Mortgage Loan Nos. 24, 29, 34, 44, 75,
76, 78, 79, 81, 102, 122, 127, 135, 167, 191,
236 and 244) own the related mortgaged property
as tenants-in-common. In general, with respect
to a tenant-in-common ownership structure, each
tenant-in-common owns an undivided interest in
the property and if such tenant-in-common
desires to sell its interest in the property
(and is unable to find a buyer or otherwise
needs to force a partition) the
tenant-in-common has the ability to request
that a court order a sale of the property and
distribute the proceeds to each
tenant-in-common proportionally.
In addition, Mortgage Loan No. 38, which had an
outstanding principal balance as of the cut-off
date of $13,755,000, representing 0.7% of the
initial outstanding pool balance (and
representing 0.7% of the initial outstanding
loan group 1 balance), permits the existing
borrower to prospectively sell its interest in
the related mortgaged property to a
tenant-in-common ownership structure.
The bankruptcy, dissolution or action for
partition by one or more of the
tenants-in-common could result in an early
repayment of the related mortgage loan, a
significant delay in recovery against the
tenant-in-common mortgagors, a material
impairment in property management
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and a substantial decrease in the amount
recoverable upon the related mortgage loan. In
some cases, the related mortgage loan documents
provide for full recourse to the related
tenant-in-common borrower or the guarantor if a
tenant-in-common files for partition or
bankruptcy. In some cases, the related
tenant-in-common borrower waived its right to
partition, reducing the risk of partition.
However, there can be no assurance that, if
challenged, this waiver would be enforceable.
In some cases, the related tenant-in-common
borrower is a special purpose entity (in some
cases bankruptcy-remote), reducing the risk of
bankruptcy. The tenant-in-common structure may
cause delays in the enforcement of remedies
because each time a tenant-in-common borrower
files for bankruptcy, the bankruptcy court stay
will be reinstated. There can be no assurance
that a bankruptcy proceeding by a single
tenant-in-common borrower will not delay
enforcement of this mortgage loan.
INCREASES IN REAL ESTATE TAXES
DUE TO TERMINATION OF A PILOT
PROGRAM OR OTHER TAX ABATEMENT
ARRANGEMENTS MAY REDUCE
PAYMENTS TO CERTIFICATEHOLDERS Certain of the mortgaged properties securing
the mortgage loans have or may in the future
have the benefit of reduced real estate taxes
under a local government program of payment in
lieu of taxes (often known as a PILOT program)
or other tax abatement arrangements. Some of
these programs or arrangements may be scheduled
to terminate or have significant tax increases
prior to the maturity of the related mortgage
loan, resulting in higher, and in some cases
substantially higher, real estate tax
obligations for the related borrower. An
increase in real estate taxes may impact the
ability of the borrower to pay debt service on
the mortgage loans. There are no assurances
that any such program will continue for the
duration of the related mortgage loan.
LEGAL ACTION ARISING OUT OF
ORDINARY BUSINESS COULD
ADVERSELY AFFECT PAYMENTS ON
YOUR CERTIFICATES There may be pending or threatened legal
actions, suits or proceedings against the
borrowers and managers of the mortgaged
properties and their respective affiliates
arising out of their ordinary business. We
cannot assure you that any such actions, suits
or proceedings would not have a material
adverse effect on your certificates.
With respect to six (6) mortgage loans,
representing approximately 2.2% of the initial
outstanding pool balance (and representing 2.3%
of the initial outstanding loan group 1
balance), certain sponsors of the related
borrowers, including W.P. Carey & Co. LLC
("W.P. Carey"), Corporate Property Associates
14 Global Inc., Corporate Property Associates
15 Global Inc., and Corporate Property
Associates 16 Global Inc. (collectively, the
"W.P. Carey Sponsors), have advised us that, in
March 2004, Carey Financial Corporation ("Carey
Financial"), the broker-dealer that managed the
public offerings of Corporate Property
Associates 15 Incorporated ("CPA 15") and a
wholly-owned subsidiary of one of the W.P.
Carey Sponsors, received a letter from the SEC
alleging various federal securities laws
violations by CPA 15 and Carey Financial in
connection with CPA 15's public offerings
between
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September 2002 and March 2003. The violations
alleged in connection with these public
offerings concern the selling of shares without
an effective registration statement and various
material misstatements and omissions in the
offering materials delivered in connection with
these offerings. W.P. Carey reported in its
September 2004 Form 10-Q that it, Carey
Financial and CPA 15 have each received
subpoenas from the staff of the SEC's Division
of Enforcement (the "SEC Enforcement Staff")
requesting information relating to, among other
things, the events addressed in the March 2004
letter. W.P. Carey further reported in its
March 2005 Form 10-Q that the scope of the SEC
Enforcement Staff's inquiries has broadened to
include broker-dealer compensation arrangements
in connection with CPA 15 and other REITS
managed by W.P. Carey, including the W.P. Carey
Sponsors. Based on W.P. Carey's Form 10-K for
2006, these investigations remain outstanding.
It cannot be determined at this time what
action, if any, the SEC will pursue against any
member of the W.P. Carey Sponsors, the remedies
the SEC may seek against the W.P. Carey
Sponsors (which may include civil monetary
penalties, injunctive relief or rescission) or
the effect on the operations of the W.P. Carey
Sponsors if an action is brought by the SEC.
Although no action is currently pending against
any member of the W.P. Carey Sponsors, we
cannot assure you that any action relating to
these allegations, if commenced, would not have
a material adverse effect on your certificates.
RISKS RELATING TO COMPLIANCE
WITH THE AMERICANS WITH
DISABILITIES ACT COULD
ADVERSELY AFFECT PAYMENTS ON
YOUR CERTIFICATES Under the Americans with Disabilities Act of
1990, public accommodations are required to
meet certain federal requirements related to
access and use by disabled persons. Borrowers
may incur costs complying with the Americans
with Disabilities Act. In addition,
noncompliance could result in the imposition of
fines by the federal government or an award of
damages to private litigants. If a borrower
incurs such costs or fines, the amount
available to pay debt service would be reduced.
CONFLICTS OF INTEREST MAY HAVE
AN ADVERSE EFFECT ON YOUR
CERTIFICATES Conflicts between various certificateholders.
The special servicer is given considerable
latitude in determining whether and in what
manner to liquidate or modify defaulted
mortgage loans. The operating adviser will have
the right to replace the special servicer upon
satisfaction of certain conditions set forth in
the pooling and servicing agreement. At any
given time, the operating adviser will be
controlled generally by the holders of the most
subordinate, or, if its certificate principal
balance is less than 25% of its original
certificate balance, the next most subordinate,
class of certificates, that is, the controlling
class, outstanding from time to time (or with
respect to an A/B Mortgage Loan, the holder of
the related B Note to the extent set forth in
the related intercreditor agreement), and such
holders may have interests in conflict with
those of the holders of the other certificates.
In addition, the operating adviser will have
the right to approve the determination of
customarily acceptable costs with respect to
insurance coverage and the right to advise the
special servicer with respect to certain
actions of the special servicer and, in
connection with such rights, may act solely in
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the interest of the holders of certificates of
the controlling class, without any liability to
any certificateholder. For instance, the
holders of certificates of the controlling
class might desire to mitigate the potential
for loss to that class from a troubled mortgage
loan by deferring enforcement in the hope of
maximizing future proceeds. However, the
interests of the trust may be better served by
prompt action, since delay followed by a market
downturn could result in less proceeds to the
trust than would have been realized if earlier
action had been taken. In general, no servicer
is required to act in a manner more favorable
to the offered certificates than to the
privately offered certificates.
The master servicer, any primary servicer, the
special servicer or an affiliate of any of them
may hold subordinate mortgage notes or acquire
certain of the most subordinated certificates,
including those of the initial controlling
class. Under such circumstances, the master
servicer, a primary servicer and the special
servicer may have interests that conflict with
the interests of the other holders of the
certificates. However, the pooling and
servicing agreement and each primary servicing
agreement will provide that the mortgage loans
are to be serviced in accordance with the
servicing standard and without regard to
ownership of any certificates by the master
servicer, the primary servicer or the special
servicer, as applicable. The initial special
servicer under the pooling and servicing
agreement will be Centerline Servicing Inc.
(formerly known as ARCap Servicing, Inc.); the
initial operating adviser under the pooling and
servicing agreement will be Centerline REIT
Inc. (formerly known as ARCap REIT, Inc.).
Conflicts between certificateholders and the
Non-Serviced Mortgage Loan Master Servicer
and/or the Non-Serviced Mortgage Loan Special
Servicer. Any non-serviced mortgage loan will
be serviced and administered pursuant to the
related non-serviced mortgage loan pooling and
servicing agreement, which provides for
servicing arrangements that are generally
consistent with the terms of other comparably
rated commercial mortgage loan securitizations.
Consequently, non-serviced mortgage loans will
not be serviced and administered pursuant to
the terms of the pooling and servicing
agreement. In addition, the legal and/or
beneficial owners of the other mortgage loans
secured by the mortgaged property securing
non-serviced mortgage loans, directly or
through representatives, have certain rights
under the related non-serviced mortgage loan
pooling and servicing agreement and the related
intercreditor agreement that affect such
mortgage loans, including with respect to the
servicing of such mortgage loans and the
appointment of a special servicer with respect
to such mortgage loans. Those legal and/or
beneficial owners may have interests that
conflict with your interests.
Conflicts between certificateholders and the
holders of subordinate notes. Pursuant to the
terms of the related intercreditor agreements,
neither the master servicer nor special
servicer may enter into material amendments,
modifications or extensions of a mortgage loan
in a material manner without the consent of the
holder of the related subordinate note, subject
to the expiration of the subordinate note
holder's consent rights. The holders of the
subordinate notes (or their respective
designees) may have interests in conflict with
those of the
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certificateholders of the classes of offered
certificates. As a result, approvals to
proposed actions of the master servicer or
special servicer, as applicable, under the
pooling and servicing agreement may not be
granted in all instances, thereby potentially
adversely affecting some or all of the classes
of offered certificates.
Conflicts between certificateholders and
primary servicer. The primary servicer for
certain of the mortgage loans will be Principal
Global Investors, LLC, an affiliate of a
mortgage loan seller. The primary servicer for
certain of the mortgage loans will be Wells
Fargo Bank, National Association, a mortgage
loan seller. It is anticipated that the master
servicer will delegate many of its servicing
obligations with respect to these mortgage
loans to such primary servicers pursuant to
primary servicing agreements. Under these
circumstances, the primary servicers, because
it is either a seller or an affiliate of a
seller, may have interests that conflict with
the interests of the holders of the
certificates.
Conflicts between borrowers and property
managers. It is likely that many of the
property managers of the mortgaged properties,
or their affiliates, manage additional
properties, including properties that may
compete with the mortgaged properties.
Affiliates of the managers, and managers
themselves, also may own other properties,
including competing properties. The managers of
the mortgaged properties may accordingly
experience conflicts of interest in the
management of such mortgaged properties.
Conflicts between the trust and the mortgage
loan sellers. The activities of the mortgage
loan sellers, and their affiliates or
subsidiaries, may involve properties that are
in the same markets as the mortgaged properties
underlying the certificates. In such case, the
interests of each of the mortgage loan sellers,
or their affiliates or subsidiaries, may differ
from, and compete with, the interests of the
trust, and decisions made with respect to those
assets may adversely affect the amount and
timing of distributions with respect to the
certificates. Conflicts of interest may arise
between the trust and each of the mortgage loan
sellers, or their affiliates or subsidiaries,
that engage in the acquisition, development,
operation, leasing, financing and disposition
of real estate if those mortgage loan sellers
acquire any certificates. In particular, if
certificates held by a mortgage loan seller are
part of a class that is or becomes the
controlling class the mortgage loan seller as
part of the holders of the controlling class
would have the ability to influence certain
actions of the special servicer under
circumstances where the interests of the trust
conflict with the interests of the mortgage
loan seller, or its affiliates or subsidiaries,
as acquirors, developers, operators, tenants,
financers or sellers of real estate related
assets.
The mortgage loan sellers, or their affiliates
or subsidiaries, may acquire a portion of the
certificates. Under those circumstances, they
may become the controlling class, and as the
controlling class, have interests that may
conflict with their interests as a seller of
the mortgage loans.
In addition, any subordinate indebtedness
secured by the related mortgaged property, any
mezzanine loans and/or any future mezzanine
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loans related to certain of the mortgage loans
may be held by the respective sellers of such
mortgage loan or affiliates or subsidiaries
thereof. The holders of such subordinate
indebtedness or such mezzanine loans may have
interests that conflict with the interests of
the holders of the certificates.
Additionally, certain of the mortgage loans
included in the trust may have been
refinancings of debt previously held by a
mortgage loan seller, or an affiliate or
subsidiary of a mortgage loan seller, and the
mortgage loan sellers, or their affiliates or
subsidiaries, may have or have had equity
investments in the borrowers (or in the owners
of the borrowers) or properties under certain
of the mortgage loans included in the trust.
Each of the mortgage loan sellers, and their
affiliates or subsidiaries, have made and/or
may make or have preferential rights to make
loans to, or equity investments in, affiliates
of the borrowers under the mortgage loans.
Other Conflicts. The depositor is an affiliate
of Bear Stearns Commercial Mortgage, Inc., a
mortgage loan seller and a sponsor, and Bear,
Stearns & Co. Inc., one of the underwriters.
Morgan Stanley Mortgage Capital Inc., one of
the mortgage loan sellers and a sponsor, is an
affiliate of Morgan Stanley & Co. Incorporated,
one of the underwriters. Wells Fargo Bank,
National Association is a mortgage loan seller,
a sponsor, the master servicer, the paying
agent, the certificate registrar and the
authenticating agent. Principal Commercial
Funding II, LLC, a mortgage loan seller and
sponsor, is affiliated with Principal Global
Investors, LLC, one of the primary servicers.
LaSalle Bank National Association and Morgan
Stanley Mortgage Capital Inc. are parties to a
custodial agreement whereby LaSalle, for
consideration, provides custodial services to
Morgan Stanley Mortgage Capital Inc. for
certain commercial mortgage loans originated or
purchased by it. Pursuant to this custodial
agreement, LaSalle Bank National Association is
currently providing custodial services for most
of the mortgage loans to be sold by Morgan
Stanley Mortgage Capital Inc. to the depositor
in connection with this securitization. The
terms of the custodial agreement are customary
for the commercial mortgage-backed
securitization industry providing for the
delivery, receipt, review and safekeeping of
mortgage loan files. LaSalle Bank National
Association and Bear Stearns Commercial
Mortgage Inc. are parties to a custodial
agreement whereby LaSalle, for consideration,
provides custodial services to Bear Stearns
Commercial Mortgage Inc. for certain commercial
mortgage loans originated or purchased by it.
Pursuant to this custodial agreement, LaSalle
Bank National Association is currently
providing custodial services for most of the
mortgage loans to be sold by Bear Stearns
Commercial Mortgage Inc. to the depositor in
connection with this securitization. The terms
of the custodial agreement are customary for
the commercial mortgage-backed securitization
industry providing for the delivery, receipt,
review and safekeeping of mortgage loan files.
PREPAYMENTS MAY REDUCE THE
YIELD ON YOUR CERTIFICATES 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
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prepayments resulting from casualty or
condemnation of mortgaged properties, defaults
and liquidations by borrowers, or repurchases
as a result of a mortgage loan seller's
material breach of representations and
warranties or material defects in a mortgage
loan's documentation. In addition, certain of
the mortgage loans may require that, upon the
occurrence of certain events, funds held in
escrow or proceeds from letters of credit may
be applied to the outstanding principal balance
of such mortgage loans as further discussed in
the footnotes to Appendix II attached to this
prospectus supplement.
The investment performance of your certificates
may vary materially and adversely from your
expectations if the actual rate of prepayment
is higher or lower than you anticipate.
Voluntary prepayments under some of the
mortgage loans are prohibited for specified
lock-out periods or require payment of a
prepayment premium or a yield maintenance
charge or both, unless the prepayment occurs
within a specified period prior to and
including the anticipated repayment date or
maturity date, as the case may be.
Nevertheless, we cannot assure you that the
related borrowers will refrain from prepaying
their mortgage loans due to the existence of a
prepayment premium or a yield maintenance
charge or the amount of such premium or charge
will be sufficient to compensate you for
shortfalls in payments on your certificates on
account of such prepayments. We also cannot
assure you that involuntary prepayments will
not occur or that borrowers will not default in
order to avoid the application of lock-out
periods. The rate at which voluntary
prepayments occur on the mortgage loans will be
affected by a variety of factors, including:
o the terms of the mortgage loans;
o the length of any prepayment lock-out
period;
o the level of prevailing interest rates;
o the availability of mortgage credit;
o the applicable yield maintenance charges
or prepayment premiums and the ability of
the master servicer, primary servicer or
special servicer to enforce the related
provisions;
o the failure to meet requirements for
release of escrows/reserves that result in
a prepayment;
o the occurrence of casualties or natural
disasters; and
o economic, demographic, tax or legal
factors.
Generally, no yield maintenance charge or
prepayment premium will be required for
prepayments (i) in connection with a casualty
or condemnation unless an event of default has
occurred or (ii) in connection with the
resolution of a specially serviced mortgage
loan. In addition, if a mortgage loan seller
repurchases any mortgage loan from the trust
due to the material breach of a representation
or warranty or a material document defect or
the mortgage loan is otherwise purchased from
the trust (including certain purchases by the
holder of a B Note or mezzanine loan), the
repurchase price paid will be passed through to
the holders of the certificates with the same
effect as if the
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mortgage loan had been prepaid in part or in
full, except that no yield maintenance charge
or prepayment premium will be payable. Any such
repurchase or purchase may, therefore,
adversely affect the yield to maturity on your
certificates.
Although all of the mortgage loans have
protection against voluntary prepayments in the
form of lock-out periods, defeasance
provisions, yield maintenance provisions and/or
prepayment premium provisions, there can be no
assurance that (i) borrowers will refrain from
prepaying mortgage loans due to the existence
of a yield maintenance charge or prepayment
premium or (ii) involuntary prepayments or
repurchases will not occur.
In addition, the yield maintenance formulas are
not the same for all of the mortgage loans that
have yield maintenance charges. This can lead
to substantial variance from loan to loan with
respect to the amount of yield maintenance
charge that is due on the related prepayment.
Also, the description in the mortgage notes of
the method of calculation of prepayment
premiums and yield maintenance charges is
complex and subject to legal interpretation and
it is possible that another person would
interpret the methodology differently from the
way we did in estimating an assumed yield to
maturity on your certificates as described in
this prospectus supplement. See Appendix II
attached to this prospectus supplement for a
description of the various prepayment
provisions.
RELEASE OF COLLATERAL Notwithstanding the prepayment restrictions
described in this prospectus supplement,
certain of the mortgage loans permit the
release of a mortgaged property (or a portion
of the mortgaged property) subject to the
satisfaction of certain conditions described in
Appendix II attached to this prospectus
supplement. In order to obtain such release
(other than with respect to the release of
certain non-material portions of the mortgaged
properties which may not require payment of a
release price), the borrower is required (among
other things) to pay a release price, which may
include a prepayment premium or yield
maintenance charge on all or a portion of such
payment.
In addition, certain mortgage loans provide for
the release, without prepayment or defeasance,
of outparcels or other portions of the related
mortgaged property that were given no value or
minimal value in the underwriting process,
subject to the satisfaction of certain
conditions. In addition, certain of the
mortgage loans permit the related borrower to
substitute collateral under certain
circumstances.
See Appendix II attached to this prospectus
supplement for further details regarding the
various release provisions.
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THE YIELD ON YOUR CERTIFICATE
WILL BE AFFECTED BY THE PRICE
AT WHICH THE CERTIFICATE WAS
PURCHASED AND THE RATE, TIMING
AND AMOUNT OF DISTRIBUTIONS ON
YOUR CERTIFICATE The yield on any certificate will depend on (1)
the price at which such certificate is
purchased by you and (2) the rate, timing and
amount of distributions on your certificate.
The rate, timing and amount of distributions on
any certificate will, in turn, depend on, among
other things:
o the interest rate for such certificate;
o the rate and timing of principal payments
(including principal prepayments) and
other principal collections (including
loan purchases in connection with breaches
of representations and warranties) 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 of such
certificate;
o the rate, timing and severity of losses on
or in respect of the mortgage loans or
unanticipated expenses of the trust;
o the rate and timing of any reimbursement
of the master servicer, the special
servicer or the trustee, as applicable,
out of the Certificate Account of
nonrecoverable advances or advances
remaining unreimbursed on a modified
mortgage loan on the date of such
modification;
o the timing and severity of any interest
shortfalls resulting from prepayments to
the extent not offset by a reduction in
master servicer compensation as described
in this prospectus supplement;
o the timing and severity of any reductions
in the appraised value of any mortgaged
property in a manner that has an effect on
the amount of advancing required on the
related mortgage loan; and
o the method of calculation of prepayment
premiums and yield maintenance charges and
the extent to which prepayment premiums
and yield maintenance charges are
collected and, in turn, distributed on
such certificate.
In addition, any change in the weighted average
life of a certificate may adversely affect
yield. Prepayments resulting in a shortening of
weighted average lives of certificates may be
made at a time of lower interest rates when you
may be unable to reinvest the resulting payment
of principal at a rate comparable to the
effective yield anticipated when making the
initial investment in certificates. Delays and
extensions resulting in a lengthening of the
weighted average lives of the certificates may
occur at a time of higher interest rates when
you may have been able to reinvest principal
payments that would otherwise have been
received by you at higher rates.
S-88
YOU BEAR THE RISK OF
BORROWER DEFAULTS The rate and timing of delinquencies or
defaults on the mortgage loans could affect the
following aspects of the offered certificates:
o the aggregate amount of distributions on
them;
o their yields to maturity;
o their rates of principal payments; and
o their weighted average lives.
The rights of holders of each class of
subordinate certificates to receive payments of
principal and interest otherwise payable on
their certificates will be subordinated to such
rights of the holders of the more senior
certificates having an earlier alphabetical
class designation (provided that the Class A-M
Certificates will be senior in right to the
Class A-J Certificates). Losses on the mortgage
loans will be allocated to the Class P, Class
O, Class N, Class M, Class L, Class K, Class J,
Class H, Class G, Class F, Class E, Class D,
Class C, Class B, Class A-J and Class A-M
Certificates, in that order, reducing amounts
otherwise payable to each class. Any remaining
losses would then be allocated to the Class A-1
Certificates, the Class A-2 Certificates, the
Class A-3 Certificates, the Class A-AB
Certificates, the Class A-4 Certificates and
the Class A-1A Certificates, pro rata, and with
respect to losses of interest only, the Class X
Certificates based on their respective
entitlements.
If losses on the mortgage loans exceed the
aggregate certificate balance of the classes of
certificates subordinated to a particular
class, that particular class will suffer a loss
equal to the full amount of that excess up to
the outstanding certificate balance of such
class.
If you calculate your anticipated yield based
on assumed rates of default 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 extreme scenarios, such yield could be
negative. In general, the earlier a loss is
borne by your certificates, the greater the
effect on your yield to maturity.
Additionally, delinquencies and defaults on the
mortgage loans may significantly delay the
receipt of distributions by you on your
certificates, unless 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.
Also, if the related borrower does not repay a
mortgage loan with an anticipated repayment
date by its anticipated repayment date, the
effect will be to increase the weighted average
life of your certificates and may reduce your
yield to maturity.
Furthermore, if principal and interest advances
and/or servicing advances are made with respect
to a mortgage loan after default and the
mortgage loan is thereafter worked out under
terms that do not provide for the repayment of
those advances in full at the time of the
workout, then any reimbursements of those
advances prior to the actual
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collection of the amount for which the advance
was made may also result in reductions in
distributions of principal to the holders of
the offered certificates for the current month.
INTEREST ON ADVANCES AND
COMPENSATION TO THE MASTER
SERVICER, THE SPECIAL
SERVICER, THE TRUSTEE MAY HAVE
AN ADVERSE EFFECT ON THE
PAYMENTS ON YOUR CERTIFICATES To the extent described in this prospectus
supplement, the master servicer, the special
servicer or the trustee, if applicable (and the
related master servicer, the special servicer,
the trustee or any fiscal agent in respect of
any non-serviced mortgage loans), will be
entitled to receive interest at the "prime
rate" on unreimbursed advances they have made
with respect to delinquent monthly payments or
that are made with respect to the preservation
and protection of the related mortgaged
property or enforcement of the mortgage loan.
This interest will generally accrue from the
date on which the related advance is made or
the related expense is incurred to the date of
reimbursement. No advance interest will accrue
during the grace period, if any, for the
related mortgage loan. This interest may be
offset in part by default interest and late
payment charges paid by the borrower in
connection with the mortgage loan or by certain
other amounts. In addition, under certain
circumstances, including delinquencies in the
payment of principal and interest, a mortgage
loan will be serviced by the special servicer,
and the special servicer is entitled to
compensation for special servicing activities.
The right to receive interest on advances and
special servicing compensation is senior to the
rights of certificateholders to receive
distributions. The payment of interest on
advances and the payment of compensation to the
special servicer may result in shortfalls in
amounts otherwise distributable on the
certificates.
LEASEHOLD INTERESTS ENTAIL
CERTAIN RISKS WHICH MAY
ADVERSELY AFFECT PAYMENTS ON
YOUR CERTIFICATES
In addition, four (4) of the mortgaged
properties, securing mortgage loans
representing 1.9% of the initial outstanding
pool balance (and representing 2.0% of the
initial outstanding loan group 1 balance), are
subject to a first mortgage lien on a leasehold
interest under a ground lease.
Six (6) of the mortgaged properties, securing
mortgage loans representing 3.5% of the initial
outstanding pool balance (which include five
(5) mortgaged properties in loan group 1,
securing mortgage loans representing 3.7% of
the initial outstanding loan group 1 balance,
and one (1) mortgaged property in loan group 2,
securing a mortgage loan representing 0.7% of
the initial outstanding loan group 2 balance),
are subject to a mortgage, deed of trust or
similar security instrument that creates a
first mortgage lien on a fee interest in a
portion of the related mortgaged property and a
leasehold interest in the remainder of the
related mortgaged property.
Leasehold mortgage loans are subject to certain
risks not associated
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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 lender would lose its
security. Generally, each related ground lease
requires the lessor to give the lender notice
of the borrower's defaults under the ground
lease and an opportunity to cure them, permits
the leasehold interest to be assigned to the
lender or the purchaser at a foreclosure sale,
in some cases only upon the consent of the
lessor, and contains certain other protective
provisions typically included in a
"mortgageable" ground lease.
In addition, certain of the mortgaged
properties are subject to various use
restrictions imposed by the related ground
lease, and these limitations could adversely
affect the ability of the related borrower to
lease or sell the mortgaged property on
favorable terms, thus adversely affecting the
borrower's ability to fulfill its obligations
under the related mortgage loan.
Upon the bankruptcy of a lessor or a lessee
under a ground lease, the debtor entity has the
right to assume or reject the lease. If a
debtor lessor rejects the lease, the lessee has
the right to remain in possession of its leased
premises for the rent otherwise payable under
the lease for the term of the lease (including
renewals). If a debtor lessee/borrower rejects
any or all of the lease, the leasehold lender
could succeed to the lessee/borrower's position
under the lease only if the lessor specifically
grants the lender such right. If both the
lessor and the lessee/borrowers are involved in
bankruptcy proceedings, the trustee may be
unable to enforce the bankrupt
lessee/borrower's right to refuse to treat a
ground lease rejected by a bankrupt lessor as
terminated. In such circumstances, a lease
could be terminated notwithstanding lender
protection provisions contained therein or in
the mortgage.
In a decision by the United States Court of
Appeals for the Seventh Circuit (Precision
Indus. v. Qualitech Steel SBQ, LLC, 327 F.3d
537 (7th Cir. 2003)) the court ruled with
respect to an unrecorded lease of real property
that where a statutory sale of the fee interest
in leased property occurs under Section 363(f)
of the Bankruptcy Code (11 U.S.C. Section
363(f)) upon the bankruptcy of a landlord, such
sale terminates a lessee's possessory interest
in the property, and the purchaser assumes
title free and clear of any interest, including
any leasehold estates. Pursuant to Section
363(e) of the Bankruptcy Code (11 U.S.C.
Section 363(a)), a lessee may request the
bankruptcy court to prohibit or condition the
statutory sale of the property so as to provide
adequate protection of the leasehold interests;
however, the court ruled that this provision
does not ensure continued possession of the
property, but rather entitles the lessee to
compensation for the value of its leasehold
interest, typically from the sale proceeds.
While there are certain circumstances under
which a "free and clear" sale under Section
363(f) of the Bankruptcy Code would not be
authorized (including that the lessee could not
be compelled in a legal or equitable proceeding
to accept a monetary satisfaction of his
possessory interest, and that none of the other
conditions of Section 363(f)(1)-(4) of the
Bankruptcy Code otherwise permits the sale), we
cannot provide assurances that those
circumstances would be present in any proposed
sale of a leased premises. As a result, we
cannot provide assurances
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that, in the event of a statutory sale of
leased property pursuant to Section 363(f) of
the Bankruptcy Code, the lessee may be able to
maintain possession of the property under the
ground lease. In addition, we cannot provide
assurances that the lessee and/or the lender
will be able to recoup the full value of the
leasehold interest in bankruptcy court.
Some of the ground leases securing the
mortgaged properties provide that the ground
rent payable under the ground lease increases
during the term of the lease. These increases
may adversely affect the cash flow and net
income of the borrower from the mortgaged
property.
THE MORTGAGE LOAN SELLERS ARE
SUBJECT TO BANKRUPTCY OR
INSOLVENCY LAWS THAT MAY
AFFECT THE TRUST'S OWNERSHIP
OF THE MORTGAGE LOANS In the event of the insolvency of any mortgage
loan seller, it is possible the trust's right
to payment from or ownership of the mortgage
loans could be challenged, and if such
challenge were successful, delays or reductions
in payments on your certificates could occur.
Based upon opinions of counsel that the
conveyance of the mortgage loans would
generally be respected in the event of
insolvency of the mortgage loan sellers, which
opinions are subject to various assumptions and
qualifications, the depositor believes that
such a challenge will be unsuccessful, but
there can be no assurance that a bankruptcy
trustee, if applicable, or other interested
party will not attempt to assert such a
position. Even if actions seeking such results
were not successful, it is possible that
payments on the certificates would be delayed
while a court resolves the claim.
LIMITED LIQUIDITY AND MARKET
VALUE MAY ADVERSELY AFFECT
PAYMENTS ON YOUR CERTIFICATES Your certificates will not be listed on any
securities exchange or traded on any automated
quotation systems of any registered securities
association, and there is currently no
secondary market for the certificates. While
the underwriters currently intend to make a
secondary market in the certificates, none of
them is obligated to do so. Accordingly, you
may not have an active or liquid secondary
market for your certificates, which could
result in a substantial decrease in the market
value of your certificates. The market value of
your certificates also may be affected by many
other factors, including then-prevailing
interest rates. Furthermore, you should be
aware that the market for securities of the
same type as the certificates has in the past
been volatile and offered very limited
liquidity.
S-92
WEIGHTED AVERAGE COUPON RATE
ENTAILS RISKS WHICH MAY
ADVERSELY AFFECT PAYMENTS ON
YOUR CERTIFICATES The interest rates on one or more classes of
certificates may be based on a weighted average
of the mortgage loan interest rates net of the
administrative cost rate, which is calculated
based upon the respective principal balances of
the mortgage loans. Alternatively, the interest
rate on one or more classes of the certificates
may be capped at such weighted average rate.
This weighted average rate is further described
in this prospectus supplement under the
definition of "Weighted Average Net Mortgage
Rate" in the "Glossary of Terms." Any class of
certificates that is either fully or partially
based upon the weighted average net mortgage
rate may be adversely affected by
disproportionate principal payments,
prepayments, defaults and other unscheduled
payments on the mortgage loans. Because some
mortgage loans will amortize their principal
more quickly than others, the rate may
fluctuate over the life of those classes of
your certificates.
In general, mortgage loans with relatively high
mortgage interest rates are more likely to
prepay than mortgage loans with relatively low
mortgage interest rates. For instance, varying
rates of unscheduled principal payments on
mortgage loans which have interest rates above
the weighted average net mortgage rate may have
the effect of reducing the interest rate of
your certificates.
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 a
variety of factors, including the risks described above in this "Risk Factors"
section and elsewhere in this prospectus supplement.
S-93
TRANSACTION PARTIES
THE SPONSORS, MORTGAGE LOAN SELLERS AND ORIGINATORS
Bear Stearns Commercial Mortgage, Inc.
Overview
Bear Stearns Commercial Mortgage, Inc., a New York corporation
("BSCMI"), is a sponsor of this transaction and is one of the mortgage loan
sellers. BSCMI or an affiliate originated or acquired and underwrote all of the
mortgage loans sold to the depositor by BSCMI. BSCMI originates, acquires and
underwrites loans through its New York City and Los Angeles offices.
BSCMI is a wholly-owned subsidiary of The Bear Stearns Companies Inc.
(NYSE: BSC) and an affiliate of Bear, Stearns & Co. Inc., one of the
underwriters. The principal offices of BSCMI are located at 383 Madison Avenue,
New York, New York 10179, and its telephone number is (212) 272-2000.
BSCMI's primary business is the underwriting, origination and sale of
mortgage loans secured by commercial or multifamily properties. BSCMI sells the
great majority of the mortgage loans that it originates through commercial
mortgage backed securities ("CMBS") securitizations. BSCMI, with its commercial
mortgage lending affiliates and predecessors, began originating commercial
mortgage loans in 1995 and securitizing commercial mortgage loans in 1996. In
its fiscal year ended November 30, 2006, the total amount of commercial mortgage
loans originated by BSCMI since 1995 was in excess of $39 billion, of which
approximately $30 billion has been securitized. Of the approximately $30 billion
of securitized commercial mortgage loans, approximately $18 billion has been
securitized by an affiliate of BSCMI acting as depositor, and approximately $12
billion has been securitized by unaffiliated entities acting as depositor. In
its fiscal year ended November 30, 2006, BSCMI originated approximately $10
billion of commercial mortgage loans, of which approximately $5 billion was
securitized by an affiliate of BSCMI acting as depositor, and approximately $4
billion was securitized by unaffiliated entities acting as depositor.
BSCMI's annual commercial mortgage loan originations have grown from
approximately $65 million in 1995 to approximately $1 billion in 2000 and to
approximately $10 billion in its fiscal year ended November 30, 2006. The
commercial mortgage loans originated by BSCMI include both fixed and floating
rate loans and both conduit loans and large loans. BSCMI primarily originates
loans secured by retail, office, multifamily, hospitality, industrial and
self-storage properties, but also originates loans secured by manufactured
housing communities, theaters, land subject to a ground lease and mixed use
properties. BSCMI originates loans in every state and in Puerto Rico and the
U.S. Virgin Islands.
As a sponsor, BSCMI originates mortgage loans and, either by itself or
together with other sponsors or loan sellers, initiates their securitization by
transferring the mortgage loans to a depositor, which in turn transfers them to
the issuing entity for the related securitization. In coordination with Bear,
Stearns & Co. Inc. and other underwriters, BSCMI works with rating agencies,
loan sellers and servicers in structuring the securitization transaction. BSCMI
acts as sponsor, originator or mortgage loan seller both in transactions in
which it is the sole sponsor and mortgage loan seller as well as in transactions
in which other entities act as sponsor and/or mortgage loan seller. Multiple
seller transactions in which BSCMI has participated to date include each of the
prior series of certificates issued under the "TOP" program, in which BSCMI,
Wells Fargo Bank, National Association, Morgan Stanley Mortgage Capital Inc.,
Principal Commercial Funding, LLC and/or Principal Commercial Funding II, LLC
generally are mortgage loan sellers and sponsors, and Bear Stearns Commercial
Mortgage Securities Inc., an affiliate of BSCMI (the "BSCMSI Depositor"), and
Morgan Stanley Capital I Inc., which is an affiliate of Morgan Stanley Mortgage
Capital Inc., have alternately acted as depositor and the "PWR" program, in
which BSCMI, Prudential Mortgage Capital Funding, LLC, Wells Fargo Bank,
National Association, Nationwide Life Insurance Company, Principal Commercial
Funding, LLC and/or Principal Commercial Funding II, LLC generally are mortgage
loan sellers, and the BSCMSI Depositor or Bear Stearns Commercial Mortgage
Securities II Inc. acts as depositor. As of January 1, 2007, BSCMI securitized
approximately $7 billion of commercial mortgage loans through the TOP program
and approximately $7 billion of commercial mortgage loans through the PWR
program.
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Neither BSCMI nor any of its affiliates acts as servicer of the
commercial mortgage loans in its securitizations. Instead, BSCMI sells the right
to be appointed servicer of its securitized mortgage loans to rating-agency
approved servicers, including Wells Fargo Bank, National Association, the master
servicer in this transaction, and Bank of America, N.A.
BSCMI's Underwriting Standards
General. All of the BSCMI mortgage loans were originated or acquired
by BSCMI or an affiliate of BSCMI. In each case, the loans were underwritten
generally in accordance with the underwriting criteria summarized below. Each
lending situation is unique, however, and the facts and circumstance surrounding
the mortgage loan, such as the quality, tenancy and location of the real estate
collateral and the sponsorship of the borrower, will impact the extent to which
the general criteria are applied to a specific mortgage loan. The underwriting
criteria are general, and there is no assurance that every mortgage loan will
comply in all respects with the criteria.
Mortgage Loan Analysis. The BSCMI credit underwriting team for each
mortgage loan is comprised of real estate professionals from BSCMI. The
underwriting team for each mortgage loan is required to conduct an extensive
review of the related mortgaged property, including an analysis of the
appraisal, engineering report, environmental report, historical property
operating statements, rent rolls, current and historical real estate taxes, and
a review of tenant leases. The review includes a market analysis which focuses
on supply and demand trends, rental rates and occupancy rates. The credit and
background of the borrower and certain key principals of the borrower are
examined prior to approval of the mortgage loan. This analysis includes a review
of historical financial statements (which are generally unaudited), historical
income tax returns of the borrower and its principals, third-party credit
reports, judgment, lien, bankruptcy and pending litigation searches. Borrowers
generally are required to be special purpose entities. The credit of key tenants
is also examined as part of the underwriting process. A member of the BSCMI
underwriting team visits and inspects each property to confirm occupancy rates
and to analyze the property's market and utility within the market.
Loan Approval. Prior to commitment, all mortgage loans must be
approved by a loan committee comprised of senior real estate professionals from
BSCMI and its affiliates. The loan committee may either approve a mortgage loan
as recommended, request additional due diligence, modify the terms or reject a
mortgage loan.
Debt Service Coverage Ratio and LTV Ratio. BSCMI's underwriting
criteria generally require the following minimum debt service coverage ratios
and maximum loan-to-value ratios for each indicated property type:
PROPERTY TYPE DSCR GUIDELINE LTV RATIO GUIDELINE
------------- -------------- -------------------
Multifamily 1.20x 80%
Office 1.25x 75%
Anchored Retail 1.20x 80%
Unanchored Retail 1.30x 75%
Self-storage 1.30x 75%
Hotel 1.40x 70%
Industrial 1.25x 70%
Manufactured Housing Community 1.25x 75%
Debt service coverage ratios are calculated based on anticipated
Underwritten Net Cash Flow at the time of origination. Therefore, the debt
service coverage ratio for each mortgage loan as reported elsewhere in this
prospectus supplement may differ from the amount determined at the time of
origination.
Escrow Requirements. BSCMI generally requires a borrower to fund
various escrows for taxes and insurance, replacement reserves and capital
expenses. Generally, the required escrows for mortgage loans originated by BSCMI
are as follows:
Taxes and Insurance-Typically, a pro rated initial deposit and monthly
deposits equal to 1/12 of the annual property taxes (based on the most recent
property assessment and the current millage rate) and annual property insurance
premium.
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Replacement Reserves-Monthly deposits generally based on the greater
of the amount recommended pursuant to a building condition report prepared for
BSCMI or the following minimum amounts:
PROPERTY TYPE RESERVE GUIDELINE
------------- -----------------
Multifamily $250 per unit
Office $0.20 per square foot
Retail $0.15 per square foot
Self-storage $0.15 per square foot
Hotel 5% of gross revenue
Industrial $0.10 - $0.15 per square foot
Manufactured Housing Community $50 per pad
Deferred Maintenance/Environmental Remediation-An initial deposit,
upon funding of the mortgage loan, in an amount generally equal to 125% of the
estimated costs of the recommended substantial repairs or replacements pursuant
to the building condition report completed by a licensed engineer and the
estimated costs of environmental remediation expenses as recommended by an
independent environmental assessment.
Re-tenanting-In some cases major leases expire within the mortgage
loan term. To mitigate this risk, special reserves may be funded either at
closing and/or during the mortgage loan term to cover certain anticipated
leasing commissions or tenant improvement costs which may be associated with
re-leasing the space occupied by these tenants.
Morgan Stanley Mortgage Capital Inc.
Morgan Stanley Mortgage Capital Inc., a New York corporation formed in
1984 ("MSMC") is a sponsor of this transaction and is one of the mortgage loan
sellers. MSMC is an affiliate of the depositor and one of the underwriters and
is a direct wholly owned subsidiary of Morgan Stanley (NYSE: MS). The executive
offices of MSMC are located at 1585 Broadway, New York, New York 10036,
telephone number (212) 761-4000. MSMC also has offices in Chicago, Illinois, Los
Angeles, California, Irvine, California, Irving, Texas, Herndon, Virginia and
Alpharetta, Georgia. MSMC originates and purchases commercial and multifamily
mortgage loans primarily for securitization or resale. MSMC also provides
warehouse and repurchase financing to residential mortgage lenders, purchases
residential mortgage loans for securitization or resale, or for its own
investment, and acts as sponsor of residential mortgage loan securitizations.
Neither MSMC nor any of its affiliates currently acts as servicer of the
mortgage loans in its securitizations. MSMC originated or purchased all of the
mortgage loans it is selling to us.
MSMC's Commercial Mortgage Securitization Program
MSMC has been active as a sponsor of securitizations of commercial
mortgage loans since its formation. As a sponsor, MSMC originates or acquires
mortgage loans and either by itself or together with other sponsors or mortgage
loan sellers, initiates the securitization of the mortgage loans by transferring
the mortgage loans to a securitization depositor, including Morgan Stanley
Capital I Inc., or another entity that acts in a similar capacity. In
coordination with its affiliate, Morgan Stanley & Co. Incorporated, and other
underwriters, MSMC works with rating agencies, investors, mortgage loan sellers
and servicers in structuring the securitization transaction. MSMC acts as
sponsor and mortgage loan seller both in transactions in which it is the sole
sponsor or mortgage loan seller and transactions in which other entities act as
sponsor or mortgage loan seller. MSMC's "IQ," "HQ" and "TOP" securitization
programs typically involve multiple mortgage loan sellers.
Substantially all mortgage loans originated by MSMC are sold to
securitizations as to which MSMC acts as either sponsor or mortgage loan seller.
Mortgage loans originated and securitized by MSMC include both fixed rate and
floating rate mortgage loans and both large mortgage loans and conduit mortgage
loans (including those shown in the table below), and mortgage loans included in
both public and private securitizations. MSMC also originates subordinate and
mezzanine debt which is generally not securitized. The following table sets
forth information with respect to originations and securitizations of commercial
and multifamily mortgage loans by MSMC for the four years ending on December 31,
2006.
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TOTAL MSMC
MORTGAGE LOANS TOTAL MSMC
TOTAL MSMC TOTAL MSMC MORTGAGE SECURITIZED WITH MORTGAGE
MORTGAGE LOANS SECURITIZED WITH NON-AFFILIATED LOANS
YEAR LOANS* AFFILIATED DEPOSITOR DEPOSITOR SECURITIZED
---- ---------- ---------------------- ---------------- -----------
(APPROXIMATE AMOUNTS IN BILLIONS OF $)
--------------------------------------
2006 16.9 8.9 1.9 10.7
2005 12.9 8.2 1.5 9.6
2004 7.6 5.1 1.3 6.4
2003 6.4 3.5 1.3 4.8
*Includes all mortgage loans originated or purchased by MSMC in the
relevant year. Mortgage loans originated in a given year that were not
securitized in that year generally were held for securitization in the following
year.
MSMC's large mortgage loan program typically originates mortgage loans
larger than $75 million, although MSMC's conduit mortgage loan program also
sometimes originates such large mortgage loans. MSMC originates commercial
mortgage loans secured by multifamily, office, retail, industrial, hotel,
manufactured housing and self-storage properties. The largest property
concentrations of MSMC securitized loans have been in retail and office
properties, and the largest geographic concentrations have been in California
and New York.
Underwriting Standards
Conduit mortgage loans originated by MSMC will generally be originated
in accordance with the underwriting criteria described below. Each lending
situation is unique, however, and the facts and circumstances surrounding the
mortgage loan, such as the quality and location of the real estate collateral,
the sponsorship of the borrower and the tenancy of the collateral, will impact
the extent to which the general guidelines below are applied to a specific
mortgage loan. The underwriting criteria are general, and in many cases
exceptions to one or more of these guidelines may be approved. Accordingly, no
representation is made that every mortgage loan will comply in all respects with
the criteria set forth below.
The MSMC credit underwriting team for each mortgage loan is required
to conduct a review of the related mortgaged property, generally including an
analysis of the historical property operating statements, rent rolls, current
and historical real estate taxes, and a review of tenant leases. The credit of
the borrower and certain key principals of the borrower are examined for
financial strength and character prior to approval of the mortgage loan. This
analysis generally includes a review of historical financial statements (which
are generally unaudited), historical income tax returns of the borrower and its
principals, third-party credit reports, judgment, lien, bankruptcy and pending
litigation searches. Depending on the type of real property collateral involved
and other relevant circumstances, the credit of key tenants also may be examined
as part of the underwriting process. Generally, a member of the MSMC
underwriting team visits the property for a site inspection to ascertain the
overall quality and competitiveness of the property, including its physical
attributes, neighborhood and market, accessibility and visibility and demand
generators. As part of its underwriting procedures, MSMC also generally performs
the procedures and obtains the third party reports or other documents described
in this prospectus supplement under "Description of the Mortgage
Pool--Assessments of Property Value and Condition," "--Appraisals,"
"--Environmental Assessments," "--Property Condition Assessments," "--Seismic
Review Process," and "--Zoning and Building Code Compliance." MSMC typically
retains outside consultants to conduct its credit underwriting.
Prior to commitment, all mortgage loans must be approved by a loan
committee comprised of senior real estate professionals from MSMC and its
affiliates. The loan committee may either approve a mortgage loan as
recommended, request additional due diligence, modify the terms, or reject a
mortgage loan.
Debt Service Coverage Ratio and LTV Ratio. MSMC's underwriting
standards generally require a minimum debt service coverage ratio of 1.20x and
maximum LTV Ratio of 80%. However, these requirements constitute solely
guidelines, and exceptions to these guidelines may be approved based on the
individual characteristics of a mortgage loan. For example, MSMC may originate a
mortgage loan with a lower debt service coverage ratio or higher LTV Ratio based
on the types of tenants and leases at the subject real property, the taking of
additional collateral such as reserves, letters of credit and/or guarantees,
MSMC's judgment of improved property
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performance in the future and/or other relevant factors. In addition, with
respect to certain mortgage loans originated by MSMC there may exist subordinate
debt secured by the related mortgaged property and/or mezzanine debt secured by
direct or indirect ownership interests in the borrower. Such mortgage loans may
have a lower debt service coverage ratio, and a higher LTV Ratio, if such
subordinate or mezzanine debt is taken into account.
The debt service coverage ratio guidelines set forth above are
calculated based on Underwritten Net Cash Flow at origination. Therefore, the
debt service coverage ratio for each Mortgage Loan as reported in this
prospectus supplement and Appendix II may differ from the amount calculated at
the time of origination. In addition, MSMC's underwriting guidelines generally
permit a maximum amortization period of 30 years. However, certain loans may
provide for interest-only payments prior to maturity, or for an interest-only
period during a portion of the term of the mortgage loan. See "Description of
the Mortgage Pool" in this prospectus supplement.
Escrow Requirements. MSMC often requires a borrower to fund various
escrows for taxes and insurance, and may also require reserves for deferred
maintenance, re-tenanting expenses and capital expenses, in some cases only
during periods when certain debt service coverage ratio tests are not satisfied.
In some cases, the borrower is permitted to post a letter of credit or guaranty,
or provide periodic evidence that the items for which the escrow or reserve
would have been established are being paid or addressed, in lieu of funding a
given reserve or escrow. MSMC conducts a case-by-case analysis to determine the
need for a particular escrow or reserve. Consequently, the aforementioned
escrows and reserves are not established for every multifamily and commercial
mortgage loan originated by MSMC.
Servicing
MSMC currently contracts with third party servicers for servicing the
mortgage loans that it originates or acquires. Third party servicers are
assessed based upon the credit quality of the servicing institution. The
servicers may be reviewed for their systems and reporting capabilities, review
of collection procedures and confirmation of servicers' ability to provide
loan-level data. In addition, MSMC may conduct background checks, meet with
senior management to determine whether the servicer complies with industry
standards or otherwise monitor the servicer on an ongoing basis.
Wells Fargo Bank, National Association
Wells Fargo Bank, National Association, a national banking association
("Wells Fargo Bank"), is a sponsor of this transaction and is one of the
mortgage loan sellers. Wells Fargo Bank originated and underwrote all of the
mortgage loans it is selling to us.
Wells Fargo Bank is a wholly-owned subsidiary of Wells Fargo & Company
(NYSE: WFC). The principal office of Wells Fargo Bank's commercial mortgage
origination division is located at 45 Fremont Street, 9th Floor, San Francisco,
California 94105, and its telephone number is (415) 396-7697.
Wells Fargo Bank is engaged in a general consumer banking, commercial
banking and trust business, offering a wide range of commercial, corporate,
international, financial market, retail and fiduciary banking services. Wells
Fargo Bank is a national banking association chartered by the Office of the
Comptroller of the Currency (the "OCC") and is subject to the regulation,
supervision and examination of the OCC.
Wells Fargo Bank's Commercial Mortgage Securitization Program
Wells Fargo Bank has been active as a participant in securitizations
of commercial and multifamily mortgage loans since 1995. Wells Fargo Bank
originates commercial and multifamily mortgage loans and, together with other
mortgage loan sellers and sponsors, participates in the securitization of such
mortgage loans by transferring them to an unaffiliated securitization depositor
and participating in structuring decisions. Multiple mortgage loan seller
transactions in which Wells Fargo Bank has participated include the "TOP"
program in which Morgan Stanley Capital I Inc. and Bear Stearns Commercial
Mortgage Securities Inc. have alternately acted as depositor, the "PWR" program
in which the BSCMSI Depositor or Bear Stearns Commercial Mortgage Securities II
Inc. act as depositor, the "HQ" and "LIFE" programs in which Morgan Stanley
Capital I Inc. acts as depositor, and the "ML-CFC" program in which Merrill
Lynch Mortgage Investors, Inc. acts as depositor.
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Between the inception of its commercial mortgage securitization
program in 1995 and December 31, 2006, Wells Fargo Bank originated approximately
3,553 fixed rate commercial and multifamily mortgage loans with an aggregate
original principal balance of approximately $18.4 billion, which were included
in approximately 50 securitization transactions. The properties securing these
loans include multifamily, office, retail, industrial, hospitality, manufactured
housing and self-storage properties. Wells Fargo Bank and certain of its
affiliates also originate other commercial and multifamily mortgage loans that
are not securitized, including subordinated and mezzanine loans. In the year
ended December 31, 2006, Wells Fargo Bank originated and securitized commercial
and multifamily mortgage loans with an aggregate original principal balance of
approximately $3.8 billion, all of which were included in securitization
transactions in which an unaffiliated entity acted as depositor.
Servicing
Wells Fargo Bank services the mortgage loans that it originates, and
is acting as master servicer in this transaction. See "Transaction
Parties--Master Servicer," in this prospectus supplement. Wells Fargo Bank is
also acting as paying agent, certificate registrar, authenticating agent and tax
administrator in this transaction.
Underwriting Standards
Wells Fargo Bank generally underwrites commercial and multifamily
mortgage loans originated for securitization in accordance with the underwriting
criteria described below. Each lending situation is unique, however, and the
facts and circumstances surrounding a particular mortgage loan, such as the
quality, location and tenancy of the mortgaged property and the sponsorship of
the borrower, will impact the extent to which the underwriting criteria are
applied to that mortgage loan. The underwriting criteria are general guidelines,
and in many cases exceptions to one or more of the criteria may be approved.
Accordingly, no representation is made that each mortgage loan originated by
Wells Fargo Bank will comply in all respects with the underwriting criteria.
An underwriting team comprised of real estate professionals conducts a
review of the mortgaged property related to each loan, generally including an
analysis of historical property operating statements, if available, rent rolls,
current and historical real estate taxes, and tenant leases. The borrower and
certain key principals of the borrower are reviewed for financial strength and
other credit factors, generally including financial statements (which are
generally unaudited), third-party credit reports, and judgment, lien, bankruptcy
and pending litigation searches. Depending on the type of the mortgaged property
and other factors, the credit of key tenants also may also be reviewed. Each
mortgaged property is generally inspected to ascertain its overall quality,
competitiveness, physical attributes, neighborhood, market, accessibility,
visibility and demand generators. Wells Fargo Bank generally obtains the third
party reports or other documents described in this prospectus supplement under
"Description of the Mortgage Pool-Assessments of Property Value and Condition,"
"--Appraisals," "--Environmental Assessments," "--Property Condition
Assessments," "--Seismic Review Process," and "--Zoning and Building Code
Compliance."
A loan committee of senior real estate professionals reviews each
proposed mortgage loan before a commitment is made. The loan committee may
approve or reject a proposed loan, or may approve it subject to modifications or
satisfaction with additional due diligence.
Debt Service Coverage Ratio and LTV Ratio. Wells Fargo Bank's
underwriting criteria generally require a minimum debt service coverage ratio of
1.20x and a maximum LTV Ratio of 80%. However, as noted above, these criteria
are general guidelines, and exceptions to them may be approved based on the
characteristics of a particular mortgage loan. For example, Wells Fargo Bank may
originate a mortgage loan with a lower debt service coverage ratio or a higher
LTV Ratio based on relevant factors such as the types of tenants and leases at
the mortgaged property or additional credit support such as reserves, letters of
credit or guarantees. In addition, with respect to certain mortgage loans
originated by Wells Fargo Bank or its affiliates there may exist subordinate
debt secured by the related mortgaged property and/or mezzanine debt secured by
direct or indirect ownership interests in the borrower. Such mortgage loans may
have a lower debt service coverage ratio, and a higher LTV Ratio, if such
subordinate or mezzanine debt is taken into account.
For purposes of the underwriting criteria, Wells Fargo Bank calculates
the debt service coverage ratio for each mortgage loan on the basis of
Underwritten Net Cash Flow at loan origination. Therefore, the debt service
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coverage ratio for each mortgage loan as reported in this prospectus supplement
and Appendix II hereto may differ from the ratio for such loan calculated at the
time of origination. In addition, Wells Fargo Bank's underwriting criteria
generally permit a maximum amortization period of 30 years. However, certain
mortgage loans may provide for interest-only payments prior to maturity, or for
an interest-only period during a portion of the term of the mortgage loan. See
"Description of the Mortgage Pool" in this prospectus supplement.
Escrow Requirements. Wells Fargo Bank may require a borrower to fund
escrows or reserves for taxes and insurance or, in some cases, requires such
escrows or reserves to be funded only upon a triggering event, such as an event
of default under the related mortgage loan. Wells Fargo Bank may also require a
borrower to fund escrows or reserves for other purposes such as deferred
maintenance, re-tenanting expenses and capital expenditures, in some cases only
during periods when certain debt service coverage ratios are not satisfied. In
some cases, in lieu of funding an escrow or reserve, the borrower is permitted
to post a letter of credit or guaranty, or provide periodic evidence that the
items for which the escrow or reserve would have been established are being paid
or addressed. Wells Fargo Bank reviews the need for a particular escrow or
reserve on a loan-by-loan basis and does not require escrows or reserves to be
funded for each mortgage loan.
Principal Commercial Funding II, LLC
Principal Commercial Funding II, LLC ("PCFII") a Delaware limited
liability company formed in 2005, is a sponsor of this transaction and one of
the mortgage loan sellers. PCFII is an entity owned jointly by U.S. Bank
National Association ("USB"), a subsidiary of U.S. Bancorp (NYSE:USB) and
Principal Commercial Funding, LLC ("PCF"), a subsidiary of Principal Global
Investors, LLC ("PGI") which is a wholly owned subsidiary of Principal Life
Insurance Company. Principal Life Insurance Company is a wholly-owned subsidiary
of Principal Financial Services, Inc., which is wholly-owned by Principal
Financial Group (NYSE: PFG). The principal offices of PCFII are located at 801
Grand Avenue, Des Moines, Iowa 50392, telephone number (515) 248-3944.
PCFII's principal business is the underwriting, origination and sale
of mortgage loans secured by commercial and multifamily properties, which
mortgage loans are in turn primarily sold into securitizations. PCF or USB have
sourced all of the mortgage loans PCFII is selling in this transaction.
Principal Global Investors, LLC, an affiliate of PCFII and a primary servicer in
this transaction, services the mortgage loans sold to the Trust by PCFII.
Principal Commercial Funding II, LLC's Commercial Real Estate Securitization
Program
PCFII began participating in the securitization of mortgage loans in
2006. PCFII sources mortgage loans through its owners, PCF and USB. PCF and its
affiliates underwrite the mortgage loans for PCFII. PCFII, with the other
mortgage loan sellers, participates in the securitization of such mortgage loans
by transferring the mortgage loans to a securitization depositor or another
entity that acts in a similar capacity. Multiple mortgage loan seller
transactions in which PCF and PCFII have participated in include the "TOP"
program in which Bear Stearns Commercial Mortgage Securities Inc. and Morgan
Stanley Capital I Inc. have alternately acted as depositor, the "PWR" program in
which the BSCMSI Depositor or Bear Stearns Commercial Mortgage Securities II
Inc. act as depositor and the "HQ" program and, with respect to PCF only, the
"IQ" program, in which Morgan Stanley Capital I Inc. has acted as depositor.
Since the inception of PCF's mortgage loan securitization program in
1998, the total amount of commercial and multifamily mortgage loans originated
by PCF and/or PCFII that have been included in securitizations as of December
31, 2006, was approximately $10.3 billion. As of such date, these securitized
loans included approximately 1,468 mortgage loans, all of which were fixed rate
and which have been included in approximately 40 securitizations. In connection
with originating mortgage loans for securitization, certain of PCFII's
affiliates also originate subordinate or mezzanine debt which is generally not
securitized. In its fiscal year ended December 31, 2006, PCF and/or PCFII
originated and securitized approximately $2.9 billion of commercial and
multifamily mortgage loans, all of which were included in securitizations in
which an unaffiliated entity acted as depositor. PCF's and/or PCFII's total
securitizations have grown from approximately $337.7 million in 1999 to
approximately $2.9 billion in 2006.
The mortgage loans originated for PCFII include fixed rate conduit
loans. PCFII's conduit loan program (which is the program under which PCFII's
mortgage loans being securitized in this transaction were originated), will also
sometimes originate large loans to be securitized within conduit issuances. The
mortgage loans originated
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for PCFII are secured by multifamily, office, retail, industrial, hotel,
manufactured housing and self-storage properties.
Servicing
Principal Global Investors, LLC, an affiliate of PCF and PCFII,
services all of the commercial mortgage loans originated for PCF and PCFII for
securitization. Additionally, PGI is the primary servicer for the mortgage loans
sold by PCFII in this transaction. See "Transactions Parties--Primary Servicer"
in this prospectus supplement.
Underwriting Standards
PCFII's mortgage loans originated for securitization are underwritten
by PCF and its affiliates, and, in each case, will generally be originated in
accordance with the underwriting criteria described below. Each lending
situation is unique, however, and the facts and circumstance surrounding the
mortgage loan, such as the quality and location of the real estate collateral,
the sponsorship of the borrower and the tenancy of the collateral, will impact
the extent to which the general guidelines below are applied to a specific
mortgage loan. The underwriting criteria are general, and in many cases
exceptions may be approved to one or more of these guidelines. Accordingly, no
representation is made that every mortgage loan will comply in all respects with
the criteria set forth below.
The credit underwriting team for each mortgage loan is comprised of
real estate professionals. The underwriting team for each mortgage loan is
required to conduct a review of the related mortgaged property, generally
including an analysis of the historical property operating statements, if
available, rent rolls, current and historical real estate taxes, and a review of
tenant leases. The review includes a market analysis which focuses on supply and
demand trends, rental rates and occupancy rates. The credit of the borrower and
certain key principals of the borrower are examined for financial strength and
character prior to approval of the mortgage loan. This analysis generally
includes a review of financial statements (which are generally unaudited),
third-party credit reports, judgment, lien, bankruptcy and pending litigation
searches. Depending on the type of real property collateral involved and other
relevant circumstances, the credit of key tenants also may be examined as part
of the underwriting process. Generally, a member of the underwriting team (or
someone on its behalf), visits the property for a site inspection to ascertain
the overall quality and competitiveness of the property, including its physical
attributes, neighborhood and market, accessibility and visibility and demand
generators. As part of its underwriting procedures, the third party reports or
other documents described in this prospectus supplement under "Description of
the Mortgage Pool--Assessments of Property Value and Condition," "--Appraisals,"
"--Environmental Assessments," "--Property Condition Assessments," "--Seismic
Review Process," and "--Zoning and Building Code Compliance" are generally
obtained.
All mortgage loans must be approved by a loan committee comprised of
senior real estate professionals. The loan committee may either approve a
mortgage loan as recommended, request additional due diligence, modify the
terms, or reject a mortgage loan.
Debt Service Coverage Ratio and Loan-to-Value Ratio. The underwriting
standards for PCFII's mortgage loans generally require a minimum debt service
coverage ratio of 1.20x and maximum loan-to-value ratio of 80%. However, these
requirements constitute solely a guideline, and exceptions to these guidelines
may be approved based on the individual characteristics of a mortgage loan. For
example, a mortgage loan originated for PCFII may have a lower debt service
coverage ratio or higher loan-to-value ratio based on the types of tenants and
leases at the subject real property, the taking of additional collateral such as
reserves, letters of credit and/or guarantees, real estate professional's
judgment of improved property performance in the future and/or other relevant
factors. In addition, with respect to certain mortgage loans originated for
PCFII, there may exist subordinate debt secured by the related mortgaged
property and/or mezzanine debt secured by direct or indirect ownership interests
in the borrower. Such mortgage loans may have a lower debt service coverage
ratio, and a higher loan-to-value ratio, if such subordinate or mezzanine debt
is taken into account.
The debt service coverage ratio guidelines set forth above are
calculated based on underwritten net cash flow at origination. Therefore, the
debt service coverage ratio for each mortgage loan as reported in this
prospectus supplement and Appendix B hereto may differ from the amount
calculated at the time of origination. In addition, PCFII's underwriting
guidelines generally permit a maximum amortization period of 30 years. However,
certain
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mortgage loans may provide for interest-only payments prior to maturity, or for
an interest-only period during a portion of the term of the mortgage loan. See
"Description of the Mortgage Pool" in this prospectus supplement.
Escrow Requirements. PCFII borrowers are often required to fund
various escrows for taxes and insurance or, in some cases, requires such
reserves to be funded only upon a triggering event, such as an event of default
under the related mortgage loan. Additional reserves may be required for
deferred maintenance, re-tenanting expenses and capital expenses, in some cases
only during periods when certain debt service coverage ratio tests are not
satisfied. In some cases, the borrower is permitted to post a letter of credit
or guaranty, or provide periodic evidence that the items for which the escrow or
reserve would have been established are being paid or addressed, in lieu of
funding a given reserve or escrow. Case-by-case analysis is done to determine
the need for a particular escrow or reserve. Consequently, the aforementioned
escrows and reserves are not established for every multifamily and commercial
mortgage loan originated for PCFII.
The information set forth in this prospectus supplement concerning the
sponsors has been provided by them.
THE DEPOSITOR
Bear Stearns Commercial Mortgage Securities Inc., the depositor, is a
Delaware corporation. Our principal executive offices are located at 383 Madison
Avenue, New York, New York 10179. Our telephone number is (212) 272-2000. We do
not have, nor is it expected in the future that we will have, any significant
assets and are not engaged in any activities except those related to the
securitization of assets.
The depositor was formed for the purpose of acting as a depositor in
asset backed securities transactions. Bear Stearns Commercial Mortgage
Securities Inc. will have minimal ongoing duties with respect to the offered
certificates and the mortgage loans. The depositor's duties will include,
without limitation, (i) appointing a successor trustee in the event of the
resignation or removal of the trustee, (ii) providing information in its
possession with respect to the certificates to the paying agent to the extent
necessary to perform REMIC tax administration, (iii) indemnifying the trustee,
the paying agent and trust for any liability, assessment or costs arising from
the depositor's bad faith, negligence or malfeasance in providing such
information, (iv) indemnifying the trustee and the paying agent against certain
securities laws liabilities, and (v) signing any annual report on Form 10-K,
including the certification therein required under the Sarbanes-Oxley Act, and
any distribution reports on Form 10-D and Current Reports on Form 8-K required
to be filed by the trust. The depositor is also required under the Underwriting
Agreement to indemnify the Underwriters for certain securities law liabilities.
THE ISSUING ENTITY
The issuing entity with respect to the offered certificates will be
the Bear Stearns Commercial Mortgage Securities Trust 2007-TOP26 (the "Trust").
The Trust will be a New York common law trust that will be formed on the Closing
Date pursuant to the Pooling and Servicing Agreement. The only activities that
the Trust may perform are those set forth in the Pooling and Servicing
Agreement, which are generally limited to owning and administering the mortgage
loans and any REO Property, disposing of defaulted mortgage loans and REO
Property, issuing the certificates, making distributions, providing reports to
Certificateholders and other activities described in this prospectus supplement.
Accordingly, the Trust may not issue securities other than the certificates, or
invest in securities, other than investing of funds in the Certificate Account
and other accounts maintained under the Pooling and Servicing Agreement in
certain short-term high-quality investments. The Trust may not lend or borrow
money, except that the master servicer and the trustee may make Advances of
delinquent monthly debt service payments and Servicing Advances to the Trust,
but only to the extent it deems such Advances to be recoverable from the related
mortgage loan; such Advances are intended to provide liquidity, rather than
credit support. The Pooling and Servicing Agreement may be amended as described
in this prospectus supplement under "Description of the Offered
Certificates--Amendments to the Pooling and Servicing Agreement." The Trust
administers the mortgage loans through the trustee, the paying agent, the master
servicer and the special servicer. A discussion of the duties of the trustee,
the paying agent, the master servicer and the special servicer, including any
discretionary activities performed by each of them, is set forth in this
prospectus supplement under "--The Trustee," "--The Paying Agent, Certificate
Registrar and Authenticating Agent," "--The Master Servicer," and "--The Special
Servicer" and "Servicing of the Mortgage Loans."
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The only assets of the Trust other than the mortgage loans and any REO
Properties are the Certificate Account and other accounts maintained pursuant to
the Pooling and Servicing Agreement and the short-term investments in which
funds in the Certificate Account and other accounts are invested. The Trust has
no present liabilities, but has potential liability relating to ownership of the
mortgage loans and any REO Properties, and the other activities described in
this prospectus supplement, and indemnity obligations to the trustee, the paying
agent, the master servicer and the special servicer. The fiscal year of the
Trust is the calendar year. The Trust has no executive officers or board of
directors and acts through the trustee, the paying agent, the master servicer
and the special servicer.
The Depositor is contributing the mortgage loans to the Trust. The
Depositor is purchasing the mortgage loans from the mortgage loan sellers, as
described in this prospectus supplement under "Description of the Mortgage
Pool--Sale of the Mortgage Loans" and "--Representations and Warranties."
Since the Trust is a common law trust, it may not be eligible for
relief under the federal bankruptcy laws, unless it can be characterized as a
"business trust" for purposes of the federal bankruptcy laws. Bankruptcy courts
look at various considerations in making this determination, so it is not
possible to predict with any certainty whether or not the Trust would be
characterized as a "business trust."
The depositor has been formed as a bankruptcy remote special purpose
entity. In connection with the sale of the mortgage loans from each mortgage
loan seller to the depositor and from the depositor to the Trust, certain legal
opinions are required. Those opinions to the extent relating to an entity
subject to Title 11 of the United States Code (the "Bankruptcy Code") are
generally to the effect that:
(1) If such mortgage loan seller (other than Wells Fargo) were to
become a debtor in a properly presented case under the Bankruptcy Code, a
federal bankruptcy court would determine that (i) (a) a transfer of the mortgage
loans by the related mortgage loan seller to the depositor (including collection
thereon) in the form and manner set forth in the related mortgage loan purchase
agreement would constitute a true sale or absolute transfer of such mortgage
loans (including the collections thereon), rather than a borrowing by the
related mortgage loan seller from the depositor secured by those mortgage loans,
so that those mortgage loans (including the collections thereon) would not be
property of the estate of the related mortgage loan seller under Section 541(a)
of the Bankruptcy Code, and thus (b) the depositor's rights to the related
mortgage loans (including the collections thereon) would not be impaired by the
operation of Section 362(a) of the Bankruptcy Code;
(2) With respect to the mortgage loans sold to the Trust by Wells
Fargo, if in the event of the insolvency of Wells Fargo and the appointment of
the Federal Deposit Insurance Corporation (the "FDIC") as conservator or
receiver for Wells Fargo, pursuant to Section 11(c) of the Federal Deposit
Insurance Act (the "FDIA"), a court, in a properly presented and decided case,
would hold that the FDIC could not (i) in the exercise of its authority under 12
U.S.C. Section 1821(e), reclaim, recover, or recharacterize as property of such
mortgage loan seller (or its receivership) the underlying mortgage loans that
have been transferred by such mortgage loan seller to the depositor and (ii)
seek to avoid the sale of the underlying mortgage loans under 12 U.S.C. Section
1823(e); and
(3) If the depositor were to become a debtor in a properly presented
case under the Bankruptcy Code, a federal bankruptcy court would determine (i)
(a) a transfer of the related mortgage loans by the depositor to the Trust
(including the collections thereon) in the form and manner set forth in the
Pooling and Servicing Agreement would constitute a true sale or absolute
transfer of those mortgage loans (including the collections thereon), rather
than a borrowing by the depositor from the Trust secured by those mortgage
loans, so that those mortgage loans (including the collections thereon) would
not be property of the estate of the depositor under Section 541(a) of the
Bankruptcy Code, and thus (b) the Trust's rights to the related mortgage loans
(including the collections thereon) would not be impaired by the operation of
Section 362(a) of the Bankruptcy Code.
Such legal opinions are based on numerous assumptions, and there can
be no assurance that all of such assumed facts are true, or will continue to be
true. Moreover, there can be no assurance that a court would rule as anticipated
in the foregoing legal opinions. Accordingly, although the transfer of the
underlying mortgage loans from each mortgage loan seller to the depositor and
from the depositor to the Trust has been structured as a sale, there can be no
assurance that the sale of the underlying mortgage loans will not be
recharacterized as a pledge, with the result that the depositor or Trust is
deemed to be a creditor of the related mortgage loan seller rather than an
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owner of the mortgage loans. See "Risk Factors--The Mortgage Loan Sellers Are
Subject To Bankruptcy Or Insolvency Laws That May Affect The Trust's Ownership
Of The Mortgage Loans."
THE TRUSTEE AND THE CUSTODIAN
The Trustee
LaSalle Bank National Association ("LaSalle") will act as the trustee
under the Pooling and Servicing Agreement. LaSalle is a national banking
association formed under the federal laws of the United States of America. Its
parent company, LaSalle Bank Corporation, is an indirect subsidiary of ABN AMRO
Bank N.V., a Netherlands banking corporation. LaSalle has extensive experience
serving as trustee on securitizations of commercial mortgage loans. Since 1994,
LaSalle has served as trustee or paying agent on approximately 695 commercial
mortgage-backed security transactions involving assets similar to the mortgage
loans. As of March 31, 2007, LaSalle served as trustee or paying agent on over
465 commercial mortgage-backed security transactions. The depositor, the master
servicer, the special servicer and the primary servicer may maintain banking
relationships in the ordinary course of business with LaSalle. The trustee's
corporate trust office is located at 135 South LaSalle Street, Suite 1625,
Chicago, Illinois, 60603. Attention: Global Securities and Trust Services - Bear
Stearns Commercial Mortgage Securities Trust 2007-TOP26, Commercial Mortgage
Pass-Through Certificates, Series 2007-TOP26, or at such other address as the
trustee may designate from time to time. The long-term unsecured debt of LaSalle
is rated "A+" by S&P, "Aa3" by Moody's and "AA-" by Fitch.
The trustee is at all times required to be, and will be required to
resign if it fails to be, (i) an institution insured by the FDIC, (ii) a
corporation, national bank or national 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 (iii) an institution whose
short-term debt obligations are at all times rated not less than "A-1" by S&P
and not less than "R-1 (middle)" by DBRS, or if not rated by DBRS, an equivalent
rating such as that listed above by at least one nationally recognized
statistical rating organization (which may include S&P, Fitch and/or Moody's),
and whose long-term senior unsecured debt is rated not less than "AA-" by Fitch
(or "A+" by Fitch if such institution's short-term debt obligations are rated at
least "F-1" by Fitch) and "AA(low)" by DBRS, or if not rated by DBRS, an
equivalent rating such as that listed above by at least two nationally
recognized statistically rating organizations (which may include S&P, Fitch
and/or Moody's), and "A+" by S&P, or otherwise acceptable to the Rating Agencies
as evidenced by a confirmation from each Rating Agency that such trustee will
not cause a downgrade, withdrawal or qualification of the then current ratings
of any Class of certificates.
Duties of the Trustee
The trustee will make no representations as to the validity or
sufficiency of the Pooling and Servicing Agreement, the certificates or any
asset or related document and is not accountable for the use or application by
the Depositor or the master servicer or the special servicer of any of the
certificates or any of the proceeds of the certificates, or for the use or
application by the Depositor or the master servicer or the special servicer of
funds paid in consideration of the assignment of the mortgage loans to the Trust
or deposited into any fund or account maintained with respect to the
certificates or any account maintained pursuant to the Pooling and Servicing
Agreement or for investment of any such amounts. If no Event of Default has
occurred and is continuing, the trustee is required to perform only those duties
specifically required under the Pooling and Servicing Agreement. However, upon
receipt of the various certificates, reports or other instruments required to be
furnished to it, the trustee is required to examine the documents and to
determine whether they conform to the requirements of the Pooling and Servicing
Agreement. The trustee is required to notify certificateholders of any
termination of a master servicer or special servicer or appointment of a
successor to the master servicer or the special servicer. The trustee will be
obligated to make any Advance required to be made, and not made, by the master
servicer under the Pooling and Servicing Agreement, provided that the trustee
will not be obligated to make any Advance that it deems to be a nonrecoverable
advance. The trustee will be entitled, but not obligated, to rely conclusively
on any determination by the master servicer or the special servicer, solely in
the case of Servicing Advances, if made, would be a nonrecoverable advance. The
trustee will be entitled to reimbursement for each Advance made by it in the
same
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manner and to the same extent as, but prior to, the master servicer. See
"Description of the Offered Certificates--Advances" in this prospectus
supplement.
In addition to having express duties under the Pooling and Servicing
Agreement, the trustee, as a fiduciary, also has certain duties unique to
fiduciaries under applicable law. In general, the trustee will be subject to
certain federal laws and, because the Pooling and Servicing Agreement is
governed by New York law, certain New York state laws. As a national bank acting
in a fiduciary capacity, the trustee will, in the administration of its duties
under the Pooling and Servicing Agreement, be subject to certain regulations
promulgated by the Office of the Comptroller of the Currency, specifically those
set forth in Chapter 12, Part 9 of the Code of Federal Regulations. New York
common law has required fiduciaries of common law trusts formed in New York to
perform their duties in accordance with the "prudent person" standard, which, in
this transaction, would require the trustee to exercise such diligence and care
in the administration of the Trust as a person of ordinary prudence would employ
in managing his own property. However, under New York common law, the
application of this standard of care can be restricted contractually to apply
only after the occurrence of a default. The Pooling and Servicing Agreement
provides that the trustee is subject to the prudent person standard only for so
long as an event of default has occurred and remains uncured.
Matters Regarding the Trustee
The trustee and its partners, representatives, affiliates, members,
managers, directors, officers, employees, agents and controlling persons shall
not have any liability to the Trust or the certificateholders arising out of or
in connection with the Pooling and Servicing Agreement, except for their
respective negligence or willful misconduct.
The trustee and each of its partners, representatives, affiliates,
members, managers, directors, officers, employees, agents and controlling
persons is entitled to indemnification from the Trust for any and all claims,
losses, penalties, fines, forfeitures, legal fees and related costs, judgments
and any other costs, liabilities, fees and expenses incurred in connection with
any legal action or performance of obligations or exercise of rights incurred
without negligence or willful misconduct on their respective part, arising out
of, or in connection with the Pooling and Servicing Agreement, the mortgage
loans, the certificates and the acceptance or administration of the trusts or
duties created under the Pooling and Servicing Agreement (including, without
limitation, any unanticipated loss, liability or expense incurred in connection
with any action or inaction of any master servicer, any special servicer or the
Depositor but only to the extent the trustee is unable to recover within a
reasonable period of time such amount from such third party pursuant to the
Pooling and Servicing Agreement), including the costs and expenses of defending
themselves against any claim in connection with the exercise or performance of
any of their powers or duties hereunder and the trustee and each of its
partners, representatives, affiliates, members, managers, directors, officers,
employees, agents and controlling persons shall be entitled to indemnification
from the Trust for any unanticipated loss, liability or expense incurred in
connection with the provision by it of the reports required to be provided by it
pursuant to the Pooling and Servicing Agreement.
Resignation and Removal of the Trustee
The trustee may at any time resign from its obligations and duties
under the Pooling and Servicing Agreement by giving written notice to the
Depositor, the master servicer, if any, and all certificateholders. Upon
receiving the notice of resignation, the Depositor is required promptly to
appoint a successor trustee meeting the requirements set forth above. If no
successor trustee shall have been so appointed and have accepted appointment
within 30 days after the giving of the notice of resignation, the resigning
trustee may petition any court of competent jurisdiction for the appointment of
a successor trustee.
If at any time the trustee (i) shall cease to be eligible to continue
as trustee under the Pooling and Servicing Agreement, or (ii) shall become
incapable of acting, or shall be adjudged bankrupt or insolvent, or a receiver
of the trustee or of its property shall be appointed, or any public officer
shall take charge or control of the trustee or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation, or (iii) a tax is
imposed or threatened with respect to the Trust or any REMIC by any state in
which the trustee or the Trust held by the trustee is located solely because of
the location of the trustee in such state; provided, that, if the trustee agrees
to indemnify the Trust for such taxes, it shall not be removed pursuant to this
clause (iii), or (iv) the continuation of the trustee as such would result in a
downgrade, qualification or withdrawal of the rating by any Rating Agency of any
Class of
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certificates with a rating as evidenced in writing by any Rating Agency, then
the Depositor may remove the trustee and appoint a successor trustee meeting the
eligibility requirements set forth above. In the case of removal under clauses
(i), (ii), (iii) and (iv) above, the trustee shall bear all such costs of
transfer. Holders of the certificates entitled to more than 50% of the voting
rights may at any time remove the trustee for cause and appoint a successor
trustee.
Any resignation or removal of the trustee and appointment of a
successor trustee will not become effective until acceptance of appointment by
the successor trustee meeting the eligibility requirements set forth above. Upon
any succession of the trustee, the predecessor trustee will be entitled to the
payment of compensation and reimbursement agreed to under the Pooling and
Servicing Agreement for services rendered and expenses incurred. The Pooling and
Servicing Agreement provides that expenses relating to resignation of the
trustee or any removal of the trustee for cause will be required to be paid by
the trustee, and expenses relating to the removal of the trustee without cause
will be paid by the parties effecting such removal or if such parties refuse to
pay, the Trust Fund.
Trustee Compensation
As compensation for the performance of its duties as trustee, LaSalle
Bank National Association will be paid the monthly trustee fee. The trustee fee
is an amount equal to, in any month, the product of the portion of a rate equal
to 0.00117% per annum applicable to such month, determined in the same manner as
the applicable mortgage rate is determined for each mortgage loan for such
month, and the scheduled principal balance of each mortgage loan. A portion of
the trustee fee is payable to the paying agent. In addition, the trustee will be
entitled to recover from the trust fund all reasonable unanticipated expenses
and disbursements incurred or made by the trustee in accordance with any of the
provisions of the Pooling and Servicing Agreement, but not including routine
expenses incurred in the ordinary course of performing its duties as trustee
under the Pooling and Servicing Agreement, and not including any expense,
disbursement or advance as may arise from its negligence or bad faith.
The Custodian
LaSalle will also act as custodian under the Pooling and Servicing
Agreement. As custodian, LaSalle will hold the mortgage loan files exclusively
for the use and benefit of the Trust. The custodian will not have any duty or
obligation to inspect, review or examine any of the documents, instruments,
certificates or other papers relating to the mortgage loans delivered to it to
determine their validity. The custodian's duties regarding the mortgage loan
files will be governed by the Pooling and Servicing Agreement. LaSalle provides
custodial services on over 1000 residential, commercial and asset-backed
securitization transactions and maintains almost 2.5 million custodial files in
its two vault locations in Elk Grove, Illinois and Irvine, California. LaSalle's
two vault locations can maintain a total of approximately 6 million custody
files. All custody files are segregated and maintained in secure and fire
resistant facilities in compliance with customary industry standards. The vault
construction complies with Fannie Mae/Ginnie Mae guidelines applicable to
document custodians. LaSalle maintains disaster recovery protocols to ensure the
preservation of custody files in the event of force majeure and maintains, in
full force and effect, such fidelity bonds and/or insurance policies as are
customarily maintained by banks which act as custodians. LaSalle uses unique
tracking numbers for each custody file to ensure segregation of collateral files
and proper filing of the contents therein and accurate file labeling is
maintained through a monthly reconciliation process. LaSalle uses a proprietary
collateral review system to track and monitor the receipt and movement
internally or externally of custody files and any release or reinstatement of
collateral.
Certain information set forth in this prospectus supplement concerning
the trustee and the custodian has been provided by them.
THE PAYING AGENT, CERTIFICATE REGISTRAR AND AUTHENTICATING AGENT
Wells Fargo Bank, National Association ("Wells Fargo Bank") will serve
as the paying agent (in such capacity, the "paying agent"). In addition, Wells
Fargo Bank will serve as registrar (in such capacity, the "certificate
registrar") for purposes of recording and otherwise providing for the
registration of the offered certificates and of transfers and exchanges of the
definitive certificates, if issued, as authenticating agent of the certificates
(in such capacity, the "authenticating agent") and as tax administrator. Wells
Fargo Bank is a national banking association and a wholly-owned subsidiary of
Wells Fargo & Company. A diversified financial services
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company with approximately $483 billion in assets, more than 23 million
customers and approximately 167,000 employees as of September 30, 2006, Wells
Fargo & Company is a U.S. bank holding company, providing banking, insurance,
trust, mortgage and consumer finance services throughout the United States and
internationally. Wells Fargo Bank provides retail and commercial banking
services and corporate trust, custody, securities lending, securities transfer,
cash management, investment management and other financial and fiduciary
services.
The Depositor, the mortgage loan sellers, any master servicer, any
special servicer and any primary servicer may maintain banking and other
commercial relationships with Wells Fargo Bank and its affiliates. Wells Fargo
Bank's principal corporate trust offices are located at 9062 Old Annapolis Road,
Columbia, Maryland 21045-1951 and its office for certificate transfer services
is located at Sixth Street and Marquette Avenue, Minneapolis, Minnesota
55479-0113. Wells Fargo Bank is also the master servicer and a mortgage loan
seller. As compensation for the performance of its duties as paying agent,
certificate registrar and authenticating agent, Wells Fargo will be paid a
portion of the monthly Trustee Fee. The paying agent and certificate registrar
will be entitled to indemnification upon similar terms to the trustee.
Paying Agent
Under the terms of the Pooling and Servicing Agreement, the paying
agent is responsible for securities administration, which includes pool
performance calculations, distribution calculations and the preparation of
monthly distribution reports. In addition, the paying agent is responsible for
the preparation of all REMIC tax returns on behalf of the Trust REMICs and the
preparation of monthly distribution reports on Form 10-D, annual reports on Form
10-K and current reports on Form 8-K that are required to be filed with the
Securities and Exchange Commission on behalf of the Trust. Wells Fargo Bank has
been engaged in the business of commercial mortgage-backed securities
administration since 1997. It has acted as paying agent with respect to more
than 360 series of commercial mortgage-backed securities and, as of December 31,
2006, was acting as paying agent with respect to more than $340 billion of
outstanding commercial mortgage-backed securities.
There have been no material changes to Wells Fargo's policies or
procedures with respect to its securities administration function other than
changes required by applicable laws.
In the past three years, Wells Fargo has not materially defaulted in
its securities administration obligations under any pooling and servicing
agreement or caused an early amortization or other performance triggering event
because of servicing by Wells Fargo with respect to commercial mortgage-backed
securities.
The assessment of compliance with applicable servicing criteria
prepared by the corporate trust services division of Wells Fargo Bank for its
platform that includes residential mortgage-backed securities transactions for
which Wells Fargo Bank performs securities administration and master servicing
functions and commercial mortgage-backed securities transactions for which Wells
Fargo Bank performs securities administration/paying agent functions for the
twelve months ended December 31, 2006, furnished pursuant to Item 1122 of
Regulation AB, discloses that it was not in compliance with the 1122(d)(3)(i)
servicing criterion during that reporting period. The assessment of compliance
indicates that certain monthly investor or remittance reports included errors in
the calculation and/or the reporting of delinquencies for the related pool
assets, which errors may or may not have been material, and that all such errors
were the result of data processing errors and/or the mistaken interpretation of
data provided by other parties participating in the servicing function. The
assessment further states that all necessary adjustments to Wells Fargo Bank's
corporate trust services division's data processing systems and/or interpretive
clarifications have been made to correct those errors and to remedy related
procedures. Despite the fact that the platform of transactions to which such
assessment of compliance relates included commercial mortgage-backed securities
transactions, the errors described above did not occur with respect to any such
commercial mortgage-backed securities transactions.
Certain information set forth in this prospectus supplement concerning
the paying agent, certificate registrar and authenticating agent has been
provided by them.
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MASTER SERVICER
Wells Fargo Bank, a national banking association, will be the master
servicer under the Pooling and Servicing Agreement for all of the mortgage
loans. Wells Fargo will acquire the right to master service the mortgage loans
that are sold to the Trust by the other sponsors as a result of entering into
servicing rights purchase agreements with such sponsors. The principal
commercial mortgage servicing offices of Wells Fargo Bank are located at 45
Fremont Street, 2nd Floor, San Francisco, California 94105.
Wells Fargo Bank has originated and serviced commercial mortgage loans
since before 1975 and has serviced securitized commercial mortgage loans since
1993. Wells Fargo Bank is approved as a master servicer, primary servicer and
special servicer for commercial mortgage-backed securities rated by Moody's, S&P
and Fitch. Moody's does not assign specific ratings to servicers. S&P has
assigned to Wells Fargo Bank the ratings of STRONG as a primary servicer and
ABOVE AVERAGE as a master servicer and special servicer. Fitch has assigned to
Wells Fargo Bank the ratings of CMS2 as a master servicer, CPS1 as a primary
servicer and CSS1 as a special servicer. S&P's and Fitch's ratings of a servicer
are based on an examination of many factors, including the servicer's financial
condition, management team, organizational structure and operating history.
As of December 31, 2006, the commercial mortgage servicing group of
Wells Fargo Bank was responsible for servicing approximately 11,665 commercial
and multifamily mortgage loans with an aggregate outstanding principal balance
of approximately $103.7 billion, including approximately 10,434 loans
securitized in approximately 93 commercial mortgage-backed securitization
transactions with an aggregate outstanding principal balance of approximately
$99.4 billion, and also including loans owned by institutional investors and
government sponsored entities such as Freddie Mac. The properties securing these
loans are located in all 50 states and include retail, office, multifamily,
industrial, hospitality and other types of income-producing properties.
According to the Mortgage Bankers Association of America, as of December 31,
2006, Wells Fargo Bank was the fourth largest commercial mortgage servicer in
terms of the aggregate outstanding principal balance of loans being serviced.
Wells Fargo Bank has developed policies, procedures and controls for
the performance of its master servicing obligations in compliance with
applicable servicing agreements, servicing standards and the servicing criteria
set forth in Item 1122 of Regulation AB. These policies, procedures and controls
include, among other things, measures for notifying borrowers of payment
delinquencies and other loan defaults and for working with borrowers to
facilitate collections and performance prior to the occurrence of a Servicing
Transfer Event.
A Wells Fargo Bank proprietary website
(www.wellsfargo.com/com/comintro) provides investors with access to investor
reports for commercial mortgage-backed securitization transactions for which
Wells Fargo Bank is master servicer.
Certain of the duties of the master servicer and the provisions of the
Pooling and Servicing Agreement are set forth in this prospectus supplement
under "Servicing of the Mortgage Loans." The manner in which collections on the
mortgage loans are to be maintained is described under "Description of the
Agreements--Collection and Other Servicing Procedures" and "--Certificate
Account and Other Collection Accounts" in the accompanying prospectus. The
master servicer's obligations to make Advances are described in this prospectus
supplement under "Description of the Offered Certificates--Advances." Certain
terms of the Pooling and Servicing Agreement regarding the master servicer's
removal, replacement, resignation or transfer are described in this prospectus
supplement under "--Events of Default" and in the prospectus under "Description
of the Agreements--Matters Regarding a Master Servicer and the Depositor."
Certain limitations on the master servicer's liability under the Pooling and
Servicing Agreement are described under "Description of the Agreements--Matters
Regarding a Master Servicer and the Depositor" in the prospectus and under
"Servicing of the Mortgage Loans--General" in this prospectus supplement.
The master servicer may appoint one or more sub-servicers to perform
all or any portion of its duties under the Pooling and Servicing Agreement, as
described under "Servicing of the Mortgage Loans--General" in this prospectus
supplement and under "Description of the Agreements--Subservicers" in the
accompanying prospectus; provided that the master servicer may not appoint a
sub-servicer that is a proposed Servicing Function Participant if the master
servicer has actual knowledge that such party has failed to comply with its
Securities Exchange Act of
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1934 reporting obligations under the Trust or any other commercial mortgage loan
securitization. Wells Fargo Bank monitors and reviews the performance of
sub-servicers appointed by it.
Wells Fargo Bank has received an issuer rating of "Aaa" from Moody's.
Wells Fargo Bank's long term deposits are rated "Aaa" by Moody's, "AA" by S&P,
"AA+" by Fitch and "AA" by DBRS.
Wells Fargo & Company is the holding company for Wells Fargo Bank.
Wells Fargo & Company files reports with the Securities and Exchange Commission
as required under the Securities Exchange Act of 1934, as amended. Such reports
include information regarding Wells Fargo Bank and may be obtained at the
website maintained by the Securities and Exchange Commission at www.sec.gov.
The information set forth in this prospectus supplement concerning the
master servicer has been provided by it.
PRIMARY SERVICER
Principal Global Investors, LLC ("PGI") will act as primary servicer
with respect to the mortgage loans sold to the Depositor by Principal Commercial
Funding II, LLC. PGI, a Delaware limited liability company, is a wholly owned
subsidiary of Principal Life Insurance Company. PGI is the parent of Principal
Commercial Funding, LLC, which owns a 49% interest in Principal Commercial
Funding II, LLC. The principal servicing offices of PGI are located at 801 Grand
Avenue, Des Moines, Iowa 50392.
PGI is ranked "Above Average" as a primary servicer and a special
servicer of commercial real estate loans by S&P. PGI has extensive experience in
servicing commercial real estate mortgage loans. PGI has been engaged in the
servicing of commercial mortgage loans since 1970 and commercial mortgage loans
originated for securitization since 1998.
As of December 31, 2006, PGI was responsible for servicing
approximately 3,092 commercial and multifamily mortgage loans, with an aggregate
outstanding principal balance of approximately $22.4 billion. The portfolio of
loans serviced by PGI includes commercial mortgage loans included in commercial
mortgage-backed securitizations, portfolio loans and loans serviced for
non-affiliated clients. The portfolio consists of multifamily, office, retail,
industrial, warehouse and other types of income-producing properties. PGI
services loans in most states throughout the United States.
As of December 31, 2006, PGI was a primary servicer in approximately
43 commercial mortgage-backed securitization transactions, servicing
approximately 1,489 loans with an aggregate outstanding principal balance of
approximately $10.2 billion.
PGI will enter into a servicing agreement with the master servicer to
service the commercial mortgage loans sold to the Depositor by Principal
Commercial Funding II, LLC and will agree, pursuant to such servicing agreement,
to service such mortgage loans in accordance with the servicing standard. PGI's
responsibilities will include, but are not limited to:
o collecting payments on the loans and remitting such amounts, net
of certain fees to be retained by PGI as servicing compensation
and certain other amounts, including escrow and reserve funds, to
the master servicer;
o providing certain CMSA reports to the master servicer;
o processing certain borrower requests (and obtaining, when
required, consent of the master servicer and/or special servicer,
as applicable); and
o handling early stage delinquencies and collections; provided that
servicing of defaulted loans is transferred from PGI to the
special servicer, as required pursuant to the terms of the
pooling and servicing agreement.
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PGI has developed policies, procedures and controls for the
performance of primary servicing obligations consistent with applicable
servicing agreements and servicing standards.
The information set forth in this prospectus supplement concerning PGI
has been provided by PGI.
THE SPECIAL SERVICER
Centerline Servicing Inc. (formerly known as ARCap Servicing, Inc.)
("CSI") will be appointed as the special servicer of all of the mortgage loans,
and as such, will be responsible for servicing the Specially Serviced Mortgage
Loans and REO Properties. CSI is a corporation organized under the laws of the
state of Delaware and is a wholly-owned subsidiary of Centerline Capital Group
Inc. (formerly known as Charter Mac Corporation), a wholly-owned subsidiary of
Centerline Holding Company (formerly known as CharterMac), a publicly traded
company. Centerline REIT Inc., an affiliate of CSI, is anticipated to be the
Operating Advisor with respect to the transaction described in this prospectus
supplement. The principal offices of CSI are located at 5221 N. O'Connor Blvd.,
Suite 600, Irving, Texas 75039, and its telephone number is 972-868-5300.
Certain of the duties of the special servicer and the provisions of
the Pooling and Servicing Agreement regarding the special servicer, including
without limitation information regarding the rights and obligations of the
special servicer with respect to delinquencies, losses, bankruptcies and
recoveries and the ability of the special servicer to waive or modify the terms
of the mortgage loans are set forth in this prospectus supplement under
"Servicing of the Mortgage Loans--Mortgage Loan Modifications," "--Sale of
Defaulted Mortgage Loans" and "--Foreclosures." Certain terms of the Pooling and
Servicing Agreement regarding the special servicer's removal, replacement,
resignation or transfer are described in this prospectus supplement under
"--Termination of Special Servicer." Certain limitations on the special
servicer's liability under the Pooling and Servicing Agreement are described in
this prospectus supplement under "Servicing of the Mortgage Loan--General." CSI
will service the specially serviced mortgage loans in this transaction in
accordance with the procedures set forth in the Pooling and Servicing Agreement
and in accordance with the loan documents and applicable laws.
CSI has a special servicer rating of CSS1 from Fitch. CSI is also on
S&P's Select Servicer list as a U.S. Commercial Mortgage Special Servicer and is
ranked "STRONG" by S&P. As of March 31, 2007, CSI was the named special servicer
in approximately 67 transactions representing approximately 9,929 first mortgage
loans, with an aggregate stated principal balance of approximately $77.604
billion. Of those 67 transactions, 63 are commercial mortgage-backed securities
transactions representing approximately 9,845 first mortgage loans, with an
aggregate stated principal balance of approximately $76.1 billion. The remaining
four transactions are made up of two CDOs and two business lines with affiliates
of CSI. The portfolio includes multifamily, office, retail, hospitality,
industrial and other types of income-producing properties, located in the United
States, Canada, Virgin Islands and Puerto Rico. With respect to such
transactions as of such date, the special servicer was administering
approximately 41 assets with a stated principal balance of approximately
$175.525 million. All of these specially serviced assets are serviced in
accordance with the applicable procedures set forth in the related pooling and
servicing agreement that governs the asset. Since its inception in 2002 and
through March 31, 2007, CSI has resolved 270 total assets, including
multifamily, office, retail, hospitality, industrial and other types of
income-producing properties, with an aggregate principal balance of $1.473
billion.
The special servicer shall segregate and hold all funds collected and
received in connection with the operation of each REO Property separate and
apart from its own funds and general assets and shall establish and maintain
with respect to each REO Property one or more accounts held in trust for the
benefit of the Certificateholders (and the holder of the related B Note if in
connection with an A/B Mortgage Loan and the holder of the related Serviced
Companion Mortgage Loan if in connection with a Loan Pair). This account or
accounts shall be an Eligible Account. The funds in this account or accounts
will not be commingled with the funds of the special servicer, or the funds of
any of the special servicer's other serviced assets that are not serviced
pursuant to the Pooling and Servicing Agreement.
CSI has developed policies and procedures and controls for the
performance of its special servicing obligations in compliance with the Pooling
and Servicing Agreement, applicable law and the applicable servicing standard.
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CSI has been special servicing assets for approximately 4 years and
employs an asset management staff with an average of 13 years experience in this
line of business. Two additional senior managers in the special servicing group
have 30 and 18 years respectively of industry experience. CSI was formed in 2002
for the purpose of supporting the related business of Centerline REIT Inc.
(formerly known as ARCap REIT, Inc.), its former parent, of acquiring and
managing investments in subordinated CMBS for its own account and those of its
managed funds. Since December 31, 2002 the number of commercial mortgage-backed
securities transactions on which CSI is the named special servicer has grown
from approximately 24 transactions representing approximately 4,004 loans with
an aggregate stated principal balance of approximately $24.5 billion, to
approximately 63 transactions consisting of approximately 9,845 loans with an
approximate stated aggregate principal balance of $76.1 billion on March 31,
2007. The four non-CMBS transactions were acquired by CSI in the first quarter
of 2007. With respect to such non-CMBS transactions, CSI is the named special
servicer on approximately 84 first mortgage loans with an aggregate stated
principal balance of $1.504 billion as of March 31, 2007.
The information set forth in this prospectus supplement concerning the
special servicer has been provided by it.
AFFILIATIONS AND CERTAIN RELATIONSHIPS
The Depositor is an affiliate of Bear Stearns Commercial Mortgage,
Inc., a mortgage loan seller and sponsor, and Bear, Stearns & Co. Inc., one of
the underwriters. Morgan Stanley Mortgage Capital Inc., a mortgage loan seller
and sponsor is an affiliate of Morgan Stanley & Co. Incorporated, one of the
underwriters. Principal Commercial Funding II, LLC, a sponsor and mortgage loan
seller and Principal Global Investors, LLC, the primary servicer with respect to
those mortgage loans sold to the Trust by Principal Commercial Funding II, LLC,
are affiliates. Wells Fargo Bank, National Association is a mortgage loan
seller, a sponsor, the master servicer and the paying agent with respect to the
mortgage loans included in the Trust. LaSalle Bank National Association is a
party to custodial agreements with both Morgan Stanley Mortgage Capital Inc. and
Bear Stearns Commercial Mortgage Inc. whereby LaSalle, for consideration,
provides custodial services for certain commercial mortgage loans originated or
purchased by the respective party. Pursuant to these custodial agreements,
LaSalle Bank National Association is currently providing custodial services for
most of the mortgage loans to be sold by Morgan Stanley Mortgage Capital Inc.
and Bear Stearns Commercial Mortgage Inc. For more information on these
custodial agreements, see "Risk Factors--Conflicts of Interest May Have An
Adverse Effect On Your Certificates--Other Conflicts."
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DESCRIPTION OF THE OFFERED CERTIFICATES
Capitalized terms are defined in the "Glossary of Terms" in this
prospectus supplement.
GENERAL
The Series 2007-TOP26 Commercial Mortgage Pass-Through Certificates
will be issued on or about April 18, 2007 pursuant to a Pooling and Servicing
Agreement to be dated as of the Cut-off Date, between the Depositor, the master
servicer, the special servicer, the paying agent and the trustee.
The certificates will represent in the aggregate the entire beneficial
ownership interest in a trust consisting primarily of:
o the mortgage loans and all payments under and proceeds of the
mortgage loans received after the Cut-off Date, exclusive of
Principal Prepayments received prior to the Cut-off Date and
Scheduled Payments of principal and interest due on or before the
Cut-off Date;
o any mortgaged property acquired on behalf of the
Certificateholders in respect of a defaulted mortgage loan
through foreclosure, deed in lieu of foreclosure or otherwise;
o a security interest in any United States government obligations
pledged in respect of the defeasance of a mortgage loan; and
o certain rights of the Depositor under, or assigned to the
Depositor pursuant to, each of the Mortgage Loan Purchase
Agreements relating to, among other things, mortgage loan
document delivery requirements and the representations and
warranties of the related mortgage loan seller regarding its
mortgage loans.
The certificates will be issued on the Closing Date and will only be
entitled to Scheduled Payments on the mortgage loans that are due (and
unscheduled payments that are received) after the Cut-off Date.
The certificates will consist of various Classes, to be designated as:
o the Class A-1 Certificates, the Class A-2 Certificates, the Class
A-3 Certificates, the Class A-AB Certificates, the Class A-4
Certificates and the Class A-1A Certificates;
o the Class X-1 Certificates and the Class X-2 Certificates;
o the Class A-M Certificates, the Class A-J Certificates, 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 J
Certificates, the Class K Certificates, the Class L Certificates,
the Class M Certificates, the Class N Certificates, the Class O
Certificates and the Class P Certificates; and
o the Class R-I Certificates, the Class R-II Certificates and the
Class R-III Certificates.
The Class A Senior, Class A-M and Class A-J Certificates will be
issued in denominations of $25,000 initial Certificate Balance and in any whole
dollar denomination in excess of that amount.
Each Class of offered certificates will initially be represented by
one or more global certificates registered in the name of the nominee of The
Depository Trust Company ("DTC"). We have been informed by DTC that DTC's
nominee initially will be Cede & Co. No person acquiring an interest in an
offered certificate will be entitled to receive a fully registered physical
certificate representing such interest, except as presented in the prospectus
under "Description Of The Certificates--Book-Entry Registration and Definitive
Certificates." Unless and until definitive certificates are issued in respect of
any Class of offered certificates, all references to actions by holders of
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the offered certificates will refer to actions taken by DTC upon instructions
received from the related Certificate Owners through DTC's participating
organizations.
All references in this prospectus supplement to payments, notices,
reports and statements to holders of the offered certificates will refer to
payments, notices, reports and statements to DTC or Cede & Co., as the
registered holder of the offered certificates, for distribution to the related
Certificate Owners through DTC's Participants in accordance with DTC procedures.
Until definitive certificates are issued in respect of any Class of offered
certificates, interests in such certificates will be transferred on the
book-entry records of DTC and its Participants. See "Description of the
Certificates--Book-Entry Registration and Definitive Certificates" in the
prospectus.
Certificateholders must hold their offered certificates in book-entry
form, and delivery of the offered certificates will be made through the
facilities of DTC, in the United States, and may be made through the facilities
of Clearstream Banking or Euroclear, in Europe. Transfers within DTC,
Clearstream Banking or Euroclear, as the case may be, will be in accordance with
the usual rules and operating procedures of the relevant system. Cross-market
transfers between persons holding directly or indirectly through DTC, on the one
hand, and counterparties holding directly or indirectly through Clearstream
Banking or Euroclear, on the other, will be effected in DTC through Citibank,
N.A. or JPMorgan Chase, the relevant depositaries of Clearstream Banking and
Euroclear, respectively.
Because of time-zone differences, credits of securities received in
Clearstream Banking or Euroclear as a result of a transaction with a DTC
participant will be made during subsequent securities settlement processing and
dated the business day following the DTC settlement date. Such credits or any
transactions in such securities settled during such processing will be reported
to the relevant Euroclear participant or Clearstream Banking customer on such
business day. Cash received in Clearstream Banking or Euroclear as a result of
sales of securities by or through a Clearstream Banking customer or a Euroclear
participant to a DTC participant will be received with value on the DTC
settlement date but will be available in the relevant Clearstream Banking or
Euroclear cash account only as of the business day following settlement in DTC.
CERTIFICATE BALANCES
Upon initial issuance, the Class A-1, Class A-2, Class A-3, Class
A-AB, Class A-4, Class A-1A, Class A-M and Class A-J Certificates will have the
following aggregate Certificate Balances. In each case, the Certificate Balance
on the Closing Date may vary by up to 5%. Mortgage loans may be removed from or
added to the Mortgage Pool prior to the Closing Date within such maximum
permitted variance. Any reduction or increase in the number of mortgage loans
within these parameters will result in consequential changes to the initial
Certificate Balance of each Class of offered certificates and to the other
statistical data contained in this prospectus supplement. No changes in the
statistical data will be made in the final prospectus supplement unless such
changes are material.
APPROXIMATE APPROXIMATE
APPROXIMATE INITIAL AGGREGATE PERCENT OF INITIAL RATINGS CREDIT
CLASS CERTIFICATE BALANCE POOL BALANCE (FITCH/S&P/DBRS) SUPPORT
---------- ----------------------------- ------------------ ---------------- -----------
Class A-1 $ 75,000,000 3.561% AAA/AAA/AAA 27.000%
Class A-2 $177,000,000 8.405% AAA/AAA/AAA 27.000%
Class A-3 $ 65,400,000 3.105% AAA/AAA/AAA 27.000%
Class A-AB $ 78,000,000 3.704% AAA/AAA/AAA 27.000%
Class A-4 $991,880,000 47.098% AAA/AAA/AAA 27.000%
Class A-1A $150,102,000 7.127% AAA/AAA/AAA 27.000%
Class A-M $210,601,000 10.000% AAA/AAA/AAA 17.000%
Class A-J $160,583,000 7.625% AAA/AAA/AAA 9.375%
The percentages indicated under the columns "Approximate Credit
Support" with respect to the Class A-1, Class A-2, Class A-3, Class A-AB, Class
A-4 and Class A-1A Certificates represent the approximate credit support for the
Class A-1, Class A-2, Class A-3, Class A-AB, Class A-4 and Class A-1A
Certificates in the aggregate.
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The initial Certificate Balance of each Principal Balance Certificate
will be presented on the face of the certificate. The Certificate Balance
outstanding at any time will equal the then maximum amount of principal that the
holder will be entitled to receive. On each Distribution Date, the Certificate
Balance of each Principal Balance Certificate will be reduced by any
distributions of principal actually made on that certificate on the applicable
Distribution Date, and will be further reduced by any Realized Losses and
Expense Losses allocated to the Certificate Balance of those certificate on that
Distribution Date. See "--Distributions" and "--Distributions--Subordination;
Allocation of Losses and Certain Expenses" below.
The Interest Only Certificates will not have a Certificate Balance and
will represent the right to receive distributions of interest accrued as
described in this prospectus supplement on a Notional Amount.
The Notional Amount of the Class X-1 Certificates will be equal to the
aggregate of the Certificate Balances of the classes of Principal Balance
Certificates outstanding from time to time. The Notional Amount of the Class X-2
Certificates will equal:
o during the period from the Closing Date through and including the
Distribution Date occurring in April 2008, the sum of (a) the
lesser of $65,735,000 and the Certificate Balance of the Class
A-1 Certificates outstanding from time to time, (b) the lesser of
$149,552,000 and the Certificate Balance of the Class A-1A
Certificates outstanding from time to time and (c) the aggregate
of the Certificate Balances of the Class A-2, Class A-3, Class
A-AB, Class A-4, Class A-M, Class A-J, Class B, Class C, Class D,
Class E, Class F, Class G, Class H, Class J, Class K and Class L
Certificates outstanding from time to time;
o during the period following the Distribution Date occurring in
April 2008 through and including the Distribution Date occurring
in April 2009, the sum of (a) the lesser of $165,278,000 and the
Certificate Balance of the Class A-2 Certificates outstanding
from time to time, (b) the lesser of $143,598,000 and the
Certificate Balance of the Class A-1A Certificates outstanding
from time to time, (c) the aggregate of the Certificate Balances
of the Class A-3, Class A-AB, Class A-4, Class A-M, Class A-J,
Class B, Class C, Class D, Class E, Class F and Class G
Certificates outstanding from time to time and (d) the lesser of
$14,744,000 and the Certificate Balance of the Class H
Certificates outstanding from time to time;
o during the period following the Distribution Date occurring in
April 2009 through and including the Distribution Date occurring
in April 2010, the sum of (a) the lesser of $85,080,000 and the
Certificate Balance of the Class A-2 Certificates outstanding
from time to time, (b) the lesser of $137,488,000 and the
Certificate Balance of the Class A-1A Certificates outstanding
from time to time, (c) the aggregate of the Certificate Balances
of the Class A-3, Class A-AB, Class A-4, Class A-M, Class A-J,
Class B, Class C, Class D and Class E Certificates outstanding
from time to time and (d) the lesser of $10,082,000 and the
Certificate Balance of the Class F Certificates outstanding from
time to time;
o during the period following the Distribution Date occurring in
April 2010 through and including the Distribution Date occurring
in April 2011, the sum of (a) the lesser of $3,497,000 and the
Certificate Balance of the Class A-2 Certificates outstanding
from time to time, (b) the lesser of $131,491,000 and the
Certificate Balance of the Class A-1A Certificates outstanding
from time to time, (c) the aggregate of the Certificate Balances
of the Class A-3, Class A-AB, Class A-4, Class A-M, Class A-J,
Class B and Class C Certificates outstanding from time to time
and (d) the lesser of $15,989,000 and the Certificate Balance of
the Class D Certificates outstanding from time to time;
o during the period following the Distribution Date occurring in
April 2011 through and including the Distribution Date occurring
in April 2012, the sum of (a) the lesser of $914,107,000 and the
Certificate Balance of the Class A-4 Certificates outstanding
from time to time, (b) the lesser of $107,425,000 and the
Certificate Balance of the Class A-1A Certificates outstanding
from time to time, (c) the aggregate of the Certificate Balances
of the Class A-M and Class A-J Certificates outstanding from time
to time and (d) the lesser of $40,660,000 and the Certificate
Balance of the Class B Certificates outstanding from time to
time;
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o during the period following the Distribution Date occurring in
April 2012 through and including the Distribution Date occurring
in April 2013, the sum of (a) the lesser of $834,026,000 and the
Certificate Balance of the Class A-4 Certificates outstanding
from time to time, (b) the lesser of $102,821,000 and the
Certificate Balance of the Class A-1A Certificates outstanding
from time to time, (c) the aggregate of the Certificate Balances
of the Class A-M and Class A-J Certificates outstanding from time
to time and (d) the lesser of $10,441,000 and the Certificate
Balance of the Class B Certificates outstanding from time to
time;
o during the period following the Distribution Date occurring in
April 2013 through and including the Distribution Date occurring
in April 2014, the sum of (a) the lesser of $758,203,000 and the
Certificate Balance of the Class A-4 Certificates outstanding
from time to time, (b) the lesser of $98,435,000 and the
Certificate Balance of the Class A-1A Certificates outstanding
from time to time, (c) the aggregate of the Certificate Balances
of the Class A-M Certificates outstanding from time to time and
(d) the lesser of $143,051,000 and the Certificate Balance of the
Class A-J Certificates outstanding from time to time; and
o following the Distribution Date occurring in April 2014, $0.
Accordingly, the Notional Amount of the Class X-1 Certificates will be
reduced on each Distribution Date by any distributions of principal actually
made on, and any Realized Losses and Expense Losses actually allocated to the
Certificate Balance of any Class of Principal Balance Certificates. The Notional
Amount of the Class X-2 Certificates will be reduced on each Distribution Date
by any distributions of principal actually made on, and any Realized Losses and
Expense Losses actually allocated to the Certificate Balance of any component
and any class of Certificates included in the calculation of the Notional Amount
for the Class X-2 Certificates on such Distribution Date, as described above. It
is anticipated that holders of the Class X-2 Certificates will not be entitled
to distributions of interest at any time following the Distribution Date
occurring in April 2014. Upon initial issuance, the aggregate Notional Amounts
of the Class X-1 Certificates and Class X-2 Certificates will be $2,106,003,971
and $2,069,863,000, respectively, subject in each case to a permitted variance
of plus or minus 5%. The Notional Amount of each Class X Certificate is used
solely for the purpose of determining the amount of interest to be distributed
on such Certificate and does not represent the right to receive any
distributions of principal.
The Residual Certificates will not have Certificate Balances or
Notional Amounts.
PASS-THROUGH RATES
The Pass-Through Rates for the Class A-1, Class A-2, Class A-3 and
Class A-AB Certificates will, at all times, be fixed at their initial rate of
5.145%, 5.330%, 5.432% and 5.429%, respectively. The Pass-Through Rates for the
Class A-4, Class A-1A, Class A-M and Class A-J Certificates will, at all times,
be a per annum rate equal to the lesser of 5.471%, 5.446%, 5.513% and 5.566%,
respectively, and the Weighted Average Net Mortgage Rate.
The Pass-Through Rate applicable to the Class X-2 Certificates for the
initial Distribution Date will equal approximately 0.144% per annum. The
Pass-Through Rate applicable to the Class X-2 Certificates for each Distribution
Date subsequent to the initial Distribution Date and on or before the
Distribution Date in April 2014 will equal the weighted average of the
respective strip rates (the "Class X-2 Strip Rates") at which interest accrues
from time to time on the respective components of the total Notional Amount of
the Class X-2 Certificates outstanding immediately prior to the related
Distribution Date (weighted on the basis of the respective balances of such
components outstanding immediately prior to such Distribution Date). Each of
those components will be comprised of all or a designated portion of the
Certificate Balance of a specified Class of Principal Balance Certificates. If
all or a designated portion of the Certificate Balance of any Class of Principal
Balance Certificates is identified under "--Certificate Balances" above as being
part of the total Notional Amount of the Class X-2 Certificates immediately
prior to any Distribution Date, then that Certificate Balance (or designated
portion of it) will represent one or more separate components of the total
Notional Amount of the Class X-2 Certificates for purposes of calculating the
accrual of interest for the related Distribution Date. For any Distribution Date
occurring in or before April 2014, on any particular component of the total
Notional Amount of the Class X-2 Certificates immediately prior to the related
Distribution Date, the applicable Class X-2 Strip Rate will equal the excess, if
any, of:
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o the lesser of (a) the rate per annum corresponding to such
Distribution Date as set forth on Schedule B attached to this
prospectus supplement and (b) the Weighted Average Net Mortgage
Rate for such Distribution Date, over
o the Pass-Through Rate for such Distribution Date for the Class of
Principal Balance Certificates whose Certificate Balance, or a
designated portion of it, comprises such component.
Under no circumstances will any Class X-2 Strip Rate be less than
zero.
The Pass-Through Rate applicable to the Class X-1 Certificates for the
initial Distribution Date will equal approximately 0.036% per annum. The
Pass-Through Rate applicable to the Class X-1 Certificates for each Distribution
Date subsequent to the initial Distribution Date will equal the weighted average
of the respective strip rates (the "Class X-1 Strip Rates") at which interest
accrues from time to time on the respective components of the total Notional
Amount of the Class X-1 Certificates outstanding immediately prior to the
related Distribution Date (weighted on the basis of the respective balances of
such components outstanding immediately prior to such Distribution Date). Each
of those components will be comprised of all or a designated portion of the
Certificate Balance of one of the classes of the Principal Balance Certificates.
In general, the Certificate Balance of each Class of Principal Balance
Certificates will constitute a separate component of the total Notional Amount
of the Class X-1 Certificates; provided that, if a portion, but not all, of the
Certificate Balance of any particular Class of Principal Balance Certificates is
identified under "--Certificate Balances" above as being part of the total
Notional Amount of the Class X-2 Certificates immediately prior to any
Distribution Date, then that identified portion of such Certificate Balance will
also represent one or more separate components of the total Notional Amount of
the Class X-1 Certificates for purposes of calculating the accrual of interest
for the related Distribution Date, and the remaining portion of such Certificate
Balance will represent one or more other separate components of the Class X-1
Certificates for purposes of calculating the accrual of interest for the related
Distribution Date. For any Distribution Date occurring in or before April 2014,
on any particular component of the total Notional Amount of the Class X-1
Certificates immediately prior to the related Distribution Date, the applicable
Class X-1 Strip Rate will be calculated as follows:
o if such particular component consists of the entire Certificate
Balance (or a designated portion of that certificate balance) of
any Class of Principal Balance Certificates, and if such entire
Certificate Balance (or that designated portion) also constitutes
a component of the total Notional Amount of the Class X-2
Certificates immediately prior to the related Distribution Date,
then the applicable Class X-1 Strip Rate will equal the excess,
if any, of (a) the Weighted Average Net Mortgage Rate for such
Distribution Date, over (b) the greater of (i) the rate per annum
corresponding to such Distribution Date as set forth on Schedule
B attached to this prospectus supplement and (ii) the
Pass-Through Rate for such Distribution Date for such Class of
Principal Balance Certificates; and
o if such particular component consists of the entire Certificate
Balance (or a designated portion of that certificate balance) of
any Class of Principal Balance Certificates, and if such entire
Certificate Balance (or that designated portion) does not also
constitute a component of the total Notional Amount of the Class
X-2 Certificates immediately prior to the related Distribution
Date, then the applicable Class X-1 Strip Rate will equal the
excess, if any, of (a) the Weighted Average Net Mortgage Rate for
such Distribution Date, over (b) the Pass-Through Rate for such
Distribution Date for such Class of Principal Balance
Certificates.
For any Distribution Date occurring after April 2014, the Certificate
Balance of each Class of Principal Balance Certificates will constitute a
separate component of the total Notional Amount of the Class X-1 Certificates,
and the applicable Class X-1 Strip Rate with respect to each such component for
each such Distribution Date will equal the excess, if any, of (a) the Weighted
Average Net Mortgage Rate for such Distribution Date, over (b) the Pass-Through
Rate for such Distribution Date for such Class of Principal Balance
Certificates. Under no circumstances will any Class X-1 Strip Rate be less than
zero.
The Class B Certificates will, at all times, accrue interest at a per
annum rate equal to the Weighted Average Net Mortgage Rate less 0.037%. The
Class C, Class D, Class E, Class F, Class G and Class H Certificates will, at
all times, accrue interest at a per annum rate equal to the Weighted Average Net
Mortgage Rate. The Class
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J, Class K, Class L, Class M, Class N, Class O and Class P Certificates will, at
all times, accrue interest at a per annum rate equal to the lesser of 5.152% and
the Weighted Average Net Mortgage Rate.
The Administrative Cost Rate for each mortgage loan is presented in
Appendix II attached to this prospectus supplement. The Administrative Cost Rate
will be payable on the Scheduled Principal Balance of each mortgage loan
outstanding from time to time. The Administrative Cost Rate applicable to a
mortgage loan in any month will be determined using the same interest accrual
basis on which interest accrues under the terms of such mortgage loan.
DISTRIBUTIONS
General
Distributions on or with respect to the certificates will be made by
the paying agent, to the extent of available funds, and in accordance with the
manner and priority presented in this prospectus supplement, on each
Distribution Date, commencing in May 2007. 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.
Every distribution 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 paying agent with wiring instructions on or before the related
Record Date, or otherwise by check mailed to such Certificateholder.
The final distribution on any certificate will be determined without
regard to any possible future reimbursement of any Realized Losses or Expense
Losses previously allocated to such certificate. The final distribution will be
made in the same manner as earlier distributions, but only upon presentation and
surrender of a 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 Expense
Loss previously allocated to that certificate, which reimbursement is to occur
after the date on which that certificate is surrendered as contemplated by the
preceding sentence, will be made by check mailed to the Certificateholder that
surrendered the certificate. The likelihood of any such distribution is remote.
All distributions made on or with respect to a Class of certificates will be
allocated pro rata among those certificates based on their respective Percentage
Interests in such Class.
Funds in the Distribution Account may be invested in investments
permitted under the Pooling and Servicing Agreement selected by, and at the risk
of, the paying agent. The investments are required to mature, unless payable by
demand, not later than such time on the Distribution Date, which will allow the
paying agent to make withdrawals from the Distribution Account to make
distributions on or with respect to the certificates.
Funds in the Certificate Account and Interest Reserve Account may be
invested in investments permitted under the Pooling and Servicing Agreement
selected by, and at the risk of, the master servicer. The investments are
required to mature, unless payable on demand, not later than the business day
immediately preceding the next Master Servicer Remittance Date, and any such
investment cannot be sold or disposed of prior to its maturity unless payable on
demand.
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 that Distribution Date.
With respect to the Distribution Date occurring in each January, other
than a leap year, and each February, the Interest Reserve Amount will be
deposited into the Interest Reserve Account in respect of each Interest Reserve
Loan in an amount equal to one day's interest at the related Net Mortgage Rate
on its principal balance as of the Due Date in the month in which such
Distribution Date occurs, to the extent a Scheduled Payment or P&I Advance is
timely made for such Due Date. For purposes of this calculation, the Net
Mortgage Rate for those months will be calculated without regard to any
adjustment for Interest Reserve Amounts or the interest accrual basis as
described in the definition of "Net Mortgage Rate" in the "Glossary of Terms."
With respect to the Distribution Date
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occurring in March of each year (or January or February if the related
Distribution Date is the final Distribution Date), the paying agent will
withdraw an amount from the Interest Reserve Account in respect of each Interest
Reserve Loan equal to the related Interest Reserve Amount from the preceding
January, if applicable, and February, and the withdrawn amount is to be included
as part of the Available Distribution Amount for such Distribution Date.
Fees and Expenses. The amounts available for distribution on the
certificates on any Distribution Date will generally be net of the following
amounts:
TYPE/RECIPIENT AMOUNT FREQUENCY SOURCE OF PAYMENT
----------------- ------------------------------------------------------------- --------------------- ------------------------
Fees
Servicing Fee / The product of the portion of the per annum Master Servicing Monthly. Interest payment on the
Master Servicer Fee Rate for the master servicer applicable to such month, related mortgage loan.
determined in the same manner as the applicable mortgage rate
is determined for each mortgage loan for such month, and the
Scheduled Principal Balance of each mortgage loan, reduced by
any Compensating Interest Payment. The Master Servicing Fee
Rate will range, on a loan-by-loan basis, from 0.01% per
annum to 0.02% per annum.
Additional o 50% of assumption fees on non-Specially Serviced Time to time. The related fees or
Servicing Mortgage Loans; investment income.
Compensation /
Master Servicer o all late payment fees and net default interest (other
than on Specially Serviced Mortgage Loans) not used to
pay interest on Advances;
o 100% of application, loan modification, forbearance and
extension fees on non-Specially Serviced Mortgage Loans;
o all investment income earned on amounts on deposit in
the Collection Account and (if not required to be paid
to borrower) escrow accounts;
o any Prepayment Interest Excess not used to offset
Prepayment Interest Shortfalls (other than on Specially
Serviced Mortgage Loans); and
o the Primary Servicer is entitled to all or a portion of
the fees otherwise payable to the master servicer set
forth in the five bullet points above that are paid on
the mortgage loans for which it acts as the primary
servicer.
Special The product of the portion of a rate equal to 0.25% per annum Monthly. Collections on the
Servicing Fee / applicable to such month, determined in the same manner as mortgage loans in the
Special Servicer the applicable mortgage rate is determined for each Specially mortgage pool.
Serviced Mortgage Loan for such month, and the Scheduled
Principal Balance of each Specially Serviced Mortgage Loan.
Workout Fee / 1.0% of each collection of principal and interest on each Monthly. The related collection
Special Servicer Rehabilitated Mortgage Loan. of principal and/or
interest.
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TYPE/RECIPIENT AMOUNT FREQUENCY SOURCE OF PAYMENT
----------------- ------------------------------------------------------------- --------------------- ------------------------
Liquidation Fee / 1.0% of the Liquidation Proceeds received in connection with Upon receipt of The related Liquidation
Special Servicer a full or partial liquidation of a Specially Serviced Liquidation Proceeds, Proceeds, Condemnation
Mortgage Loan or related REO Property and/or any Condemnation Proceeds Proceeds or Insurance
Condemnation Proceeds or Insurance Proceeds received by the and Insurance Proceeds.
Trust (other than Liquidation Proceeds received in Proceeds.
connection with a repurchase by a mortgage loan seller or
purchase by a mezzanine or subordinate lender within the
time periods specified in the definition of Liquidation Fee
in this prospectus supplement).
Additional o all late payment fees and net default interest (on Time to time. The related fee or
Special Servicing Specially Serviced Mortgage Loans) not used to pay investment income.
Compensation / interest on Advances;
Special Servicer
o 50% of assumption fees on non-Specially Serviced
Mortgage Loans that require special servicer consent and
100% of such fees on Specially Serviced Mortgage Loans;
o 100% of application, loan modification, forbearance and
extension fees on Specially Serviced Mortgage Loans; and
o all investment income received on funds in any REO
Account.
Trustee Fee / The product of the portion of a rate equal to 0.00117% per Monthly. Interest on each
Trustee & Paying annum applicable to such month, determined in the same manner mortgage loan.
Agent as the applicable mortgage rate is determined for each
mortgage loan for such month, and the Scheduled Principal
Balance of each mortgage loan. A portion of the Trustee Fee
is payable to the paying agent.
Primary Servicing The product of the applicable Primary Servicing Fee Rate and Monthly. Collections on the
Fees the Scheduled Principal Balance of the applicable mortgage related mortgage loan.
loan immediately before the related Due Date (prorated for
the number of days during the calendar month for that
mortgage loan for which interest actually accrues on that
mortgage loan). The Primary Servicing Fee Rate for Principal
Global Investors, LLC is 0.01% per annum. The Primary
Servicing Fee Rate (including any subservicing fees) for
Wells Fargo Bank, National Association will range, on a
loan-by-loan basis, from 0.01% per annum to 0.10% per annum.
Expenses
Servicing To the extent of funds available, the amount of any Servicing Time to time. Recoveries on the
Advances / Advances. related mortgage loan,
Master Servicer or to the extent that
and Trustee the party making the
advance determines it is
nonrecoverable, from
collections in the
Certificate Account.
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TYPE/RECIPIENT AMOUNT FREQUENCY SOURCE OF PAYMENT
----------------- ------------------------------------------------------------- --------------------- ------------------------
Interest on At Advance Rate. When Advance is First from late payment
Servicing reimbursed. charges and default
Advances / interest in excess of
Master Servicer the regular interest
and Trustee rate, and then from
collections in the
Certificate Account.
P&I Advances / To the extent of funds available, the amount of any P&I Time to time. Recoveries on the
Master Servicer Advances. related mortgage loan,
and Trustee or to the extent that
the party making the
advance determines it is
nonrecoverable, from
collections in the
Certificate Account.
Interest on P&I At Advance Rate. When Advance is First from late payment
Advances / Master reimbursed. charges and default
Servicer and interest in excess of
Trustee the regular interest
rate, and then from all
collections in the
Certificate Account.
Indemnification Amounts for which the trustee, the paying agent, the master Time to time. All collections in the
Expenses / servicer and the special servicer are entitled to Certificate Account.
Trustee, indemnification.
Paying Agent,
Master Servicer
and Special
Servicer
Trust Expenses Based on third party charges. Time to time. All collections in the
not Advanced (may Certificate Account.
include
environmental
remediation
costs,
appraisals,
independent
contractor to
operate REO)
The Pooling and Servicing Agreement does not provide for any successor
master servicer or successor special servicer or successor trustee, as the case
may be, to receive compensation in excess of that permitted to be received by
its predecessor, except in the case where a successor cannot be found for
existing compensation. Any change to the compensation of the master servicer,
special servicer or trustee would require an amendment to the Pooling and
Servicing Agreement.
Application of the Available Distribution Amount
On each Distribution Date, except as described under "--Optional
Termination" below, for so long as any Class of offered certificates remains
outstanding, the paying agent will apply the Available Distribution Amount other
than Excess Interest and Excess Liquidation Proceeds, if any for such date for
the following purposes and in the following order of priority:
(i) to the holders of the Class A-1, Class A-2, Class A-3, Class A-AB, Class
A-4, Class A-1A, Class X-1 and Class X-2 Certificates, concurrently:
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o to the holders of the Class A-1, Class A-2, Class A-3, Class
A-AB and Class A-4, the Distributable Certificate Interest
Amount in respect of each such Class for such Distribution
Date (which shall be payable from amounts in the Available
Distribution Amount attributable to Loan Group 1), pro rata
in proportion to the Distributable Certificate Interest
Amount payable in respect of each such Class;
o to the holders of the Class A-1A Certificates, the
Distributable Certificate Interest Amount in respect of such
Class for such Distribution Date (which shall be payable
from amounts in the Available Distribution Amount
attributable to Loan Group 2); and
o to the holders of the Class X-1 and Class X-2 Certificates,
the Distributable Certificate Interest Amount in respect of
each such Class for such Distribution Date (which shall be
payable from amounts in the Available Distribution Amount
attributable to both Loan Group 1 and Loan Group 2), pro
rata in proportion to the Distributable Certificate Interest
Amount payable in respect of each such Class;
provided, however, that if the portion of Available Distribution
Amount attributable to either Loan Group is insufficient to pay in full the
total amount of interest to be distributed with respect to any of the Class A
Senior Certificates, Class X-1 Certificates or Class X-2 Certificates on such
Distribution Date as described above, the Available Distribution Amount will be
allocated among all those Classes pro rata in proportion to the respective
amounts of interest payable thereon for such Distribution Date, without regard
to loan group;
(ii) to the holders of the Class A-1, Class A-2, Class A-3, Class A-AB, Class
A-4 and Class A-1A Certificates, the Principal Distribution Amount for such
Distribution Date, concurrently:
(A) to the holders of the Class A-1A Certificates in an amount equal to
the lesser of --
o the portion of the Principal Distribution Amount for that
Distribution Date that is attributable to Loan Group 2 and, on or
after the Distribution Date on which the aggregate Certificate
Balance of the Class A-1, Class A-2, Class A-3, Class A-AB and
Class A-4 Certificates has been reduced to zero, the portion of
the Principal Distribution Amount for that Distribution Date that
is attributable to Loan Group 1 (net of any portion thereof that
is distributable on that Distribution Date to the holders of the
Class A-1, Class A-2, Class A-3, Class A-AB and/or Class A-4
Certificates); and
o the aggregate Certificate Balance of the Class A-1A Certificates
immediately prior to that Distribution Date;
(B) to the holders of the Class A-1, Class A-2, Class A-3, Class A-AB and
Class A-4 Certificates collectively in an aggregate amount equal to
the lesser of --
o the portion of the Principal Distribution Amount for that
Distribution Date that is attributable to Loan Group 1 and, on or
after the Distribution Date on which the aggregate Certificate
Balance of the Class A-1A Certificates has been reduced to zero,
the portion of the Principal Distribution Amount for that
Distribution Date that is attributable to Loan Group 2 (net of
any portion thereof that is distributable on that Distribution
Date to the holders of the Class A-1A Certificates); and
o the aggregate Certificate Balance of the Class A-1, Class A-2,
Class A-3, Class A-AB and Class A-4 Certificates immediately
prior to that Distribution Date;
which amount described in (B) above (the "Certificate Group 1
Principal Distribution Amount") will be further allocated among
those holders in the following amounts and order of priority:
o first, to the holders of the Class A-AB Certificates in an amount
equal to the lesser of --
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(1) the Certificate Group 1 Principal Distribution Amount for
that Distribution Date, and
(2) an amount sufficient to reduce the aggregate Certificate
Balance of the Class A-AB Certificates to the Class A-AB
Planned Principal Balance for that Distribution Date;
o second, to the holders of the Class A-1 Certificates in an amount
equal to the lesser of--
(1) the Certificate Group 1 Principal Distribution Amount for
that Distribution Date, reduced by any portion of that
amount that is allocable to reduce the aggregate Certificate
Balance of the Class A-AB Certificates to the Class A-AB
Planned Principal Balance for that Distribution Date as
described in the preceding bullet and paid to the holders of
that Class on that Distribution Date, and
(2) the aggregate Certificate Balance of the Class A-1
Certificates immediately prior to that Distribution Date;
o third, to the holders of the Class A-2 Certificates in an amount
equal to the lesser of --
(1) the Certificate Group 1 Principal Distribution Amount for
that Distribution Date, reduced by any portion of that
amount that is allocable to reduce the aggregate Certificate
Balances of the Class A-AB Certificates (to the Class A-AB
Planned Principal Balance for that Distribution Date) or the
Class A-1 Certificates, in each case as described in the
preceding bullets and paid to the holders of those Classes
on that Distribution Date, and
(2) the aggregate Certificate Balance of the Class A-2
Certificates immediately prior to that Distribution Date;
o fourth, to the holders of the Class A-3 Certificates in an amount
equal to the lesser of --
(3) the Certificate Group 1 Principal Distribution Amount for
that Distribution Date, reduced by any portion of that
amount that is allocable to reduce the aggregate Certificate
Balances of the Class A-AB Certificates (to the Class A-AB
Planned Principal Balance for that Distribution Date) or the
Class A-1 or Class A-2 Certificates, in each case as
described in the preceding bullets and paid to the holders
of those Classes on that Distribution Date, and
(4) the aggregate Certificate Balance of the Class A-3
Certificates immediately prior to that Distribution Date;
o fifth, to the holders of the Class A-AB Certificates in an amount
(in addition to the amount allocated to them as described in the
first bullet above) equal to the lesser of--
(1) the Certificate Group 1 Principal Distribution Amount for
that Distribution Date, reduced by any portion of that
amount that is allocable to reduce the aggregate Certificate
Balances of the Class A-AB Certificates (to the Class A-AB
Planned Principal Balance for that Distribution Date as
described in the first bullet above), or the Class A-1,
Class A-2 or Class A-3 Certificates, in each case as
described in the preceding bullets and paid to the holders
of those Classes on that Distribution Date, and
(2) the aggregate Certificate Balance of the Class A-AB
Certificates immediately after the allocation made pursuant
to the first bullet above;
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o finally, to the holders of the Class A-4 Certificates in an
amount equal to the lesser of --
(1) the Certificate Group 1 Principal Distribution Amount for
that Distribution Date, reduced by any portion of that
amount that is allocable to the Class A-1, Class A-2, Class
A-3 or Class A-AB Certificates, in each case as described in
the preceding bullets and paid to the holders of those
Classes on that Distribution Date, and
(2) the aggregate Certificate Balance of the Class A-4
Certificates immediately prior to that Distribution Date;
(iii) to the holders of the Class A Senior Certificates and the Class X
Certificates, pro rata in proportion to their respective entitlements to
reimbursement described in this clause, to reimburse them for any
Realized Losses or Expense Losses previously allocated to such
certificates and for which reimbursement has not previously been fully
paid (in the case of the Class X Certificates, insofar as Realized Losses
or Expense Losses have resulted in shortfalls in the amount of interest
distributed, other than by reason of a reduction of the Notional Amount),
plus interest on such Realized Losses or Expense Losses, at one-twelfth
the applicable Pass-Through Rate;
(iv) to the holders of the Class A-M Certificates, the Distributable
Certificate Interest Amount in respect of such Class of certificates for
such Distribution Date;
(v) upon payment in full of the aggregate Certificate Balance of the Class
A-4 and Class A-1A Certificates, to the holders of the Class A-M
Certificates, the Principal Distribution Amount for such Distribution
Date until the aggregate Certificate Balance of the Class A-M
Certificates has been reduced to zero; the portion of the Principal
Distribution Amount distributed under this payment priority will be
reduced by any portion of the Principal Distribution Amount distributed
to the holders of the Class A Senior Certificates;
(vi) to the holders of the Class A-M Certificates, to reimburse them for any
Realized Losses or Expense Losses previously allocated to such Class of
certificates and for which reimbursement has not previously been fully
paid, plus interest on such Realized Losses or Expense Losses, at
one-twelfth the applicable Pass-Through Rate;
(vii) to the holders of the Class A-J Certificates, the Distributable
Certificate Interest Amount in respect of such Class of certificates for
such Distribution Date;
(viii) upon payment in full of the aggregate Certificate Balance of the Class
A-M Certificates, to the holders of the Class A-J Certificates, the
Principal Distribution Amount for such Distribution Date until the
aggregate Certificate Balance of the Class A-J Certificates has been
reduced to zero; the portion of the Principal Distribution Amount
distributed under this payment priority will be reduced by any portion of
the Principal Distribution Amount distributed to the holders of the Class
A Senior and Class A-M Certificates;
(ix) to the holders of the Class A-J Certificates, to reimburse them for any
Realized Losses or Expense Losses previously allocated to such Class of
certificates and for which reimbursement has not previously been fully
paid, plus interest on such Realized Losses or Expense Losses, at
one-twelfth the applicable Pass-Through Rate; and
(x) to make payments to the holders of the private certificates (other than
the Class X-1 Certificates and the Class X-2 Certificates) as
contemplated below.
Notwithstanding the foregoing, on each Distribution Date occurring on or
after the date, if any, upon which the aggregate Certificate Balance of all
Classes of Subordinate Certificates has been reduced to zero, or the aggregate
Appraisal Reduction in effect is greater than or equal to the aggregate
Certificate Balance of all Classes of Subordinate Certificates, the Principal
Distribution Amount will be distributed:
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o first, to the Class A-1, Class A-2, Class A-3, Class A-AB, Class
A-4 and Class A-1A Certificates, in proportion to their
respective Certificate Balances, in reduction of their respective
Certificate Balances, until the aggregate Certificate Balance of
each such Class is reduced to zero; and
o second, to the Class A-1, Class A-2, Class A-3, Class A-AB, Class
A-4 and Class A-1A Certificates, based on their respective
entitlements to reimbursement, for the unreimbursed amount of
Realized Losses and Expense Losses previously allocated to such
Classes, plus interest on such Realized Losses or Expense Losses,
at one-twelfth the applicable Pass-Through Rate.
On each Distribution Date, following the above-described distributions
on the offered certificates and the Class X-1 Certificates and the Class X-2
Certificates, the paying agent will apply the remaining portion, if any, of the
Available Distribution Amount for such date to make payments to the holders of
each of the respective Classes of private certificates, other than the Class X-1
Certificates, the Class X-2 Certificates and the Residual Certificates, in
alphabetical order of Class designation (provided that the Class A-M
Certificates will be senior in right to the Class A-J Certificates), in each
case for the following purposes and in the following order of priority, that is,
payments under clauses (1), (2) and (3) below, in that order, to the holders of
the Class B Certificates, then payments under clauses (1), (2) and (3) below, in
that order, to the holders of the Class C, Class D, Class E, Class F, Class G,
Class H, Class J, Class K, Class L, Class M, Class N, Class O and Class P
Certificates:
(1) to pay interest to the holders of the particular Class of
certificates, up to an amount equal to the Distributable
Certificate Interest Amount in respect of such Class of
certificates for such Distribution Date;
(2) if the aggregate Certificate Balance of each other Class of
Subordinate Certificates, if any, with an earlier alphabetical
Class designation (provided that the Class A-M Certificates will
be senior in right to the Class A-J Certificates) has been
reduced to zero, to pay principal to the holders of the
particular Class of certificates, up to an amount equal to the
lesser of (a) the then outstanding aggregate Certificate Balance
of such Class of certificates and (b) the remaining Principal
Distribution Amount for such Distribution Date; and
(3) to reimburse the holders of the particular Class of certificates,
up to an amount equal to (a) all Realized Losses and Expense
Losses, if any, previously allocated to such Class of
certificates and for which no reimbursement has previously been
paid, plus (b) all unpaid interest on such amounts, at
one-twelfth the Pass-Through Rate of such Classes.
Any portion of the Available Distribution Amount for any Distribution
Date that is not otherwise payable to the holders of REMIC Regular Certificates
as contemplated above, will be paid to the holders of the Class R-I
Certificates, and any amount of Excess Interest on deposit in the Excess
Interest Sub-account for the related Collection Period will be paid to holders
of the Class P Certificates (regardless of whether the Certificate Balance of
such Class has been reduced to zero).
Excess Liquidation Proceeds will be deposited into the Reserve
Account. On each Distribution Date, amounts on deposit in the Reserve Account
will be used, first, to reimburse the holders of the Principal Balance
Certificates -- in order of alphabetical Class designation (provided that the
Class A-M Certificates will be senior in right to the Class A-J Certificates) --
for any, and to the extent of, Unpaid Interest; second, Realized Losses and
Expense Losses, including interest on Advances, previously allocated to them;
and third, upon the reduction of the aggregate Certificate Balance of the
Principal Balance Certificates to zero, to pay any amounts remaining on deposit
in such account to the special servicer as additional Special Servicer
Compensation.
Class A-AB Planned Principal Balance
On each Distribution Date, the Class A-AB Certificates have priority
with respect to receiving distributions of principal from the Certificate Group
1 Principal Distribution Amount (including after the principal balance of the
Class A-1A Certificates has been reduced to zero, the portions of the Principal
Distribution Amount for that Distribution Date that is attributable to Loan
Group 2) in either case, to reduce its Certificate Balance to the Planned
Principal Balance for such Distribution Date as described in
"--Distributions--Application of the Available
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Distribution Amount" above. The "Planned Principal Balance" for any Distribution
Date is the balance shown for such Distribution Date in the table set forth in
Schedule A to this prospectus supplement. These balances were calculated using,
among other things, the Structuring Assumptions. Based on these assumptions, the
Certificate Balance of the Class A-AB Certificates on each Distribution Date
would be reduced to the balance indicated for the related Distribution Date on
Schedule A. There is no assurance, however, that the mortgage loans will perform
in conformity with the Structuring Assumptions. Therefore, there can be no
assurance that the Certificate Balance of the Class A-AB Certificates on any
Distribution Date will be equal to the balance that is specified for such
Distribution Date on Schedule A. In general, once the Certificate Balances of
the Class A-1, Class A-2 and Class A-3 Certificates have been reduced to zero,
any remaining Certificate Group 1 Principal Distribution Amount will be
distributed to the Class A-AB Certificates until the Certificate Balance of the
Class A-AB Certificates is reduced to zero.
Distributions of Prepayment Premiums and Yield Maintenance Charges
On any Distribution Date, Prepayment Premiums or Yield Maintenance
Charges collected in respect of each mortgage loan included in Loan Group 1
during the related Collection Period will be distributed by the paying agent on
the Classes of certificates as follows: to the holders of each of the Class A-1,
Class A-2, Class A-3, Class A-AB, Class A-4, Class A-M, Class A-J, Class B,
Class C, Class D, Class E, Class F, Class G and Class H Certificates then
entitled to distributions of principal on such Distribution Date, an amount
equal to the product of (a) a fraction, the numerator of which is the amount
distributed as principal to the holders of that Class on that Distribution Date,
and the denominator of which is the total amount distributed as principal to the
holders of all Classes of certificates, except the Class A-1A Certificates, on
that Distribution Date, (b) the Base Interest Fraction for the related Principal
Prepayment and that Class and (c) the amount of the Prepayment Premium or Yield
Maintenance Charge collected in respect of such Principal Prepayment during the
related Collection Period. Any Prepayment Premiums or Yield Maintenance Charges
relating to a mortgage loan in Loan Group 1 and collected during the related
Collection Period remaining after those distributions described above will be
distributed to the holders of the Class X Certificates.
On any Distribution Date, Prepayment Premiums or Yield Maintenance
Charges collected in respect of each mortgage loan included in Loan Group 2
during the related Collection Period will be distributed by the paying agent as
follows: to the holders of the Class A-1A Certificates then entitled to
distributions of principal on such Distribution Date, an amount equal to the
product of (a) the Base Interest Fraction for the related principal prepayment
and the Class A-1A Certificates and (b) the amount of the Prepayment Premium or
Yield Maintenance Charge collected in respect of such principal prepayment
during the related Collection Period. Any Prepayment Premiums or Yield
Maintenance Charges relating to a mortgage loan in Loan Group 2 and collected
during the related Collection Period remaining after those distributions
described above will be distributed to the holders of the Class X Certificates.
On any Distribution Date on or before the Distribution Date in April
2012, 74% of such Prepayment Premiums or Yield Maintenance Charges remaining
after those distributions will be distributed to the holders of the Class X-1
Certificates and 26% of the Prepayment Premiums or Yield Maintenance Charges
remaining after those distributions will be distributed to the holders of the
Class X-2 Certificates, provided, that with respect to Mortgage Loan No. 173
(the 94-125 Leokane Mortgage Loan), 100% of any Prepayment Premiums or Yield
Maintenance Charges collected with respect to that mortgage loan for the first
Distribution Date, and remaining after the allocated distributions of those
amounts to the Principal Balance Certificates, will be distributed to the Class
X-1 Certificates. After the Distribution Date in April 2012, any of such
Prepayment Premiums or Yield Maintenance Charges remaining after those
distributions will be distributed to the holders of the Class X-1 Certificates.
No Prepayment Premiums or Yield Maintenance Charges will be
distributed to holders of the Class J, Class K, Class L, Class M, Class N, Class
O and Class P Certificates or the Residual Certificates. Any Prepayment Premiums
or Yield Maintenance Charges distributed to holders of a Class of certificates
may not be sufficient to compensate those holders for any loss in yield
attributable to the related Principal Prepayments.
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Treatment of REO Properties
Notwithstanding that any mortgaged property may be acquired as part of
the Trust through foreclosure, deed in lieu of foreclosure or otherwise (or that
a beneficial interest in a mortgaged property with respect to a Non-Serviced
Mortgage Loan may be acquired by the Trust under a Non-Serviced Mortgage Loan
Pooling and Servicing Agreement), the related mortgage loan will, for purposes
of, among other things, determining Pass-Through Rates of, distributions on and
allocations of Realized Losses and Expense Losses to the certificates, as well
as the amount of Master Servicing Fees, Primary Servicing Fees, Excess Servicing
Fees, Trustee Fees and Special Servicing Fees payable under the Pooling and
Servicing Agreement, be treated as having remained outstanding until such REO
Property is liquidated. In connection therewith, operating revenues and other
proceeds derived from such REO Property, exclusive of related operating costs,
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 under "--Advances" below and the effect of any Appraisal
Reductions described under "--Appraisal Reductions" below, the master servicer
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. References to mortgage
loan and mortgage loans in the definitions of Weighted Average Net Mortgage Rate
and Principal Distribution Amount are intended to include any mortgage loan or
mortgage loans as to which the related mortgaged property has become an REO
Property.
Appraisal Reductions
Not later than the earliest Appraisal Event with respect to any
mortgage loan, Loan Pair or A/B Mortgage Loan serviced under the Pooling and
Servicing Agreement, the special servicer is required to obtain an MAI
appraisal, if the Scheduled Principal Balance of the mortgage loan, Loan Pair or
A/B Mortgage Loan is greater than $2,000,000, or at its option, if the Scheduled
Principal Balance of the mortgage loan, Loan Pair or A/B Mortgage Loan is equal
to or less than $2,000,000, either obtain an MAI appraisal or perform an
internal valuation of the related mortgaged property or REO Property, as the
case may be. However, the special servicer, in accordance with the Servicing
Standard, need not obtain either the MAI appraisal or the internal valuation if
such an appraisal or valuation had been obtained within the prior twelve months.
Notwithstanding the foregoing, an updated appraisal will not be required so long
as a debt service reserve, letter of credit, guaranty or surety bond is
available and has the ability to pay off the then unpaid principal balance of
the mortgage loan in full except to the extent that the Special Servicer, in
accordance with the Servicing Standard, determines that obtaining an appraisal
is in the best interests of the Certificateholders.
As a result of such appraisal or internal valuation, an Appraisal
Reduction may be created. An Appraisal Reduction will be reduced to zero as of
the date the related mortgage loan, Loan Pair or A/B Mortgage Loan is brought
current under the then current terms of such mortgage loan, Loan Pair or A/B
Mortgage Loan for at least three consecutive months. No Appraisal Reduction will
exist as to any mortgage loan, Loan Pair or A/B Mortgage Loan after it has been
paid in full, liquidated, repurchased or otherwise disposed of. An appraisal for
any mortgage loan, Loan Pair or A/B Mortgage Loan that has not been brought
current for at least three consecutive months (or paid in full, liquidated,
repurchased or otherwise disposed of) will be updated annually for so long as an
Appraisal Reduction exists, with a corresponding adjustment to the amount of the
related Appraisal Reduction. In addition, the Operating Adviser may at any time
request the special servicer to obtain, at the Operating Adviser's expense, an
updated appraisal, with a corresponding adjustment to the amount of the
Appraisal Reduction (including, without limitation, any request of a B Note
holder, at its expense as and to the extent provided for in the related
intercreditor agreement, with respect to the related A/B Mortgage Loan (or
Operating Adviser on their behalf) if there shall have been a determination that
such holder will no longer be the directing holder).
The existence of an Appraisal Reduction will proportionately reduce
the master servicer's or the trustee's, as the case may be, obligation to make
the interest portion of P&I Advances in respect of the related mortgage loan,
which will generally result in a reduction in current distributions in respect
of the then most subordinate Class or Classes of Principal Balance Certificates.
See "--Advances--P&I Advances" below.
Each Non-Serviced Mortgage Loan is subject to provisions in its
related Non-Serviced Mortgage Loan Pooling and Servicing Agreement relating to
appraisal reductions that are substantially similar to the provisions set forth
above. The existence of an appraisal reduction under such Non-Serviced Mortgage
Loan Pooling and Servicing Agreement in respect of a Non-Serviced Mortgage Loan
will proportionately reduce the interest
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component of the amount of the P&I Advances (including advances, if any, to be
made on such Non-Serviced Mortgage Loan under the Non-Serviced Mortgage Loan
Pooling and Servicing Agreement) to be made in respect of the applicable
mortgage loan. This will generally result in a reduction in current
distributions in respect of the then most subordinate Class or Classes of
Principal Balance Certificates.
Subordination; Allocation of Losses and Certain Expenses
As and to the extent described in this prospectus supplement, the
rights of holders of the Subordinate Certificates to receive distributions of
amounts collected or advanced on the mortgage loans will be subordinated, to the
extent described in this prospectus supplement, to the rights of holders of the
Senior Certificates, and to the rights of the holders of each other Class of
Subordinate Certificates with an earlier alphabetical Class designation
(provided that the Class A-M Certificates will be senior in right to the Class
A-J Certificates). This subordination is intended to enhance the likelihood of
timely receipt by the holders of the Senior Certificates of the full amount of
all interest payable in respect of the Senior Certificates on each Distribution
Date, and the ultimate receipt by the holders of each Class of Class A Senior
Certificates of principal in an amount equal to the entire Certificate Balance
of the Class A Senior Certificates.
Similarly, but to decreasing degrees and in alphabetical order of
Class designation (provided that the Class A-M Certificates will be senior in
right to the Class A-J Certificates), this subordination is also intended to
enhance the likelihood of timely receipt by the holders of the Subordinate
Certificates, other than the Class P Certificates, which do not have the benefit
of any effective subordination, of the full amount of interest payable in
respect of such Classes of certificates on each Distribution Date, and the
ultimate receipt by such holders of principal equal to, in each case, the entire
Certificate Balance of such Class of certificates. This subordination will be
accomplished by the application of the Available Distribution Amount on each
Distribution Date in accordance with the order of priority described above under
"--Application of the Available Distribution Amount" and by the allocation of
Realized Losses and Expense Losses as described below. No other form of credit
support will be available for the benefit of the holders of the certificates.
Allocation to the Class A Senior Certificates, for so long as they are
outstanding, of the entire Principal Distribution Amount for each Distribution
Date will generally have the effect of reducing the Certificate Balance of those
Classes at a faster rate than would be the case if principal payments were
allocated pro rata to all Classes of certificates with Certificate Balances.
Thus, as principal is distributed to the holders of the Class A Senior
Certificates, the Percentage Interest in the Trust evidenced by the Class A
Senior Certificates will be decreased, with a corresponding increase in the
Percentage Interest in the Trust evidenced by the Subordinate Certificates,
thereby increasing, relative to their respective Certificate Balances, the
subordination afforded the Class A Senior Certificates by the Subordinate
Certificates.
Following retirement of the Class A Senior Certificates, the
successive allocation to the Subordinate Certificates, in alphabetical order of
Class designation (provided that the Class A-M Certificates will be senior in
right to the Class A-J Certificates), in each case until such Class is paid in
full, of the entire Principal Distribution Amount for each Distribution Date
will provide a similar benefit to each such Class of certificates as regards the
relative amount of subordination afforded by the other Classes of Subordinate
Certificates with later alphabetical Class designations (provided that the Class
A-M Certificates will be senior in right to the Class A-J Certificates).
Realized Losses of principal and interest on the mortgage loans and
Expense Losses for any Distribution Date, to the extent not previously allocated
and net of amounts, if any, on deposit in the Reserve Account, will be allocated
to the Class P, Class O, Class N, Class M, Class L, Class K, Class J, Class H,
Class G, Class F, Class E, Class D, Class C, Class B, Class A-J and Class A-M
Certificates, in that order, and then to the Class A-1, Class A-2, Class A-3,
Class A-AB, Class A-4 and Class A-1A Certificates, pro rata, and, solely with
respect to losses of interest (other than as a reduction of the Notional
Amount), to the Class X-1 and Class X-2 Certificates, pro rata with each other
and with the Class A Senior Certificates, in each case reducing principal and/or
interest otherwise payable thereon.
Any reimbursements of Advances determined to be nonrecoverable (and
interest on such Advances) that are made in any Collection Period from
collections or advances of principal that (in the absence of the reductions that
we describe under the definition of "Principal Distribution Amount" in the
"Glossary of Terms" in this
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prospectus supplement) would otherwise be included in the total amount of
principal distributable to Certificateholders for the related Distribution Date,
will create a deficit (or increase an otherwise-existing deficit) between the
total principal balance of the Mortgage Pool (net of advances of principal) and
the total principal balance of the certificates. The related reimbursements and
payments made during any Collection Period will therefore result in the
allocation of those amounts (in reverse sequential order in accordance with the
loss allocation rules described in the preceding paragraph) to reduce the
principal balances of the Principal Balance Certificates (without accompanying
principal distributions) on the Distribution Date for that Collection Period.
Any shortfall in the amount of the Distributable Certificate Interest
Amount paid to the Certificateholders of any Class of certificates on any
Distribution Date will result in Unpaid Interest for such Class, which will be
distributable in subsequent periods to the extent of funds available therefor.
Realized Losses with respect to Non-Serviced Mortgage Loans will equal
a pro rata share (based on principal balance) of the amount of any loss
calculated with respect to such mortgage loans and the related Non-Serviced
Companion Mortgage Loans. Any additional Trust expenses under the related
Non-Serviced Mortgage Loan Pooling and Servicing Agreement that are similar to
those expenses resulting in Expense Losses and that relate to any Non-Serviced
Mortgage Loan Group containing a Non-Serviced Mortgage Loan B Note are to be
paid first out of collections on, and other proceeds of, any related
Non-Serviced Mortgage Loan B Note, to the extent permitted under the related
intercreditor agreement, and then, pro rata, out of collections on, and other
proceeds of, the Non-Serviced Mortgage Loan and the Non-Serviced Companion
Mortgage Loans.
Realized Losses with respect to any Serviced Pari Passu Mortgage Loan
will equal a pro rata share (based on principal balance) of the amount of any
loss calculated with respect to such Serviced Pari Passu Mortgage Loan and the
one or more related Serviced Companion Mortgage Loans. Any additional Trust
expenses under the Pooling and Servicing Agreement that are Expense Losses are
to be paid, pro rata, out of collections on, and other proceeds of, any Serviced
Pari Passu Mortgage Loan and the one or more related Serviced Companion Mortgage
Loans.
Realized Losses with respect to any A/B Mortgage Loan are to be
allocated, and expenses are to be paid, first out of collections on, and other
proceeds of, the related B Note and then out of collections on, and other
proceeds of, the A Note.
Prepayment Interest Shortfalls and Prepayment Interest Excesses
If the aggregate Prepayment Interest Shortfalls on all mortgage loans
other than Specially Serviced Mortgage Loans exceed the aggregate Prepayment
Interest Excesses for such mortgage loans for the Collection Period related to a
Distribution Date, the Master Servicing Fee and certain other compensation
payable to the master servicer will be reduced by the amount of any Compensating
Interest (as defined in this prospectus supplement), subject to certain
limitations described in this prospectus supplement. See "Servicing of the
Mortgage Loans--The Master Servicer--Master Servicer Compensation" in this
prospectus supplement.
Any Net Aggregate Prepayment Interest Shortfall for a Distribution
Date will be allocated to each Class of certificates, pro rata, in proportion to
the amount of Accrued Certificate Interest payable to such Class on such
Distribution Date, in each case reducing interest otherwise payable thereon. The
Distributable Certificate Interest Amount in respect of any Class of
certificates will be reduced to the extent any Net Aggregate Prepayment Interest
Shortfalls are allocated to such Class of certificates. See "Servicing of the
Mortgage Loans--The Master Servicer--Master Servicer Compensation" in this
prospectus supplement.
On any Distribution Date, to the extent that the aggregate Prepayment
Interest Excesses on all mortgage loans other than Specially Serviced Mortgage
Loans exceed the aggregate Prepayment Interest Shortfalls for such mortgage
loans for such Distribution Date, the excess amount will be payable to the
master servicer as additional servicing compensation. Likewise, to the extent
that the aggregate Prepayment Interest Excesses on all Specially Serviced
Mortgage Loans exceed the aggregate Prepayment Interest Shortfalls for such
mortgage loans for such Distribution Date, the excess amount will be payable to
the special servicer as additional servicing compensation.
In the case of any mortgage loan that provides for a Due Date
(including applicable grace periods) that occurs after the Determination Date
occurring in the month of such Due Date, the master servicer will be required to
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remit to the trustee (for inclusion in the Available Distribution Amount for the
distributions occurring in such month) any Principal Prepayments and Balloon
Payments that are received by the master servicer (from the borrower or the
Primary Servicer) after the Determination Date but on or before the third
business day prior to the related Distribution Date.
OPTIONAL TERMINATION
The holders of a majority of the Controlling Class, the special
servicer, the master servicer and the holder of the majority interest in the
Class R-I Certificates, in that order, will have the option to purchase, in
whole but not in part, the mortgage loans and any other property remaining in
the Trust on any Distribution Date on or after the Distribution Date on which
the aggregate principal balance of the mortgage loans is less than or equal to
1.0% of the balance as of the Cut-off Date of the mortgage loans.
The Purchase Price for any such purchase will be 100% of the aggregate
unpaid principal balances of the mortgage loans, other than any mortgage loans
as to which the master servicer has determined that all payments or recoveries
with respect to such mortgage loans have been made, plus accrued and unpaid
interest at the mortgage rate--or the mortgage rate less the Master Servicing
Fee Rate if the master servicer is the purchaser--to the Due Date for each
mortgage loan ending in the Collection Period with respect to which such
purchase occurs, plus unreimbursed Advances, with interest thereon at the
Advance Rate, and the fair market value of any other property remaining in the
Trust. The optional termination of the Trust must be conducted so as to
constitute a "qualified liquidation" of each REMIC under Section 860F of the
Code.
Upon any such termination, the Purchase Price for the mortgage loans
and the other property in the Trust will be applied to pay accrued and unpaid
interest on and reduce the Certificate Balance of all outstanding Classes to
zero in the manner provided under "Description of the Offered
Certificates--Distributions--Application of the Available Distribution Amount"
in this prospectus supplement. Notice of any optional termination must be mailed
by the paying agent on behalf of trustee to the Certificateholders and the
Rating Agencies upon the receipt of written notice of such optional termination
by the trustee and the paying agent.
ANY SUCH TERMINATION WILL HAVE AN ADVERSE EFFECT ON THE YIELD OF ANY
OUTSTANDING OFFERED CERTIFICATES PURCHASED AT A PREMIUM. SEE "YIELD, PREPAYMENT
AND MATURITY CONSIDERATIONS" IN THIS PROSPECTUS SUPPLEMENT.
ADVANCES
P&I Advances
On the business day prior to each Distribution Date, the master
servicer will be obligated to make a P&I Advance in respect of each mortgage
loan, subject to the following paragraph, but only to the extent that the master
servicer or the special servicer has not determined, in its sole discretion,
exercised in good faith, that the amount so advanced, plus interest expected to
accrue thereon, would be nonrecoverable from subsequent payments or collections,
including Insurance Proceeds and Liquidation Proceeds, in respect of the related
mortgage loan, and only until such mortgage loan has been liquidated; provided,
however, that the amount of any P&I Advance required to be advanced by the
master servicer with respect to interest on such a mortgage loan as to which
there has been an Appraisal Reduction will be an amount equal to the product of:
o the amount of interest required to be advanced by the master
servicer without giving effect to this sentence; and
o a fraction, the numerator of which is the Scheduled Principal
Balance of such mortgage loan as of the immediately preceding
Determination Date less any Appraisal Reduction in effect with
respect to such mortgage loan (or, in the case of a Non-Serviced
Mortgage Loan or Serviced Pari Passu Mortgage Loan, the portion
of the Appraisal Reduction that is allocable to such Non-Serviced
Mortgage Loan or Serviced Pari Passu Mortgage Loan, as
applicable) and the denominator of which is the Scheduled
Principal Balance of the mortgage loan as of such Determination
Date.
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In addition, the master servicer will not in any event be required to
(i) advance prepayment or yield maintenance premiums, Excess Interest or default
interest, if any, or (ii) make any P&I Advances on any B Note, any Non-Serviced
Companion Mortgage Loans or any Serviced Companion Mortgage Loan.
With respect to any mortgage loan that is delinquent in respect of its
Balloon Payment, including any REO Property as to which the related mortgage
loan provided for a Balloon Payment, P&I Advances will be required in an amount
equal to the Assumed Scheduled Payment, less the related Master Servicing Fee,
the Excess Servicing Fee, the Primary Servicing Fee and any other servicing fees
payable from such Assumed Scheduled Payment, subject to the same conditions and
limitations, as described above, that apply to P&I Advances of other Scheduled
Payments.
The master servicer will be entitled to interest on P&I Advances,
which interest will accrue at the Advance Rate. This interest and any interest
on other Advances, including interest on servicing advances made by the
applicable Non-Serviced Mortgage Loan Master Servicer in respect of the related
Non-Serviced Mortgage Loan, will result in a reduction in amounts payable on the
certificates, to the extent that interest is not otherwise offset in accordance
with the Pooling and Servicing Agreement and any related Non-Serviced Mortgage
Loan Pooling and Servicing Agreement.
P&I Advances and interest accrued thereon at the Advance Rate will be
reimbursable or payable from recoveries on the related mortgage loans and, to
the extent the master servicer or the special servicer determines in its sole
discretion, exercised in good faith, that a P&I Advance will not be ultimately
recoverable from related recoveries, from funds on deposit in the Certificate
Account and Distribution Account as described under "--Reimbursement of
Advances" below. P&I Advances made in respect of mortgage loans that have a
grace period that expires after the Determination Date will not begin to accrue
interest until the day succeeding the expiration date of any applicable grace
period. In no event will the master servicer be required to make aggregate P&I
Advances with respect to any mortgage loan which, when including the amount of
interest accrued on such advances at the Advance Rate, equals an amount greater
than the Scheduled Principal Balance plus all overdue amounts on such mortgage
loan.
Subject to certain exceptions, the right of the master servicer to
reimbursement or payment out of recoveries will be prior to the right of the
Certificateholders to receive any amounts recovered with respect to any mortgage
loan. If the master servicer fails to make a required P&I Advance, the trustee
is required to make such P&I Advance, each subject to the same limitations, and
with the same rights, including the right to receive interest on such P&I
Advance, as described above for the master servicer.
Notwithstanding the foregoing, with respect to any Non-Serviced
Mortgage Loan, the master servicer and the trustee will be required to rely on
the determination of any master servicer, trustee or fiscal agent for the
securitization of any related Non-Serviced Companion Mortgage Loan that a
particular advance with respect to principal or interest and relating to such
other securitization is, or would if made be, ultimately nonrecoverable from
collections on the related Non-Serviced Mortgage Loan Group. The securitization
documents for a Non-Serviced Companion Mortgage Loan may provide for a
nonrecoverability determination that differs from the basis for determining
nonrecoverability of P&I Advances on the mortgage loans by the master servicer.
Because of the foregoing, the obligation to make P&I Advances with respect to
any Non-Serviced Mortgage Loans as to which advancing is provided for under the
Pooling and Servicing Agreement could terminate earlier than would have been the
case if such determination were made solely pursuant to the Pooling and
Servicing Agreement.
Servicing Advances
Servicing Advances, in all cases, will be reimbursable as described
below. The master servicer will be permitted to pay, or to direct the payment
of, certain servicing expenses directly out of the Certificate Account or
Distribution Account and under certain circumstances without regard to the
relationship between the expense and the funds from which it is being paid.
With respect to the mortgaged properties securing the mortgage loans,
the master servicer will be obligated to make, and the special servicer may
make, Servicing Advances for, among other things, real estate taxes and
insurance premiums, to the extent that insurance coverage is available at
commercially reasonable rates and not paid
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by the related borrower, on a timely basis and for collection or foreclosure
costs, including reasonable attorneys fees. With respect to REO Properties, the
master servicer will be obligated to make, and the special servicer may make,
Servicing Advances, if necessary and to the extent that funds from the operation
of the related REO Property are unavailable to pay any amounts due and payable,
for:
o insurance premiums, to the extent that insurance coverage is
available at commercially reasonable rates;
o items such as real estate taxes and assessments in respect of
such REO Property that may result in the imposition of a lien;
o any ground rents in respect of such REO Property; and
o other costs and expenses necessary to maintain, manage or operate
such REO Property.
Notwithstanding the foregoing, the master servicer will be obligated
to make such Servicing Advances only to the extent that the master servicer or
the special servicer has not determined, as described below, that the amount so
advanced, plus interest expected to accrue thereon, would be nonrecoverable from
subsequent payments or collections, including Insurance Proceeds, Condemnation
Proceeds, Liquidation Proceeds or proceeds of mortgage loan repurchases (or from
any other collections), in respect of such mortgage loan or REO Property.
The master servicer and the special servicer may incur certain costs
and expenses in connection with the servicing of a mortgage loan, any Serviced
Companion Mortgage Loan, any B Note or the administration of REO Property.
Servicing Advances, including interest accrued thereon at the Advance Rate, will
be reimbursable from recoveries or collections on the related mortgage loan
(and, if applicable, the related Serviced Companion Mortgage Loan or B Note) or
REO Property. However, if the master servicer or the special servicer, as
applicable, determines, as described below, that any Servicing Advance
previously made, and accrued interest thereon at the Advance Rate, will not be
ultimately recoverable from such related recoveries, such advances will
generally be reimbursable from amounts on deposit in the Certificate Account or
Distribution Account as described under "--Reimbursement of Advances" below. If
the master servicer fails to make a required Servicing Advance, the trustee is
required to make such Servicing Advance, each subject to the same limitations,
and with the same rights, as described above for the master servicer.
In general, none of the master servicer, the special servicer or the
trustee or any fiscal agent will be required to make any Servicing Advances with
respect to any Non-Serviced Mortgage Loan under the Pooling and Servicing
Agreement. Those advances will be made by the applicable Non-Serviced Mortgage
Loan Master Servicer, the applicable Non-Serviced Mortgage Loan Special Servicer
and/or another party under the related Non-Serviced Mortgage Loan Pooling and
Servicing Agreement on generally the same terms and conditions as are applicable
under the Pooling and Servicing Agreement. If any Servicing Advances are made
with respect to any Non-Serviced Mortgage Loan Group under the related
Non-Serviced Mortgage Loan Pooling and Servicing Agreement, the party making
that advance will be entitled to be reimbursed with interest thereon.
Reimbursement of Advances
Any monthly P&I Advance or Servicing Advance (in either case, with
interest) that has been determined to be nonrecoverable from the particular
mortgage loan to which it relates will be reimbursable from the Certificate
Account in the Collection Period in which the nonrecoverability determination is
made. Any reimbursement of nonrecoverable Advances will be made first from
amounts in the Certificate Account that are allocable to principal received with
respect to the Mortgage Pool during the Collection Period in which the
reimbursement is made, prior to reimbursement from other collections (including
interest) received during that Collection Period (and similarly, in subsequent
periods, from principal first and then from other collections). If interest on
the mortgage loans is used to reimburse such nonrecoverable Advances, then the
party entitled to such reimbursement has agreed to notify the Rating Agencies at
least fifteen (15) days prior to such use, unless circumstances exist which are
extraordinary in the sole discretion of such party. If the amount in the
Certificate Account allocable to principal received with respect to the mortgage
loans is insufficient to fully reimburse the party entitled to reimbursement,
then such party may elect at its sole option to defer reimbursement of the
portion that exceeds such amount allocable to principal (in which case
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interest will continue to accrue on the unreimbursed portion of the Advance). If
a monthly P&I Advance or Servicing Advance is made with respect to a mortgage
loan after a default thereon and the mortgage loan is thereafter worked out
under terms that do not provide for the repayment of those Advances (together
with interest thereon) in full at the time of the workout (but such amounts
become an obligation of the borrower to be paid in the future), then such
Advance (together with interest thereon), unless determined to be
nonrecoverable, will be reimbursable only from amounts in the Certificate
Account that represent principal on the mortgage loans (net of any principal
used to reimburse any nonrecoverable Advance (together with interest thereon)).
To the extent that the reimbursement is made from principal, the Principal
Distribution Amount otherwise payable on the certificates on the related
Distribution Date will be reduced and, in the case of reimbursement of
nonrecoverable Advances (or interest thereon), a Realized Loss will be allocated
(in reverse sequential order in accordance with the loss allocation rules
described above under "--Distributions--Subordination; Allocation of Losses and
Certain Expenses") to reduce the total principal balance of the certificates on
that Distribution Date. Any provision in the Pooling and Servicing Agreement for
any Servicing Advance or P&I Advance by the master servicer, the special
servicer or the trustee is intended solely to provide liquidity for the benefit
of the Certificateholders and not as credit support or otherwise to impose on
any such person or entity the risk of loss with respect to one or more of the
mortgage loans.
Nonrecoverable Advances
The determination that any P&I Advance or Servicing Advance,
previously made or proposed to be made, would not be recoverable will be made in
the sole discretion of the master servicer or special servicer, as applicable
(subject to the reliance on the determination of nonrecoverability in respect of
Non-Serviced Mortgage Loans described above), exercising good faith, and is
required to be accompanied by an officer's certificate delivered to the trustee,
the special servicer or the master servicer (as applicable), the Operating
Adviser, the Rating Agencies, the paying agent and us (and the holders of the B
Note or the Serviced Companion Mortgage Loan if the Servicing Advance relates to
an A/B Mortgage Loan or a Loan Pair) and setting forth the reasons for such
determination, with copies of appraisals or internal valuations, if any, or
other information that supports such determination. The master servicer's or
special servicer's determination of nonrecoverability will be conclusive and
binding upon the Certificateholders and the trustee. The trustee will be
entitled to rely conclusively on any determination by the master servicer or
special servicer of nonrecoverability with respect to such Advance and will have
no obligation, but will be entitled, to make a separate determination of
recoverability.
In addition, the master servicer or special servicer, in considering
whether a P&I Advance or Servicing Advance is a nonrecoverable Advance, will be
entitled to give due regard to the existence of any outstanding nonrecoverable
advances with respect to other mortgage loans where reimbursement is, at the
time of such consideration, being deferred or delayed by a master servicer,
special servicer or the trustee because there is insufficient principal
available for such reimbursement, in light of the fact that proceeds on the
related mortgage loan are not only a source of reimbursement for the P&I Advance
or Servicing Advance under consideration, but also a potential source of
reimbursement for such deferred or delayed nonrecoverable Advance. In addition,
the master servicer or special servicer may update or change its recoverability
determinations at any time.
REPORTS TO CERTIFICATEHOLDERS; AVAILABLE INFORMATION
Paying Agent Reports
Based on information provided in monthly reports prepared by the
master servicer and the special servicer and delivered to the trustee and the
paying agent, the paying agent will be required to provide or make available to
each Certificateholder on each Distribution Date (in the aggregate and by Loan
Group as appropriate):
(a) A statement (in the form of Appendix V) setting forth, to the
extent applicable:
(i) the date of such Distribution Date, and of the Record
Date, Interest Accrual Period, and Determination Date for
such Distribution Date;
(ii) the Available Distribution Amount for the Distribution
Date, and any other cash flows received on the mortgage
loans and applied to pay fees and expenses (including the
components of the Available Distribution Amount or such
other cash flows);
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(iii) the aggregate amount of servicing fees, Special Servicing
Fees, other special servicing compensation and Trustee
Fees paid to the master servicer, the Primary Servicer,
the special servicer, the holders of the rights to Excess
Servicing Fees, the trustee and the paying agent with
respect to the Mortgage Pool;
(iv) the amount of other fees and expenses accrued and paid
from the Trust, including without limitation Advance
reimbursement and interest on Advances, and specifying the
purpose of such fees or expenses and the party receiving
payment of those amounts, if applicable;
(v) the amount, if any, of such distributions to the holders
of each Class of Principal Balance Certificates applied to
reduce the aggregate Certificate Balance of that Class;
(vi) the amount of such distribution to holders of each Class
of certificates allocable to (A) interest and (B)
Prepayment Premiums or Yield Maintenance Charges;
(vii) the amount of any shortfall in principal distributions and
any shortfall in interest distributions to each applicable
Class of certificates;
(viii) the amount of excess cash flow, if any distributed to the
holder of the Residual Certificates;
(ix) the aggregate Certificate Balance or Notional Amount of
each Class of certificates before and after giving effect
to the distribution made on such Distribution Date;
(x) the Pass-Through Rate applicable to each Class of
certificates for such Distribution Date;
(xi) the weighted average mortgage rate (and interest rates by
distributional groups or ranges) of the mortgage loans as
of the related Determination Date;
(xii) the number of outstanding mortgage loans and the aggregate
principal balance and Scheduled Principal Balance of the
mortgage loans and weighted average remaining term at the
close of business on the related Determination Date, with
respect to the Mortgage Pool and with respect to each Loan
Group;
(xiii) the number and aggregate Scheduled Principal Balance of
mortgage loans, with respect to the Mortgage Pool:
(A) delinquent 30 to 59 days,
(B) delinquent 60 to 89 days,
(C) delinquent 90 days or more,
(D) as to which foreclosure proceedings have been
commenced, or
(E) as to which bankruptcy proceedings have been
commenced;
(xiv) the aggregate amount and general purpose of Servicing
Advances and P&I Advances outstanding, separately stated,
that have been made by the master servicer, the special
servicer and the trustee with respect to the Mortgage Pool
and the aggregate amount and general purpose of Servicing
Advances and P&I Advances made by the applicable
Non-Serviced Mortgage Loan Master Servicer in respect of
the Non-Serviced Mortgage Loans;
(xv) the number and related principal balances of any mortgage
loans modified, extended or waived on a loan-by-loan basis
since the previous Determination Date (including a
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description of any modifications, extensions or waivers
to mortgage loan terms, fees, penalties or payments
during the distribution period as provided to the Paying
Agent);
(xvi) with respect to any REO Property included in the Trust,
the principal balance of the related mortgage loan as of
the date of acquisition of the REO Property and the
Scheduled Principal Balance of the mortgage loan;
(xvii) as of the related Determination Date:
(A) as to any REO Property sold during the related
Collection Period, the date of the related
determination by such special servicer that it has
recovered all payments which it expects to be
finally recoverable and the amount of the proceeds
of such sale deposited into the applicable
Certificate Account, and
(B) the aggregate amount of other revenues collected by
each special servicer with respect to each REO
Property during the related Collection Period and
credited to the applicable Certificate Account, in
each case identifying such REO Property by the loan
number of the related mortgage loan;
(xviii) the aggregate amount of Principal Prepayments made during
the related Collection Period, with respect to the
Mortgage Pool and with respect to each Loan Group;
(xix) the amount of Unpaid Interest, Realized Losses or Expense
Losses, if any, incurred with respect to the mortgage
loans, including a break out by type of such Realized
Losses or Expense Losses, with respect to the Mortgage
Pool and with respect to each Loan Group;
(xx) Material Breaches of mortgage loan representations and
warranties of which the trustee, the master servicer or
the special servicer has received written notice; and
(xxi) the amount of any Appraisal Reductions effected during
the related Collection Period on a loan-by-loan basis and
the total Appraisal Reductions in effect as of such
Distribution Date, with respect to the Mortgage Pool (and
in the case of the Non-Serviced Mortgage Loans, the
amount of any appraisal reductions effected under the
related Non-Serviced Mortgage Loan Pooling and Servicing
Agreement).
(b) A report containing information regarding the mortgage loans as
of the end of the related Collection Period, which report will
contain substantially the categories of information regarding the
mortgage loans presented in Appendix I and will be presented in a
tabular format substantially similar to the format utilized in
Appendix I.
The reports described in clauses (a) and (b) above may be combined
into one report for purposes of dissemination.
In the case of information furnished pursuant to subclauses (a)(v),
(a)(vi) and (a)(ix) above, the amounts shall be expressed as a dollar amount per
$1,000 of original actual principal amount of the certificates for all
certificates of each applicable Class.
The paying agent will make the foregoing reports and certain other
information available each month to the general public via the paying agent's
website, which shall initially be located at www.ctslink.com. In addition, the
paying agent will also make certain other additional reports available via the
paying agent's website on a restricted basis to the Depositor and its designees,
including the Financial Market Publishers, the Rating Agencies, the parties to
the Pooling and Servicing Agreement, the Underwriters, Certificateholders and
any prospective investors or beneficial owners of certificates who provide the
paying agent with an investor certification in the form attached to the Pooling
and Servicing Agreement (which form may be submitted electronically via the
paying agent's website). In addition, the paying agent will make available on
its website any reports on Forms 10-D, 10-K and 8-K that have been prepared and
filed by the paying agent with respect to the Trust through the EDGAR system.
For assistance
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with the paying agent's website, investors may call 301-815-6600.
The trustee and the paying agent will make no representations or warranties as
to the accuracy or completeness of such documents and will assume no
responsibility therefor. In addition, the trustee and the paying agent may
disclaim responsibility for any information of which it is not the original
source.
In connection with providing access to the paying agent's website, the
paying agent may require registration and the acceptance of a disclaimer. The
trustee and the paying agent will not be liable for the dissemination of
information in accordance with the Pooling and Servicing Agreement.
On an annual basis, the master servicer is required to deliver or make
available electronically the Annual Report to the trustee and the paying agent,
and the paying agent will make such report available as described above to the
Underwriters, the Certificateholders, the Depositor and its designees, the
parties to the Pooling and Servicing Agreement, the Rating Agencies and any
prospective investors or beneficial owners of certificates who provide the
paying agent with an investor certification satisfactory to the paying agent.
The paying agent shall make available at its corporate trust offices
(either in physical or electronic form), during normal business hours, upon
reasonable advance written notice for review by any Certificateholder, any
Certificate Owner, any prospective investor, the Underwriters, each Rating
Agency, the special servicer, the Depositor and the holder of any Serviced
Companion Mortgage Loan, originals or copies of, among other things, the
following items: (i) the most recent property inspection reports in the
possession of the paying agent in respect of each mortgaged property and REO
Property, (ii) the most recent mortgaged property/REO Property annual operating
statement and rent roll, if any, collected or otherwise obtained by or on behalf
of the master servicer or the special servicer and delivered to the paying
agent, (iii) any Phase I environmental report or engineering report prepared or
appraisals performed in respect of each mortgaged property; provided, however,
that the paying agent shall be permitted to require payment by the requesting
party (other than either Rating Agency or the Operating Adviser) of a sum
sufficient to cover the reasonable expenses actually incurred by the paying
agent of providing access or copies (including electronic or digital copies) of
any such information reasonably requested in accordance with the preceding
sentence.
Other Information
The Pooling and Servicing Agreement generally requires that the paying
agent or, with respect to the mortgage loan files, the trustee make available,
at their respective corporate trust offices or at such other office as they may
reasonably designate, during normal business hours, upon reasonable advance
notice for review by any Certificateholder, the holder of a B Note, the holder
of any Serviced Companion Mortgage Loan, each Rating Agency or the Depositor,
originals or copies of, among other things, the following items, except to the
extent not permitted by applicable law or under any of the mortgage loan
documents:
o the Pooling and Servicing Agreement and any amendments to it;
o all reports or statements delivered to holders of the relevant
Class of certificates since the Closing Date;
o all officer's certificates delivered to the paying agent since
the Closing Date;
o all accountants' reports delivered to the paying agent since the
Closing Date;
o the mortgage loan files;
o any and all modifications, waivers and amendments of the terms of
a mortgage loan entered into by the master servicer and/or the
special servicer; and
o any and all officer's certificates and other evidence delivered
to the paying agent to support the master servicer's
determination that any Advance was not or, if made, would not be,
recoverable.
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Copies of any and all of the foregoing items and any servicer reports
will be available from the paying agent (or, with respect to the mortgage loan
files, the trustee) upon request; however, the paying agent or trustee will be
permitted to require the requesting party to pay a sum sufficient to cover the
reasonable costs and expenses of providing such copies (except that such items
will be furnished to the Operating Adviser without charge if such request is not
excessive in the judgment of the paying agent or the trustee, as applicable).
Recipients of such information will generally be required to acknowledge that
such information may be used only in connection with an evaluation of the
certificates by such recipient and in accordance with applicable law.
The Trust will file distribution reports on Form 10-D, annual reports
on Form 10-K and (if applicable) current reports on Form 8-K with the Securities
and Exchange Commission (the "Commission") regarding the certificates, to the
extent, and for such time, as it shall be required to do so under the Securities
Exchange Act of 1934, as amended. Such reports will be filed under the name
"Bear Stearns Commercial Mortgage Securities Trust 2007-TOP26." Members of the
public may read and copy any materials filed with the Commission at the
Commission's Public Reference Room at 100 F Street N.E., Washington, D.C. 20549.
Additional information regarding the Public Reference Room can be obtained by
calling the Commission at 1-800-SEC-0330. The Commission also maintains a site
on the World Wide Web at "http://www.sec.gov" at which you can view and download
copies of reports, proxy and information statements and other information filed
electronically through the Electronic Data Gathering, Analysis and Retrieval
("EDGAR") system. The Depositor has filed the prospectus and the related
registration statement, including all exhibits thereto, through the EDGAR
system, so the materials should be available by logging onto the Commission's
Web site. The Commission maintains computer terminals providing access to the
EDGAR system at each of the offices referred to above.
Book-Entry Certificates
Until such time, if any, as definitive certificates are issued in
respect of the offered certificates, the foregoing information and access will
be available to the related Certificate Owners only to the extent it is
forwarded by, or otherwise available through, DTC and its Participants or
otherwise made available publicly by the paying agent. The manner in which
notices and other communications are conveyed by DTC to its Participants, and by
such Participants to the 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 paying agent and the
Depositor are required to recognize as Certificateholders only those persons in
whose names the certificates are registered with the certificate registrar as of
the related Record Date; however, any Certificate Owner that has delivered to
the certificate registrar a written certification, in the form prescribed by the
Pooling and Servicing Agreement, regarding such Certificate Owner's beneficial
ownership of offered certificates will be recognized as a Certificateholder for
purposes of obtaining the foregoing information and access.
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EXAMPLE OF DISTRIBUTIONS
The following chart sets forth an example of distributions on the
certificates as if the certificates had been issued in April 2007:
The close of business on
April 1 (except as described in (A) Cut-off Date.
this prospectus supplement)
April 30 (B) Record Date for all Classes of
Certificates.
April 2 - May 7 (C) The Collection Period. The master servicer
receives Scheduled Payments due after the
Cut-off Date and any Principal Prepayments
made after the Cut-off Date and on or
prior to May 7.
May 7 (D) Determination Date.
May 11 (E) Master Servicer Remittance Date.
May 14 (F) Distribution Date.
Succeeding monthly periods follow the pattern of (B) through (F) above
(except as described below).
(A) The outstanding principal balance of the mortgage loans will be
the aggregate outstanding principal balance of the mortgage loans at the close
of business on the Cut-off Date, after deducting principal payments due on or
before such date, whether or not received. Principal payments due on or before
such date, and the accompanying interest payments, are not part of the Trust.
(B) Distributions on the next Distribution Date will be made to those
persons that are Certificateholders of record on this date. Each subsequent
Record Date will be the last business day of the month preceding the month in
which the related Distribution Date occurs.
(C) Any Scheduled Payments due and collected and Principal Prepayments
collected, after the Cut-off Date and on or prior to May 7, 2007 will be
deposited in the Certificate Account. Each subsequent Collection Period will
begin on the day after the Determination Date in the month preceding the month
of each Distribution Date and will end on the Determination Date in the month in
which the Distribution Date occurs. In the case of certain mortgage loans
identified in a schedule to the Pooling and Servicing Agreement as to which the
Scheduled Payment is due on a Due Date that may occur after, but in the same
calendar month as, the last day of a given Collection Period, certain payments
that are either received before the Distribution Date or advanced in respect of
such Scheduled Payment (or, if applicable, Assumed Scheduled Payment) will, to
the extent provided in the Pooling and Servicing Agreement, be deemed to be
included in that Collection Period.
(D) As of the close of business on the Determination Date, the master
servicer will have determined the amounts of principal and interest that will be
remitted with respect to the related Collection Period.
(E) The master servicer will remit to the paying agent no later than
the business day prior to the related Distribution Date all amounts held by the
master servicer, and any P&I Advances required to be made by the master
servicer, that together constitute the Available Distribution Amount for such
Distribution Date.
(F) The paying agent will make distributions to Certificateholders on
the 12(th) day of each month or, if such day is not a business day, the next
succeeding business day.
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EXPECTED FINAL DISTRIBUTION DATE; RATED FINAL DISTRIBUTION DATE
The Expected Final Distribution Date for each Class of certificates
presented under "Summary of Prospectus Supplement--Expected Final Distribution
Dates" in this prospectus supplement is the date on which such Class is expected
to be paid in full, assuming timely payments and no Principal Prepayments (other
than payments with respect to ARD Loans on their Anticipated Repayment Dates)
will be made on the mortgage loans in accordance with their terms and otherwise
based on the Structuring Assumptions. The actual final distribution date for any
Class may be earlier or later (and could be substantially later) than the
expected final distribution date.
The Rated Final Distribution Date of each Class of certificates is the
Distribution Date in January 2045.
The ratings assigned by the Rating Agencies to each Class of Principal
Balance Certificates reflects an assessment of the likelihood that the
Certificateholders of such Class will receive, on or before the Rated Final
Distribution Date, all principal distributions to which they are entitled.
AMENDMENTS TO THE POOLING AND SERVICING AGREEMENT
The Pooling and Servicing Agreement may be amended from time to time
by the parties to the Pooling and Servicing Agreement, without notice to or the
consent of any of the Holders, to do the following:
o to cure any ambiguity;
o to cause the provisions in the Pooling and Servicing Agreement to
conform to or be consistent with or in furtherance of the
statements made with respect to the certificates, the Trust or
the Pooling and Servicing Agreement in this prospectus
supplement, the accompanying prospectus or the memorandum under
which certain of the Subordinate Certificates are being offered,
or to correct or supplement any provision which may be
inconsistent with any other provisions;
o to amend any provision of the Pooling and Servicing Agreement to
the extent necessary or desirable to maintain the status of each
REMIC (or the grantor trust portion of the Trust) for the
purposes of federal income tax law (or comparable provisions of
state income tax law);
o to make any other provisions with respect to matters or questions
arising under or with respect to the Pooling and Servicing
Agreement not inconsistent with the provisions therein;
o to modify, add to or eliminate the provisions in the Pooling and
Servicing Agreement relating to transfers of Residual
Certificates;
o to amend any provision of the Pooling and Servicing Agreement to
the extent necessary or desirable to list the certificates on a
stock exchange, including, without limitation, the appointment of
one or more sub-paying agents and the requirement that certain
information be delivered to such sub-paying agents;
o to modify the provisions relating to the timing of reimbursements
of Servicing Advances or P&I Advances in order to conform them to
the commercial mortgage-backed securities industry standard for
such provisions; or
o any other amendment which does not adversely affect in any
material respect the interests of any Certificateholder (unless
such Certificateholder consents).
No such amendment effected pursuant to the first, second or fourth
bullet above may (A) adversely affect in any material respect the interests of
any Certificateholder not consenting to such amendment without the consent of
100% of the Certificateholders (if adversely affected) or (B) adversely affect
the status of any REMIC (or the grantor trust portion of the Trust). In
addition, no amendment to the Pooling and Servicing Agreement that is materially
adverse to the interests of the holder of any B Note may be effected unless the
holder of the related B
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Note provides written consent to such amendment. Prior to entering into any
amendment without the consent of Holders pursuant to this paragraph, the trustee
may require an opinion of counsel.
The Pooling and Servicing Agreement may also be amended from time to
time by the agreement of the parties to the Pooling and Servicing Agreement
(without the consent of the Certificateholders) and with the written
confirmation of the Rating Agencies that such amendment would not cause the
ratings on any Class of certificates to be qualified, withdrawn or downgraded;
provided, however, that such amendment may not effect any of the items set forth
in the bullet points contained in the next succeeding paragraph. The trustee may
request, at its option, to receive an opinion of counsel, addressed to the
parties to the Pooling and Servicing Agreement and the Primary Servicer, that
any amendment pursuant to this paragraph is permitted under the Pooling and
Servicing Agreement.
The Pooling and Servicing Agreement may also be amended from time to
time by the parties with the consent of the Holders of not less than 51% of the
aggregate Certificate Balance of the certificates then outstanding (as
calculated under the Pooling and Servicing Agreement), for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of the Pooling and Servicing Agreement or of modifying in any manner the rights
of the Holders or such holders; provided that no such amendment may:
o reduce in any manner the amount of, or delay the timing of the
distributions required to be made on any certificate without the
consent of the Holder of such certificate;
o reduce the aforesaid percentages of aggregate certificate
percentage or Certificate Balance, the Holders of which are
required to consent to any such amendment without the consent of
all the Holders of each Class of certificates affected thereby;
o eliminate the master servicer's or the trustee's obligation to
advance or alter the Servicing Standard except as may be
necessary or desirable to comply with Sections 860A through 860G
of the Code and related Treasury Regulations and rulings
promulgated under the Code; or
o adversely affect the status of any REMIC created under the
Pooling and Servicing Agreement for federal income tax purposes
without the consent of 100% of the Certificateholders (including
the Class R-I, Class R-II and Class R-III Certificateholders) or
adversely affect the status of the grantor trust created from the
related portion of the Trust, without the consent of 100% of the
holders of the Class P Certificates. The trustee may request, at
its option, to receive an opinion of counsel that any amendment
pursuant to this paragraph is permitted under the Pooling and
Servicing Agreement.
EVIDENCE AS TO COMPLIANCE
Each of the master servicer, the special servicer, the Primary
Servicer and the paying agent will be required under the Pooling and Servicing
Agreement, and we expect that each Additional Servicer and each sub-servicer
will be required under the applicable primary servicing or sub-servicing
agreement, to deliver annually, to the trustee, the paying agent, the Depositor,
and the Rating Agencies, on or before the date specified in the Pooling and
Servicing Agreement or the applicable primary servicing or sub-servicing
agreement, an officer's certificate stating that (i) a review of that party's
servicing activities during the preceding calendar year or portion of that year
and of performance under the Pooling and Servicing Agreement or the applicable
primary servicing or sub-servicing agreement in the case of an Additional
Servicer or other sub-servicer, has been made under the officer's supervision,
and (ii) to the best of the officer's knowledge, based on the review, such party
has fulfilled all its obligations under the Pooling and Servicing Agreement or
the applicable primary servicing or sub-servicing agreement in the case of an
Additional Servicer or other sub-servicer, in all material respects throughout
the year or portion thereof, or, if there has been a failure to fulfill any such
obligation in any material respect, specifying the failure known to the officer
and the nature and status of the failure.
In addition, the master servicer, the special servicer, the Primary
Servicer, the paying agent and the trustee, each at its own expense, will be
required under the Pooling and Servicing Agreement, and we expect that each
Servicing Function Participant will be required under the applicable primary
servicing or sub-servicing agreement, to deliver annually, to the trustee, the
paying agent, the Rating Agencies and the Depositor, a report (an "Assessment
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of Compliance") assessing compliance by that party with the servicing criteria
set forth in Item 1122(d) of Regulation AB that contains the following:
o a statement of the party's responsibility for assessing
compliance with the servicing criteria set forth in Item 1122 of
Regulation AB applicable to it;
o a statement that the party used the criteria in Item 1122(d) of
Regulation AB to assess compliance with the applicable servicing
criteria;
o the party's assessment of compliance with the applicable
servicing criteria during and as of the end of the prior fiscal
year, setting forth any material instance of noncompliance
identified by the party, a discussion of each such failure and
the nature and status thereof; and
o a statement that a registered public accounting firm has issued
an attestation report on the party's assessment of compliance
with the applicable servicing criteria during and as of the end
of the prior fiscal year.
Each party that is required to deliver an Assessment of Compliance
will also be required to simultaneously deliver a report (an "Attestation
Report") of a registered public accounting firm, prepared in accordance with the
standards for attestation engagements issued or adopted by the Public Company
Accounting Oversight Board, that expresses an opinion, or states that an opinion
cannot be expressed, concerning the party's assessment of compliance with the
applicable servicing criteria.
YIELD, PREPAYMENT AND MATURITY CONSIDERATIONS
GENERAL
The yield to maturity on the offered certificates will be affected by
the price paid by the Certificateholder, the related Pass-Through Rates and the
rate, timing and amount of distributions on such offered certificates. The rate,
timing and amount of distributions on any such certificate will in turn depend
on, among other things:
o the Pass-Through Rate for such certificate;
o the rate and timing of principal payments, including Principal
Prepayments, and other principal collections on the mortgage
loans (including payments of principal arising from purchases of
mortgage loans in connection with Material Breaches of
representations and warranties and Material Document Defects or
the exercise of a purchase option by a holder of a subordinate
note or a mezzanine loan) and the extent to which such amounts
are to be applied in reduction of the Certificate Balance or
Notional Amount of such certificate;
o the rate, timing and severity of Realized Losses and Expense
Losses and the extent to which such losses and expenses are
allocable in reduction of the Certificate Balance or Notional
Amount of such certificate or in reduction of amounts
distributable thereon;
o the rate and timing of any reimbursement of the master servicer,
the special servicer or the trustee, as applicable, out of the
Certificate Account of nonrecoverable advances or advances
remaining unreimbursed on a modified mortgage loan on the date of
such modification; and
o 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 Amount
payable on such certificate.
In addition, the effective yield to holders of the offered
certificates will differ from the yield otherwise produced by the applicable
Pass-Through Rate and purchase prices of such certificates because interest
distributions will not be payable to such holders until at least the 12(th) day
of the month following the month of accrual without any additional distribution
of interest or earnings thereon in respect of such delay.
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PASS-THROUGH RATES
The Pass-Through Rates on one or more Classes of certificates may be
based on, limited by, or equal to, a weighted average of the mortgage loan
interest rates net of the Administrative Cost Rate, which is calculated based
upon the respective principal balances of the mortgage loans as described in
this prospectus supplement. In addition, the Pass-Through Rate on one or more
Classes of certificates may be capped at such weighted average rate.
Accordingly, the yield on those Classes of certificates may (and in the case of
a Class with a Pass-Through Rate equal to or based on the Weighted Average Net
Mortgage Rate, will) be sensitive to changes in the relative composition of the
Mortgage Pool as a result of scheduled amortization, voluntary and involuntary
prepayments and any unscheduled collections of principal and/or any experience
of Realized Losses as a result of liquidations of mortgage loans. In general,
the effect of any such changes on such yields and Pass-Through Rates for such
certificates will be particularly adverse to the extent that mortgage loans with
relatively higher mortgage rates experience faster rates of such scheduled
amortization, voluntary prepayments and unscheduled collections or Realized
Losses than mortgage loans with relatively lower mortgage rates.
RATE AND TIMING OF PRINCIPAL PAYMENTS
The yield to maturity on the Class X-1 Certificates (and to a lesser
extent, the Class X-2 Certificates) will be extremely sensitive to, and the
yield to maturity on any Class of offered certificates purchased at a discount
or premium will be affected by the rate and timing of principal payments made in
reduction of the aggregate Certificate Balance or Notional Amount of such Class
of certificates. As described in this prospectus supplement, the Principal
Distribution Amount for each Distribution Date will be distributable entirely in
respect of the Class A Senior Certificates until their Certificate Balance is
reduced to zero, and will thereafter be distributable entirely in respect of
each other Class of Principal Balance Certificates, in descending alphabetical
order of Class designation (provided that the Class A-M Certificates will be
senior in right to the Class A-J Certificates), in each case until the aggregate
Certificate Balance of such Class of certificates is, in turn, reduced to zero.
Consequently, the rate and timing of principal payments that are distributed or
otherwise result in reduction of the aggregate Certificate Balance of each Class
of offered certificates will be directly related to 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 of such mortgage loans, the dates on
which Balloon Payments are due, any extension of maturity dates by the master
servicer or the special servicer, the rate and timing of any reimbursement of
the master servicer, the special servicer or the trustee, as applicable, out of
the Certificate Account of nonrecoverable advances or advances remaining
unreimbursed on a modified mortgage loan on the date of such modification
(together with interest on such advances), 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,
repurchases as a result of a mortgage loan seller's breach of representations
and warranties or material defects in a mortgage loan's documentation and other
purchases of mortgage loans out of the trust. Furthermore, because the amount of
principal that will be distributed to the Class A-1, Class A-2, Class A-3, Class
A-AB, Class A-4 and Class A-1A Certificates will generally be based upon the
particular Loan Group that the related mortgage loan is deemed to be in, the
yield on the Class A-1, Class A-2, Class A-3, Class A-AB and Class A-4
Certificates will be particularly sensitive to prepayments on mortgage loans in
Loan Group 1 and the yield on the Class A-1A Certificates will be particularly
sensitive to prepayments on mortgage loans in Loan Group 2.
A concentration of mortgage loans secured by the same mortgaged
property types can increase the risk that a decline in a particular industry or
business would have a disproportionately large impact on the Mortgage Pool. In
particular, the mortgage loans in Loan Group 1 are secured primarily by
mortgaged properties other than multifamily properties and the mortgage loans in
Loan Group 2 are secured primarily by multifamily properties. Because principal
distributions on the Class A-1A Certificates are generally received from
collections on the Mortgage Loans in Loan Group 2, an adverse event with respect
to multifamily properties would have a substantially greater impact on the Class
A-1A Certificates than if such Class received principal distributions from other
property types as well. However, on and after any Distribution Date on which the
Certificate Balances of the Class A-M through Class P Certificates have been
reduced to zero or the aggregate Appraisal Reduction in effect is greater than
or equal to Certificate Balances of such Certificates, the Class A-1A
Certificates will receive principal distributions from the collections on the
Mortgage Pool, pro rata, with the Class A-1, Class A-2, Class A-3, Class A-AB
and Class A-4 Certificates without regard to Loan Group.
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Although the borrower under an ARD Loan may have incentives to prepay
the ARD Loan on its Anticipated Repayment Date, there is no assurance that the
borrower will choose to or will be able to prepay an ARD Loan on its Anticipated
Repayment Date. The failure of the borrower to prepay an ARD Loan on its
Anticipated Repayment Date will not be an event of default under the terms of
that mortgage loan. However, the Pooling and Servicing Agreement will require
action to be taken to enforce the Trust's right to apply excess cash flow
generated by the mortgaged property to the payment of principal in accordance
with the terms of the ARD Loan documents.
Prepayments and, assuming the respective maturity dates therefor have
not occurred, liquidations of the mortgage loans will result in distributions on
the 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 the Principal Balance Certificates. Any early termination of
the Trust as described in this prospectus supplement under "Description of the
Offered Certificates--Optional Termination" will also shorten the weighted
average lives of those certificates then outstanding. Defaults on the mortgage
loans, particularly at or near their maturity dates, may result in significant
delays in payments of principal on the mortgage loans, and, accordingly, on the
Principal Balance Certificates, while work-outs are negotiated or foreclosures
are completed, and such delays will tend to lengthen the weighted average lives
of those certificates. See "Servicing of the Mortgage Loans--Mortgage Loan
Modifications" in this prospectus supplement.
The extent to which the yield to maturity of any offered certificate
may vary from the anticipated yield will depend upon the degree to which such
certificate is purchased at a discount or premium and when, and to what degree,
payments of principal on the mortgage loans in turn are distributed or otherwise
result in a reduction of the aggregate Certificate Balance or Notional Amount of
its Class. An investor should consider, in the case of any such 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 any
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, if an offered certificate is purchased at a discount or
premium, the earlier a payment of principal on the mortgage loans is distributed
or otherwise results in reduction of the Certificate Balance or Notional Amount
of the related Class, the greater will be the effect on the yield to maturity of
such certificate. As a result, the effect on an investor's yield of principal
payments on the mortgage loans 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 such
principal payments. With respect to the Class A Senior, Class A-M, Class A-J,
Class B, Class C, Class D, Class E, Class F, Class G, Class H, Class X-1 and
Class X-2 Certificates, the allocation of a portion of collected Prepayment
Premiums or Yield Maintenance Charges to the certificates as described in this
prospectus supplement is intended to mitigate those risks; however, such
allocation, if any, may be insufficient to offset fully the adverse effects on
yield that such prepayments may have. The Prepayment Premium or Yield
Maintenance Charge payable, if any, with respect to any mortgage loan, is
required to be calculated as presented in "Appendix II - Certain Characteristics
of the Mortgage Loans."
Because the rate of principal payments on 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 in particular. We are 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.
UNPAID DISTRIBUTABLE CERTIFICATE INTEREST
If the portion of the Available Distribution Amount distributable in
respect of interest on any Class of certificates on any Distribution Date is
less than the Distributable Certificate Interest Amount then payable for that
Class, the shortfall will be distributable to holders of the Class of
certificates on subsequent Distribution Dates, to the extent of the Available
Distribution Amount. Any such shortfall (which would not include interest
shortfalls in connection with a Principal Prepayment accompanied by less than a
full month's interest) may adversely affect the yield to maturity of the Class
of certificates for as long as it is outstanding.
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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. Realized Losses and Expense Losses will
generally be applied in reverse sequential order, that is, first to the Class P
Certificates, and then to the other respective Classes of Principal Balance
Certificates, in ascending alphabetical order of Class designation (provided
that the Class A-M Certificates will be senior in right to the Class A-J
Certificates) -- from the Class O Certificates to the Class B Certificates, then
the Class A-J Certificates, then the Class A-M Certificates, then pro rata among
the Class A-1, Class A-2, Class A-3, Class A-AB, Class A-4 and Class A-1A
Certificates. As to each of such Classes, Realized Losses and Expense Losses
will reduce (i) first, the Certificate Balance of such Class until such
Certificate Balance is reduced to zero (in the case of the Principal Balance
Certificates); (ii) second, Unpaid Interest owing to such Class; and (iii)
third, Distributable Certificate Interest Amounts owing to such Class, provided,
that such reductions shall be allocated among the Class A-1 Certificates, Class
A-2 Certificates, Class A-3 Certificates, Class A-AB Certificates, Class A-4
Certificates and Class A-1A Certificates and, as to their interest entitlements
only, the Class X-1 Certificates and Class X-2 Certificates, pro rata, based
upon their outstanding Certificate Balances or accrued interest, as the case may
be. Net Aggregate Prepayment Interest Shortfalls will be borne by the holders of
each Class of certificates, as described in this prospectus supplement, in each
case reducing interest otherwise payable thereon. Shortfalls arising from
delinquencies and defaults, to the extent the master servicer determines that
P&I Advances would be nonrecoverable, Appraisal Reductions, Expense Losses and
Realized Losses generally will result in, among other things, a shortfall in
current or ultimate distributions to the most subordinate Class of certificates
outstanding.
RELEVANT FACTORS
The rate and timing of principal payments and defaults and the
severity of losses on the mortgage loans may be affected by a number of factors
including, without limitation, payments of principal arising from repurchases of
mortgage loans (including payments of principal arising from purchases of
mortgage loans in connection with breaches of representations and warranties and
otherwise), prevailing interest rates, the terms of the mortgage loans--for
example, provisions prohibiting Principal Prepayments for certain periods and/or
requiring the payment of Prepayment Premiums or Yield Maintenance Charges,
due-on-sale and due-on-encumbrance provisions, provisions requiring that upon
occurrence of certain events, funds held in escrow or proceeds from letters of
credit be applied to principal 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
rental units or comparable commercial space, as applicable, 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" in this prospectus supplement and "Risk Factors" in the
prospectus.
The rate of prepayment on the Mortgage Pool is likely to be affected
by prevailing market interest rates for mortgage loans of a comparable type,
term and risk level. When the prevailing market interest rate is below a
mortgage interest rate, the related borrower has an incentive to refinance its
mortgage loan. A requirement that a prepayment be accompanied by a Prepayment
Premium or Yield Maintenance Charge may not provide a sufficient economic
disincentive to deter a borrower from refinancing at a more favorable interest
rate.
Depending on prevailing market interest rates, the outlook for market
interest rates and economic conditions generally, some borrowers may sell or
refinance 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.
We make no representation 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 whether a
default will have occurred as of any date or as to the overall rate of
prepayment or default on the mortgage loans.
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WEIGHTED AVERAGE LIFE
Weighted average life refers to the average amount of time from the
date of issuance of a security until each dollar of principal of such security
will be repaid to the investor. The weighted average life of any Principal
Balance Certificate will be influenced by, among other things, the rate at which
principal on the mortgage loans is paid or otherwise collected or advanced and
applied to reduce the Certificate Balance of such certificate. Furthermore,
because the amount of principal that will be distributed to the Class A-1, Class
A-2, Class A-3, Class A-AB, Class A-4, and Class A-1A Certificates will
generally be based upon the particular Loan Group in which the related mortgage
loan is deemed to be included, the weighted average life on the Class A-1, Class
A-2, Class A-3, Class A-AB and Class A-4 Certificates will be particularly
sensitive to prepayments on mortgage loans in Loan Group 1 and the weighted
average life on the Class A-1A Certificates will be particularly sensitive to
prepayments on mortgage loans in Loan Group 2.
Prepayments on mortgage loans are commonly measured relative to a
prepayment standard or model. The prepayment model used in this prospectus
supplement is the Constant Prepayment Rate or CPR model. The CPR model
represents an assumed constant rate of prepayment each month expressed as a
percentage of the then outstanding principal balance of all of the mortgage
loans, which are past their lock-out, defeasance and yield maintenance periods.
We make no representation as to the appropriateness of using the CPR model for
purposes of analyzing an investment in the offered certificates.
The following tables indicate the percent of the initial Certificate
Balance of each Class of offered certificates after each of the dates shown and
the corresponding weighted average life of each such Class of the certificates,
if the Mortgage Pool were to prepay at the indicated levels of CPR, and sets
forth the percentage of the initial Certificate Balance of such certificates
that would be outstanding after each of the dates shown. The tables below have
also been prepared generally on the basis of the Structuring Assumptions.
The mortgage loans do not have all of the characteristics of the
Structuring Assumptions. To the extent that the mortgage loans have
characteristics that differ from those assumed in preparing the tables, the
Classes of Certificates analyzed in the tables may mature earlier or later than
indicated by the tables and therefore will have a corresponding decrease or
increase in weighted average life. Additionally, mortgage loans generally do not
prepay at any constant rate. Accordingly, it is highly unlikely that the
mortgage loans will prepay in a manner consistent with the Structuring
Assumptions. Furthermore, it is unlikely that the mortgage loans will experience
no defaults or losses. 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 shorten or extend
the weighted average lives, shown in the following tables. These variations may
occur even if the average prepayment experience of the mortgage loans were to
equal any of the specified CPR percentages. Investors are urged to conduct their
own analyses of the rates at which the mortgage loans may be expected to prepay.
For the purposes of each table, the weighted average life of a
certificate is determined by:
o multiplying the amount of each reduction in the Certificate
Balance thereon by the number of years from the date of issuance
of the certificate to the related Distribution Date;
o summing the results; and
o dividing the sum by the aggregate amount of the reductions in the
Certificate Balance of such certificate.
The characteristics of the mortgage loans differ in substantial
respects from those assumed in preparing the tables below, and the tables are
presented for illustrative purposes only. In particular, it is unlikely that the
Mortgage Pool will not experience any defaults or losses, or that the Mortgage
Pool or any mortgage loan will prepay at any constant rate. Therefore, there can
be no assurance that the mortgage loans will prepay at any particular rate.
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PERCENT OF INITIAL CERTIFICATE BALANCE OUTSTANDING FOR THE
CLASS A-1 CERTIFICATES AT THE RESPECTIVE PERCENTAGES OF CPR
DISTRIBUTION DATE 0% 25% 50% 75% 100%
----------------------------- ---- ---- ---- ---- ----
Closing Date 100% 100% 100% 100% 100%
April 2008 90% 89% 88% 88% 87%
April 2009 79% 78% 77% 76% 76%
April 2010 65% 64% 63% 62% 62%
April 2011 49% 46% 44% 42% 38%
April 2012 0% 0% 0% 0% 0%
Weighted average life (years) 3.39 3.31 3.24 3.19 3.09
PERCENT OF INITIAL CERTIFICATE BALANCE OUTSTANDING FOR THE
CLASS A-2 CERTIFICATES AT THE RESPECTIVE PERCENTAGES OF CPR
DISTRIBUTION DATE 0% 25% 50% 75% 100%
----------------------------- ---- ---- ---- ---- ----
Closing Date 100% 100% 100% 100% 100%
April 2008 100% 100% 100% 100% 100%
April 2009 100% 100% 100% 100% 100%
April 2010 100% 100% 100% 100% 100%
April 2011 100% 100% 100% 100% 100%
April 2012 0% 0% 0% 0% 0%
Weighted average life (years) 4.81 4.80 4.78 4.76 4.56
PERCENT OF INITIAL CERTIFICATE BALANCE OUTSTANDING FOR THE
CLASS A-3 CERTIFICATES AT THE RESPECTIVE PERCENTAGES OF CPR
DISTRIBUTION DATE 0% 25% 50% 75% 100%
----------------------------- ---- ---- ---- ---- ----
Closing Date 100% 100% 100% 100% 100%
April 2008 100% 100% 100% 100% 100%
April 2009 100% 100% 100% 100% 100%
April 2010 100% 100% 100% 100% 100%
April 2011 100% 100% 100% 100% 100%
April 2012 100% 100% 100% 100% 100%
April 2013 100% 96% 92% 85% 60%
April 2014 21% 21% 21% 21% 21%
April 2015 0% 0% 0% 0% 0%
Weighted average life (years) 6.80 6.74 6.68 6.59 6.32
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PERCENT OF INITIAL CERTIFICATE BALANCE OUTSTANDING FOR THE
CLASS A-AB CERTIFICATES AT THE RESPECTIVE PERCENTAGES OF CPR
DISTRIBUTION DATE 0% 25% 50% 75% 100%
----------------------------- ---- ---- ---- ---- ----
Closing Date 100% 100% 100% 100% 100%
April 2008 100% 100% 100% 100% 100%
April 2009 100% 100% 100% 100% 100%
April 2010 100% 100% 100% 100% 100%
April 2011 100% 100% 100% 100% 100%
April 2012 99% 99% 99% 99% 99%
April 2013 81% 81% 81% 81% 81%
April 2014 64% 64% 64% 64% 64%
April 2015 45% 45% 45% 45% 45%
April 2016 10% 10% 10% 10% 10%
April 2017 0% 0% 0% 0% 0%
Weighted average life (years) 7.57 7.56 7.56 7.56 7.56
PERCENT OF INITIAL CERTIFICATE BALANCE OUTSTANDING FOR THE
CLASS A-4 CERTIFICATES AT THE RESPECTIVE PERCENTAGES OF CPR
DISTRIBUTION DATE 0% 25% 50% 75% 100%
----------------------------- ---- ---- ---- ---- ----
Closing Date 100% 100% 100% 100% 100%
April 2008 100% 100% 100% 100% 100%
April 2009 100% 100% 100% 100% 100%
April 2010 100% 100% 100% 100% 100%
April 2011 100% 100% 100% 100% 100%
April 2012 100% 100% 100% 100% 100%
April 2013 100% 100% 100% 100% 100%
April 2014 100% 100% 100% 100% 100%
April 2015 100% 100% 100% 100% 100%
April 2016 100% 100% 100% 100% 100%
April 2017 0% 0% 0% 0% 0%
Weighted average life (years) 9.77 9.76 9.74 9.72 9.55
PERCENT OF INITIAL CERTIFICATE BALANCE OUTSTANDING FOR THE
CLASS A-1A CERTIFICATES AT THE RESPECTIVE PERCENTAGES OF CPR
DISTRIBUTION DATE 0% 25% 50% 75% 100%
----------------------------- ---- ---- ---- ---- ----
Closing Date 100% 100% 100% 100% 100%
April 2008 100% 100% 100% 100% 100%
April 2009 99% 99% 99% 99% 99%
April 2010 99% 99% 99% 99% 99%
April 2011 98% 98% 98% 98% 98%
April 2012 82% 82% 82% 82% 82%
April 2013 81% 81% 81% 81% 81%
April 2014 80% 80% 80% 80% 80%
April 2015 79% 79% 79% 79% 79%
April 2016 78% 78% 78% 78% 78%
April 2017 0% 0% 0% 0% 0%
Weighted average life (years) 8.73 8.72 8.71 8.69 8.53
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PERCENT OF INITIAL CERTIFICATE BALANCE OUTSTANDING FOR THE
CLASS A-M CERTIFICATES AT THE RESPECTIVE PERCENTAGES OF CPR
DISTRIBUTION DATE 0% 25% 50% 75% 100%
----------------------------- ---- ---- ---- ---- ----
Closing Date 100% 100% 100% 100% 100%
April 2008 100% 100% 100% 100% 100%
April 2009 100% 100% 100% 100% 100%
April 2010 100% 100% 100% 100% 100%
April 2011 100% 100% 100% 100% 100%
April 2012 100% 100% 100% 100% 100%
April 2013 100% 100% 100% 100% 100%
April 2014 100% 100% 100% 100% 100%
April 2015 100% 100% 100% 100% 100%
April 2016 100% 100% 100% 100% 100%
April 2017 0% 0% 0% 0% 0%
Weighted average life (years) 9.90 9.90 9.90 9.90 9.77
PERCENT OF INITIAL CERTIFICATE BALANCE OUTSTANDING FOR THE
CLASS A-J CERTIFICATES AT THE RESPECTIVE PERCENTAGES OF CPR
DISTRIBUTION DATE 0% 25% 50% 75% 100%
----------------------------- ----- ----- ----- ---- ----
Closing Date 100% 100% 100% 100% 100%
April 2008 100% 100% 100% 100% 100%
April 2009 100% 100% 100% 100% 100%
April 2010 100% 100% 100% 100% 100%
April 2011 100% 100% 100% 100% 100%
April 2012 100% 100% 100% 100% 100%
April 2013 100% 100% 100% 100% 100%
April 2014 100% 100% 100% 100% 100%
April 2015 100% 100% 100% 100% 100%
April 2016 100% 100% 100% 100% 100%
April 2017 41% 36% 30% 23% 5%
April 2018 0% 0% 0% 0% 0%
Weighted average life (years) 10.03 10.02 10.01 9.99 9.89
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DESCRIPTION OF THE MORTGAGE POOL
GENERAL
The Mortgage Pool will consist of two hundred thirty-seven (237)
fixed-rate, first mortgage loans with an aggregate Cut-off Date Balance of
$2,106,003,972, subject to a permitted variance of plus or minus 5%. The Cut-off
Date Balances of the mortgage loans range from $548,850 to $150,000,000, and the
mortgage loans have an average Cut-off Date Balance of $8,886,093.
For purposes of calculating distributions on certain Classes of
certificates, the mortgage loans in the pool of mortgage loans backing the
offered certificates will be divided into Loan Group 1 and Loan Group 2.
Loan Group 1 will consist of all of the mortgage loans that are
secured by property types other than twenty-two (22) mortgage loans that are
secured by multifamily properties and two (2) mortgage loans that are secured by
manufactured housing community properties. Loan Group 1 will consist of two
hundred thirteen (213) mortgage loans, with an Initial Loan Group 1 Balance of
$1,955,901,313, subject to a permitted variance of plus or minus 5%. Loan Group
1 represents approximately 92.9% of the Initial Pool Balance.
Loan Group 2 will consist of twenty-two (22) of the mortgage loans
that are secured by multifamily properties and two (2) mortgage loans that are
secured by manufactured housing community properties and have an Initial Loan
Group 2 Balance of $150,102,659. Loan Group 2 represents approximately 7.1% of
the initial outstanding pool balance and approximately 100% of the principal
balance of all the mortgage loans secured by multifamily and manufactured
housing community properties.
The Cut-off Date Balances of the mortgage loans in Loan Group 1 range
from $548,850 to $150,000,000 and the mortgage loans in Loan Group 1 had an
average Cut-off Date Balance of $9,182,635. The Cut-off Date Balances of the
mortgage loans in Loan Group 2 range from $894,281 to $24,000,000 and the
mortgage loans in Loan Group 2 had an average Cut-off Date Balance of
$6,254,277.
Generally, for purposes of the presentation of Mortgage Pool
information in this prospectus supplement, multiple mortgaged properties
securing a single mortgage loan have been treated as multiple
cross-collateralized and cross-defaulted mortgage loans, each secured by one of
the related mortgaged properties and each having a principal balance in an
amount equal to an allocated portion of the aggregate indebtedness represented
by such obligation. In addition, for purposes of the presentation of Mortgage
Pool information in this prospectus supplement, certain multiple mortgaged
properties securing a single mortgage loan were treated as a single mortgaged
property if, generally, such mortgaged properties were in close proximity to
each other and economically dependent upon each other in order to provide
sufficient income to pay debt service on the related mortgage loan. All
numerical information concerning the mortgage loans contained in this prospectus
supplement is approximate.
A description of the underwriting standards for each of Bear Stearns
Commercial Mortgage, Inc., Morgan Stanley Mortgage Capital Inc., Wells Fargo
Bank, National Association and Principal Commercial Funding II, LLC are set
forth in this prospectus supplement under "The Sponsors, Mortgage Loan Sellers
and Originators--Bear Stearns Commercial Mortgage, Inc.--Underwriting
Standards," "--Morgan Stanley Mortgage Capital Inc.--Underwriting Standards,"
"--Wells Fargo Bank, National Association--Underwriting Standards" and
"--Principal Commercial Funding II, LLC--Underwriting Standards," respectively.
The mortgage loans included in this transaction were selected for this
transaction from mortgage loans specifically originated for securitizations of
this type by the sponsors taking into account Rating Agency criteria and
feedback, subordinate investor feedback, property type and geographic location.
The mortgage loans were originated between September 23, 2003 and
March 15, 2007. As of the Cut-off Date, none of the mortgage loans were 30 days
or more delinquent, or had been 30 days or more delinquent during the 12
calendar months preceding the Cut-off Date. Brief summaries of the material
terms of the mortgage loans associated with the ten (10) largest mortgage loans
(including crossed mortgage loans) in the Mortgage Pool are contained in
Appendix IV attached to this prospectus supplement.
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Two hundred thirty-seven (237) mortgaged properties, securing mortgage
loans representing 94.7% of the Initial Pool Balance (which include two hundred
fourteen (214) mortgaged properties in Loan Group 1, securing mortgage loans
representing 94.3% of the Initial Loan Group 1 Balance, and twenty-three (23)
mortgaged properties in Loan Group 2, securing mortgage loans representing 99.3%
of the Initial Loan Group 2 Balance), are subject to a mortgage, deed of trust
or similar security instrument that creates a first mortgage lien on a fee
simple estate in such mortgaged property. Six (6) mortgaged properties, securing
mortgage loans representing 3.5% of the Initial Pool Balance (which include five
(5) mortgaged properties in Loan Group 1, securing mortgage loans representing
3.7% of the Initial Loan Group 1 Balance, and one (1) mortgaged property in Loan
Group 2, securing a mortgage loan representing 0.7% of the Initial Loan Group 2
Balance), are subject to a mortgage, deed of trust or similar security
instrument that creates a first mortgage lien on a fee interest in a portion of
the related mortgaged property and a leasehold interest in the remainder of the
related mortgaged properties. Four (4) mortgaged properties, securing mortgage
loans representing 1.9% of the Initial Pool Balance (securing mortgage loans
representing 2.0% of the Initial Loan Group 1 Balance), are subject to a
mortgage, deed of trust or similar security instrument that creates a first
mortgage lien on a leasehold interest in those mortgaged properties.
On the Closing Date, we will acquire the mortgage loans from the
mortgage loan sellers, in each case pursuant to a Mortgage Loan Purchase
Agreement to be entered into between us and the particular seller. We will then
transfer the mortgage loans, without recourse, to the trustee for the benefit of
the Certificateholders. See "--The Sponsors, Mortgage Loan Sellers and
Originators" and "--Sale of the Mortgage Loans" below.
MATERIAL TERMS AND CHARACTERISTICS OF THE MORTGAGE LOANS
Mortgage Rates; Calculations of Interest
The mortgage loans bear interest at mortgage rates that will remain
fixed for their entire terms. Other than ARD Loans, no mortgage loan permits
negative amortization or the deferral of accrued interest. Two hundred thirty
(230) mortgage loans, representing 89.9% of the Initial Pool Balance (which
include two hundred seven (207) mortgage loans in Loan Group 1, representing
89.4% of the Initial Loan Group 1 Balance, and twenty-three (23) mortgage loans
in Loan Group 2, representing 96.3% of the Initial Loan Group 2 Balance), accrue
interest on the basis of the actual number of days elapsed each month in a
360-day year. Seven (7) mortgage loans, representing 10.1% of the Initial Pool
Balance (which include six (6) mortgage loans in Loan Group 1, representing
10.6% of the Initial Loan Group 1 Balance, and one (1) mortgage loan in Loan
Group 2, representing 3.7% of the Initial Loan Group 2 Balance), accrue interest
on the basis of a 360-day year consisting of twelve 30-day months.
Property Types
The mortgage loans consist of the following property types:
o Office - Forty-two (42) of the mortgaged properties, which secure
40.8% of the Initial Pool Balance (securing mortgage loans
representing 43.9% of the Initial Loan Group 1 Balance), are
office properties;
o Retail - Ninety-seven (97) of the mortgaged properties, which
secure 23.6% of the Initial Pool Balance (securing mortgage loans
representing 25.4% of the Initial Loan Group 1 Balance), are
retail properties;
o Industrial - Thirty-six (36) of the mortgaged properties, which
secure 11.6% of the Initial Pool Balance (securing mortgage loans
representing 12.5% of the Initial Loan Group 1 Balance), are
industrial properties;
o Hospitality -Fifteen (15) of the mortgaged properties, which
secure 7.6% of the Initial Pool Balance (securing mortgage loans
representing 8.2% of the Initial Loan Group 1 Balance), are
hospitality properties;
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o Multifamily - Twenty-two (22) of the mortgaged properties, which
secure 6.9% of the Initial Pool Balance (securing mortgage loans
representing 96.9% of the Initial Loan Group 2 Balance), are
multifamily properties;
o Mixed Use - Sixteen (16) of the mortgaged properties, which
secure 5.5% of the Initial Pool Balance (securing mortgage loans
representing 5.9% of the Initial Loan Group 1 Balance), are mixed
use properties;
o Other - Eight (8) of the mortgaged properties, which secure 2.4%
of the Initial Pool Balance (securing mortgage loans representing
2.6% of the Initial Loan Group 1 Balance), are a type of property
other than those set forth in this paragraph;
o Self Storage - Nine (9) of the mortgaged properties, which secure
1.3% of the Initial Pool Balance (securing mortgage loans
representing 1.4% of the Initial Loan Group 1 Balance), are self
storage properties; and
o Manufactured Housing Community - Two (2) of the mortgaged
properties, which secure 0.2% of the Initial Pool Balance
(securing mortgage loans representing 3.1% of the Initial Loan
Group 2 Balance), are manufactured housing community properties.
For information regarding the property types in Loan Group 1 or Loan
Group 2, see Appendix I to this prospectus supplement.
Property Location
The following geographic areas contain the largest concentrations of
mortgaged properties securing the mortgage loans: New York, California, Texas,
New Jersey and Missouri.
o Twenty-four (24) mortgaged properties, representing security for
16.0% of the Initial Pool Balance, are located in New York (which
include twenty-one (21) mortgaged properties in Loan Group 1,
representing security for 16.4% of the Initial Loan Group 1
Balance, and three (3) mortgaged properties in Loan Group 2,
representing security for 10.9% of the Initial Loan Group 2
Balance).
o Forty-nine (49) mortgaged properties, representing security for
12.6% of the Initial Pool Balance, are located in California
(which include forty-four (44) mortgaged properties in Loan Group
1, representing security for 12.4% of the Initial Loan Group 1
Balance, and five (5) mortgaged properties in Loan Group 2,
representing security for 15.9% of the Initial Loan Group 2
Balance). Of the mortgaged properties located in California,
thirty-one (31) of such mortgaged properties, representing
security for 8.3% of the Initial Pool Balance, are located in
Southern California (which include twenty-seven (27) mortgaged
properties in Loan Group 1, representing security for 7.8% of the
Initial Loan Group 1 Balance, and four (4) mortgaged properties
in Loan Group 2, representing security for 14.4% of the Initial
Loan Group 2 Balance), and eighteen (18) mortgaged properties,
representing security for 4.4% of the Initial Pool Balance, are
located in Northern California (which include seventeen (17)
mortgaged properties in Loan Group 1, representing security for
4.6% of the Initial Loan Group 1 Balance, and one (1) mortgaged
property in Loan Group 2, representing security for 1.5% of the
Initial Loan Group 2 Balance). Northern California includes areas
with zip codes above 93600 and Southern California includes areas
with zip codes of 93600 and below;
o Twenty-two (22) mortgaged properties, representing security for
9.5% of the Initial Pool Balance, are located in Texas (and
representing security for 10.3% of the Initial Loan Group 1
Balance);
o Thirteen (13) mortgaged properties, representing security for
7.0% of the Initial Pool Balance, are located in New Jersey
(which include nine (9) mortgaged properties in Loan Group 1,
representing security for 6.3% of the Initial Loan Group 1
Balance, and four (4) mortgaged properties in Loan Group 2,
representing security for 16.2% of the Initial Loan Group 2
Balance); and
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o Three (3) mortgaged properties, representing security for 5.7% of
the Initial Pool Balance, are located in Missouri (representing
security for 6.2% of the Initial Loan Group 1 Balance).
For information regarding the location of the properties securing the
mortgage loans included in Loan Group 1 and Loan Group 2, see Appendix I to this
prospectus supplement.
Due Dates
Two hundred thirty-one (231) of the mortgage loans, representing 93.8%
of the Initial Pool Balance (which include two hundred eight (208) mortgage
loans in Loan Group 1, representing 93.5% of the Initial Loan Group 1 Balance,
and twenty-three (23) mortgage loans in Loan Group 2 representing 98.5% of the
Initial Loan Group 2 Balance), have Due Dates on the 1st day of each calendar
month. One (1) of the mortgage loans, representing 0.7% of the Initial Pool
Balance (and representing 0.7% of the Initial Loan Group 1 Balance), has a Due
Date on the 3rd day of each calendar month. Five (5) mortgage loans,
representing 5.5% of the Initial Pool Balance (which include four (4) mortgage
loans in Loan Group 1, representing 5.8% of the Initial Loan Group 1 Balance,
and one (1) mortgage loan in Loan Group 2 representing 1.5% of the Initial Loan
Group 2 Balance), have Due Dates on the 8th day of each calendar month. The
mortgage loans have various grace periods prior to the imposition of late
payment charges, including (i) two hundred thirty-four (234) mortgage loans,
representing 99.4% of the Initial Pool Balance (which include two hundred ten
(210) mortgage loans in Loan Group 1, representing 99.3% of the Initial Loan
Group 1 Balance, and twenty-four (24) mortgage loans in Loan Group 2
representing 100% of the Initial Loan Group 2 Balance), with grace periods prior
to the imposition of late payment charges of 0 to 5 calendar days or 5 business
days; (ii) one (1) mortgage loan, representing 0.3% of the Initial Pool Balance
(and representing 0.3% of the Initial Loan Group 1 Balance), with a grace period
prior to the imposition of late payment charges of 10 calendar days; and (iii)
two (2) mortgage loans, representing 0.3% of the Initial Pool Balance (and
representing 0.4% of the Initial Loan Group 1 balance), with a grace period
prior to the imposition of late payment charges of 15 calendar days. Certain
states may have provisions under applicable law that permit longer grace periods
than the grace periods shown in this prospectus supplement, which are based on
the related mortgage loan documents.
Amortization
The mortgage loans have the following amortization features:
o Two hundred thirty-three (233) mortgage loans, representing 99.6%
of the Initial Pool Balance (which include two hundred ten (210)
mortgage loans in Loan Group 1, representing 99.7% of the Initial
Loan Group 1 Balance, and twenty-three (23) mortgage loans in
Loan Group 2 representing 98.8% of the Initial Loan Group 2
Balance), are Balloon Loans. For purposes of this prospectus
supplement, we consider a mortgage loan to be a Balloon Loan if
its principal balance is not scheduled to be fully or
substantially amortized by the loan's stated maturity date or
Anticipated Repayment Date, as applicable. Thirty-nine (39) of
these mortgage loans, representing 30.7% of the Initial Pool
Balance (and representing 33.0% of the Initial Loan Group 1
Balance), are mortgage loans that have an Anticipated Repayment
Date that provide for an increase in the mortgage rate and/or
principal amortization at a specified date prior to stated
maturity. These ARD Loans are structured to encourage the
borrower to repay the mortgage loan in full by the specified date
(which is prior to the mortgage loan's stated maturity date) upon
which these increases occur.
o Also included in these Balloon Loans are sixty (60) mortgage
loans, representing 53.7% of the Initial Pool Balance (which
include fifty-six (56) mortgage loans in Loan Group 1,
representing 55.4% of the Initial Loan Group 1 Balance, and four
(4) mortgage loans in Loan Group 2 representing 31.8% of the
Initial Loan Group 2 Balance), that provide for monthly payments
of interest only for their entire respective terms and
fifty-seven (57) mortgage loans, representing 19.9% of the
Initial Pool Balance (which include fifty-one (51) mortgage loans
in Loan Group 1, representing 18.4% of the Initial Loan Group 1
Balance, and six (6) mortgage loans in Loan Group 2 representing
39.7% of the Initial Loan Group 2 Balance), that currently
provide for monthly payments of interest only for a portion of
their respective terms ranging from 12 months to 84 months and
then provide for the monthly payment of principal and interest
over their respective remaining terms.
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Prepayment Restrictions
As of the Cut-off Date, each of the mortgage loans restricted
voluntary Principal Prepayments in one of the following ways:
o One hundred thirty-five (135) mortgage loans, representing 54.3%
of the Initial Pool Balance (which include one hundred twenty
(120) mortgage loans in Loan Group 1, representing 54.2% of the
Initial Loan Group 1 Balance, and fifteen (15) mortgage loans in
Loan Group 2, representing 56.0% of the Initial Loan Group 2
Balance), prohibit voluntary Principal Prepayments during the
Lock-out Period, but permit the related borrower, after an
initial period of at least two years following the date of
issuance of the certificates, to defease the mortgage loan by
pledging "government securities" as defined in the Investment
Company Act of 1940 that provide for payment on or prior to each
due date through and including the maturity date (or such earlier
due date on which the mortgage loan first becomes freely
prepayable) of amounts at least equal to the amounts that would
have been payable on those dates under the terms of the mortgage
loans and obtaining the release of the mortgaged property from
the lien of the mortgage;
o Forty-four (44) mortgage loans, representing 20.9% of the Initial
Pool Balance (which include forty (40) mortgage loans in Loan
Group 1, representing 20.6% of the Initial Loan Group 1 Balance,
and four (4) mortgage loans in Loan Group 2, representing 24.9%
of the Initial Loan Group 2 Balance), prohibit voluntary
Principal Prepayments during a Lock-out Period, and following the
Lock-out Period provide for a Prepayment Premium or Yield
Maintenance Charge calculated on the basis of the greater of a
yield maintenance formula and 1.0% of the amount prepaid, and
also permit the related borrower, after an initial period of at
least two years following the date of the issuance of the
certificates, to defease the mortgage loan by pledging
"government securities" as defined above;
o Forty-six (46) mortgage loans, representing 19.8% of the Initial
Pool Balance (which include forty-one (41) mortgage loans in Loan
Group 1, representing 19.9% of the Initial Loan Group 1 Balance,
and five (5) mortgage loans in Loan Group 2, representing 19.1%
of the Initial Loan Group 2 Balance), prohibit voluntary
Principal Prepayments during a Lock-out Period, and following the
Lock-out Period provide for a Prepayment Premium or Yield
Maintenance Charge calculated on the basis of the greater of a
yield maintenance formula and 1.0% of the amount prepaid;
o Five (5) mortgage loans, representing 2.7% of the Initial Pool
Balance (and representing 2.9% of the Initial Loan Group 1
Balance), prohibit voluntary Principal Prepayments during a
Lock-out Period, and following the Lock-out Period permit the
prepayment of the related mortgage loan without the payment of
any Prepayment Premium;
o Two (2) mortgage loans, representing 1.1% of the Initial Pool
Balance (and representing 1.2% of the Initial Loan Group 1
Balance), have no Lock-out Period and permit voluntary Principal
Prepayments for the first 28 payment periods if accompanied by a
Prepayment Premium or Yield Maintenance Charge calculated on the
basis of the greater of a yield maintenance formula and 1.0% of
the amount prepaid, and following such payment periods provide
for a Prepayment Premium or Yield Maintenance Charge calculated
on the basis of the greater of a yield maintenance formula and
1.0% of the amount prepaid, and also permit the related borrower,
after an initial period of at least two years following the date
of the issuance of the certificates, to defease the mortgage loan
by pledging "government securities" as defined above;
o One (1) mortgage loan, representing 0.7% of the initial
outstanding pool balance (and representing 0.8% of the initial
outstanding loan group 1 balance), has no lock-out period and
permits voluntary principal prepayments if accompanied by a
prepayment premium or yield maintenance charge calculated on the
basis of the greater of a yield maintenance formula and (i) 3.0%
of the amount prepaid with respect to a prepayment made prior to
March 1, 2009 or (ii) 1.0% of the amount prepaid with respect to
a prepayment made on or after March 1, 2009;
o Two (2) mortgage loans, representing 0.3% of the Initial Pool
Balance (and representing 0.3% of the Initial Loan Group 1
Balance), have no Lock-out Period and permit voluntary Principal
Prepayments if
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accompanied by a Prepayment Premium or Yield Maintenance Charge
calculated on the basis of the greater of a yield maintenance
formula and 1.0% of the amount prepaid;
o One (1) mortgage loan, representing 0.1% of the Initial Pool
Balance (and representing 0.2% of the Initial Loan Group 1
Balance), prohibits voluntary Principal Prepayments during a
Lock-out Period, and following the Lock-out Period provides for a
Prepayment Premium or Yield Maintenance Charge calculated on the
basis of the greater of a yield maintenance formula and 0.5% of
the amount prepaid; and
o One (1) mortgage loan, representing 0.1% of the Initial Pool
Balance (and representing 0.1% of the Initial Loan Group 1
Balance), has no Lock-out Period and permits the related borrower
to prepay all or a portion of the mortgage loan subject to the
Prepayment Premium calculated on the basis of 3.0% of the amount
prepaid with respect to any prepayment made on or prior to
January 1, 2008; 2.0% of the amount prepaid with respect to any
prepayment made thereafter through January 1, 2009; and 1.0% of
the amount prepaid with respect to any prepayment made
thereafter.
Notwithstanding the above, the mortgage loans generally (i) permit
prepayment in connection with casualty or condemnation and certain other matters
without payment of a prepayment premium or yield maintenance charge and (ii)
provide for a specified period commencing prior to and including the maturity
date or Anticipated Repayment Date during which the related borrower may prepay
the mortgage loan without payment of a prepayment premium or yield maintenance
charge. In addition, the yield maintenance formulas are not the same for all of
the mortgage loans that have Yield Maintenance Charges. See the footnotes to
Appendix II of this prospectus supplement for more details about the various
yield maintenance formulas.
With respect to the prepayment and defeasance provisions set forth
above, certain of the mortgage loans also include provisions described below:
o One (1) mortgage loan, representing 3.2% of the Initial Pool
Balance (and representing 3.5% of the Initial Loan Group 1
Balance), is secured by multiple parcels and permits the release
of two (2) of the parcels from the lien of the related mortgage
subject to the satisfaction of certain conditions including, but
not limited to, (i) the payment of $379,500 with respect to the
parcel identified as Tract 3 and $796,950 with respect to the
parcel identified as Tract 4 plus a Prepayment Premium equal to
the greater of a yield maintenance formula and 3.0% of the amount
prepaid, (ii) the aggregate debt service coverage ratio with
respect to the remaining parcels following the release being
equal to or greater than the greater of (a) 1.62x and (b) the
aggregate debt service coverage ratio immediately prior to the
release, (iii) the loan-to-value ratio of the remaining parcels
following the release being equal to or less than the lesser of
(a) 66% and (b) the loan-to-value ratio immediately prior to the
release and (iv) borrower having provided to lender written
notice of the release no later than (a) September 29, 2011 with
respect to the parcel identified as Tract 3 and (b) April 10,
2008 with respect to the parcel identified as Tract 4;
o Two (2) mortgage loans, representing 1.3% of the Initial Pool
Balance (and representing 1.4% of the Initial Loan Group 1
Balance) are cross-collateralized with each other and permit the
release of either mortgaged property from the lien of the
cross-collateralized loan after the applicable Lock-out Period
subject to the satisfaction of certain conditions including, but
not limited to, (i) payment of the entire outstanding principal
balance of the related mortgage loan plus a Prepayment Premium
equal to the greater of 1% and a yield maintenance formula, (ii)
the remaining mortgaged property following such release having a
loan-to-value ratio no greater than 70% and (iii) the debt
service coverage ratio of the remaining mortgaged property
following such release being no less than 1.50x with respect to
one mortgaged property and 1.65x with respect to the other
mortgaged property;
o One (1) mortgage loan, representing 0.9% of the Initial Pool
Balance (and representing 0.9% of the Initial Loan Group 1
Balance), is secured by multiple parcels and permits the release
of one (1) of those parcels from the lien of the mortgage
following the related Lock-out Period subject to the satisfaction
of certain conditions including, but not limited to, (i) payment
of release price and accompanying Prepayment Premium equal to
lesser of (a) minimum amount necessary to satisfy loan-to-value
and net cash flow release criteria or (b) $1,000,000; (ii)
trailing 12 month net cash flow for the
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remaining property must be at least $1,361,600; and (iii) the
remaining property's loan-to-value ratio (after payment of
release fee) is not greater than 75%;
o Two (2) mortgage loans, representing 0.9% of the Initial Pool
Balance (and representing 0.9% of the Initial Loan Group 1
Balance) are cross-collateralized with each other and permit the
release of either mortgaged property from the lien of the
cross-collateralized loan after the applicable Lock-out Period
subject to the satisfaction of certain conditions including, but
not limited to, (i) (a) payment of the entire outstanding
principal balance of the related mortgage loan plus applicable
prepayment charges; (b) the loan-to-value ratio of the remaining
mortgaged property being not greater than 80%; and (c) the debt
service coverage ratio of the remaining mortgaged property not
being less than 0.97x based on a 10% loan constant; or (ii) (a)
payment of the entire outstanding principal balance of the
related mortgage loan plus applicable prepayment charges; (b)
payment of 25% of original principal balance of the other
mortgage loan as principal reduction, together with applicable
prepayment charges; (c) the loan-to-value ratio of the remaining
mortgaged property following such payment not being greater than
60%; and (d) the debt service coverage ratio of the remaining
mortgaged property following such payment not being less than
1.29x with respect to one of the mortgaged properties and 1.30x
with respect to the release of the other mortgage property, based
on a 10% mortgage constant;
o One (1) mortgage loan, representing 0.5% of the Initial Pool
Balance (and representing 0.6% of the Initial Loan Group 1
Balance), is secured by multiple parcels and permits the release
of two (2) of the parcels from the lien of the related mortgage
following the related Lock-out Period subject to the satisfaction
of certain conditions including, but not limited to, with respect
to one parcel, the payment of a release price equal to the
greater of $350,000 and 85% of the related net sales proceeds
from the sale of such parcel and with respect to the other parcel
the payment of a release price equal to the greater of $50,000
and 85% of the related net sales proceeds from the sale of such
parcel plus, in each case, a Prepayment Premium;
o One (1) mortgage loan, representing 0.5% of the Initial Pool
Balance (and representing 0.5% of the Initial Loan Group 1
Balance), is secured by multiple parcels and permits the release
of a parcel from the lien of the mortgage at any time subject to
the satisfaction of certain conditions including, but not limited
to, a prepayment of an amount equal to 110% of the allocated loan
amount of the property being released, plus a Prepayment Premium,
if, in each case, the debt service coverage ratio with respect to
the remaining parcels following the release is at least 1.20x;
o One (1) mortgage loan, representing 0.4% of the Initial Pool
Balance (and representing 0.4% of the Initial Loan Group 1
Balance), is secured by multiple mortgaged properties and permits
the release of a portion of only one of the mortgaged properties
at any time subject to the satisfaction of certain conditions
including, but not limited to, a prepayment of an amount equal to
125% of the allocated loan amount of the property being released,
plus a Prepayment Premium, if, in each case, the debt service
coverage ratio with respect to the remaining mortgaged property
following the release is at least 1.20x;
o One (1) mortgage loan, representing 0.3% of the Initial Pool
Balance (and representing 0.3% of the Initial Loan Group 1
Balance), is secured by multiple mortgaged properties and permits
the release of one or more of the related mortgaged properties
from the lien of the related mortgage loan after the applicable
Lock-out Period if certain conditions are satisfied, including,
but not limited to, (i) the partial defeasance of the mortgage
loan in an amount equal to 115% of the allocated loan amount of
the mortgaged property being released, (ii) the aggregate debt
service coverage ratio with respect to the remaining mortgaged
properties following the release being equal to or greater than
the greater of (a) 1.86x (assuming a debt service constant of
5.77%) and (b) the aggregate debt service coverage ratio existing
immediately prior to the release, (iii) the loan-to-value ratio
of the remaining mortgaged properties following the release being
not greater than 55%, and (iv) the mortgaged property located in
Livingston, Texas must be the first mortgaged property released;
o Two (2) mortgage loans, representing 0.5% of the Initial Pool
Balance (and representing 0.5% of the Initial Loan Group 1
Balance), are each secured by multiple parcels and permit the
release of one of the parcels from the lien of the related
mortgage at any time subject to the satisfaction of certain
conditions including, but not limited to, (i) the payment of an
amount equal to 105% and 110%, respectively, of the allocated
mortgage loan amount of the parcel being released plus a
Prepayment
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Premium, (ii) the loan-to-value of remaining portion of the
mortgaged property following the release being not greater than
65% and 80%, respectively, and (iii) the debt service coverage
ratio with respect to the remaining portion of the mortgaged
property following the release being not less than 1.30x and
1.25x, respectively; and
o One (1) mortgage loan, representing 0.2% of the Initial Pool
Balance (and representing 0.2% of the Initial Loan Group 1
Balance), is secured by multiple mortgaged properties and permits
the release of either of the mortgaged properties after the
applicable Lock-out Period subject to the satisfaction of certain
conditions including, but not limited to, the partial defeasance
of the mortgage loan in an amount equal to 120% of the allocated
loan amount of the mortgaged property being released, and, with
respect to the remaining mortgaged properties, (i) the debt
service coverage ratio (assuming a debt service constant of 10%)
following the release being not less than the greater of (a)
1.52x and (b) the debt service coverage ratio immediately prior
to the release, and (ii) the loan-to-value ratio being not
greater than the lesser of (a) 63.51% and (b) the loan-to-value
ratio immediately prior to the release.
Notwithstanding the above, the mortgage loans generally provide that
the related borrower may prepay the mortgage loan without Prepayment Premium or
defeasance requirements commencing one (1) to fourteen (14) payment dates prior
to and including the maturity date or the Anticipated Repayment Date.
The method of calculation of any Prepayment Premium or Yield
Maintenance Charge will vary for any mortgage loan as presented in "Appendix II
- Certain Characteristics of the Mortgage Loans."
In addition, certain mortgage loans provide for the release, without
prepayment or defeasance, of outparcels or other portions of the related
mortgaged property that were given no value or minimal value in the underwriting
process, subject to the satisfaction of certain conditions. In addition, certain
of the mortgage loans may permit the related borrower to substitute collateral
under certain circumstances.
See the footnotes to Appendix II attached to this prospectus
supplement for more details concerning certain of the foregoing provisions
including the method of calculation of any Prepayment Premium or Yield
Maintenance Charge which will vary for any mortgage loan.
Non-Recourse Obligations
The mortgage loans are generally non-recourse obligations of the
related borrowers and, upon any such borrower's default in the payment of any
amount due under the related mortgage loan, the holder of a non-recourse
mortgage loan may look only to the related mortgaged property for satisfaction
of the borrower's obligations. In those cases where the loan documents permit
recourse to the borrower or a guarantor for some or all of the amounts due under
such mortgage loan, we have not evaluated the financial condition of any such
person, and prospective investors should thus consider all of the mortgage loans
to be non-recourse. None of the mortgage loans is insured or guaranteed by any
seller or any of their affiliates, the United States, any government entity or
instrumentality, mortgage insurer or any other person.
"Due-on-Sale" and "Due-on-Encumbrance" Provisions
The mortgages generally contain due-on-sale and due-on-encumbrance
clauses that permit the holder of the mortgage to accelerate the maturity of the
related mortgage loan, any Serviced Companion Mortgage Loan or any B Note if the
borrower sells or otherwise transfers or encumbers the related mortgaged
property or that prohibit the borrower from doing so without the consent of the
holder of the mortgage. However, the mortgage loans, any Serviced Companion
Mortgage Loan and any B Note generally permit transfers of the related mortgaged
property, subject to reasonable approval of the proposed transferee by the
holder of the mortgage, payment of an assumption fee, which may be waived by the
master servicer or the special servicer, as the case may be, or, if collected,
will be paid to the master servicer or the special servicer as additional
servicing compensation, and certain other conditions.
In addition, some of the mortgage loans, any Serviced Companion
Mortgage Loans and any B Notes permit the borrower to transfer the related
mortgaged property or interests in the borrower to an affiliate or subsidiary of
the borrower, or an entity of which the borrower is the controlling beneficial
owner, or other unrelated parties, upon the satisfaction of certain limited
conditions set forth in the applicable mortgage loan, Serviced Companion
Mortgage Loan or B Note documents and/or as determined by the master servicer.
The master servicer or the special servicer, as the case may be, will determine,
in a manner consistent with the Servicing Standard, whether to exercise any
right
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it may have under any such clause to accelerate payment of the related mortgage
loan, Serviced Companion Mortgage Loan or B Note upon, or to withhold its
consent to, any transfer or further encumbrance of the related mortgaged
property in accordance with the Pooling and Servicing Agreement.
Subordinate and Other Financing
Two (2) of the mortgage loans, representing 0.4% of the Initial Pool
Balance (and representing 0.4% of the Initial Loan Group 1 Balance), currently
has additional financing in place that is secured by the mortgaged property or
properties related to such mortgage loan.
In addition to the foregoing, the borrower under one (1) mortgage
loan, Mortgage Loan No. 18, representing 1.1% of the Initial Pool Balance (and
representing 16.0% of the Initial Loan Group 2 Balance), has entered into
additional related mezzanine financing that is not secured by the related
mortgaged property as further described below under "The Newbury Village
Mortgage Loan."
In general, borrowers that have not agreed to certain special purpose
covenants in the related mortgage loan documents may have also incurred
additional financing that is not secured by the mortgaged property.
Nineteen (19) of the mortgage loans, representing 14.7% of the Initial
Pool Balance (which includes seventeen (17) mortgage loans in Loan Group 1,
representing 15.1% of the Initial Loan Group 1 Balance, and two (2) mortgage
loans in Loan Group 2, representing 9.4% of the Initial Loan Group 2 Balance),
permit the owners of the borrower to enter into additional financing that is
secured by a pledge of some or all of the equity interests in the borrower,
provided that certain debt service coverage ratio ("DSCR") and loan-to-value
("LTV") tests are satisfied as further discussed in the footnotes of Appendix II
to this prospectus supplement.
One (1) of the mortgage loans, representing 7.1% of the Initial Pool
Balance (and representing 7.7% of the Initial Loan Group 1 Balance), permits the
borrower to enter into both additional financing that is secured by a pledge of
equity interests in the borrower and additional unsecured financing of up to
$10,000,000 from the borrower's direct or indirect owners or affiliates,
provided that, in each case, certain DSCR and LTV tests are satisfied as further
discussed in the footnotes of Appendix II to this prospectus supplement.
Two (2) of the mortgage loans, representing 3.4% of the Initial Pool
Balance (and representing 3.6% of the Initial Loan Group 1 Balance), permit the
borrower to enter into additional subordinate financing that is secured by the
mortgaged property, provided that, in each case, certain DSCR and LTV tests are
satisfied as further discussed in the footnotes of Appendix II to this
prospectus supplement.
Two (2) of the mortgage loans, representing 1.6% of the Initial Pool
Balance (which include one (1) mortgage loans in Loan Group 1, representing 1.5%
of the Initial Loan Group 1 Balance, and one (1) mortgage loan in Loan Group 2,
representing 2.1% of the Initial Loan Group 2 Balance), permit the borrower to
enter into both additional subordinate financing that is secured by the related
mortgaged property and additional subordinate financing that is not secured by
the related mortgaged property, provided that, in each case, certain DSCR and
LTV tests are satisfied as further discussed in the footnotes of Appendix II to
this prospectus supplement.
One (1) of the mortgage loans, representing 0.5% of the Initial Pool
Balance (and representing 0.5% of the Initial Loan Group 1 Balance), permits the
borrower to enter into both additional subordinate financing that is secured by
the related mortgaged property or additional financing that is secured by a
pledge of equity interests in the borrower, provided that, in each case, certain
DSCR and LTV tests are satisfied as further discussed in the footnotes of
Appendix II to this prospectus supplement.
In general, borrowers that have not agreed to certain special purpose
covenants in the related mortgage loan documents may also be permitted to incur
additional financing that is not secured by the mortgaged property.
In the case of some or all of the mortgage loans with existing
subordinate or mezzanine debt, the holder of the subordinate or mezzanine loan
has the right to cure certain defaults occurring on the mortgage loan and/or the
right to purchase the mortgage loan from the Trust if certain defaults on the
mortgage loan occur. The purchase price required to be paid in connection with
such a purchase is generally equal to the outstanding principal balance
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of the mortgage loan, together with accrued and unpaid interest on, and all
unpaid servicing expenses and Advances relating to, the mortgage loan. Such
purchase price generally does not include a Yield Maintenance Charge or
Prepayment Premium. Accordingly, such purchase (if made prior to the maturity
date or Anticipated Repayment Date) will have the effect of a prepayment made
without payment of a Yield Maintenance Charge or Prepayment Premium.
The specific rights of the related subordinate or mezzanine lender
with respect to any future subordinate or mezzanine debt will be specified in
the related intercreditor agreement and may include rights substantially similar
to the cure and repurchase rights described in the preceding sentence.
For further information with respect to subordinate debt, mezzanine
debt and other financing, see Appendix II attached to this prospectus
supplement.
We make no representation as to whether any other secured subordinate
financing currently encumbers any mortgaged property or whether a third-party
holds debt secured by a pledge of an equity ownership interest in a related
borrower. See "Legal Aspects of The Mortgage Loans--Subordinate Financing" in
the prospectus and "Risk Factors--A Borrower's Other Loans May Reduce The Cash
Flow Available To The Mortgaged Property Which May Adversely Affect Payment On
Your Certificates" in this prospectus supplement.
Generally all of the mortgage loans also permit the related borrower
to incur other unsecured indebtedness, including but not limited to trade
payables, in the ordinary course of business and to incur indebtedness secured
by equipment or other personal property located at the mortgaged property.
The Newbury Village Mortgage Loan
Mortgage Loan No. 18, which consists of a note with an outstanding
principal balance as of the Cut-off Date of $24,000,000 (the "Newbury Village
Mortgage Loan"), representing 1.1% of the Initial Pool Balance (and representing
16.0% of the Initial Loan Group 2 Balance), is secured by the related mortgaged
property. Additional mezzanine financing (the "Newbury Village Mezzanine Loan")
is in place with an original principal amount of $3,500,000 that is secured by
pledges of the equity interests in the borrower under the Newbury Village
Mortgage Loan.
Rights of the Holder of the Newbury Village Mezzanine Loan
Pursuant to the terms of an intercreditor agreement, the holder of the
Newbury Village Mezzanine Loan has certain rights with respect to the Newbury
Village Mortgage Loan, including, among others, the following:
Option to Cure Defaults Under the Newbury Village Mortgage Loan. The
holder of the Newbury Village Mezzanine Loan has the right to cure monetary
events of default under the Newbury Village Mortgage Loan within five (5)
business days of the later of the giving of notice of the subject event of
default by the holder of the Newbury Village Mortgage Loan and the expiration of
the borrower's cure provision, if any, provided, however, that the holder of the
Newbury Village Mezzanine Loan will defend and hold harmless the holder of the
Newbury Village Mortgage Loan for certain expenses arising from the cure period
and reimburse the holder of the Newbury Village Mortgage Loan for any required
advances for monthly payments of principal and/or interest on the Newbury
Village Mortgage Loan and/or any protective advances. The holder of the Newbury
Village Mezzanine Loan also has the right to cure non-monetary events of default
with respect to the Newbury Village Mortgage Loan within any applicable grace
period for the subject event of default or such additional period as is
reasonably necessary for the holder of the Newbury Village Mezzanine Loan to
cure the non-monetary event of default if it cannot reasonably be cured within
the applicable grace period so long as (i) the holder of the Newbury Village
Mezzanine Loan is diligently and expeditiously proceeding to cure such
non-monetary default, (ii) unless otherwise paid, the holder of the Newbury
Village Mezzanine Loan makes or causes to be made timely payment to the holder
of the Newbury Village Mortgage Loan the regularly scheduled principal and
interest payments, (iii) such additional cure period does not exceed 90 days
(unless such non-monetary default is of a nature that cannot be cured within
such 90 days without ownership of the collateral securing the Newbury Village
Mezzanine Loan (the "Newbury Village Mezzanine Collateral"), in which case, the
holder of the Newbury Village Mezzanine Loan will have additional time as is
reasonably necessary to gain ownership of the Newbury Village Mezzanine
Collateral, provided that the holder
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of the Newbury Village Mezzanine Loan is continuously and diligently pursuing
the ownership of the Newbury Village Mezzanine Collateral), (iv) so long as the
non-monetary default is not caused by a bankruptcy or like proceeding and (v) so
long as there is no material adverse effect to the Newbury Village Mortgage Loan
borrower or the related mortgaged property as a result of such non-monetary
default.
Option to Purchase the Newbury Village Mortgage Loan. If (i) the
Newbury Village Mortgage Loan has been accelerated or (ii) any proceeding to
foreclose or otherwise enforce the Newbury Village Mortgage Loan or other
security for the Newbury Village Mortgage Loan has been commenced, the holder of
the Newbury Village Mezzanine Loan has the right to purchase the Newbury Village
Mortgage Loan, at a price generally equal to the unpaid principal balance of the
Newbury Village Mortgage Loan, plus accrued and unpaid interest and other
amounts due thereon, including Servicing Advances and interest charged thereon,
plus any expenses incurred in connection with enforcing the related mortgage
loan documents and interest on an P&I Advances made with respect to the Newbury
Village Mortgage Loan pursuant to the Pooling and Servicing Agreement.
Consent Rights. The holder of the Newbury Village Mortgage Loan is
required to notify the holder of the Newbury Village Mezzanine Loan if the
borrower requests a release of the lien of the Newbury Village Mortgage Loan or
requests the holder of the Newbury Village Mortgage Loan's consent to, or takes
any action in connection with or in furtherance of, a transfer of the related
mortgaged property or a prepayment or refinancing of the Newbury Village
Mortgage Loan. If the borrower requests the consent of the holder of the Newbury
Village Mortgage Loan to either transfer the related mortgaged property or any
direct or indirect interest in the borrower or to obtain a further encumbrance
of the related mortgaged property, the holder of the Newbury Village Mortgage
Loan is required to obtain the prior written consent of the holder of the
Newbury Village Mezzanine Loan if the holder of the Newbury Village Mortgage
Loan has the right to consent.
Prior to the occurrence of an event of default, the holder of the
Newbury Village Mortgage Loan is required to obtain the prior written consent of
the holder of the Newbury Village Mezzanine Loan to:
o increase the interest rate or principal amount of the Newbury
Village Mortgage Loan except for increases in principal to cover
workout costs and protective advances made by the holder of the
Newbury Village Mortgage Loan;
o increase in any other material respect any monetary obligations
of the related borrower;
o shorten the scheduled maturity date of the Newbury Village
Mortgage Loan;
o convert or exchange the Newbury Village Mortgage Loan into or for
any other indebtedness or subordinate any of the Newbury Village
Mortgage Loan to any indebtedness of borrower;
o permit the holder of the Newbury Village Mortgage Loan to accept
a grant of any lien on or security interest in any collateral or
property of the borrower or any other person not originally
granted or contemplated to be granted under the Newbury Village
Mortgage Loan;
o modify or amend the terms and provisions of the cash management
agreement with respect to the amount, manner, timing and method
of the application of payments under the Newbury Village Mortgage
Loan or the Newbury Village Mezzanine Loan;
o cross-default the Newbury Village Mortgage Loan with any other
indebtedness;
o permit the holder of the Newbury Village Mortgage Loan to obtain
any equity interest in the related borrower or its parent, or any
contingent interest, additional interest or so-called "kicker"
measured on the basis of the cash flow or appreciation of the
mortgaged property;
o spread the lien of the Newbury Village Mortgage Loan to encumber
additional real property;
o extend the period during which voluntary prepayments are
prohibited or impose any prepayment fee or
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premium or yield maintenance charge in connection with a
prepayment of the Newbury Village Mortgage Loan when none is now
required or after the current maturity date of the Newbury
Village Mortgage Loan or increase the amount of such prepayment
fee, premium or yield maintenance charge;
o result in the termination of, or increase the required strike
price with respect to any interest rate protection agreement
required under the Newbury Village Mortgage Loan or modify or
amend the requirements of the Newbury Village Mortgage Loan
relating to any interest rate protection agreement;
o modify or amend the definition of "Event of Default" under the
Newbury Village Mortgage Loan;
o modify or amend the provisions of the Newbury Village Mortgage
Loan limiting transfers of interest (direct or indirect) in the
borrower or the mortgaged property;
o modify the provisions of the Newbury Village Mortgage Loan
relating to the establishment of reserve accounts and the amounts
to be deposited into such accounts; or
o release any collateral for the Newbury Village Mortgage Loan.
Generally, following the occurrence of an event of default, the holder
of the Newbury Village Mortgage Loan shall not be obligated to get the consent
of the holder of the Newbury Village Mezzanine Loan with respect to the
foregoing, provided that, the Newbury Village Mezzanine Loan holder's consent is
required to increase the principal balance of the Newbury Village Mortgage Loan
or to extend the period during which voluntary prepayments are prohibited or
impose any prepayment fee or premium or yield maintenance charge in connection
with a prepayment of the Newbury Village Mortgage Loan when none is now required
or after the current maturity date of the Newbury Village Mortgage Loan or
increase the amount of such prepayment fee, premium or yield maintenance charge.
If the holder of the Newbury Village Mezzanine Loan has cured or is in
the process of curing any such event of default that the holder of the Newbury
Village Mezzanine Loan is capable of curing and, with respect to non-monetary
events of default that the holder of the Newbury Village Mezzanine Loan is not
capable of curing, if such events of default will not materially adversely
affect the mortgaged property or the cash flow from the mortgaged property and
if the holder of the Newbury Village Mezzanine Loan diligently pursues its
remedies to acquire the equity in the borrower pursuant to the holder of the
Newbury Village Mezzanine Loan's equity pledge agreement, the holder of the
Newbury Village Mortgage Loan will not violate bullet point one (1) through
fifteen (15) above without the written consent of the holder of the Newbury
Village Mezzanine Loan.
The holder of the Newbury Village Mortgage Loan is required to consult
with the holder of the Newbury Village Mezzanine Loan regarding any leasing of
the mortgaged property or alterations to the mortgaged property in which both
the Newbury Village Mezzanine Loan and the Newbury Village Mortgage Loan require
the consent of the holder of the Newbury Village Mortgage Loan and the holder of
the Newbury Village Mezzanine Loan, respectively, to approve any such leasing or
alteration.
Loan Purpose
Seventy-six (76) of the mortgage loans, representing 35.2% of the
Initial Pool Balance (which include seventy-one (71) mortgage loans in Loan
Group 1, representing 35.3% of the Initial Loan Group 1 Balance, and five (5)
mortgage loans in Loan Group 2, representing 33.1% of the Initial Loan Group 2
Balance), were originated in connection with the borrower's acquisition of the
mortgaged property that secures such mortgage loan, and one hundred sixty-one
(161) of the mortgage loans, representing 64.8% of the Initial Pool Balance
(which include one hundred forty-two (142) mortgage loans in Loan Group 1,
representing 64.7% of the Initial Loan Group 1 Balance, and nineteen (19)
mortgage loans in Loan Group 2, representing 66.9% of the Initial Loan Group 2
Balance), were originated in connection with the borrower's refinancing of a
previous mortgage loan.
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Additional Collateral
Seven (7) of the mortgage loans, representing 3.2% of the Initial Pool
Balance (which include five (5) mortgage loans in Loan Group 1, representing
3.0% of the Initial Loan Group 1 Balance, and two (2) mortgage loans in Loan
Group 2, representing 6.6% of the Initial Loan Group 2 Balance), have additional
collateral in the form of reserves under which monies disbursed by the
originating lender or letters of credit are reserved for specified periods and
are to be released only upon the satisfaction of certain conditions by the
borrower. If the applicable borrower does not satisfy the conditions for release
of the monies or letters of credit by the applicable release date, such monies
or letters of credit may be applied to partially repay the related mortgage
loan, or may be held by the lender as additional security for the applicable
mortgage loan. Certain of these reserves are used for items such as deferred
maintenance, environmental remediation, debt service, tenant improvements and
leasing commissions and capital improvements. For further information with
respect to additional collateral, see Appendix II attached to this prospectus
supplement.
The ARD Loans
Thirty-nine (39) mortgage loans, representing 30.7% of the Initial
Pool Balance (and representing 33.0% of the Initial Loan Group 1 Balance),
provide that if the related borrower has not prepaid such mortgage loan in full
on or before its Anticipated Repayment Date, any principal outstanding on that
date will thereafter amortize more rapidly and accrue interest at the revised
rate for that mortgage loan rather than at the initial rate. In addition, funds
on deposit in lockbox accounts relating to the ARD Loan in excess of amounts
needed to pay property operating expenses and reserves will be applied to
repayment of the applicable mortgage loan resulting in a more rapid
amortization.
Cash Management Agreements/Lockboxes
Eighty-three (83) of the mortgage loans, representing 60.2% of the
Initial Pool Balance (which include eighty-one (81) mortgage loans in Loan Group
1, representing 63.6% of the Initial Loan Group 1 Balance, and two (2) mortgage
loans in Loan Group 2, representing 15.4% of the Initial Loan Group 2 Balance),
generally provided that rents, credit card receipts, accounts receivables
payments and other income derived from the related mortgaged properties will be
subject to a cash management/lockbox arrangement.
Appendix II to this prospectus supplement sets forth (among other
things) the type of provisions (if any) for the establishment of a lockbox under
the terms of each mortgage loan. The following paragraphs describe each type of
provision:
o Hard. The related borrower is required to instruct the tenants
and other payors to pay all rents and other revenue directly to
an account controlled by the lockbox bank, which in general is
the applicable servicer on behalf of the Trust. Such revenue
generally is either (a) swept and remitted to the related
borrower unless a default or other "trigger" event under the
related mortgage loan documents has occurred or (b) not made
immediately available to the related borrower, but instead is
forwarded to a cash management account controlled by the lockbox
bank, which in general is the applicable servicer on behalf of
the Trust and then applied according to the related mortgage loan
documents, which typically contemplate application to sums
payable under the related mortgage loan and, in certain
transactions, to expenses at the related mortgaged property, with
any excess remitted to the related borrower.
o Soft, Springing to Hard. Revenue from the related mortgaged
property is generally paid by the tenants and other payors to the
related borrower or the property manager and then forwarded to an
account controlled by the lockbox bank, which in general is the
applicable servicer on behalf of the Trust. Until the occurrence
of certain specified "trigger" events, which typically include an
event of default under the mortgage loan, such revenue is
forwarded to an account controlled by the related borrower or is
otherwise made available to the related borrower. Upon the
occurrence of such a trigger event, the mortgage loan documents
require the related borrower to instruct tenants and other payors
to pay directly into an account controlled by the lockbox bank,
which in general is the applicable servicer on
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behalf of the Trust; the revenue is then applied by the
applicable servicer on behalf of the Trust according to the
related mortgage loan documents.
o Soft. Revenue from the related mortgaged property is generally
paid by the tenants and other payors to the related borrower or
the property manager and forwarded to an account controlled by
the lockbox bank, which in general is the applicable servicer on
behalf of the Trust. The funds are then either made available to
the related borrower or are applied by the applicable servicer on
behalf of the Trust according to the related mortgage loan
documents.
o Springing to Hard. Revenue from the related mortgaged property is
generally paid by the tenants and other payors to the related
borrower or property manager. Upon the occurrence of certain
specified "trigger" events, which typically include an event of
default under the mortgage loan, the mortgage loan documents
contemplate establishment of a hard lockbox and require the
related borrower to instruct tenants to pay directly into an
account controlled by the applicable servicer on behalf of the
Trust; the revenue is then applied by the lockbox bank, which in
general is the applicable servicer on behalf of the Trust
according to the related mortgage loan documents.
o None. Revenue from the related mortgaged property is paid to the
related borrower and is not subject to a lockbox as of the
origination date, and no lockbox is contemplated to be
established during the mortgage loan term.
In connection with any hard lockbox, income deposited directly into
the related lockbox account may not include amounts paid in cash that are paid
directly to the related property manager, notwithstanding requirements to the
contrary. Furthermore, with respect to certain multifamily and hospitality
properties, cash or "over-the-counter" receipts may be deposited into the
lockbox account by the property manager. Mortgage loans whose terms call for the
establishment of a lockbox account require that the amounts paid to the property
manager will be deposited into the applicable lockbox account on a regular
basis. Lockbox accounts will not be assets of the Trust.
ASSESSMENTS OF PROPERTY VALUE AND CONDITION
Appraisals
In connection with the origination or securitization of each of the
mortgage loans, the related mortgaged property was appraised by an independent
appraiser that, generally, was a Member of the Appraisal Institute. Each such
appraisal complied, or the appraiser certified that it complied, with the real
estate appraisal regulations issued jointly by the federal bank regulatory
agencies under the Financial Institutions Reform, Recovery, and Enforcement Act
of 1989, as amended. In general, those appraisals represent the analysis and
opinion of the person performing the appraisal and are not guarantees of, and
may not be indicative of, present or future value. There can be no assurance
that another person would not have arrived at a different valuation, even if
such person used the same general approach to and same method of valuing the
property. Moreover, such appraisals sought to establish the amount of 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. Information regarding the values
of the mortgaged properties as of the Cut-off Date is presented in this
prospectus supplement for illustrative purposes only.
Environmental Assessments
An environmental site assessment was performed with respect to each
mortgaged property except for mortgaged properties securing mortgage loans that
are the subject of a secured creditor impaired property policy that we describe
below under "--Environmental Insurance" generally within the twelve-month period
preceding the origination or securitization of the related mortgage loan. In all
cases, the environmental site assessment was a "Phase I" environmental
assessment, generally performed in accordance with industry practice. In some
cases, a "Phase II" environmental site assessment was also performed. In
general, the environmental assessments contained no recommendations for further
significant environmental remediation efforts which, if not undertaken, would
have a material adverse effect on the interests of the certificate holders.
However, in certain cases, the assessment disclosed the existence of or
potential for adverse environmental conditions, generally the result of the
activities of
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identified tenants, adjacent property owners or previous owners of
the mortgaged property. In certain of such cases, the related borrowers were
required to establish operations and maintenance plans, monitor the mortgaged
property, abate or remediate the condition and/or provide additional security
such as letters of credit, reserves or stand-alone secured creditor impaired
property policies. See "Risk Factors--Environmental Risks Relating to Specific
Mortgaged Properties May Adversely Affect Payments On Your Certificates" in this
prospectus supplement.
Property Condition Assessments
In general, a licensed engineer, architect or consultant inspected the
related mortgaged property, in connection with the origination or securitization
of the related mortgage loan, to assess the condition of the structure, exterior
walls, roofing, interior structure and mechanical and electrical systems.
Engineering reports by licensed engineers, architects or consultants generally
were prepared, except for newly constructed properties, for the mortgaged
properties in connection with the origination or securitization of the related
mortgage loan. See "Risk Factors--Property Inspections and Engineering Reports
May Not Reflect All Conditions That Require Repair On The Property" in this
prospectus supplement. In certain cases where material deficiencies were noted
in such reports, the related borrower was required to establish reserves for
replacement or repair or to remediate the deficiency.
Seismic Review Process
In general, the underwriting guidelines applicable to the origination
of the mortgage loans required that prospective borrowers seeking loans secured
by properties located in California and areas of other states where seismic risk
is deemed material obtain a seismic engineering report of the building and,
based thereon and on certain statistical information, an estimate of probable
maximum loss ("PML"), in an earthquake scenario. Generally, any of the mortgage
loans as to which the property was estimated to have PML in excess of 20% of the
estimated replacement cost would either be subject to a lower loan-to-value
limit at origination, be conditioned on seismic upgrading (or appropriate
reserves or letter of credit for retrofitting), be conditioned on satisfactory
earthquake insurance or be declined.
Zoning and Building Code Compliance
Each seller took steps to establish that the use and operation of the
mortgaged properties that represent security for its mortgage loans, at their
respective dates of origination, were in compliance in all material respects
with, or were legally existing non-conforming uses or structures under,
applicable zoning, land-use and similar laws and ordinances, but no assurance
can be given that such steps revealed all possible violations. Evidence of such
compliance may have been in the form of legal opinions, confirmations from
government officials, title insurance endorsements, survey endorsements,
appraisals, zoning consultants' reports and/or representations by the related
borrower contained in the related mortgage loan documents. Violations may be
known to exist at any particular mortgaged property, but the related mortgage
loan seller has informed us that it does not consider any such violations known
to it to be material.
ENVIRONMENTAL INSURANCE
In the case of forty-nine (49) mortgaged properties, securing mortgage
loans representing approximately 4.9% of the Initial Pool Balance (which include
forty-three (43) mortgaged properties in Loan Group 1, securing mortgage loans
representing 5.0% of the Initial Loan Group 1 Balance, and six (6) mortgaged
properties in Loan Group 2, securing mortgage loans representing 4.9% of the
Initial Loan Group 2 Balance), the related mortgage loan seller has obtained, or
has the benefit of, and there will be assigned to the Trust, a group secured
creditor impaired property policy covering selected environmental matters with
respect to all those mortgage loans as a group. None of the mortgage loans
covered by this policy has a Cut-off Date Balance in excess of approximately
$4,995,465. The premium for the environmental group policy has been or, as of
the date of initial issuance of the certificates, will be, paid in full.
In general, the group secured creditor impaired property policy
referred to above provides coverage for the following losses, subject to the
coverage limits discussed below, and further subject to the policy's conditions
and exclusions:
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o if during the term of the policy, a borrower defaults under its
mortgage loan and adverse environmental conditions exist at
levels above legal limits on the related underlying real
property, the insurer will indemnify the insured for the
outstanding principal balance of the related mortgage loan on the
date of the default, together with accrued interest from the date
of default until the date that the outstanding principal balance
is paid;
o if the insured becomes legally obligated to pay as a result of a
claim first made against the insured and reported to the insurer
during the term of the policy, for bodily injury, property damage
or clean-up costs resulting from adverse environmental conditions
on, under or emanating from an underlying real property, the
insurer will pay that claim; and
o if the insured enforces the related mortgage, the insurer will
thereafter pay legally required clean-up costs for adverse
environmental conditions at levels above legal limits which exist
on or under the acquired underlying real property, provided that
the appropriate party reported those conditions to the government
in accordance with applicable law.
The secured creditor impaired property policy does not cover adverse
environmental conditions that the insured first became aware of before the term
of the policy unless those conditions were disclosed to the insurer before the
policy was issued. However, property condition assessments or engineering
surveys were conducted for the mortgaged properties covered by the policy. If
the report disclosed the existence of material amounts of lead based paint,
asbestos containing materials or radon gas affecting such a mortgaged property,
the related borrower was required to remediate the condition before the closing
of the loan, establish a reserve from loan proceeds in an amount considered
sufficient by the mortgage loan seller or agree to establish an operations and
maintenance plan. No individual claim under the group policy may exceed
$6,250,000 and the total claims under the group policy is subject to a maximum
of $36,477,000. There is no deductible under the policy.
The secured creditor impaired property policy requires that the
appropriate party associated with the Trust report a claim during the term of
the policy, which extends five years beyond the terms of the respective mortgage
loans.
The secured creditor impaired property policy will be issued by
Steadfast Insurance Company, an affiliate of Zurich North America.
In the case of four (4) mortgaged properties, securing mortgage loans
representing 9.0% of the Initial Pool Balance (and representing 9.7% of the
Initial Loan Group 1 Balance), the related mortgage loans have the benefit of a
stand-alone secured creditor impaired property policy or pollution legal
liability policy which will be assigned to the Trust and which covers selected
environmental matters with respect to the related properties. Such stand-alone
policies may contain additional limitations and exclusions, including but not
limited to exclusions from coverage for mold and other microbial contamination,
coverage limits that are less than the related loan amount, or policy durations
which do not extend to or beyond the maturity of the related loan.
ADDITIONAL MORTGAGE LOAN INFORMATION
Each of the tables presented in Appendix I sets forth selected
characteristics of the Mortgage Pool presented, where applicable, as of the
Cut-off Date. For a detailed presentation of certain of the characteristics of
the mortgage loans and the mortgaged properties, on an individual basis, see
Appendix II to this prospectus supplement, and for a brief summary of the ten
(10) largest mortgage loans (including crossed mortgage loans) in the Mortgage
Pool, see Appendix IV to this prospectus supplement. Additional information
regarding the mortgage loans is contained (a) in this prospectus supplement
under "Risk Factors" and elsewhere in this "Description of the Mortgage Pool"
section and (b) under "Legal Aspects Of Mortgage Loans" in the prospectus.
For purposes of the tables in Appendix I and for the information
presented in Appendix II, Appendix III and Appendix IV:
(1) References to "DSCR" are references to "Debt Service Coverage
Ratios." In general, debt service coverage ratios are used by
income property lenders to measure the ratio of (a) Underwritable
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Cash Flow to (b) required debt service payments. However, debt
service coverage ratios only measure the current, or recent,
ability of a property to service mortgage debt. If a property
does not possess a stable operating expectancy (for instance, if
it is subject to material leases that are scheduled to expire
during the loan term and that provide for above-market rents
and/or that may be difficult to replace), a debt service coverage
ratio may not be a reliable indicator of a property's ability to
service the mortgage debt over the entire remaining loan term.
For purposes of this prospectus supplement, including for the
tables in Appendix I and the information presented in Appendix
II, Appendix III and Appendix IV, the "Debt Service Coverage
Ratio" or "DSCR" for any mortgage loan is calculated pursuant to
the definition of those terms under the "Glossary of Terms" in
this prospectus supplement. For purposes of the information
presented in this prospectus supplement, the Debt Service
Coverage Ratio (unless otherwise indicated) reflects (i) with
respect to any Serviced Pari Passu Mortgage Loan, the aggregate
indebtedness evidenced by the Serviced Pari Passu Mortgage Loan
and the related Serviced Companion Mortgage Loan, and (ii) with
respect to any Non-Serviced Mortgage Loan, the aggregate
indebtedness evidenced by the Non-Serviced Mortgage Loan and the
related Non-Serviced Companion Mortgage Loan. The Debt Service
Coverage Ratio information in this prospectus supplement with
respect to any A/B Mortgage Loan, reflects the indebtedness under
the related mortgage loan, but not the indebtedness on the
related B Note. The Debt Service Coverage Ratio information in
this prospectus supplement with respect to any mortgage loan that
has subordinated, second lien indebtedness, reflects the
indebtedness under the related mortgage loan, but not the
subordinated, second lien indebtedness.
In connection with the calculation of DSCR and loan-to-value
ratios, in determining Underwritable Cash Flow for a mortgaged
property, the applicable mortgage loan seller relied on rent
rolls and other generally unaudited financial information
provided by the respective borrowers and calculated stabilized
estimates of cash flow that took into consideration historical
financial statements, material changes in the operating position
of the mortgaged property of which the mortgage loan seller was
aware (e.g., new signed leases or end of "free rent" periods and
market data), and estimated capital expenditures, leasing
commission and tenant improvement reserves. The applicable
mortgage loan seller made changes to operating statements and
operating information obtained from the respective borrowers,
resulting in either an increase or decrease in the estimate of
Underwritable Cash Flow derived therefrom, based upon the
mortgage loan seller's evaluation of such operating statements
and operating information and the assumptions applied by the
respective borrowers in preparing such statements and
information. In most cases, borrower supplied "trailing-12
months" income and/or expense information or the most recent
operating statements or rent rolls were utilized. In some cases,
partial year operating income data was annualized, with certain
adjustments for items deemed not appropriate to be annualized. In
some instances, historical expenses were inflated. For purposes
of calculating Underwritable Cash Flow for mortgage loans where
leases have been executed by one or more affiliates of the
borrower, the rents under some of such leases have been adjusted
downward to reflect market rents for similar properties if the
rent actually paid under the lease was significantly higher than
the market rent for similar properties.
The Underwritable Cash Flow for residential cooperative mortgaged
properties is based on projected net operating income at the
mortgaged property, as determined by the appraisal obtained in
connection with the origination of the related mortgage loan,
assuming that the related mortgaged property was operated as a
rental property with rents set at prevailing market rates taking
into account the presence, if any, of existing rent-controlled or
rent-stabilized occupants, if any, reduced by underwritten
capital expenditures, property operating expenses, a market-rate
vacancy assumption and projected reserves.
Historical operating results may not be available or were deemed
not relevant for some of the mortgage loans which are secured by
mortgaged properties with newly constructed improvements,
mortgaged properties with triple net leases, mortgaged properties
that have recently undergone substantial renovations and newly
acquired mortgaged properties. In such cases, items of revenue
and expense used in calculating Underwritable Cash Flow were
generally derived from rent rolls, estimates set forth in the
related appraisal, leases with tenants or from other
borrower-supplied
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information such as estimates or budgets. No assurance can be
given with respect to the accuracy of the information provided by
any borrowers, or the adequacy of the procedures used by the
applicable mortgage loan seller in determining the presented
operating information.
The Debt Service Coverage Ratios are presented in this prospectus
supplement for illustrative purposes only and, as discussed
above, are limited in their usefulness in assessing the current,
or predicting the future, ability of a mortgaged property to
generate sufficient cash flow to repay the related mortgage loan.
Accordingly, no assurance can be given, and no representation is
made, that the Debt Service Coverage Ratios accurately reflect
that ability.
(2) References to "DSCR Post IO Period" are references to "Debt
Service Coverage Ratio Post IO Period." For purposes of this
prospectus supplement, including for the tables in Appendix I and
the information presented in Appendix II, Appendix III and
Appendix IV, the "Debt Service Coverage Ratio Post IO Period" or
"DSCR Post IO Period" for any mortgage loan is calculated
pursuant to the definition of those terms under the "Glossary of
Terms" in this prospectus supplement. For purposes of the
information presented in this prospectus supplement, the Debt
Service Coverage Ratio Post IO Period (unless otherwise
indicated) reflects, for mortgage loans that require monthly
payments of interest-only for a certain amount of time after
origination followed by monthly payments of principal and
interest for the remaining term of the mortgage loan, the
annualized amount of debt service that will be payable under the
mortgage loan after the beginning of the amortization term of the
mortgage loan.
(3) References in the tables to "Cut-off Date LTV" are references to
"Cut-off Date Loan-to-Value" and references to "Balloon LTV" are
references to "Balloon Loan-to-Value." For purposes of this
prospectus supplement, including for the tables in Appendix I and
the information presented in Appendix II, Appendix III and
Appendix IV, the "Cut-off Date LTV," "Cut-off Date
Loan-to-Value," "Balloon LTV" or "Balloon Loan-to-Value" for any
mortgage loan is calculated pursuant to the definition of those
terms under the "Glossary of Terms" in this prospectus
supplement. For purposes of the information presented in this
prospectus supplement, the loan-to-value ratio reflects (i) with
respect to any Serviced Pari Passu Mortgage Loan, the aggregate
indebtedness evidenced by the Serviced Pari Passu Mortgage Loan
and the related Serviced Companion Mortgage Loan, and (ii) with
respect to any Non-Serviced Mortgage Loan, the aggregate
indebtedness evidenced by the Non-Serviced Mortgage Loan and the
related Non-Serviced Companion Mortgage Loan. The loan-to-value
information in this prospectus supplement with respect to any A/B
Mortgage Loan reflects the indebtedness under the related
mortgage loan, but not the indebtedness on the related B Note.
The loan-to-value information in this prospectus supplement with
respect to any mortgage loan that has subordinated, second lien
indebtedness, reflects the indebtedness under the related
mortgage loan, but not the subordinated, second lien
indebtedness.
The value of the related mortgaged property or properties for
purposes of determining the Cut-off Date LTV are each based on
the appraisals described above under "--Assessments of Property
Value and Condition--Appraisals."
When information with respect to mortgaged properties is
expressed as a percentage of the Initial Pool Balance, the
percentages are based upon the Cut-off Date principal balances of
the related mortgage loans or with respect to an individual
property securing a multi-property mortgage loan, the portions of
those loan balances allocated to such properties. The allocated
loan amount for each mortgaged property securing a multi-property
mortgage loan is set forth on Appendix II to this prospectus
supplement.
No representation is made that any such value would approximate
either the value that would be determined in a current appraisal
of the related mortgaged property or the amount that would be
realized upon a sale.
(4) References to "weighted averages" are references to averages
weighted on the basis of the Cut-off Date Balances of the related
mortgage loans.
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The sum in any column of any of the tables in Appendix I may not equal
the indicated total due to rounding.
Generally, the loan documents with respect to the mortgage loans
require the borrowers to provide the related lender with quarterly and/or annual
operating statements and rent rolls.
STANDARD HAZARD INSURANCE
The master servicer is required to use reasonable efforts, consistent
with the Servicing Standard, to cause each borrower to maintain for the related
mortgaged property all insurance required by the terms of the loan documents and
the related mortgage in the amounts set forth therein, which shall be obtained
from an insurer meeting the requirements of the applicable loan documents. This
includes a fire and hazard insurance policy with extended coverage that contains
no exclusion for damages due to acts of terrorism (subject to the provisions set
forth below). Certain mortgage loans may permit such hazard insurance policy to
be maintained by a tenant at the related mortgaged property, or may permit the
related borrower or its tenant to self-insure. The coverage of each such policy
will be in an amount, subject to a deductible customary in the related
geographic area, that is not less than the lesser of the full replacement cost
of the improvements that represent security for such mortgage loan, with no
deduction for depreciation, and the outstanding principal balance owing on such
mortgage loan, but in any event, unless otherwise specified in the applicable
mortgage or mortgage note, in an amount sufficient to avoid the application of
any coinsurance clause. The master servicer will be deemed to have satisfied the
Servicing Standard in respect of such insurance requirement if the borrower
maintains, or the master servicer has otherwise caused to be obtained, a
standard hazard insurance policy that is in compliance with the related mortgage
loan documents, and, if required by such mortgage loan documents, the borrower
pays, or the master servicer has otherwise caused to be paid, the premium
required by the related insurance provider that is necessary to avoid an
exclusion in such policy against "acts of terrorism" as defined by the Terrorism
Risk Insurance Act of 2002.
If, on the date of origination of a mortgage loan, the portion of the
improvements on a related mortgaged property was in an area identified in the
Federal Register by the Federal Emergency Management Agency as having special
flood hazards (and such flood insurance is required by the Federal Emergency
Management Agency and has been made available), the master servicer will cause
to be maintained a flood insurance policy meeting the requirements of the
current guidelines of the Federal Insurance and Mitigation Administration in an
amount representing coverage of at least the lesser of:
o the outstanding principal balance of the related mortgage loan;
and
o the maximum amount of such insurance available for the related
mortgaged property, but only to the extent such mortgage loan
permits the lender to require such coverage and such coverage
conforms to the Servicing Standard.
If a borrower fails to maintain such fire and hazard insurance, the
master servicer will be required to obtain such insurance and the cost of the
insurance will be a Servicing Advance made by the master servicer, subject to a
determination of recoverability. The special servicer will be required to
maintain fire and hazard insurance with extended coverage and, if applicable,
flood insurance (and other insurance required under the related mortgage) on an
REO Property (other than with respect to a Non-Serviced Mortgage Loan) in an
amount not less than the maximum amount obtainable with respect to such REO
Property and the cost of the insurance will be a Servicing Advance made by the
master servicer, subject to a determination of recoverability, provided that the
special servicer shall not be required in any event to maintain or obtain
insurance coverage beyond what is reasonably available at a cost customarily
acceptable and consistent with the Servicing Standard; provided that the special
servicer will be required to maintain insurance against property damage
resulting from terrorism or similar acts if the terms of the related mortgage
loan documents and the related mortgage so require unless the special servicer
determines that (i) such insurance is not available at any rate or (ii) such
insurance is not available at commercially reasonable rates and such hazards are
not at the time commonly insured against for properties similar to the related
mortgaged property and located in or around the region in which such related
mortgaged property is located.
In addition, the master servicer may require any borrower to maintain
other forms of insurance as the master servicer may be permitted to require
under the related mortgage, including, but not limited to, loss of rents
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endorsements and comprehensive public liability insurance. The master servicer
will not require borrowers to maintain earthquake insurance unless the related
borrower is required under the terms of its mortgage loan to maintain earthquake
insurance. Any losses incurred with respect to mortgage loans due to uninsured
risks, including terrorist attacks, earthquakes, mudflows and floods, or
insufficient hazard insurance proceeds may adversely affect payments to
Certificateholders. The special servicer will have the right, but not the
obligation, at the expense of the Trust, to obtain earthquake insurance on any
mortgaged property securing a Specially Serviced Mortgage Loan and/or any REO
Property so long as such insurance is available at commercially reasonable
rates. The master servicer will not be required in any event to cause the
borrower to maintain or itself obtain insurance coverage beyond what is
available on commercially reasonable terms at a cost customarily acceptable (as
determined by the master servicer) and consistent with the Servicing Standard;
provided that the master servicer will be obligated to cause the borrower to
maintain or itself obtain insurance against property damage resulting from
terrorism or similar acts if the terms of the related mortgage loan documents
and the related mortgage so require unless the master servicer determines that
(i) such insurance is not available at any rate or (ii) such insurance is not
available at commercially reasonable rates and such hazards are not at the time
commonly insured against for properties similar to the related mortgaged
property and located in or around the region in which such related mortgaged
property is located. Notwithstanding the limitation set forth in the preceding
sentence, if the related mortgage loan documents and the related mortgage
require the borrower to maintain insurance against property damage resulting
from terrorism or similar acts, the master servicer will, prior to availing
itself of any limitation described in that sentence with respect to any mortgage
loan (or any component loan of an A/B Mortgage Loan) that has a principal
balance in excess of $2,500,000, obtain the approval or disapproval of the
special servicer and the Operating Adviser to the extent required by, and in
accordance with the procedures set forth in, the Pooling and Servicing
Agreement. The master servicer will be entitled to rely on the determination of
the special servicer made in connection with such approval or disapproval. The
special servicer will decide whether to withhold or grant such approval in
accordance with the Servicing Standard. If any such approval has not been
expressly denied within seven (7) business days of receipt by the special
servicer and Operating Adviser from the master servicer of the master servicer's
determination and analysis and all information reasonably requested thereby and
reasonably available to the master servicer in order to make an informed
decision, such approval will be deemed to have been granted. See "Risk
Factors--The Absence Of Or Inadequacy Of Insurance Coverage On The Property May
Adversely Affect Payments On Your Certificates" in this prospectus supplement.
SALE OF THE MORTGAGE LOANS
On the Closing Date, each mortgage loan seller will sell its mortgage
loans, without recourse, to the Depositor, and the Depositor, in turn, will sell
all of the mortgage loans, without recourse and will assign the representations
and warranties made by each mortgage loan seller in respect of the mortgage
loans and the related remedies for breach of the representations and warranties
to the trustee for the benefit of the Certificateholders. In connection with
such assignments, each mortgage loan seller is required in accordance with the
related Mortgage Loan Purchase Agreement to deliver the Mortgage File, with
respect to each mortgage loan so assigned by it to the trustee or its designee.
The trustee will be required to review the documents delivered by each
mortgage loan seller with respect to its mortgage loans within 75 days following
the Closing Date, and the trustee will hold the related documents in trust.
Within 45 days following the Closing Date, pursuant to the Pooling and Servicing
Agreement, the assignments with respect to each mortgage loan and any related
assignment of rents and leases, as described in the "Glossary of Terms" under
the term "Mortgage File," are to be completed in the name of the trustee, if
delivered in blank, and submitted for recording in the real property records of
the appropriate jurisdictions at the expense of the applicable mortgage loan
seller.
The mortgagee of record with respect to any Non-Serviced Mortgage Loan
will be the related Non-Serviced Mortgage Loan Trustee.
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REPRESENTATIONS AND WARRANTIES
In each Mortgage Loan Purchase Agreement, the related mortgage loan
seller has represented and warranted with respect to each of its mortgage loans,
subject to certain specified exceptions, as of the Closing Date or as of such
other date specifically provided in the representation and warranty, among other
things, generally to the effect that:
(1) the information presented in the schedule of the mortgage loans
attached to the related Mortgage Loan Purchase Agreement is complete, true and
correct in all material respects;
(2) such mortgage loan seller owns the mortgage loan free and clear of
any and all pledges, liens and/or other encumbrances;
(3) no Scheduled Payment of principal and interest under the mortgage
loan was 30 days or more past due as of the Cut-off Date, and the mortgage loan
has not been 30 days or more delinquent in the twelve-month period immediately
preceding the Cut-off Date;
(4) the related mortgage constitutes a valid and, subject to certain
creditors' rights exceptions, enforceable first priority mortgage lien, subject
to certain permitted encumbrances, upon the related mortgaged property;
(5) the assignment of the related mortgage in favor of the trustee
constitutes a legal, valid and binding assignment;
(6) the related assignment of leases establishes and creates a valid
and, subject to certain creditors' rights exceptions, enforceable first priority
lien in the related borrower's interest in all leases of the mortgaged property;
(7) the mortgage has not been satisfied, cancelled, rescinded or
subordinated in whole or in material part, and the related mortgaged property
has not been released from the lien of such mortgage, in whole or in material
part;
(8) except as set forth in a property inspection report prepared in
connection with the origination or securitization of the mortgage loan, the
related mortgaged property is, to the mortgage loan seller's knowledge, free and
clear of any damage that would materially and adversely affect its value as
security for the mortgage loan;
(9) the mortgage loan seller has received no notice of the
commencement of any proceeding for the condemnation of all or any material
portion of any mortgaged property;
(10) the related mortgaged property is covered by an American Land
Title Association, or an equivalent form of, lender's title insurance policy
that insures that the related mortgage is a valid, first priority lien on such
mortgaged property, subject only to certain permitted encumbrances;
(11) the proceeds of the mortgage loan have been fully disbursed and
there is no obligation for future advances with respect to the mortgage loan;
(12) except in the case of the mortgage loans covered by the secured
creditor impaired property policy that we describe above, an environmental site
assessment or update of a previous assessment was performed with respect to the
mortgaged property in connection with the origination or securitization of the
related mortgage loan, a report of each such assessment (or the most recent
assessment with respect to each mortgaged property) has been delivered to the
Depositor, and such seller has no knowledge of any material and adverse
environmental condition or circumstance affecting such mortgaged property that
was not disclosed in such report;
(13) each mortgage note, mortgage and other agreement that evidences
or secures the mortgage loan is, subject to certain creditors' rights exceptions
and other exceptions of general application, the legal, valid and
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binding obligation of the maker, enforceable in accordance with its terms, and
there is no valid defense, counterclaim or right of offset or rescission
available to the related borrower with respect to such mortgage note, mortgage
or other agreement;
(14) the related mortgaged property is, and is required pursuant to
the related mortgage to be, insured by casualty, business interruption and
liability insurance policies of a type specified in the related Mortgage Loan
Purchase Agreement;
(15) there are no delinquent or unpaid taxes, assessments or other
outstanding charges affecting the related mortgaged property that are or may
become a lien of priority equal to or higher than the lien of the related
Mortgage;
(16) the related borrower is not, to the mortgage loan seller's
knowledge, a debtor in any state or federal bankruptcy or insolvency proceeding;
(17) no mortgage requires the holder of it to release all or any
material portion of the related mortgaged property from the lien of the mortgage
except upon payment in full of the mortgage loan, a defeasance of the mortgage
loan or, in certain cases, upon (a) the satisfaction of certain legal and
underwriting requirements and/or (b) except where the portion of the related
mortgaged property permitted to be released was not considered by the mortgage
loan seller to be material in underwriting the mortgage loan, the payment of a
release price and prepayment consideration in connection therewith;
(18) to such seller's knowledge, there exists no material default,
breach, violation or event of acceleration, and no event which, with the passage
of time or the giving of notice, or both, would constitute any of the foregoing,
under the related mortgage note or mortgage in any such case to the extent the
same materially and adversely affects the value of the mortgage loan and the
related mortgaged property, other than those defaults that are covered by
certain other of the preceding representations and warranties;
(19) the related mortgaged property consists of a fee simple estate in
real estate or, if the related mortgage encumbers the interest of a borrower as
a lessee under a ground lease of the mortgaged property (a) such ground lease or
a memorandum of the ground lease has been or will be duly recorded and (or the
related estoppel letter or lender protection agreement between the seller and
related lessor) permits the interest of the lessee under the ground lease to be
encumbered by the related mortgage; (b) the lessee's interest in such ground
lease is not subject to any liens or encumbrances superior to, or of equal
priority with, the related mortgage, other than certain permitted encumbrances;
(c) the borrower's interest in such ground lease is assignable to the Depositor
and its successors and assigns upon notice to, but without the consent of, the
lessor under the ground lease (or if it is required it will have been obtained
prior to the Closing Date); (d) such ground lease is in full force and effect
and the seller has received no notice that an event of default has occurred
under the ground lease; (e) such ground lease, or a related estoppel letter,
requires the lessor under such ground lease to give notice of any default by the
lessee to the holder of the mortgage and further provides that no notice of
termination given under such ground lease is effective against such holder
unless a copy has been delivered to such holder and the lessor has offered to
enter into a new lease with such holder on the terms that do not materially vary
from the economic terms of the ground lease; (f) the holder of the mortgage is
permitted a reasonable opportunity (including, where necessary, sufficient time
to gain possession of the interest of the lessee under such ground lease) to
cure any default under such ground lease, which is curable after the receipt of
notice of any such default, before the lessor under the ground lease may
terminate such ground lease; and (g) such ground lease has an original term
(including any extension options set forth therein) which extends not less than
twenty years beyond the scheduled maturity date of the related mortgage loan;
and
(20) the related mortgage loan documents provide that the related
borrower is responsible for the payment of all reasonable costs and expenses of
lender incurred in connection with the defeasance of such mortgage loan and the
release of the related mortgaged property, and the borrower is required to pay
all reasonable costs and expenses of lender associated with the approval of an
assumption of such mortgage loan.
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REPURCHASES AND OTHER REMEDIES
If any mortgage loan document required to be delivered to the trustee
by a mortgage loan seller with respect to its mortgage loans as described under
"--Sale of the Mortgage Loans" above has a Material Document Defect, or if there
is a Material Breach by a mortgage loan seller regarding the characteristics of
any of its mortgage loans and/or the related mortgaged properties as described
under "--Representations and Warranties" above, then such mortgage loan seller
will be obligated to cure such Material Document Defect or Material Breach in
all material respects within the applicable Permitted Cure Period.
Notwithstanding the foregoing, in the event that the payments described under
subparagraph 20 of the preceding paragraph above are insufficient to pay the
expenses associated with such defeasance or assumption of the related mortgage
loan, it shall be the sole obligation of the related mortgage loan seller to pay
an amount sufficient to pay such expenses.
If any such Material Document Defect or Material Breach cannot be
corrected or cured in all material respects within the applicable Permitted Cure
Period, the related mortgage loan seller will be obligated, not later than the
last day of such Permitted Cure Period, to:
o repurchase the affected mortgage loan from the Trust at the
Purchase Price; or
o at its option, if within the two-year period commencing on the
Closing Date, replace such mortgage loan with a Qualifying
Substitute Mortgage Loan, and pay an amount generally equal to
the excess of the applicable Purchase Price for the mortgage loan
to be replaced (calculated as if it were to be repurchased
instead of replaced), over the unpaid principal balance of the
applicable Qualifying Substitute Mortgage Loan as of the date of
substitution, after application of all payments due on or before
such date, whether or not received.
The related mortgage loan seller must cure any Material Document
Defect or Material Breach within the Permitted Cure Period, provided, however,
that if such Material Document Defect or Material Breach would cause the
mortgage loan to be other than a "qualified mortgage", as defined in the Code,
then the repurchase or substitution must occur within 90 days from the date the
mortgage loan seller was notified of the defect or breach.
The foregoing obligations of any mortgage loan seller to cure a
Material Document Defect or a Material Breach in respect of any of its mortgage
loans or the obligation of any mortgage loan seller to repurchase or replace the
defective mortgage loan, will constitute the sole remedies of the trustee and
the Certificateholders with respect to such Material Document Defect or Material
Breach; and none of us, the other mortgage loan sellers or any other person or
entity will be obligated to repurchase or replace the affected mortgage loan if
the related mortgage loan seller defaults on its obligation to do so. Each
mortgage loan seller is obligated to cure, repurchase or replace only mortgage
loans that are sold by it, and will have no obligations with respect to any
mortgage loan sold by any other mortgage loan seller.
If (x) a mortgage loan is to be repurchased or replaced as
contemplated above (a "Defective Mortgage Loan"), (y) such Defective Mortgage
Loan is cross-collateralized and cross-defaulted with one or more other mortgage
loans ("Crossed Mortgage Loans") and (z) the applicable Document Defect or
breach does not constitute a Material Document Defect or Material Breach, as the
case may be, as to such Crossed Mortgage Loans (without regard to this
paragraph), then the applicable Document Defect or breach (as the case may be)
shall be deemed to constitute a Material Document Defect or Material Breach, as
the case may be, as to each such Crossed Mortgage Loan, and the applicable
mortgage loan seller shall be obligated to repurchase or replace each such
Crossed Mortgage Loan in accordance with the provisions of the applicable
Mortgage Loan Purchase Agreement, unless, in the case of such breach or Document
Defect, (A) the applicable mortgage loan seller provides a nondisqualification
opinion to the trustee at the expense of that mortgage loan seller and (B) both
of the following conditions would be satisfied if that mortgage loan seller were
to repurchase or replace only those mortgage loans as to which a Material Breach
or Material Document Defect had occurred (without regard to this paragraph) (the
"Affected Loan(s)"): (i) the debt service coverage ratio for all those Crossed
Mortgage Loans (excluding the Affected Loan(s)) for the four calendar quarters
immediately preceding the repurchase or replacement is not less than the lesser
of (A) 0.10x below the debt service coverage ratio for all such Crossed Mortgage
Loans (including the Affected Loans(s)) set forth in Appendix II of this
prospectus supplement and (B) the debt service coverage ratio for all such
Crossed Mortgage Loans (including the Affected Loan(s)) for the four preceding
calendar quarters preceding the repurchase
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or replacement, and (ii) the loan-to-value ratio for all such Crossed Mortgage
Loans (excluding the Affected Loan(s)) is not greater than the greater of (A)
the loan-to-value ratio, expressed as a whole number (taken to one decimal
place), for all such Crossed Mortgage Loans (including the Affected Loan(s)) set
forth in Appendix II of this prospectus supplement plus 10% and (B) the
loan-to-value ratio for all such Crossed Mortgage Loans (including the Affected
Loans(s)), at the time of repurchase or replacement. The determination of the
master servicer as to whether the conditions set forth above have been satisfied
shall be conclusive and binding in the absence of manifest error. The master
servicer will be entitled to cause to be delivered, or direct the applicable
mortgage loan seller to (in which case that mortgage loan seller shall) cause to
be delivered to the master servicer, an appraisal of any or all of the related
mortgaged properties for purposes of determining whether the condition set forth
in clause (ii) above has been satisfied, in each case at the expense of that
mortgage loan seller if the scope and cost of the appraisal is approved by that
mortgage loan seller (such approval not to be unreasonably withheld).
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 expected to be
constituted at the time the offered certificates are issued. Prior to the
issuance of the offered certificates, a mortgage loan may be removed from the
Mortgage Pool if we deem such removal necessary or appropriate or if it is
prepaid. A limited number of other mortgage loans may be included in the
Mortgage Pool prior to the issuance of the offered certificates, unless
including such mortgage loans would materially alter the characteristics of the
Mortgage Pool as described in this prospectus supplement. The information
presented in this prospectus supplement is representative of the characteristics
of the Mortgage Pool as it will be constituted at the time the offered
certificates are issued, although the range of mortgage rates and maturities and
certain other characteristics of the mortgage loans in the Mortgage Pool may
vary.
MORTGAGE ELECTRONIC REGISTRATION SYSTEMS
With respect to any Mortgage Loan for which the related assignment of
mortgage, assignment of assignment of leases, security agreements and/or UCC
financing statements have been recorded in the name of Mortgage Electronic
Registration Systems, Inc. ("MERS") or its designee, no assignment of mortgage,
assignment of assignment of leases, security agreements and/or UCC financing
statements in favor of the trustee will be required to be prepared or delivered.
Instead, the related mortgage loan seller will be required to take all actions
as are necessary to cause the trustee on behalf of the Trust to be shown as, and
the trustee will be required to take all actions necessary to confirm that the
trustee on behalf of the Trust is shown as, the owner of the related mortgage
loan on the records of MERS for purposes of the system of recording transfers of
beneficial ownership of mortgages maintained by MERS.
SERVICING OF THE MORTGAGE LOANS
GENERAL
The master servicer and the special servicer, either directly or
through the Primary Servicer or sub-servicers, will be required to service and
administer the mortgage loans (other than any Non-Serviced Mortgage Loans) in
accordance with the Servicing Standard. The applicable Non-Serviced Mortgage
Loan Pooling and Servicing Agreement will exclusively govern the servicing and
administration of the related Non-Serviced Mortgage Loan Group (and all
decisions, consents, waivers, approvals and other actions on the part of the
holders of any loans in a Non-Serviced Mortgage Loan Group will be effected in
accordance with the related Non-Serviced Mortgage Loan Pooling and Servicing
Agreement). Consequently, the servicing provisions described herein, including,
but not limited to those regarding the maintenance of insurance, the enforcement
of due-on-encumbrance and due-on-sale provisions, and those regarding
modification of the mortgage loans, appraisal reductions, defaulted mortgage
loans and foreclosure procedures and the administration of accounts will not be
applicable to any Non-Serviced Mortgage Loans, the servicing and administration
of which will instead be governed by the related Non-Serviced Mortgage Loan
Pooling and Servicing Agreement. The servicing standard for any Non-Serviced
Mortgage Loan under its related Non-Serviced Mortgage Loan Pooling and Servicing
Agreement is substantially similar to the Servicing Standard under the Pooling
and Servicing Agreement.
Each of the master servicer and the special servicer is required to
adhere to the Servicing Standard without regard to any conflict of interest that
it may have, any fees or other compensation to which it is entitled, any
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relationship it may have with any borrower, and the different payment priorities
among the Classes of certificates. Each of the master servicer, the special
servicer and the Primary Servicer may become the owner or pledgee of
certificates with the same rights as each would have if it were not the master
servicer, the special servicer or the Primary Servicer, as the case may be.
Any such interest of the master servicer, the special servicer or the
Primary Servicer in the certificates will not be taken into account when
evaluating whether actions of the master servicer, the special servicer or the
Primary Servicer are consistent with their respective obligations in accordance
with the Servicing Standard, regardless of whether such actions may have the
effect of benefiting the Class or Classes of certificates owned by the master
servicer, the special servicer or the Primary Servicer. In addition, the master
servicer or the special servicer may, under limited circumstances, lend money on
a secured or unsecured basis to, accept deposits from, and otherwise generally
engage in any kind of business or dealings with, any borrower as though the
master servicer or the special servicer were not a party to the transactions
contemplated hereby.
On the Closing Date, the master servicer will enter into an agreement
with the Primary Servicer under which the Primary Servicer will assume many of
the servicing obligations of the master servicer presented in this section with
respect to mortgage loans sold by it or its affiliates to the Trust. The Primary
Servicer is subject to the Servicing Standard. If an Event of Default occurs in
respect of the master servicer and the master servicer is terminated, such
termination will not necessarily cause the termination of the Primary Servicer.
Notwithstanding the provisions of any primary servicing agreement or the Pooling
and Servicing Agreement, the master servicer shall remain obligated and liable
to the trustee, paying agent and the Certificateholders for servicing and
administering of the mortgage loans in accordance with the provisions of the
Pooling and Servicing Agreement to the same extent as if the master servicer was
alone servicing and administering the mortgage loans.
Each of the master servicer, the Primary Servicer and the special
servicer is permitted to enter into a sub-servicing agreement and any such
sub-servicer will receive a fee for the services specified in such sub-servicing
agreement; provided that none of the master servicer, the Primary Servicer or
the special servicer may appoint a sub-servicer after the Closing Date without
the Depositor's prior consent to the extent set forth in the Pooling and
Servicing Agreement, which consent may not be unreasonably withheld. However,
any subservicing is subject to various conditions set forth in the Pooling and
Servicing Agreement including the requirement that the master servicer, the
special servicer or the Primary Servicer, as the case may be, will remain liable
for its servicing obligations under the Pooling and Servicing Agreement. The
master servicer or the special servicer, as the case may be, will be required to
pay any servicing compensation due to any sub-servicer out of its own funds.
The master servicer or special servicer may resign from the
obligations and duties imposed on it under the Pooling and Servicing Agreement,
upon 30 days notice to the trustee, provided that:
o a successor master servicer or special servicer is available, has
a net worth of at least $15,000,000 and is willing to assume the
obligations of the master servicer or special servicer, and
accepts appointment as successor master servicer or special
servicer, on substantially the same terms and conditions, and for
not more than equivalent compensation and, in the case of the
special servicer, is reasonably acceptable to the Operating
Adviser, the Depositor and the trustee;
o the master servicer or special servicer bears all costs
associated with its resignation and the transfer of servicing;
and
o the Rating Agencies have confirmed in writing that such servicing
transfer will not result in a withdrawal, downgrade or
qualification of the then current ratings on the certificates.
Furthermore, the master servicer or special servicer may resign if it
determines that its duties 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. A resignation of the master servicer will not affect the
rights and obligations of the Primary Servicer to continue to act as primary
servicer. If the master servicer ceases to serve as such and shall not have been
replaced by a qualified successor, the trustee or an agent of the trustee will
assume the master servicer's duties and obligations under the Pooling and
Servicing Agreement. If the special servicer shall cease to serve as such and a
qualified successor shall not have been engaged, the trustee or an agent will
assume the duties and obligations of the
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special servicer. In the event the trustee or any agent of the trustee assumes
the duties and obligations of the master servicer or special servicer under such
circumstances, the trustee will be permitted to resign as master servicer or
special servicer notwithstanding the first sentence of this paragraph if it has
been replaced by a qualified successor pursuant to the terms of the Pooling and
Servicing Agreement.
The relationship of each of the master servicer and the special
servicer to the trustee is intended to be that of an independent contractor and
not that of a joint venturer, partner or agent.
The master servicer will have no responsibility for the performance by
the special servicer, to the extent they are different entities, of its duties
under the Pooling and Servicing Agreement, and the special servicer will have no
responsibility for the performance by the master servicer of its duties under
the Pooling and Servicing Agreement.
The master servicer initially will be responsible for servicing and
administering the entire pool of mortgage loans other than the Non-Serviced
Mortgage Loans. The special servicer will be responsible for servicing and
administering any Specially Serviced Mortgage Loans other than the Non-Serviced
Mortgage Loans.
Upon the occurrence of any of the events set forth under the
definition of the term "Specially Serviced Mortgage Loan" in the "Glossary of
Terms" in this prospectus supplement (generally regarded as "Servicing Transfer
Events"), the master servicer will be required to transfer its principal
servicing responsibilities with respect to a Specially Serviced Mortgage Loan to
the special servicer in accordance with the procedures set forth in the Pooling
and Servicing Agreement. Notwithstanding such transfer, the master servicer will
continue to receive any payments on such mortgage loan, including amounts
collected by the special servicer, to make selected calculations with respect to
such mortgage loan, and to make remittances to the paying agent and prepare
reports for the trustee and the paying agent with respect to such mortgage loan.
If title to the related mortgaged property is acquired by the Trust, whether
through foreclosure, deed in lieu of foreclosure or otherwise, the special
servicer will be responsible for the operation and management of the property
and such loan will be considered a Specially Serviced Mortgage Loan. The special
servicing transfer events for any Non-Serviced Mortgage Loan under its related
Non-Serviced Mortgage Loan Pooling and Servicing Agreement are substantially
similar to the events set forth under the definition of the term "Specially
Serviced Mortgage Loan" in the "Glossary of Terms" to this prospectus
supplement.
A Specially Serviced Mortgage Loan can become a Rehabilitated Mortgage
Loan to which the master servicer will re-assume all servicing responsibilities.
The master servicer and the special servicer will, in general, each be
required to pay all ordinary expenses incurred by it in connection with its
servicing activities under the Pooling and Servicing Agreement and will not be
entitled to reimbursement therefor except as expressly provided in the Pooling
and Servicing Agreement. See "Description of the Offered
Certificates--Advances--Servicing Advances" in this prospectus supplement.
The Primary Servicer, the master servicer and the special servicer and
any director, officer, employee or agent of any of them will be entitled to
indemnification from the Trust out of collections on, and other proceeds of, the
mortgage loans (and, if and to the extent that the matter relates to a Serviced
Companion Mortgage Loan or B Note, out of collections on, and other proceeds of,
the Serviced Companion Mortgage Loan or B Note) against any loss, liability, or
expense incurred in connection with any legal action relating to the Pooling and
Servicing Agreement, the mortgage loans, any Serviced Companion Mortgage Loan,
any B Note or the certificates other than any loss, liability or expense
incurred by reason of the Primary Servicer's, master servicer's or special
servicer's willful misfeasance, bad faith or negligence in the performance of
their duties under the Pooling and Servicing Agreement.
The Non-Serviced Mortgage Loan Pooling and Servicing Agreements
generally require the consent of the trustee, as holder of the Non-Serviced
Mortgage Loans, to certain amendments to that agreement that would adversely
affect the rights of the trustee in that capacity.
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THE MASTER SERVICER
Master Servicer Compensation
The master servicer will be entitled to a Master Servicing Fee equal
to the Master Servicing Fee Rate applied to the outstanding Scheduled Principal
Balance of each mortgage loan, including REO Properties. The master servicer
will be entitled to retain as additional servicing compensation all investment
income earned on amounts on deposit in the Certificate Account and interest on
escrow accounts if permitted by the related loan documents, and--in each case to
the extent not payable to the special servicer or any sub-servicer or Primary
Servicer as provided in the Pooling and Servicing Agreement or any primary or
sub-servicing agreement--late payment charges, assumption fees, modification
fees, extension fees, defeasance fees and default interest payable at a rate
above the related mortgage rate, provided that late payment charges and default
interest will only be payable to the extent that they are not required to be
used to pay interest accrued on any Advances pursuant to the terms of the
Pooling and Servicing Agreement.
The related Master Servicing Fee and certain other compensation
payable to the Master Servicer will be reduced, on each Distribution Date by the
amount, if any, of any Compensating Interest Payment required to be made by the
master servicer on such Distribution Date. Any Net Aggregate Prepayment Interest
Shortfall will be allocated as presented under "Description of the Offered
Certificates--Distributions--Prepayment Interest Shortfalls and Prepayment
Interest Excesses" in this prospectus supplement. If Prepayment Interest
Excesses for all mortgage loans other than Specially Serviced Mortgage Loans
exceed Prepayment Interest Shortfalls for such mortgage loans as of any
Distribution Date, such excess amount will be payable to the master servicer as
additional servicing compensation.
In addition, the master servicer will be entitled to 50% of all
assumption fees received in connection with any mortgage loans which are not
Specially Serviced Mortgage Loans. The special servicer will generally be
entitled to approve assumptions.
In the event that Wells Fargo resigns or is no longer master servicer
for any reason, Wells Fargo will continue to have the right to receive its
portion of the Excess Servicing Fee. Any successor servicer will receive the
Master Servicing Fee as compensation.
EVENTS OF DEFAULT
If an Event of Default described under the third, fourth, eighth,
ninth or tenth bullet or the last paragraph under the definition of "Event of
Default" under the "Glossary of Terms" has occurred, the obligations and
responsibilities of the master servicer under the Pooling and Servicing
Agreement will terminate on the date which is 60 days following the date on
which the trustee or the Depositor gives written notice to the master servicer
that the master servicer is terminated. If an event of default described under
the first, second, fifth, sixth or seventh bullet under the definition of "Event
of Default" under the "Glossary of Terms" has occurred, the obligations and
responsibilities of the master servicer under the Pooling and Servicing
Agreement will terminate immediately upon the date which the trustee or the
Depositor gives written notice to the master servicer that the master servicer
is terminated. After any Event of Default, the trustee may elect to terminate
the master servicer by providing such notice, and shall provide such notice if
holders of certificates representing more than 25% of the Certificate Balance of
all certificates so direct the trustee. Notwithstanding the foregoing, and in
accordance with the Pooling and Servicing Agreement, if the Event of Default
occurs primarily by reason of the occurrence of a default of the Primary
Servicer under the primary servicing agreement, then the initial master servicer
shall have the right to require that any successor master servicer enter into a
primary servicing agreement with the initial master servicer with respect to all
the mortgage loans as to which the primary servicing default occurred.
The events of default under any Non-Serviced Mortgage Loan Pooling and
Servicing Agreement, and the effect of such defaults in respect of the master
servicer thereunder, are substantially similar to the Events of Default and
termination provisions set forth above.
Upon termination of the master servicer under the Pooling and
Servicing Agreement, all authority, power and rights of the master servicer
under the Pooling and Servicing Agreement, whether with respect to the mortgage
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loans or otherwise, shall terminate except for any rights related to
indemnification, unpaid servicing compensation or unreimbursed Advances and
related interest or its portion of the Excess Servicing Fee, provided that in no
event shall the termination of the master servicer be effective until a
successor servicer shall have succeeded the master servicer as successor
servicer, subject to approval by the Rating Agencies, notified the master
servicer of such designation, and such successor servicer shall have assumed the
master servicer's obligations and responsibilities with respect to the mortgage
loans as set forth in the Pooling and Servicing Agreement. The trustee may not
succeed the master servicer as servicer until and unless it has satisfied the
provisions specified in the Pooling and Servicing Agreement. However, if the
master servicer is terminated as a result of an Event of Default described under
the fifth, sixth or seventh bullet under the definition of "Event of Default"
under the "Glossary of Terms", the trustee shall act as successor servicer
immediately and shall use commercially reasonable efforts to either satisfy the
conditions specified in the Pooling and Servicing Agreement or transfer the
duties of the master servicer to a successor servicer who has satisfied such
conditions. Pursuant to the Pooling and Servicing Agreement, a successor master
servicer must (i) be a servicer to which the Rating Agencies have confirmed in
writing that the transfer of servicing will not result in a withdrawal,
downgrade or qualification of the then current ratings on the Certificates and
(ii) if it is a master servicer, assume the obligations under the primary
servicing agreements entered into by the predecessor master servicer. If any
master servicer is terminated based upon an Event of Default related to a Rating
Agency downgrade or its failure to remain on an approved servicer list of any
Rating Agency, then such master servicer will have the right to enter into a
sub-servicing agreement or primary servicing agreement with the applicable
successor master servicer with respect to all applicable mortgage loans that are
not then subject to a subservicing agreement or primary servicing agreement, so
long as such terminated master servicer is on the S&P Select Servicer List as a
U.S. Commercial Mortgage Servicer and the Operating Adviser has consented to
such primary servicing or subservicing arrangement.
However, if the master servicer is terminated solely due to an Event
of Default described in the eighth, ninth or tenth bullet or the last paragraph
of the definition of Event of Default, and prior to being replaced as described
in the previous paragraph the terminated master servicer provides the trustee
with the appropriate "request for proposal" material and the names of potential
bidders, the trustee will solicit good faith bids for the rights to master
service the mortgage loans in accordance with the Pooling and Servicing
Agreement (which rights will be subject to the right of the Primary Servicer to
continue as Primary Servicer in the absence of a primary servicer event of
default by the Primary Servicer). The trustee will have thirty days to sell the
rights and obligations of the master servicer under the Pooling and Servicing
Agreement to a successor servicer that meets the requirements of a master
servicer under the Pooling and Servicing Agreement, provided that the Rating
Agencies have confirmed in writing that such servicing transfer will not result
in a withdrawal, downgrade or qualification of the then current ratings on the
certificates. The termination of the master servicer will be effective when such
servicer has succeeded the master servicer, as successor servicer and such
successor servicer has assumed the master servicer's obligations and
responsibilities with respect to the mortgage loans, as set forth in an
agreement substantially in the form of the Pooling and Servicing Agreement. If a
successor master servicer is not appointed within thirty days, the master
servicer will be replaced by the trustee as described in the previous paragraph.
The Pooling and Servicing Agreement does not provide for any successor
master servicer to receive any compensation in excess of that paid to the
predecessor master servicer. The predecessor master servicer is required to
cooperate with respect to the transfer of servicing and to pay for the expenses
of its termination and replacement if such termination is due to an Event of
Default or voluntary resignation.
THE SPECIAL SERVICER
Special Servicer Compensation
The special servicer will be entitled to receive:
o a Special Servicing Fee;
o a Workout Fee; and
o a Liquidation Fee.
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The Special Servicing Fee will be payable monthly from general
collections on all the mortgage loans in the Mortgage Pool and, to the extent of
the Trust's interest in the mortgage loan, any foreclosure properties, prior to
any distribution of such collections to certificateholders. The Workout Fee with
respect to any Rehabilitated 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; otherwise such fee is paid until maturity. If
the special servicer is terminated for any reason, it will retain the right to
receive any Workout Fees payable on mortgage loans that became Rehabilitated
Mortgage Loans while it acted as special servicer and remained Rehabilitated
Mortgage Loans at the time of such termination until such mortgage loan becomes
a Specially Serviced Mortgage Loan or until the related mortgaged property
becomes an REO Property. The successor special servicer will not be entitled to
any portion of such Workout Fees.
The special servicer is also permitted to retain, in general,
assumption fees, modification fees, default interest and extension fees
collected on Specially Serviced Mortgage Loans, certain borrower-paid fees,
investment income earned on amounts on deposit in any accounts maintained for
REO Property collections, and other charges specified in the Pooling and
Servicing Agreement. The Special Servicing Fee, the Liquidation Fee and the
Workout Fee will be obligations of the Trust and will represent Expense Losses.
The Special Servicer Compensation will be payable in addition to the Master
Servicing Fee payable to the master servicer.
In addition, the special servicer will be entitled to all assumption
fees received in connection with any Specially Serviced Mortgage Loan and 50% of
any other assumption fees. The special servicer will be entitled to approve
assumptions with respect to all mortgage loans. If Prepayment Interest Excesses
for all Specially Serviced Mortgage Loans exceed Prepayment Interest Shortfalls
for such mortgage loans as of any Distribution Date, such excess amount will be
payable to the special servicer as additional servicing compensation.
As described in this prospectus supplement under "--The Operating
Adviser," the Operating Adviser will have the right to receive notification of,
advise the special servicer regarding, and consent to, certain actions of the
special servicer, subject to the limitations described in this prospectus
supplement and further set forth in the Pooling and Servicing Agreement.
If any Non-Serviced Mortgage Loan becomes specially serviced under the
related Non-Serviced Mortgage Loan Pooling and Servicing Agreement, the
applicable Non-Serviced Mortgage Loan Special Servicer will be entitled to
compensation substantially similar in nature, but not necessarily in amount, to
that described above.
Termination of Special Servicer
The trustee may terminate the special servicer upon a Special Servicer
Event of Default. The termination of the special servicer will be effective when
such successor special servicer has succeeded the special servicer as successor
special servicer and such successor special servicer has assumed the special
servicer's obligations and responsibilities with respect to the mortgage loans,
as set forth in an agreement substantially in the form of the Pooling and
Servicing Agreement. If a successor special servicer is not appointed within the
time periods set forth in the Pooling and Servicing Agreement, the special
servicer will be replaced by the trustee as described in the Pooling and
Servicing Agreement. The Pooling and Servicing Agreement does not provide for
any successor special servicer to receive any compensation in excess of that
paid to the predecessor special servicer. The predecessor special servicer is
required to cooperate with respect to the transfer of servicing and to pay for
the expenses of its termination and replacement, if such termination is due to a
Special Servicer Event of Default or voluntary resignation.
The special servicer events of default under any Non-Serviced Mortgage
Loan Pooling and Servicing Agreement, and the effect of such defaults in respect
of the special servicer thereunder, are substantially similar to the Special
Servicer Events of Default and termination provisions set forth above.
In addition to the termination of the special servicer upon a Special
Servicer Event of Default, the Operating Adviser may direct the trustee to
remove the special servicer, subject to certain conditions, as described below.
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THE OPERATING ADVISER
An Operating Adviser appointed by the holders of a majority of the
Controlling Class will have the right to receive notification from the special
servicer in regard to certain actions and to advise the special servicer with
respect to the following actions, and the special servicer will not be permitted
to take any of the following actions as to which the Operating Adviser has
objected in writing (i) within five (5) business days of receiving notice in
respect of actions relating to non-Specially Serviced Mortgage Loans and (ii)
within ten (10) business days of receiving notice in respect of actions relating
to Specially Serviced Mortgage Loans. The special servicer will be required to
notify the Operating Adviser of, among other things:
o any proposed modification, amendment or waiver, or consent to a
modification, amendment or waiver, of a Money Term of a mortgage
loan or A/B Mortgage Loan or an extension of the original
maturity date;
o any foreclosure or comparable conversion of the ownership of a
mortgaged property;
o any proposed sale of a defaulted mortgage loan or A/B Mortgage
Loan, other than in connection with the termination of the Trust
as described in this prospectus supplement under "Description of
the Offered Certificates--Optional Termination";
o any determination to bring an REO Property into compliance with
applicable environmental laws;
o any release of or acceptance of substitute or additional
collateral for a mortgage loan or A/B Mortgage Loan;
o any acceptance of a discounted payoff;
o any waiver or consent to a waiver of a "due-on-sale" or
"due-on-encumbrance" clause;
o any acceptance or consent to acceptance of an assumption
agreement releasing a borrower from liability under a mortgage
loan or A/B Mortgage Loan;
o any release of collateral for a Specially Serviced Mortgage Loan
or A/B Mortgage Loan (other than in accordance with the terms of,
or upon satisfaction of, such mortgage loan);
o any franchise changes or management company changes to which the
special servicer is required to consent;
o certain releases of any escrow accounts, reserve accounts or
letters of credit; and
o any determination as to whether any type of property-level
insurance is required under the terms of any mortgage loan or A/B
Mortgage Loan, is available at commercially reasonable rates, is
available for similar properties in the area in which the related
mortgaged property is located or any other determination or
exercise of discretion with respect to property-level insurance.
In addition, subject to the satisfaction of certain conditions, the
Operating Adviser will have the right to direct the trustee to remove the
special servicer at any time, with or without cause, upon the appointment and
acceptance of such appointment by a successor special servicer appointed by the
Operating Adviser; provided that, prior to the effectiveness of any such
appointment the trustee shall have received a letter from each Rating Agency to
the effect that such appointment would not result in a downgrade, withdrawal or
qualification in any rating then assigned to any Class of certificates. The
Operating Adviser shall pay costs and expenses incurred in connection with the
removal and appointment of a special servicer (unless such removal is based on
certain events or circumstances specified in the Pooling and Servicing
Agreement).
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At any time, the holders of a majority of the Controlling Class may
direct the paying agent in writing to hold an election for an Operating Adviser,
which election will be held commencing as soon as practicable thereafter.
The Operating Adviser shall be responsible for its own expenses.
We anticipate that an affiliate of the initial special servicer will
purchase certain non-offered Classes of certificates, including the Class P
Certificates (which will be the initial Controlling Class), and will be the
initial Operating Adviser.
Except as may be set forth in the Pooling and Servicing Agreement, the
Operating Adviser will not have any rights under the applicable Non-Serviced
Mortgage Loan Pooling and Servicing Agreement (other than limited notification
rights), but the Operating Adviser or controlling party under the Non-Serviced
Mortgage Loan Pooling and Servicing Agreement (or any B Note thereunder) will
generally have similar rights to receive notification from that special servicer
in regard to certain actions and to advise the special servicer with respect to
those actions.
MORTGAGE LOAN MODIFICATIONS
Subject to any restrictions applicable to REMICs, and to limitations
imposed by the Pooling and Servicing Agreement and any applicable intercreditor
agreement, the master servicer may amend any term (other than a Money Term) of a
mortgage loan, Serviced Companion Mortgage Loan or B Note that is not a
Specially Serviced Mortgage Loan and may extend the maturity date of any Balloon
Loan, other than a Specially Serviced Mortgage Loan, to a date not more than 60
days beyond the original maturity date.
Subject to any restrictions applicable to REMICs, the special servicer
will be permitted to enter into a modification, waiver or amendment of the terms
of any Specially Serviced Mortgage Loan, including any modification, waiver or
amendment to:
o reduce the amounts owing under any Specially Serviced Mortgage
Loan by forgiving principal, accrued interest and/or any
Prepayment Premium or Yield Maintenance Charge;
o reduce the amount of the Scheduled Payment on any Specially
Serviced Mortgage Loan, including by way of a reduction in the
related mortgage rate;
o forbear in the enforcement of any right granted under any
mortgage note or mortgage relating to a Specially Serviced
Mortgage Loan;
o extend the maturity date of any Specially Serviced Mortgage Loan;
and/or
o accept a Principal Prepayment during any Lock-out Period;
provided in each case that (1) the related borrower is in default with respect
to the Specially Serviced Mortgage Loan or, in the reasonable judgment of the
special servicer, such default is reasonably foreseeable, and (2) in the
reasonable judgment of the special servicer, such modification, waiver or
amendment would result in a recovery to Certificateholders equal to or exceeding
the recovery to Certificateholders (or if the related mortgage loan relates to a
Serviced Companion Mortgage Loan or B Note, equal to or exceeding the recovery
to Certificateholders and the holders of such Serviced Companion Mortgage Loan
or B Note, as a collective whole) on a net present value basis, from liquidation
as demonstrated in writing by the special servicer to the trustee and the paying
agent.
In no event, however, will the special servicer be permitted to:
o extend the maturity date of a Specially Serviced Mortgage Loan
beyond a date that is two years prior to the Rated Final
Distribution Date or, in the case of an ARD Loan, five years
prior to the Rated Final Distribution Date; or
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o if the Specially Serviced Mortgage Loan is secured by a ground
lease, extend the maturity date of such Specially Serviced
Mortgage Loan unless the special servicer gives due consideration
to the remaining term of such ground lease.
Modifications that forgive principal or interest of a mortgage loan
will result in Realized Losses on such mortgage loan and such Realized Losses
will be allocated among the various Classes of certificates in the manner
described under "Description of the Offered
Certificates--Distributions--Subordination; Allocation of Losses and Expenses"
in this prospectus supplement.
The modification of a mortgage loan may tend to reduce prepayments by
avoiding liquidations and therefore may extend the weighted average life of the
certificates beyond that which might otherwise be the case. See "Yield,
Prepayment and Maturity Considerations" in this prospectus supplement.
The provisions in any Non-Serviced Mortgage Loan Pooling and Servicing
Agreement regarding the modifications of the related Non-Serviced Mortgage Loan
are generally consistent with the terms of other comparably rated commercial
mortgage loan securitizations.
SALE OF DEFAULTED MORTGAGE LOANS
The Pooling and Servicing Agreement grants to (a) the holder of the
certificates representing the greatest Percentage Interest in the Controlling
Class, (b) the special servicer, and (c) any mortgage loan seller with respect
to mortgage loans it originated (other than Wells Fargo Bank, National
Association), in that order, an option (the "Option") to purchase from the Trust
any defaulted mortgage loan (other than a Non-Serviced Mortgage Loan that is
subject to a comparable option under a related pooling and servicing agreement)
that is at least 60 days delinquent as to any monthly debt service payment (or
is delinquent as to its Balloon Payment). The "Option Purchase Price" for a
defaulted mortgage loan will equal the fair value of such mortgage loan, as
determined by the special servicer. The special servicer is required to
recalculate the fair value of such defaulted mortgage loan if there has been a
material change in circumstances or the special servicer has received new
information that has a material effect on value (or otherwise if the time since
the last valuation exceeds 60 days). If the Option is exercised by either the
special servicer or the holder of certificates representing the greatest
Percentage Interest in the Controlling Class or any of their affiliates then,
prior to the exercise of the Option, the trustee will be required to verify that
the Option Purchase Price equal to fair value.
The Option is assignable to a third party by the holder of the Option,
and upon such assignment such third party shall have all of the rights granted
to the original holder of such Option. The Option will automatically terminate,
and will not be exercisable, if the mortgage loan to which it relates is no
longer delinquent, because the defaulted mortgage loan has (i) become a
Rehabilitated Mortgage Loan, (ii) been subject to a work-out arrangement, (iii)
been foreclosed upon or otherwise resolved (including by a full or discounted
pay-off), (iv) been purchased by the related mortgage loan seller pursuant to
the Pooling and Servicing Agreement or (v) been purchased by the holder of a
related B Note pursuant to a purchase option set forth in the related
intercreditor agreement.
Additionally, each holder of a B Note may have a purchase Option with
respect to defaulted mortgage loans under the related intercreditor agreement
and the holder of the Newbury Village Mezzanine Loan has a purchase Option with
respect to the Newbury Village Mortgage Loan to the extent described in
"Description of the Mortgage Pool--Subordinate and Other Financing--The Newbury
Village Mortgage Loan."
FORECLOSURES
The special servicer may at any time, with notification to and consent
of the Operating Adviser (or a B Note designee, if applicable) and in accordance
with the Pooling and Servicing Agreement, institute foreclosure proceedings,
exercise any power of sale contained in any mortgage, accept a deed in lieu of
foreclosure or otherwise acquire title to a mortgaged property by operation of
law or otherwise, if such action is consistent with the Servicing Standard and a
default on the related mortgage loan has occurred but subject, in all cases, to
limitations concerning environmental matters and, in specified situations, the
receipt of an opinion of counsel relating to REMIC requirements.
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If any mortgaged property is acquired as described in the preceding
paragraph, the special servicer is required to sell the REO Property as soon as
practicable consistent with the requirement to maximize proceeds for all
certificateholders (and with respect to any Serviced Companion Mortgage Loan or
B Note, for the holders of such loans) but in no event later than three years
after the end of the year in which it was acquired (as such period may be
extended by an application to the Internal Revenue Service or following receipt
of an opinion of counsel that such extension will not result in the failure of
such mortgaged property to qualify as "foreclosure property" under the REMIC
provisions of the Code), or any applicable extension period, unless the special
servicer has obtained an extension from the Internal Revenue Service or has
previously delivered to the trustee an opinion of counsel to the effect that the
holding of the REO Property by the Trust subsequent to three years after the end
of the year in which it was acquired, or to the expiration of such extension
period, will not result in the failure of such REO Property to qualify as
"foreclosure property" under the REMIC provisions of the Code. In addition, the
special servicer is required to use its best efforts to sell any REO Property
prior to the Rated Final Distribution Date or earlier to the extent required to
comply with REMIC provisions.
If the Trust acquires a mortgaged property by foreclosure or deed in
lieu of foreclosure upon a default of a mortgage loan, the Pooling and Servicing
Agreement provides that the special servicer, on behalf of the trustee, must
administer such mortgaged property so that it qualifies at all times as
"foreclosure property" within the meaning of Code Section 860G(a)(8). The
Pooling and Servicing Agreement also requires that any such mortgaged property
be managed and operated by an "independent contractor," within the meaning of
applicable Treasury regulations, who furnishes or renders services to the
tenants of such mortgaged property. Generally, REMIC I will not be taxable on
income received with respect to a mortgaged property to the extent that it
constitutes "rents from real property," within the meaning of Code Section
856(c)(3)(A) and Treasury regulations under the Code. "Rents from real property"
do not include the portion of any rental based on the net profits derived by any
person from such property. 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 a Trust, would
not constitute "rents from real property," or that all of the rental income
would not so qualify if the non-customary services are not provided by an
independent contractor or a separate charge is not stated. In addition to the
foregoing, any net income from a trade or business operated or managed by an
independent contractor on a mortgaged property allocated to REMIC I, such as a
hotel, will not constitute "rents from real property." Any of the foregoing
types of income may 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 amount of the proceeds available for distribution to holders of
certificates. Under the Pooling and Servicing Agreement, the special servicer is
required to determine whether the earning of such income taxable to REMIC I
would result in a greater recovery to Certificateholders on a net after-tax
basis than a different method of operation of such property. Prospective
investors are advised to consult their own tax advisers regarding the possible
imposition of REO Taxes in connection with the operation of commercial REO
Properties by REMICs.
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MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following discussion, when read in conjunction with the discussion
of "Federal Income Tax Consequences" in the prospectus, describes the material
federal income tax considerations for investors in the offered certificates.
However, these two discussions do not purport to deal with all federal tax
consequences applicable to all categories of investors, some of which may be
subject to special rules, and do not address state and local tax considerations.
Prospective purchasers should consult their own tax advisers in determining the
federal, state, local and any other tax consequences to them of the purchase,
ownership and disposition of the offered certificates.
GENERAL
For United States federal income tax purposes, portions of the Trust
will be treated as "Tiered REMICs" as described in the prospectus. See "Federal
Income Tax Consequences--REMICS--Tiered REMIC Structures" in the prospectus.
Three separate REMIC elections will be made with respect to designated portions
of the Trust other than that portion of the Trust consisting of the rights to
Excess Interest and the Excess Interest Sub-account (the "Excess Interest
Grantor Trust"). Upon the issuance of the offered certificates, Cadwalader,
Wickersham & Taft LLP, counsel to the Depositor, will deliver its opinion
generally to the effect that, assuming:
o the making of proper elections;
o the accuracy of all representations made with respect to the
mortgage loans;
o ongoing compliance with all provisions of the Pooling and
Servicing Agreement and other related documents and no amendments
to them; and
o ongoing compliance with applicable provisions of the Code, as it
may be amended from time to time, and applicable Treasury
Regulations adopted under the Code;
for federal income tax purposes, (1) each of REMIC I, REMIC II and REMIC III
will qualify as a REMIC under the Code; (2) the Residual Certificates will
represent three separate classes of REMIC residual interests evidencing the sole
class of "residual interests" in each of REMIC I, REMIC II and REMIC III; (3)
the REMIC Regular Certificates (other than the beneficial interest of the Class
P Certificates in the Excess Interest) will evidence the "regular interests" in,
and will be treated as debt instruments of, REMIC III; (4) the Excess Interest
Grantor Trust will be treated as a grantor trust for federal income tax
purposes; and (5) each Class P Certificate will represent both a REMIC regular
interest and a beneficial ownership of the assets of the Excess Interest Grantor
Trust.
The offered certificates will be REMIC Regular Certificates issued by
REMIC III. See "Federal Income Tax Consequences--Taxation of Owners of REMIC
Regular Certificates" in the prospectus for a discussion of the principal
federal income tax consequences of the purchase, ownership and disposition of
the offered certificates.
The offered certificates will be "real estate assets" within the
meaning of Section 856(c)(4)(A) and 856(c)(5)(B) of the Code for a real estate
investment trust ("REIT") in the same proportion that the assets in the REMIC
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 for a REIT to the extent that such certificates are
treated as "real estate assets" under Section 856(c)(5)(B) of the Code. However,
if 95% or more of the REMIC's assets are real estate assets within the meaning
of Section 856(c)(5)(B), then the entire offered certificates shall be treated
as real estate assets and all interest from the offered certificates shall be
treated as interest described in Section 856(c)(3)(B). The offered certificates
will not qualify for the foregoing treatments to the extent the mortgage loans
are defeased with U.S. obligations.
Moreover, the offered certificates will be "qualified mortgages" under
Section 860G(a)(3) of the Code if transferred to another REMIC on its start-up
day in exchange for regular or residual interests therein. Offered certificates
held by certain financial institutions will constitute "evidences of
indebtedness" within the meaning of Section 582(c)(1) of the Code.
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The offered certificates will be treated as assets described in
Section 7701(a)(19)(C)(xi) of the Code for a domestic building and loan
association generally only in the proportion that the REMIC's assets consist of
loans secured by an interest in real property that is residential real property
(including multifamily properties and manufactured housing community properties
or other loans described in Section 7701(a)(19)(C)). However, if 95% or more of
the REMIC's assets are assets described in 7701(a)(19)(C)(i) through
7701(a)(19)(C)(x), then the entire offered certificates shall be treated as
qualified property under 7701(a)(19)(C). See "Description of the Mortgage Pool"
in this prospectus supplement and "Federal Income Tax Consequences--REMICs" in
the prospectus.
ORIGINAL ISSUE DISCOUNT AND PREMIUM
Whether any holder of any Class of certificates will be treated as
holding a certificate with amortizable bond premium will depend on such
Certificateholder's purchase price and the distributions remaining to be made on
such Certificate at the time of its acquisition by such Certificateholder. Based
on their anticipated issue prices, it is anticipated that each Class of offered
certificates will be issued at a premium for federal income tax purposes.
Final regulations on the amortization of bond premium (a) do not apply
to regular interests in a REMIC such as the offered certificates and (b) state
that they are intended to create no inference concerning the amortization of
premium of such instruments. Holders of each Class of certificates issued with
amortizable bond premium should consult their tax advisers regarding the
possibility of making an election to amortize such premium. See "Federal Income
Tax Consequences--REMICs--Taxation of Owners of REMIC Regular Certificates" in
the prospectus.
The prepayment assumption that will be used in determining the rate of
accrual of original issue discount, if any, and amortizable bond premium for
federal income tax purposes for all Classes of certificates issued by the Trust
will be a 0% CPR applied to each mortgage loan until its maturity; provided,
that any ARD Loan is assumed to prepay in full on such mortgage loan's
Anticipated Repayment Date. For a description of CPR, see "Yield, Prepayment and
Maturity Considerations" in this prospectus supplement. However, we make no
representation that the mortgage loans will not prepay during any such period or
that they will prepay at any particular rate before or during any such period.
PREPAYMENT PREMIUMS AND YIELD MAINTENANCE CHARGES
Prepayment Premiums or Yield Maintenance Charges actually collected on
the mortgage loans will be distributed to the holders of each Class of
certificates entitled to Prepayment Premiums or Yield Maintenance Charges as
described under "Description of the Offered
Certificates--Distributions--Distributions of Prepayment Premiums and Yield
Maintenance Charges" in this prospectus supplement. It is not entirely clear
under the Code when the amount of a Prepayment Premium or Yield Maintenance
Charge should be taxed to the holders of a Class of certificates entitled to a
Prepayment Premium or Yield Maintenance Charge. For federal income tax
information reporting purposes, Prepayment Premiums or Yield Maintenance Charges
will be treated as income to the holders of a Class of certificates entitled to
Prepayment Premiums or Yield Maintenance Charges only after the master
servicer's actual receipt of a Prepayment Premium or a Yield Maintenance Charge
to which the holders of such Class of certificates is entitled under the terms
of the Pooling and Servicing Agreement, rather than including projected
Prepayment Premiums or Yield Maintenance Charges in the determination of a
Certificateholder's projected constant yield to maturity. It appears that
Prepayment Premiums or Yield Maintenance Charges are treated as ordinary income
rather than capital gain. However, the timing and characterization of such
income is not entirely clear and Certificateholders should consult their tax
advisers concerning the treatment of Prepayment Premiums or Yield Maintenance
Charges.
ADDITIONAL CONSIDERATIONS
The special servicer is authorized, when doing so is consistent with
maximizing the Trust's net after-tax proceeds from an REO Property, to incur
taxes on the Trust in connection with the operation of such REO Property. Any
such taxes imposed on the Trust would reduce the amount distributable to the
Certificateholders. See "Servicing of the Mortgage Loans--Foreclosures" in this
prospectus supplement.
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Federal income tax information reporting duties with respect to the
offered certificates, REMIC I, REMIC II, REMIC III and the Excess Interest
Grantor Trust will be the obligation of the paying agent, and not of any master
servicer.
For further information regarding the United States federal income tax
consequences of investing in the offered certificates, see "Federal Income Tax
Consequences--REMICs" and "State and Local Tax Considerations" in the
prospectus.
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS
The following discussion summarizes certain legal aspects of mortgage
loans secured by real property in New York and California (approximately 16.0%
and 12.6% of the Initial Pool Balance, respectively) that are general in nature.
This summary does not purport to be complete and is qualified in its entirety by
reference to the applicable federal and state laws governing the mortgage loans.
NEW YORK
New York law requires a lender to elect either a foreclosure action or
a personal action against the borrower, and to exhaust the security under the
mortgage, or exhaust its personal remedies against the borrower, before it may
bring the other such action. The practical effect of the election requirement is
that lenders will usually proceed first against the security rather than
bringing personal action against the borrower. Other statutory provisions limit
any deficiency judgment against the former borrower following a judicial sale to
the excess of the outstanding debt over the fair market value of the property at
the time of the public sale. The purpose of these statutes is generally to
prevent a lender from obtaining a large deficiency judgment against the former
borrower as a result of low bids or the absence of bids at the judicial sale.
CALIFORNIA
Mortgage loans in California are generally secured by deeds of trust.
Foreclosure of a deed of trust may be accomplished by a non judicial trustee's
sale in accordance with the California Civil Code (so long as it is permitted
under a specific provision in the deed of trust) or by judicial foreclosure in
accordance with the California Code of Civil Procedure. Public notice of either
the trustee's sale or the judgment of foreclosure is given for a statutory
period of time, after which the mortgaged real estate may be sold by the
trustee, if foreclosed pursuant to the trustee's power of sale, or by a
court-appointed sheriff under a judicial foreclosure. Following a judicial
foreclosure sale, the borrower may, for a period of up to one year, redeem the
property; however, there is no redemption following a trustee's power of sale.
California's "one action rule" requires the lender to complete foreclosure of
all real estate security under the deed of trust in an attempt to satisfy the
full debt before bringing a personal action (if otherwise permitted) against the
borrower for recovery of the debt, except in certain cases involving
environmentally impaired real property where foreclosure of the real property is
not required before making a claim under the indemnity. Violations of such
statutes may result in the loss of some or all of the security under the
mortgage loan and a loss of the ability to sue for the debt. Other statutory
provisions in California limit any deficiency judgment (if otherwise permitted)
against the borrower following a judicial foreclosure to the amount by which the
indebtedness exceeds the fair value at the time of the public sale. Further,
once a property has been sold pursuant to a power of sale clause contained in a
deed of trust (and in the case of certain types of purchase money acquisition
financings, under all circumstances), the lender is precluded from seeking a
deficiency judgment from the borrower or, under certain circumstances,
guarantors. On the other hand, under certain circumstances, California law
permits separate and even contemporaneous actions against both the borrower and
any guarantors. California statutory provisions regarding assignments of rents
and leases require that a lender whose loan is secured by such an assignment
must exercise a remedy with respect to rents as authorized by statute in order
to establish its right to receive the rents after an event of default.
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CERTAIN ERISA CONSIDERATIONS
ERISA and the Code impose restrictions on Plans that are subject to
ERISA and/or Section 4975 of the Code and on persons that are Parties in
Interest with respect to such Plans. ERISA also imposes duties on persons who
are fiduciaries of Plans subject to ERISA. Under ERISA, any person who exercises
any authority or control respecting the management or disposition of the assets
of a Plan, and any person who provides investment advice with respect to such
assets for a fee, is a fiduciary of such Plan. ERISA and Section 4975 of the
Code also prohibit certain transactions between a Plan and Parties in Interest
with respect to such Plan. Governmental plans (as defined in Section 3(32) of
ERISA) and most non-U.S. plans as described by Section 4(b)(4) of ERISA are not
subject to the restrictions of ERISA and the Code. However, such plans may be
subject to similar provisions of applicable federal, state or local law.
PLAN ASSETS AND PROHIBITED TRANSACTIONS
Under Section 3(42) of ERISA and the U.S. Department of Labor ("DOL")
regulation located at 29 C.F.R. Section 2510.3-101, as a general rule, the
underlying assets and properties of corporations, partnerships, trusts and
certain other entities in which a Plan makes an "equity" investment will be
deemed for certain purposes, including the prohibited transaction provisions of
ERISA and Section 4975 of the Code, to be assets of the investing Plan unless
certain exceptions apply. If the assets of the Trust were deemed to constitute
Plan assets by reason of a Plan's investment in certificates, such Plan asset
would include an undivided interest in the mortgage loans and any other assets
of the Trust. If the mortgage loans or other Trust assets constitute Plan
assets, then any party exercising management or discretionary control regarding
those assets may be deemed to be a "fiduciary" with respect to those assets, and
thus subject to the fiduciary requirements and prohibited transaction provisions
of ERISA and Section 4975 of the Code with respect to the mortgage loans and
other Trust assets.
Affiliates of the Depositor, the Underwriters, the master servicer,
the special servicer, any party responsible for the servicing and administration
of a Non-Serviced Mortgage Loan or any related REO property and certain of their
respective affiliates might be considered or might become fiduciaries or other
Parties in Interest with respect to investing Plans. Moreover, the trustee, the
paying agent, the master servicer, the special servicer, the Operating Adviser,
any insurer, primary insurer or any other issuer of a credit support instrument
relating to the primary assets in the Trust or certain of their respective
affiliates might be considered fiduciaries or other Parties in Interest with
respect to investing Plans. In the absence of an applicable exemption,
"prohibited transactions"-- within the meaning of ERISA and Section 4975 of the
Code -- could arise if certificates were acquired by, or with "plan assets" of,
a Plan with respect to which any such person is a Party in Interest.
In addition, an insurance company proposing to acquire or hold the
offered certificates with assets of its general account should consider the
extent to which such acquisition or holding would be subject to the requirements
of ERISA and Section 4975 of the Code under John Hancock Mutual Life Insurance
Co. v. Harris Trust and Savings Bank, 510 U.S. 86 (1993), and Section 401(c) of
ERISA, as added by the Small Business Job Protection Act of 1996, Public Law No.
104-188, and subsequent DOL and judicial guidance. See "--Insurance Company
General Accounts" below.
SPECIAL EXEMPTION APPLICABLE TO THE OFFERED CERTIFICATES
With respect to the acquisition and holding of the offered
certificates, the DOL has granted to the Underwriters individual prohibited
transaction exemptions, which generally exempt from certain of the prohibited
transaction rules of ERISA and Section 4975 of the Code transactions relating
to:
o the initial purchase, the holding, and the subsequent resale by
Plans of certificates evidencing interests in pass-through
trusts; and
o transactions in connection with the servicing, management and
operation of such trusts, provided that the assets of such trusts
consist of certain secured receivables, loans and other
obligations that meet the conditions and requirements of the
Exemptions.
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The assets covered by the Exemptions include mortgage loans such as the mortgage
loans and fractional undivided interests in such loans.
The Exemptions as applicable to the offered certificates (and as
modified by Prohibited Transaction Exemption 2002-41) set forth the following
five general conditions which must be satisfied for exemptive relief:
o the acquisition of the certificates by a Plan must be on terms,
including the price for the certificates, that are at least as
favorable to the Plan as they would be in an arm's-length
transaction with an unrelated party;
o the certificates acquired by the Plan must have received a rating
at the time of such acquisition that is in one of the four
highest generic rating categories from Fitch, Moody's, S&P or
DBRS, Inc.;
o the trustee cannot be an affiliate of any member of the
Restricted Group, other than an underwriter. The "Restricted
Group" consists of the Underwriters, the Depositor, the master
servicer, the special servicer, the Primary Servicer, any person
responsible for servicing a Non-Serviced Mortgage Loan or any
related REO property and any borrower with respect to mortgage
loans constituting more than 5% of the aggregate unamortized
principal balance of the mortgage loans as of the date of initial
issuance of such Classes of certificates, or any affiliate of any
of these parties;
o the sum of all payments made to the Underwriters in connection
with the distribution of the certificates must represent not more
than reasonable compensation for underwriting the certificates;
the sum of all payments made to and retained by the Depositor in
consideration of the assignment of the mortgage loans to the
Trust must represent not more than the fair market value of such
mortgage loans; 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 and Servicing Agreement or
other relevant servicing agreement and reimbursement of such
person's reasonable expenses in connection therewith; and
o the Plan investing in the certificates must be an "accredited
investor" as defined in Rule 501(a)(1) of Regulation D of the
Securities and Exchange Commission under the 1933 Act.
A fiduciary of a Plan contemplating purchasing any such Class of
certificates in the secondary market must make its own determination that at the
time of such acquisition, any such Class of certificates continues to satisfy
the second general condition set forth above. The Depositor expects that the
third general condition set forth above will be satisfied with respect to each
of such Classes of certificates. A fiduciary of a Plan contemplating purchasing
any such Class of certificates must make its own determination that at the time
of purchase the general conditions set forth above will be satisfied with
respect to any such Class of certificate.
Before purchasing any such Class of certificates, a fiduciary of a
Plan should itself confirm (a) that such certificates constitute "securities"
for purposes of the Exemptions and (b) that the specific and general conditions
of the Exemptions and the other requirements set forth in the Exemptions would
be satisfied. In addition to making its own determination as to the availability
of the exemptive relief provided in the Exemptions, the Plan fiduciary should
consider the availability of other prohibited transaction exemptions.
Moreover, the Exemptions provide relief from certain
self-dealing/conflict of interest prohibited transactions, but only if, among
other requirements:
o the investing Plan fiduciary or its affiliates is an obligor with
respect to 5% or less of the fair market value of the obligations
contained in the Trust;
o the Plan's investment in each Class of certificates does not
exceed 25% of all of the certificates outstanding of that Class
at the time of the acquisition; and
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o immediately after the acquisition, no more than 25% of the assets
of the Plan are invested in certificates representing an interest
in one or more trusts containing assets sold or serviced by the
same entity.
We believe that the Exemptions will apply to the acquisition and
holding of the offered certificates by Plans or persons acting on behalf of or
with "plan assets" of Plans, and that all of the above conditions of the
Exemptions, other than those within the control of the investing Plans or Plan
investors, have been met. Upon request, the Underwriters will deliver to any
fiduciary or other person considering investing "plan assets" of any Plan in the
certificates a list identifying each borrower that is the obligor under each
mortgage loan that constitutes more than 5% of the aggregate principal balance
of the assets of the Trust.
INSURANCE COMPANY GENERAL ACCOUNTS
Based on the reasoning of the United States Supreme Court in John
Hancock Mutual Life Ins. Co. v. Harris Trust and Savings Bank, an insurance
company's general account may be deemed to include assets of the Plans investing
in the general account (e.g., through the purchase of an annuity contract), and
the insurance company might be treated as a Party in Interest with respect to a
Plan by virtue of such investment. Any investor that is an insurance company
using the assets of an insurance company general account should note that the
Small Business Job Protection Act of 1996 added Section 401(c) of ERISA relating
to the status of the assets of insurance company general accounts under ERISA
and Section 4975 of the Code. Pursuant to Section 401(c), the Department of
Labor issued final regulations effective January 5, 2000 with respect to
insurance policies issued on or before December 31, 1998 that are supported by
an insurer's general account. As a result of these regulations, assets of an
insurance company general account will not be treated as "plan assets" for
purposes of the fiduciary responsibility provisions of ERISA and Section 4975 of
the Code to the extent such assets relate to contracts issued to employee
benefit plans on or before December 31, 1998 and the insurer satisfied various
conditions.
Any assets of an insurance company general account which support
insurance policies or annuity contracts issued to Plans after December 31, 1998,
or on or before that date for which the insurer does not comply with the 401(c)
Regulations, may be treated as "plan assets" of such Plans. Because Section
401(c) does not relate to insurance company separate accounts, separate account
assets continue to be treated as "plan assets" of any Plan that is invested in
such separate account. Insurance companies contemplating the investment of
general account assets in the Subordinate Certificates should consult with their
legal counsel with respect to the applicability of Section 401(c).
Accordingly, any insurance company that acquires or holds any offered
certificate shall be deemed to have represented and warranted to the Depositor,
the trustee, the paying agent and the master servicer that (1) such acquisition
and holding is permissible under applicable law, including the Exemption, will
not constitute or result in a non-exempt prohibited transaction under ERISA or
Section 4975 of the Code, and will not subject the Depositor, the trustee, the
paying agent or the master servicer to any obligation in addition to those
undertaken in the Pooling and Servicing Agreement, or (2) the source of funds
used to acquire and hold such certificates is an "insurance company general
account", as defined in DOL Prohibited Transaction Class Exemption 95-60, and
the applicable conditions set forth in PTCE 95-60 have been satisfied.
GENERAL INVESTMENT CONSIDERATIONS
Prospective Plan investors should consult with their legal counsel
concerning the impact of ERISA, Section 4975 of the Code or any corresponding
provisions of applicable federal, state or local law, the applicability of the
Exemptions, or other exemptive relief, and the potential consequences to their
specific circumstances, prior to making an investment in the certificates.
Moreover, each Plan fiduciary should determine whether, under the general
fiduciary standards of ERISA regarding prudent investment procedure and
diversification, an investment in the certificates is appropriate for the Plan,
taking into account the overall investment policy of the Plan and the
composition of the Plan's investment portfolio.
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LEGAL INVESTMENT
The offered certificates will not constitute "mortgage related
securities" for purposes of the Secondary Mortgage Market Enhancement Act of
1984, as amended. The appropriate characterization of the offered certificates
under various legal investment restrictions, and thus the ability of investors
subject to these restrictions to purchase offered certificates, is subject to
significant interpretive uncertainties.
No representations are made as to the proper characterization of the
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 restrictions. The
uncertainties described above (and any unfavorable future determinations
concerning the 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 own legal advisers to determine whether and to what extent the offered
certificates will constitute legal investments for them or are subject to
investment, capital, or other restrictions. See "Legal Investment" in the
prospectus.
USE OF PROCEEDS
We will apply the net proceeds of the offering of the certificates
towards the simultaneous purchase of the mortgage loans from the mortgage loan
sellers and to the payment of expenses in connection with the issuance of the
certificates.
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PLAN OF DISTRIBUTION
We have entered into an Underwriting Agreement with Bear, Stearns &
Co. Inc. and Morgan Stanley & Co. Incorporated. Subject to the terms and
conditions set forth in the Underwriting Agreement, we have agreed to sell to
each Underwriter and each Underwriter has agreed severally to purchase from us,
the respective aggregate Certificate Balance of each class of offered
certificates presented below.
UNDERWRITERS CLASS A-1 CLASS A-2 CLASS A-3 CLASS A-AB
--------------------------------- ---------- ------------ ----------- -----------
Bear, Stearns & Co. Inc. $37,500,000 $ 88,500,000 $32,700,000 $39,000,000
Morgan Stanley & Co. Incorporated $37,500,000 $ 88,500,000 $32,700,000 $39,000,000
Total......................... $75,000,000 $177,000,000 $65,400,000 $78,000,000
UNDERWRITERS CLASS A-4 CLASS A-1A CLASS A-M CLASS A-J
--------------------------------- ------------ ------------ ------------ ------------
Bear, Stearns & Co. Inc. $495,940,000 $ 75,051,000 $105,300,500 $ 80,291,500
Morgan Stanley & Co. Incorporated $495,940,000 $ 75,051,000 $105,300,500 $ 80,291,500
Total......................... $991,880,000 $150,102,000 $210,601,000 $160,583,000
Bear, Stearns & Co. Inc. and Morgan Stanley & Co. Incorporated will
act as co-lead managers and co-bookrunners with respect to the offered
certificates.
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to conditions precedent, and that the Underwriters
severally will be obligated to purchase all of the offered certificates if any
are purchased. In the event of a default by an Underwriter, the Underwriting
Agreement provides that the purchase commitment of the non-defaulting
Underwriter may be increased. Proceeds to the Depositor from the sale of the
offered certificates, before deducting expenses payable by the Depositor, will
be approximately $1,918,788,947, plus accrued interest on the certificates.
The Underwriters have advised us that they will propose to offer the
offered certificates from time to time for sale in one or more negotiated
transactions or otherwise at varying prices to be determined at the time of
sale. The Underwriters may effect such transactions by selling such Classes of
offered certificates to or through dealers and such dealers may receive
compensation in the form of underwriting discounts, concessions or commissions
from the Underwriters and any purchasers of such Classes of offered certificates
for whom they may act as agent.
One or more affiliates of the Underwriters have entered into and may,
in the future, enter into other financing arrangements with affiliates of some
or all of the borrowers. Affiliates of the Underwriters, including Bear Stearns
Commercial Mortgage Securities Inc., engage in, and intend to continue to engage
in, the acquisition, development, operation, financing and disposition of real
estate-related assets in the ordinary course of their business, and are not
prohibited in any way from engaging in business activities similar to or
competitive with those of the borrowers. See "Risk Factors--Conflicts of
Interest May Have An Adverse Effect On Your Certificates" in this prospectus
supplement.
In connection with the offering, the Underwriters may purchase and
sell the offered certificates in the open market. These transactions may include
purchases to cover short positions created by an Underwriter in connection with
the offering. Short positions created by an Underwriter involve the sale by the
Underwriter of a greater number
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of certificates than it is required to purchase from Bear Stearns Commercial
Mortgage Securities Inc. in the offering. An Underwriter also may impose a
penalty bid, whereby selling concessions allowed to broker-dealers in respect of
the securities sold in the offering may be reclaimed by the Underwriter if the
certificates are repurchased by the Underwriter in covering transactions. These
activities may maintain or otherwise affect the market price of the
certificates, which may be higher than the price that might otherwise prevail in
the open market; and these activities, if commenced, may be discontinued at any
time. These transactions may be effected in the over-the-counter market or
otherwise. We expect that an affiliate of Morgan Stanley & Co. Incorporated will
purchase approximately $40,000,000 of the Class A-4 Certificates for its own
account.
The offered certificates are offered by the Underwriters when, as and
if issued by the Depositor, delivered to and accepted by the Underwriters and
subject to their right to reject orders in whole or in part. It is expected that
delivery of the offered certificates will be made in book-entry form through the
facilities of DTC against payment therefor on or about April 18, 2007, which is
the ninth business day following the date of pricing of the certificates.
Under Rule 15c6-1 under the Securities Exchange Act of 1934, as
amended, trades in the secondary market generally are required to settle in
three business days, unless the parties to any such trade expressly agree
otherwise. Accordingly, purchasers who wish to trade offered certificates in the
secondary market prior to such delivery should specify a longer settlement
cycle, or should refrain from specifying a shorter settlement cycle, to the
extent that failing to do so would result in a settlement date that is earlier
than the date of delivery of such offered certificates.
The Underwriters and any dealers that participate with the
Underwriters in the distribution of the offered certificates will be deemed to
be underwriters, and any discounts or commissions received by them and any
profit on the resale of such Classes of offered certificates by them may be
deemed to be underwriting discounts or commissions, under the Securities Act of
1933, as amended.
We have agreed to indemnify the Underwriters against civil
liabilities, including liabilities under the Securities Act of 1933, as amended,
or contribute to payments the Underwriters may be required to make in respect of
such liabilities.
One or more of the Underwriters currently intend to make a secondary
market in the offered certificates, but they are not obligated to do so.
The Depositor is an affiliate of Bear, Stearns & Co. Inc., an
Underwriter, and Bear Stearns Commercial Mortgage, Inc., a mortgage loan seller.
LEGAL MATTERS
The legality of the offered certificates and the material federal
income tax consequences of investing in the offered certificates will be passed
upon for the Depositor by Cadwalader, Wickersham & Taft LLP, New York, New York
and Latham & Watkins LLP, New York, New York. Certain legal matters with respect
to the offered certificates will be passed upon for the Underwriters by Latham &
Watkins LLP, New York, New York. Certain legal matters will be passed upon for
Bear Stearns Commercial Mortgage, Inc. by Cadwalader, Wickersham & Taft LLP, New
York, New York, for Morgan Stanley Mortgage Capital Inc. by Latham & Watkins
LLP, New York, New York, for Wells Fargo Bank, National Association, in its
capacity as sponsor and mortgage loan seller, by Andrews Kurth LLP, for Wells
Fargo Bank, National Association, in its capacity as master servicer, by Sidley
Austin LLP, New York, New York, for Principal Commercial Funding II, LLC, by
Dechert LLP, New York, New York, for Wells Fargo Bank, National Association, in
its capacity as paying agent, certificate registrar and authenticating agent, by
Kennedy Covington Lobdell & Hickman LLP, and for LaSalle Bank National
Association, by Kennedy Covington Lobdell & Hickman LLP.
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RATINGS
It is a condition of the issuance of the offered certificates that
they receive the following credit ratings from Fitch, S&P and DBRS.
CLASS FITCH S&P DBRS
----------------------------------- ----- --- ----
Class A-1 ......................... AAA AAA AAA
Class A-2 ......................... AAA AAA AAA
Class A-3 ......................... AAA AAA AAA
Class A-AB ........................ AAA AAA AAA
Class A-4 ......................... AAA AAA AAA
Class A-1A ........................ AAA AAA AAA
Class A-M ......................... AAA AAA AAA
Class A-J ......................... AAA AAA AAA
It is expected that each of the Rating Agencies identified above will
perform ratings surveillance with respect to its ratings for so long as the
offered certificates remain outstanding except that a Rating Agency may stop
performing ratings surveillance at any time, if, among other reasons, that
Rating Agency does not have sufficient information to allow it to continue to
perform ratings surveillance on the certificates. The Depositor has no ability
to ensure that the Rating Agencies perform ratings surveillance. Fees for such
ratings surveillance have been prepaid by the Depositor. The ratings of the
offered certificates address the likelihood of the timely payment of interest
and the ultimate payment of principal, if any, due on the offered certificates
by the Rated Final Distribution Date. That date is the first Distribution Date
that follows, by at least 60 months, the maturity date of the ARD Loan that, as
of the Cut-off Date, has the latest final maturity date. 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.
The ratings of the certificates do not represent any assessment of (1)
the likelihood or frequency of Principal Prepayments, voluntary or involuntary,
on the mortgage loans, (2) the degree to which such prepayments might differ
from those originally anticipated, (3) whether and to what extent Prepayment
Premiums, Yield Maintenance Charges, any Excess Interest or default interest
will be received, (4) the allocation of Net Aggregate Prepayment Interest
Shortfalls or (5) the tax treatment of the certificates. A security rating does
not represent any assessment of the yield to maturity that investors may
experience. In general, the ratings thus address credit risk and not prepayment
risk.
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 of the offered certificates and, if so, what such rating would be. 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 to such Class at the request of the Depositor.
S-190
GLOSSARY OF TERMS
The certificates will be issued pursuant to the Pooling and Servicing
Agreement. The following Glossary of Terms is not complete. You should also
refer to the prospectus and the Pooling and Servicing Agreement for additional
definitions. If you send a written request to the trustee at its corporate
office, the trustee will provide to you without charge a copy of the Pooling and
Servicing Agreement, without exhibits and schedules.
Unless the context requires otherwise, the definitions contained in
this Glossary of Terms apply only to this series of certificates and will not
necessarily apply to any other series of certificates the Trust may issue.
"A Note" means, with respect to any A/B Mortgage Loan, the mortgage
note (or notes) included in the Trust.
"A/B Mortgage Loan" means any mortgage loan serviced under the Pooling
and Servicing Agreement that is divided into a senior mortgage note(s) and a
subordinated mortgage note, one or more of which senior mortgage note(s) is
included in the Trust. References in this prospectus supplement to an A/B
Mortgage Loan shall be construed to refer to the aggregate indebtedness under
the related A Note and the related B Note. There are no A/B Mortgage Loans
included in the Trust.
"Accrued Certificate Interest" means, in respect of each Class of
Certificates for each Distribution Date, the amount of interest for the
applicable Interest Accrual Period accrued at the applicable Pass-Through Rate
on the aggregate Certificate Balance or Notional Amount, as the case may be, of
such Class of certificates 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.
"Additional Servicer" means each affiliate of the master servicer, the
Depositor, MSMC, BSCMI, PCFII, Wells Fargo Bank, or any Underwriter that
services any of the mortgage loans and each person that is not an affiliate of
the master servicer, the Depositor, MSMC, BSCMI, PCFII, Wells Fargo Bank or any
Underwriter other than the special servicer, and who services 10% or more of the
mortgage loans based on the principal balance of the mortgage loans.
"Administrative Cost Rate" will equal the sum of the related Master
Servicing Fee Rate, the Excess Servicing Fee Rate, the Primary Servicing Fee
Rate, and the Trustee Fee Rate set forth in the Pooling and Servicing Agreement
(and in the case of a Non-Serviced Mortgage Loan, the applicable Pari Passu Loan
Servicing Fee Rate, respectively) for any month (in each case, expressed as a
per annum rate) for any mortgage loan in such month, and is set forth in
Appendix II and Appendix III.
"Advance Rate" means a rate equal to the "Prime Rate" as reported in
The Wall Street Journal from time to time.
"Advances" means Servicing Advances and P&I Advances, collectively.
"Annual Report" means a report for each mortgage loan based on the
most recently available year-end financial statements and most recently
available rent rolls of each applicable borrower, to the extent such information
is provided to the master servicer, containing such information and analyses as
required by the Pooling and Servicing Agreement including, without limitation,
Debt Service Coverage Ratios, to the extent available, and in such form as shall
be specified in the Pooling and Servicing Agreement.
"Anticipated Repayment Date" means, in respect of any ARD Loan, the
date on which a substantial principal payment on an ARD Loan is anticipated to
be made (which is prior to stated maturity).
"Appraisal Event" means not later than the earliest of the following:
S-191
o the date 120 days after the occurrence of any delinquency in payment with
respect to a mortgage loan, Loan Pair or A/B Mortgage Loan if such
delinquency remains uncured;
o the date 30 days after receipt of notice that the related borrower has
filed a bankruptcy petition, an involuntary bankruptcy has occurred or a
receiver is appointed in respect of the related mortgaged property,
provided that such petition or appointment remains in effect;
o the effective date of any modification to a Money Term of a mortgage loan,
Loan Pair or A/B Mortgage Loan, other than an extension of the date that a
Balloon Payment is due for a period of less than six months from the
original due date of such Balloon Payment; and
o the date 30 days following the date a mortgaged property becomes an REO
Property.
"Appraisal Reduction" will equal, for any mortgage loan, including a
mortgage loan as to which the related mortgaged property has become an REO
Property, an amount that is equal to the excess, if any, of:
the sum of:
o the Scheduled Principal Balance of such mortgage loan, Loan Pair or A/B
Mortgage Loan or in the case of an REO Property, the related REO mortgage
loan, less the principal amount of certain guarantees and surety bonds and
any undrawn letter of credit or debt service reserve, if applicable, that
is then securing such mortgage loan or Loan Pair;
o to the extent not previously advanced by the master servicer or the
trustee, all accrued and unpaid interest on the mortgage loan, Loan Pair or
A/B Mortgage Loan at a per annum rate equal to the applicable mortgage
rate;
o all related unreimbursed Advances and interest on such Advances at the
Advance Rate, and, to the extent applicable, all Advances that were made on
a mortgage loan, Loan Pair or A/B Mortgage Loan on or before the date such
mortgage loan, Loan Pair or A/B Mortgage Loan became a Rehabilitated
Mortgage Loan that have since been reimbursed to the advancing party by the
Trust out of principal collections but not by the related mortgagor; and
o to the extent funds on deposit in any applicable Escrow Accounts are not
sufficient therefor, and to the extent not previously advanced by the
master servicer or the trustee, all currently due and unpaid real estate
taxes and assessments, insurance premiums and, if applicable, ground rents
and other amounts which were required to be deposited in any Escrow Account
(but were not deposited) in respect of the related mortgaged property or
REO Property, as the case may be,
over
o 90% of the value (net of any prior mortgage liens) of such mortgaged
property or REO Property as determined by such appraisal or internal
valuation, plus the full amount of any escrows held by or on behalf of the
trustee as security for the mortgage loan, Loan Pair or A/B Mortgage Loan
(less the estimated amount of obligations anticipated to be payable in the
next twelve months to which such escrows relate).
In the case of any Serviced Pari Passu Mortgage Loan, any Appraisal Reduction
will be calculated in respect of the Serviced Pari Passu Mortgage Loan and the
related Serviced Companion Mortgage Loan and then allocated pro rata between the
Serviced Pari Passu Mortgage Loan and the Serviced Companion Mortgage Loan
according to their respective principal balances. In the case of any A/B
Mortgage Loan, any Appraisal Reduction will be calculated in respect of such A/B
Mortgage Loan taken as a whole and any such Appraisal Reduction will be
allocated first to the related B Note and then allocated to the related A Note.
In the case of any Non-Serviced Mortgage Loan, any Appraisal Reduction will be
calculated in accordance with the related Non-Serviced Mortgage Loan Pooling and
Servicing Agreement.
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"ARD Loan" means a mortgage loan that provides for increases in the
mortgage rate and/or principal amortization at a date prior to stated maturity,
which creates an incentive for the related borrower to prepay such mortgage
loan.
"Assumed Scheduled Payment" means an amount deemed due in respect of:
o any Balloon Loan that is delinquent in respect of its Balloon Payment
beyond the first Determination Date that follows its original stated
maturity date; or
o any mortgage loan as to which the related mortgaged property has become an
REO Property.
The Assumed Scheduled Payment deemed due on any such Balloon Loan on its
original stated maturity date and on each successive Due Date that such Balloon
Loan remains or is deemed to remain outstanding will equal the Scheduled Payment
that would have been due on such date if the related Balloon Payment had not
come due, but rather such mortgage loan had continued to amortize in accordance
with its amortization schedule in effect immediately prior to maturity. With
respect to any mortgage loan as to which the related mortgaged property has
become an REO Property, the Assumed Scheduled Payment deemed due on each Due
Date for so long as the REO Property remains part of the Trust, equals the
Scheduled Payment (or Assumed Scheduled Payment) due on the last Due Date prior
to the acquisition of such REO Property.
"Available Distribution Amount" means in general, for any Distribution
Date:
(1) all amounts on deposit in the Certificate Account as of the
business day preceding the related Distribution Date that
represent payments and other collections on or in respect of the
mortgage loans and any REO Properties that were received by the
master servicer or the special servicer through the end of the
related Collection Period, exclusive of any portion that
represents one or more of the following:
o Scheduled Payments collected but due on a Due Date
subsequent to the related Collection Period;
o Prepayment Premiums or Yield Maintenance Charges (which are
separately distributable on the certificates as described in
this prospectus supplement);
o amounts that are payable or reimbursable to any person other
than the Certificateholders (including, among other things,
amounts attributable to Expense Losses and amounts payable
to the master servicer, the special servicer, the Primary
Servicer, the trustee and the paying agent as compensation
or in reimbursement of outstanding Advances or as Excess
Servicing Fees);
o amounts deposited in the Certificate Account in error;
o if such Distribution Date occurs during January, other than
a leap year, or February of any year, the Interest Reserve
Amounts of one day's interest with respect to the Interest
Reserve Loans to be deposited into the Interest Reserve
Account;
o in the case of the REO Property related to an A/B Mortgage
Loan or Loan Pair, all amounts received with respect to such
A/B Mortgage Loan or Loan Pair, as applicable, that are
required to be paid to the holder of the related B Note or
Serviced Companion Mortgage Loan pursuant to the terms of
the related B Note or Serviced Companion Mortgage Loan and
the related intercreditor agreement; and
o any portion of such amounts payable to the holders of any
Serviced Companion Mortgage Loan or B Note;
S-193
(2) to the extent not already included in clause (1), any P&I
Advances made and any Compensating Interest Payment paid with
respect to such Distribution Date; and
(3) if such Distribution Date occurs during March of any year or on
the final Distribution Date, the aggregate of the Interest
Reserve Amounts then on deposit in the Interest Reserve Account.
"B Note" means, with respect to any A/B Mortgage Loan, any related
subordinated Mortgage Note not included in the Trust, which is subordinated in
right of payment to the related A Note to the extent set forth in the related
intercreditor agreement. There are no B Notes associated with any A/B Mortgage
Loan in the Trust.
"Balloon Loans" means mortgage loans that provide for Scheduled
Payments based on amortization schedules significantly longer than their terms
to maturity or Anticipated Repayment Date, and that are expected to have
remaining principal balances equal to or greater than 5% of the outstanding
principal balance as of the Cut-Off Date of those mortgage loans as of their
respective stated maturity date or anticipated to be paid on their Anticipated
Repayment Dates, as the case may be, unless previously prepaid.
"Balloon LTV" - See "Balloon LTV Ratio."
"Balloon LTV Ratio" or "Balloon LTV" means the ratio, expressed as a
percentage, of (a) (i) the principal balance of a Balloon Loan anticipated to be
outstanding on the date on which the related Balloon Payment is scheduled to be
due or, (ii) in the case of an ARD Loan, the principal balance on its related
Anticipated Repayment Date to (b) the value of the related mortgaged property or
properties as of the Cut-off Date determined as described under "Description of
the Mortgage Pool--Additional Mortgage Loan Information" in this prospectus
supplement.
"Balloon Payment" means, with respect to the Balloon Loans, the
principal payments and scheduled interest due and payable on the relevant
maturity dates.
"Bankruptcy Code" means, the federal Bankruptcy Code, Title 11 of the
United States Code, as amended.
"Base Interest Fraction" means, with respect to any Principal
Prepayment of any mortgage loan that provides for payment of a Prepayment
Premium or Yield Maintenance Charge, and with respect to any Class of
certificates, a fraction (A) whose numerator is the greater of (x) zero and (y)
the difference between (i) the Pass-Through Rate on that Class of certificates,
and (ii) the Discount Rate used in calculating the Prepayment Premium or Yield
Maintenance Charge with respect to the Principal Prepayment (or the current
Discount Rate if not used in such calculation) and (B) whose denominator is the
difference between (i) the mortgage rate on the related mortgage loan and (ii)
the Discount Rate used in calculating the Prepayment Premium or Yield
Maintenance Charge with respect to that Principal Prepayment (or the current
Discount Rate if not used in such calculation), provided, however, that under no
circumstances will the Base Interest Fraction be greater than one, and provided,
further, that with respect to Mortgage Loan No. 173 (the 94-125 Leokane Mortgage
Loan), the Base Interest Fraction will be deemed to be equal to approximately
33.33% for the first Distribution Date. If the Discount Rate referred to above
is greater than or equal to the mortgage rate on the related mortgage loan, then
the Base Interest Fraction will equal zero; provided, however, that if the
Discount Rate referred to above is greater than or equal to the mortgage rate on
the related mortgage loan, but is less than the Pass-Through Rate on that Class
of certificates, then the Base Interest Fraction shall be equal to 1.0.
"BSCMI" means Bear Stearns Commercial Mortgage, Inc.
"BSCMI Loans" means the mortgage loans that were originated or
purchased by BSCMI or an affiliate of BSCMI.
"Certificate Account" means one or more separate accounts established
and maintained by the master servicer, the Primary Servicer or any sub-servicer
on behalf of the master servicer, pursuant to the Pooling and Servicing
Agreement.
S-194
"Certificate Balance" will equal the then maximum amount that the
holder of each Principal Balance Certificate will be entitled to receive in
respect of principal out of future cash flow on the mortgage loans and other
assets included in the Trust.
"Certificateholder" or "Holder" means an entity in whose name a
certificate is registered in the certificate registrar.
"Certificate Group 1 Principal Distribution Amount" means, for any
Distribution Date, an amount equal to the lesser of (A) the sum of (i) the
portion of the Principal Distribution Amount for such Distribution Date
attributable to Loan Group 1, and (ii) on or after the Distribution Date on
which the aggregate Certificate Balance of the Class A-1A Certificates has been
reduced to zero, the portion of the Principal Distribution Amount attributable
to Loan Group 2 (net of any portion thereof that is distributable on that
Distribution Date to the holders of the Class A-1A Certificates), and (B) the
Aggregate Certificate Balance of the Class A-1, Class A-2, Class A-3, Class A-AB
and Class A-4 Certificates outstanding immediately before such Distribution
Date.
"Certificate Owner" means an entity acquiring an interest in an
offered certificate.
"Class" means the designation applied to the offered certificates and
the private certificates, pursuant to this prospectus supplement.
"Class A Senior Certificates" means the Class A-1 Certificates, the
Class A-2 Certificates, the Class A-3 Certificates, the Class A-AB Certificates,
the Class A-4 Certificates, and the Class A-1A Certificates.
"Class X Certificates" means the Class X-1 Certificates and the Class
X-2 Certificates.
"Clearstream Bank" means Clearstream Bank, societe anonyme.
"Closing Date" means on or about April 18, 2007.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collection Period" means, with respect to any Distribution Date, the
period beginning with the day after the Determination Date in the month
preceding such Distribution Date (or, in the case of the first Distribution
Date, the Cut-off Date) and ending with the Determination Date occurring in the
month in which such Distribution Date occurs.
"Compensating Interest" means with respect to any Distribution Date,
an amount equal to the lesser of (A) the excess of (i) Prepayment Interest
Shortfalls incurred in respect of the mortgage loans other than Specially
Serviced Mortgage Loans resulting from (x) voluntary Principal Prepayments on
such mortgage loans (but not including any B Note, Non-Serviced Companion
Mortgage Loan or Serviced Companion Mortgage Loan) or (y) to the extent that the
master servicer did not apply the proceeds from involuntary Principal
Prepayments in accordance with the terms of the related mortgage loan documents,
involuntary Principal Prepayments during the related Collection Period over (ii)
the aggregate of Prepayment Interest Excesses incurred in respect of the
mortgage loans resulting from Principal Prepayments on the mortgage loans (but
not including any B Note, Non-Serviced Companion Mortgage Loan or Serviced
Companion Mortgage Loan) during the same Collection Period, and (B) the
aggregate of the portion of the aggregate Master Servicing Fee accrued at a rate
per annum equal to 2 basis points for the related Collection Period calculated
in respect of all the mortgage loans including REO Properties (but not including
any B Note, Non-Serviced Companion Mortgage Loan or Serviced Companion Mortgage
Loan), plus any investment income earned on the amount prepaid prior to such
Distribution Date.
"Compensating Interest Payment" means any payment of Compensating
Interest.
"Condemnation Proceeds" means any awards resulting from the full or
partial condemnation or eminent domain proceedings or any conveyance in lieu or
in anticipation of such proceedings with respect to a mortgaged property by or
to any governmental, quasi-governmental authority or private entity with
condemnation powers other than amounts to be applied to the restoration,
preservation or repair of such mortgaged property or released to the
S-195
related borrower in accordance with the terms of the mortgage loan and (if
applicable) its related B Note or Serviced Companion Mortgage Loan. With respect
to the mortgaged property or properties securing any Non-Serviced Mortgage Loan
or Non-Serviced Companion Mortgage Loan, only the portion of such amounts
payable to the holder of the related Non-Serviced Mortgage Loan will be included
in Condemnation Proceeds, and with respect to the mortgaged property or
properties securing any Loan Pair or A/B Mortgage Loan, only an allocable
portion of such Condemnation Proceeds will be distributable to the
Certificateholders.
"Constant Default Rate" or "CDR" means a rate that represents an
assumed constant rate of default each month, which is expressed as an annual
percentage, relative to the then outstanding principal balance of a pool of
mortgage loans for the life of such mortgage loans. CDR does not purport to be
either an historical description of the default experience of any pool of
mortgage loans or a prediction of the anticipated rate of default of any
mortgage loans, including the mortgage loans underlying the certificates.
"Constant Prepayment Rate" or "CPR" means a rate that represents an
assumed constant rate of prepayment each month, which is expressed on a per
annum basis, relative to the then outstanding principal balance of a pool of
mortgage loans for the life of such mortgage loans. CPR does not purport to be
either an historical description of the prepayment experience of any pool of
mortgage loans or a prediction of the anticipated rate of prepayment of any
mortgage loans, including the mortgage loans underlying the certificates.
"Controlling Class" means the most subordinate Class of Subordinate
Certificates outstanding at any time of determination; provided, however, that
if the aggregate Certificate Balance of such Class of certificates is less than
25% of the initial aggregate Certificate Balance of such Class as of the Closing
Date, the Controlling Class will be the next most subordinate Class of
Subordinate Certificates.
"CPR" - See "Constant Prepayment Rate" above.
"Cut-off Date" means April 1, 2007. For purposes of the information
contained in this prospectus supplement (including the appendices to this
prospectus supplement), Scheduled Payments due in April 2007 with respect to
mortgage loans not having Due Dates on the first of each month have been deemed
received on April 1, 2007, not the actual day which such Scheduled Payments were
due.
"Cut-off Date Balance" means, with respect to any mortgage loan, such
mortgage loan's principal balance outstanding as of its Cut-off Date, after
application of all payments of principal due on or before such date, whether or
not received determined as described under "Description of the Mortgage
Pool--Additional Mortgage Loan Information" in this prospectus supplement. For
purposes of those mortgage loans that have a Due Date on a date other than the
first of the month, we have assumed that monthly payments on such mortgage loans
are due on the first of the month for purposes of determining their Cut-off Date
Balances.
"Cut-off Date Loan-to-Value" or "Cut-off Date LTV" means a ratio,
expressed as a percentage, of the Cut-off Date Balance of a mortgage loan to the
value of the related mortgaged property or properties determined as described
under "Description of the Mortgage Pool--Additional Mortgage Loan Information"
in this prospectus supplement.
"Cut-off Date LTV" - See "Cut-off Date Loan-to-Value."
"DBRS" means Dominion Bond Rating Service, Inc.
"Debt Service Coverage Ratio" or "DSCR" means the ratio of
Underwritable Cash Flow estimated to be produced by the related mortgaged
property or properties to the annualized amount of current debt service payable
under that mortgage loan, whether or not the mortgage loan has an interest-only
period that has not expired as of the Cut-Off Date. See "Description of the
Mortgage Pool--Additional Mortgage Loan Information" in this prospectus
supplement.
"Debt Service Coverage Ratio Post IO Period" or "DSCR Post IO Period"
means, with respect to the related mortgage loan that has an interest-only
period that has not expired as of the Cut-off Date but will expire prior to
maturity, a debt service coverage ratio calculated in the same manner as DSCR
except that the amount of the
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monthly debt service payment considered in the calculation is the amount of the
monthly debt service payment that is due in the first month following the
expiration of the applicable interest-only period. See "Description of the
Mortgage Pool--Additional Mortgage Loan Information" in this prospectus
supplement.
"Depositor" means Bear Stearns Commercial Mortgage Securities Inc.
"Determination Date" means, with respect to any Distribution Date, the
earlier of (i) the 7th day of the month in which such Distribution Date occurs,
or, if such day is not a business day, the next preceding business day, and (ii)
the 5th business day prior to the related Distribution Date.
"Discount Rate" means, for the purposes of the distribution of
Prepayment Premiums or Yield Maintenance Charges, the rate which, when
compounded monthly, is equivalent to the Treasury Rate when compounded
semi-annually.
"Distributable Certificate Interest Amount" means, in respect of any
Class of certificates for any Distribution Date, the sum of:
o Accrued Certificate Interest in respect of such Class or Classes of
certificates for such Distribution Date, reduced (to not less than zero)
by:
o any Net Aggregate Prepayment Interest Shortfalls allocated
to such Class or Classes for such Distribution Date; and
o Realized Losses and Expense Losses, in each case
specifically allocated with respect to such Distribution
Date to reduce the Distributable Certificate Interest Amount
payable in respect of such Class or Classes in accordance
with the terms of the Pooling and Servicing Agreement; plus
o the portion of the Distributable Certificate Interest Amount for such Class
or Classes remaining unpaid as of the close of business on the preceding
Distribution Date; plus
o if the aggregate Certificate Balance is reduced because of a diversion of
principal as a result of the reimbursement of non-recoverable Advances out
of principal in accordance with the terms of the Pooling and Servicing
Agreement, and there is a subsequent recovery of amounts applied by the
master servicer as recoveries of principal, then an amount generally equal
to interest at the applicable Pass-Through Rate that would have accrued and
been distributable with respect to the amount that the aggregate
Certificate Balance was so reduced, which interest will accrue from the
date that the related Realized Loss is allocated through the end of the
Interest Accrual Period related to the Distribution Date on which such
amounts are subsequently recovered.
"Distribution Account" means the distribution account maintained by
the paying agent, in accordance with the Pooling and Servicing Agreement.
"Distribution Date" means the 12th day of each month, or if any such
12th day is not a business day, on the next succeeding business day.
"Document Defect" means that a mortgage loan is not delivered as and
when required, is not properly executed or is defective on its face.
"DOL Regulation" means the final regulation, issued by the DOL,
defining the term "plan assets" which provides, generally, that when a Plan
makes an equity investment in another entity, the underlying assets of that
entity may be considered plan assets unless exceptions apply (29 C.F.R. Section
2510.3-101).
"DSCR" - See "Debt Service Coverage Ratio."
"DTC" means The Depository Trust Company.
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"Due Dates" means dates upon which the related Scheduled Payments are
due under the terms of the related mortgage loans or any B Note or Serviced
Companion Mortgage Loan.
"Eligible Account" means an account (or accounts) that is any of the
following: (i) maintained with a depository institution or trust company (A)
whose commercial paper, short-term unsecured debt obligations or other
short-term deposits are rated at least "A-1" by S&P, "F-1" by Fitch, and
"R-1(middle)" by DBRS or, if not rated by DBRS, an equivalent rating such as
those listed above by at least two nationally recognized statistical rating
organizations (which may include S&P, Fitch and/or Moody's), in the case of
accounts in which funds are to be held for 30 days or less or (B) whose
long-term unsecured debt obligations are rated at least "AA-" by S&P (or "A-" if
the short-term unsecured debt obligations are rated at least "A-1" by S&P), at
least "AA-" by Fitch (or "A-" by Fitch so long as the short-term deposit
unsecured debt obligations are rated not less than "F-1" by Fitch), and at least
"A(high)" by DBRS (or if not rated by DBRS, an equivalent rating (such as those
listed above for Fitch and S&P) by at least two nationally recognized
statistical rating organizations (which may include S&P, Fitch and/or Moody's)),
if the deposits are to be held in the account more than 30 days, or (ii) a
segregated trust account or accounts maintained in the trust department of the
trustee or the paying agent or other financial institution having a combined
capital and surplus of at least $50,000,000 and subject to regulations regarding
fiduciary funds on deposit similar to Title 12 of the Code of Federal
Regulations Section 9.10(b), or (iii) an account or accounts of a depository
institution acceptable to each Rating Agency, as evidenced by confirmation that
the use of any such account as the Certificate Account or the Distribution
Account will not cause a downgrade, withdrawal or qualification of the then
current ratings of any Class of certificates. Notwithstanding anything in the
foregoing to the contrary, an account shall not fail to be an Eligible Account
solely because it is maintained with Wells Fargo Bank, National Association,
each a wholly-owned subsidiary of Wells Fargo & Co., provided that such
subsidiary's or its parent's (A) commercial paper, short-term unsecured debt
obligations or other short-term deposits are at least "A-1" in the case of S&P,
"F-1" in the case of Fitch and "R-1(middle)" in the case of DBRS (or, if not
rated by DBRS, an equivalent rating (such as those listed above for Fitch and
S&P) by at least two nationally recognized statistical rating organizations
(which may include S&P, Fitch and/or Moody's)), if the deposits are to be held
in the account for 30 days or less, or (B) long-term unsecured debt obligations
are rated at least "AA-" (or "A-" if the short-term unsecured debt obligations
are rated at least "A-1") in the case of S&P, at least "A+" in the case of
Fitch, and at least "AA(low)" in the case of DBRS (or, if not rated by DBRS, an
equivalent rating (such as those listed above for Fitch and S&P) by at least two
nationally recognized statistical rating organizations (which may include S&P,
Fitch and/or Moody's)), if the deposits are to be held in the account for more
than 30 days.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Account" means one or more custodial accounts established and
maintained by the master servicer (or the Primary Servicer on its behalf)
pursuant to the Pooling and Servicing Agreement.
"Euroclear Bank" means Euroclear Bank, S.A./N.V., as operator of the
Euroclear system.
"Event of Default" means, with respect to the master servicer under
the Pooling and Servicing Agreement, any one of the following events:
o any failure by the master servicer to remit to the paying agent any payment
required to be remitted by the master servicer under the terms of the
Pooling and Servicing Agreement, including any required Advances;
o any failure by the master servicer to make a required deposit to the
Certificate Account which continues unremedied for one business day
following the date on which such deposit was first required to be made;
o any failure on the part of the master servicer duly to observe or perform
in any material respect any other of the duties, covenants or agreements on
the part of the master servicer contained in the Pooling and Servicing
Agreement (other than with respect to the duties described under
"Description of the Offered Certificates - Evidence as to Compliance" in
this prospectus supplement or certain other reporting duties imposed on it
for purposes of compliance with Regulation AB and the Securities Exchange
Act of 1934, which the failure to perform may be an Event of Default in
accordance with the last paragraph of this definition of Event of Default),
which continues unremedied for a period of 30 days after the date on which
written notice of such failure, requiring the same to be remedied, shall
have been given to the master servicer by the Depositor or the
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trustee; provided, however, that if the master servicer certifies to the
trustee and the Depositor that the master servicer is in good faith
attempting to remedy such failure, such cure period will be extended to the
extent necessary to permit the master servicer to cure such failure;
provided, further that such cure period may not exceed 90 days;
o any breach of the representations and warranties of the master servicer in
the Pooling and Servicing Agreement that materially and adversely affects
the interest of any holder of any Class of certificates and that continues
unremedied for a period of 30 days after the date on which notice of such
breach, requiring the same to be remedied shall have been given to the
master servicer by the Depositor or the trustee, provided, however, that if
the master servicer certifies to the trustee and the Depositor that the
master servicer is in good faith attempting to remedy such breach, such
cure period will be extended to the extent necessary to permit the master
servicer to cure such breach; provided, further that such cure period may
not exceed 90 days;
o 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 for the
appointment of a conservator, receiver, liquidator, trustee or similar
official in any bankruptcy, 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 master
servicer and such decree or order shall have remained in force undischarged
or unstayed for a period of 60 days;
o the master servicer shall consent to the appointment of a conservator,
receiver, liquidator, trustee or similar official in any bankruptcy,
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to the master servicer or of or relating
to all or substantially all of its property;
o the master servicer shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable bankruptcy, insolvency or reorganization statute, make an
assignment for the benefit of its creditors, voluntarily suspend payment of
its obligations, or take any corporate action in furtherance of the
foregoing;
o the master servicer is removed from S&P's Select Servicer List as a U.S.
Commercial Mortgage Master Servicer and is not reinstated within 60 days;
o the trustee shall receive notice from Fitch or DBRS to the effect that the
continuation of the master servicer in such capacity would result in the
downgrade, qualification or withdrawal of any rating then assigned by Fitch
or DBRS, as applicable, to any Class of certificates; or
o the master servicer has been downgraded to a servicer rating level below
CMS3, or its then equivalent, by Fitch.
Under certain circumstances, the failure by a party to the Pooling and
Servicing Agreement or a primary servicing agreement or sub-servicing agreement
to perform its duties described under "Description of the Offered Certificates
-- Evidence as to Compliance" in this prospectus supplement, or to perform
certain other reporting duties imposed on it for purposes of compliance with
Regulation AB and the Securities Exchange Act of 1934 or the failure of the
Master Servicer to terminate certain of those parties for such failures, will
constitute an event of default that entitles the Depositor or another party to
terminate that defaulting party. In some circumstances, such an event of default
may be waived by the Depositor in its sole discretion.
"Excess Interest" means, in respect of each ARD Loan that does not
repay on its Anticipated Repayment Date, the excess, if any, of interest accrued
on such mortgage loan at the Revised Rate over interest accrued on such mortgage
loan at the Initial Rate, together with interest thereon at the Revised Rate
from the date accrued to the date such interest is payable (generally, after
payment in full of the outstanding principal balance of such loan).
"Excess Interest Sub-account" means an administrative account deemed
to be a sub-account of the Distribution Account. The Excess Interest Sub-account
will not be an asset of any REMIC Pool.
"Excess Liquidation Proceeds" means the excess of (i) proceeds from
the sale or liquidation of a mortgage loan or related REO Property, net of
expenses over (ii) the amount that would have been received if a prepayment in
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full had been made with respect to such mortgage loan (or, in the case of an REO
Property related to an A/B Mortgage Loan, a prepayment in full had been made
with respect to both the related A Note and B Note or, in the case of an REO
Property related to a Loan Pair, a prepayment in full had been made with respect
to both the Serviced Pari Passu Mortgage Loan and the Serviced Companion
Mortgage Loan) on the date such proceeds were received plus accrued and unpaid
interest with respect to that mortgage loan and any and all expenses with
respect to that mortgage loan. In the case of a Serviced Pari Passu Mortgage
Loan, Excess Liquidation Proceeds means only the pro rata share of such proceeds
that are allocable to the Trust.
"Excess Servicing Fee" means an additional fee payable to Wells Fargo
that accrues at the Excess Servicing Fee Rate, which is assignable and
non-terminable.
"Excess Servicing Fee Rate" means an amount per annum which is payable
each month with respect to certain mortgage loans in connection with the Excess
Servicing Fee. The Excess Servicing Fee Rate will range, on a loan-by-loan
basis, from 0.00% per annum to 0.13% per annum.
"Exemptions" means the individual prohibited transaction exemptions
relating to pass-through certificates and the operation of asset pool investment
trusts granted by the DOL to the Underwriters, as amended.
"Expense Losses" means, among other things:
o any interest paid to the master servicer, special servicer or the
trustee in respect of unreimbursed Advances on the mortgage
loans;
o all Special Servicer Compensation payable to the special servicer
from amounts that are part of the Trust;
o other expenses of the Trust, including, but not limited to,
specified reimbursements and indemnification payments to the
trustee, the paying agent and certain related persons, specified
reimbursements and indemnification payments to the Depositor, the
master servicer, the special servicer, the Primary Servicer and
certain related persons, specified taxes payable from the assets
of the Trust, the costs and expenses of any tax audits with
respect to the Trust and other tax-related expenses, rating
agency fees not recovered from the borrower, amounts expended on
behalf of the Trust to remediate an adverse environmental
condition and the cost of various opinions of counsel required to
be obtained in connection with the servicing of the mortgage
loans and administration of the Trust; and
o any other expense of the Trust not specifically included in the
calculation of Realized Loss for which there is no corresponding
collection from the borrower.
"Financial Market Publishers" means TREPP, LLC, Bloomberg L.P. and
Intex Solutions, Inc., or any successor entities thereof.
"Fitch" means Fitch, Inc.
"401(c) Regulations" means the final regulations issued by the DOL
under Section 401(c) of ERISA clarifying the application of ERISA to Insurance
Company General Accounts.
"Initial Loan Group 1 Balance" means the aggregate Cut-off Date
Balance of the mortgage loans in Loan Group 1, or $1,955,901,313.
"Initial Loan Group 2 Balance" means the aggregate Cut-off Date
Balance of the mortgage loans in Loan Group 2, or $150,102,659.
"Initial Pool Balance" means the aggregate Cut-off Date Balance of
$2,106,003,972.
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"Initial Rate" means, with respect to any mortgage loan, the mortgage
rate in effect as of the Cut-off Date for such mortgage loan.
"Insurance Proceeds" means all amounts paid by an insurer under an
insurance policy in connection with a mortgage loan, Serviced Companion Mortgage
Loan or B Note, other than amounts required to be paid to the related borrower
pursuant to law. With respect to the mortgaged property or properties securing
any Non-Serviced Mortgage Loan, only the portion of such amounts payable to the
holder of the related Non-Serviced Mortgage Loan will be included in Insurance
Proceeds, and with respect to the mortgaged property or properties securing any
Loan Pair or A/B Mortgage Loan, only an allocable portion of such Insurance
Proceeds will be distributable to the Certificateholders.
"Interest Accrual Period" means, for each class of REMIC Regular
Certificates and each Distribution Date, the calendar month immediately
preceding the month in which such Distribution Date occurs.
"Interest Only Certificates" means the Class X Certificates.
"Interest Reserve Account" means an account that the master servicer
has established and will maintain for the benefit of the holders of the
certificates.
"Interest Reserve Amount" means all amounts deposited in the Interest
Reserve Account with respect to Scheduled Payments due in any applicable January
and February.
"Interest Reserve Loan" - See "Non-30/360 Loan" below.
"Liquidation Fee" means 1.00% of the related Liquidation Proceeds
and/or any Condemnation Proceeds and Insurance Proceeds received by the Trust in
connection with a Specially Serviced Mortgage Loan or related REO Property (net
of any expenses). For the avoidance of doubt, a Liquidation Fee will be payable
in connection with a repurchase of an A Note by the holder of the related B Note
only to the extent set forth in the related intercreditor agreement.
"Liquidation Proceeds" means proceeds from the sale or liquidation
(provided that for the purposes of calculating Liquidation Fees, Liquidation
Proceeds shall not include any proceeds from a repurchase of a mortgage loan by
a mortgage loan seller due to a Material Breach of a representation or warranty
or Material Document Defect) of a mortgage loan, Serviced Companion Mortgage
Loan or B Note or related REO Property, net of liquidation expenses. With
respect to the mortgaged property or properties securing any Non-Serviced
Mortgage Loan, only the portion of such amounts payable to the holder of the
related Non-Serviced Mortgage Loan will be included in Liquidation Proceeds, and
with respect to the mortgaged property or properties securing any Loan Pair or
A/B Mortgage Loan, only an allocable portion of such Liquidation Proceeds will
be distributable to the Certificateholders.
"Loan Group" means Loan Group 1 or Loan Group 2, as applicable.
"Loan Group 1" means that distinct loan group consisting of two
hundred thirteen (213) mortgage loans, representing 92.9% of the Initial Pool
Balance, comprised of all of the mortgage loans other than twenty-two (22)
mortgage loans that are secured by multifamily properties and two (2) mortgage
loans that are secured by manufactured housing community properties.
"Loan Group 2" means that distinct loan group consisting of
twenty-four (24) mortgage loans, representing 7.1% of the Initial Pool Balance
(and representing approximately 100% of the Initial Pool Balance of all the
mortgage loans secured by multifamily and manufactured housing community
properties), comprised of twenty-two (22) mortgage loans that are secured by
multifamily properties and two (2) mortgage loans that are secured by
manufactured housing community properties.
"Loan Pair" means a Serviced Pari Passu Mortgage Loan and the related
Serviced Companion Mortgage Loan, collectively.
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"Lock-out Period" means the period during which voluntary Principal
Prepayments are prohibited.
"MAI" means Member of the Appraisal Institute.
"Master Servicer Remittance Date" means, in each month, the business
day preceding the Distribution Date.
"Master Servicing Fee" means the monthly amount, based on the Master
Servicing Fee Rate, to which the master servicer is entitled in compensation for
servicing the mortgage loans, any Serviced Companion Mortgage Loan and any B
Note.
"Master Servicing Fee Rate" means the rate per annum payable each
month with respect to a mortgage loan (other than, in certain cases, the
Non-Serviced Mortgage Loans), any Serviced Companion Mortgage Loan and any B
Note in connection with the Master Servicing Fee as set forth in the Pooling and
Servicing Agreement. The Master Servicing Fee Rate for Wells Fargo Bank,
National Association will range, on a loan-by-loan basis, from 0.01% per annum
to 0.02% per annum.
"Material Breach" means a breach of any of the representations and
warranties that (a) materially and adversely affects the interests of the
holders of the certificates in the related mortgage loan, or (b) both (i) the
breach materially and adversely affects the value of the mortgage loan and (ii)
the mortgage loan is a Specially Serviced Mortgage Loan or Rehabilitated
Mortgage Loan.
"Material Document Defect" means a Document Defect that either (a)
materially and adversely affects the interests of the holders of the
certificates in the related mortgage loan, or (b) both (i) the Document Defect
materially and adversely affects the value of the mortgage loan and (ii) the
mortgage loan is a Specially Serviced Mortgage Loan or Rehabilitated Mortgage
Loan.
"Money Term" means, with respect to any mortgage loan, Serviced
Companion Mortgage Loan or B Note, the stated maturity date, mortgage rate,
principal balance, amortization term or payment frequency or any provision of
the mortgage loan requiring the payment of a Prepayment Premium or Yield
Maintenance Charge (but does not include late fee or default interest
provisions).
"Moody's" means Moody's Investors Service, Inc.
"Mortgage File" means the following documents, among others:
o the original mortgage note (or lost note affidavit), endorsed
(without recourse) in blank or to the order of the trustee;
o 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 with evidence of recording thereon
(unless such document(s) have not been returned by the applicable
recorder's office);
o the original or a copy of any related assignment(s) of rents and
leases (if any such item is a document separate from the
mortgage), together with originals or copies of any intervening
assignments of such document(s), in each case with evidence of
recording thereon (unless such document(s) have not been returned
by the applicable recorder's office);
o an assignment of each related mortgage in blank or in favor of
the trustee, in recordable form;
o an assignment of any related assignment(s) of rents and leases
(if any such item is a document separate from the mortgage) in
blank or in favor of the trustee, in recordable form;
o an original or copy of the related lender's title insurance
policy (or, if a title insurance policy has not yet been issued,
a binder, commitment for title insurance or a preliminary title
report); and
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o when relevant, the related ground lease or a copy of it.
"Mortgage Loan Purchase Agreement" means each of the agreements
entered into between the Depositor and the respective mortgage loan seller, as
the case may be.
"Mortgage Pool" means the two hundred thirty-seven (237) mortgage
loans with an aggregate principal balance, as of the Cut-off Date, of
approximately $2,106,003,972, which may vary on the Closing Date by up to 5%.
"MSMC" means Morgan Stanley Mortgage Capital Inc.
"MSMC Loans" means the mortgage loans that were originated or
purchased by MSMC.
"Net Aggregate Prepayment Interest Shortfall" means, for the related
Distribution Date, the aggregate of all Prepayment Interest Shortfalls incurred
in respect of the mortgage loans other than Specially Serviced Mortgage Loans
during any Collection Period that are neither offset by Prepayment Interest
Excesses collected on such mortgage loans during such Collection Period nor
covered by a Compensating Interest Payment paid by the master servicer.
"Net Mortgage Rate" means, in general, with respect to any mortgage
loan, a per annum rate equal to the related mortgage rate (excluding any default
interest or any rate increase occurring after an Anticipated Repayment Date)
minus the related Administrative Cost Rate; provided 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 any mortgage loan will be
calculated without regard to any modification, waiver or amendment of the terms
of such mortgage loan subsequent to the Closing Date. In addition, because the
certificates accrue interest on the basis of a 360-day year consisting of twelve
30-day months, when calculating the Pass-Through Rate for each Class of
certificates for each Distribution Date, the Net Mortgage Rate on a Non-30/360
Loan will be the annualized rate at which interest would have to accrue on the
basis of a 360-day year consisting of twelve 30-day months in order to result in
the accrual of the aggregate amount of net interest actually accrued (exclusive
of default interest or Excess Interest). However, with respect to each
Non-30/360 Loan:
o the Net Mortgage Rate that would otherwise be in effect for purposes of the
Scheduled Payment due in January of each year (other than a leap year) and
February of each year will be adjusted to take into account the applicable
one day's interest included in the Interest Reserve Amount; and
o the Net Mortgage Rate that would otherwise be in effect for purposes of the
Scheduled Payment due in March of each year (or January or February if the
related Distribution Date is the final Distribution Date) will be adjusted
to take into account the related withdrawal from the Interest Reserve
Account for the preceding January, if applicable, and February.
"Net Operating Income" or "NOI" means historical net operating income
for a mortgaged property for the annual or other period specified (or ending on
the "NOI Date" specified), and generally consists of revenue derived from the
use and operation of the mortgaged property, consisting primarily of rental
income (and in the case of residential cooperative mortgage loans, assuming that
the property was operated as a rental property), less the sum of (a) operating
expenses (such as utilities, administrative expenses, management fees and
advertising) and (b) fixed expenses, such as insurance, real estate taxes
(except in the case of certain mortgage loans included in the Trust, where the
related borrowers are exempted from real estate taxes and assessments) and, if
applicable, ground lease payments. Net operating income generally does not
reflect (i.e. it does not deduct for) capital expenditures, including tenant
improvement costs and leasing commissions, interest expenses and non-cash items
such as depreciation and amortization.
"Non-Serviced Companion Mortgage Loan" means a loan not included in
the Trust that is generally payable on a pari passu basis with the related
Non-Serviced Mortgage Loan. There are no Non-Serviced Companion Mortgage Loans
related to the Trust.
"Non-Serviced Mortgage Loan" means a mortgage loan included in the
Trust but serviced under another agreement. There are no Non-Serviced Mortgage
Loans related to the Trust.
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"Non-Serviced Mortgage Loan B Note" means any related note subordinate
in right of payment to a Non-Serviced Mortgage Loan. There are no Non-Serviced
Mortgage Loan B Notes related to the Trust.
"Non-Serviced Mortgage Loan Group" means a loan group comprised of
Non-Serviced Mortgage Loans, Non-Serviced Companion Mortgage Loans, and/or
Non-Serviced Mortgage Loan B Notes. There are no Non-Serviced Mortgage Loan
Groups related to the Trust.
"Non-Serviced Mortgage Loan Master Servicer" means the applicable
"master servicer" under the related Non-Serviced Mortgage Loan Pooling and
Servicing Agreement. There are no Non-Serviced Mortgage Loan Master Servicers
related to the Trust.
"Non-Serviced Mortgage Loan Mortgage" means the mortgage securing a
Non-Serviced Mortgage Loan. There are no Non-Serviced Mortgage Loan Mortgages
related to the Trust.
"Non-Serviced Mortgage Loan Pooling and Servicing Agreement" means a
pooling and servicing agreement under which a Non-Serviced Mortgage Loan is
serviced. There are no Non-Serviced Mortgage Loan Pooling and Servicing
Agreements related to the Trust.
"Non-Serviced Mortgage Loan Special Servicer" means the applicable
"special servicer" under the related Non-Serviced Mortgage Loan Pooling and
Servicing Agreement. There are no Non-Serviced Mortgaged Loan Special Servicers
related to the Trust.
"Non-Serviced Mortgage Loan Trustee" means the applicable "trustee"
under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement.
There are no Non-Serviced Mortgage Loan Trustees related to the Trust.
"Non-30/360 Loan" or "Interest Reserve Loan" means a mortgage loan
that accrues interest other than on the basis of a 360-day year consisting of
twelve 30-day months.
"Notional Amount" means the notional principal amount of the Class X
Certificates, which will be based upon the outstanding principal balance of the
Principal Balance Certificates outstanding from time to time.
"OID" means original issue discount.
"Operating Adviser" means that entity appointed by the holders of a
majority of the Controlling Class which will have the right to receive
notification from, and in specified cases to direct, the special servicer in
regard to specified actions; provided, that, with respect to an A/B Mortgage
Loan, a holder of the related B Note, will, to the extent set forth in the
related intercreditor agreement, instead be entitled to the rights and powers
granted to the Operating Adviser under the Pooling and Servicing Agreement to
the extent such rights and powers relate to the related A/B Mortgage Loan (but
only so long as the holder of the related B Note is the directing holder or
controlling holder, as defined in the related Intercreditor Agreement). The
initial Operating Adviser will be Centerline REIT Inc. (formerly known as ARCap
REIT, Inc.), an affiliate of the special servicer.
"Option" means the option to purchase from the Trust any defaulted
mortgage loan, as described under "Servicing of the Mortgage Loans--Sale of
Defaulted Mortgage Loans," in this prospectus supplement.
"P&I Advance" means the amount of any Scheduled Payments or Assumed
Scheduled Payment (net of the related Master Servicing Fees, Excess Servicing
Fees, Primary Servicing Fees and other servicing fees payable from such
Scheduled Payments or Assumed Scheduled Payments), other than any Balloon
Payment, advanced on the mortgage loans that are delinquent as of the close of
business on the preceding Determination Date.
"Pari Passu Loan Servicing Fee" means the monthly amount, based on the
Pari Passu Loan Servicing Fee Rate, paid as compensation for the servicing of
the applicable Non-Serviced Mortgage Loan. There are no Pari Passu Loan
Servicing Fees related to the Trust.
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"Pari Passu Loan Servicing Fee Rate" means the servicing fee rate
applicable to any Non-Serviced Mortgage Loan pursuant to its related
Non-Serviced Mortgage Loan Pooling and Servicing Agreement. There are no Pari
Passu Loan Servicing Fee Rates related to the Trust.
"Participants" means DTC's participating organizations.
"Parties in Interest" means persons who have specified relationships
to Plans ("parties in interest" under ERISA or "disqualified persons" under
Section 4975 of the Code).
"Pass-Through Rate" means the rate per annum at which any Class of
certificates (other than the Residual Certificates) accrues interest.
"PCFII" means Principal Commercial Funding II, LLC.
"PCFII Loans" means the mortgage loans that were originated for PCFII
by its affiliates.
"Penetration" means, with respect to a hotel mortgaged property, the
ratio between the hotel's operating results and the corresponding data for the
market. If the penetration factor is greater than 100%, then the hotel is
performing at a level above the competitive market; conversely, if the
penetration is less than 100%, the hotel is performing at a level below the
competitive market.
"Percentage Interest" will equal, as evidenced by any certificate in
the Class to which it belongs, a fraction, expressed as a percentage, the
numerator of which is equal to the initial Certificate Balance or Notional
Amount, as the case may be, of such certificate as set forth on the face of the
certificate, and the denominator of which is equal to the initial aggregate
Certificate Balance or Notional Amount, as the case may be, of such Class.
"Percent Leased" means the percentage of square feet or units, as the
case may be, of a mortgaged property that was occupied or leased or, in the case
of hospitality properties, average units so occupied over a specified period, as
of a specified date (identified on Appendix II to this prospectus supplement as
the "Percent Leased as of Date"), as specified by the borrower or as derived
from the mortgaged property's rent rolls, operating statements or appraisals or
as determined by a site inspection of such mortgaged property. Such percentage
includes tenants which have executed a lease to occupy such mortgaged property
even though the applicable tenant has not taken physical occupancy.
"Permitted Cure Period" means, for the purposes of any Material
Document Defect or Material Breach in respect of any mortgage loan, the 90-day
period immediately following the earlier of the discovery by the related
mortgage loan seller or receipt by the related mortgage loan seller of notice of
such Material Document Defect or Material Breach, as the case may be. However,
if such Material Document Defect or Material Breach, as the case may be, cannot
be corrected or cured in all material respects within such 90-day period and
such Document Defect or Material Breach would not cause the mortgage loan to be
other than a "qualified mortgage", but the related mortgage loan seller is
diligently attempting to effect such correction or cure, then the applicable
Permitted Cure Period will be extended for an additional 90 days unless, solely
in the case of a Material Document Defect, (x) the mortgage loan is then a
Specially Serviced Mortgage Loan and a Servicing Transfer Event has occurred as
a result of a monetary default or as described in the second and fifth bullet
points of the definition of Specially Serviced Mortgage Loan and (y) the
Document Defect was identified in a certification delivered to the related
mortgage loan seller by the trustee in accordance with the Pooling and Servicing
Agreement.
"Planned Principal Balance" means, for any Distribution Date, the
balance shown for such Distribution Date in the table set forth in Schedule A to
this prospectus supplement.
"Plans" means (a) employee benefit plans as defined in Section 3(3) of
ERISA that are subject to Title I of ERISA, (b) plans as defined in Section 4975
of the Code that are subject to Section 4975 of the Code, (c) any other
retirement plan or employee benefit plan or arrangement subject to applicable
federal, state or local law materially similar to the foregoing provisions of
ERISA and the Code, and (d) entities whose underlying assets include plan assets
by reason of a plan's investment in such entities.
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"Pooling and Servicing Agreement" means the Pooling and Servicing
Agreement, dated as of April 1, 2007, between Bear Stearns Commercial Mortgage
Securities Inc., as depositor, Wells Fargo Bank, National Association, as master
servicer, Centerline Servicing Inc. (formerly known as ARCap Servicing, Inc.),
as special servicer, LaSalle Bank National Association, as trustee and custodian
and Wells Fargo Bank, National Association, as paying agent, certificate
registrar and authenticating agent.
"Prepayment Interest Excess" means, in the case of a mortgage loan in
which a full or partial Principal Prepayment or a Balloon Payment is made during
any Collection Period after the Due Date for such mortgage loan, the amount of
interest which accrues on the amount of such Principal Prepayment or Balloon
Payment that exceeds the corresponding amount of interest accruing on the
certificates. The amount of the Prepayment Interest Excess in any such case will
generally equal the interest that accrues on the mortgage loan from such Due
Date to the date such payment was made, net of the Trustee Fee, the Master
Servicing Fee, the Primary Servicing Fee, the Pari Passu Loan Servicing Fee (in
the case of any Non-Serviced Mortgage Loan), the Excess Servicing Fee and, if
the related mortgage loan is a Specially Serviced Mortgage Loan, net of the
Special Servicing Fee.
"Prepayment Interest Shortfall" means, a shortfall in the collection
of a full month's interest for any Distribution Date and with respect to any
mortgage loan as to which the related borrower has made a full or partial
Principal Prepayment (or a Balloon Payment) during the related Collection
Period, and the date such payment was made occurred prior to the Due Date for
such mortgage loan in such Collection Period (including any shortfall resulting
from such a payment during the grace period relating to such Due Date). Such a
shortfall arises because the amount of interest (net of the Master Servicing
Fee, the Primary Servicing Fee, the Excess Servicing Fee, the Pari Passu Loan
Servicing Fee (in the case of any Non-Serviced Mortgage Loan) and the Trustee
Fee that accrues on the amount of such Principal Prepayment or Balloon Payment
will be less than the corresponding amount of interest accruing on the
Certificates. In such a case, the Prepayment Interest Shortfall will generally
equal the excess of:
o the aggregate amount of interest that would have accrued at the Net
Mortgage Rate (less the Special Servicing Fee, if the related mortgage loan
is a Specially Serviced Mortgage Loan) on the Scheduled Principal Balance
of such mortgage loan if the mortgage loan had paid on its Due Date and
such Principal Prepayment or Balloon Payment had not been made, over
o the aggregate interest that did so accrue through the date such payment was
made (net of the Master Servicing Fee, the Primary Servicing Fee, the
Excess Servicing Fee, the Pari Passu Loan Servicing Fee payable in
connection with any Non-Serviced Mortgage Loan, the Special Servicing Fee,
if the related mortgage loan is a Specially Serviced Mortgage Loan, and the
Trustee Fee).
"Prepayment Premium" means, with respect to any mortgage loan,
Serviced Companion Mortgage Loan or B Note for any Distribution Date, prepayment
premiums and charges, if any, received during the related Collection Period in
connection with Principal Prepayments on such mortgage loan, Serviced Companion
Mortgage Loan or B Note.
"Primary Servicer" means Principal Global Investors, LLC.
"Primary Servicing Fee" means the monthly amount, based on the Primary
Servicing Fee Rate, paid as compensation for the primary servicing of the
mortgage loans.
"Primary Servicing Fee Rate" means an amount per annum set forth in
the Pooling and Servicing Agreement, which is payable each month with respect to
a mortgage loan in connection with the Primary Servicing Fee. The primary
servicing fee rate for Principal Global Investors, LLC is 0.01% per annum. The
primary servicing fee rate (including any subservicing fees) for Wells Fargo
Bank, National Association will range, on a loan-by-loan basis, from 0.01% per
annum to 0.10% per annum.
"Principal Balance Certificates" means, upon initial issuance, the
Class A-1, Class A-2, Class A-3, Class A-AB, Class A-4, Class A-1A, Class A-M,
Class A-J, Class B, Class C, Class D, Class E, Class F, Class G, Class H, Class
J, Class K, Class L, Class M, Class N, Class O and Class P Certificates.
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"Principal Distribution Amount" equals, in general, for any
Distribution Date, the aggregate of the following:
o the principal portions of all Scheduled Payments (other than the principal
portion of Balloon Payments) and any Assumed Scheduled Payments, in each
case, to the extent received or advanced, as the case may be, in respect of
the mortgage loans and any REO mortgage loans (but not in respect of any
Serviced Companion Mortgage Loan or B Note or, in either case, its
respective successor REO mortgage loan) for their respective Due Dates
occurring during the related Collection Period; and
o all payments (including Principal Prepayments and the principal portion of
Balloon Payments (but not in respect of any Serviced Companion Mortgage
Loan or B Note or, in either case, its respective successor REO mortgage
loan)) and other collections (including Liquidation Proceeds (other than
the portion, if any, constituting Excess Liquidation Proceeds),
Condemnation Proceeds, Insurance Proceeds and REO Income (each as defined
in this prospectus supplement) and proceeds of mortgage loan repurchases)
that were received on or in respect of the mortgage loans (but not in
respect of any Serviced Companion Mortgage Loan or B Note) during the
related Collection Period and that were identified and applied by the
master servicer as recoveries of principal.
The following amounts shall generally reduce the Principal
Distribution Amount (and, in each case, will be allocated first to reduce the
Principal Distribution Amount attributable to the Loan Group to which the
applicable mortgage loan relates, and then to reduce the Principal Distribution
Amount attributable to the other Loan Group) to the extent applicable:
o if any Advances previously made in respect of any mortgage loan that
becomes the subject of a workout are not fully repaid at the time of that
workout, then those Advances (and advance interest thereon) are
reimbursable from amounts allocable to principal received with respect to
the Mortgage Pool during the Collection Period for the related Distribution
Date, and the Principal Distribution Amount will be reduced (to not less
than zero) by any of those Advances (and advance interest thereon) that are
reimbursed from such principal collections during that Collection Period
(provided that if any of those amounts that were reimbursed from such
principal collections are subsequently recovered on the related mortgage
loan, such recoveries will increase the Principal Distribution Amount (and
will be allocated first to increase the Principal Distribution Amount
attributable to such other Loan Group, and then to increase the Principal
Distribution Amount attributable to the Loan Group to which the applicable
mortgage loan relates) for the distribution date following the Collection
Period in which the subsequent recovery occurs); and
o if any advance previously made in respect of any mortgage loan is
determined to be nonrecoverable, then that advance (unless the applicable
party entitled to the reimbursement elects to defer all or a portion of the
reimbursement as described in this prospectus supplement) will be
reimbursable (with advance interest thereon) first from amounts allocable
to principal received with respect to the Mortgage Pool during the
Collection Period for the related Distribution Date (prior to reimbursement
from other collections) and the Principal Distribution Amount will be
reduced (to not less than zero) by any of those Advances (and advance
interest thereon) that are reimbursed from such principal collections on
the Mortgage Pool during that Collection Period (provided that if any of
those amounts that were reimbursed from such principal collections are
subsequently recovered (notwithstanding the nonrecoverability
determination) on the related mortgage loan, such recovery will increase
the Principal Distribution Amount (and will be allocated first to increase
the Principal Distribution Amount attributable to such other Loan Group,
and then to increase the Principal Distribution Amount attributable to the
Loan Group to which the applicable mortgage loan relates) for the
distribution date following the Collection Period in which the subsequent
recovery occurs).
So long as both the Class A-4 and Class A-1A Certificates remain
outstanding, the Principal Distribution Amount for each Distribution Date will
be calculated on a Loan Group-by-Loan Group basis. On each Distribution Date
after the Certificate Balance of either the Class A-4 or Class A-1A Certificates
has been reduced to zero, a single Principal Distribution Amount will
effectively be calculated in the aggregate for both Loan Groups.
"Principal Prepayments" means any voluntary or involuntary payment or
collection of principal on a Mortgage Loan, Serviced Companion Mortgage Loan or
B Note which is received or recovered in advance of its
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scheduled Due Date and applied to reduce the Principal Balance of the Mortgage
Loan, Serviced Companion Mortgage Loan or B Note in advance of its scheduled Due
Date.
"PTCE" means a DOL Prohibited Transaction Class Exemption.
"Purchase Price" means that amount at least equal to the unpaid
principal balance of such mortgage loan, together with accrued but unpaid
interest thereon to but not including the Due Date in the Collection Period in
which the purchase or liquidation occurs and the amount of any expenses related
to such mortgage loan and any related B Note, Serviced Companion Mortgage Loan
or REO Property (including any unreimbursed Servicing Advances, Advance Interest
related to such mortgage loan and any related B Note or Serviced Companion
Mortgage Loan, and also includes the amount of any Servicing Advances (and
interest thereon) that were reimbursed from principal collections on the
Mortgage Pool and not subsequently recovered from the related mortgagor), and
any Special Servicing Fees and Liquidation Fees paid with respect to the
mortgage loan and/or (if applicable) its related B Note or any related Serviced
Companion Mortgage Loan that are reimbursable to the master servicer, the
special servicer or the trustee, plus if such mortgage loan is being repurchased
or substituted for by a seller pursuant to the related Mortgage Loan Purchase
Agreement, all expenses reasonably incurred or to be incurred by the Primary
Servicer, the master servicer, the special servicer, the Depositor or the
trustee in respect of the Material Breach or Material Document Defect giving
rise to the repurchase or substitution obligation (and that are not otherwise
included above).
"Qualifying Substitute Mortgage Loan" means a mortgage loan having the
characteristics required in the Pooling and Servicing Agreement and otherwise
satisfying the conditions set forth therein and for which the Rating Agencies
have confirmed in writing that such mortgage loan would not result in a
withdrawal, downgrade or qualification of the then current ratings on the
certificates.
"Rated Final Distribution Date" as to each Class of certificates,
means the Distribution Date in January 2045, which is the first Distribution
Date that follows, by at least 60 months, the maturity date of the ARD Loan
that, as of the Cut-off Date, has the latest final maturity date.
"Rating Agencies" means Fitch, S&P and DBRS.
"Realized Losses" means losses arising from the inability of the
trustee, master servicer or the special servicer to collect all amounts due and
owing under any defaulted mortgage loan, including by reason of any
modifications to the terms of a mortgage loan, bankruptcy of the related
borrower or a casualty of any nature at the related mortgaged property, to the
extent not covered by insurance. The Realized Loss, if any, in respect of a
liquidated mortgage loan or related REO Property, will generally equal the
excess, if any, of:
o the outstanding principal balance of such mortgage loan as of the date of
liquidation, together with all accrued and unpaid interest thereon at the
related mortgage rate, over
o the aggregate amount of Liquidation Proceeds, if any, recovered in
connection with such liquidation, net of any portion of such liquidation
proceeds that is payable or reimbursable in respect of related liquidation
and other servicing expenses to the extent not already included in Expense
Losses.
If the mortgage rate on any mortgage loan is reduced or a portion of
the debt due under any mortgage loan is forgiven, whether in connection with a
modification, waiver or amendment granted or agreed to by the special servicer
or in connection with a bankruptcy or similar proceeding involving the related
borrower, the resulting reduction in interest paid and the principal amount so
forgiven, as the case may be, also will be treated as a Realized Loss. Any
reimbursements of Advances determined to be nonrecoverable (and interest on such
Advances) that are made in any Collection Period from collections of principal
that would otherwise be included in the Principal Distribution Amount for the
related Distribution Date, will generally create a deficit (or increase an
otherwise-existing deficit) between the aggregate principal balance of the
Mortgage Pool and the total principal balance of the certificates on the
succeeding Distribution Date. The related reimbursements and payments made
during any Collection Period will therefore result in the allocation of those
amounts as Realized Losses (in reverse sequential order in accordance with the
loss allocation rules described in this prospectus supplement) to reduce
principal balances of the Principal Balance Certificates on the Distribution
Date for that Collection Period.
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"Record Date" means, with respect to each Class of offered
certificates for each Distribution Date, the last business day of the calendar
month immediately preceding the month in which such Distribution Date occurs.
"Regulation AB" means Subpart 229.1100 - Asset Backed Securities
(Regulation AB), 17 C.F.R. Sections 229.1100-229.1123, as such may be amended
from time to time, and subject to such clarification and interpretation as have
been provided by the Commission in the adopting release (Asset-Backed
Securities, Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506-1,631 (Jan.
7, 2005)) or by the staff of the Commission, or as may be provided by the
Commission or its staff from time to time.
"Rehabilitated Mortgage Loan" means a Specially Serviced Mortgage Loan
for which (a) three consecutive Scheduled Payments have been made, in the case
of any such mortgage loan, Serviced Companion Mortgage Loan or B Note that was
modified, based on the modified terms, or a complete defeasance shall have
occurred, (b) no other Servicing Transfer Event has occurred and is continuing
with respect to such mortgage loan and (c) the Trust has been reimbursed for all
costs incurred as a result of the occurrence of the Servicing Transfer Event or
such amounts have been forgiven. An A Note will not constitute a Rehabilitated
Mortgage Loan unless its related B Note would also constitute a Rehabilitated
Mortgage Loan. A B Note will not constitute a Rehabilitated Mortgage Loan unless
its related A Note also would constitute a Rehabilitated Mortgage Loan. A
Serviced Pari Passu Mortgage Loan will not constitute a Rehabilitated Mortgage
Loan unless the related Serviced Companion Mortgage Loan would also constitute a
Rehabilitated Mortgage Loan. A Serviced Companion Mortgage Loan will not
constitute a Rehabilitated Mortgage Loan unless the related Serviced Pari Passu
Mortgage Loan would also constitute a Rehabilitated Mortgage Loan.
"REMIC" means a "real estate mortgage investment conduit," within the
meaning of Section 860D(a) of the Code.
"REMIC Regular Certificates" means the Senior Certificates and the
Subordinate Certificates.
"REO Income" means the income received in connection with the
operation of an REO Property, net of certain expenses specified in the Pooling
and Servicing Agreement. With respect to any Non-Serviced Mortgage Loan (if the
applicable Non-Serviced Mortgage Loan Special Servicer has foreclosed upon the
mortgaged property or properties securing such Non-Serviced Mortgage Loan
Mortgage), the REO Income shall include only the portion of such net income that
is payable to the holder of such Non-Serviced Mortgage Loan, and with respect to
any Loan Pair or A/B Mortgage Loan, only an allocable portion of such REO Income
will be distributable to the Certificateholders.
"REO Property" means any mortgaged property acquired on behalf of the
Certificateholders in respect of a defaulted mortgage loan through foreclosure,
deed in lieu of foreclosure or otherwise.
"REO Tax" means a tax on "net income from foreclosure property" within
the meaning of the REMIC provisions of the Code.
"Reserve Account" means an account in the name of the paying agent for
the deposit of any Excess Liquidation Proceeds.
"Residual Certificates" means the Class R-I Certificates, the Class
R-II Certificates and the Class R-III Certificates.
"Revised Rate" means, with respect to any mortgage loan, a fixed rate
per annum equal to the Initial Rate plus a specified percentage.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc.
"Scheduled Payment" means, in general, for any mortgage loan, Serviced
Companion Mortgage Loan or B Note on any Due Date, the amount of the scheduled
payment of principal and interest, or interest only, due thereon on such date,
taking into account any waiver, modification or amendment of the terms of such
mortgage loan,
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Serviced Companion Mortgage Loan or B Note subsequent to the Closing Date,
whether agreed to by the special servicer or occurring in connection with a
bankruptcy proceeding involving the related borrower.
"Scheduled Principal Balance" means, in respect of any mortgage loan,
Serviced Companion Mortgage Loan, Loan Pair, B Note or REO mortgage loan on any
Distribution Date will generally equal its Cut-off Date Balance, as defined
above (less any principal amortization occurring on or prior to the Cut-off
Date), reduced, to not less than zero, by:
o any payments or other collections of principal, or Advances in lieu of such
payments or collections, on such mortgage loan that have been collected or
received during any preceding Collection Period, other than any Scheduled
Payments due in any subsequent Collection Period; and
o the principal portion of any Realized Loss and Expense Loss incurred in
respect of such mortgage loan during any preceding Collection Period.
"Senior Certificates" means the Class A Senior Certificates and the
Class X Certificates.
"Serviced Companion Mortgage Loan" means a loan not included in the
Trust but serviced pursuant to the Pooling and Servicing Agreement and secured
on a pari passu basis with the related Serviced Pari Passu Mortgage Loan. There
are no Serviced Companion Mortgage Loans related to the Trust.
"Serviced Pari Passu Mortgage Loan" means a mortgage loan included in
the Trust that is serviced under the Pooling and Servicing Agreement and secured
by a mortgaged property that secures one or more other loans on a pari passu
basis that are not included in the Trust. There are no Serviced Pari Passu
Mortgage Loans related to the Trust.
"Servicing Advances" means, in general, customary, reasonable and
necessary "out-of-pocket" costs and expenses required to be incurred by the
master servicer in connection with the servicing of a mortgage loan after a
default, whether or not a payment default, delinquency or other unanticipated
event, or in connection with the administration of any REO Property.
"Servicing Function Participant" means any person, other than the
master servicer and the special servicer, that, within the meaning of Item 1122
of Regulation AB, is performing activities that address the servicing criteria
set forth in Item 1122(d) of Regulation AB, unless such person's activities
relate only to 5% or less of the mortgage loans based on the principal balance
of the mortgage loans.
"Servicing Standard" means with respect to the master servicer or the
special servicer, as the case may be, to service and administer the mortgage
loans (and any Serviced Companion Mortgage Loan and any B Note, but not any
Non-Serviced Mortgage Loan) that it is obligated to service and administer
pursuant to the Pooling and Servicing Agreement on behalf of the trustee and in
the best interests of and for the benefit of the Certificateholders (and, in the
case of any Serviced Companion Mortgage Loan or any B Note, the related holder
of such Serviced Companion Mortgage Loan or B Note, as applicable) as a
collective whole (as determined by the master servicer or the special servicer,
as the case may be, in its good faith and reasonable judgment), in accordance
with applicable law, the terms of the Pooling and Servicing Agreement and the
terms of the respective mortgage loans, any Serviced Companion Mortgage Loan and
any B Note and any related intercreditor or co-lender agreement and, to the
extent consistent with the foregoing, further as follows:
o with the same care, skill and diligence as is normal and usual in its
general mortgage servicing and REO Property management activities on behalf
of third parties or on behalf of itself, whichever is higher, with respect
to mortgage loans and REO properties that are comparable to those for which
it is responsible under the Pooling and Servicing Agreement;
o with a view to the timely collection of all Scheduled Payments of principal
and interest under the mortgage loans, any Serviced Companion Mortgage Loan
and any B Note or, if a mortgage loan, any Serviced Companion Mortgage Loan
or B Note 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
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delinquent payments, the maximization of the recovery of principal and
interest on such mortgage loan to the Certificateholders (as a collective
whole) (or in the case of any A/B Mortgage Loan and its related B Note or a
Loan Pair, the maximization of recovery thereon of principal and interest
to the Certificateholders and the holder of the related B Note or the
Serviced Companion Mortgage Loan, as applicable, all taken as a collective
whole) on a net present value basis (the relevant discounting of
anticipated collections that will be distributable to Certificateholders to
be performed at the rate determined by the special servicer but in any
event not less than (i) the related Net Mortgage Rate, in the case of the
mortgage loans (other than any A Note or Serviced Pari Passu Mortgage
Loan), or (ii) the weighted average of the mortgage rates on the related A
Note and B Note, in the case of any A/B Mortgage Loan, and on the Serviced
Pari Passu Mortgage Loan and the related Serviced Companion Mortgage Loan,
in the case of a Loan Pair); and without regard to:
o any other relationship that the master servicer or the special
servicer, as the case may be, or any of their affiliates may have
with the related borrower;
o the ownership of any certificate or any interest in any Serviced
Companion Mortgage Loan, any Non-Serviced Companion Mortgage
Loan, any B Note or any mezzanine loan related to a mortgage loan
by the master servicer or the special servicer, as the case may
be, or any of their affiliates;
o the master servicer's obligation to make Advances;
o the right of the master servicer (or any of their affiliates) or
the special servicer, as the case may be, to receive
reimbursement of costs, or the sufficiency of any compensation
payable to it, under the Pooling and Servicing Agreement or with
respect to any particular transaction; and
o any obligation of the master servicer (or any of its affiliates)
to repurchase any mortgage loan from the Trust.
"Servicing Transfer Event" means an instance where an event has
occurred that has caused a mortgage loan (other than a Non-Serviced Mortgage
Loan), a Serviced Companion Mortgage Loan or a B Note to become a Specially
Serviced Mortgage Loan. If a Servicing Transfer Event occurs with respect to any
A Note, it will be deemed to have occurred also with respect to the related B
Note; provided, however, that if a Servicing Transfer Event would otherwise have
occurred with respect to an A Note, but has not so occurred solely because the
holder of the related B Note has exercised its cure rights under the related
intercreditor agreement, a Servicing Transfer Event will not occur with respect
to the related A/B Mortgage Loan. If a Servicing Transfer Event occurs with
respect to any B Note, it will be deemed to have occurred also with respect to
the related A Note. If a Servicing Transfer Event occurs with respect to a
Serviced Pari Passu Mortgage Loan, it will be deemed to have occurred also with
respect to the related Serviced Companion Mortgage Loan. If a Servicing Transfer
Event occurs with respect to a Serviced Companion Mortgage Loan, it will be
deemed to have occurred also with respect to the related Serviced Pari Passu
Mortgage Loan. Under any applicable Non-Serviced Mortgage Loan Pooling and
Servicing Agreement, if a Servicing Transfer Event occurs with respect to a
Non-Serviced Companion Mortgage Loan, it will be deemed to have occurred also
with respect to the related Non-Serviced Mortgage Loan.
"Specially Serviced Mortgage Loan" means the following:
o any mortgage loan (other than an A/B Mortgage Loan), Serviced Companion
Mortgage Loan or B Note as to which a Balloon Payment is past due, and the
master servicer has determined that payment is unlikely to be made on or
before the 60th day succeeding the date the Balloon Payment was due, or any
other payment is more than 60 days past due or has not been made on or
before the second Due Date following the date such payment was due;
o any mortgage loan, Serviced Companion Mortgage Loan or B Note as to which,
to the master servicer's knowledge, the borrower has consented to the
appointment of a receiver or conservator in any insolvency or similar
proceeding of or relating to such borrower or to all or substantially all
of its property, or the borrower has become the subject of a decree or
order issued under a bankruptcy, insolvency or similar law and such decree
or order shall have remained undischarged or unstayed for a period of 30
days;
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o any mortgage loan, Serviced Companion Mortgage Loan or B Note as to which
the master servicer shall have received notice of the foreclosure or
proposed foreclosure of any other lien on the mortgaged property;
o any mortgage loan, Serviced Companion Mortgage Loan or B Note as to which
the master servicer has knowledge of a default (other than a failure by the
related borrower to pay principal or interest) which, in the judgment of
the master servicer, materially and adversely affects the interests of the
Certificateholders or the holder of the related B Note or Serviced
Companion Mortgage Loan and which has occurred and remains unremedied for
the applicable grace period specified in such mortgage loan (or, if no
grace period is specified, 60 days);
o any mortgage loan, Serviced Companion Mortgage Loan or B Note as to which
the borrower admits in writing its inability to pay its debts generally as
they become due, files a petition to take advantage of any applicable
insolvency or reorganization statute, makes an assignment for the benefit
of its creditors or voluntarily suspends payment of its obligations; or
o any mortgage loan, Serviced Companion Mortgage Loan or B Note as to which,
in the judgment of the master servicer, (a) (other than with respect to any
A/B Mortgage Loan), a payment default is imminent or is likely to occur
within 60 days, or (b) any other default is imminent or is likely to occur
within 60 days and such default, in the judgment of the master servicer is
reasonably likely to materially and adversely affect the interests of the
Certificateholders or the holder of the related B Note or Serviced
Companion Mortgage Loan (as the case may be).
"Special Servicer Compensation" means such fees payable to the special
servicer, collectively, including the Special Servicing Fee, the Workout Fee,
the Liquidation Fee and any other fees payable to the special servicer pursuant
to the Pooling and Servicing Agreement.
"Special Servicer Event of Default" means, with respect to the special
servicer under the Pooling and Servicing Agreement, any one of the following
events:
o any failure by the special servicer to remit to the paying agent or the
master servicer within one business day of the date when due any amount
required to be so remitted under the terms of the Pooling and Servicing
Agreement;
o any failure by the special servicer to deposit into any account any amount
required to be so deposited or remitted under the terms of the Pooling and
Servicing Agreement which failure continues unremedied for one business day
following the date on which such deposit or remittance was first required
to be made;
o any failure on the part of the special servicer duly to observe or perform
in any material respect any other of the covenants or agreements on the
part of the special servicer contained in the Pooling and Servicing
Agreement which continues unremedied for a period of 30 days after the date
on which written notice of such failure, requiring the same to be remedied,
shall have been given to the special servicer by the Depositor or the
trustee; provided, however, that to the extent that the special servicer
certifies to the trustee and the Depositor that the special servicer is in
good faith attempting to remedy such failure and the Certificateholders
shall not be materially and adversely affected thereby, such cure period
will be extended to the extent necessary to permit the special servicer to
cure such failure, provided that such cure period may not exceed 90 days;
o any breach by the special servicer of the representations and warranties
contained in the Pooling and Servicing Agreement that materially and
adversely affects the interests of the holders of any Class of certificates
and that continues unremedied for a period of 30 days after the date on
which notice of such breach, requiring the same to be remedied, shall have
been given to the special servicer by the Depositor or the trustee,
provided, however, that to the extent that the special servicer is in good
faith attempting to remedy such breach and the Certificateholders shall not
be materially and adversely affected thereby, such cure period may be
extended to the extent necessary to permit the special servicer to cure
such failure, provided that such cure period may not exceed 90 days;
S-212
o 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 for the
appointment of a conservator, receiver, liquidator, trustee or similar
official in any bankruptcy, 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 special
servicer and such decree or order shall have remained in force undischarged
or unstayed for a period of 60 days;
o the special servicer shall consent to the appointment of a conservator,
receiver, liquidator, trustee or similar official in any bankruptcy,
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to the special servicer or of or
relating to all or substantially all of its property;
o the special servicer shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable bankruptcy, insolvency or reorganization statute, make an
assignment for the benefit of its creditors, voluntarily suspend payment of
its obligations, or take any corporate action in furtherance of the
foregoing;
o the trustee shall have received notice from Fitch or DBRS, as applicable,
that the continuation of the special servicer in such capacity would result
in the downgrade, qualification or withdrawal of any rating then assigned
by Fitch or DBRS, as applicable, to any Class of certificates;
o the special servicer has been downgraded to a servicer rating level below
CSS3, or its then equivalent, by Fitch;
o the special servicer is no longer listed on S&P's Select Servicer List as a
U.S. Commercial Mortgage Special Servicer and is not reinstated within 60
days; or
o under certain circumstances, if the special servicer, or any primary
servicer or sub-servicer appointed by the special servicer after the
Closing Date, shall fail to deliver the items required to be delivered by
such servicer to enable the Depositor to comply with the Trust's reporting
obligations under the Securities Exchange Act of 1934, as amended, and the
Trust's disclosure obligations under Regulation AB by the time provided for
in the Pooling and Servicing Agreement.
"Special Servicing Fee" means an amount equal to, in any month, the
portion of a rate equal to 0.25% per annum applicable to such month, determined
in the same manner as the applicable mortgage rate is determined for each
Specially Serviced Mortgage Loan for such month, of the outstanding Scheduled
Principal Balance of each Specially Serviced Mortgage Loan.
"Structuring Assumptions" means the following assumptions:
o the mortgage rate as of the Closing Date on each mortgage loan remains in
effect until maturity or its Anticipated Repayment Date;
o the initial Certificate Balances and initial Pass-Through Rates of the
certificates are as presented in this prospectus supplement;
o the Closing Date for the sale of the certificates is April 18, 2007;
o distributions on the certificates are made on the 12th day of each month,
commencing in May 2007;
o there are no delinquencies, defaults or Realized Losses with respect to the
mortgage loans;
o Scheduled Payments on the mortgage loans are timely received on the first
day of each month;
o the Trust does not experience any Expense Losses;
S-213
o no Principal Prepayment on any mortgage loan is made during its Lock-out
Period, if any, or during any period when Principal Prepayments on such
mortgage loans are required to be accompanied by a Yield Maintenance Charge
or a defeasance requirement, and otherwise Principal Prepayments are made
on the mortgage loans at the indicated levels of CPR, notwithstanding any
limitations in the mortgage loans on partial prepayments;
o no Prepayment Interest Shortfalls occur;
o no mortgage loan exercises its partial release option;
o no amounts that would otherwise be payable to Certificateholders as
principal are paid to the master servicer, the special servicer or the
trustee as reimbursements of any nonrecoverable Advances, unreimbursed
Advances outstanding as of the date of modification of any mortgage loan
and any related interest on those Advances;
o no mortgage loan is the subject of a repurchase or substitution by any
party and no optional termination of the Trust occurs;
o each ARD Loan pays in full on its Anticipated Repayment Date; and
o any mortgage loan with the ability to choose defeasance or yield
maintenance chooses yield maintenance.
"Subordinate Certificates" means the Class A-M, Class A-J, Class B,
Class C, Class D, Class E, Class F, Class G, Class H, Class J, Class K, Class L,
Class M, Class N, Class O and Class P Certificates.
"Treasury Rate" unless a different term methodology or source is
otherwise specified in the related mortgage loan document, is the yield
calculated by the linear interpolation of the yields, as reported in Federal
Reserve Statistical Release H.15-Selected Interest Rates under the heading "U.S.
government securities/Treasury constant maturities" for the week ending prior to
the date of the relevant Principal Prepayment, of U.S. Treasury constant
maturities with a maturity date, one longer and one shorter, most nearly
approximating the maturity date (or Anticipated Repayment Date, if applicable)
of the mortgage loan prepaid. If Release H.15 is no longer published, the master
servicer will select a comparable publication to determine the Treasury Rate.
"Trust" means Bear Stearns Commercial Mortgage Securities Trust
2007-TOP26.
"Trustee Fee" means a monthly fee in an amount equal to, in any month,
the product of the portion of a rate equal to 0.00117% per annum applicable to
such month, determined in the same manner as the applicable mortgage rate is
determined for each mortgage loan for such month, and the scheduled principal
balance of each mortgage loan, which fee is to be paid from the Distribution
Account to the trustee and the paying agent as compensation for the performance
of their duties.
"UCF" - See "Underwritable Cash Flow."
"Underwritable Cash Flow" or "UCF" means an estimate of stabilized
cash flow available for debt service. In general, it is the estimated stabilized
revenue derived from the use and operation of a mortgaged property, consisting
primarily of rental income, less the sum of (a) estimated stabilized operating
expenses (such as utilities, administrative expenses, repairs and maintenance,
management fees and advertising), (b) fixed expenses, such as insurance, real
estate taxes and, if applicable, ground lease payments, and (c) reserves for
capital expenditures, including tenant improvement costs and leasing
commissions. Underwritable Cash Flow generally does not reflect interest
expenses and non-cash items such as depreciation and amortization.
"Underwriters" means Bear, Stearns & Co. Inc. and Morgan Stanley & Co.
Incorporated.
"Underwriting Agreement" means that agreement, dated as of the date of
this prospectus supplement, entered into by the Depositor and the Underwriters.
S-214
"Unpaid Interest" means, on any Distribution Date with respect to any
Class of interests or certificates (other than the Residual Certificates), the
portion of Distributable Certificate Interest Amount for such Class remaining
unpaid as of the close of business on the preceding Distribution Date.
"WAC" - See "Weighted Average Net Mortgage Rate."
"Weighted Average Net Mortgage Rate" or "WAC" means, for any
Distribution Date, the weighted average of the Net Mortgage Rates for the
mortgage loans (in the case of each mortgage loan that is a Non-30/360 Loan,
adjusted as described under the definition of Net Mortgage Rate), weighted on
the basis of their respective Scheduled Principal Balances, as of the close of
business on the preceding Distribution Date.
"Wells Fargo" means Wells Fargo Bank, National Association.
"Workout Fee" means that fee, payable with respect to any
Rehabilitated Mortgage Loan, Serviced Companion Mortgage Loan or B Note, equal
to 1.00% of the amount of each collection of interest (other than default
interest and any Excess Interest) and principal received (including any
Condemnation Proceeds received and applied as a collection of such interest and
principal) on such mortgage loan, Serviced Companion Mortgage Loan or B Note for
so long as it remains a Rehabilitated Mortgage Loan.
"Yield Maintenance Charge" means, with respect to any Distribution
Date, the aggregate of all yield maintenance charges, if any, received during
the related Collection Period in connection with Principal Prepayments. The
method of calculation of any Prepayment Premium or Yield Maintenance Charge will
vary for any mortgage loan as presented in "Appendix II - Certain
Characteristics of the Mortgage Loans" and "Appendix III - Certain
Characteristics of the Mortgage Loans in Loan Group 2."
S-215
[THIS PAGE INTENTIONALLY LEFT BLANK.]
APPENDIX I
MORTGAGE POOL INFORMATION
MORTGAGE LOAN SELLERS
WEIGHTED WEIGHTED WEIGHTED
PERCENT BY WEIGHTED AVERAGE AVERAGE AVERAGE WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE REMAINING WEIGHTED DSCR CUT-OFF AVERAGE
MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE TERM AVERAGE AFTER DATE BALLOON
LOAN SELLER LOANS BALANCE ($) BALANCE (%) RATE (%) (MOS.) DSCR (x) IO (x) LTV (%) LTV (%)
------------------------------------------------------------------------------------------------------------------------------------
Bear Stearns Commercial
Mortgage, Inc. 42 797,149,126 37.9 5.644 128 1.92 1.88 56.6 55.3
Morgan Stanley Mortgage
Capital Inc. 55 460,808,205 21.9 5.539 97 2.02 1.98 56.9 54.1
Principal Commercial Funding
II, LLC 52 448,232,370 21.3 5.712 120 1.61 1.53 64.1 57.9
Wells Fargo Bank, National
Association 88 399,814,271 19.0 5.835 107 1.64 1.57 63.5 55.5
------------------------------------------------------------------------------------------------------------------------------------
TOTAL: 237 $2,106,003,972 100.0% 5.672% 115 1.82x 1.77x 59.6% 55.6%
====================================================================================================================================
CUT-OFF DATE BALANCES
WEIGHTED WEIGHTED WEIGHTED
PERCENT BY WEIGHTED AVERAGE AVERAGE AVERAGE WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE REMAINING WEIGHTED DSCR CUT-OFF AVERAGE
MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE TERM AVERAGE AFTER DATE BALLOON
CUT-OFF DATE BALANCE ($) LOANS BALANCE ($) BALANCE (%) RATE (%) (MOS.) DSCR (x) IO (x) LTV (%) LTV (%)
------------------------------------------------------------------------------------------------------------------------------------
1 - 1,000,000 9 8,283,616 0.4 6.148 132 1.56 1.52 54.1 39.3
1,000,001 - 2,000,000 45 68,417,470 3.2 5.936 116 1.76 1.69 55.8 46.3
2,000,001 - 3,000,000 33 81,218,823 3.9 5.938 115 1.51 1.47 61.9 52.6
3,000,001 - 4,000,000 28 96,757,918 4.6 5.842 118 1.92 1.87 54.6 46.1
4,000,001 - 5,000,000 21 95,316,925 4.5 5.712 110 1.76 1.71 59.4 53.4
5,000,001 - 6,000,000 14 78,569,384 3.7 5.813 113 2.23 2.12 55.6 48.8
6,000,001 - 7,000,000 14 91,886,271 4.4 5.762 111 1.86 1.76 56.6 51.7
7,000,001 - 8,000,000 7 53,145,601 2.5 5.851 118 1.62 1.48 65.8 59.1
8,000,001 - 9,000,000 9 77,331,886 3.7 5.701 123 2.01 1.91 57.2 48.5
9,000,001 - 10,000,000 9 86,940,171 4.1 5.708 111 1.69 1.58 58.7 54.7
10,000,001 - 15,000,000 17 210,887,995 10.0 5.770 104 1.62 1.57 63.7 60.0
15,000,001 - 20,000,000 9 152,374,000 7.2 5.628 113 1.60 1.45 65.8 61.6
20,000,001 - 25,000,000 8 182,740,023 8.7 5.650 106 1.65 1.57 65.4 62.5
25,000,001 - 50,000,000 8 267,255,140 12.7 5.634 114 1.87 1.87 62.3 61.2
50,000,001 <= 6 554,878,748 26.3 5.494 124 1.99 1.99 55.1 53.7
------------------------------------------------------------------------------------------------------------------------------------
TOTAL: 237 $2,106,003,972 100.0% 5.672% 115 1.82x 1.77x 59.6% 55.6%
====================================================================================================================================
Minimum: $548,850
Maximum: $150,000,000
Average: $8,886,093
I-1
APPENDIX I
MORTGAGE POOL INFORMATION
STATES
WEIGHTED WEIGHTED WEIGHTED
PERCENT BY WEIGHTED AVERAGE AVERAGE AVERAGE WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE REMAINING WEIGHTED DSCR CUT-OFF AVERAGE
MORTGAGED CUT-OFF DATE CUT-OFF DATE MORTGAGE TERM AVERAGE AFTER DATE BALLOON
STATE PROPERTIES BALANCE ($) BALANCE (%) RATE (%) (MOS.) DSCR (x) IO (x) LTV (%) LTV (%)
------------------------------------------------------------------------------------------------------------------------------------
New York 24 338,003,334 16.0 5.539 144 2.22 2.20 47.8 47.0
California - Southern 31 173,774,991 8.3 5.817 117 1.68 1.59 56.0 50.1
California - Northern 18 92,486,886 4.4 5.614 106 1.69 1.63 57.0 50.7
Texas 22 200,587,128 9.5 5.462 90 2.02 1.99 60.7 59.1
New Jersey 13 148,379,570 7.0 5.696 122 1.88 1.78 58.2 52.9
Missouri 3 120,681,814 5.7 5.361 117 2.21 2.19 55.4 54.8
Florida 11 81,918,753 3.9 5.632 87 1.50 1.47 67.0 63.8
Arizona 6 76,696,125 3.6 6.061 115 1.30 1.29 61.1 59.6
Georgia 8 76,153,091 3.6 5.856 120 1.43 1.32 67.2 62.8
Ohio 3 75,319,333 3.6 5.509 119 1.60 1.60 69.2 57.6
Minnesota 8 64,171,333 3.0 6.079 119 1.44 1.34 73.9 64.4
Washington 6 63,885,942 3.0 5.592 114 1.64 1.64 69.4 68.4
Illinois 6 60,206,304 2.9 5.547 116 2.00 1.99 55.3 54.6
Connecticut 5 52,840,000 2.5 5.744 91 1.85 1.72 60.4 58.8
Virginia 5 41,098,218 2.0 5.584 117 1.55 1.48 70.9 66.2
Massachusetts 7 40,050,000 1.9 5.506 88 1.91 1.91 59.2 59.2
Utah 3 39,338,055 1.9 6.207 127 1.45 1.28 69.1 59.3
Colorado 3 38,650,000 1.8 5.565 119 2.30 2.23 52.8 51.0
Maryland 5 37,862,564 1.8 5.837 118 1.70 1.70 54.3 48.4
Pennsylvania 7 34,251,184 1.6 5.808 118 1.57 1.49 67.0 59.7
Nebraska 2 30,722,828 1.5 5.645 119 1.88 1.81 62.0 60.4
North Carolina 4 24,078,125 1.1 5.787 95 1.45 1.28 78.1 70.8
Alabama 4 19,925,023 0.9 5.852 117 1.72 1.49 62.9 57.5
New Mexico 2 19,572,342 0.9 5.828 118 1.54 1.32 76.7 71.2
Wyoming 2 18,280,212 0.9 6.020 57 1.13 1.13 79.5 68.5
Michigan 7 15,932,065 0.8 5.851 118 1.50 1.50 61.1 50.3
South Dakota 1 13,755,000 0.7 5.496 90 2.45 2.45 48.8 48.8
Wisconsin 3 13,151,482 0.6 5.844 98 1.38 1.33 71.2 61.9
Kansas 1 12,880,000 0.6 5.967 116 1.80 1.80 64.4 64.4
South Carolina 4 12,271,627 0.6 5.587 122 1.81 1.81 56.9 38.8
Louisiana 2 12,089,254 0.6 5.658 118 1.52 1.52 61.7 52.0
Nevada 4 11,698,114 0.6 5.931 102 1.71 1.65 53.9 48.1
Hawaii 2 8,446,018 0.4 5.956 57 1.53 1.53 53.2 49.0
Oregon 2 8,091,034 0.4 6.167 117 1.78 1.59 58.6 49.3
North Dakota 2 6,935,937 0.3 5.689 118 2.48 2.48 47.5 40.7
Iowa 2 6,571,230 0.3 5.842 117 1.53 1.53 74.8 66.7
Tennessee 1 2,979,865 0.1 5.760 117 1.36 1.36 63.4 41.7
Mississippi 1 2,881,349 0.1 6.230 178 1.59 1.59 63.4 47.0
Indiana 2 2,281,787 0.1 6.253 119 1.37 1.37 72.0 61.7
Kentucky 1 2,200,000 0.1 6.310 119 1.72 1.48 71.0 63.5
Rhode Island 1 1,462,801 0.1 5.950 118 1.26 1.26 70.3 59.8
Idaho 1 1,245,314 0.1 6.120 116 1.65 1.65 51.9 44.4
Delaware 1 1,150,000 0.1 6.120 119 1.82 1.55 64.8 57.7
Oklahoma 1 1,047,942 0.0 6.230 178 1.59 1.59 63.4 47.0
------------------------------------------------------------------------------------------------------------------------------------
TOTAL: 247 $2,106,003,972 100.0% 5.672% 115 1.82x 1.77x 59.6% 55.6%
====================================================================================================================================
I-2
APPENDIX I
MORTGAGE POOL INFORMATION
PROPERTY TYPES
WEIGHTED WEIGHTED WEIGHTED
PERCENT BY WEIGHTED AVERAGE AVERAGE AVERAGE WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE REMAINING WEIGHTED DSCR CUT-OFF AVERAGE
MORTGAGED CUT-OFF DATE CUT-OFF DATE MORTGAGE TERM AVERAGE AFTER DATE BALLOON
PROPERTY TYPE PROPERTIES BALANCE ($) BALANCE (%) RATE (%) (MOS.) DSCR (x) IO (x) LTV (%) LTV (%)
------------------------------------------------------------------------------------------------------------------------------------
Office
Urban 11 562,334,037 26.7 5.499 124 1.99 1.98 55.1 53.6
Suburban 27 250,737,599 11.9 5.682 105 1.65 1.56 62.1 57.6
Medical 4 46,410,949 2.2 6.559 124 1.27 1.22 71.7 62.0
SUBTOTAL: 42 $ 859,482,586 40.8% 5.610% 118 1.85x 1.82x 58.1% 55.2%
Retail
Anchored 18 207,722,385 9.9 5.565 111 1.93 1.86 57.7 54.6
Free Standing 38 109,962,745 5.2 5.903 116 1.81 1.76 58.5 53.5
Unanchored 29 106,645,804 5.1 5.781 115 1.60 1.53 58.0 51.7
Specialty 2 44,400,000 2.1 5.490 120 1.69 1.69 64.1 64.1
Shadow Anchored 9 27,346,289 1.3 5.841 109 1.72 1.61 54.2 47.8
Big Box 1 1,598,107 0.1 6.380 119 2.06 2.06 36.7 28.9
SUBTOTAL: 97 $ 497,675,330 23.6% 5.697% 114 1.80x 1.74x 58.2% 54.1%
Industrial
Warehouse 22 173,956,646 8.3 5.821 114 1.55 1.49 65.0 60.1
Flex Industrial 8 45,593,757 2.2 5.553 97 1.89 1.86 60.2 56.6
Light Industrial 6 25,126,750 1.2 5.944 108 1.62 1.62 60.6 54.8
SUBTOTAL: 36 $ 244,677,153 11.6% 5.784% 110 1.62x 1.57x 63.7% 58.9%
Hospitality
Full Service 6 110,543,473 5.2 5.917 118 1.82 1.76 65.8 60.8
Limited Service 9 50,554,297 2.4 5.821 119 1.83 1.69 68.9 58.0
SUBTOTAL: 15 $ 161,097,770 7.6% 5.887% 118 1.82x 1.74x 66.8% 59.9%
Multifamily
Garden 14 111,039,700 5.3 5.606 106 1.54 1.45 65.7 62.0
Cooperative 3 16,384,901 0.8 5.477 117 7.11 7.11 16.0 13.8
Mid Rise 3 14,742,998 0.7 5.816 118 1.84 1.56 55.3 51.1
Low Rise 1 2,272,000 0.1 5.830 116 1.69 1.42 73.5 67.6
Assisted Living 1 944,231 0.0 6.070 119 1.44 1.44 74.9 63.9
SUBTOTAL: 22 $ 145,383,831 6.9% 5.619% 109 2.20x 2.10x 59.2% 55.6%
Mixed Use
Multifamily/Retail 4 42,500,000 2.0 5.436 120 1.64 1.52 63.8 60.3
Office/Retail 3 37,878,505 1.8 5.437 116 2.26 2.26 50.7 48.6
Retail/Industrial/Office 1 16,500,000 0.8 5.640 118 1.45 1.20 61.1 54.9
Retail/Multifamily 5 10,000,000 0.5 5.576 118 1.82 1.82 50.3 50.3
Retail/Office 2 5,491,335 0.3 5.866 117 2.10 1.88 40.7 34.0
Office/Industrial 1 2,693,823 0.1 5.660 118 1.47 1.47 53.9 45.4
SUBTOTAL: 16 $ 115,063,662 5.5% 5.503% 118 1.85x 1.76x 56.6% 53.2%
Other
Theater 3 26,937,617 1.3 5.600 118 1.52 1.52 61.6 51.8
Leased Fee 5 23,942,559 1.1 5.666 118 1.47 1.45 61.8 56.6
SUBTOTAL: 8 $ 50,880,176 2.4% 5.631% 118 1.49x 1.49x 61.7% 54.1%
Self Storage
Self Storage 9 27,024,635 1.3 5.912 100 1.65 1.58 58.5 51.5
SUBTOTAL: 9 $ 27,024,635 1.3% 5.912% 100 1.65x 1.58x 58.5% 51.5%
Manufactured Housing Community
Manufactured Housing
Community 2 4,718,828 0.2 5.938 118 1.37 1.21 78.7 69.9
SUBTOTAL: 2 $ 4,718,828 0.2% 5.938% 118 1.37x 1.21x 78.7% 69.9%
------------------------------------------------------------------------------------------------------------------------------------
TOTAL: 247 $2,106,003,972 100.0% 5.672% 115 1.82x 1.77x 59.6% 55.6%
====================================================================================================================================
I-3
APPENDIX I
MORTGAGE POOL INFORMATION
MORTGAGE RATES
WEIGHTED WEIGHTED WEIGHTED
PERCENT BY WEIGHTED AVERAGE AVERAGE AVERAGE WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE REMAINING WEIGHTED DSCR CUT-OFF AVERAGE
MORTGAGED CUT-OFF DATE CUT-OFF DATE MORTGAGE TERM AVERAGE AFTER DATE BALLOON
MORTGAGE RATE (%) PROPERTIES BALANCE ($) BALANCE (%) RATE (%) (MOS.) DSCR (x) IO (x) LTV (%) LTV (%)
------------------------------------------------------------------------------------------------------------------------------------
<= 5.000 2 27,918,556 1.3 4.980 78 1.98 1.98 50.8 43.8
5.001 - 5.500 27 576,678,049 27.4 5.355 107 2.20 2.18 55.7 53.2
5.501 - 6.000 151 1,173,382,540 55.7 5.689 120 1.74 1.68 60.0 56.4
6.001 - 6.500 52 278,979,749 13.2 6.161 115 1.46 1.37 64.7 58.0
6.501 <= 5 49,045,078 2.3 6.592 129 1.27 1.22 70.7 58.9
------------------------------------------------------------------------------------------------------------------------------------
TOTAL: 237 $2,106,003,972 100.0% 5.672% 115 1.82x 1.77x 59.6% 55.6%
====================================================================================================================================
Minimum: 4.980%
Maximum: 6.640%
Weighted Average: 5.672%
ORIGINAL TERMS TO STATED MATURITY
WEIGHTED WEIGHTED WEIGHTED
PERCENT BY WEIGHTED AVERAGE AVERAGE AVERAGE WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE REMAINING WEIGHTED DSCR CUT-OFF AVERAGE
ORIGINAL TERM TO MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE TERM AVERAGE AFTER DATE BALLOON
STATED MATURITY (MOS.) LOANS BALANCE ($) BALANCE (%) RATE (%) (MOS.) DSCR (x) IO (x) LTV (%) LTV (%)
------------------------------------------------------------------------------------------------------------------------------------
60 20 230,693,172 11.0 5.549 58 1.87 1.83 63.2 61.5
61 - 120 201 1,603,816,945 76.2 5.695 116 1.80 1.74 60.8 56.4
121 - 180 14 267,403,865 12.7 5.628 158 1.91 1.89 49.2 46.8
181 - 240 2 4,089,989 0.2 6.547 239 1.24 1.24 57.8 2.1
------------------------------------------------------------------------------------------------------------------------------------
TOTAL: 237 $2,106,003,972 100.0% 5.672% 115 1.82X 1.77X 59.6% 55.6%
====================================================================================================================================
Minimum: 60 mos.
Maximum: 240 mos.
Weighted Average: 118 mos.
REMAINING TERMS TO STATED MATURITY
WEIGHTED WEIGHTED WEIGHTED
PERCENT BY WEIGHTED AVERAGE AVERAGE AVERAGE WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE REMAINING WEIGHTED DSCR CUT-OFF AVERAGE
REMAINING TERM TO MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE TERM AVERAGE AFTER DATE BALLOON
STATED MATURITY (MOS.) LOANS BALANCE ($) BALANCE (%) RATE (%) (MOS.) DSCR (x) IO (x) LTV (%) LTV (%)
------------------------------------------------------------------------------------------------------------------------------------
60 20 230,693,172 11.0 5.549 58 1.87 1.83 63.2 61.5
61 - 120 201 1,603,816,945 76.2 5.695 116 1.80 1.74 60.8 56.4
121 - 180 14 267,403,865 12.7 5.628 158 1.91 1.89 49.2 46.8
181 - 240 2 4,089,989 0.2 6.547 239 1.24 1.24 57.8 2.1
------------------------------------------------------------------------------------------------------------------------------------
TOTAL: 237 $2,106,003,972 100.0% 5.672% 115 1.82x 1.77x 59.6% 55.6%
====================================================================================================================================
Minimum: 56 mos.
Maximum: 239 mos.
Weighted Average: 115 mos.
I-4
APPENDIX I
MORTGAGE POOL INFORMATION
ORIGINAL AMORTIZATION TERMS
WEIGHTED WEIGHTED WEIGHTED
PERCENT BY WEIGHTED AVERAGE AVERAGE AVERAGE WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE REMAINING WEIGHTED DSCR CUT-OFF AVERAGE
ORIGINAL AMORTIZATION MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE TERM AVERAGE AFTER DATE BALLOON
TERM (MOS.) LOANS BALANCE ($) BALANCE (%) RATE (%) (MOS.) DSCR (x) IO (x) LTV (%) LTV (%)
------------------------------------------------------------------------------------------------------------------------------------
BALLOON LOANS
Interest Only 60 1,130,520,000 53.7 5.537 117 1.97 1.97 56.3 56.3
181 - 240 11 46,379,131 2.2 5.849 94 1.63 1.63 56.9 43.8
241 - 300 18 59,965,395 2.8 5.944 117 1.58 1.53 60.1 46.9
301 - 360 144 861,712,937 40.9 5.816 114 1.66 1.53 64.0 56.4
SUBTOTAL: 233 $2,098,577,463 99.6% 5.670% 115 1.82x 1.77x 59.6% 55.8%
FULLY AMORTIZING LOANS
121 - 180 2 3,336,519 0.2 5.631 162 2.17 2.17 49.8 1.0
181 - 240 2 4,089,989 0.2 6.547 239 1.24 1.24 57.8 2.1
SUBTOTAL: 4 $ 7,426,509 0.4% 6.135% 204 1.66x 1.66x 54.2% 1.6%
------------------------------------------------------------------------------------------------------------------------------------
TOTAL: 237 $2,106,003,972 100.0% 5.672% 115 1.82x 1.77x 59.6% 55.6%
====================================================================================================================================
Minimum: 144 mos.
Maximum: 360 mos.
Weighted Average: 349 mos.
REMAINING AMORTIZATION TERMS
WEIGHTED WEIGHTED WEIGHTED
PERCENT BY WEIGHTED AVERAGE AVERAGE AVERAGE WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE REMAINING WEIGHTED DSCR CUT-OFF AVERAGE
REMAINING AMORTIZATION MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE TERM AVERAGE AFTER DATE BALLOON
TERM (MOS.) LOANS BALANCE ($) BALANCE (%) RATE (%) (MOS.) DSCR (x) IO (x) LTV (%) LTV (%)
------------------------------------------------------------------------------------------------------------------------------------
BALLOON LOANS
Interest Only 60 1,130,520,000 53.7 5.537 117 1.97 1.97 56.3 56.3
181 - 240 11 46,379,131 2.2 5.849 94 1.63 1.63 56.9 43.8
241 - 300 18 59,965,395 2.8 5.944 117 1.58 1.53 60.1 46.9
301 - 360 144 861,712,937 40.9 5.816 114 1.66 1.53 64.0 56.4
SUBTOTAL: 233 $2,098,577,463 99.6% 5.670% 115 1.82x 1.77x 59.6% 55.8%
FULLY AMORTIZING LOANS
121 - 180 2 3,336,519 0.2 5.631 162 2.17 2.17 49.8 1.0
181 - 240 2 4,089,989 0.2 6.547 239 1.24 1.24 57.8 2.1
SUBTOTAL: 4 $ 7,426,509 0.4% 6.135% 204 1.66x 1.66x 54.2% 1.6%
------------------------------------------------------------------------------------------------------------------------------------
TOTAL: 237 $2,106,003,972 100.0% 5.672% 115 1.82x 1.77x 59.6% 55.6%
====================================================================================================================================
Minimum: 143 mos.
Maximum: 360 mos.
Weighted Average: 347 mos.
I-5
APPENDIX I
MORTGAGE POOL INFORMATION
DEBT SERVICE COVERAGE RATIOS
WEIGHTED WEIGHTED WEIGHTED
PERCENT BY WEIGHTED AVERAGE AVERAGE AVERAGE WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE REMAINING WEIGHTED DSCR CUT-OFF AVERAGE
DEBT SERVICE MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE TERM AVERAGE AFTER DATE BALLOON
COVERAGE RATIO (X) LOANS BALANCE ($) BALANCE (%) RATE (%) (MOS.) DSCR (x) IO (x) LTV (%) LTV (%)
------------------------------------------------------------------------------------------------------------------------------------
<= 1.20 12 52,874,624 2.5 5.970 93 1.16 1.16 68.1 56.4
1.21 - 1.30 31 219,483,001 10.4 6.048 117 1.25 1.24 69.3 62.8
1.31 - 1.40 19 78,464,680 3.7 5.928 96 1.37 1.28 68.2 60.4
1.41 - 1.50 32 331,910,177 15.8 5.784 116 1.46 1.36 68.9 64.7
1.51 - 1.60 24 209,274,951 9.9 5.697 117 1.57 1.50 65.9 62.0
1.61 - 1.70 25 206,538,263 9.8 5.619 116 1.64 1.56 62.7 55.0
1.71 - 1.80 16 92,416,092 4.4 5.855 103 1.78 1.68 61.5 58.0
1.81 - 2.00 35 262,441,649 12.5 5.564 109 1.91 1.85 54.8 51.0
2.01 - 2.20 16 279,503,334 13.3 5.589 149 2.14 2.11 48.0 47.2
2.21 <= 27 373,097,199 17.7 5.362 102 2.61 2.60 48.7 47.9
------------------------------------------------------------------------------------------------------------------------------------
TOTAL: 237 $2,106,003,972 100.0% 5.672% 115 1.82x 1.77x 59.6% 55.6%
====================================================================================================================================
Minimum: 1.12x
Maximum: 10.05x
Weighted Average: 1.82x
DEBT SERVICE COVERAGE RATIOS AFTER IO PERIOD
WEIGHTED WEIGHTED WEIGHTED
PERCENT BY WEIGHTED AVERAGE AVERAGE AVERAGE WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE REMAINING WEIGHTED DSCR CUT-OFF AVERAGE
DEBT SERVICE COVERAGE MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE TERM AVERAGE AFTER DATE BALLOON
RATIO AFTER IO PERIOD (X) LOANS BALANCE ($) BALANCE (%) RATE (%) (MOS.) DSCR (x) IO (x) LTV (%) LTV (%)
------------------------------------------------------------------------------------------------------------------------------------
<= 1.20 21 138,729,624 6.6 5.927 100 1.30 1.17 69.7 62.1
1.21 - 1.30 43 332,857,001 15.8 6.009 115 1.34 1.25 70.8 64.5
1.31 - 1.40 27 133,656,680 6.3 5.869 117 1.53 1.36 66.4 58.4
1.41 - 1.50 25 208,628,177 9.9 5.670 112 1.48 1.46 66.6 63.8
1.51 - 1.60 22 208,887,951 9.9 5.705 120 1.64 1.56 63.3 59.5
1.61 - 1.70 22 167,616,263 8.0 5.600 114 1.68 1.64 60.5 52.5
1.71 - 1.80 13 69,238,920 3.3 5.820 108 1.83 1.79 60.0 56.4
1.81 - 2.00 27 224,261,649 10.6 5.498 108 1.94 1.92 54.0 50.7
2.01 - 2.20 12 257,280,506 12.2 5.577 152 2.14 2.14 47.3 46.9
2.21 <= 25 364,847,199 17.3 5.356 101 2.62 2.62 48.3 47.6
------------------------------------------------------------------------------------------------------------------------------------
TOTAL: 237 $2,106,003,972 100.0% 5.672% 115 1.82x 1.77x 59.6% 55.6%
====================================================================================================================================
Minimum: 1.12x
Maximum: 10.05x
Weighted Average: 1.77x
I-6
APPENDIX I
MORTGAGE POOL INFORMATION
LOAN-TO-VALUE RATIOS
PERCENT BY
AGGREGATE WEIGHTED WEIGHTED
NUMBER OF AGGREGATE CUT-OFF AVERAGE AVERAGE
MORTGAGE CUT-OFF DATE DATE MORTGAGE REMAINING
LOAN-TO-VALUE RATIO (%) LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.)
---------------------------------------------------------------------------------------------
<= 20.0 2 8,262,550 0.4 5.602 117
20.1 - 30.0 7 20,271,182 1.0 5.616 120
30.1 - 40.0 18 70,331,158 3.3 5.682 108
40.1 - 50.0 24 328,312,746 15.6 5.534 144
50.1 - 60.0 66 574,416,351 27.3 5.516 107
60.1 - 70.0 65 684,916,977 32.5 5.757 115
70.1 - 80.0 55 419,493,008 19.9 5.857 106
---------------------------------------------------------------------------------------------
TOTAL: 237 $2,106,003,972 100.0% 5.672% 115
=============================================================================================
WEIGHTED WEIGHTED WEIGHTED
WEIGHTED AVERAGE AVERAGE AVERAGE
AVERAGE DSCR CUT-OFF DATE BALLOON
LOAN-TO-VALUE RATIO (%) DSCR (x) AFTER IO (x) LTV (%) LTV (%)
-------------------------------------------------------------------------------
<= 20.0 9.95 9.95 7.9 7.4
20.1 - 30.0 3.19 3.19 24.9 17.7
30.1 - 40.0 2.18 2.18 35.6 31.3
40.1 - 50.0 2.19 2.18 44.5 43.4
50.1 - 60.0 1.99 1.95 55.1 51.7
60.1 - 70.0 1.57 1.52 64.8 60.6
70.1 - 80.0 1.42 1.31 75.6 69.2
-------------------------------------------------------------------------------
TOTAL: 1.82x 1.77x 59.6% 55.6%
===============================================================================
Minimum: 7.7%
Maximum: 80.0%
Weighted Average: 59.6%
BALLOON LOAN-TO-VALUE RATIOS
PERCENT BY
AGGREGATE WEIGHTED WEIGHTED
NUMBER OF AGGREGATE CUT-OFF AVERAGE AVERAGE
BALLOON LOAN-TO-VALUE MORTGAGE CUT-OFF DATE DATE MORTGAGE REMAINING
RATIO (%) LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.)
---------------------------------------------------------------------------------------------
<= 20.0 9 21,214,058 1.0 5.895 148
20.1 - 30.0 10 35,209,939 1.7 5.634 117
30.1 - 40.0 18 73,389,297 3.5 5.687 110
40.1 - 50.0 58 496,396,099 23.6 5.576 133
50.1 - 60.0 65 652,891,141 31.0 5.587 110
60.1 - 70.0 61 602,259,919 28.6 5.836 110
70.1 - 80.0 16 224,643,519 10.7 5.670 103
---------------------------------------------------------------------------------------------
TOTAL: 237 $2,106,003,972 100.0% 5.672% 115
=============================================================================================
WEIGHTED WEIGHTED WEIGHTED
WEIGHTED AVERAGE AVERAGE AVERAGE
BALLOON LOAN-TO-VALUE AVERAGE DSCR CUT-OFF DATE BALLOON
RATIO (%) DSCR (x) AFTER IO (x) LTV (%) LTV (%)
-------------------------------------------------------------------------------
<= 20.0 5.11 5.11 28.4 7.6
20.1 - 30.0 2.63 2.63 31.3 23.4
30.1 - 40.0 2.11 2.10 40.1 35.6
40.1 - 50.0 2.02 2.00 48.9 44.9
50.1 - 60.0 1.86 1.81 59.1 54.9
60.1 - 70.0 1.56 1.50 67.8 64.4
70.1 - 80.0 1.42 1.30 76.3 73.8
-------------------------------------------------------------------------------
TOTAL: 1.82x 1.77x 59.6% 55.6%
===============================================================================
Minimum: 0.5%
Maximum: 76.9%
Weighted Average: 55.6%
I-7
APPENDIX I
MORTGAGE POOL INFORMATION
PERCENTAGE OF COLLATERAL BY PREPAYMENT RESTRICTION (%)(1)
Prepayment
Restrictions APR-07 APR-08 APR-09 APR-10 APR-11 APR-12
----------------------------------------------------------------------------------------------------------------------------
Locked Out 96.52% 96.55% 96.38% 57.44% 57.19% 60.69%
Yield Maintenance
Total (2)(3) 3.48% 3.45% 3.62% 42.56% 42.52% 39.31%
Open 0.00% 0.00% 0.00% 0.00% 0.29% 0.00%
----------------------------------------------------------------------------------------------------------------------------
TOTALS 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
----------------------------------------------------------------------------------------------------------------------------
Pool Balance
Outstanding $2,106,003,972 $2,097,990,380 $2,088,968,257 $2,078,057,144 $2,064,740,631 $1,825,358,105
% Initial Pool Balance 100.00% 99.62% 99.19% 98.67% 98.04% 86.67%
PERCENTAGE OF COLLATERAL BY PREPAYMENT RESTRICTION (%)(1)
Prepayment
Restrictions (Cont'd) APR-13 APR-14 APR-15 APR-16 APR-17 APR-18
------------------------------------------------------------------------------------------------------------------------
Locked Out 60.72% 62.46% 63.00% 62.78% 77.56% 98.82%
Yield Maintenance
Total (2)(3) 37.84% 37.54% 37.00% 37.22% 0.92% 1.18%
Open 1.44% 0.00% 0.00% 0.00% 21.52% 0.00%
------------------------------------------------------------------------------------------------------------------------
TOTALS 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
------------------------------------------------------------------------------------------------------------------------
Pool Balance
Outstanding $1,810,796,572 $1,744,154,244 $1,714,623,975 $1,685,903,069 $262,583,098 $178,007,611
% Initial Pool Balance 85.98% 82.82% 81.42% 80.05% 12.47% 8.45%
PERCENTAGE OF COLLATERAL BY PREPAYMENT RESTRICTION (%)(1)
Prepayment
Restrictions (cont'd) APR-19 APR-20 APR-21 APR-22
----------------------------------------------------------------------------------
Locked Out 98.92% 95.35% 99.09% 23.77%
Yield Maintenance
Total (2)(3) 1.08% 0.98% 0.91% 76.23%
Open 0.00% 3.67% 0.00% 0.00%
----------------------------------------------------------------------------------
TOTALS 100.00% 100.00% 100.00% 100.00%
----------------------------------------------------------------------------------
Pool Balance
Outstanding $164,189,386 $163,372,480 $156,842,445 $1,620,117
% Initial Pool Balance 7.80% 7.76% 7.45% 0.08%
Notes:
(1) The analysis is based on the Structuring Assumptions and a 0% CPR as
discussed herein.
(2) See Appendix II for a description of the Yield Maintenance.
(3) YM3, YM1, YM0.5, prepayment premium, and DEF/YM1 loans have been included
in Yield Maintenance Total.
I-8
APPENDIX I
GROUP 1
MORTGAGE POOL INFORMATION
MORTGAGE LOAN SELLERS
PERCENT BY WEIGHTED WEIGHTED
AGGREGATE AGGREGATE AVERAGE AVERAGE
NUMBER OF CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING
LOAN SELLER MORTGAGE LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.)
-----------------------------------------------------------------------------------------------------------
Bear Stearns Commercial Mortgage, Inc. 41 779,575,126 39.9 5.641 128
Principal Commercial Funding II, LLC 44 395,818,622 20.2 5.733 120
Morgan Stanley Mortgage Capital Inc. 47 391,267,836 20.0 5.530 97
Wells Fargo Bank, National Association 81 389,239,728 19.9 5.831 107
-----------------------------------------------------------------------------------------------------------
TOTAL: 213 $1,955,901,313 100.0% 5.675% 116
===========================================================================================================
WEIGHTED WEIGHTED WEIGHTED
WEIGHTED AVERAGE AVERAGE AVERAGE
AVERAGE DSCR CUT-OFF DATE BALLOON
LOAN SELLER DSCR (x) AFTER IO (x) LTV (%) LTV (%)
--------------------------------------------------------------------------------------
Bear Stearns Commercial Mortgage, Inc. 1.93 1.89 56.1 54.8
Principal Commercial Funding II, LLC 1.58 1.50 65.5 59.2
Morgan Stanley Mortgage Capital Inc. 1.89 1.85 56.6 53.7
Wells Fargo Bank, National Association 1.65 1.58 63.3 55.3
--------------------------------------------------------------------------------------
TOTAL: 1.79x 1.74x 59.5% 55.6%
======================================================================================
CUT-OFF DATE BALANCES
PERCENT BY WEIGHTED WEIGHTED
AGGREGATE AGGREGATE AVERAGE AVERAGE
NUMBER OF CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING
CUT-OFF DATE BALANCE ($) MORTGAGE LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.)
----------------------------------------------------------------------------------------------------
1 - 1,000,000 7 6,445,103 0.3 6.163 136
1,000,001 - 2,000,000 39 59,577,016 3.0 5.950 114
2,000,001 - 3,000,000 30 73,806,356 3.8 5.951 115
3,000,001 - 4,000,000 26 90,290,368 4.6 5.837 118
4,000,001 - 5,000,000 21 95,316,925 4.9 5.712 110
5,000,001 - 6,000,000 12 67,994,384 3.5 5.831 113
6,000,001 - 7,000,000 12 77,893,078 4.0 5.804 110
7,000,001 - 8,000,000 6 45,945,601 2.3 5.936 118
8,000,001 - 9,000,000 7 60,630,403 3.1 5.805 124
9,000,001 - 10,000,000 9 86,940,171 4.4 5.708 111
10,000,001 - 15,000,000 16 198,387,995 10.1 5.777 103
15,000,001 - 20,000,000 8 134,800,000 6.9 5.605 112
20,000,001 - 25,000,000 6 135,740,023 6.9 5.667 112
25,000,001 - 50,000,000 8 267,255,140 13.7 5.634 114
50,000,001 <= 6 554,878,748 28.4 5.494 124
----------------------------------------------------------------------------------------------------
TOTAL: 213 $1,955,901,313 100.0% 5.675% 116
====================================================================================================
WEIGHTED WEIGHTED WEIGHTED
WEIGHTED AVERAGE AVERAGE AVERAGE
AVERAGE DSCR CUT-OFF DATE BALLOON
CUT-OFF DATE BALANCE ($) DSCR (x) AFTER IO (x) LTV (%) LTV (%)
------------------------------------------------------------------------------
1 - 1,000,000 1.63 1.58 51.8 35.4
1,000,001 - 2,000,000 1.78 1.71 54.8 46.1
2,000,001 - 3,000,000 1.53 1.49 61.2 51.9
3,000,001 - 4,000,000 1.65 1.61 55.3 46.5
4,000,001 - 5,000,000 1.76 1.71 59.4 53.4
5,000,001 - 6,000,000 1.71 1.61 58.7 51.1
6,000,001 - 7,000,000 1.82 1.74 59.2 54.2
7,000,001 - 8,000,000 1.53 1.36 68.6 60.8
8,000,001 - 9,000,000 1.76 1.64 61.2 52.1
9,000,001 - 10,000,000 1.69 1.58 58.7 54.7
10,000,001 - 15,000,000 1.64 1.57 64.0 60.1
15,000,001 - 20,000,000 1.62 1.48 64.0 59.9
20,000,001 - 25,000,000 1.74 1.67 63.2 59.7
25,000,001 - 50,000,000 1.87 1.87 62.3 61.2
50,000,001 <= 1.99 1.99 55.1 53.7
------------------------------------------------------------------------------
Total: 1.79x 1.74x 59.5% 55.6%
==============================================================================
Minimum: $548,850
Maximum: $150,000,000
Average: $9,182,635
I-9
APPENDIX I
GROUP 1
MORTGAGE POOL INFORMATION
STATES
PERCENT BY WEIGHTED WEIGHTED
AGGREGATE AGGREGATE AVERAGE AVERAGE
NUMBER OF CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING
STATE MORTGAGED PROPERTIES BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.)
---------------------------------------------------------------------------------------------------------
New York 21 321,618,433 16.4 5.542 146
California - Southern 27 152,131,508 7.8 5.849 116
California - Northern 17 90,243,888 4.6 5.609 105
Texas 22 200,587,128 10.3 5.462 90
New Jersey 9 124,063,290 6.3 5.746 122
Missouri 3 120,681,814 6.2 5.361 117
Florida 11 81,918,753 4.2 5.632 87
Arizona 6 76,696,125 3.9 6.061 115
Georgia 8 76,153,091 3.9 5.856 120
Ohio 2 73,678,863 3.8 5.501 119
Minnesota 7 63,227,102 3.2 6.079 119
Washington 5 60,988,474 3.1 5.582 114
Illinois 6 60,206,304 3.1 5.547 116
Massachusetts 7 40,050,000 2.0 5.506 88
Utah 3 39,338,055 2.0 6.207 127
Colorado 3 38,650,000 2.0 5.565 119
Maryland 5 37,862,564 1.9 5.837 118
Nebraska 2 30,722,828 1.6 5.645 119
Connecticut 4 28,840,000 1.5 5.673 118
Pennsylvania 5 26,479,184 1.4 5.770 118
North Carolina 4 24,078,125 1.2 5.787 95
Alabama 4 19,925,023 1.0 5.852 117
Wyoming 2 18,280,212 0.9 6.020 57
Virginia 4 18,098,218 0.9 5.869 119
South Dakota 1 13,755,000 0.7 5.496 90
Kansas 1 12,880,000 0.7 5.967 116
South Carolina 4 12,271,627 0.6 5.587 122
Louisiana 2 12,089,254 0.6 5.658 118
Nevada 4 11,698,114 0.6 5.931 102
Michigan 4 11,525,237 0.6 5.840 118
Wisconsin 2 9,871,482 0.5 5.832 91
Hawaii 2 8,446,018 0.4 5.956 57
Oregon 2 8,091,034 0.4 6.167 117
North Dakota 2 6,935,937 0.4 5.689 118
Iowa 2 6,571,230 0.3 5.842 117
Tennessee 1 2,979,865 0.2 5.760 117
Mississippi 1 2,881,349 0.1 6.230 178
Indiana 2 2,281,787 0.1 6.253 119
Kentucky 1 2,200,000 0.1 6.310 119
New Mexico 1 1,998,342 0.1 6.000 119
Rhode Island 1 1,462,801 0.1 5.950 118
Idaho 1 1,245,314 0.1 6.120 116
Delaware 1 1,150,000 0.1 6.120 119
Oklahoma 1 1,047,942 0.1 6.230 178
---------------------------------------------------------------------------------------------------------
TOTAL: 223 $1,955,901,313 100.0% 5.675% 116
=========================================================================================================
WEIGHTED WEIGHTED WEIGHTED
WEIGHTED AVERAGE AVERAGE AVERAGE
AVERAGE DSCR CUT-OFF DATE BALLOON
STATE DSCR (x) AFTER IO (x) LTV (%) LTV (%)
-------------------------------------------------------------------------------
New York 1.97 1.95 49.4 48.7
California - Southern 1.68 1.58 56.3 49.6
California - Northern 1.70 1.64 57.0 50.8
Texas 2.02 1.99 60.7 59.1
New Jersey 1.86 1.75 60.3 55.5
Missouri 2.21 2.19 55.4 54.8
Florida 1.50 1.47 67.0 63.8
Arizona 1.30 1.29 61.1 59.6
Georgia 1.43 1.32 67.2 62.8
Ohio 1.60 1.60 68.9 57.5
Minnesota 1.44 1.34 73.9 64.4
Washington 1.66 1.66 69.2 68.8
Illinois 2.00 1.99 55.3 54.6
Massachusetts 1.91 1.91 59.2 59.2
Utah 1.45 1.28 69.1 59.3
Colorado 2.30 2.23 52.8 51.0
Maryland 1.70 1.70 54.3 48.4
Nebraska 1.88 1.81 62.0 60.4
Connecticut 2.25 2.19 48.2 46.9
Pennsylvania 1.55 1.52 67.6 59.3
North Carolina 1.45 1.28 78.1 70.8
Alabama 1.72 1.49 62.9 57.5
Wyoming 1.13 1.13 79.5 68.5
Virginia 1.67 1.52 74.4 63.6
South Dakota 2.45 2.45 48.8 48.8
Kansas 1.80 1.80 64.4 64.4
South Carolina 1.81 1.81 56.9 38.8
Louisiana 1.52 1.52 61.7 52.0
Nevada 1.71 1.65 53.9 48.1
Michigan 1.60 1.60 56.7 46.1
Wisconsin 1.37 1.37 68.2 58.5
Hawaii 1.53 1.53 53.2 49.0
Oregon 1.78 1.59 58.6 49.3
North Dakota 2.48 2.48 47.5 40.7
Iowa 1.53 1.53 74.8 66.7
Tennessee 1.36 1.36 63.4 41.7
Mississippi 1.59 1.59 63.4 47.0
Indiana 1.37 1.37 72.0 61.7
Kentucky 1.72 1.48 71.0 63.5
New Mexico 2.11 2.11 51.9 44.2
Rhode Island 1.26 1.26 70.3 59.8
Idaho 1.65 1.65 51.9 44.4
Delaware 1.82 1.55 64.8 57.7
Oklahoma 1.59 1.59 63.4 47.0
-------------------------------------------------------------------------------
TOTAL: 1.79x 1.74x 59.5% 55.6%
===============================================================================
I-10
APPENDIX I
GROUP 1
MORTGAGE POOL INFORMATION
PROPERTY TYPES
PERCENT BY WEIGHTED WEIGHTED
AGGREGATE AGGREGATE AVERAGE AVERAGE
NUMBER OF CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING
PROPERTY TYPE MORTGAGED PROPERTIES BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.)
---------------------------------------------------------------------------------------------------------
Office
Urban 11 562,334,037 28.8 5.499 124
Suburban 27 250,737,599 12.8 5.682 105
Medical 4 46,410,949 2.4 6.559 124
---------------------------------------------------------------------------------------------------------
SUBTOTAL: 42 $ 859,482,586 43.9% 5.610% 118
Retail
Anchored 18 207,722,385 10.6 5.565 111
Free Standing 38 109,962,745 5.6 5.903 116
Unanchored 29 106,645,804 5.5 5.781 115
Specialty 2 44,400,000 2.3 5.490 120
Shadow Anchored 9 27,346,289 1.4 5.841 109
Big Box 1 1,598,107 0.1 6.380 119
---------------------------------------------------------------------------------------------------------
SUBTOTAL: 97 $ 497,675,330 25.4% 5.697% 114
Industrial
Warehouse 22 173,956,646 8.9 5.821 114
Flex Industria 8 45,593,757 2.3 5.553 97
Light Industria 6 25,126,750 1.3 5.944 108
---------------------------------------------------------------------------------------------------------
SUBTOTAL: 36 $ 244,677,153 12.5% 5.784% 110
Hospitality
Full Service 6 110,543,473 5.7 5.917 118
Limited Service 9 50,554,297 2.6 5.821 119
---------------------------------------------------------------------------------------------------------
SUBTOTAL: 15 $ 161,097,770 8.2% 5.887% 118
Mixed Use
Multifamily/Retail 4 42,500,000 2.2 5.436 120
Office/Retail 3 37,878,505 1.9 5.437 116
Retail/Industrial/Office 1 16,500,000 0.8 5.640 118
Retail/Multifamily 5 10,000,000 0.5 5.576 118
Retail/Office 2 5,491,335 0.3 5.866 117
Office/Industrial 1 2,693,823 0.1 5.660 118
---------------------------------------------------------------------------------------------------------
SUBTOTAL: 16 $ 115,063,662 5.9% 5.503% 118
Other
Theater 3 26,937,617 1.4 5.600 118
Leased Fee 5 23,942,559 1.2 5.666 118
---------------------------------------------------------------------------------------------------------
SUBTOTAL: 8 $ 50,880,176 2.6% 5.631% 118
Self Storage
Self Storage 9 27,024,635 1.4 5.912 100
---------------------------------------------------------------------------------------------------------
SUBTOTAL: 9 $ 27,024,635 1.4% 5.912% 100
---------------------------------------------------------------------------------------------------------
TOTAL: 223 $1,955,901,313 100.0% 5.675% 116
=========================================================================================================
WEIGHTED WEIGHTED WEIGHTED
WEIGHTED AVERAGE AVERAGE AVERAGE
AVERAGE DSCR CUT-OFF DATE BALLOON
PROPERTY TYPE DSCR (x) AFTER IO (x) LTV (%) LTV (%)
------------------------------------------------------------------------------
Office
Urban 1.99 1.98 55.1 53.6
Suburban 1.65 1.56 62.1 57.6
Medical 1.27 1.22 71.7 62.0
------------------------------------------------------------------------------
SUBTOTAL: 1.85x 1.82x 58.1% 55.2%
Retail
Anchored 1.93 1.86 57.7 54.6
Free Standing 1.81 1.76 58.5 53.5
Unanchored 1.60 1.53 58.0 51.7
Specialty 1.69 1.69 64.1 64.1
Shadow Anchored 1.72 1.61 54.2 47.8
Big Box 2.06 2.06 36.7 28.9
------------------------------------------------------------------------------
SUBTOTAL: 1.80x 1.74x 58.2% 54.1%
Industrial
Warehouse 1.55 1.49 65.0 60.1
Flex Industria 1.89 1.86 60.2 56.6
Light Industria 1.62 1.62 60.6 54.8
------------------------------------------------------------------------------
SUBTOTAL: 1.62x 1.57x 63.7% 58.9%
Hospitality
Full Service 1.82 1.76 65.8 60.8
Limited Service 1.83 1.69 68.9 58.0
------------------------------------------------------------------------------
SUBTOTAL: 1.82x 1.74x 66.8% 59.9%
Mixed Use
Multifamily/Retail 1.64 1.52 63.8 60.3
Office/Retail 2.26 2.26 50.7 48.6
Retail/Industrial/Office 1.45 1.20 61.1 54.9
Retail/Multifamily 1.82 1.82 50.3 50.3
Retail/Office 2.10 1.88 40.7 34.0
Office/Industrial 1.47 1.47 53.9 45.4
------------------------------------------------------------------------------
SUBTOTAL: 1.85x 1.76x 56.6% 53.2%
Other
Theater 1.52 1.52 61.6 51.8
Leased Fee 1.47 1.45 61.8 56.6
------------------------------------------------------------------------------
SUBTOTAL: 1.49x 1.49x 61.7% 54.1%
Self Storage
Self Storage 1.65 1.58 58.5 51.5
------------------------------------------------------------------------------
SUBTOTAL: 1.65x 1.58x 58.5% 51.5%
------------------------------------------------------------------------------
TOTAL: 1.79x 1.74x 59.5% 55.6%
==============================================================================
I-11
APPENDIX I
GROUP 1
MORTGAGE POOL INFORMATION
MORTGAGE RATES
PERCENT BY WEIGHTED WEIGHTED
AGGREGATE AGGREGATE AVERAGE AVERAGE
NUMBER OF CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING
MORTGAGE RATE (%) MORTGAGED LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.)
----------------------------------------------------------------------------------------------------
<= 5.000 2 27,918,556 1.4 4.980 78
5.001 - 5.500 20 515,964,419 26.4 5.355 105
5.501 - 6.000 138 1,088,320,053 55.6 5.681 122
6.001 - 6.500 48 274,653,207 14.0 6.161 115
6.501 <= 5 49,045,078 2.5 6.592 129
----------------------------------------------------------------------------------------------------
TOTAL: 213 $1,955,901,313 100.0% 5.675% 116
====================================================================================================
WEIGHTED WEIGHTED WEIGHTED
WEIGHTED AVERAGE AVERAGE AVERAGE
AVERAGE DSCR CUT-OFF DATE BALLOON
MORTGAGE RATE (%) DSCR (x) AFTER IO (x) LTV (%) LTV (%)
-----------------------------------------------------------------------------
<= 5.000 1.98 1.98 50.8 43.8
5.001 - 5.500 2.13 2.12 56.5 54.1
5.501 - 6.000 1.74 1.68 59.4 55.8
6.001 - 6.500 1.46 1.37 64.7 58.0
6.501 <= 1.27 1.22 70.7 58.9
------------------------------------------------------------------------------
TOTAL: 1.79x 1.74x 59.5% 55.6%
==============================================================================
Minimum: 4.980%
Maximum: 6.640%
Weighted Average: 5.675%
ORIGINAL TERMS TO STATED MATURITY
PERCENT BY WEIGHTED WEIGHTED
AGGREGATE AGGREGATE AVERAGE AVERAGE
ORIGINAL TERM TO STATED NUMBER OF CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING
MATURITY (MOS.) MORTGAGED LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.)
----------------------------------------------------------------------------------------------------
60 19 206,693,172 10.6 5.516 58
61 - 120 179 1,479,458,241 75.6 5.703 116
121 - 180 13 265,659,910 13.6 5.629 158
181 - 240 2 4,089,989 0.2 6.547 239
----------------------------------------------------------------------------------------------------
TOTAL: 213 $1,955,901,313 100.0% 5.675% 116
====================================================================================================
WEIGHTED WEIGHTED WEIGHTED
WEIGHTED AVERAGE AVERAGE AVERAGE
ORIGINAL TERM TO STATED AVERAGE DSCR CUT-OFF DATE BALLOON
MATURITY (MOS.) DSCR (x) AFTER IO (x) LTV (%) LTV (%)
-----------------------------------------------------------------------------
60 1.93 1.91 61.8 60.2
61 - 120 1.76 1.70 61.1 56.6
121 - 180 1.91 1.88 49.4 47.1
181 - 240 1.24 1.24 57.8 2.1
------------------------------------------------------------------------------
TOTAL: 1.79x 1.74x 59.5% 55.6%
==============================================================================
Minimum: 60 mos.
Maximum: 240 mos.
Weighted Average: 119 mos.
REMAINING TERMS TO STATED MATURITY
PERCENT BY WEIGHTED WEIGHTED
AGGREGATE AGGREGATE AVERAGE AVERAGE
REMAINING TERM TO STATED NUMBER OF CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING
MATURITY (MOS.) MORTGAGED LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.)
----------------------------------------------------------------------------------------------------
1 - 60 19 206,693,172 10.6 5.516 58
61 - 120 179 1,479,458,241 75.6 5.703 116
121 - 180 13 265,659,910 13.6 5.629 158
181 - 240 2 4,089,989 0.2 6.547 239
----------------------------------------------------------------------------------------------------
TOTAL: 213 $1,955,901,313 100.0% 5.675% 116
====================================================================================================
WEIGHTED WEIGHTED WEIGHTED
WEIGHTED AVERAGE AVERAGE AVERAGE
REMAINING TERM TO STATED AVERAGE DSCR CUT-OFF DATE BALLOON
MATURITY (MOS.) DSCR (x) AFTER IO (x) LTV (%) LTV (%)
-----------------------------------------------------------------------------
1 - 60 1.93 1.91 61.8 60.2
61 - 120 1.76 1.70 61.1 56.6
121 - 180 1.91 1.88 49.4 47.1
181 - 240 1.24 1.24 57.8 2.1
------------------------------------------------------------------------------
TOTAL: 1.79x 1.74x 59.5% 55.6%
==============================================================================
Minimum: 56 mos.
Maximum: 239 mos.
Weighted Average: 116 mos.
I-12
APPENDIX I
GROUP 1
MORTGAGE POOL INFORMATION
ORIGINAL AMORTIZATION TERMS
PERCENT BY WEIGHTED
AGGREGATE AGGREGATE AVERAGE
ORIGINAL AMORTIZATION NUMBER OF CUT-OFF DATE CUT-OFF DATE MORTGAGE
TERM (MOS.) MORTGAGE LOANS BALANCE ($) BALANCE (%) RATE (%)
--------------------------------------------------------------------------------------
BALLOON LOANS
Interest Only 56 1,082,745,000 55.4 5.542
181 - 240 11 46,379,131 2.4 5.849
241 - 300 17 58,324,925 3.0 5.947
301 - 360 126 762,769,703 39.0 5.828
--------------------------------------------------------------------------------------
SUBTOTAL: 210 $1,950,218,758 99.7% 5.673%
FULLY AMORTIZING LOANS
121 - 180 1 1,592,565 0.1 5.840
181 - 240 2 4,089,989 0.2 6.547
--------------------------------------------------------------------------------------
SUBTOTAL: 3 $5,682,554 0.3% 6.349%
--------------------------------------------------------------------------------------
TOTAL: 213 $1,955,901,313 100.0% 5.675%
======================================================================================
WEIGHTED WEIGHTED WEIGHTED WEIGHTED
AVERAGE WEIGHTED AVERAGE AVERAGE AVERAGE
ORIGINAL AMORTIZATION REMAINING AVERAGE DSCR CUT-OFF DATE BALLOON
TERM (MOS.) TERM (MOS.) DSCR (x) AFTER IO (x) LTV (%) LTV (%)
--------------------------------------------------------------------------------------------
BALLOON LOANS
Interest Only 117 1.94 1.94 56.3 56.3
181 - 240 94 1.63 1.63 56.9 43.8
241 - 300 117 1.59 1.54 59.5 46.5
301 - 360 115 1.61 1.49 64.2 56.3
--------------------------------------------------------------------------------------------
SUBTOTAL: 116 1.80x 1.75x 59.5% 55.7%
FULLY AMORTIZING LOANS
121 - 180 143 1.12 1.12 76.8 1.5
181 - 240 239 1.24 1.24 57.8 2.1
--------------------------------------------------------------------------------------------
SUBTOTAL: 212 1.21x 1.21x 63.1% 1.9%
--------------------------------------------------------------------------------------------
TOTAL: 116 1.79x 1.74x 59.5% 55.6%
============================================================================================
Minimum: 144 mos.
Maximum: 360 mos.
Weighted Average: 348 mos.
REMAINING AMORTIZATION TERMS
PERCENT BY WEIGHTED
AGGREGATE AGGREGATE AVERAGE
REMAINING AMORTIZATION NUMBER OF CUT-OFF DATE CUT-OFF DATE MORTGAGE
TERM (MOS.) MORTGAGE LOANS BALANCE ($) BALANCE (%) RATE (%)
--------------------------------------------------------------------------------------
BALLOON LOANS
Interest Only 56 1,082,745,000 55.4 5.542
181 - 240 11 46,379,131 2.4 5.849
241 - 300 17 58,324,925 3.0 5.947
301 - 360 126 762,769,703 39.0 5.828
--------------------------------------------------------------------------------------
SUBTOTAL: 210 $1,950,218,758 99.7% 5.673%
FULLY AMORTIZING LOANS
121 - 180 1 1,592,565 0.1 5.840
181 - 240 2 4,089,989 0.2 6.547
SUBTOTAL: 3 $ 5,682,554 0.3% 6.349%
--------------------------------------------------------------------------------------
TOTAL: 213 $1,955,901,313 100.0% 5.675%
======================================================================================
WEIGHTED WEIGHTED WEIGHTED WEIGHTED
AVERAGE WEIGHTED AVERAGE AVERAGE AVERAGE
REMAINING AMORTIZATION REMAINING AVERAGE DSCR CUT-OFF DATE BALLOON
TERM (MOS.) TERM (MOS.) DSCR (x) AFTER IO (x) LTV (%) LTV (%)
--------------------------------------------------------------------------------------------
BALLOON LOANS
Interest Only 117 1.94 1.94 56.3 56.3
181 - 240 94 1.63 1.63 56.9 43.8
241 - 300 117 1.59 1.54 59.5 46.5
301 - 360 115 1.61 1.49 64.2 56.3
--------------------------------------------------------------------------------------------
SUBTOTAL: 116 1.80x 1.75x 59.5% 55.7%
FULLY AMORTIZING LOANS
121 - 180 143 1.12 1.12 76.8 1.5
181 - 240 239 1.24 1.24 57.8 2.1
SUBTOTAL: 212 1.21x 1.21x 63.1% 1.9%
--------------------------------------------------------------------------------------------
TOTAL: 116 1.79x 1.74x 59.5% 55.6%
============================================================================================
Minimum: 143 mos.
Maximum: 360 mos.
Weighted Average: 346 mos.
I-13
APPENDIX I
GROUP 1
MORTGAGE POOL INFORMATION
DEBT SERVICE COVERAGE RATIOS
PERCENT BY WEIGHTED
AGGREGATE AGGREGATE AVERAGE
DEBT SERVICE COVERAGE NUMBER OF CUT-OFF DATE CUT-OFF DATE MORTGAGE
RATIO (X) MORTGAGE LOANS BALANCE ($) BALANCE (%) RATE (%)
--------------------------------------------------------------------------------------
<= 1.20 10 50,931,141 2.6 5.960
1.21 - 1.30 25 208,295,236 10.6 6.059
1.31 - 1.40 18 54,464,680 2.8 5.971
1.41 - 1.50 27 274,611,946 14.0 5.822
1.51 - 1.60 24 209,274,951 10.7 5.697
1.61 - 1.70 22 190,187,131 9.7 5.621
1.71 - 1.80 16 92,416,092 4.7 5.855
1.81 - 2.00 34 255,448,456 13.1 5.569
2.01 - 2.20 15 272,503,334 13.9 5.587
2.21 <= 22 347,768,344 17.8 5.357
--------------------------------------------------------------------------------------
TOTAL: 213 $1,955,901,313 100.0% 5.675%
======================================================================================
WEIGHTED WEIGHTED WEIGHTED WEIGHTED
AVERAGE WEIGHTED AVERAGE AVERAGE AVERAGE
DEBT SERVICE COVERAGE REMAINING AVERAGE DSCR CUT-OFF DATE BALLOON
RATIO (X) TERM (MOS.) DSCR (x) AFTER IO (x) LTV (%) LTV (%)
--------------------------------------------------------------------------------------------
<= 1.20 92 1.16 1.16 68.8 56.8
1.21 - 1.30 117 1.25 1.24 69.2 63.0
1.31 - 1.40 112 1.36 1.33 65.3 54.7
1.41 - 1.50 116 1.46 1.36 68.7 64.0
1.51 - 1.60 117 1.57 1.50 65.9 62.0
1.61 - 1.70 116 1.64 1.56 62.8 55.0
1.71 - 1.80 103 1.78 1.68 61.5 58.0
1.81 - 2.00 109 1.91 1.85 55.3 51.6
2.01 - 2.20 150 2.14 2.12 48.0 47.2
2.21 <= 100 2.41 2.40 50.4 49.7
--------------------------------------------------------------------------------------------
TOTAL: 116 1.79x 1.74x 59.5% 55.6%
============================================================================================
Minimum: 1.12x
Maximum: 3.00x
Weighted Average: 1.79x
DEBT SERVICE COVERAGE RATIOS AFTER IO PERIOD
PERCENT BY WEIGHTED
AGGREGATE AGGREGATE AVERAGE
DEBT SERVICE COVERAGE RATIO NUMBER OF CUT-OFF DATE CUT-OFF DATE MORTGAGE
AFTER IO PERIOD (X) MORTGAGE LOANS BALANCE ($) BALANCE (%) RATE (%)
--------------------------------------------------------------------------------------
<= 1.20 17 109,506,141 5.6 5.945
1.21 - 1.30 36 304,095,236 15.5 6.026
1.31 - 1.40 26 128,156,680 6.6 5.864
1.41 - 1.50 21 169,911,946 8.7 5.708
1.51 - 1.60 22 208,887,951 10.7 5.705
1.61 - 1.70 21 159,037,131 8.1 5.616
1.71 - 1.80 13 69,238,920 3.5 5.820
1.81 - 2.00 25 210,268,456 10.8 5.496
2.01 - 2.20 12 257,280,506 13.2 5.577
2.21 <= 20 339,518,344 17.4 5.351
--------------------------------------------------------------------------------------
TOTAL: 213 $1,955,901,313 100.0% 5.675%
======================================================================================
WEIGHTED WEIGHTED WEIGHTED WEIGHTED
AVERAGE WEIGHTED AVERAGE AVERAGE AVERAGE
DEBT SERVICE COVERAGE RATIO REMAINING AVERAGE DSCR CUT-OFF DATE BALLOON
AFTER IO PERIOD (X) TERM (MOS.) DSCR (x) AFTER IO (x) LTV (%) LTV (%)
--------------------------------------------------------------------------------------------
<= 1.20 108 1.29 1.17 68.6 59.7
1.21 - 1.30 114 1.34 1.25 70.3 64.2
1.31 - 1.40 117 1.53 1.36 66.6 58.4
1.41 - 1.50 110 1.49 1.46 66.9 63.5
1.51 - 1.60 120 1.64 1.56 63.3 59.5
1.61 - 1.70 114 1.69 1.64 60.6 52.7
1.71 - 1.80 108 1.83 1.79 60.0 56.4
1.81 - 2.00 107 1.93 1.92 54.8 51.5
2.01 - 2.20 152 2.14 2.14 47.3 46.9
2.21 <= 100 2.41 2.41 50.0 49.5
--------------------------------------------------------------------------------------------
TOTAL: 116 1.79x 1.74x 59.5% 55.6%
============================================================================================
Minimum: 1.12x
Maximum: 3.00x
Weighted Average: 1.74x
I-14
APPENDIX I
GROUP 1
MORTGAGE POOL INFORMATION
LOAN-TO-VALUE RATIOS
PERCENT BY WEIGHTED WEIGHTED
AGGREGATE AGGREGATE AVERAGE AVERAGE
NUMBER OF CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING
LOAN-TO-VALUE RATIO (%) MORTGAGE LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.)
---------------------------------------------------------------------------------------------------
20.1 - 30.0 5 10,404,877 0.5 5.854 112
30.1 - 40.0 17 63,337,965 3.2 5.716 107
40.1 - 50.0 21 313,218,464 16.0 5.534 145
50.1 - 60.0 62 550,045,019 28.1 5.513 106
60.1 - 70.0 62 655,363,977 33.5 5.769 115
70.1 - 80.0 46 363,531,011 18.6 5.860 109
---------------------------------------------------------------------------------------------------
TOTAL: 213 $1,955,901,313 100.0% 5.675% 116
===================================================================================================
WEIGHTED
WEIGHTED AVERAGE WEIGHTED
WEIGHTED AVERAGE CUT-OFF AVERAGE
AVERAGE DSCR AFTER DATE BALLOON
LOAN-TO-VALUE RATIO (%) DSCR (x) IO (x) LTV (%) LTV (%)
------------------------------------------------------------------------
20.1 - 30.0 2.39 2.39 25.4 18.5
30.1 - 40.0 2.21 2.21 35.6 31.4
40.1 - 50.0 2.19 2.19 44.3 43.3
50.1 - 60.0 2.01 1.97 55.0 51.6
60.1 - 70.0 1.58 1.52 64.7 60.3
70.1 - 80.0 1.43 1.33 75.4 68.9
------------------------------------------------------------------------
TOTAL: 1.79 1.74x 59.5% 55.6%
========================================================================
Minimum: 23.2%
Maximum: 80.0%
Weighted Average: 59.5%
BALLOON LOAN-TO-VALUE RATIOS
PERCENT BY WEIGHTED WEIGHTED
AGGREGATE AGGREGATE AVERAGE AVERAGE
BALLOON LOAN-TO-VALUE NUMBER OF CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING
RATIOS (%) MORTGAGE LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.)
---------------------------------------------------------------------------------------------------
<= 20.0 6 11,207,553 0.6 6.182 166
20.1 - 30.0 9 27,087,588 1.4 5.719 116
30.1 - 40.0 17 66,396,104 3.4 5.720 109
40.1 - 50.0 52 469,430,485 24.0 5.580 134
50.1 - 60.0 62 633,838,141 32.4 5.582 110
60.1 - 70.0 54 568,151,922 29.0 5.854 110
70.1 - 80.0 13 179,789,519 9.2 5.631 107
---------------------------------------------------------------------------------------------------
TOTAL: 213 $1,955,901,313 100.0% 5.675% 116
===================================================================================================
WEIGHTED
WEIGHTED AVERAGE WEIGHTED
WEIGHTED AVERAGE CUT-OFF AVERAGE
BALLOON LOAN-TO-VALUE AVERAGE DSCR AFTER DATE BALLOON
RATIOS (%) DSCR (x) IO (x) LTV (%) LTV (%)
------------------------------------------------------------------------
<= 20.0 1.85 1.85 44.0 8.9
20.1 - 30.0 2.16 2.16 33.4 24.3
30.1 - 40.0 2.13 2.12 40.5 36.2
40.1 - 50.0 2.03 2.01 48.6 44.7
50.1 - 60.0 1.87 1.82 59.1 54.8
60.1 - 70.0 1.57 1.51 67.6 64.3
70.1 - 80.0 1.42 1.33 76.0 73.8
------------------------------------------------------------------------
TOTAL: 1.79x 1.74x 59.5% 55.6%
========================================================================
Minimum: 1.5%
Maximum: 76.9%
Weighted Average: 55.6%
I-15
APPENDIX I
LOAN GROUP 1
MORTGAGE POOL INFORMATION
PERCENTAGE OF COLLATERAL BY PREPAYMENT RESTRICTION (%)(1)
Prepayment Restrictions APR-07 APR-08 APR-09 APR-10 APR-11 APR-12
------------------------------------------------------------------------------------------------------------------------------
Locked Out 96.26% 96.28% 96.10% 57.57% 57.31% 61.68%
Yield Maintenance Total (2)(3) 3.74% 3.72% 3.90% 42.43% 42.38% 38.32%
Open 0.00% 0.00% 0.00% 0.00% 0.31% 0.00%
------------------------------------------------------------------------------------------------------------------------------
TOTALS 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
------------------------------------------------------------------------------------------------------------------------------
Pool Balance Outstanding $1,955,901,313 $1,948,484,969 $1,940,101,162 $1,929,925,892 $1,917,658,967 $1,702,810,308
% Initial Pool Balance 100.00% 99.62% 99.19% 98.67% 98.04% 87.06%
==============================================================================================================================
PERCENTAGE OF COLLATERAL BY PREPAYMENT RESTRICTION (%)(1)
Prepayment Restrictions
(cont'd) APR-13 APR-14 APR-15 APR-16 APR-17 APR-18
--------------------------------------------------------------------------------------------------------------------------
Locked Out 61.73% 63.65% 64.25% 64.05% 77.50% 98.81%
Yield Maintenance Total (2)(3) 36.73% 36.35% 35.75% 35.95% 0.92% 1.19%
Open 1.54% 0.00% 0.00% 0.00% 21.58% 0.00%
--------------------------------------------------------------------------------------------------------------------------
TOTALS 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
--------------------------------------------------------------------------------------------------------------------------
Pool Balance Outstanding $1,689,423,836 $1,624,087,744 $1,595,940,465 $1,568,673,622 $261,832,339 $177,389,675
% Initial Pool Balance 86.38% 83.04% 81.60% 80.20% 13.39% 9.07%
==========================================================================================================================
PERCENTAGE OF COLLATERAL BY PREPAYMENT RESTRICTION (%)(1)
Prepayment Restrictions
(cont'd) APR-19 APR-20 APR-21 APR-22
------------------------------------------------------------------------------------
Locked Out 98.92% 95.34% 99.09% 23.77%
Yield Maintenance Total (2)(3) 1.08% 0.98% 0.91% 76.23%
Open 0.00% 3.68% 0.00% 0.00%
------------------------------------------------------------------------------------
TOTALS 100.00% 100.00% 100.00% 100.00%
------------------------------------------------------------------------------------
Pool Balance Outstanding $163,711,787 $163,043,105 $156,669,732 $1,620,117
% Initial Pool Balance 8.37% 8.34% 8.01% 0.08%
====================================================================================
Notes:
(1) The analysis is based on the Structuring Assumptions and a 0% CPR as
discussed herein.
(2) See Appendix II for a description of the Yield Maintenance.
(3) YM3, YM1, YM0.5, prepayment premium, and DEF/YM1 loans have been included
in Yield Maintenance Total.
I-16
APPENDIX I
GROUP 2
MORTGAGE POOL INFORMATION
MORTGAGE LOAN SELLERS
PERCENT BY WEIGHTED WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE AVERAGE
MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING
LOAN SELLER LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.)
--------------------------------------------------------------------------------------------
Morgan Stanley Mortgage
Capital Inc. 8 69,540,369 46.3 5.591 96
Principal Commercial Funding
II, LLC 8 52,413,748 34.9 5.552 121
Bear Stearns Commercial
Mortgage, Inc. 1 17,574,000 11.7 5.808 118
Wells Fargo Bank,
National Association 7 10,574,542 7.0 5.960 119
--------------------------------------------------------------------------------------------
TOTAL: 24 $150,102,659 100.0% 5.629% 109
============================================================================================
WEIGHTED WEIGHTED WEIGHTED
WEIGHTED AVERAGE AVERAGE AVERAGE
AVERAGE DSCR CUT-OFF DATE BALLOON
LOAN SELLER DSCR (x) AFTER IO (x) LTV (%) LTV (%)
------------------------------------------------------------------------------
Morgan Stanley Mortgage
Capital Inc. 2.75 2.67 58.4 56.4
Principal Commercial Funding
II, LLC 1.81 1.73 52.9 48.3
Bear Stearns Commercial
Mortgage, Inc. 1.47 1.23 79.5 74.3
Wells Fargo Bank,
National Association 1.31 1.24 71.1 61.8
------------------------------------------------------------------------------
TOTAL: 2.17x 2.07x 59.9% 56.0%
==============================================================================
CUT-OFF DATE BALANCES
PERCENT BY WEIGHTED WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE AVERAGE
MORTGAGE CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING
CUT-OFF DATE BALANCE ($) LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.)
--------------------------------------------------------------------------------------------
1 - 1,000,000 2 1,838,513 1.2 6.094 119
1,000,001 - 2,000,000 6 8,840,454 5.9 5.841 131
2,000,001 - 3,000,000 3 7,412,467 4.9 5.812 117
3,000,001 - 4,000,000 2 6,467,550 4.3 5.910 117
5,000,001 - 6,000,000 2 10,575,000 7.0 5.697 118
6,000,001 - 7,000,000 2 13,993,193 9.3 5.530 118
7,000,001 - 8,000,000 1 7,200,000 4.8 5.310 119
8,000,001 - 9,000,000 2 16,701,483 11.1 5.324 118
10,000,001 - 15,000,000 1 12,500,000 8.3 5.660 119
15,000,001 - 20,000,000 1 17,574,000 11.7 5.808 118
20,000,001 - 25,000,000 2 47,000,000 31.3 5.600 86
--------------------------------------------------------------------------------------------
TOTAL: 24 $150,102,659 100.0% 5.629% 109
============================================================================================
WEIGHTED WEIGHTED WEIGHTED
WEIGHTED AVERAGE AVERAGE AVERAGE
AVERAGE DSCR CUT-OFF DATE BALLOON
CUT-OFF DATE BALANCE ($) DSCR (x) AFTER IO (x) LTV (%) LTV (%)
------------------------------------------------------------------------------
1 - 1,000,000 1.32 1.32 62.0 52.9
1,000,001 - 2,000,000 1.61 1.61 62.3 47.7
2,000,001 - 3,000,000 1.36 1.27 68.6 59.8
3,000,001 - 4,000,000 5.68 5.56 44.6 40.1
5,000,001 - 6,000,000 5.59 5.45 35.8 34.1
6,000,001 - 7,000,000 2.08 1.89 42.5 37.9
7,000,001 - 8,000,000 2.21 2.21 48.0 48.0
8,000,001 - 9,000,000 2.89 2.89 42.4 35.4
10,000,001 - 15,000,000 1.43 1.43 58.4 58.4
15,000,001 - 20,000,000 1.47 1.23 79.5 74.3
20,000,001 - 25,000,000 1.41 1.30 71.7 70.8
------------------------------------------------------------------------------
TOTAL: 2.17x 2.07x 59.9% 56.0%
==============================================================================
Minimum: $894,281
Maximum: $24,000,000
Average: $6,254,277
I-17
APPENDIX I
GROUP 2
MORTGAGE POOL INFORMATION
STATES
PERCENT BY WEIGHTED WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE AVERAGE
MORTGAGED CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING
STATE PROPERTIES BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.)
---------------------------------------------------------------------------------------------
New Jersey 4 24,316,279 16.2 5.442 122
Connecticut 1 24,000,000 16.0 5.830 58
California - Southern 4 21,643,483 14.4 5.595 119
California - Northern 1 2,242,998 1.5 5.810 117
Virginia 1 23,000,000 15.3 5.360 116
New Mexico 1 17,574,000 11.7 5.808 118
New York 3 16,384,901 10.9 5.477 117
Pennsylvania 2 7,772,000 5.2 5.936 118
Michigan 3 4,406,828 2.9 5.878 120
Wisconsin 1 3,280,000 2.2 5.880 118
Washington 1 2,897,468 1.9 5.800 119
Ohio 1 1,640,470 1.1 5.860 116
Minnesota 1 944,231 0.6 6.070 119
---------------------------------------------------------------------------------------------
TOTAL: 24 $150,102,659 100.0% 5.629% 109
=============================================================================================
WEIGHTED WEIGHTED WEIGHTED
WEIGHTED AVERAGE AVERAGE AVERAGE
AVERAGE DSCR CUT-OFF DATE BALLOON
STATE DSCR (x) AFTER IO (x) LTV (%) LTV (%)
------------------------------------------------------------------------------
New Jersey 2.00 1.89 47.3 39.4
Connecticut 1.37 1.15 75.0 73.2
California - Southern 1.67 1.67 54.3 53.6
California - Northern 1.21 1.21 58.7 49.8
Virginia 1.45 1.45 68.2 68.2
New Mexico 1.47 1.23 79.5 74.3
New York 7.11 7.11 16.0 13.8
Pennsylvania 1.65 1.38 65.2 61.2
Michigan 1.24 1.24 72.5 61.4
Wisconsin 1.43 1.20 80.0 72.2
Washington 1.21 1.21 72.4 61.3
Ohio 1.23 1.23 80.0 62.2
Minnesota 1.44 1.44 74.9 63.9
------------------------------------------------------------------------------
TOTAL: 2.17x 2.07x 59.9% 56.0%
==============================================================================
PROPERTY TYPES
PERCENT BY WEIGHTED WEIGHTED
NUMBER OF AGGREGATE AGGREGATE AVERAGE AVERAGE
MORTGAGED CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING
PROPERTY TYPE PROPERTIES BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.)
---------------------------------------------------------------------------------------------
Multifamily
Garden 14 111,039,700 74.0 5.606 106
Cooperative 3 16,384,901 10.9 5.477 117
Mid Rise 3 14,742,998 9.8 5.816 118
Low Rise 1 2,272,000 1.5 5.830 116
Assisted Living 1 944,231 0.6 6.070 119
---------------------------------------------------------------------------------------------
SUBTOTAL: 22 $145,383,831 96.9% 5.619% 109
Manufactured Housing Community
Manufactured Housing
Community 2 4,718,828 3.1 5.938 118
---------------------------------------------------------------------------------------------
SUBTOTAL: 2 $ 4,718,828 3.1% 5.938% 118
---------------------------------------------------------------------------------------------
TOTAL: 24 $150,102,659 100.0% 5.629% 109
=============================================================================================
WEIGHTED WEIGHTED WEIGHTED
WEIGHTED AVERAGE AVERAGE AVERAGE
AVERAGE DSCR CUT-OFF DATE BALLOON
PROPERTY TYPE DSCR (x) AFTER IO (x) LTV (%) LTV (%)
------------------------------------------------------------------------------
Multifamily
Garden 1.54 1.45 65.7 62.0
Cooperative 7.11 7.11 16.0 13.8
Mid Rise 1.84 1.56 55.3 51.1
Low Rise 1.69 1.42 73.5 67.6
Assisted Living 1.44 1.44 74.9 63.9
------------------------------------------------------------------------------
SUBTOTAL: 2.20x 2.10x 59.2% 55.6%
Manufactured Housing Community
Manufactured Housing
Community 1.37 1.21 78.7 69.9
------------------------------------------------------------------------------
SUBTOTAL: 1.37x 1.21x 78.7% 69.9%
------------------------------------------------------------------------------
TOTAL: 2.17x 2.07x 59.9% 56.0%
==============================================================================
I-18
APPENDIX I
GROUP 2
MORTGAGE POOL INFORMATION
MORTGAGE RATES
PERCENT BY WEIGHTED WEIGHTED
AGGREGATE AGGREGATE AVERAGE AVERAGE
NUMBER OF CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING
MORTGAGE RATE (%) MORTGAGE LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.)
-------------------------------------------------------------------------------------------------
5.001 - 5.500 7 60,713,630 40.4 5.350 119
5.501 - 6.000 13 85,062,487 56.7 5.802 101
6.001 - 6.500 4 4,326,542 2.9 6.141 119
-------------------------------------------------------------------------------------------------
TOTAL: 24 $150,102,659 100.0% 5.629% 109
=================================================================================================
WEIGHTED WEIGHTED WEIGHTED
WEIGHTED AVERAGE AVERAGE AVERAGE
AVERAGE DSCR CUT-OFF DATE BALLOON
MORTGAGE RATE (%) DSCR (x) AFTER IO (x) LTV (%) LTV (%)
------------------------------------------------------------------------------
5.001 - 5.500 2.75 2.75 48.7 45.4
5.501 - 6.000 1.80 1.63 67.6 63.7
6.001 - 6.500 1.26 1.26 64.6 55.2
------------------------------------------------------------------------------
TOTAL: 2.17x 2.07x 59.9% 56.0%
==============================================================================
Minimum: 5.300%
Maximum: 6.320%
Weighted Average: 5.629%
ORIGINAL TERMS TO STATED MATURITY
PERCENT BY WEIGHTED WEIGHTED
AGGREGATE AGGREGATE AVERAGE AVERAGE
ORIGINAL TERM TO STATED NUMBER OF CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING
MATURITY (MOS.) MORTGAGE LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.)
-------------------------------------------------------------------------------------------------
1 - 60 1 24,000,000 16.0 5.830 58
61 - 120 22 124,358,705 82.8 5.593 118
121 - 180 1 1,743,954 1.2 5.440 179
-------------------------------------------------------------------------------------------------
TOTAL: 24 $150,102,659 100.0% 5.629% 109
=================================================================================================
WEIGHTED WEIGHTED WEIGHTED
WEIGHTED AVERAGE AVERAGE AVERAGE
ORIGINAL TERM TO STATED AVERAGE DSCR CUT-OFF DATE BALLOON
MATURITY (MOS.) DSCR (x) AFTER IO (x) LTV (%) LTV (%)
------------------------------------------------------------------------------
1 - 60 1.37 1.15 75.0 73.2
61 - 120 2.31 2.23 57.4 53.5
121 - 180 3.12 3.12 25.1 0.5
------------------------------------------------------------------------------
TOTAL: 2.17x 2.07x 59.9% 56.0%
==============================================================================
Minimum: 60 mos.
Maximum: 180 mos.
Weighted Average: 111 mos.
REMAINING TERMS TO STATED MATURITY
PERCENT BY WEIGHTED WEIGHTED
AGGREGATE AGGREGATE AVERAGE AVERAGE
REMAINING TERM TO STATED NUMBER OF CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING
MATURITY (MOS.) MORTGAGE LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.)
-------------------------------------------------------------------------------------------------
1 - 60 1 24,000,000 16.0 5.830 58
61 - 120 22 124,358,705 82.8 5.593 118
121 - 180 1 1,743,954 1.2 5.440 179
-------------------------------------------------------------------------------------------------
TOTAL: 24 $150,102,659 100.0% 5.629% 109
=================================================================================================
WEIGHTED WEIGHTED WEIGHTED
WEIGHTED AVERAGE AVERAGE AVERAGE
REMAINING TERM TO STATED AVERAGE DSCR CUT-OFF DATE BALLOON
MATURITY (MOS.) DSCR (x) AFTER IO (x) LTV (%) LTV (%)
------------------------------------------------------------------------------
1 - 60 1.37 1.15 75.0 73.2
61 - 120 2.31 2.23 57.4 53.5
121 - 180 3.12 3.12 25.1 0.5
------------------------------------------------------------------------------
TOTAL: 2.17x 2.07x 59.9% 56.0%
==============================================================================
Minimum: 58 mos.
Maximum: 179 mos.
Weighted Average: 109 mos.
I-19
APPENDIX I
GROUP 2
MORTGAGE POOL INFORMATION
ORIGINAL AMORTIZATION TERMS
PERCENT BY WEIGHTED WEIGHTED
AGGREGATE AGGREGATE AVERAGE AVERAGE
ORIGINAL AMORTIZATION TERM NUMBER OF CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING
(MOS.) MORTGAGE LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.)
-------------------------------------------------------------------------------------------------
BALLOON LOANS
Interest Only 4 47,775,000 31.8 5.434 117
241 - 300 1 1,640,470 1.1 5.860 116
301 - 360 18 98,943,235 65.9 5.723 103
-------------------------------------------------------------------------------------------------
SUBTOTAL: 23 $148,358,705 98.8% 5.631% 108
FULLY AMORTIZING LOANS
121 - 180 1 1,743,954 1.2 5.440 179
-------------------------------------------------------------------------------------------------
SUBTOTAL: 1 $ 1,743,954 1.2% 5.440% 179
-------------------------------------------------------------------------------------------------
TOTAL: 24 $150,102,659 100.0% 5.629% 109
=================================================================================================
WEIGHTED WEIGHTED WEIGHTED
WEIGHTED AVERAGE AVERAGE AVERAGE
ORIGINAL AMORTIZATION TERM AVERAGE DSCR CUT-OFF DATE BALLOON
(MOS.) DSCR (x) AFTER IO (x) LTV (%) LTV (%)
------------------------------------------------------------------------------
BALLOON LOANS
Interest Only 2.45 2.45 56.2 56.2
241 - 300 1.23 1.23 80.0 62.2
301 - 360 2.03 1.88 61.9 56.8
------------------------------------------------------------------------------
SUBTOTAL: 2.16x 2.06x 60.3% 56.7%
FULLY AMORTIZING LOANS
121 - 180 3.12 3.12 25.1 0.5
------------------------------------------------------------------------------
SUBTOTAL: 3.12x 3.12x 25.1% 0.5%
------------------------------------------------------------------------------
TOTAL: 2.17x 2.07x 59.9% 56.0%
==============================================================================
Minimum: 180 mos.
Maximum: 360 mos.
Weighted Average: 356 mos.
REMAINING AMORTIZATION TERMS
PERCENT BY WEIGHTED WEIGHTED
AGGREGATE AGGREGATE AVERAGE AVERAGE
REMAINING AMORTIZATION TERM NUMBER OF CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING
(MOS.) MORTGAGE LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.)
-------------------------------------------------------------------------------------------------
BALLOON LOANS
Interest Only 4 47,775,000 31.8 5.434 117
241 - 300 1 1,640,470 1.1 5.860 116
301 - 360 18 98,943,235 65.9 5.723 103
-------------------------------------------------------------------------------------------------
SUBTOTAL: 23 $148,358,705 98.8% 5.631% 108
FULLY AMORTIZING LOANS
121 - 180 1 1,743,954 1.2 5.440 179
-------------------------------------------------------------------------------------------------
SUBTOTAL: 1 $ 1,743,954 1.2% 5.440% 179
-------------------------------------------------------------------------------------------------
TOTAL: 24 $150,102,659 100.0% 5.629% 109
=================================================================================================
WEIGHTED WEIGHTED WEIGHTED
WEIGHTED AVERAGE AVERAGE AVERAGE
REMAINING AMORTIZATION TERM AVERAGE DSCR CUT-OFF DATE BALLOON
(MOS.) DSCR (x) AFTER IO (x) LTV (%) LTV (%)
------------------------------------------------------------------------------
BALLOON LOANS
Interest Only 2.45 2.45 56.2 56.2
241 - 300 1.23 1.23 80.0 62.2
301 - 360 2.03 1.88 61.9 56.8
------------------------------------------------------------------------------
SUBTOTAL: 2.16x 2.06x 60.3% 56.7%
FULLY AMORTIZING LOANS
121 - 180 3.12 3.12 25.1 0.5
------------------------------------------------------------------------------
SUBTOTAL: 3.12x 3.12x 25.1% 0.5%
------------------------------------------------------------------------------
TOTAL: 2.17x 2.07x 59.9% 56.0%
==============================================================================
Minimum: 179 mos.
Maximum: 360 mos.
Weighted Average: 355 mos.
I-20
APPENDIX I
GROUP 2
MORTGAGE POOL INFORMATION
DEBT SERVICE COVERAGE RATIOS
PERCENT BY WEIGHTED WEIGHTED
AGGREGATE AGGREGATE AVERAGE AVERAGE
DEBT SERVICE COVERAGE NUMBER OF CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING
RATIO (X) MORTGAGE LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.)
--------------------------------------------------------------------------------------------------
<= 1.20 2 1,943,483 1.3 6.228 119
1.21 - 1.30 6 11,187,765 7.5 5.842 118
1.31 - 1.40 1 24,000,000 16.0 5.830 58
1.41 - 1.50 5 57,298,231 38.2 5.604 117
1.61 - 1.70 3 16,351,132 10.9 5.602 118
1.81 <= 7 39,322,048 26.2 5.464 120
--------------------------------------------------------------------------------------------------
TOTAL: 24 $150,102,659 100.0% 5.629% 109
==================================================================================================
WEIGHTED WEIGHTED WEIGHTED
WEIGHTED AVERAGE AVERAGE AVERAGE
DEBT SERVICE COVERAGE AVERAGE DSCR CUT-OFF DATE BALLOON
RATIO (X) DSCR (x) AFTER IO (x) LTV (%) LTV (%)
------------------------------------------------------------------------------
<= 1.20 1.20 1.20 51.3 43.9
1.21 - 1.30 1.23 1.23 70.8 59.2
1.31 - 1.40 1.37 1.15 75.0 73.2
1.41 - 1.50 1.45 1.36 70.3 68.1
1.61 - 1.70 1.65 1.52 62.3 55.1
1.81 <= 4.24 4.18 31.7 28.1
------------------------------------------------------------------------------
TOTAL: 2.17x 2.07x 59.9% 56.0%
==============================================================================
Minimum: 1.20x
Maximum: 10.05x
Weighted Average: 2.17x
DEBT SERVICE COVERAGE RATIOS AFTER IO PERIOD
PERCENT BY WEIGHTED WEIGHTED
AGGREGATE AGGREGATE AVERAGE AVERAGE
DEBT SERVICE COVERAGE RATIO NUMBER OF CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING
AFTER IO PERIOD (X) MORTGAGE LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.)
--------------------------------------------------------------------------------------------------
<= 1.20 4 29,223,483 19.5 5.862 69
1.21 - 1.30 7 28,761,765 19.2 5.821 118
1.31 - 1.40 1 5,500,000 3.7 5.980 119
1.41 - 1.50 4 38,716,231 25.8 5.502 117
1.61 - 1.70 1 8,579,132 5.7 5.300 118
1.81 <= 7 39,322,048 26.2 5.464 120
--------------------------------------------------------------------------------------------------
TOTAL: 24 $150,102,659 100.0% 5.629% 109
==================================================================================================
WEIGHTED WEIGHTED WEIGHTED
WEIGHTED AVERAGE AVERAGE AVERAGE
DEBT SERVICE COVERAGE RATIO AVERAGE DSCR CUT-OFF DATE BALLOON
AFTER IO PERIOD (X) DSCR (x) AFTER IO (x) LTV (%) LTV (%)
------------------------------------------------------------------------------
<= 1.20 1.37 1.16 74.0 71.1
1.21 - 1.30 1.37 1.23 76.1 68.4
1.31 - 1.40 1.64 1.37 61.8 58.5
1.41 - 1.50 1.46 1.44 65.5 64.9
1.61 - 1.70 1.64 1.64 59.6 49.7
1.81 <= 4.24 4.18 31.7 28.1
------------------------------------------------------------------------------
TOTAL: 2.17x 2.07x 59.9% 56.0%
==============================================================================
Minimum: 1.15x
Maximum: 10.05x
Weighted Average: 2.07x
I-21
APPENDIX I
GROUP 2
MORTGAGE POOL INFORMATION
LOAN-TO-VALUE RATIOS
PERCENT BY WEIGHTED WEIGHTED
AGGREGATE AGGREGATE AVERAGE AVERAGE
NUMBER OF CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING
LOAN-TO-VALUE RATIO (%) MORTGAGE LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.)
--------------------------------------------------------------------------------------------------
<= 20.0 2 8,262,550 5.5 5.602 117
20.1 - 30.0 2 9,866,305 6.6 5.366 128
30.1 - 40.0 1 6,993,193 4.7 5.370 119
40.1 - 50.0 3 15,094,281 10.1 5.534 118
50.1 - 60.0 4 24,371,332 16.2 5.575 118
60.1 - 70.0 3 29,553,000 19.7 5.492 117
70.1 - 80.0 9 55,961,998 37.3 5.833 92
--------------------------------------------------------------------------------------------------
TOTAL: 24 $150,102,659 100.0% 5.629% 109
==================================================================================================
WEIGHTED WEIGHTED WEIGHTED
WEIGHTED AVERAGE AVERAGE AVERAGE
AVERAGE DSCR CUT-OFF DATE BALLOON
LOAN-TO-VALUE RATIO (%) DSCR (x) AFTER IO (x) LTV (%) LTV (%)
------------------------------------------------------------------------------
<= 20.0 9.95 9.95 7.9 7.4
20.1 - 30.0 4.03 4.03 24.4 16.8
30.1 - 40.0 1.96 1.96 36.0 30.1
40.1 - 50.0 2.15 1.97 48.5 46.5
50.1 - 60.0 1.47 1.47 58.7 54.0
60.1 - 70.0 1.48 1.43 66.9 65.9
70.1 - 80.0 1.40 1.20 76.6 71.6
------------------------------------------------------------------------------
TOTAL: 2.17x 2.07x 59.9% 56.0%
==============================================================================
Minimum: 7.7%
Maximum: 80.0%
Weighted Average: 59.9%
BALLOON LOAN-TO-VALUE RATIOS
PERCENT BY WEIGHTED WEIGHTED
AGGREGATE AGGREGATE AVERAGE AVERAGE
BALLOON LOAN-TO-VALUE NUMBER OF CUT-OFF DATE CUT-OFF DATE MORTGAGE REMAINING
RATIO (%) MORTGAGE LOANS BALANCE ($) BALANCE (%) RATE (%) TERM (MOS.)
--------------------------------------------------------------------------------------------------
<= 20.0 3 10,006,505 6.7 5.574 127
20.1 - 30.0 1 8,122,351 5.4 5.350 117
30.1 - 40.0 1 6,993,193 4.7 5.370 119
40.1 - 50.0 6 26,965,613 18.0 5.513 118
50.1 - 60.0 3 19,053,000 12.7 5.762 119
60.1 - 70.0 7 34,107,998 22.7 5.525 117
70.1 - 80.0 3 44,854,000 29.9 5.825 86
--------------------------------------------------------------------------------------------------
TOTAL: 24 $150,102,659 100.0% 5.629% 109
==================================================================================================
WEIGHTED WEIGHTED WEIGHTED
WEIGHTED AVERAGE AVERAGE AVERAGE
BALLOON LOAN-TO-VALUE AVERAGE DSCR CUT-OFF DATE BALLOON
RATIO (%) DSCR (X) AFTER IO (X) LTV (%) LTV (%)
------------------------------------------------------------------------------
<= 20.0 8.76 8.76 10.9 6.2
20.1 - 30.0 4.22 4.22 24.2 20.3
30.1 - 40.0 1.96 1.96 36.0 30.1
40.1 - 50.0 1.87 1.77 53.1 47.8
50.1 - 60.0 1.48 1.40 59.8 58.3
60.1 - 70.0 1.41 1.40 70.3 66.7
70.1 - 80.0 1.41 1.19 77.1 73.6
------------------------------------------------------------------------------
TOTAL: 2.17X 2.07X 59.9% 56.0%
==============================================================================
Minimum: 0.5%
Maximum: 74.3%
Weighted Average: 56.0%
I-22
APPENDIX I
LOAN GROUP 2
MORTGAGE POOL INFORMATION
PERCENTAGE OF COLLATERAL BY PREPAYMENT RESTRICTION (%)(1)
Prepayment Restrictions APR-07 APR-08 APR-09
--------------------------------------------------------------------------
Locked Out 100.00% 100.00% 100.00%
Yield Maintenance Total(2)(3) 0.00% 0.00% 0.00%
Open 0.00% 0.00% 0.00%
--------------------------------------------------------------------------
TOTALS 100.00% 100.00% 100.00%
--------------------------------------------------------------------------
Pool Balance Outstanding $150,102,659 $149,505,411 $148,867,094
% Initial Pool Balance 100.00% 99.60% 99.18%
--------------------------------------------------------------------------
Prepayment Restrictions APR-10 APR-11 APR-12
--------------------------------------------------------------------------
Locked Out 55.77% 55.59% 46.88%
Yield Maintenance Total(2)(3) 44.23% 44.41% 53.12%
Open 0.00% 0.00% 0.00%
--------------------------------------------------------------------------
TOTALS 100.00% 100.00% 100.00%
--------------------------------------------------------------------------
Pool Balance Outstanding $148,131,252 $147,081,663 $122,547,798
% Initial Pool Balance 98.69% 97.99% 81.64%
--------------------------------------------------------------------------
PERCENTAGE OF COLLATERAL BY PREPAYMENT RESTRICTION (%)(1)
Prepayment Restrictions
(cont'd) APR-13 APR-14 APR-15
--------------------------------------------------------------------------
Locked Out 46.62% 46.36% 46.08%
Yield Maintenance Total (2)(3) 53.38% 53.64% 53.92%
Open 0.00% 0.00% 0.00%
--------------------------------------------------------------------------
TOTALS 100.00% 100.00% 100.00%
--------------------------------------------------------------------------
Pool Balance Outstanding $121,372,737 $120,066,501 $118,683,511
% Initial Pool Balance 80.86% 79.99% 79.07%
--------------------------------------------------------------------------
Prepayment Restrictions
(cont'd) APR-16 APR-17 APR-18
------------------------------------------------------------------
Locked Out 45.79% 100.00% 100.00%
Yield Maintenance Total (2)(3) 54.21% 0.00% 0.00%
Open 0.00% 0.00% 0.00%
-------------------------------------------------------------------
TOTALS 100.00% 100.00% 100.00%
-------------------------------------------------------------------
Pool Balance Outstanding $117,229,447 $750,760 $617,936
% Initial Pool Balance 78.10% 0.50% 0.41%
------------------------------------------------------------------
PERCENTAGE OF COLLATERAL BY PREPAYMENT RESTRICTION (%)(1)
Prepayment Restrictions
(cont'd) APR-19 APR-20 APR-21
--------------------------------------------------------------
Locked Out 100.00% 100.00% 100.00%
Yield Maintenance Total (2)(3) 0.00% 0.00% 0.00%
Open 0.00% 0.00% 0.00%
--------------------------------------------------------------
TOTALS 100.00% 100.00% 100.00%
--------------------------------------------------------------
Pool Balance Outstanding $477,598 $329,375 $172,713
% Initial Pool Balance 0.32% 0.22% 0.12%
--------------------------------------------------------------
Notes:
(1) The analysis is based on the Structuring Assumptions and a 0% CPR as
discussed herein.
(2) See Appendix II for a description of the Yield Maintenance.
(3) YM1 and DEF/YM1 loans have been included inYield Maintenance Total.
I-23
[THIS PAGE INTENTIONALLY LEFT BLANK.]
[THIS PAGE INTENTIONALLY LEFT BLANK.]
[THIS PAGE INTENTIONALLY LEFT BLANK.]
APPENDIX II
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
MORTGAGE CMSA CMSA LOAN GROUP MORTGAGE
LOAN NO. LOAN NO. PROPERTY NO. (ONE OR TWO) LOAN SELLER(1) PROPERTY NAME(2)
----------------------------------------------------------------------------------------------------------------
1 1 1-001 1 BSCMI One Dag Hammarskjold Plaza
2 2 2-001 1 BSCMI One AT&T Center
3 3 3-001 1 MSMC Fulbright Tower
4 4 4-001 1 PCFII Scripps Center
5 5 5-001 1 BSCMI Academy Sports HQ
6 6 6-001 1 BSCMI Viad Corporate Center
7 7 7-001 1 PCFII 909 A Street
8 8 8-001 1 BSCMI DoubleTree Hotel Jersey City
9 9 9-001 1 PCFII Overlook II
10 10 10-001 1 BSCMI The Shops at Sherman Plaza
11 11 11-001 1 BSCMI 503 Broadway
12 12 12-001 1 PCFII Harmony Marketplace
13 13 13-001 1 WFB Regions/Gillette Medical Office
14 14 14-001 1 MSMC Stony Point East (A)
15 15 15-001 1 MSMC Stony Point West (A)
16 16 16-001 1 WFB MetroNorth Business Center
17 17 17-001 1 PCFII Millrock Park II
18 18 18-001 2 MSMC Newbury Village
19 19 19-001 1 BSCMI One Pacific Place
20 20 20-001 2 MSMC Rose Hill Apartments
21 21 21-001 1 BSCMI Holiday Inn - Santa Maria
22 22 22-001 1 BSCMI Lincoln Village
23 23 23-001 1 MSMC 854-864 Madison Ave
24 24 24-001 1 PCFII Astoria Federal Savings & Loan
25 25 25-001 1 WFB DRA - Lake Emma Corporate Park
26 26 26-001 1 WFB Sierra Trading Post Fulfillment (B)
27 27 27-001 1 WFB Sierra Trading Post Admin Building (B)
28 28 28-001 1 WFB University Square Apts/Retail
29 29 29-001 2 BSCMI Las Ventanas
30 30 30-001 1 BSCMI 100 Challenger
31 31 31-001 1 PCFII Gateway Business Park
32 32 32-001 1 BSCMI Fox Chapel Shopping Center
33 33 33-001 1 WFB Byram Plaza Shopping Center
34 34 34-001 1 PCFII 3536 Highway 31
35 35 35-001 1 BSCMI Four Points Newark Airport
36 36 36-001 1 MSMC 165 East 35th Street
37 37 37-001 1 PCFII Fayette Medical Office Building
38 38 38-001 1 BSCMI HSBC Sioux Falls
39 39 39-001 1 BSCMI FedEx - Edwardsville
40 40 40-001 2 PCFII Benchmark Apartments
41 41 41-001 1 PCFII Ivy Walk
42 42 42-001 1 BSCMI Inn at Chester Springs
43 43 43-001 1 MSMC Cordova Commons
44 44 44-001 1 WFB Gemini Plaza
45 45 45-001 1 MSMC 991 Third Avenue
46 46 46-001 1 BSCMI First and Shaw
47 47 47-001 1 MSMC Thomson Campus
48 48 48-001 1 WFB Rave Cinemas Baton Rouge
49 49 49-001 1 MSMC 38-05 to 38-17 and 37-27/29 Main Street
50 50 50-001 1 MSMC Tradewinds Shopping Center
51 51 51-001 1 MSMC 213 West 35th Street
52 Newbury Portfolio Roll-Up (I)
52 52-001 1 BSCMI Newbury Portfolio - 222 Newbury Street (I)
53 52-002 1 BSCMI Newbury Portfolio - 224 Newbury Street (I)
54 52-003 1 BSCMI Newbury Portfolio - 232 Newbury Street (I)
55 52-004 1 BSCMI Newbury Portfolio - 226 Newbury Street (I)
56 52-005 1 BSCMI Newbury Portfolio - 230 Newbury Street (I)
57 53 53-001 1 PCFII Mar Industrial Buildings
58 54 54-001 1 WFB Rave Cinemas Pensacola
59 55 55-001 1 BSCMI Indrio Crossings Shopping Center
60 56 56-001 1 PCFII Shoppes at Smithville
61 57 57-001 1 MSMC North Hollywood Warehouse
62 58 58-001 1 MSMC Bridgeport Stop & Shop II
63 59 59-001 1 BSCMI NC Mutual Building
64 60 60-001 1 MSMC Carteret Shopping Center
65 61 61-001 1 WFB The Regency Suites Hotel
66 62 62-001 1 WFB Provo Craft
67 63 63-001 1 WFB Hampton Inn Lexington
68 64 64-001 2 PCFII Butler Ridge Apartments
69 65 65-001 1 MSMC Nicholson Plaza
70 66 66-001 1 MSMC Home Depot Bridgeport CT
71 67 67-001 1 BSCMI HIE Solvang
72 68 68-001 2 MSMC Rye Colony Apartment
69 Redstone American Grill Portfolio Roll-Up (II)
73 69-001 1 PCFII Redstone American Grill - Oakbrook (II)
74 69-002 1 PCFII Redstone American Grill - Eden Prairie (II)
75 70 70-001 1 WFB 1600 Central Avenue
76 71 71-001 1 PCFII 1035 Nathan Lane North
77 72 72-001 1 MSMC Beverly Blvd Retail
78 73 73-001 1 PCFII Summit Pointe (C)
79 74 74-001 1 PCFII Cross Pointe NC (C)
80 75 75-001 1 BSCMI Prosperity Market
81 76 76-001 1 MSMC Metropolitan Business Center
82 77 77-001 2 PCFII Villa Santa Fe Apartments
83 78 78-001 2 PCFII Westover Apartments
84 79 79-001 1 MSMC Bridgeport Stop & Shop I
85 80 80-001 1 BSCMI Walgreens - St. Petersburg
86 81 81-001 1 WFB 9300 Flair Drive
87 82 82-001 2 PCFII Princeton Hill Apartments
88 83 83-001 1 WFB Holiday Inn Express Chester
89 84 84-001 1 WFB Glad Business Park
85 Tractor Supply Portfolio Roll-Up (III)
90 85-001 1 BSCMI Tractor Supply Portfolio - New Braunfels (III)
91 85-002 1 BSCMI Tractor Supply Portfolio - Livingston (III)
92 85-003 1 BSCMI Tractor Supply Portfolio - La Grange (III)
93 85-004 1 BSCMI Tractor Supply Portfolio - Crockett (III)
94 86 86-001 1 WFB Rave Cinemas Port St. Lucie
95 87 87-001 1 MSMC CalTech JPL Building
96 88 88-001 1 MSMC Gateway Plaza - CO
97 89 89-001 1 WFB Radisson Hotel Corning
98 90 90-001 1 PCFII Whole Foods Santa Monica
99 91 91-001 1 WFB Western Union
100 92 92-001 1 WFB Macomb Centre
101 93 93-001 1 WFB A-American Lipoa
102 94 94-001 1 MSMC West Marine Plaza
103 95 95-001 1 MSMC Fidelity National Title Office
104 96 96-001 1 MSMC Hampton Inn - Bremerton, WA
105 97 97-001 2 PCFII The Legends Apartments
106 98 98-001 1 MSMC Suby Von Haden Office Building
107 99 99-001 1 MSMC 162 E 55th Street
108 100 100-001 1 PCFII 3765 A Old Court Road
109 101 101-001 1 MSMC Sportsman Warehouse - St. George
110 102 102-001 1 WFB Holiday Inn Express Abingdon
111 103 103-001 2 MSMC 36 Sutton Place South
112 104 104-001 1 MSMC King Taylor Commercial Park
113 105 105-001 1 BSCMI Walgreens - Philadelphia
114 106 106-001 1 BSCMI 1577 Northern Blvd
115 107 107-001 1 WFB Brea Mini-Storage
116 108 108-001 1 WFB Buena Park Business Complex
117 109 109-001 1 WFB Country Inn Hagerstown
118 110 110-001 1 BSCMI HOM Furniture - Fargo
119 111 111-001 1 WFB North Main Storage
120 112 112-001 1 WFB Brentwood Country Mart
121 113 113-001 1 MSMC 160 E 55th Street
122 114 114-001 1 BSCMI Magnolia Pointe Shopping Center
123 115 115-001 1 WFB Days Inn at Country Club
124 116 116-001 1 WFB Victoria Place Center
125 117 117-001 1 PCFII West Allis Industrial
126 118 118-001 1 WFB The Plaza at Jordan Creek Crossing
127 119 119-001 1 PCFII North Tech Industrial
128 120 120-001 1 BSCMI La-Z-Boy - Newington
129 121 121-001 1 MSMC Gibson Plaza
130 122 122-001 1 MSMC Walgreens - Holbrook
131 123 123-001 1 WFB Ameripath
132 124 124-001 1 MSMC 342-344 & 354-364 Flatbush Avenue
133 125 125-001 1 MSMC 9th Street Office
134 126 126-001 1 PCFII 111 West Lemon Avenue
135 127 127-001 1 BSCMI High Pointe Centre
136 128 128-001 1 WFB 51 Auto Center Drive
129 Optronics Portfolio Roll-Up (IV)
137 129-001 1 WFB Optronics - Flora (IV)
138 129-002 1 WFB Optronics - Muskogee (IV)
139 130 130-001 1 BSCMI Comfort Inn - Columbus
140 131 131-001 1 WFB American River Drive
141 132 132-001 1 MSMC DiBona Village Retail Center
142 133 133-001 1 BSCMI King's Ocean
143 134 134-001 1 MSMC BB & T Bank Ground Lease
144 135 135-001 1 MSMC 2112 White Plains Road
145 136 136-001 1 PCFII 550 PA Route 611
146 137 137-001 1 WFB Rainbow Village Las Vegas
147 138 138-001 1 WFB Venice Beach Retail
148 139 139-001 1 BSCMI Sack 'N Save Garland
149 140 140-001 2 WFB The Elms MHP
150 141 141-001 1 PCFII 727 South Wanamaker Avenue
151 142 142-001 1 PCFII Shoppes of Northtowne
152 143 143-001 2 MSMC Tracy Towers
153 144 144-001 1 WFB Sullivan Moving and Storage
154 145 145-001 1 PCFII G.I. Joe's Leasehold
155 146 146-001 1 BSCMI Mack Rite Aid
156 147 147-001 1 PCFII 9937 Garland Road
157 148 148-001 1 WFB Hampton Inn - Clackamas
158 149 149-001 1 PCFII 935 Broadbeck Drive
159 150 150-001 1 MSMC 731 South Fourth Street
160 151 151-001 1 WFB Reno Airport Center
161 152 152-001 1 PCFII Cherokee Hills
162 153 153-001 1 WFB Midway Industrial Park
163 154 154-001 1 WFB 3636 Birch Street
164 155 155-001 1 MSMC Cool Springs - 1935 Mallory Lane
165 156 156-001 1 MSMC Integra Medical
166 157 157-001 2 PCFII Summertree Park Apartments
167 158 158-001 1 PCFII 1020 Railroad Street
168 159 159-001 1 WFB August Supply
169 160 160-001 1 WFB Security Public Storage - Sacramento I
170 161 161-001 1 WFB North Creek Business Park
171 162 162-001 1 WFB Cost Plus - Torrance
172 163 163-001 1 MSMC Orlando Kmart
173 164 164-001 1 WFB 94 - 125 Leokane
174 165 165-001 1 PCFII 730 Apollo Drive
175 166 166-001 1 PCFII 400 East Market Street
176 167 167-001 1 WFB Boulevard Walk
177 168 168-001 1 WFB Hualapai Village Center
178 169 169-001 2 MSMC Walnut Park Apartments/Hempstead Apartments
179 170 170-001 1 MSMC Grandon Village
180 171 171-001 2 MSMC 754 Post Street
181 172 172-001 1 WFB Newington Warehouse
182 173 173-001 1 WFB Handi Self Storage - Lexington
183 174 174-001 1 MSMC 1370-1390 Jerome Avenue
184 175 175-001 1 PCFII 3240 North Pleasantburg Drive
185 176 176-001 1 BSCMI FedEx - Council Bluffs
186 177 177-001 1 WFB CVS - Westland, MI
187 178 178-001 1 WFB Farmington Gateway Marketplace
188 179 179-001 1 WFB Interstate Companies - Grand Forks
189 180 180-001 1 BSCMI Madison Plaza
190 181 181-001 1 PCFII 8018 West Broad Street
191 182 182-001 1 WFB 3260 Scott Blvd.
192 183 183-001 1 MSMC HERC Deer Park
193 184 184-001 1 WFB Coronado Self Storage
194 185 185-001 1 BSCMI 39 W 56th Street
195 186 186-001 1 MSMC Kelly Crossing Center
196 187 187-001 1 WFB Harvest Meat Industrial Building
197 188 188-001 1 BSCMI Staples - Peru, IL
198 189 189-001 2 WFB West Dearborn Apartments
199 190 190-001 1 PCFII The Crossings At Akers Mill
200 191 191-001 1 PCFII 20195 Stevens Creek Boulevard
201 192 192-001 1 WFB Premier Self Storage
202 193 193-001 1 WFB Magnolia Bend Retail Center
203 194 194-001 1 BSCMI Office Depot Enterprise
204 195 195-001 1 WFB Alcan NorthAmerican Industrial
205 196 196-001 1 BSCMI Chili's - Paris
206 197 197-001 1 WFB Valley View Office Building
207 198 198-001 2 PCFII Lodi Court Apartments
208 199 199-001 1 WFB McCarthy Ranch SC (Pad C and J)
209 200 200-001 1 WFB Dock Street Building2
210 201 201-001 2 MSMC Otter Creek Apts.
211 202 202-001 1 WFB Cheektowaga IP Building
212 203 203-001 1 WFB Petco - Lakewood
213 204 204-001 1 WFB Hollywood Plaza
214 205 205-001 1 PCFII Judges Office
215 206 206-001 1 BSCMI Freeport Henry
207 Starbucks & AutoZone Portfolio Roll-Up (V)
216 207-001 1 WFB Starbucks & AutoZone Portfolio - Starbucks (V)
217 207-002 1 WFB Starbucks & AutoZone Portfolio - AutoZone (V)
218 208 208-001 1 WFB Inner Space Storage
219 209 209-001 1 PCFII 251 Legris Avenue
220 210 210-001 2 WFB Huron Estates Cheboygan
221 211 211-001 1 PCFII 1275 Chatham Parkway
222 212 212-001 1 WFB 8250-8262 Alpine Ave
223 213 213-001 1 WFB Mosley Industrial
224 214 214-001 1 MSMC Comerica Ground Lease
225 215 215-001 1 MSMC Fuqua Shopping Center
226 216 216-001 1 MSMC Sunbelt Rentals Building
227 217 217-001 1 WFB Bartlett Center
228 218 218-001 1 WFB Advance Auto - Martin Rd
229 219 219-001 1 PCFII 845 Eldridge Parkway
230 220 220-001 1 WFB Transmetco Building
231 221 221-001 1 WFB Buckner Building
232 222 222-001 1 WFB White Cap Construction Supply - Indianapolis, IN
233 223 223-001 1 PCFII KaRon Self Storage
234 224 224-001 1 PCFII 5101 Highway 101
235 225 225-001 2 WFB Oakman Apartments
236 226 226-001 2 WFB Park Street Apartments
237 227 227-001 1 WFB Advanced Auto - Chelsea, AL
238 228 228-001 1 WFB Advance Auto - Alexandria, LA
239 229 229-001 1 PCFII 3909 Frankford Road
240 230 230-001 1 WFB Monterey Medical Office
241 231 231-001 1 WFB Advance Auto - Fernandina Beach, FL
242 232 232-001 1 PCFII 217 Washington Street
243 233 233-001 1 PCFII 1945 West Main Street
244 234 234-001 1 WFB National Tire Battery - Cedar Hill
245 235 235-001 2 WFB Northside Terrace Senior Apartments
246 236 236-001 2 WFB El Segundo Apartments
247 237 237-001 1 WFB Airgas Building
Totals and Weighted Averages:
MORTGAGE LOAN PURPOSE
LOAN NO. (ACQUISITION/REFINANCE) STREET ADDRESS CITY
--------------------------------------------------------------------------------------------------------------------------------
1 Refinance 885 Second Avenue New York
2 Acquisition 909 Pine Street St. Louis
3 Refinance 1301 McKinney Street Houston
4 Refinance 312 Walnut Street Cincinnati
5 Acquisition 1800 North Mason Road Katy
6 Acquisition 1850 North Central Avenue Phoenix
7 Acquisition 909 A Street Tacoma
8 Refinance 455 Washington Boulevard Jersey City
9 Acquisition 2839 Paces Ferry Road Atlanta
10 Acquisition 1600-1620 Sherman Avenue Evanston
11 Refinance 503-511 Broadway New York
12 Refinance 4503 John F. Kennedy Parkway Fort Collins
13 Refinance 435 Phalen Blvd. St. Paul
14 Refinance 100, 110, 120 Stony Point Road Santa Rosa
15 Refinance 131 Stony Point Circle Santa Rosa
16 Refinance 74 Commerce Way Woburn
17 Refinance 3165 East Millrock Drive Holladay
18 Acquisition 211 Pomeroy Avenue Meriden
19 Acquisition 10305 Pacific Street Omaha
20 Refinance 6201 Rose Hill Falls Way Alexandria
21 Refinance 2100 North Broadway Santa Maria
22 Acquisition 6075-6201 N. Lincoln Avenue Chicago
23 Refinance 854-864 Madison Avenue New York
24 Refinance 211 Station Road Mineola
25 Acquisition 3200-3210 Lake Emma Road Lake Mary
26 Refinance 5121 Campstool Road Cheyenne
27 Refinance 5025 Campstool Rd Cheyenne
28 Refinance 1600 Warren Street Mankato
29 Acquisition 2200 E. First Street Alamogordo
30 Refinance 100 Challenger Road Ridgefield Park
31 Refinance 26341-26499 Jefferson Avenue Murrieta
32 Refinance 19717 N. Frederick Road Germantown
33 Refinance Route 206 and Lake Lackawanna Drive Stanhope
34 Refinance 3536 Highway 31 Calera
35 Refinance 901 Spring St. Elizabeth
36 Refinance 165 East 35th Street New York
37 Refinance 1255 Highway 54 Fayetteville
38 Acquisition 2200 East Benson Road Sioux Falls
39 Acquisition 9140 Woodend Road Edwardsville
40 Refinance 353 West San Marcos Boulevard San Marcos
41 Acquisition 1675 Cumberland Parkway Smyrna
42 Refinance 815 North Pottstown Pike Uwchlan Township
43 Acquisition 1650 Airport Boulevard Pensacola
44 Refinance 1150 Gemini Street Houston
45 Refinance 991 Third Avenue New York
46 Acquisition 1029-1041 E. Shaw Avenue Fresno
47 Acquisition 400 Providence Mine Road Nevada City
48 Refinance 16040 Hatteras Ave Baton Rouge
49 Refinance 38-05 to 38-17 and 37-27 Main Street Flushing
50 Acquisition 6601 North Davis Highway Pensacola
51 Refinance 213 West 35th Street New York
52 Refinance 222 Newbury Street Boston
53 Refinance 224 Newbury Street Boston
54 Refinance 232 Newbury Street Boston
55 Refinance 226 Newbury Street Boston
56 Refinance 230 Newbury Street Boston
57 Refinance 2,10,17-19,18-20 Industrial Road, 114,140-142 Clinton Road Fairfield
58 Refinance 6595 North W. St. Pensacola
59 Refinance 4890 Kings Highway Fort Pierce
60 Refinance 45 Old New York Road Galloway Township
61 Refinance 11211 Vanowen Street Los Angeles
62 Refinance 2500 Madison Avenue Bridgeport
63 Acquisition 411 West Chapel Hill Street Durham
64 Refinance 801 Roosevelt Avenue Carteret
65 Refinance 975 West Peachtree Street Atlanta
66 Acquisition 151 East 3450 North Spanish Fork
67 Refinance 401 E Nelson St. Lexington
68 Refinance 1581-1611 Route 23 Butler
69 Refinance 5000 - 5060 Nicholson Lane Rockville
70 Refinance 656 Reservoir Avenue Bridgeport
71 Acquisition 145 Mission Drive Solvang
72 Refinance One Peck Avenue Rye
73 Refinance 13 Lincoln Court Oakbrook Terrace
74 Refinance 8000 Eden Road Eden Prairie
75 Acquisition 1600 Central Avenue Far Rockaway
76 Refinance 1035 Nathan Lane North Plymouth
77 Refinance 8471 Beverly Boulevard Los Angeles
78 Acquisition 570-576 East Fleming Drive Morganton
79 Acquisition 5200 US Highway 29 Business Reidsville
80 Acquisition 5332 Prosperity Church Road Charlotte
81 Refinance 11128 John Galt Boulevard Omaha
82 Refinance 11850 East Florence Avenue Santa Fe Springs
83 Refinance 519 Bloomfield Avenue Caldwell
84 Refinance 2135 & 2145 Fairfield Avenue Bridgeport
85 Acquisition 3839 4th Street North St Petersburg
86 Refinance 9300 Flair Drive El Monte
87 Refinance 101 Princeton Avenue Montgomery
88 Acquisition 2 Bryle Place Chester
89 Refinance 2446-2530 Main Street Chula Vista
90 Acquisition 840 Loop 337 New Braunfels
91 Acquisition 1820 US Highway 190 Livingston
92 Acquisition 2005 West State Highway 71 La Grange
93 Acquisition 1408 East Loop 304 Crockett
94 Refinance 1900 NW Courtyard Circle Port St. Lucie
95 Acquisition 464 West Woodbury Road Altadena
96 Refinance 1000 to 1096 South Sable Boulevard; 14551 to 14593 East Mississippi Avenue Aurora
97 Refinance 125 Denison Parkway East Corning
98 Refinance 2201-2207 Wilshire Boulevard Santa Monica
99 Refinance 13022 Hollenberg Drive Bridgeton
100 Refinance 19700-19800 Hall Road Clinton Township
101 Refinance 115 East Lipoa Street Kihei
102 Refinance 4441-4449 Granite Drive Rocklin
103 Acquisition 17592 East 17th Street Tustin
104 Refinance 150 Washington Avenue Bremerton
105 Refinance 246 Highland Avenue State College
106 Refinance 1221 John Q. Hammons Drive Madison
107 Refinance 162 East 55th Street New York
108 Refinance 3765 A Old Court Road Pikesville
109 Acquisition 2957 E. 850 North St. George
110 Acquisition 940 East Main Street Abingdon
111 Refinance 36 Sutton Place South New York
112 Refinance 308-321 SE Taylor Street & 313-345 SE Yamhill Street Portland
113 Acquisition 12050 Bustleton Avenue Philadelphia
114 Refinance 1577 Northern Blvd Manhasset
115 Acquisition 502 Apollo Street Brea
116 Refinance 6481 Orangethorpe Road and 6940-6980 Aragon Circle Buena Park
117 Refinance 17612 Valley Mall Rd Hagerstown
118 Acquisition 4601 23rd Avenue Southwest Fargo
119 Refinance 1280 North Main Street Manteca
120 Refinance 225-253 26th Street Los Angeles
121 Refinance 160 East 55th Street New York
122 Acquisition 2000 Clemson Road Columbia
123 Refinance 333 West Juanita Ave Mesa
124 Refinance 3144 - 3240 Broadway Street Eureka
125 Refinance 2152 & 2122 S. 114th St. & 11217 W. Becher St. West Allis
126 Refinance 230 S. 68th Street West Des Moinces
127 Acquisition 1388 North Tech Boulevard Gilbert
128 Acquisition 3050 Berlin Turnpike Newington
129 Refinance 1825-1837 East Gibson Road Woodland
130 Refinance 1 Plymouth Street Holbrook
131 Acquisition 6750 West 52nd Ave. Arvada
132 Acquisition 342-344 Flatbush Avenue; 354-364 Flatbush Avenue Brooklyn
133 Acquisition 1438-1444 9th Street Santa Monica
134 Refinance 111 West Lemon Avenue Monrovia
135 Acquisition 700 Columbiana Drive Irmo
136 Refinance 51 Auto Center Drive Irvine
137 Refinance 604 First Street Flora
138 Refinance 401 S 41st Street East Muskogee
139 Refinance 4870 Old Rathmell Court Obetz
140 Refinance 3406-3436 American River Drive Sacramento
141 Refinance 2887 The Villages Parkway San Jose
142 Refinance 2555 Ocean Avenue Brooklyn
143 Refinance 3400 East-West Highway Hyattsville
144 Refinance 2112 White Plains Road Bronx
145 Refinance 550 PA Route 611 Stroudsburg
146 Refinance 5625 - 5645 S. Rainbow Blvd. Las Vegas
147 Refinance 321-325 Ocean Front Walk and 5-11 Dudley Avenue Venice Beach
148 Acquisition 11445 Garland Road Dallas
149 Acquisition 871 South Main St Fon Du Lac
150 Refinance 727 South Wanamaker Avenue Ontario
151 Refinance 3501 North Ponce De Leon Boulevard St. Augustine
152 Refinance 245 East 24th Street New York
153 Refinance 5704 Copley Drive San Diego
154 Refinance 25928 SE 104th Avenue Kent
155 Refinance 5692 Rising Sun Avenue Philadelphia
156 Refinance 9937 Garland Road Dallas
157 Refinance 9040 SE Adams Street Clackamas
158 Acquisition 935 Broadbeck Drive Thousand Oaks
159 Refinance 731 South 4th Street Las Vegas
160 Refinance 1100 East Plumb Lane Reno
161 Refinance 1241 Indian Trail Road Norcross
162 Refinance 2775 & 2785 Kurtz Street San Diego
163 Refinance 3636 Birch Street Newport Beach
164 Refinance 1935 Mallory Lane Franklin
165 Refinance 3074 College Park Drive The Woodlands
166 Acquisition 1801 South 15th Street Tacoma
167 Acquisition 1020 Railroad Street Corona
168 Refinance 1575 Adrian Road Burlingame
169 Refinance 3901 Fruitridge Road Sacramento
170 Refinance 14110-14260 NE 21st St. Bellevue
171 Refinance 22929 Hawthorne Boulevard Torrance
172 Refinance 1801 S. Semoran Blvd Orlando
173 Acquisition 94 - 125 Leokane St. Waipahu
174 Acquisition 730 Apollo Drive Lino Lakes
175 Refinance 400 East Market Street West Chester
176 Refinance 6330 Lawrenceville Highway 29 Tucker
177 Refinance 3370 S. Hualapai Way Las Vegas
178 Refinance 5326 Pocusset Street; 5644 Hempstead Road Pittsburgh
179 Acquisition 577 South Rancho Santa Fe Road San Marcos
180 Refinance 754 Post Street San Francisco
181 Refinance 7234 Fullerton Road Springfield
182 Refinance 160 West Tiverton Way Lexington
183 Refinance 1370-1390 Jerome Avenue Bronx
184 Acquisition 3240 North Pleasantburg Drive Greenville
185 Acquisition 3502 South 11th Street Council Bluffs
186 Acquisition 6501 North Wayne Road Westland
187 Refinance 18350-18500 Pilot Knob Road Farmington
188 Refinance 3450 S. 42nd Street Grand Forks
189 Refinance 307-311 Main Street Madison
190 Refinance 8018 West Broad Street Richmond
191 Refinance 3260 Scott Blvd. Santa Clara
192 Acquisition 1002 Clay Court Deer Park
193 Refinance 255 & 845 S. Hill Road; 213 S. Camino Del Pueblo Bernalillo
194 Refinance 39 W 56th Street New York
195 Acquisition 7601 NW Roanridge Road Kansas City
196 Refinance 2901 Eunice Avenue Orlando
197 Acquisition 4350 Mahoney Drive Peru
198 Acquisition 1265 Monroe & 1312 Porter Street Dearborn
199 Refinance 3051 Akers Mill Road SE Atlanta
200 Refinance 20195 Stevens Creek Boulevard Cupertino
201 Refinance 6130 Old Greensboro Rd Tuscaloosa
202 Refinance 18423 FM 1488 Magnolia
203 Acquisition 704 Boll Weevil Circle Enterprise
204 Acquisition 46555 Magellan Drive Novi
205 Acquisition 1105 NE Loop 286 Paris
206 Refinance 5775 E. Los Angeles Avenue Simi Valley
207 Refinance 126 Route 46 Lodi
208 Refinance 74-82 and 170-182 Ranch Drive Milpitas
209 Refinance 535 Dock Street Tacoma
210 Refinance 4144 Otter Creek Drive Amelia
211 Acquisition 75 Allied Drive Cheektowaga
212 Refinance 5215 Lakewood Boulevard Lakewood
213 Refinance 15525 15 Mile Road Clinton Township
214 Refinance 7326 College Street Irmo
215 Refinance 21-25 Sunrise Highway/ 12 Henry Street Freeport
216 Acquisition 35065 Interstate Highway 10 West Boerne
217 Acquisition 3101 North Main Street Rockford
218 Refinance 2950 North 73rd Street Scottsdale
219 Acquisition 251 Legris Avenue West Warwick
220 Refinance 1290 South Huron Cheboygan
221 Refinance 1275 Chatham Parkway Savannah
222 Refinance 8250-8262 Alpine Ave Sacramento
223 Acquisition 8200-8210 Mosely Road Houston
224 Acquisition 1600 Research Forest Drive Shenandoah
225 Refinance 11200 Fuqua Road Houston
226 Acquisition 486 E. Franklin Road Meridian
227 Refinance 1681-1695 South Route 59 Bartlett
228 Refinance 4729 North Shepherd Drive Houston
229 Acquisition 845 Eldridge Parkway Houston
230 Acquisition 1750 E. Riverfork Dr Huntington
231 Acquisition 1308 Delaware Avenue Wilmington
232 Refinance 7130 W. McCarty Street Indianapolis
233 Acquisition 1304-1312 Ranch Road 620 Austin
234 Refinance 5101 Highway 101 Minnetonka
235 Refinance 5104 - 5120 Oakman Blvd Dearborn
236 Refinance 9746 Park Street Bellflower
237 Refinance 16462 US-280 W Chelsea
238 Acquisition 920 MacArthur Drive Alexandria
239 Acquisition 3909 Frankford Road Dallas
240 Refinance 24551 Silver Cloud Court Monterey
241 Acquisition 1880 South 8th Street. Fernandina Beach
242 Refinance 217 Washington Street Toms River
243 Acquisition 1945 West Main Street Mesa
244 Acquisition 408 North Clark Road Cedar Hill
245 Refinance 1002 North 6th Street Hawley
246 Refinance 321 W. El Segundo Blvd. El Segundo
247 Acquisition 201 S. River Run Road Flagstaff
MORTGAGE
LOAN NO. STATE ZIP CODE PROPERTY TYPE PROPERTY SUB-TYPE UNITS/SF(3) YEAR BUILT
------------------------------------------------------------------------------------------------------ -----------------------
1 NY 10017 Office Urban 782,928 1971
2 MO 63101 Office Urban 1,226,293 1986
3 TX 77010 Office Urban 1,247,061 1982
4 OH 45202 Office Urban 543,616 1989
5 TX 77449 Industrial Warehouse 1,454,563 1976 - 2006
6 AZ 85007 Office Urban 476,424 1990 - 1991
7 WA 98402 Office Urban 210,186 1988
8 NJ 07310 Hospitality Full Service 198 1998
9 GA 30339 Office Suburban 254,658 1985
10 IL 60201 Retail Anchored 152,187 2006
11 NY 10012 Mixed Use Office/Retail 150,000 1900
12 CO 80525 Retail Anchored 327,438 1998
13 MN 55117 Office Medical 124,316 2006 - 2007
14 CA 95401 Office Suburban 201,366 1990, 1999, 2000
15 CA 95401 Office Suburban 80,878 1985
16 MA 01801 Industrial Flex Industrial 512,727 1974 - 1978
17 UT 84121 Office Suburban 141,849 2006
18 CT 06450 Multifamily Garden 180 2005
19 NE 68114 Retail Specialty 91,706 1988
20 VA 22310 Multifamily Garden 264 1964
21 CA 93454 Hospitality Full Service 207 1987
22 IL 60659 Retail Anchored 139,223 1951
23 NY 10021 Retail Specialty 4,797 1930
24 NY 11501 Office Suburban 77,466 1987
25 FL 32746 Office Suburban 242,754 1975, 1996
26 WY 82007 Industrial Warehouse 347,400 2002
27 WY 82007 Industrial Warehouse 164,056 1992
28 MN 56001 Mixed Use Multifamily/Retail 142,206 1975, 2002
29 NM 88310 Multifamily Garden 280 1999
30 NJ 07660 Office Suburban 149,092 1986
31 CA 92562 Mixed Use Retail/Industrial/Office 122,883 2005
32 MD 20876 Retail Anchored 115,230 1987
33 NJ 07874 Retail Anchored 137,247 1998
34 AL 35040 Industrial Warehouse 575,000 2006
35 NJ 07201 Hospitality Full Service 260 1974
36 NY 10016 Mixed Use Multifamily/Retail 130 1955
37 GA 30214 Office Medical 100,860 2006
38 SD 57104 Office Suburban 158,000 1997
39 KS 66111 Industrial Warehouse 155,965 1999
40 CA 92069 Multifamily Garden 132 1986
41 GA 30080 Retail Unanchored 43,044 2005
42 PA 19341 Hospitality Full Service 216 1972
43 FL 32504 Retail Anchored 175,691 1972, 1989 - 1990
44 TX 77058 Office Suburban 158,627 1984
45 NY 10022 Other Leased Fee 1,600 2007
46 CA 93710 Retail Anchored 81,453 1972
47 CA 95959 Office Suburban 150,350 1988, 1993
48 LA 70816 Other Theater 73,292 2003
49 NY 11354 Retail Unanchored 15,861 1931
50 FL 32504 Retail Anchored 178,554 1982
51 NY 10001 Office Urban 169,192 1921
52 MA 02116 Mixed Use Retail/Multifamily 11,361 1882 - 1884
53 MA 02116 Mixed Use Retail/Multifamily 4,000 1882 - 1884
54 MA 02116 Mixed Use Retail/Multifamily 4,000 1882 - 1884
55 MA 02116 Mixed Use Retail/Multifamily 4,050 1882 - 1884
56 MA 02116 Mixed Use Retail/Multifamily 4,000 1882 - 1884
57 NJ 07004 Industrial Warehouse 197,267 1969 - 1972, 1977, 1985
58 FL 32534 Other Theater 72,544 2002
59 FL 34951 Retail Anchored 131,013 1989
60 NJ 08205 Retail Anchored 103,215 1989
61 CA 91605 Industrial Warehouse 202,000 1953, 1960
62 CT 06606 Retail Free Standing 67,026 1997
63 NC 27701 Office Suburban 154,036 1965
64 NJ 07008 Retail Anchored 135,725 1954, 1980, 1985
65 GA 30309 Hospitality Full Service 96 1965
66 UT 84660 Industrial Warehouse 212,685 2001
67 VA 24450 Hospitality Limited Service 86 1827, 1900, 1932, 1997
68 NJ 07405 Multifamily Garden 188 1972
69 MD 20852 Retail Anchored 102,721 1972 - 1985
70 CT 06606 Retail Free Standing 103,000 1994
71 CA 93463 Hospitality Limited Service 82 1985
72 NY 10580 Multifamily Cooperative 160 1949
73 IL 60181 Retail Free Standing 7,575 2004
74 MN 55344 Retail Free Standing 8,553 2002
75 NY 11691 Office Urban 35,862 1927
76 MN 55441 Industrial Light Industrial 198,261 1975, 1995
77 CA 90048 Retail Unanchored 24,020 1989
78 NC 28655 Retail Anchored 44,425 2000
79 NC 27320 Retail Anchored 41,825 1998
80 NC 28269 Retail Anchored 64,638 1999
81 NE 68137 Office Suburban 136,724 1975
82 CA 90670 Multifamily Garden 107 1972
83 NJ 07006 Multifamily Mid Rise 159 1971
84 CT 06605 Retail Free Standing 60,640 2005 - 2006
85 FL 33704 Retail Free Standing 14,490 2006
86 CA 91731 Office Suburban 84,395 1982
87 NJ 08540 Multifamily Garden 160 1977 - 1979
88 NY 10918 Hospitality Limited Service 80 2005
89 CA 91911 Industrial Light Industrial 145,363 1985, 1991
90 TX 78130 Retail Free Standing 24,727 2006
91 TX 77351 Retail Free Standing 24,727 2006
92 TX 78945 Retail Free Standing 24,727 2006
93 TX 75835 Retail Free Standing 24,727 2006
94 FL 34952 Other Theater 53,020 2001
95 CA 91001 Office Suburban 35,062 1966
96 CO 80012 Retail Unanchored 100,948 1984
97 NY 14830 Hospitality Full Service 177 1974
98 CA 90403 Other Leased Fee 27,000 2003
99 MO 63044 Office Suburban 78,080 1971
100 MI 48038 Office Suburban 74,074 1985, 1987
101 HI 96753 Self Storage Self Storage 72,585 2005
102 CA 95677 Retail Unanchored 43,000 1991
103 CA 92780 Office Suburban 30,597 1991
104 WA 98337 Hospitality Limited Service 105 2004
105 PA 16801 Multifamily Mid Rise 42 1996
106 WI 53717 Office Suburban 54,665 1991
107 NY 10022 Mixed Use Multifamily/Retail 30 1941
108 MD 21208 Retail Shadow Anchored 19,466 1958
109 UT 84790 Retail Free Standing 48,171 2006
110 VA 24210 Hospitality Limited Service 81 1991
111 NY 10022 Multifamily Cooperative 100 1948
112 OR 97214 Office Urban 74,025 1998
113 PA 19116 Retail Free Standing 14,820 2004
114 NY 11030 Retail Unanchored 15,400 1948
115 CA 92821 Self Storage Self Storage 57,663 1978
116 CA 90620 Industrial Flex Industrial 95,179 1974
117 MD 21740 Hospitality Limited Service 85 2005
118 ND 58104 Retail Free Standing 122,108 2004
119 CA 95336 Self Storage Self Storage 86,650 2004, 2005
120 CA 90402 Retail Shadow Anchored 30,289 1948, 1960, 1963, 1991
121 NY 10022 Mixed Use Multifamily/Retail 44 1955
122 SC 29229 Retail Anchored 62,128 1997
123 AZ 85210 Hospitality Limited Service 123 1986
124 CA 95501 Retail Unanchored 42,995 1989
125 WI 53227 Industrial Light Industrial 94,018 1979, 1981
126 IA 50266 Mixed Use Office/Retail 27,663 2006
127 AZ 85233 Industrial Flex Industrial 43,619 2001
128 CT 06111 Retail Free Standing 20,701 2006
129 CA 95776 Retail Shadow Anchored 15,167 2006
130 MA 02343 Retail Free Standing 15,120 2001
131 CO 80002 Industrial Flex Industrial 32,911 1998
132 NY 11238 Retail Unanchored 14,093 1931
133 CA 90401 Office Suburban 18,962 1980
134 CA 91016 Office Suburban 48,225 1989
135 SC 29063 Retail Anchored 61,736 1994
136 CA 92618 Retail Unanchored 49,307 1981
137 MS 39071 Industrial Warehouse 102,498 2002, 2005
138 OK 74403 Industrial Warehouse 57,075 1992, 1993, 2003, 2004
139 OH 43207 Hospitality Limited Service 70 1998
140 CA 95864 Office Suburban 38,386 1978
141 CA 95135 Retail Unanchored 19,511 1982
142 NY 11229 Mixed Use Retail/Office 17,529 1926
143 MD 20782 Other Leased Fee 43,322 2007
144 NY 10462 Mixed Use Office/Retail 20,000 1994
145 PA 18360 Retail Free Standing 28,003 2001
146 NV 89118 Retail Unanchored 16,968 1998
147 CA 90291 Retail Unanchored 8,116 1922
148 TX 75218 Retail Unanchored 65,295 1970
149 WI 54935 Manufactured Housing Community Manufactured Housing Community 207 1971
150 CA 92882 Industrial Warehouse 74,307 1989
151 FL 32084 Retail Shadow Anchored 38,015 1995
152 NY 10010 Multifamily Cooperative 169 1963
153 CA 92111 Industrial Warehouse 62,368 1997
154 WA 98030 Retail Free Standing 42,077 1983
155 PA 19120 Retail Free Standing 11,211 2006
156 TX 75275 Retail Free Standing 15,120 2000
157 OR 97015 Hospitality Limited Service 114 1986
158 CA 91320 Retail Shadow Anchored 9,416 2006
159 NV 89101 Office Urban 40,019 1963
160 NV 89502 Retail Unanchored 16,547 1984
161 GA 30093 Retail Unanchored 24,135 1985
162 CA 92110 Industrial Light Industrial 48,000 1974
163 CA 92660 Office Suburban 33,240 1973
164 TN 37067 Retail Unanchored 21,000 2000
165 TX 77381 Office Medical 15,000 2003
166 WA 98405 Multifamily Garden 68 1964
167 CA 92882 Industrial Warehouse 40,600 2000
168 CA 94010 Industrial Warehouse 38,726 1962
169 CA 95820 Self Storage Self Storage 83,172 1979
170 WA 98007 Mixed Use Office/Industrial 32,072 1976, 1977
171 CA 90505 Retail Anchored 24,027 1977
172 FL 32822 Retail Free Standing 116,680 1971
173 HI 96797 Industrial Warehouse 26,250 1990
174 MN 55014 Retail Shadow Anchored 13,949 2003
175 PA 19382 Retail Free Standing 6,300 2007
176 GA 30084 Retail Unanchored 32,302 1985
177 NV 89117 Retail Unanchored 12,750 2006
178 PA 15217 Multifamily Low Rise 40 1925, 1975
179 CA 92069 Retail Unanchored 11,314 2004
180 CA 94109 Multifamily Mid Rise 23 1916
181 VA 22150 Industrial Warehouse 28,800 1973
182 KY 40503 Self Storage Self Storage 55,500 1986
183 NY 10452 Retail Unanchored 12,900 1928
184 SC 29609 Retail Free Standing 10,330 2006
185 IA 51501 Industrial Warehouse 23,510 1999
186 MI 48185 Retail Free Standing 10,855 2002
187 MN 55024 Retail Unanchored 26,781 2002, 2004
188 ND 58201 Industrial Flex Industrial 30,100 2000
189 NJ 07940 Retail Unanchored 10,017 2000
190 VA 23294 Retail Free Standing 14,842 1963, 1978
191 CA 95054 Industrial Light Industrial 20,000 1974
192 TX 77536 Industrial Warehouse 26,700 2005
193 NM 87004 Self Storage Self Storage 80,325 1995 - 2001
194 NY 10019 Mixed Use Retail/Office 13,400 1920
195 MO 64151 Retail Unanchored 15,098 2005
196 FL 32808 Industrial Warehouse 44,105 1970
197 IL 61354 Retail Free Standing 23,925 1998
198 MI 48124 Multifamily Garden 90 1927
199 GA 30339 Retail Shadow Anchored 10,190 1998
200 CA 95014 Office Suburban 17,970 1985
201 AL 35405 Self Storage Self Storage 34,450 2002
202 TX 77355 Retail Unanchored 23,800 2002
203 AL 36330 Retail Free Standing 20,000 2006
204 MI 48377 Industrial Flex Industrial 52,350 2003
205 TX 75460 Retail Free Standing 6,698 1999
206 CA 93063 Office Suburban 23,749 1981
207 NJ 07644 Multifamily Garden 80 1972
208 CA 95035 Retail Shadow Anchored 14,700 1997
209 WA 98402 Office Urban 43,627 1895
210 OH 45102 Multifamily Garden 22 2005
211 NY 14227 Industrial Warehouse 48,100 1989
212 CA 90712 Retail Big Box 13,600 1996, 2005
213 MI 48035 Retail Unanchored 19,013 1996
214 SC 29063 Office Suburban 4,858 2005
215 NY 11520 Retail Unanchored 9,050 1990
216 TX 78006 Retail Free Standing 1,800 2006
217 IL 61103 Retail Free Standing 6,786 2006
218 AZ 85251 Self Storage Self Storage 34,247 1985
219 RI 02893 Retail Free Standing 6,790 2006
220 MI 49721 Manufactured Housing Community Manufactured Housing Community 112 1993
221 GA 31405 Industrial Warehouse 29,727 1994
222 CA 95826 Industrial Light Industrial 45,000 1990
223 TX 77075 Industrial Flex Industrial 36,066 1978, 1979
224 TX 77381 Other Leased Fee 4,277 2006
225 TX 77089 Retail Unanchored 8,475 2004
226 ID 83642 Retail Free Standing 10,000 2006
227 IL 60103 Retail Unanchored 9,005 2000
228 TX 77018 Retail Free Standing 7,000 2006
229 TX 77079 Other Leased Fee 4,025 2006
230 IN 46750 Industrial Warehouse 40,200 2004
231 DE 19806 Office Suburban 11,300 1880
232 IN 46241 Industrial Flex Industrial 36,250 1995
233 TX 78734 Self Storage Self Storage 19,220 1996, 2004
234 MN 55345 Retail Shadow Anchored 3,010 1983
235 MI 48126 Multifamily Garden 69 1926
236 CA 90706 Multifamily Garden 16 1967
237 AL 35043 Retail Free Standing 7,000 2006
238 LA 71303 Retail Free Standing 7,000 2005
239 TX 75287 Retail Free Standing 6,000 2003
240 CA 93940 Office Medical 9,151 2005
241 FL 32034 Retail Free Standing 7,000 2006
242 NJ 08753 Office Suburban 8,378 2002
243 AZ 85201 Retail Free Standing 4,215 1986
244 TX 75104 Retail Unanchored 6,912 2006
245 MN 56549 Multifamily Assisted Living 30 1979
246 CA 90245 Multifamily Garden 6 1963
247 AZ 86001 Retail Free Standing 4,000 1998
MORTGAGE PERCENT PERCENT LEASED
LOAN NO. YEAR RENOVATED LEASED(4) AS OF DATE(4) SECURITY TYPE(5) LIEN POSITION
---------------------------------------------------------------------------------------------
1 2006 - 2007 97.1% 11/01/2006 Fee First
2 NAP 100.0% 04/01/2007 Fee First
3 NAP 89.0% 12/15/2006 Fee First
4 NAP 90.2% 02/23/2007 Fee First
5 NAP 100.0% 04/01/2007 Fee First
6 2004 - 2006 88.6% 12/01/2006 Fee First
7 NAP 100.0% 12/20/2006 Fee First
8 NAP 81.7% 12/31/2006 Fee First
9 NAP 92.7% 02/09/2007 Fee First
10 NAP 87.6% 01/30/2007 Fee/Leasehold First
11 1998 66.7% 02/27/2007 Fee First
12 NAP 98.3% 02/06/2007 Fee First
13 NAP 100.0% 12/04/2006 Fee First
14 NAP 93.3% 09/01/2006 Fee First
15 NAP 94.7% 09/01/2006 Fee/Leasehold First
16 NAP 100.0% 12/01/2006 Fee First
17 NAP 78.6% 02/19/2007 Fee First
18 NAP 95.0% 01/02/2007 Fee First
19 2005 91.0% 02/01/2007 Fee First
20 2007 98.1% 01/31/2007 Fee First
21 2006 - 2007 68.2% 11/30/2006 Fee First
22 2002 97.1% 11/28/2006 Fee/Leasehold First
23 2005 - 2006 100.0% 09/27/2006 Fee First
24 NAP 100.0% 03/01/2007 Fee First
25 1992 98.4% 01/31/2007 Fee First
26 NAP 100.0% 12/01/2006 Fee First
27 1999 100.0% 12/01/2006 Fee First
28 2004 96.9% 02/06/2007 Fee First
29 NAP 92.9% 03/01/2007 Fee First
30 NAP 100.0% 04/01/2007 Leasehold First
31 NAP 78.8% 03/07/2007 Fee First
32 NAP 100.0% 02/27/2007 Fee First
33 NAP 97.5% 03/05/2007 Fee First
34 NAP 100.0% 12/21/2006 Fee First
35 2006 97.4% 12/31/2006 Fee First
36 NAP 97.7% 09/27/2006 Fee First
37 NAP 87.7% 02/27/2007 Leasehold First
38 1999 100.0% 04/01/2007 Fee First
39 NAP 100.0% 04/01/2007 Fee First
40 NAP 97.0% 02/20/2007 Fee First
41 NAP 93.0% 01/19/2007 Fee First
42 2002, 2004 - 2005 64.8% 12/31/2006 Fee First
43 NAP 99.1% 10/10/2006 Fee First
44 2002 100.0% 10/01/2006 Fee First
45 NAP 100.0% 04/01/2007 Fee First
46 2006 97.9% 12/20/2006 Fee First
47 1999 100.0% 04/01/2007 Fee First
48 NAP 100.0% 09/30/2006 Fee First
49 1993 100.0% 09/27/2006 Fee First
50 NAP 91.4% 10/11/2006 Fee First
51 NAP 99.5% 11/01/2006 Fee First
52 2004 100.0% 01/22/2007 Fee First
53 2004 100.0% 01/22/2007 Fee First
54 2004 100.0% 01/22/2007 Fee First
55 2004 100.0% 01/22/2007 Fee First
56 2001 80.0% 01/22/2007 Fee First
57 1997 - 1999, 2002, 2006 79.0% 12/20/2006 Fee First
58 NAP 100.0% 03/05/2007 Fee First
59 2006 95.6% 12/14/2006 Fee First
60 2003 94.4% 02/06/2007 Fee First
61 1992 100.0% 10/31/2006 Fee First
62 NAP 100.0% 09/28/2006 Fee First
63 NAP 87.7% 12/01/2006 Fee First
64 NAP 100.0% 03/01/2007 Fee First
65 1985, 2005 - 2006 70.4% 12/31/2006 Fee First
66 NAP 100.0% 10/02/2006 Fee First
67 NAP 71.7% 12/31/2006 Fee First
68 NAP 96.8% 01/30/2007 Fee First
69 NAP 98.7% 02/05/2007 Fee First
70 NAP 100.0% 04/01/2007 Fee First
71 2004 59.5% 11/30/2006 Fee First
72 NAP 100.0% 09/28/2006 Fee First
73 NAP 100.0% 02/16/2007 Fee First
74 NAP 100.0% 02/16/2007 Fee First
75 NAP 90.8% 01/26/2007 Fee First
76 NAP 100.0% 02/20/2007 Fee First
77 NAP 100.0% 12/31/2006 Fee First
78 NAP 100.0% 01/12/2007 Fee First
79 NAP 100.0% 01/12/2007 Fee First
80 NAP 100.0% 01/10/2007 Fee First
81 2001 86.3% 12/31/2006 Fee First
82 NAP 90.7% 02/12/2007 Fee First
83 NAP 98.1% 12/21/2006 Fee First
84 NAP 100.0% 04/01/2007 Fee/Leasehold First
85 NAP 100.0% 04/01/2007 Fee First
86 NAP 98.3% 09/01/2006 Fee First
87 NAP 98.1% 02/01/2007 Fee First
88 NAP 66.3% 12/31/2006 Fee First
89 NAP 97.4% 01/19/2007 Fee/Leasehold First
90 NAP 100.0% 04/01/2007 Fee First
91 NAP 100.0% 04/01/2007 Fee First
92 NAP 100.0% 04/01/2007 Fee First
93 NAP 100.0% 04/01/2007 Fee First
94 NAP 100.0% 04/01/2007 Fee First
95 2006 100.0% 08/31/2006 Fee First
96 NAP 83.5% 11/02/2006 Fee First
97 1986 61.2% 10/30/2006 Fee First
98 NAP 100.0% 03/01/2007 Fee First
99 2006 100.0% 04/01/2007 Fee First
100 NAP 83.3% 10/31/2006 Fee First
101 NAP 50.4% 11/13/2006 Fee First
102 NAP 90.3% 10/31/2006 Fee First
103 2005 100.0% 08/31/2006 Fee First
104 NAP 79.4% 09/30/2006 Fee First
105 NAP 100.0% 02/12/2007 Fee First
106 2001 100.0% 11/28/2006 Fee First
107 NAP 100.0% 09/27/2006 Fee First
108 2005, 2006 94.0% 03/05/2007 Fee First
109 NAP 100.0% 12/13/2006 Fee First
110 NAP 69.5% 11/30/2006 Fee First
111 NAP 100.0% 09/25/2006 Fee First
112 NAP 100.0% 10/18/2006 Fee First
113 NAP 100.0% 04/01/2007 Fee First
114 1983 100.0% 12/06/2006 Fee First
115 NAP 93.5% 12/31/2006 Fee First
116 NAP 97.4% 01/01/2007 Fee First
117 NAP 62.4% 08/31/2006 Fee First
118 NAP 100.0% 04/01/2007 Fee First
119 NAP 73.6% 01/11/2007 Fee First
120 2004 100.0% 10/05/2006 Leasehold First
121 1988 100.0% 09/27/2006 Fee First
122 NAP 94.8% 03/09/2007 Fee First
123 NAP 74.7% 12/31/2006 Fee First
124 NAP 100.0% 11/06/2006 Fee First
125 NAP 100.0% 02/23/2007 Fee First
126 NAP 95.9% 11/01/2006 Fee First
127 NAP 100.0% 02/02/2007 Fee First
128 NAP 100.0% 04/01/2007 Fee First
129 NAP 92.6% 11/16/2006 Fee First
130 NAP 100.0% 11/27/2006 Fee First
131 NAP 100.0% 01/01/2007 Fee First
132 1980s 100.0% 04/01/2007 Fee First
133 NAP 100.0% 10/26/2006 Fee First
134 2001 100.0% 02/16/2007 Fee First
135 NAP 100.0% 11/29/2006 Fee First
136 NAP 100.0% 10/17/2006 Fee First
137 NAP 100.0% 04/01/2007 Fee First
138 NAP 100.0% 04/01/2007 Fee First
139 2006 - 2007 66.2% 12/31/2006 Fee First
140 1994 91.9% 01/23/2007 Fee First
141 NAP 88.3% 02/13/2007 Fee First
142 1995 100.0% 10/04/2006 Fee First
143 NAP 100.0% 04/01/2007 Fee First
144 NAP 100.0% 12/01/2006 Fee First
145 NAP 100.0% 01/30/2007 Fee First
146 NAP 100.0% 01/11/2007 Fee First
147 NAP 100.0% 11/22/2006 Fee First
148 2002 100.0% 04/01/2006 Fee First
149 1992 90.8% 12/01/2006 Fee First
150 NAP 100.0% 02/12/2007 Fee First
151 NAP 100.0% 01/17/2007 Fee First
152 NAP 100.0% 10/18/2006 Fee First
153 NAP 100.0% 12/05/2006 Fee First
154 2003 100.0% 11/13/2006 Leasehold First
155 NAP 100.0% 04/01/2007 Fee First
156 NAP 100.0% 02/01/2007 Fee First
157 NAP 61.4% 08/31/2006 Fee First
158 NAP 100.0% 02/12/2007 Fee First
159 1997 100.0% 12/05/2006 Fee First
160 1998 100.0% 11/03/2006 Fee First
161 1997, 1998 100.0% 02/26/2007 Fee First
162 NAP 100.0% 01/01/2007 Fee First
163 1992 100.0% 09/01/2006 Fee First
164 NAP 100.0% 03/06/2007 Fee First
165 NAP 100.0% 04/01/2007 Fee First
166 2006 95.6% 02/14/2007 Fee First
167 NAP 100.0% 01/26/2007 Fee First
168 2003 100.0% 02/14/2007 Fee First
169 NAP 67.9% 11/24/2006 Fee First
170 NAP 100.0% 01/09/2007 Fee First
171 2006 100.0% 12/22/2006 Fee First
172 NAP 100.0% 09/06/2006 Fee First
173 NAP 100.0% 04/01/2007 Fee First
174 NAP 100.0% 01/19/2007 Fee First
175 NAP 100.0% 02/14/2007 Fee First
176 NAP 100.0% 11/01/2006 Fee First
177 NAP 66.6% 12/11/2006 Fee First
178 2001, 2006 100.0% 10/09/2006 Fee First
179 NAP 83.9% 12/15/2006 Fee First
180 2004 100.0% 11/11/2006 Fee First
181 NAP 100.0% 11/01/2006 Fee First
182 NAP 94.5% 12/31/2006 Fee First
183 1998 100.0% 04/01/2007 Fee First
184 NAP 100.0% 02/12/2007 Fee First
185 NAP 100.0% 04/01/2007 Fee First
186 NAP 100.0% 10/11/2006 Fee First
187 NAP 95.0% 12/01/2006 Fee First
188 NAP 100.0% 04/01/2007 Fee First
189 NAP 83.2% 01/31/2007 Fee First
190 2002 100.0% 02/15/2007 Fee First
191 2000 100.0% 04/01/2007 Fee First
192 NAP 100.0% 04/01/2007 Fee First
193 NAP 91.6% 09/30/2006 Fee First
194 2005 100.0% 12/06/2006 Fee First
195 NAP 89.1% 10/24/2006 Fee First
196 NAP 100.0% 04/01/2007 Fee First
197 NAP 100.0% 04/01/2007 Fee First
198 NAP 86.7% 12/14/2006 Fee First
199 NAP 100.0% 01/30/2007 Fee First
200 NAP 100.0% 02/23/2007 Fee First
201 NAP 80.0% 11/30/2006 Fee First
202 NAP 74.7% 12/01/2006 Fee First
203 NAP 100.0% 04/01/2007 Fee First
204 NAP 100.0% 04/01/2007 Fee First
205 NAP 100.0% 04/01/2007 Fee First
206 NAP 100.0% 10/20/2006 Fee First
207 NAP 95.0% 01/31/2007 Fee First
208 NAP 100.0% 01/24/2007 Fee First
209 1985 91.0% 11/30/2006 Fee First
210 NAP 95.5% 08/31/2006 Fee First
211 2000 100.0% 02/16/2007 Fee First
212 NAP 100.0% 04/01/2007 Fee First
213 NAP 86.9% 01/03/2007 Fee First
214 NAP 100.0% 02/05/2007 Fee First
215 NAP 100.0% 10/04/2006 Fee First
216 NAP 100.0% 12/28/2006 Fee First
217 NAP 100.0% 12/28/2006 Fee First
218 NAP 68.9% 12/15/2006 Fee First
219 NAP 100.0% 01/31/2007 Fee First
220 NAP 82.1% 01/29/2007 Fee First
221 NAP 100.0% 02/15/2007 Fee First
222 NAP 93.3% 02/28/2007 Fee First
223 NAP 100.0% 11/06/2006 Fee First
224 NAP 100.0% 04/01/2007 Fee First
225 NAP 100.0% 10/01/2006 Fee First
226 NAP 100.0% 09/26/2006 Fee First
227 NAP 100.0% 12/27/2006 Fee First
228 NAP 100.0% 04/01/2007 Fee First
229 NAP 100.0% 01/30/2007 Fee First
230 NAP 100.0% 12/31/2006 Fee First
231 1990 100.0% 01/17/2007 Fee First
232 1998 100.0% 04/01/2007 Fee First
233 NAP 92.0% 02/07/2007 Fee First
234 2003 100.0% 01/29/2007 Fee First
235 NAP 87.0% 01/05/2007 Fee/Leasehold First
236 2002 100.0% 12/07/2006 Fee First
237 NAP 100.0% 04/01/2007 Fee First
238 NAP 100.0% 04/01/2007 Fee First
239 NAP 100.0% 02/28/2007 Fee First
240 NAP 100.0% 07/05/2006 Fee First
241 NAP 100.0% 12/07/2006 Fee First
242 NAP 100.0% 01/19/2007 Fee First
243 NAP 100.0% 01/31/2007 Fee First
244 NAP 100.0% 12/04/2006 Fee First
245 NAP 86.7% 02/13/2007 Fee First
246 NAP 100.0% 02/26/2007 Fee First
247 NAP 100.0% 01/01/2006 Fee First
MORTGAGE RELATED ORIGINAL CUT-OFF DATE % OF TOTAL POOL
LOAN NO. BORROWER LIST BALANCE BALANCE(6) CUT-OFF DATE BALANCE
-------------------------------------------------------------------------------------------------------------------
1 NAP $150,000,000 $150,000,000 7.1%
2 2, 10, 22, 38 $112,695,000 $112,695,000 5.4%
3 3, 6 $89,000,000 $89,000,000 4.2%
4 NAP $70,000,000 $69,933,748 3.3%
5 5, 19, 39, 90-93, 118, 128, 148, 185, 197, 203, 205 $68,250,000 $68,250,000 3.2%
6 3, 6 $65,000,000 $65,000,000 3.1%
7 NAP $48,000,000 $48,000,000 2.3%
8 8, 30 $45,000,000 $45,000,000 2.1%
9 NAP $31,500,000 $31,500,000 1.5%
10 2, 10, 22, 38 $30,275,000 $30,275,000 1.4%
11 NAP $30,000,000 $30,000,000 1.4%
12 NAP $28,500,000 $28,500,000 1.4%
13 NAP $28,000,000 $27,980,140 1.3%
14 14, 15 $22,550,000 $21,305,023 1.0%
15 14, 15 $7,000,000 $6,613,533 0.3%
16 NAP $26,000,000 $26,000,000 1.2%
17 NAP $25,000,000 $25,000,000 1.2%
18 NAP $24,000,000 $24,000,000 1.1%
19 5, 19, 39, 90-93, 118, 128, 148, 185, 197, 203, 205 $23,400,000 $23,400,000 1.1%
20 NAP $23,000,000 $23,000,000 1.1%
21 NAP $23,000,000 $23,000,000 1.1%
22 2, 10, 22, 38 $22,035,000 $22,035,000 1.0%
23 23, 36, 49, 107, 121 $21,000,000 $21,000,000 1.0%
24 NAP $19,000,000 $19,000,000 0.9%
25 NAP $18,300,000 $18,300,000 0.9%
26 26, 27 $12,000,000 $11,921,878 0.6%
27 26, 27 $6,400,000 $6,358,335 0.3%
28 NAP $17,850,000 $17,850,000 0.8%
29 NAP $17,574,000 $17,574,000 0.8%
30 8, 30 $17,000,000 $17,000,000 0.8%
31 NAP $16,500,000 $16,500,000 0.8%
32 NAP $15,500,000 $15,500,000 0.7%
33 NAP $15,500,000 $15,500,000 0.7%
34 NAP $15,150,000 $15,150,000 0.7%
35 NAP $15,000,000 $14,967,632 0.7%
36 23, 36, 49, 107, 121 $14,750,000 $14,750,000 0.7%
37 NAP $14,500,000 $14,500,000 0.7%
38 2, 10, 22, 38 $13,755,000 $13,755,000 0.7%
39 5, 19, 39, 90-93, 118, 128, 148, 185, 197, 203, 205 $12,880,000 $12,880,000 0.6%
40 NAP $12,500,000 $12,500,000 0.6%
41 NAP $12,500,000 $12,500,000 0.6%
42 NAP $12,500,000 $12,489,131 0.6%
43 43, 50 $12,000,000 $12,000,000 0.6%
44 NAP $12,000,000 $12,000,000 0.6%
45 NAP $12,000,000 $12,000,000 0.6%
46 NAP $11,100,000 $11,100,000 0.5%
47 NAP $11,100,000 $11,100,000 0.5%
48 48, 58, 66, 94, 99, 137-138 $11,100,000 $11,074,354 0.5%
49 23, 36, 49, 107, 121 $10,850,000 $10,850,000 0.5%
50 43, 50 $10,500,000 $10,500,000 0.5%
51 NAP $10,000,000 $10,000,000 0.5%
52 NAP $4,000,000 $4,000,000 0.2%
53 NAP $1,750,000 $1,750,000 0.1%
54 NAP $1,750,000 $1,750,000 0.1%
55 NAP $1,500,000 $1,500,000 0.1%
56 NAP $1,000,000 $1,000,000 0.0%
57 NAP $10,000,000 $10,000,000 0.5%
58 48, 58, 66, 94, 99, 137-138 $9,700,000 $9,677,588 0.5%
59 NAP $9,600,000 $9,600,000 0.5%
60 NAP $9,500,000 $9,500,000 0.5%
61 NAP $9,500,000 $9,462,583 0.4%
62 62, 70, 84 $9,350,000 $9,350,000 0.4%
63 NAP $9,350,000 $9,350,000 0.4%
64 NAP $9,000,000 $9,000,000 0.4%
65 NAP $9,000,000 $9,000,000 0.4%
66 48, 58, 66, 94, 99, 137-138 $9,000,000 $8,938,055 0.4%
67 NAP $8,600,000 $8,600,000 0.4%
68 NAP $8,600,000 $8,579,132 0.4%
69 NAP $8,500,000 $8,492,348 0.4%
70 62, 70, 84 $8,350,000 $8,350,000 0.4%
71 NAP $8,250,000 $8,250,000 0.4%
72 NAP $8,150,000 $8,122,351 0.4%
73 73-74, 234 $4,034,188 $4,034,188 0.2%
74 73-74, 234 $3,965,812 $3,965,812 0.2%
75 NAP $8,000,000 $8,000,000 0.4%
76 NAP $7,800,000 $7,793,415 0.4%
77 NAP $7,500,000 $7,469,358 0.4%
78 78, 79 $4,120,000 $4,110,558 0.2%
79 78, 79 $3,265,000 $3,257,566 0.2%
80 NAP $7,360,000 $7,360,000 0.3%
81 NAP $7,322,828 $7,322,828 0.3%
82 NAP $7,200,000 $7,200,000 0.3%
83 NAP $7,000,000 $7,000,000 0.3%
84 62, 70, 84 $7,000,000 $7,000,000 0.3%
85 85, 113 $7,000,000 $7,000,000 0.3%
86 NAP $7,000,000 $6,993,825 0.3%
87 87, 207 $7,000,000 $6,993,193 0.3%
88 NAP $6,700,000 $6,700,000 0.3%
89 NAP $6,500,000 $6,500,000 0.3%
90 5, 19, 39, 90-93, 118, 128, 148, 185, 197, 203, 205 $1,750,000 $1,750,000 0.1%
91 5, 19, 39, 90-93, 118, 128, 148, 185, 197, 203, 205 $1,725,000 $1,725,000 0.1%
92 5, 19, 39, 90-93, 118, 128, 148, 185, 197, 203, 205 $1,405,000 $1,405,000 0.1%
93 5, 19, 39, 90-93, 118, 128, 148, 185, 197, 203, 205 $1,325,000 $1,325,000 0.1%
94 48, 58, 66, 94, 99, 137-138 $6,200,000 $6,185,675 0.3%
95 NAP $6,150,000 $6,150,000 0.3%
96 NAP $6,100,000 $6,100,000 0.3%
97 NAP $6,100,000 $6,086,710 0.3%
98 NAP $6,000,000 $6,000,000 0.3%
99 48, 58, 66, 94, 99, 137-138 $6,000,000 $6,000,000 0.3%
100 NAP $6,000,000 $5,983,694 0.3%
101 NAP $6,000,000 $5,972,716 0.3%
102 NAP $5,900,000 $5,882,758 0.3%
103 NAP $5,780,000 $5,780,000 0.3%
104 NAP $5,500,000 $5,500,000 0.3%
105 NAP $5,500,000 $5,500,000 0.3%
106 NAP $5,500,000 $5,475,216 0.3%
107 23, 36, 49, 107, 121 $5,400,000 $5,400,000 0.3%
108 NAP $5,400,000 $5,400,000 0.3%
109 NAP $5,400,000 $5,400,000 0.3%
110 NAP $5,200,000 $5,200,000 0.2%
111 NAP $5,075,000 $5,075,000 0.2%
112 NAP $5,000,000 $5,000,000 0.2%
113 85, 113 $5,000,000 $5,000,000 0.2%
114 NAP $5,000,000 $5,000,000 0.2%
115 NAP $5,000,000 $4,995,465 0.2%
116 116, 162 $5,000,000 $4,988,485 0.2%
117 NAP $5,000,000 $4,977,657 0.2%
118 5, 19, 39, 90-93, 118, 128, 148, 185, 197, 203, 205 $4,800,000 $4,800,000 0.2%
119 NAP $4,650,000 $4,650,000 0.2%
120 NAP $4,500,000 $4,500,000 0.2%
121 23, 36, 49, 107, 121 $4,500,000 $4,500,000 0.2%
122 122, 135 $4,500,000 $4,495,671 0.2%
123 NAP $4,500,000 $4,490,490 0.2%
124 NAP $4,500,000 $4,486,103 0.2%
125 NAP $4,400,000 $4,396,266 0.2%
126 NAP $4,400,000 $4,386,230 0.2%
127 NAP $4,200,000 $4,200,000 0.2%
128 5, 19, 39, 90-93, 118, 128, 148, 185, 197, 203, 205 $4,140,000 $4,140,000 0.2%
129 NAP $4,100,000 $4,100,000 0.2%
130 NAP $4,050,000 $4,050,000 0.2%
131 NAP $4,050,000 $4,050,000 0.2%
132 NAP $4,000,000 $4,000,000 0.2%
133 NAP $4,000,000 $4,000,000 0.2%
134 NAP $4,000,000 $3,996,426 0.2%
135 122, 135 $4,000,000 $3,996,241 0.2%
136 NAP $4,000,000 $3,981,137 0.2%
137 48, 58, 66, 94, 99, 137-138 $2,887,369 $2,881,349 0.1%
138 48, 58, 66, 94, 99, 137-138 $1,050,131 $1,047,942 0.0%
139 NAP $3,750,000 $3,745,115 0.2%
140 NAP $3,750,000 $3,741,790 0.2%
141 NAP $3,700,000 $3,700,000 0.2%
142 142, 215 $3,500,000 $3,500,000 0.2%
143 NAP $3,500,000 $3,492,559 0.2%
144 144, 183 $3,500,000 $3,492,274 0.2%
145 NAP $3,500,000 $3,492,031 0.2%
146 NAP $3,400,000 $3,392,471 0.2%
147 NAP $3,300,000 $3,292,716 0.2%
148 5, 19, 39, 90-93, 118, 128, 148, 185, 197, 203, 205 $3,290,000 $3,290,000 0.2%
149 NAP $3,280,000 $3,280,000 0.2%
150 150, 167 $3,200,000 $3,200,000 0.2%
151 NAP $3,200,000 $3,192,521 0.2%
152 NAP $3,200,000 $3,187,550 0.2%
153 NAP $3,200,000 $3,185,226 0.2%
154 NAP $3,100,000 $3,100,000 0.1%
155 NAP $3,100,000 $3,100,000 0.1%
156 NAP $3,100,000 $3,094,331 0.1%
157 NAP $3,100,000 $3,091,034 0.1%
158 NAP $3,017,000 $3,017,000 0.1%
159 NAP $3,020,000 $3,010,638 0.1%
160 NAP $3,000,000 $3,000,000 0.1%
161 NAP $3,000,000 $2,996,035 0.1%
162 116, 162 $3,000,000 $2,993,432 0.1%
163 NAP $3,000,000 $2,986,490 0.1%
164 NAP $3,000,000 $2,979,865 0.1%
165 NAP $2,950,000 $2,933,505 0.1%
166 NAP $2,900,000 $2,897,468 0.1%
167 150, 167 $2,800,000 $2,800,000 0.1%
168 NAP $2,750,000 $2,747,874 0.1%
169 NAP $2,775,000 $2,736,375 0.1%
170 NAP $2,700,000 $2,693,823 0.1%
171 NAP $2,500,000 $2,500,000 0.1%
172 NAP $2,500,000 $2,490,333 0.1%
173 NAP $2,480,000 $2,473,303 0.1%
174 NAP $2,425,000 $2,419,751 0.1%
175 NAP $2,400,000 $2,398,021 0.1%
176 NAP $2,340,000 $2,333,253 0.1%
177 NAP $2,300,000 $2,295,005 0.1%
178 NAP $2,272,000 $2,272,000 0.1%
179 NAP $2,250,000 $2,243,182 0.1%
180 NAP $2,250,000 $2,242,998 0.1%
181 NAP $2,200,000 $2,200,000 0.1%
182 NAP $2,200,000 $2,200,000 0.1%
183 144, 183 $2,200,000 $2,198,114 0.1%
184 NAP $2,190,000 $2,187,150 0.1%
185 5, 19, 39, 90-93, 118, 128, 148, 185, 197, 203, 205 $2,185,000 $2,185,000 0.1%
186 NAP $2,160,000 $2,153,480 0.1%
187 NAP $2,150,000 $2,142,984 0.1%
188 NAP $2,150,000 $2,135,937 0.1%
189 NAP $2,100,000 $2,100,000 0.1%
190 NAP $2,100,000 $2,098,218 0.1%
191 NAP $2,100,000 $2,093,637 0.1%
192 NAP $2,100,000 $2,091,593 0.1%
193 NAP $2,000,000 $1,998,342 0.1%
194 NAP $2,000,000 $1,991,335 0.1%
195 NAP $2,000,000 $1,986,814 0.1%
196 NAP $1,980,000 $1,975,608 0.1%
197 5, 19, 39, 90-93, 118, 128, 148, 185, 197, 203, 205 $1,930,000 $1,930,000 0.1%
198 198, 235 $1,915,000 $1,915,000 0.1%
199 NAP $1,900,000 $1,900,000 0.1%
200 NAP $1,900,000 $1,897,474 0.1%
201 NAP $1,900,000 $1,895,813 0.1%
202 NAP $1,850,000 $1,850,000 0.1%
203 5, 19, 39, 90-93, 118, 128, 148, 185, 197, 203, 205 $1,850,000 $1,850,000 0.1%
204 NAP $1,800,000 $1,791,647 0.1%
205 5, 19, 39, 90-93, 118, 128, 148, 185, 197, 203, 205 $1,790,000 $1,790,000 0.1%
206 NAP $1,750,000 $1,748,076 0.1%
207 87, 207 $1,750,000 $1,743,954 0.1%
208 NAP $1,750,000 $1,742,017 0.1%
209 NAP $1,700,000 $1,694,652 0.1%
210 NAP $1,650,000 $1,640,470 0.1%
211 NAP $1,600,000 $1,600,000 0.1%
212 NAP $1,600,000 $1,598,107 0.1%
213 NAP $1,600,000 $1,596,416 0.1%
214 NAP $1,600,000 $1,592,565 0.1%
215 142, 215 $1,550,000 $1,550,000 0.1%
216 NAP $813,941 $812,295 0.0%
217 NAP $701,059 $699,642 0.0%
218 NAP $1,500,000 $1,496,785 0.1%
219 NAP $1,466,000 $1,462,801 0.1%
220 NAP $1,440,000 $1,438,828 0.1%
221 NAP $1,425,000 $1,423,803 0.1%
222 NAP $1,350,000 $1,350,000 0.1%
223 NAP $1,330,000 $1,330,000 0.1%
224 NAP $1,250,000 $1,250,000 0.1%
225 NAP $1,250,000 $1,250,000 0.1%
226 NAP $1,250,000 $1,245,314 0.1%
227 NAP $1,235,000 $1,232,475 0.1%
228 NAP $1,215,000 $1,215,000 0.1%
229 NAP $1,200,000 $1,200,000 0.1%
230 NAP $1,185,000 $1,184,099 0.1%
231 NAP $1,150,000 $1,150,000 0.1%
232 NAP $1,100,000 $1,097,688 0.1%
233 NAP $1,080,000 $1,079,140 0.1%
234 73-74, 234 $1,075,000 $1,075,000 0.1%
235 198, 235 $1,053,000 $1,053,000 0.0%
236 NAP $1,050,000 $1,049,201 0.0%
237 NAP $1,030,050 $1,029,210 0.0%
238 NAP $1,017,000 $1,014,900 0.0%
239 NAP $1,000,000 $999,143 0.0%
240 NAP $1,000,000 $997,305 0.0%
241 NAP $1,000,000 $997,027 0.0%
242 NAP $1,000,000 $995,658 0.0%
243 NAP $960,000 $960,000 0.0%
244 NAP $950,000 $947,121 0.0%
245 NAP $945,000 $944,231 0.0%
246 NAP $895,000 $894,281 0.0%
247 NAP $550,000 $548,850 0.0%
$2,108,834,378 $2,106,003,972 100.0%
MORTGAGE % OF APPLICABLE LOAN GROUP CUT-OFF DATE BALANCE FIRST PAYMENT FIRST PAYMENT
LOAN NO. CUT-OFF DATE BALANCE PER UNIT OR SF NOTE DATE DATE (P&I) DATE (IO) MATURITY DATE
-------------------------------------------------------------------------------------------------------------------
1 7.7% $192 01/26/2007 NAP 03/01/2007 02/01/2022
2 5.8% $92 12/21/2006 NAP 02/01/2007 01/01/2017
3 4.6% $71 01/10/2007 NAP 03/08/2007 02/08/2012
4 3.6% $129 02/23/2007 04/01/2007 NAP 03/01/2017
5 3.5% $47 01/18/2007 NAP 03/01/2007 02/01/2017
6 3.3% $136 11/10/2006 NAP 01/01/2007 12/01/2016
7 2.5% $228 01/05/2007 NAP 03/01/2007 02/01/2017
8 2.3% $227,273 12/18/2006 NAP 02/01/2007 01/01/2017
9 1.6% $124 02/09/2007 NAP 04/01/2007 03/01/2017
10 1.5% $199 02/12/2007 NAP 04/01/2007 03/01/2017
11 1.5% $200 12/01/2006 NAP 01/01/2007 12/01/2016
12 1.5% $87 02/13/2007 NAP 04/01/2007 03/01/2017
13 1.4% $225 02/07/2007 04/01/2007 NAP 03/01/2017
14 1.1% $99 09/23/2003 11/01/2003 NAP 10/01/2013
15 0.3% $99 09/23/2003 11/01/2003 NAP 10/01/2013
16 1.3% $51 12/21/2006 NAP 02/01/2007 01/01/2014
17 1.3% $176 02/21/2007 04/01/2010 04/01/2007 03/01/2017
18 16.0% $133,333 01/12/2007 03/01/2010 03/01/2007 02/01/2012
19 1.2% $255 02/06/2007 NAP 04/01/2007 03/01/2017
20 15.3% $87,121 11/30/2006 NAP 01/01/2007 12/01/2016
21 1.2% $111,111 02/16/2007 04/01/2009 04/01/2007 03/01/2017
22 1.1% $158 12/01/2006 NAP 01/01/2007 12/01/2016
23 1.1% $4,378 10/31/2006 NAP 12/01/2006 05/01/2017
24 1.0% $245 03/02/2007 NAP 05/01/2007 04/01/2017
25 0.9% $75 01/23/2007 NAP 03/01/2007 02/01/2012
26 0.6% $36 12/18/2006 02/01/2007 NAP 01/01/2012
27 0.3% $36 12/18/2006 02/01/2007 NAP 01/01/2012
28 0.9% $126 02/13/2007 04/01/2010 04/01/2007 03/01/2017
29 11.7% $62,764 01/25/2007 03/01/2012 03/01/2007 02/01/2017
30 0.9% $114 02/14/2007 04/01/2012 04/01/2007 03/01/2018
31 0.8% $134 01/23/2007 03/01/2010 03/01/2007 02/01/2017
32 0.8% $135 01/26/2007 NAP 03/01/2007 02/01/2017
33 0.8% $113 03/08/2007 05/01/2007 NAP 04/01/2017
34 0.8% $26 12/21/2006 02/01/2011 02/01/2007 01/01/2017
35 0.8% $57,568 02/01/2007 03/01/2007 NAP 02/01/2017
36 0.8% $113,462 10/31/2006 NAP 12/01/2006 05/01/2017
37 0.7% $144 08/09/2006 09/03/2009 10/03/2006 09/03/2018
38 0.7% $87 02/09/2007 NAP 04/01/2007 10/01/2014
39 0.7% $83 11/15/2006 NAP 01/01/2007 12/01/2016
40 8.3% $94,697 02/20/2007 NAP 04/01/2007 03/01/2017
41 0.6% $290 01/19/2007 03/01/2012 03/01/2007 02/01/2017
42 0.6% $57,820 03/01/2007 04/01/2007 NAP 03/01/2017
43 0.6% $68 11/21/2006 NAP 01/08/2007 12/08/2011
44 0.6% $76 02/12/2007 04/01/2009 04/01/2007 03/01/2012
45 0.6% $7,500 12/14/2006 NAP 02/01/2007 01/01/2017
46 0.6% $136 03/27/2006 05/01/2008 05/01/2006 04/01/2016
47 0.6% $74 12/05/2006 NAP 02/01/2007 01/01/2018
48 0.6% $151 01/09/2007 03/01/2007 NAP 02/01/2017
49 0.6% $684 10/31/2006 NAP 12/01/2006 05/01/2017
50 0.5% $59 11/21/2006 NAP 01/08/2007 12/08/2011
51 0.5% $59 12/28/2006 NAP 02/01/2007 01/01/2017
52 0.2% $365 01/10/2007 NAP 03/01/2007 02/01/2017
53 0.1% $365 01/10/2007 NAP 03/01/2007 02/01/2017
54 0.1% $365 01/10/2007 NAP 03/01/2007 02/01/2017
55 0.1% $365 01/10/2007 NAP 03/01/2007 02/01/2017
56 0.1% $365 01/10/2007 NAP 03/01/2007 02/01/2017
57 0.5% $51 12/20/2006 02/01/2010 02/01/2007 01/01/2017
58 0.5% $133 01/12/2007 03/01/2007 NAP 02/01/2017
59 0.5% $73 12/28/2006 02/01/2014 02/01/2007 01/01/2017
60 0.5% $92 02/06/2007 04/01/2010 04/01/2007 03/01/2017
61 0.5% $47 11/29/2006 01/01/2007 NAP 12/01/2016
62 0.5% $140 12/13/2006 NAP 02/01/2007 01/01/2017
63 0.5% $61 12/21/2006 02/01/2009 02/01/2007 01/01/2012
64 0.5% $66 02/09/2007 04/01/2011 04/01/2007 03/01/2017
65 0.5% $93,750 01/25/2007 03/01/2009 03/01/2007 02/01/2017
66 0.5% $42 10/26/2006 12/01/2006 NAP 05/01/2020
67 0.4% $100,000 03/05/2007 05/01/2007 NAP 04/01/2017
68 5.7% $45,634 01/30/2007 03/01/2007 NAP 02/01/2017
69 0.4% $83 02/21/2007 04/01/2007 NAP 03/01/2017
70 0.4% $81 11/22/2006 NAP 01/01/2007 12/01/2016
71 0.4% $100,610 02/01/2007 03/01/2009 03/01/2007 02/01/2017
72 5.4% $50,765 12/12/2006 02/01/2007 NAP 01/01/2017
73 0.2% $496 02/16/2007 04/01/2009 04/01/2007 03/01/2017
74 0.2% $496 02/16/2007 04/01/2009 04/01/2007 03/01/2017
75 0.4% $223 01/31/2007 03/01/2012 03/01/2007 02/01/2017
76 0.4% $39 02/20/2007 04/01/2007 NAP 03/01/2017
77 0.4% $311 11/08/2006 01/01/2007 NAP 12/01/2016
78 0.2% $85 01/12/2007 03/01/2007 NAP 02/01/2017
79 0.2% $85 01/12/2007 03/01/2007 NAP 02/01/2017
80 0.4% $114 02/09/2007 04/01/2010 04/01/2007 03/01/2017
81 0.4% $54 02/16/2007 04/01/2008 04/01/2007 03/01/2017
82 4.8% $67,290 02/14/2007 NAP 04/01/2007 03/01/2017
83 4.7% $44,025 12/27/2006 02/01/2012 02/01/2007 01/01/2017
84 0.4% $115 03/06/2007 05/01/2010 05/01/2007 04/01/2017
85 0.4% $483 01/04/2007 NAP 03/01/2007 02/01/2017
86 0.4% $83 02/08/2007 04/01/2007 NAP 03/01/2017
87 4.7% $43,707 02/01/2007 04/01/2007 NAP 03/01/2017
88 0.3% $83,750 03/01/2007 04/01/2010 04/01/2007 03/01/2017
89 0.3% $45 02/23/2007 NAP 04/01/2007 03/01/2017
90 0.1% $63 12/01/2006 NAP 01/01/2007 12/01/2016
91 0.1% $63 12/01/2006 NAP 01/01/2007 12/01/2016
92 0.1% $63 12/01/2006 NAP 01/01/2007 12/01/2016
93 0.1% $63 12/01/2006 NAP 01/01/2007 12/01/2016
94 0.3% $117 01/11/2007 03/01/2007 NAP 02/01/2017
95 0.3% $175 12/11/2006 NAP 02/01/2007 01/01/2017
96 0.3% $60 12/01/2006 02/01/2010 02/01/2007 01/01/2017
97 0.3% $34,388 01/31/2007 03/01/2007 NAP 02/01/2017
98 0.3% $222 03/15/2007 05/01/2007 NAP 04/01/2017
99 0.3% $77 12/22/2006 02/01/2010 02/01/2007 01/01/2017
100 0.3% $81 02/01/2007 03/01/2007 NAP 02/01/2017
101 0.3% $82 12/19/2006 02/01/2007 NAP 01/01/2012
102 0.3% $137 12/14/2006 02/01/2007 NAP 01/01/2017
103 0.3% $189 11/15/2006 07/01/2008 01/01/2007 12/01/2016
104 0.3% $52,381 12/15/2006 NAP 02/01/2007 01/01/2017
105 3.7% $130,952 02/12/2007 04/01/2013 04/01/2007 03/01/2017
106 0.3% $100 12/21/2006 02/01/2007 NAP 01/01/2017
107 0.3% $180,000 10/31/2006 NAP 12/01/2006 05/01/2017
108 0.3% $277 03/05/2007 05/01/2007 NAP 04/01/2017
109 0.3% $112 12/15/2006 02/01/2012 02/01/2007 01/01/2017
110 0.3% $64,198 02/15/2007 04/01/2010 04/01/2007 03/01/2017
111 3.4% $50,750 12/06/2006 NAP 02/01/2007 01/01/2017
112 0.3% $68 12/08/2006 02/01/2009 02/01/2007 01/01/2017
113 0.3% $337 12/15/2006 NAP 02/01/2007 01/01/2017
114 0.3% $325 12/29/2006 NAP 02/01/2007 01/01/2017
115 0.3% $87 02/05/2007 04/01/2007 NAP 03/01/2017
116 0.3% $52 12/21/2006 03/01/2007 NAP 02/01/2017
117 0.3% $58,561 12/14/2006 02/01/2007 NAP 01/01/2017
118 0.2% $39 01/04/2007 NAP 03/01/2007 02/01/2017
119 0.2% $54 01/24/2007 03/01/2010 03/01/2007 02/01/2017
120 0.2% $149 01/02/2007 NAP 03/01/2007 02/01/2012
121 0.2% $102,273 10/31/2006 NAP 12/01/2006 05/01/2017
122 0.2% $72 03/01/2007 04/01/2007 NAP 03/01/2017
123 0.2% $36,508 02/07/2007 04/01/2007 NAP 03/01/2017
124 0.2% $104 12/14/2006 02/01/2007 NAP 01/01/2017
125 0.2% $47 02/23/2007 04/01/2007 NAP 03/01/2012
126 0.2% $159 12/20/2006 02/01/2007 NAP 01/01/2017
127 0.2% $96 02/02/2007 NAP 04/01/2007 03/01/2017
128 0.2% $200 01/05/2007 NAP 03/01/2007 02/01/2017
129 0.2% $270 12/21/2006 02/01/2009 02/01/2007 01/01/2017
130 0.2% $268 01/05/2007 NAP 03/01/2007 02/01/2012
131 0.2% $123 02/12/2007 04/01/2009 04/01/2007 03/01/2017
132 0.2% $284 01/24/2007 NAP 03/01/2007 02/01/2012
133 0.2% $211 12/22/2006 NAP 02/01/2007 01/01/2017
134 0.2% $83 02/21/2007 04/01/2007 NAP 03/01/2017
135 0.2% $65 03/01/2007 04/01/2007 NAP 03/01/2017
136 0.2% $81 01/08/2007 03/01/2007 NAP 02/01/2017
137 0.1% $25 02/01/2007 03/01/2007 NAP 02/01/2022
138 0.1% $25 02/01/2007 03/01/2007 NAP 02/01/2022
139 0.2% $53,502 02/27/2007 04/01/2007 NAP 03/01/2017
140 0.2% $97 01/22/2007 03/01/2007 NAP 02/01/2017
141 0.2% $190 12/26/2006 NAP 02/01/2007 01/01/2017
142 0.2% $200 12/18/2006 02/01/2009 02/01/2007 01/01/2017
143 0.2% $81 01/25/2007 03/01/2007 NAP 02/01/2017
144 0.2% $175 01/31/2007 03/01/2007 NAP 02/01/2017
145 0.2% $125 01/30/2007 03/01/2007 NAP 02/01/2017
146 0.2% $200 01/17/2007 03/01/2007 NAP 02/01/2017
147 0.2% $406 01/18/2007 03/01/2007 NAP 02/01/2017
148 0.2% $50 02/06/2007 NAP 04/01/2007 03/01/2017
149 2.2% $15,845 01/24/2007 03/01/2010 03/01/2007 02/01/2017
150 0.2% $43 02/12/2007 04/01/2009 04/01/2007 03/01/2017
151 0.2% $84 01/24/2007 03/01/2007 NAP 02/01/2017
152 2.1% $18,861 12/01/2006 01/01/2007 NAP 12/01/2016
153 0.2% $51 12/05/2006 02/01/2007 NAP 01/01/2017
154 0.2% $74 11/13/2006 NAP 01/01/2007 12/01/2011
155 0.2% $277 01/09/2007 03/01/2010 03/01/2007 02/01/2017
156 0.2% $205 02/01/2007 04/01/2007 NAP 03/01/2027
157 0.2% $27,114 01/16/2007 03/01/2007 NAP 02/01/2017
158 0.2% $320 02/16/2007 04/01/2012 04/01/2007 03/01/2017
159 0.2% $75 12/08/2006 02/01/2007 NAP 01/01/2012
160 0.2% $181 01/16/2007 03/01/2012 03/01/2007 02/01/2017
161 0.2% $124 03/01/2007 04/01/2007 NAP 03/01/2017
162 0.2% $62 01/22/2007 03/01/2007 NAP 02/01/2017
163 0.2% $90 12/29/2006 03/01/2007 NAP 02/01/2017
164 0.2% $142 12/21/2006 02/01/2007 NAP 01/01/2017
165 0.1% $196 11/20/2006 01/01/2007 NAP 12/01/2016
166 1.9% $42,610 02/15/2007 04/01/2007 NAP 03/01/2017
167 0.1% $69 01/26/2007 03/01/2012 03/01/2007 02/01/2017
168 0.1% $71 02/14/2007 04/01/2007 NAP 03/01/2017
169 0.1% $33 01/25/2006 03/01/2006 NAP 02/01/2016
170 0.1% $84 01/10/2007 03/01/2007 NAP 02/01/2017
171 0.1% $104 12/22/2006 NAP 03/01/2007 02/01/2017
172 0.1% $21 11/10/2006 01/01/2007 NAP 12/01/2016
173 0.1% $94 12/27/2006 02/01/2007 NAP 01/01/2012
174 0.1% $173 01/19/2007 03/01/2007 NAP 02/01/2017
175 0.1% $381 02/14/2007 04/01/2007 NAP 03/01/2017
176 0.1% $72 12/08/2006 02/01/2007 NAP 01/01/2012
177 0.1% $180 01/05/2007 03/01/2007 NAP 02/01/2017
178 1.5% $56,800 11/06/2006 01/08/2011 01/08/2007 12/08/2016
179 0.1% $198 12/18/2006 02/01/2007 NAP 01/01/2017
180 1.5% $97,522 12/21/2006 02/01/2007 NAP 01/01/2017
181 0.1% $76 12/11/2006 02/01/2010 02/01/2007 01/01/2017
182 0.1% $40 02/01/2007 04/01/2009 04/01/2007 03/01/2017
183 0.1% $170 02/05/2007 04/01/2007 NAP 03/01/2017
184 0.1% $212 02/12/2007 04/01/2007 NAP 03/01/2017
185 0.1% $93 11/15/2006 NAP 01/01/2007 12/01/2016
186 0.1% $198 12/28/2006 02/01/2007 NAP 01/01/2017
187 0.1% $80 01/31/2007 03/01/2007 NAP 02/01/2017
188 0.1% $71 12/04/2006 02/01/2007 NAP 01/01/2017
189 0.1% $210 12/21/2006 02/01/2012 02/01/2007 01/01/2022
190 0.1% $141 02/15/2007 04/01/2007 NAP 03/01/2017
191 0.1% $105 12/13/2006 02/01/2007 NAP 01/01/2017
192 0.1% $78 11/16/2006 01/08/2007 NAP 12/08/2016
193 0.1% $25 02/09/2007 04/01/2007 NAP 03/01/2017
194 0.1% $149 01/05/2007 03/01/2007 NAP 02/01/2017
195 0.1% $132 10/25/2006 12/01/2006 NAP 11/01/2016
196 0.1% $45 01/25/2007 03/01/2007 NAP 02/01/2017
197 0.1% $81 11/09/2006 NAP 01/01/2007 12/01/2011
198 1.3% $21,278 03/02/2007 05/01/2007 NAP 04/01/2017
199 0.1% $186 02/06/2007 04/01/2010 04/01/2007 03/01/2017
200 0.1% $106 02/23/2007 04/01/2007 NAP 03/01/2017
201 0.1% $55 01/08/2007 03/01/2007 NAP 02/01/2017
202 0.1% $78 01/31/2007 03/01/2010 03/01/2007 02/01/2017
203 0.1% $93 02/27/2007 NAP 04/01/2007 03/01/2017
204 0.1% $34 01/01/2007 03/01/2007 NAP 02/01/2017
205 0.1% $267 12/28/2006 NAP 02/01/2007 01/01/2017
206 0.1% $74 02/07/2007 04/01/2007 NAP 03/01/2017
207 1.2% $21,799 01/31/2007 04/01/2007 NAP 03/01/2022
208 0.1% $119 01/12/2007 03/01/2007 NAP 02/01/2017
209 0.1% $39 01/16/2007 03/01/2007 NAP 02/01/2014
210 1.1% $74,567 11/22/2006 01/01/2007 NAP 12/01/2016
211 0.1% $33 02/16/2007 04/01/2012 04/01/2007 03/01/2017
212 0.1% $118 01/29/2007 04/01/2007 NAP 03/01/2017
213 0.1% $84 01/05/2007 03/01/2007 NAP 02/01/2017
214 0.1% $328 02/05/2007 04/01/2007 NAP 03/01/2019
215 0.1% $171 12/18/2006 02/01/2009 02/01/2007 01/01/2017
216 0.0% $176 01/19/2007 03/01/2007 NAP 02/01/2017
217 0.0% $176 01/19/2007 03/01/2007 NAP 02/01/2017
218 0.1% $44 12/29/2006 03/01/2007 NAP 02/01/2012
219 0.1% $215 01/31/2007 03/01/2007 NAP 02/01/2017
220 1.0% $12,847 02/08/2007 04/01/2007 NAP 03/01/2017
221 0.1% $48 02/15/2007 04/01/2007 NAP 03/01/2017
222 0.1% $30 02/22/2007 05/01/2007 NAP 04/01/2017
223 0.1% $37 01/19/2007 03/01/2009 03/01/2007 02/01/2017
224 0.1% $292 12/28/2006 NAP 02/01/2007 01/01/2017
225 0.1% $147 11/28/2006 01/01/2008 01/01/2007 12/01/2016
226 0.1% $125 11/10/2006 01/01/2007 NAP 12/01/2016
227 0.1% $137 01/05/2007 03/01/2007 NAP 02/01/2017
228 0.1% $174 02/08/2007 NAP 04/01/2007 03/01/2017
229 0.1% $298 01/30/2007 03/01/2009 03/01/2007 02/01/2017
230 0.1% $29 02/02/2007 04/01/2007 NAP 03/01/2017
231 0.1% $102 02/22/2007 04/01/2009 04/01/2007 03/01/2017
232 0.1% $30 01/10/2007 03/01/2007 NAP 02/01/2017
233 0.1% $56 02/07/2007 04/01/2007 NAP 03/01/2017
234 0.1% $357 02/02/2007 04/01/2009 04/01/2007 03/01/2017
235 0.7% $15,261 03/02/2007 05/01/2007 NAP 04/01/2017
236 0.7% $65,575 02/06/2007 04/01/2007 NAP 03/01/2017
237 0.1% $147 02/13/2007 04/01/2007 NAP 03/01/2017
238 0.1% $145 01/31/2007 03/01/2007 NAP 02/01/2017
239 0.1% $167 02/28/2007 04/01/2007 NAP 03/01/2017
240 0.1% $109 12/01/2006 02/01/2007 NAP 01/01/2017
241 0.1% $142 12/07/2006 02/01/2007 NAP 01/01/2017
242 0.1% $119 01/19/2007 03/01/2007 NAP 02/01/2027
243 0.0% $228 01/31/2007 03/01/2009 03/01/2007 02/01/2017
244 0.0% $137 12/04/2006 02/01/2007 NAP 01/01/2017
245 0.6% $31,474 02/21/2007 04/01/2007 NAP 03/01/2017
246 0.6% $149,047 02/28/2007 04/01/2007 NAP 03/01/2017
247 0.0% $137 01/02/2007 03/01/2007 NAP 02/01/2017
MORTGAGE GRACE LOCKBOX LOCKBOX ORIGINAL TERM REMAINING TERM ORIGINAL REMAINING MORTGAGE
LOAN NO. PERIOD(7) ARD LOAN STATUS TYPE TO MATURITY TO MATURITY AMORT. TERM(8) AMORT. TERM RATE
------------------------------------------------------------------------------------------------------------- --------
1 0 Yes In Place Hard 180 178 IO IO 5.514%
2 5 Yes In Place Hard 120 117 IO IO 5.343%
3 0 No In Place Hard 60 58 IO IO 5.129%
4 0 No In Place Hard 120 119 360 359 5.480%
5 0 Yes Springing Hard 120 118 IO IO 5.606%
6 0 No In Place Hard 120 116 IO IO 6.112%
7 0 Yes In Place Hard 120 118 IO IO 5.530%
8 5 No In Place Hard 120 117 IO IO 5.684%
9 3 No None NAP 120 119 IO IO 5.610%
10 5 No Springing Hard 120 119 IO IO 5.569%
11 5 No None NAP 120 116 IO IO 5.335%
12 2 No None NAP 120 119 IO IO 5.430%
13 5 Yes Springing Hard 120 119 360 359 6.570%
14 5 No None NAP 120 78 360 318 4.980%
15 5 No None NAP 120 78 360 318 4.980%
16 5 No Springing Hard 84 81 IO IO 5.410%
17 0 No Springing Hard 120 119 360 360 6.201%
18 5 No None NAP 60 58 360 360 5.830%
19 0 Yes Springing Hard 120 119 IO IO 5.534%
20 5 No None NAP 120 116 IO IO 5.360%
21 5 No Springing Hard 120 119 360 360 6.399%
22 5 No Springing Hard 120 116 IO IO 5.321%
23 0 Yes Springing Hard 126 121 IO IO 5.440%
24 2 No None NAP 120 120 IO IO 5.680%
25 5 No In Place Hard 60 58 IO IO 5.525%
26 5 No Springing Hard 60 57 240 237 6.020%
27 5 No Springing Hard 60 57 240 237 6.020%
28 5 No None NAP 120 119 360 360 5.430%
29 0 No In Place Hard 120 118 360 360 5.808%
30 5 No In Place Hard 132 131 360 360 5.809%
31 0 No None NAP 120 118 360 360 5.640%
32 5 No In Place Hard 120 118 IO IO 5.719%
33 5 No None NAP 120 120 360 360 5.260%
34 0 Yes None NAP 120 117 360 360 5.780%
35 5 No None NAP 120 118 360 358 6.019%
36 0 Yes Springing Hard 126 121 IO IO 5.440%
37 0 No None NAP 144 137 360 360 6.640%
38 5 Yes Springing Hard 91 90 IO IO 5.496%
39 0 Yes Springing Hard 120 116 IO IO 5.967%
40 2 No None NAP 120 119 IO IO 5.660%
41 0 No None NAP 120 118 360 360 5.580%
42 5 No None NAP 120 119 360 359 5.816%
43 0 No Springing Hard 60 56 IO IO 5.600%
44 5 No In Place Hard 60 59 360 360 5.880%
45 5 No None NAP 120 117 IO IO 5.640%
46 5 No None NAP 120 108 360 360 5.710%
47 5 No In Place Hard 132 129 IO IO 5.780%
48 5 Yes Springing Hard 120 118 360 358 5.600%
49 0 Yes Springing Hard 126 121 IO IO 5.440%
50 0 No Springing Hard 60 56 IO IO 5.600%
51 5 No None NAP 120 117 IO IO 5.580%
52 5 No None NAP 120 118 IO IO 5.576%
53 5 No None NAP 120 118 IO IO 5.576%
54 5 No None NAP 120 118 IO IO 5.576%
55 5 No None NAP 120 118 IO IO 5.576%
56 5 No None NAP 120 118 IO IO 5.576%
57 0 No None NAP 120 117 360 360 6.020%
58 5 Yes Springing Hard 120 118 360 358 5.600%
59 0 No Springing Hard 120 117 360 360 5.616%
60 0 No None NAP 120 119 360 360 5.800%
61 5 No Springing Hard 120 116 360 356 5.880%
62 5 No In Place Soft 120 117 IO IO 5.480%
63 5 No None NAP 60 57 360 360 5.817%
64 5 No None NAP 120 119 360 360 5.850%
65 5 No Springing Hard 120 118 360 360 5.790%
66 5 No Springing Hard 162 157 300 295 6.210%
67 5 Yes Springing Hard 120 120 360 360 5.700%
68 0 No None NAP 120 118 360 358 5.300%
69 5 No None NAP 120 119 360 359 5.680%
70 5 No In Place Hard 120 116 IO IO 5.480%
71 5 No None NAP 120 118 360 360 5.902%
72 5 No None NAP 120 117 360 357 5.350%
73 2 Yes None NAP 120 119 360 360 6.160%
74 2 Yes None NAP 120 119 360 360 6.160%
75 5 No None NAP 120 118 360 360 5.940%
76 0 No None NAP 120 119 360 359 5.930%
77 5 No None NAP 120 116 360 356 5.700%
78 15 Yes None NAP 120 118 360 358 5.650%
79 15 Yes None NAP 120 118 360 358 5.690%
80 5 Yes Springing Hard 120 119 360 360 5.868%
81 5 No None NAP 120 119 360 360 6.000%
82 0 No None NAP 120 119 IO IO 5.310%
83 0 No None NAP 120 117 360 360 5.690%
84 5 No In Place Soft 120 120 360 360 6.170%
85 5 No None NAP 120 118 IO IO 5.911%
86 5 No None NAP 120 119 360 359 5.760%
87 2 No None NAP 120 119 360 359 5.370%
88 5 Yes Springing Hard 120 119 360 360 5.630%
89 5 No None NAP 120 119 IO IO 5.930%
90 0 Yes Springing Hard 120 116 IO IO 5.992%
91 0 Yes Springing Hard 120 116 IO IO 5.992%
92 0 Yes Springing Hard 120 116 IO IO 5.992%
93 0 Yes Springing Hard 120 116 IO IO 5.992%
94 5 Yes Springing Hard 120 118 360 358 5.600%
95 5 No None NAP 120 117 IO IO 5.590%
96 5 No None NAP 120 117 360 360 6.110%
97 5 No None NAP 120 118 360 358 5.960%
98 0 No None NAP 120 120 240 240 5.460%
99 5 Yes Springing Hard 120 117 360 360 5.500%
100 5 Yes Springing Hard 120 118 324 322 5.840%
101 5 No None NAP 60 57 300 297 5.710%
102 5 No None NAP 120 117 360 357 6.140%
103 10 No Springing Hard 120 116 360 360 5.940%
104 5 No None NAP 120 117 IO IO 5.530%
105 0 No Springing Soft 120 119 360 360 5.980%
106 5 No None NAP 120 117 300 297 5.770%
107 0 Yes Springing Hard 126 121 IO IO 5.440%
108 0 No None NAP 120 120 360 360 6.260%
109 5 No Springing Hard 120 117 360 360 6.230%
110 5 No Springing Hard 120 119 300 300 6.225%
111 5 No None NAP 120 117 IO IO 5.390%
112 5 No None NAP 120 117 360 360 6.010%
113 5 No None NAP 120 117 IO IO 5.686%
114 0 No None NAP 120 117 IO IO 5.544%
115 5 No None NAP 120 119 360 359 5.650%
116 5 No None NAP 120 118 360 358 5.620%
117 5 No None NAP 120 117 300 297 5.825%
118 0 Yes Springing Hard 120 118 IO IO 5.559%
119 5 No None NAP 120 118 360 360 6.120%
120 5 No None NAP 60 58 IO IO 5.710%
121 0 Yes Springing Hard 126 121 IO IO 5.440%
122 5 No In Place Hard 120 119 360 359 5.414%
123 5 No None NAP 120 119 240 239 5.600%
124 5 No None NAP 120 117 360 357 5.850%
125 0 No None NAP 60 59 360 359 5.910%
126 5 No None NAP 120 117 360 357 5.780%
127 0 No None NAP 120 119 IO IO 5.720%
128 0 Yes Springing Hard 120 118 IO IO 5.660%
129 5 No None NAP 120 117 360 360 5.570%
130 5 No None NAP 60 58 IO IO 5.950%
131 5 Yes Springing Hard 120 119 360 360 5.690%
132 5 No None NAP 60 58 IO IO 5.990%
133 5 No None NAP 120 117 IO IO 5.530%
134 0 No None NAP 120 119 360 359 5.710%
135 5 No In Place Hard 120 119 360 359 5.509%
136 5 No None NAP 120 118 240 238 5.580%
137 5 No Springing Hard 180 178 360 358 6.230%
138 5 No Springing Hard 180 178 360 358 6.230%
139 5 No In Place Hard 120 119 300 299 5.895%
140 5 No None NAP 120 118 360 358 5.930%
141 5 No None NAP 120 117 IO IO 5.860%
142 5 No None NAP 120 117 360 360 5.580%
143 5 Yes Springing Hard 120 118 360 358 6.110%
144 5 No None NAP 120 118 360 358 5.880%
145 0 No None NAP 120 118 360 358 5.690%
146 5 No None NAP 120 118 360 358 5.860%
147 5 No None NAP 120 118 360 358 5.880%
148 0 Yes Springing Hard 120 119 IO IO 5.544%
149 5 No None NAP 120 118 360 360 5.880%
150 2 No None NAP 120 119 360 360 5.690%
151 0 No None NAP 120 118 360 358 5.530%
152 5 No None NAP 120 116 360 356 5.940%
153 5 No None NAP 120 117 300 297 5.610%
154 0 No None NAP 60 56 IO IO 6.290%
155 5 No None NAP 120 118 360 360 5.620%
156 0 No None NAP 240 239 240 239 6.610%
157 5 No None NAP 120 118 300 298 6.420%
158 0 No None NAP 120 119 360 360 5.850%
159 5 No None NAP 60 57 360 357 5.830%
160 5 No None NAP 120 118 360 360 6.075%
161 0 No None NAP 120 119 300 299 5.820%
162 5 No None NAP 120 118 360 358 5.930%
163 5 No None NAP 120 118 240 238 6.010%
164 5 No None NAP 120 117 240 237 5.760%
165 5 No In Place Soft 120 116 300 296 6.060%
166 2 No None NAP 120 119 360 359 5.800%
167 2 No None NAP 120 118 360 360 5.730%
168 5 No Springing Hard 120 119 360 359 6.260%
169 5 No None NAP 120 106 360 346 5.930%
170 5 No None NAP 120 118 360 358 5.660%
171 5 No None NAP 120 118 IO IO 5.820%
172 5 No Springing Hard 120 116 360 356 5.970%
173 5 No Springing Hard 60 57 360 357 6.550%
174 2 No None NAP 120 118 360 358 6.000%
175 0 No None NAP 120 119 360 359 6.020%
176 5 No None NAP 60 57 360 357 6.210%
177 5 No None NAP 120 118 360 358 5.980%
178 0 No None NAP 120 116 360 360 5.830%
179 5 No In Place Hard 120 117 360 357 5.950%
180 5 No None NAP 120 117 360 357 5.810%
181 5 No None NAP 120 117 360 360 5.650%
182 5 No None NAP 120 119 360 360 6.310%
183 5 No None NAP 120 119 360 359 5.870%
184 0 Yes None NAP 120 119 300 299 5.900%
185 0 Yes Springing Hard 120 116 IO IO 5.967%
186 5 Yes Springing Hard 120 117 360 357 5.970%
187 5 No None NAP 120 118 300 298 5.530%
188 5 No In Place Hard 120 117 240 237 5.980%
189 5 No None NAP 180 177 360 360 5.925%
190 0 No None NAP 120 119 360 359 5.910%
191 5 No None NAP 120 117 360 357 5.950%
192 0 No In Place Hard 120 116 360 356 5.800%
193 5 No None NAP 120 119 360 359 6.000%
194 5 No None NAP 120 118 240 238 6.370%
195 5 No None NAP 120 115 312 307 5.990%
196 5 No None NAP 120 118 360 358 5.850%
197 0 Yes Springing Hard 60 56 IO IO 5.659%
198 5 No None NAP 120 120 360 360 5.760%
199 2 No None NAP 120 119 360 360 5.630%
200 0 No None NAP 120 119 300 299 5.790%
201 5 No None NAP 120 118 360 358 5.890%
202 5 No None NAP 120 118 360 360 5.630%
203 0 Yes Springing Hard 120 119 IO IO 6.291%
204 5 No None NAP 120 118 240 238 5.730%
205 0 Yes Springing Hard 120 117 IO IO 5.650%
206 5 No None NAP 120 119 324 323 5.890%
207 5 No None NAP 180 179 180 179 5.440%
208 5 No None NAP 120 118 240 238 5.890%
209 5 No None NAP 84 82 300 298 5.800%
210 5 No None NAP 120 116 300 296 5.860%
211 5 No Springing Hard 120 119 360 360 5.700%
212 5 No Springing Hard 120 119 300 299 6.380%
213 5 No None NAP 120 118 360 358 5.790%
214 0 No None NAP 144 143 144 143 5.840%
215 5 No None NAP 120 117 360 360 5.580%
216 5 No Springing Hard 120 118 360 358 6.420%
217 5 No Springing Hard 120 118 360 358 6.420%
218 5 No None NAP 60 58 360 358 6.060%
219 0 Yes None NAP 120 118 360 358 5.950%
220 5 No None NAP 120 119 360 359 6.070%
221 0 No None NAP 120 119 360 359 5.950%
222 5 No None NAP 120 120 360 360 6.230%
223 5 No None NAP 120 118 300 300 5.700%
224 5 No None NAP 120 117 IO IO 5.600%
225 5 No None NAP 120 116 360 360 5.820%
226 5 No None NAP 120 116 360 356 6.120%
227 5 No None NAP 120 118 360 358 6.350%
228 5 No Springing Hard 120 119 IO IO 6.210%
229 0 Yes None NAP 120 118 360 360 5.740%
230 5 No Springing Hard 120 119 360 359 6.320%
231 5 No None NAP 120 119 360 360 6.120%
232 5 No Springing Hard 120 118 360 358 6.180%
233 0 No None NAP 120 119 360 359 6.150%
234 2 No None NAP 120 119 360 360 6.150%
235 5 No None NAP 120 120 360 360 5.830%
236 5 No None NAP 120 119 360 359 6.320%
237 5 No Springing Hard 120 119 360 359 6.060%
238 5 No Springing Hard 120 118 360 358 6.290%
239 0 No None NAP 120 119 360 359 5.870%
240 5 No None NAP 120 117 360 357 6.560%
241 5 No Springing Hard 120 117 360 357 6.050%
242 0 No None NAP 240 238 240 238 6.350%
243 0 No None NAP 120 118 300 300 6.160%
244 5 No Springing Hard 120 117 360 357 5.950%
245 5 No None NAP 120 119 360 359 6.070%
246 5 No None NAP 120 119 360 359 6.120%
247 5 No None NAP 120 118 360 358 6.210%
118 115 349 347 5.672%
MORTGAGE MONTHLY MONTHLY THIRD MOST RECENT THIRD MOST RECENT SECOND MOST RECENT SECOND MOST RECENT
LOAN NO. PAYMENT (P&I) PAYMENT (IO) NOI NOI DATE NOI NOI DATE
---------------------------------------------------------------------------------------------------------------------
1 NAP $698,823 $15,413,451 12/31/2004 $16,238,990 12/31/2005
2 NAP $501,728 NAP NAP NAP NAP
3 NAP $385,684 $3,593,376 12/31/2003 $5,328,547 12/31/2005
4 $396,574 NAP $7,728,899 12/31/2003 $8,075,888 12/31/2004
5 NAP $323,270 NAP NAP NAP NAP
6 NAP $335,665 $6,060,193 12/31/2004 $5,992,742 12/31/2005
7 NAP $224,272 NAP NAP $4,055,785 12/31/2004
8 NAP $216,110 $3,535,789 12/31/2004 $4,716,366 12/31/2005
9 NAP $149,308 NAP NAP $1,684,241 12/31/2004
10 NAP $140,501 NAP NAP NAP NAP
11 NAP $135,227 $2,393,079 12/31/2003 $2,493,008 12/31/2004
12 NAP $130,754 $3,831,260 12/31/2003 $4,144,952 12/31/2004
13 $178,270 NAP NAP NAP NAP NAP
14 $120,778 NAP $2,979,784 12/31/2004 $3,151,662 12/31/2005
15 $37,492 NAP $460,376 12/31/2004 $418,880 12/31/2005
16 NAP $118,845 $2,586,011 12/31/2004 $2,489,036 12/31/2005
17 $153,133 $130,982 NAP NAP NAP NAP
18 $141,280 $118,219 NAP NAP NAP NAP
19 NAP $109,412 $2,314,302 12/31/2003 $2,269,860 12/31/2004
20 NAP $104,160 $1,783,818 12/31/2004 $1,824,658 12/31/2005
21 $143,851 $124,351 $1,807,059 12/31/2004 $2,164,914 8/31/2005
22 NAP $97,707 NAP NAP $2,346,559 12/31/2004
23 NAP $96,522 NAP NAP $1,300,897 T-12 06/30/2005
24 NAP $91,182 NAP NAP NAP NAP
25 NAP $85,426 NAP NAP $331,428 12/31/2005
26 $86,110 NAP NAP NAP NAP NAP
27 $45,925 NAP NAP NAP NAP NAP
28 $100,568 $81,893 NAP NAP $1,656,018 12/31/2005
29 $103,206 $86,240 NAP NAP $1,380,880 12/31/2005
30 $99,845 $83,437 $2,348,132 12/31/2004 $2,367,206 12/31/2005
31 $95,140 $78,627 NAP NAP NAP NAP
32 NAP $74,896 $1,756,398 12/31/2003 $1,813,345 12/31/2004
33 $85,688 NAP $2,030,141 12/31/2004 $2,065,255 12/31/2005
34 $88,700 $73,986 NAP NAP NAP NAP
35 $90,116 NAP NAP NAP NAP NAP
36 NAP $67,795 NAP NAP $1,194,592 T-12 06/30/2005
37 $92,989 $81,348 NAP NAP NAP NAP
38 NAP $62,998 NAP NAP NAP NAP
39 NAP $64,935 NAP NAP NAP NAP
40 NAP $59,777 $975,212 12/31/2003 $1,019,011 12/31/2004
41 $71,602 $58,932 NAP NAP NAP NAP
42 $73,472 NAP $1,119,090 12/31/2004 $966,121 12/31/2005
43 NAP $56,778 $1,126,443 12/31/2004 $1,134,291 12/31/2005
44 $71,023 $59,617 NAP NAP $1,355,223 12/31/2005
45 NAP $57,183 NAP NAP NAP NAP
46 $64,495 $53,551 $585,999 T-12 10/1/2004 $535,803 12/31/2005
47 NAP $54,208 $177,481 12/31/2004 $1,182,989 12/31/2005
48 $63,723 NAP $1,230,348 12/31/2004 $1,310,879 12/31/2005
49 NAP $49,870 NAP NAP $869,516 T-12 06/30/2005
50 NAP $49,681 $933,056 12/31/2004 $976,485 12/31/2005
51 NAP $47,146 $1,546,446 12/31/2003 $1,521,464 12/31/2004
52 NAP $18,845 $342,014 12/31/2003 $366,070 12/31/2004
53 NAP $8,245 $144,373 12/31/2003 $130,651 12/31/2004
54 NAP $8,245 $152,403 12/31/2003 $145,029 12/31/2004
55 NAP $7,067 $154,431 12/31/2003 $131,888 12/31/2004
56 NAP $4,711 $133,509 12/31/2003 $132,207 12/31/2004
57 $60,084 $50,863 $1,154,527 12/31/2003 $944,298 12/31/2004
58 $55,686 NAP $1,084,414 12/31/2004 $1,116,694 12/31/2005
59 $55,208 $45,552 $829,973 12/31/2004 $832,568 12/31/2005
60 $55,742 $46,554 NAP NAP NAP NAP
61 $56,226 NAP $1,046,219 12/31/2004 $606,919 12/31/2005
62 NAP $43,291 NAP NAP NAP NAP
63 $54,963 $45,954 NAP NAP NAP NAP
64 $53,095 $44,484 $648,900 12/31/2004 $748,125 12/31/2005
65 $52,750 $44,028 $353,446 12/31/2004 $339,496 12/31/2005
66 $59,148 NAP NAP NAP NAP NAP
67 $49,914 NAP $757,317 12/31/2004 $899,283 12/31/2005
68 $47,756 NAP NAP NAP NAP NAP
69 $49,226 NAP $1,057,520 12/31/2004 $1,119,945 12/31/2005
70 NAP $38,661 NAP NAP NAP NAP
71 $48,944 $41,140 $175,464 12/31/2004 $639,917 12/31/2005
72 $45,511 NAP NAP NAP $398,923 12/31/2004
73 $24,604 $20,996 NAP NAP NAP NAP
74 $24,187 $20,641 NAP NAP NAP NAP
75 $47,656 $40,150 NAP NAP NAP NAP
76 $46,414 NAP NAP NAP NAP NAP
77 $43,530 NAP NAP NAP $640,582 12/31/2004
78 $23,782 NAP NAP NAP $429,363 12/31/2004
79 $18,929 NAP NAP NAP $325,288 12/31/2004
80 $43,504 $36,490 NAP NAP $666,698 12/31/2004
81 $43,904 $37,123 NAP NAP $1,134,060 12/31/2005
82 NAP $32,303 NAP NAP NAP NAP
83 $40,584 $33,653 $1,079,765 12/31/2003 $1,019,587 12/31/2004
84 $42,737 $36,492 NAP NAP NAP NAP
85 NAP $34,960 NAP NAP NAP NAP
86 $40,895 NAP $288,607 12/31/2004 $363,067 12/31/2005
87 $39,176 NAP $755,121 12/31/2003 $738,495 12/31/2004
88 $38,590 $31,871 NAP NAP $698,000 12/31/2005
89 NAP $32,567 $759,750 12/31/2004 $718,961 12/31/2005
90 NAP $8,860 NAP NAP NAP NAP
91 NAP $8,733 NAP NAP NAP NAP
92 NAP $7,113 NAP NAP NAP NAP
93 NAP $6,708 NAP NAP NAP NAP
94 $35,593 NAP $736,268 12/31/2004 $752,977 12/31/2005
95 NAP $29,047 $112,104 12/31/2004 $52,614 12/31/2005
96 $37,005 $31,491 NAP NAP $874,804 12/31/2005
97 $36,416 NAP $947,206 12/31/2004 $903,290 12/31/2005
98 $41,138 NAP $868,410 12/31/2004 $943,053 12/31/2005
99 $34,067 $27,882 $534,241 12/31/2003 $503,210 12/31/2004
100 $36,842 NAP $1,269,174 12/31/2004 $1,236,564 12/31/2005
101 $37,601 NAP $441,487 12/31/2005 $795,987 T-12 09/30/2006
102 $35,906 NAP NAP NAP $550,481 12/31/2005
103 $34,431 $29,008 $493,948 12/31/2004 $484,493 12/31/2005
104 NAP $25,698 NAP NAP $1,293,499 12/31/2005
105 $32,905 $27,408 $619,360 12/31/2004 $610,551 12/31/2005
106 $34,667 NAP $586,676 12/31/2004 $587,676 12/31/2005
107 NAP $24,820 NAP NAP $379,444 T-12 06/30/2005
108 $33,284 NAP NAP NAP NAP NAP
109 $33,179 $28,424 NAP NAP NAP NAP
110 $34,222 $27,350 NAP NAP $637,857 12/31/2005
111 NAP $23,112 $184,513 12/31/2003 $239,046 12/31/2004
112 $30,010 $25,389 $501,150 12/31/2004 $558,345 12/31/2005
113 NAP $24,021 NAP NAP NAP NAP
114 NAP $23,421 $506,473 12/31/2004 $459,377 12/31/2005
115 $28,862 NAP $564,045 12/31/2004 $646,192 12/31/2005
116 $28,767 NAP $682,994 12/31/2004 $711,553 12/31/2005
117 $31,682 NAP NAP NAP NAP NAP
118 NAP $22,545 NAP NAP NAP NAP
119 $28,239 $24,044 $247,577 12/31/2005 $320,443 12/31/2006
120 NAP $21,710 $452,587 12/31/2004 $365,966 12/31/2005
121 NAP $20,683 NAP NAP $334,539 T-12 06/30/2005
122 $25,308 NAP $604,304 12/31/2004 $612,144 12/31/2005
123 $31,210 NAP $363,738 12/31/2004 $506,794 12/31/2005
124 $26,547 NAP $468,893 12/31/2004 $498,326 12/31/2005
125 $26,126 NAP NAP NAP NAP NAP
126 $25,761 NAP NAP NAP NAP NAP
127 NAP $20,298 NAP NAP NAP NAP
128 NAP $19,798 NAP NAP NAP NAP
129 $23,460 $19,295 NAP NAP NAP NAP
130 NAP $20,360 $392,482 12/31/2004 $391,764 12/31/2005
131 $23,481 $19,470 NAP NAP $333,512 Ann. 7 mos 12/31/2005
132 NAP $20,244 NAP NAP NAP NAP
133 NAP $18,689 NAP NAP NAP NAP
134 $23,241 NAP $765,659 12/31/2003 $868,513 12/31/2004
135 $22,734 NAP NAP NAP $504,701 12/31/2004
136 $27,697 NAP $737,932 12/31/2004 $763,443 12/31/2005
137 $17,740 NAP NAP NAP NAP NAP
138 $6,452 NAP NAP NAP NAP NAP
139 $23,921 NAP NAP NAP NAP NAP
140 $22,315 NAP $381,536 12/31/2004 $548,687 12/31/2005
141 NAP $18,319 $374,973 12/31/2004 $403,402 12/31/2005
142 $20,049 $16,501 $309,007 12/31/2003 $345,624 12/31/2004
143 $21,232 NAP NAP NAP NAP NAP
144 $20,715 NAP NAP NAP $337,679 12/31/2004
145 $20,292 NAP $293,883 12/31/2003 $305,239 12/31/2004
146 $20,080 NAP $388,426 12/31/2004 $363,999 12/31/2005
147 $19,531 NAP $335,172 12/31/2004 $351,345 12/31/2005
148 NAP $15,411 NAP NAP NAP NAP
149 $19,413 $16,295 $252,442 12/31/2004 $267,009 12/31/2005
150 $18,553 $15,384 $276,651 12/31/2003 $275,900 12/31/2004
151 $18,230 NAP NAP NAP $215,329 12/31/2004
152 $19,062 NAP $136,172 12/31/2004 $136,574 12/31/2005
153 $19,862 NAP NAP NAP $512,653 12/31/2004
154 NAP $16,475 $440,175 12/31/2004 $440,091 12/31/2005
155 $17,836 $14,720 NAP NAP NAP NAP
156 $23,314 NAP $351,012 12/31/2003 $350,841 12/31/2004
157 $20,777 NAP $206,084 12/31/2004 $356,649 12/31/2005
158 $17,799 $14,912 NAP NAP NAP NAP
159 $17,778 NAP $485,353 12/31/2004 $533,772 12/31/2005
160 $18,131 $15,398 $337,820 12/31/2004 $339,332 12/31/2005
161 $19,000 NAP NAP NAP $324,844 12/31/2004
162 $17,852 NAP $391,006 12/31/2004 $407,660 12/31/2005
163 $21,510 NAP $603,813 12/31/2004 $527,529 12/31/2005
164 $21,080 NAP $233,230 12/31/2003 $304,933 12/31/2004
165 $19,115 NAP NAP NAP NAP NAP
166 $17,016 NAP NAP NAP NAP NAP
167 $16,304 $13,556 $226,017 12/31/2003 $225,933 12/31/2004
168 $16,950 NAP $370,489 12/31/2004 $306,610 12/31/2005
169 $16,513 NAP $411,165 12/31/2004 $328,440 12/31/2005
170 $15,602 NAP NAP NAP $204,094 12/31/2005
171 NAP $12,293 NAP NAP NAP NAP
172 $14,941 NAP $293,145 12/31/2003 $293,145 12/31/2004
173 $15,757 NAP NAP NAP NAP NAP
174 $14,539 NAP NAP NAP $202,982 12/31/2004
175 $14,420 NAP NAP NAP NAP NAP
176 $14,347 NAP NAP NAP NAP NAP
177 $13,760 NAP NAP NAP NAP NAP
178 $13,374 $11,191 NAP NAP NAP NAP
179 $13,418 NAP NAP NAP NAP NAP
180 $13,216 NAP NAP NAP $194,302 12/31/2005
181 $12,699 $10,502 $234,077 12/31/2004 $233,707 12/31/2005
182 $13,632 $11,729 $231,501 12/31/2004 $257,247 12/31/2005
183 $13,007 NAP NAP NAP $172,265 12/31/2004
184 $13,977 NAP NAP NAP NAP NAP
185 NAP $11,016 NAP NAP NAP NAP
186 $12,909 NAP NAP NAP NAP NAP
187 $13,241 NAP $229,991 12/31/2004 $369,920 12/31/2005
188 $15,378 NAP $274,515 12/31/2004 $278,634 12/31/2005
189 $12,489 $10,513 $281,435 12/31/2004 $272,692 12/31/2005
190 $12,469 NAP $190,717 10/31/2004 $204,669 10/31/2005
191 $12,523 NAP NAP NAP NAP NAP
192 $12,322 NAP NAP NAP NAP NAP
193 $11,991 NAP $278,162 12/31/2004 $278,084 12/31/2005
194 $14,759 NAP $367,460 12/31/2003 $306,012 12/31/2004
195 $12,661 NAP NAP NAP $89,420 12/31/2005
196 $11,681 NAP NAP NAP NAP NAP
197 NAP $9,228 NAP NAP NAP NAP
198 $11,188 NAP $166,055 12/31/2004 $122,376 12/31/2005
199 $10,943 $9,038 $184,738 12/31/2004 $244,186 12/31/2005
200 $11,999 NAP $312,520 12/31/2004 $353,241 12/31/2005
201 $11,257 NAP NAP NAP NAP NAP
202 $10,655 $8,800 $157,207 12/31/2004 $214,829 12/31/2005
203 NAP $9,833 NAP NAP NAP NAP
204 $12,617 NAP NAP NAP NAP NAP
205 NAP $8,545 NAP NAP NAP NAP
206 $10,800 NAP $263,772 12/31/2004 $259,386 12/31/2005
207 $14,243 NAP $500,470 12/31/2003 $496,555 12/31/2004
208 $12,427 NAP $374,861 12/31/2004 $411,759 12/31/2005
209 $10,746 NAP $411,016 12/31/2004 $396,014 12/31/2005
210 $10,490 NAP NAP NAP $115,148 12/31/2005
211 $9,286 $7,706 $217,631 12/31/2004 $220,001 12/31/2005
212 $10,684 NAP NAP NAP NAP NAP
213 $9,378 NAP $230,592 12/31/2004 $218,402 12/31/2005
214 $15,481 NAP NAP NAP NAP NAP
215 $8,879 $7,308 $196,633 12/31/2003 $206,727 12/31/2004
216 $5,102 NAP NAP NAP NAP NAP
217 $4,394 NAP NAP NAP NAP NAP
218 $9,051 NAP $204,039 12/31/2004 $202,319 12/31/2005
219 $8,742 NAP NAP NAP NAP NAP
220 $8,698 NAP NAP NAP $101,034 12/31/2005
221 $8,498 NAP $144,380 12/31/2004 $150,363 12/31/2005
222 $8,295 NAP $140,847 12/31/2004 $152,337 12/31/2005
223 $8,327 $6,405 $186,424 12/31/2004 $186,809 12/31/2005
224 NAP $5,914 NAP NAP NAP NAP
225 $7,350 $6,147 $79,892 12/31/2004 $118,797 12/31/2005
226 $7,591 NAP NAP NAP NAP NAP
227 $7,685 NAP $235,435 12/31/2004 $227,640 12/31/2005
228 NAP $6,375 NAP NAP NAP NAP
229 $6,995 $5,820 NAP NAP NAP NAP
230 $7,350 NAP NAP NAP NAP NAP
231 $6,984 $5,946 NAP NAP NAP NAP
232 $6,723 NAP NAP NAP NAP NAP
233 $6,580 NAP $67,987 12/31/2003 $66,956 12/31/2004
234 $6,549 $5,586 NAP NAP NAP NAP
235 $6,199 NAP $106,621 12/31/2004 $89,498 12/31/2005
236 $6,513 NAP $107,785 12/31/2004 $103,244 12/31/2005
237 $6,215 NAP NAP NAP NAP NAP
238 $6,288 NAP NAP NAP NAP NAP
239 $5,912 NAP NAP NAP NAP NAP
240 $6,360 NAP NAP NAP NAP NAP
241 $6,028 NAP NAP NAP NAP NAP
242 $7,368 NAP NAP NAP NAP NAP
243 $6,280 $4,996 NAP NAP NAP NAP
244 $5,665 NAP NAP NAP NAP NAP
245 $5,708 NAP $102,120 12/31/2004 $100,951 12/31/2005
246 $5,435 NAP $83,931 12/31/2004 $88,268 12/31/2005
247 $3,372 NAP $79,347 12/31/2004 $79,637 12/31/2005
MORTGAGE MOST RECENT MOST RECENT NOI UNDERWRITABLE
LOAN NO. NOI DATE EGI
--------------------------------------------------------------
1 $19,350,808 Ann. 9 mos. 09/30/2006 $38,996,535
2 NAP NAP $14,824,033
3 $5,882,798 12/31/2006 $24,653,834
4 $8,745,254 12/31/2005 $13,622,180
5 NAP NAP $6,686,100
6 $5,619,455 12/31/2006 $11,325,334
7 $4,241,695 12/31/2005 $6,408,888
8 $5,739,331 12/31/2006 $10,948,949
9 $1,584,368 12/31/2005 $4,979,745
10 NAP NAP $5,376,931
11 $3,040,959 12/31/2005 $5,779,100
12 $3,914,869 12/31/2005 $5,065,615
13 NAP NAP $4,425,949
14 $3,496,825 Ann. 9 mos. 09/30/2006 $5,041,582
15 $663,574 Ann. 9 mos. 09/30/2006 $1,744,388
16 $2,888,259 T-12 09/30/2006 $4,006,567
17 NAP NAP $3,350,516
18 NAP NAP $2,827,627
19 $2,427,688 12/31/2005 $3,641,110
20 $1,968,611 12/31/2006 $3,449,208
21 $2,295,079 T-12 11/30/2006 $6,421,743
22 $2,081,621 12/31/2005 $4,010,725
23 $2,061,152 T-12 06/30/2006 $2,394,365
24 NAP NAP $2,686,705
25 $1,032,256 12/31/2006 $3,868,609
26 $1,174,200 Ann. 9 mos. 09/30/2006 $1,496,068
27 $927,000 Ann. 9 mos. 09/30/2006 $809,390
28 $1,730,058 T-12 11/30/2006 $2,493,931
29 $1,558,022 Ann. 5 mos. 05/31/2006 $2,421,557
30 $1,118,297 12/31/2006 $3,104,780
31 NAP NAP $1,903,860
32 $2,047,523 12/31/2005 $2,622,429
33 $2,056,533 Ann. 11 mos. 11/30/2006 $3,140,366
34 NAP NAP $2,196,826
35 NAP NAP $7,773,600
36 $1,262,709 T-12 06/30/2006 $2,838,814
37 NAP NAP $2,218,992
38 NAP NAP $2,050,716
39 NAP NAP $1,456,400
40 $1,052,982 12/31/2005 $1,599,339
41 NAP NAP $1,309,150
42 $1,519,010 Ann. 11 mos. 11/30/2006 $7,525,742
43 $1,163,353 Ann. 9 mos. 09/30/2006 $1,655,021
44 $1,373,474 Ann. 10 mos. 10/31/2006 $2,565,764
45 NAP NAP $859,345
46 $382,338 12/31/2006 $1,715,779
47 $1,183,079 Ann. 10 mos. 10/31/2006 $1,467,860
48 $1,315,837 Ann. 9 mos. 09/30/2006 $1,273,389
49 $1,206,423 T-12 06/30/2006 $1,571,409
50 $1,147,367 Ann. 9 mos. 09/30/2006 $1,824,777
51 $1,769,875 12/31/2005 $3,633,767
52 $420,126 12/31/2005 $646,917
53 $158,378 12/31/2005 $271,529
54 $153,453 12/31/2005 $257,817
55 $135,710 12/31/2005 $235,337
56 $139,262 12/31/2005 $176,400
57 $919,965 12/31/2005 $1,544,334
58 $1,138,854 Ann. 9 mos. 09/30/2006 $1,063,606
59 $780,284 T-12 10/31/2006 $1,425,030
60 NAP NAP $1,435,584
61 $762,309 T-12 09/30/2006 $1,330,744
62 NAP NAP $1,701,484
63 NAP NAP $1,991,148
64 $1,002,360 Ann 6 mos. 06/30/2006 $1,915,270
65 $1,015,842 T-12 10/30/2006 $2,720,182
66 NAP NAP $1,444,009
67 $1,076,726 12/31/2006 $2,551,619
68 NAP NAP $1,900,608
69 $1,173,834 12/31/2006 $1,593,214
70 NAP NAP $1,972,585
71 $891,923 T-12 11/30/2006 $2,365,932
72 $454,132 12/31/2005 $3,286,050
73 NAP NAP $457,724
74 NAP NAP $534,935
75 $886,219 T-12 08/15/2006 $1,079,172
76 NAP NAP $1,204,771
77 $594,913 12/31/2005 $859,725
78 $429,654 12/31/2005 $475,981
79 $335,368 12/31/2005 $395,271
80 $705,506 12/31/2005 $879,301
81 $895,370 12/31/2006 $2,014,759
82 NAP NAP $1,544,206
83 $997,121 12/31/2005 $2,280,678
84 NAP NAP $858,301
85 NAP NAP $660,000
86 $593,259 Ann. 10 mos. 10/31/2006 $1,743,015
87 $726,682 12/31/2005 $2,186,009
88 $988,664 12/31/2006 $2,466,546
89 $819,127 12/31/2006 $1,279,950
90 NAP NAP $213,275
91 NAP NAP $213,750
92 NAP NAP $179,550
93 NAP NAP $170,050
94 $793,722 Ann. 9 mos. 09/30/2006 $723,166
95 $363,068 Ann 6 mos. 06/30/2006 $854,165
96 $946,370 T-12 10/31/2006 $1,268,716
97 $1,225,347 T-12 10/30/2006 $6,248,157
98 $1,045,500 12/31/2006 $994,204
99 $524,827 12/31/2005 $697,959
100 $1,037,023 12/31/2006 $1,345,677
101 $861,483 Ann. 6 mos. 09/30/2006 $1,174,974
102 $584,826 12/31/2006 $751,464
103 $516,066 T-8 (8/31/2006) Ann. $910,564
104 $1,295,793 T-12 10/31/2006 $2,580,988
105 $601,693 12/31/2006 $913,974
106 $668,862 Ann. 10 mos. 10/31/2006 $1,104,055
107 $395,177 T-12 06/30/2006 $893,424
108 NAP NAP $652,364
109 NAP NAP $566,533
110 $690,733 T-12 11/30/2006 $1,703,288
111 $42,088 12/31/2005 $4,960,890
112 $628,392 T-12 09/30/2006 $779,818
113 NAP NAP $565,000
114 $431,631 Ann. 11 mos. 11/30/2006 $765,998
115 $708,145 Ann. 11 mos. 11/30/2006 $883,436
116 $597,534 Ann. 10 mos. 10/31/2006 $1,012,874
117 $637,997 T-12 10/31/2006 $1,741,775
118 NAP NAP $895,400
119 $429,021 T-3 12/31/2006 $766,752
120 $516,624 T-12 08/31/2006 $2,184,322
121 $335,100 T-12 06/30/2006 $778,078
122 $582,157 Ann. 6 mos. 07/02/2006 $972,212
123 $712,384 T-12 11/30/2006 $1,936,949
124 $593,517 Ann. 11 mos. 11/06/2006 $724,513
125 NAP NAP $680,715
126 NAP NAP $629,747
127 NAP NAP $560,523
128 NAP NAP $471,983
129 NAP NAP $505,291
130 $392,150 T-12 09/30/2006 $413,830
131 $413,275 12/31/2006 $508,941
132 NAP NAP $371,783
133 $432,740 Ann. 9 mos. 09/30/2006 $551,734
134 $920,472 12/31/2005 $1,043,833
135 $528,757 12/31/2005 $748,422
136 $810,926 T-12 11/30/2006 $1,014,111
137 NAP NAP $423,384
138 NAP NAP $153,984
139 $479,106 12/31/2006 $1,067,379
140 $509,367 12/31/2006 $827,832
141 $367,361 T-12 10/31/2006 $517,471
142 $385,641 12/31/2005 $612,813
143 NAP NAP $295,625
144 $529,445 12/31/2005 $584,428
145 $305,000 12/31/2005 $401,439
146 $353,829 12/31/2006 $472,978
147 $372,108 T-12 07/31/2006 $467,976
148 NAP NAP $383,084
149 $214,684 Ann. 3 mos. 09/30/2006 $513,075
150 $278,099 12/31/2005 $350,800
151 $306,642 12/31/2005 $636,935
152 $254,830 T-12 09/30/2006 $3,968,854
153 $531,304 12/31/2005 $602,983
154 $442,252 12/31/2006 $623,799
155 NAP NAP $285,428
156 $350,938 12/31/2005 $430,766
157 $506,623 T-12 08/31/2006 $1,637,016
158 NAP NAP $367,299
159 $503,498 Ann. 9 mos. 09/30/2006 $787,297
160 $354,820 12/31/2006 $409,950
161 $312,357 12/31/2005 $420,445
162 $409,883 12/31/2006 $577,383
163 $677,690 Ann. 9 mos. 09/28/2006 $792,369
164 $265,976 12/31/2005 $447,992
165 NAP NAP $439,348
166 NAP NAP $487,567
167 $233,051 12/31/2005 $305,586
168 $301,632 Ann. 11 mos. 11/30/2006 $375,648
169 $331,151 T-12 10/31/2006 $625,829
170 $215,707 Ann. 10 mos. 10/31/2006 $417,536
171 NAP NAP $410,542
172 $293,145 12/31/2005 $283,413
173 NAP NAP $315,233
174 $211,089 12/31/2005 $395,188
175 NAP NAP $276,329
176 $243,035 T-12 06/30/2006 $319,544
177 NAP NAP $381,019
178 NAP NAP $392,906
179 NAP NAP $275,647
180 $237,705 Ann. 9 mos. 09/30/2006 $293,100
181 $256,883 T-12 10/31/2006 $278,557
182 $261,668 12/31/2006 $381,865
183 $174,184 12/31/2005 $343,788
184 NAP NAP $294,437
185 NAP NAP $247,013
186 NAP NAP $231,049
187 $357,605 12/31/2006 $625,754
188 $280,710 T-12 09/30/2006 $339,478
189 $296,923 Ann. 10 mos. 10/31/2006 $346,133
190 $204,669 10/31/2006 $249,258
191 NAP NAP $286,380
192 NAP NAP $261,047
193 $334,616 T-12 11/30/2006 $534,274
194 $271,280 12/31/2005 $635,411
195 $133,675 9/11/2006 Ann. $281,591
196 $115,158 T-10 10/31/2006 $363,291
197 NAP NAP $252,754
198 $188,286 12/31/2006 $448,377
199 $276,193 12/31/2006 $320,763
200 $186,417 12/31/2006 $495,041
201 $142,144 Ann. 6 mos. 11/30/2006 $261,438
202 $190,752 12/31/2006 $278,377
203 NAP NAP $204,250
204 NAP NAP $622,173
205 NAP NAP $236,818
206 $249,308 12/31/2006 $438,149
207 $548,484 12/31/2005 $972,432
208 $420,859 Ann. 10 mos. 10/31/2006 $568,749
209 $410,173 Ann. 11 mos. 11/30/2006 $707,659
210 $178,357 T-12 08/31/2006 $213,670
211 $223,241 Ann. 9 mos. 09/30/2006 $339,043
212 NAP NAP $338,077
213 $190,458 12/31/2006 $333,209
214 $215,336 12/31/2006 $269,432
215 $162,276 12/31/2005 $356,263
216 NAP NAP $130,257
217 NAP NAP $47,374
218 $202,953 T-12 10/31/2006 $359,546
219 NAP NAP $161,085
220 $116,582 12/31/2006 $299,984
221 $151,412 12/31/2006 $190,244
222 $175,174 12/31/2006 $203,538
223 $198,300 Ann. 9 mos. 09/30/2006 $262,690
224 NAP NAP $240,605
225 $130,225 12/31/2006 $188,131
226 NAP NAP $216,341
227 $303,158 Ann. 8 mos. 12/31/2006 $337,530
228 NAP NAP $128,900
229 NAP NAP $128,701
230 NAP NAP $134,748
231 NAP NAP $187,939
232 $131,353 12/31/2006 $211,791
233 $108,570 12/31/2005 $186,420
234 NAP NAP $134,198
235 $112,618 12/31/2006 $296,138
236 $124,245 12/31/2006 $161,648
237 NAP NAP $118,912
238 NAP NAP $147,875
239 NAP NAP $176,045
240 NAP NAP $197,505
241 NAP NAP $115,380
242 NAP NAP $159,250
243 NAP NAP $124,444
244 NAP NAP $156,934
245 $122,030 12/31/2006 $195,093
246 $92,940 12/31/2006 $112,223
247 $83,421 12/31/2006 $70,823
MORTGAGE UNDERWRITABLE UNDERWRITABLE UNDERWRITABLE UNDERWRITABLE NOI NCF NCF POST IO CUT-OFF DATE
LOAN NO. EXPENSES NOI CAPITAL ITEMS CASH FLOW DSCR (X) (9) DSCR (X) (9) PERIOD DSCR (X)(10) LTV
------------------------------------------------------------------------------------------------------------------------------------
1 $19,591,041 $19,405,494 $1,230,846 $18,174,647 2.31 2.17 2.17 41.1%
2 $296,481 $14,527,552 $1,023,709 $13,503,843 2.41 2.24 2.24 54.4%
3 $12,132,399 $12,521,435 $932,936 $11,588,498 2.71 2.50 2.50 55.6%
4 $5,371,377 $8,250,803 $538,113 $7,712,690 1.73 1.62 1.62 68.6%
5 $133,722 $6,552,378 $342,084 $6,210,294 1.69 1.60 1.60 66.0%
6 $5,772,617 $5,552,717 $613,775 $4,938,942 1.38 1.23 1.23 61.6%
7 $2,238,030 $4,170,858 $218,592 $3,952,266 1.55 1.47 1.47 75.0%
8 $5,136,189 $5,812,760 $437,958 $5,374,802 2.24 2.07 2.07 64.7%
9 $2,112,806 $2,866,939 $315,718 $2,551,221 1.60 1.42 1.42 62.6%
10 $2,004,010 $3,372,920 $104,392 $3,268,529 2.00 1.94 1.94 54.5%
11 $1,563,853 $4,215,246 $224,125 $3,991,121 2.60 2.46 2.46 46.7%
12 $1,069,926 $3,995,689 $88,976 $3,906,713 2.55 2.49 2.49 48.3%
13 $1,656,774 $2,769,175 $95,669 $2,673,506 1.29 1.25 1.25 76.7%
14 $1,612,210 $3,429,372 $427,299 $3,002,073 2.29 1.98 1.98 50.8%
15 $820,116 $924,272 $168,448 $755,824 2.29 1.98 1.98 50.8%
16 $1,175,120 $2,831,447 $0 $2,831,447 1.99 1.99 1.99 61.6%
17 $857,451 $2,493,065 $170,218 $2,322,847 1.59 1.48 1.26 69.7%
18 $833,573 $1,994,054 $45,000 $1,949,054 1.41 1.37 1.15 75.0%
19 $1,203,792 $2,437,318 $55,246 $2,382,072 1.86 1.81 1.81 64.5%
20 $1,565,312 $1,883,895 $66,000 $1,817,895 1.51 1.45 1.45 68.2%
21 $3,944,958 $2,476,785 $256,870 $2,219,915 1.66 1.49 1.29 74.4%
22 $1,344,682 $2,666,043 $116,216 $2,549,827 2.27 2.17 2.17 54.5%
23 $526,184 $1,868,182 $75,326 $1,792,856 1.61 1.55 1.55 63.6%
24 $1,322,899 $1,363,806 $38,732 $1,325,074 1.25 1.21 1.21 75.7%
25 $2,193,336 $1,675,273 $358,717 $1,316,556 1.63 1.28 1.28 71.2%
26 $272,059 $1,224,009 $58,461 $1,165,548 1.19 1.13 1.13 79.5%
27 $154,751 $654,639 $34,119 $620,520 1.19 1.13 1.13 79.5%
28 $811,725 $1,682,206 $79,979 $1,602,227 1.71 1.63 1.33 79.7%
29 $834,238 $1,587,319 $70,000 $1,517,319 1.53 1.47 1.23 79.5%
30 $1,284,287 $1,820,493 $146,844 $1,673,649 1.82 1.67 1.40 55.7%
31 $416,870 $1,486,990 $116,963 $1,370,027 1.58 1.45 1.20 61.1%
32 $701,404 $1,921,026 $82,814 $1,838,211 2.14 2.05 2.05 46.3%
33 $1,037,447 $2,102,919 $62,012 $2,040,908 2.05 1.98 1.98 56.2%
34 $455,757 $1,741,069 $126,500 $1,614,569 1.96 1.82 1.52 60.7%
35 $5,519,042 $2,254,558 $310,944 $1,943,614 2.08 1.80 1.80 58.7%
36 $1,456,845 $1,381,969 $32,500 $1,349,469 1.70 1.66 1.66 51.4%
37 $821,725 $1,397,267 $149,272 $1,247,995 1.43 1.28 1.12 65.0%
38 $41,014 $2,009,702 $160,207 $1,849,495 2.66 2.45 2.45 48.8%
39 $29,128 $1,427,272 $23,395 $1,403,877 1.83 1.80 1.80 64.4%
40 $534,161 $1,065,178 $36,168 $1,029,010 1.48 1.43 1.43 58.4%
41 $244,559 $1,064,591 $36,519 $1,028,072 1.51 1.45 1.20 78.5%
42 $5,820,313 $1,705,429 $338,658 $1,366,771 1.93 1.55 1.55 65.7%
43 $513,950 $1,141,071 $139,904 $1,001,167 1.67 1.47 1.47 66.0%
44 $1,181,706 $1,384,058 $135,752 $1,248,306 1.93 1.74 1.46 70.6%
45 $17,187 $842,158 $0 $842,158 1.23 1.23 1.23 71.4%
46 $461,681 $1,254,098 $51,192 $1,202,906 1.95 1.87 1.55 59.7%
47 $359,344 $1,108,517 $136,107 $972,411 1.70 1.49 1.49 75.3%
48 $38,202 $1,235,187 $55,545 $1,179,642 1.62 1.54 1.54 61.2%
49 $388,404 $1,183,005 $60,272 $1,122,733 1.98 1.88 1.88 46.8%
50 $646,669 $1,178,108 $110,868 $1,067,240 1.98 1.79 1.79 66.3%
51 $1,953,031 $1,680,736 $414,520 $1,266,215 2.97 2.24 2.24 30.3%
52 $192,420 $454,497 $13,588 $440,909 1.87 1.82 1.82 50.3%
53 $89,214 $182,315 $3,635 $178,680 1.87 1.82 1.82 50.3%
54 $83,857 $173,960 $3,635 $170,325 1.87 1.82 1.82 50.3%
55 $82,542 $152,795 $3,733 $149,063 1.87 1.82 1.82 50.3%
56 $82,079 $94,321 $2,868 $91,454 1.87 1.82 1.82 50.3%
57 $548,629 $995,705 $98,937 $896,768 1.63 1.47 1.24 60.6%
58 $31,908 $1,031,697 $52,262 $979,436 1.54 1.47 1.47 63.7%
59 $545,196 $879,834 $72,437 $807,397 1.61 1.48 1.22 80.0%
60 $457,736 $977,847 $88,603 $889,244 1.75 1.59 1.33 65.1%
61 $343,724 $987,020 $66,660 $920,360 1.46 1.36 1.36 57.5%
62 $468,055 $1,233,429 $58,983 $1,174,447 2.37 2.26 2.26 46.8%
63 $940,073 $1,051,075 $210,259 $840,816 1.91 1.52 1.27 76.0%
64 $892,274 $1,022,996 $62,434 $960,563 1.92 1.80 1.51 54.2%
65 $1,749,244 $970,939 $108,807 $862,131 1.84 1.63 1.36 70.9%
66 $420,787 $1,023,221 $100,195 $923,027 1.44 1.30 1.30 70.4%
67 $1,515,255 $1,036,364 $102,065 $934,299 1.73 1.56 1.56 75.4%
68 $900,428 $1,000,179 $62,792 $937,387 1.75 1.64 1.64 59.6%
69 $529,310 $1,063,904 $79,097 $984,807 1.80 1.67 1.67 48.5%
70 $588,474 $1,384,111 $66,423 $1,317,688 2.98 2.84 2.84 36.5%
71 $1,493,995 $871,937 $94,637 $777,300 1.77 1.57 1.32 71.7%
72 $943,767 $2,342,283 $40,000 $2,302,283 4.29 4.22 4.22 24.2%
73 $89,809 $367,915 $9,828 $358,087 1.51 1.47 1.26 68.4%
74 $149,089 $385,846 $7,697 $378,149 1.51 1.47 1.26 68.4%
75 $317,654 $761,519 $77,356 $684,163 1.58 1.42 1.20 80.0%
76 $290,432 $914,339 $83,268 $831,071 1.64 1.49 1.49 62.3%
77 $220,983 $638,742 $24,500 $614,242 1.22 1.18 1.18 66.1%
78 $81,399 $394,582 $17,768 $376,814 1.37 1.30 1.30 78.8%
79 $85,889 $309,382 $17,579 $291,803 1.37 1.30 1.30 78.8%
80 $179,994 $699,307 $37,195 $662,111 1.60 1.51 1.27 80.0%
81 $873,166 $1,141,593 $199,612 $941,980 2.56 2.11 1.79 54.2%
82 $656,998 $887,207 $32,207 $855,000 2.29 2.21 2.21 48.0%
83 $1,353,337 $927,341 $39,750 $887,591 2.30 2.20 1.82 49.0%
84 $75,749 $782,552 $9,096 $773,456 1.79 1.77 1.51 56.9%
85 $0 $660,000 $0 $660,000 1.57 1.57 1.57 66.0%
86 $627,345 $1,115,671 $152,110 $963,560 2.27 1.96 1.96 46.9%
87 $1,218,589 $967,419 $45,760 $921,659 2.06 1.96 1.96 36.0%
88 $1,481,535 $985,012 $98,662 $886,350 2.58 2.32 1.91 70.5%
89 $404,451 $875,500 $81,625 $793,875 2.24 2.03 2.03 52.4%
90 $6,398 $206,877 $12,040 $194,837 2.00 1.87 1.87 54.1%
91 $6,413 $207,338 $12,040 $195,298 2.00 1.87 1.87 54.1%
92 $5,387 $174,164 $12,040 $162,124 2.00 1.87 1.87 54.1%
93 $5,102 $164,949 $12,040 $152,909 2.00 1.87 1.87 54.1%
94 $21,695 $701,471 $36,413 $665,058 1.64 1.56 1.56 58.9%
95 $240,664 $613,501 $75,032 $538,469 1.76 1.54 1.54 63.4%
96 $436,627 $832,089 $91,862 $740,227 2.20 1.96 1.67 58.9%
97 $5,079,835 $1,168,322 $249,926 $918,396 2.67 2.10 2.10 52.0%
98 $9,738 $984,466 $0 $984,466 1.99 1.99 1.99 36.4%
99 $13,959 $684,000 $0 $684,000 2.04 2.04 1.67 69.0%
100 $723,020 $622,657 $93,970 $528,687 1.41 1.20 1.20 63.3%
101 $428,088 $746,885 $16,896 $729,989 1.66 1.62 1.62 45.9%
102 $201,304 $550,161 $33,110 $517,051 1.28 1.20 1.20 61.6%
103 $347,360 $563,204 $48,649 $514,555 1.62 1.48 1.25 68.8%
104 $1,558,185 $1,022,803 $103,240 $919,563 3.32 2.98 2.98 50.0%
105 $346,836 $567,138 $27,184 $539,954 1.72 1.64 1.37 61.8%
106 $443,609 $660,446 $69,975 $590,470 1.59 1.42 1.42 60.0%
107 $379,115 $514,309 $7,500 $506,809 1.73 1.70 1.70 51.9%
108 $85,328 $567,036 $17,753 $549,283 1.42 1.38 1.38 59.3%
109 $16,996 $549,537 $19,268 $530,269 1.61 1.55 1.33 64.3%
110 $989,499 $713,788 $68,132 $645,657 2.17 1.97 1.57 75.4%
111 $2,196,879 $2,764,011 $25,000 $2,739,011 9.97 9.88 9.88 7.7%
112 $136,753 $643,065 $49,493 $593,572 2.11 1.95 1.65 51.3%
113 $0 $565,000 $0 $565,000 1.96 1.96 1.96 55.6%
114 $227,376 $538,622 $31,130 $507,492 1.92 1.81 1.81 58.8%
115 $288,744 $594,691 $8,649 $586,042 1.72 1.69 1.69 55.5%
116 $288,859 $724,016 $85,847 $638,168 2.10 1.85 1.85 49.9%
117 $1,144,620 $597,155 $69,671 $527,484 1.57 1.39 1.39 68.2%
118 $26,862 $868,538 $56,707 $811,831 3.21 3.00 3.00 39.4%
119 $286,272 $480,480 $8,665 $471,815 1.67 1.64 1.39 64.6%
120 $1,549,054 $635,268 $52,689 $582,579 2.44 2.24 2.24 36.6%
121 $377,896 $400,182 $11,000 $389,182 1.61 1.57 1.57 55.6%
122 $243,452 $728,759 $37,335 $691,424 2.40 2.28 2.28 46.8%
123 $1,227,029 $709,920 $77,478 $632,442 1.90 1.69 1.69 59.1%
124 $229,194 $495,320 $45,675 $449,645 1.55 1.41 1.41 53.1%
125 $220,571 $460,144 $51,709 $408,435 1.47 1.30 1.30 78.5%
126 $168,603 $461,144 $27,336 $433,808 1.49 1.40 1.40 79.7%
127 $111,920 $448,603 $23,988 $424,615 1.84 1.74 1.74 60.5%
128 $14,159 $457,823 $16,147 $441,677 1.93 1.86 1.86 60.0%
129 $130,379 $374,912 $18,959 $355,953 1.62 1.54 1.26 62.5%
130 $12,415 $401,415 $2,268 $399,147 1.64 1.63 1.63 65.5%
131 $126,449 $382,491 $34,509 $347,982 1.64 1.49 1.24 75.0%
132 $89,968 $281,815 $0 $281,815 1.16 1.16 1.16 38.1%
133 $126,093 $425,641 $31,477 $394,164 1.90 1.76 1.76 56.1%
134 $171,629 $872,204 $74,749 $797,455 3.13 2.86 2.86 31.3%
135 $219,273 $529,149 $42,598 $486,551 1.94 1.78 1.78 58.8%
136 $206,703 $807,408 $46,830 $760,577 2.43 2.29 2.29 31.3%
137 $59,669 $363,715 $24,375 $339,340 1.71 1.59 1.59 63.4%
138 $21,702 $132,282 $8,865 $123,417 1.71 1.59 1.59 63.4%
139 $640,357 $427,022 $53,369 $373,653 1.49 1.30 1.30 74.9%
140 $338,509 $489,323 $57,825 $431,498 1.83 1.61 1.61 53.0%
141 $162,748 $354,723 $20,682 $334,041 1.61 1.52 1.52 58.3%
142 $197,278 $415,536 $19,583 $395,953 2.10 2.00 1.65 50.7%
143 $2,956 $292,669 $0 $292,669 1.15 1.15 1.15 76.6%
144 $161,878 $422,550 $16,617 $405,933 1.70 1.63 1.63 48.5%
145 $93,837 $307,602 $13,440 $294,162 1.26 1.21 1.21 77.6%
146 $94,980 $377,998 $21,401 $356,597 1.57 1.48 1.48 63.4%
147 $106,454 $361,522 $15,411 $346,111 1.54 1.48 1.48 39.4%
148 $11,493 $371,592 $47,236 $324,356 2.01 1.75 1.75 63.5%
149 $220,330 $292,745 $12,477 $280,268 1.50 1.43 1.20 80.0%
150 $71,378 $279,422 $23,654 $255,768 1.51 1.39 1.15 52.5%
151 $222,941 $413,994 $52,864 $361,130 1.89 1.65 1.65 51.5%
152 $1,614,494 $2,354,360 $55,393 $2,298,967 10.29 10.05 10.05 8.2%
153 $78,009 $524,975 $24,422 $500,552 2.20 2.10 2.10 28.2%
154 $210,210 $413,589 $23,983 $389,606 2.09 1.97 1.97 51.9%
155 $8,563 $276,865 $8,750 $268,115 1.57 1.52 1.25 75.6%
156 $83,338 $347,428 $4,438 $342,990 1.24 1.23 1.23 54.3%
157 $1,198,167 $438,850 $65,481 $373,369 1.76 1.50 1.50 70.3%
158 $75,743 $291,556 $4,606 $286,950 1.63 1.60 1.34 57.6%
159 $311,453 $475,844 $82,245 $393,599 2.23 1.85 1.85 38.6%
160 $90,550 $319,401 $16,687 $302,713 1.73 1.64 1.39 64.9%
161 $104,229 $316,216 $21,479 $294,737 1.39 1.29 1.29 69.7%
162 $137,914 $439,469 $41,216 $398,253 2.05 1.86 1.86 47.5%
163 $250,029 $542,340 $53,528 $488,812 2.10 1.89 1.89 38.3%
164 $81,899 $366,093 $21,420 $344,673 1.45 1.36 1.36 63.4%
165 $113,533 $325,815 $17,700 $308,115 1.42 1.34 1.34 69.0%
166 $216,316 $271,251 $23,732 $247,519 1.33 1.21 1.21 72.4%
167 $64,225 $241,361 $16,130 $225,231 1.48 1.38 1.15 66.7%
168 $54,398 $321,250 $24,221 $297,029 1.58 1.46 1.46 45.8%
169 $289,556 $336,273 $12,987 $323,285 1.70 1.63 1.63 60.8%
170 $115,929 $301,607 $27,276 $274,331 1.61 1.47 1.47 53.9%
171 $83,532 $327,010 $16,204 $310,805 2.22 2.11 2.11 44.2%
172 $11,337 $272,076 $32,671 $239,406 1.52 1.34 1.34 57.9%
173 $65,600 $249,633 $2,625 $247,008 1.32 1.31 1.31 70.7%
174 $156,348 $238,840 $15,482 $223,358 1.37 1.28 1.28 73.3%
175 $62,991 $213,339 $4,095 $209,244 1.23 1.21 1.21 77.4%
176 $69,263 $250,281 $15,969 $234,313 1.45 1.36 1.36 77.8%
177 $45,833 $335,186 $10,930 $324,256 2.03 1.96 1.96 45.4%
178 $152,926 $239,980 $12,617 $227,363 1.79 1.69 1.42 73.5%
179 $69,282 $206,365 $12,445 $193,920 1.28 1.20 1.20 60.2%
180 $95,467 $197,633 $6,107 $191,526 1.25 1.21 1.21 58.7%
181 $41,663 $236,894 $12,346 $224,548 1.88 1.78 1.47 63.8%
182 $131,949 $249,917 $8,325 $241,592 1.78 1.72 1.48 71.0%
183 $152,411 $191,377 $1,935 $189,442 1.23 1.21 1.21 62.8%
184 $51,138 $243,299 $6,558 $236,741 1.45 1.41 1.41 59.5%
185 $4,940 $242,073 $3,527 $238,547 1.83 1.80 1.80 65.0%
186 $5,078 $225,970 $1,986 $223,984 1.46 1.45 1.45 67.3%
187 $225,608 $400,146 $30,320 $369,827 2.52 2.33 2.33 40.1%
188 $85,135 $254,342 $12,520 $241,822 1.38 1.31 1.31 65.7%
189 $109,404 $236,729 $5,760 $230,969 1.88 1.83 1.54 43.8%
190 $52,869 $196,389 $9,581 $186,808 1.31 1.25 1.25 79.2%
191 $61,217 $225,163 $20,194 $204,969 1.50 1.36 1.36 64.9%
192 $63,442 $197,605 $3,992 $193,613 1.34 1.31 1.31 76.1%
193 $219,276 $314,998 $12,049 $302,949 2.19 2.11 2.11 51.9%
194 $211,945 $423,466 $19,067 $404,399 2.39 2.28 2.28 23.2%
195 $88,341 $193,250 $15,852 $177,398 1.27 1.17 1.17 69.5%
196 $89,318 $273,973 $19,216 $254,756 1.95 1.82 1.82 59.0%
197 $7,448 $245,306 $3,589 $241,717 2.22 2.18 2.18 58.7%
198 $252,894 $195,482 $27,000 $168,482 1.46 1.25 1.25 73.7%
199 $75,514 $245,250 $8,660 $236,590 2.26 2.18 1.80 53.9%
200 $246,481 $248,560 $29,470 $219,090 1.73 1.52 1.52 37.2%
201 $93,495 $167,943 $3,475 $164,468 1.24 1.22 1.22 75.2%
202 $86,517 $191,860 $12,757 $179,103 1.82 1.70 1.40 59.1%
203 $6,128 $198,123 $3,000 $195,123 1.68 1.65 1.65 64.9%
204 $165,991 $456,182 $26,341 $429,842 3.01 2.84 2.84 26.1%
205 $47,843 $188,975 $0 $188,975 1.84 1.84 1.84 64.9%
206 $177,450 $260,699 $28,396 $232,303 2.01 1.79 1.79 35.7%
207 $410,142 $562,290 $28,709 $533,581 3.29 3.12 3.12 25.1%
208 $181,341 $387,407 $23,050 $364,358 2.60 2.44 2.44 23.7%
209 $321,655 $386,005 $60,016 $325,989 2.99 2.53 2.53 24.0%
210 $53,736 $159,934 $5,500 $154,434 1.27 1.23 1.23 80.0%
211 $132,038 $207,005 $27,308 $179,697 2.24 1.94 1.61 62.7%
212 $63,125 $274,951 $10,566 $264,385 2.14 2.06 2.06 36.7%
213 $104,364 $228,846 $16,959 $211,887 2.03 1.88 1.88 52.3%
214 $57,155 $212,277 $4,664 $207,614 1.14 1.12 1.12 76.8%
215 $143,656 $212,607 $7,941 $204,667 2.42 2.33 1.92 51.7%
216 $9,884 $120,373 $2,212 $118,161 1.44 1.41 1.41 59.3%
217 $3,595 $43,780 $805 $42,975 1.44 1.41 1.41 59.3%
218 $175,635 $183,911 $5,137 $178,774 1.69 1.65 1.65 52.0%
219 $25,074 $136,011 $4,194 $131,817 1.30 1.26 1.26 70.3%
220 $166,948 $133,036 $5,600 $127,436 1.27 1.22 1.22 75.7%
221 $53,018 $137,226 $10,998 $126,228 1.35 1.24 1.24 63.3%
222 $40,223 $163,315 $25,313 $138,002 1.64 1.39 1.39 54.2%
223 $87,837 $174,854 $25,541 $149,313 2.27 1.94 1.49 52.2%
224 $116,626 $123,979 $0 $123,979 1.75 1.75 1.75 55.8%
225 $60,645 $127,486 $9,280 $118,206 1.73 1.60 1.34 64.1%
226 $55,234 $161,107 $10,500 $150,607 1.77 1.65 1.65 51.9%
227 $116,142 $221,387 $9,853 $211,534 2.40 2.29 2.29 36.5%
228 $7,109 $121,791 $3,412 $118,380 1.59 1.55 1.55 65.3%
229 $1,286 $127,415 $0 $127,415 1.82 1.82 1.52 56.6%
230 $4,042 $130,706 $9,307 $121,398 1.48 1.38 1.38 73.1%
231 $55,934 $132,004 $2,260 $129,744 1.85 1.82 1.55 64.8%
232 $83,265 $128,526 $18,761 $109,766 1.59 1.36 1.36 70.8%
233 $72,353 $114,067 $2,883 $111,184 1.44 1.41 1.41 77.1%
234 $37,635 $96,563 $2,386 $94,178 1.44 1.40 1.20 75.7%
235 $181,518 $114,620 $20,700 $93,920 1.54 1.26 1.26 65.8%
236 $62,487 $99,161 $5,760 $93,401 1.27 1.20 1.20 53.8%
237 $18,285 $100,627 $4,827 $95,800 1.35 1.28 1.28 68.6%
238 $46,120 $101,754 $3,634 $98,120 1.35 1.30 1.30 66.8%
239 $46,592 $129,453 $4,200 $125,253 1.82 1.77 1.77 52.6%
240 $50,925 $146,580 $19,140 $127,440 1.92 1.67 1.67 38.4%
241 $2,308 $113,073 $3,767 $109,306 1.56 1.51 1.51 58.6%
242 $36,939 $122,311 $8,963 $113,348 1.38 1.28 1.28 68.7%
243 $28,232 $96,212 $2,878 $93,334 1.60 1.56 1.24 57.7%
244 $4,708 $152,226 $3,379 $148,847 2.24 2.19 2.19 36.6%
245 $87,160 $107,932 $9,000 $98,932 1.58 1.44 1.44 74.9%
246 $31,365 $80,858 $2,433 $78,425 1.24 1.20 1.20 48.3%
247 $15,515 $55,309 $2,716 $52,593 1.37 1.30 1.30 48.1%
1.95 1.82 1.77 59.6%
MORTGAGE BALLOON BALLOON APPRAISED VALUATION LEASE
LOAN NO. LTV BALANCE VALUE DATE(11) LARGEST TENANT(12) EXPIRATION DATE
------------------------------------------------------------------------------------------------------------------------------------
1 41.1% $150,000,000 $365,000,000 01/03/2007 Interpublic Group 12/31/2014
2 54.4% $112,695,000 $207,260,000 12/01/2006 AT&T Services, Inc. 09/20/2017
3 55.6% $89,000,000 $160,000,000 01/01/2007 Fulbright & Jaworski L.L.P. 02/28/2014
4 57.5% $58,602,571 $102,000,000 02/05/2007 The E.W. Scripps Company 11/30/2012
5 66.0% $68,250,000 $103,400,000 12/05/2006 Academy,Ltd. 01/31/2027
6 61.6% $65,000,000 $105,550,000 07/24/2006 Viad Corp 08/31/2011
7 75.0% $48,000,000 $64,000,000 12/12/2006 Frank Russell Company 11/30/2013
8 64.7% $45,000,000 $69,500,000 11/02/2006 NAP NAP
9 62.6% $31,500,000 $50,300,000 01/26/2007 Manugistics 03/31/2008
10 54.5% $30,275,000 $55,500,000 10/22/2006 L.A. Fitness 01/21/2022
11 46.7% $30,000,000 $64,200,000 08/29/2006 Bath and Body Works 12/31/2015
12 48.3% $28,500,000 $59,000,000 01/17/2007 Home Depot U.S.A., Inc. 01/31/2014
13 66.3% $24,200,438 $36,500,000 02/01/2007 Physicians Office 01/03/2022
14 43.8% $18,376,084 $41,000,000 02/21/2007 Accpac International 07/01/2007
15 43.8% $5,704,328 $14,000,000 02/21/2007 Simons & Brecht Inc. dba Stony Point Executive Offices 12/31/2010
16 61.6% $26,000,000 $42,200,000 11/03/2006 Creative Office Interiors 02/28/2015
17 63.4% $22,726,400 $35,850,000 01/04/2007 BTJD 09/30/2011
18 73.2% $23,436,856 $32,000,000 12/01/2006 NAP NAP
19 64.5% $23,400,000 $36,300,000 12/06/2006 Abercrombie & Fitch 01/31/2008
20 68.2% $23,000,000 $33,700,000 10/16/2006 NAP NAP
21 66.7% $20,608,416 $30,900,000 12/27/2006 NAP NAP
22 54.5% $22,035,000 $40,400,000 06/12/2006 Borders, Inc. 06/30/2023
23 63.6% $21,000,000 $33,000,000 10/04/2006 Juicy Couture 05/31/2016
24 75.7% $19,000,000 $25,100,000 01/17/2007 Astoria Federal Savings & Loan 03/31/2017
25 71.2% $18,300,000 $25,700,000 12/12/2006 Wells Fargo Bank, N.A. 08/31/2010
26 68.5% $10,280,386 $15,000,000 11/17/2006 Sierra Trading Post, Inc. 11/30/2021
27 68.5% $5,482,872 $8,000,000 11/17/2006 Sierra Trading Post, Inc. 11/30/2021
28 71.3% $15,982,158 $22,400,000 12/12/2006 Carmike Cinema 6 01/31/2024
29 74.3% $16,419,761 $22,100,000 10/06/2006 NAP NAP
30 51.2% $15,620,663 $30,500,000 01/11/2007 AGFA 02/29/2012
31 54.9% $14,826,018 $27,000,000 01/04/2007 Interior Specialists, Inc. 10/31/2010
32 46.3% $15,500,000 $33,500,000 11/10/2006 Giant Food 04/30/2012
33 46.7% $12,880,544 $27,600,000 01/08/2007 Shop Rite 06/30/2023
34 55.7% $13,908,150 $24,950,000 11/11/2006 Custom Marketing Services, Inc. 04/30/2013
35 50.0% $12,750,637 $25,500,000 12/12/2006 NAP NAP
36 51.4% $14,750,000 $28,700,000 10/11/2006 NAP NAP
37 57.3% $12,785,363 $22,300,000 03/01/2007 Piedmont Fayette Hospital 09/30/2016
38 48.8% $13,755,000 $28,200,000 12/05/2006 Household Credit Services, Inc. 09/30/2014
39 64.4% $12,880,000 $20,000,000 10/16/2006 FedEx Freight East, Inc. 09/30/2021
40 58.4% $12,500,000 $21,400,000 01/24/2007 NAP NAP
41 73.1% $11,642,831 $15,920,000 01/02/2007 Natural Body International, Inc. 01/31/2016
42 55.6% $10,572,207 $19,000,000 01/10/2007 NAP NAP
43 66.0% $12,000,000 $18,190,000 11/18/2006 K-Mart #4723 08/31/2011
44 68.1% $11,570,155 $17,000,000 12/05/2006 United Space Alliance 05/31/2011
45 71.4% $12,000,000 $16,800,000 10/27/2006 North Fork Bank 02/28/2031
46 52.6% $9,788,378 $18,600,000 01/28/2007 Ross Store 01/31/2016
47 75.3% $11,100,000 $14,750,000 11/10/2006 Thomson Broadcast Media Solutions 08/05/2017
48 51.5% $9,318,841 $18,100,000 11/17/2006 Rave Review Cinemas 08/31/2023
49 46.8% $10,850,000 $23,200,000 10/06/2006 Citibank, N.A. #18 08/31/2017
50 66.3% $10,500,000 $15,840,000 11/18/2006 TJ Maxx n' More 03/31/2013
51 30.3% $10,000,000 $33,000,000 11/10/2006 S.K.I.P. of New York, Inc. 07/31/2010
52 50.3% $4,000,000 $8,500,000 12/15/2006 Panache Editorial, Inc. 07/01/2008
53 50.3% $1,750,000 $3,120,000 12/15/2006 Piattini 02/01/2011
54 50.3% $1,750,000 $2,715,000 12/15/2006 European Watch Co. 08/01/2008
55 50.3% $1,500,000 $3,100,000 12/15/2006 Sleek, Inc. 07/01/2008
56 50.3% $1,000,000 $2,450,000 12/15/2006 Teuscher 04/01/2009
57 54.9% $9,052,859 $16,500,000 11/15/2006 Flowserve U.S., Inc. 05/31/2007
58 53.6% $8,143,492 $15,200,000 12/01/2006 Rave Review Cinemas 09/24/2023
59 76.9% $9,233,698 $12,000,000 11/16/2006 Winn-Dixie 10/06/2014
60 58.7% $8,569,583 $14,600,000 01/13/2007 Smitty's Market, LLC 07/31/2026
61 48.9% $8,045,626 $16,450,000 10/13/2006 Scenic Expressions, Inc. 01/31/2016
62 46.8% $9,350,000 $20,000,000 10/18/2006 The Stop & Shop Supermarket Company d/b/a Stop & Shop 09/30/2018
63 73.2% $9,005,733 $12,300,000 10/14/2006 NC Mutual 12/01/2018
64 49.9% $8,277,178 $16,600,000 05/31/2006 ShopRite of Carteret, Inc. 05/31/2031
65 62.6% $7,949,441 $12,700,000 11/13/2006 NAP NAP
66 47.2% $6,000,052 $12,700,000 07/20/2006 Provo Craft & Novelty, Inc 03/31/2020
67 63.5% $7,244,230 $11,400,000 01/01/2007 NAP NAP
68 49.7% $7,153,539 $14,400,000 12/28/2006 NAP NAP
69 40.9% $7,159,740 $17,500,000 11/15/2006 La-Z-Boy, Inc. 08/31/2008
70 36.5% $8,350,000 $22,900,000 10/18/2006 Home Depot 01/31/2016
71 63.5% $7,305,520 $11,500,000 12/28/2006 NAP NAP
72 20.3% $6,790,422 $33,500,000 10/13/2006 NAP NAP
73 60.9% $3,595,962 $5,900,000 01/16/2007 Redstone American Grill 01/31/2022
74 60.9% $3,535,013 $5,800,000 01/04/2007 Redstone American Grill 01/31/2022
75 74.9% $7,487,704 $10,000,000 12/20/2006 Long Island Jewish Medical Ctr 09/30/2010
76 53.0% $6,619,433 $12,500,000 09/05/2006 Core-Mark, International, Inc. 04/22/2016
77 55.9% $6,317,792 $11,300,000 09/18/2006 Lenscrafters, Inc. 12/31/2011
78 66.4% $3,464,124 $5,200,000 01/03/2007 Food Lion 06/06/2020
79 66.4% $2,748,543 $4,150,000 01/03/2007 Food Lion 05/19/2018
80 72.3% $6,648,046 $9,200,000 01/18/2007 Bi-Lo 12/31/2019
81 47.2% $6,368,921 $13,500,000 08/06/2006 Election Systems & Software, Inc. 10/31/2011
82 48.0% $7,200,000 $15,000,000 11/10/2006 NAP NAP
83 45.7% $6,530,072 $14,300,000 11/10/2006 NAP NAP
84 51.7% $6,355,999 $12,300,000 08/08/2006 The Stop & Shop Supermarket Company d/b/a Stop & Shop 11/30/2026
85 66.0% $7,000,000 $10,600,000 08/22/2006 Walgreen Co. 01/31/2082
86 39.7% $5,910,509 $14,900,000 11/03/2006 East West bank 07/16/2016
87 30.1% $5,840,234 $19,400,000 12/27/2006 NAP NAP
88 63.4% $6,023,378 $9,500,000 01/23/2007 NAP NAP
89 52.4% $6,500,000 $12,400,000 01/10/2007 Tile Force 04/30/2008
90 54.1% $1,750,000 $3,190,000 09/16/2006 Tractor Supply Company 02/28/2021
91 54.1% $1,725,000 $3,140,000 09/14/2006 Tractor Supply Company 11/13/2021
92 54.1% $1,405,000 $2,630,000 09/14/2006 Tractor Supply Company 05/31/2021
93 54.1% $1,325,000 $2,500,000 09/14/2006 Tractor Supply Company 10/23/2021
94 49.6% $5,205,118 $10,500,000 11/28/2006 Rave Review Cinemas 06/30/2021
95 63.4% $6,150,000 $9,700,000 10/23/2006 Jet Propulsion Laboratory 06/30/2009
96 53.4% $5,531,680 $10,350,000 09/19/2006 ARC Thrift Store 07/31/2009
97 44.2% $5,176,357 $11,700,000 09/28/2006 NAP NAP
98 23.5% $3,875,623 $16,500,000 02/05/2007 Mrs. Gooch's Natural Food Market, Inc. 07/31/2021
99 61.8% $5,376,426 $8,700,000 11/17/2006 Western Union Financial Services, Inc. 11/30/2016
100 51.2% $4,834,002 $9,450,000 12/21/2006 NGS 05/31/2011
101 41.6% $5,411,230 $13,000,000 11/09/2006 NAP NAP
102 52.7% $5,033,355 $9,550,000 12/01/2006 West Marine Products, Inc. 12/05/2007
103 60.4% $5,072,040 $8,400,000 09/28/2006 Fidelity National Title Company 01/31/2011
104 50.0% $5,500,000 $11,000,000 10/18/2006 NAP NAP
105 58.5% $5,209,728 $8,900,000 12/11/2006 NAP NAP
106 46.4% $4,239,386 $9,130,000 11/20/2006 Suby Von Haden & Associates, S.C. 12/31/2021
107 51.9% $5,400,000 $10,400,000 10/11/2006 NAP NAP
108 50.8% $4,623,858 $9,100,000 01/02/2007 Mattress Discounters 12/31/2013
109 60.4% $5,073,431 $8,400,000 05/15/2006 Sportsman's Warehouse 04/30/2021
110 65.1% $4,491,604 $6,900,000 01/01/2007 NAP NAP
111 7.7% $5,075,000 $65,900,000 10/31/2006 NAP NAP
112 45.5% $4,438,657 $9,745,000 08/22/2006 Rodda Paint 05/31/2011
113 55.6% $5,000,000 $9,000,000 11/12/2006 Walgreen Co. 09/30/2079
114 58.8% $5,000,000 $8,500,000 12/08/2006 Smith and Hawken Ltd 01/31/2009
115 46.8% $4,207,778 $9,000,000 01/10/2007 NAP NAP
116 42.0% $4,200,222 $10,000,000 11/03/2006 Walgreen Co. 11/30/2016
117 52.9% $3,861,180 $7,300,000 07/28/2006 NAP NAP
118 39.4% $4,800,000 $12,180,000 11/06/2006 HOM Furniture, Inc. 01/31/2022
119 58.6% $4,217,285 $7,200,000 01/05/2007 NAP NAP
120 36.6% $4,500,000 $12,300,000 10/26/2006 Calypso St. Barth, Inc. 11/14/2011
121 55.6% $4,500,000 $8,100,000 10/11/2006 NAP NAP
122 39.2% $3,759,597 $9,600,000 11/03/2006 Piggly Wiggly 09/30/2017
123 38.5% $2,924,476 $7,600,000 12/05/2006 NAP NAP
124 45.0% $3,806,696 $8,450,000 11/16/2006 Social Security Administration 04/01/2008
125 73.5% $4,118,559 $5,600,000 02/01/2007 Creative Business Interiors 04/30/2012
126 67.5% $3,714,373 $5,500,000 11/02/2006 Dr.Lomas 05/31/2011
127 60.5% $4,200,000 $6,940,000 12/13/2006 ViaSat, Inc. 02/29/2012
128 60.0% $4,140,000 $6,900,000 12/01/2006 LZB Furniture Galleries of Paramus, Inc. 12/26/2021
129 54.9% $3,603,291 $6,560,000 11/08/2006 River City Bank 07/31/2016
130 65.5% $4,050,000 $6,180,000 11/08/2006 Walgreen Co. 07/20/2021
131 66.1% $3,571,823 $5,400,000 01/12/2007 CO Diagnostic Laboratory, LLC 01/31/2012
132 38.1% $4,000,000 $10,500,000 10/01/2006 Nephrology Foundation of Brooklyn 02/28/2011
133 56.1% $4,000,000 $7,125,000 11/07/2006 Heal the Bay 09/30/2010
134 26.4% $3,372,349 $12,750,000 01/16/2007 Xencor, Inc. 10/31/2011
135 49.3% $3,351,720 $6,800,000 12/26/2006 Piggly Wiggly 08/08/2014
136 20.4% $2,594,624 $12,700,000 11/16/2006 Wheel & Tire Connection 09/30/2011
137 47.0% $2,135,969 $4,600,000 11/10/2006 Primos Hunting Calls 12/31/2021
138 47.0% $776,846 $1,600,000 12/06/2006 Optronics 12/31/2021
139 58.1% $2,905,347 $5,000,000 04/01/2007 NAP NAP
140 45.0% $3,179,394 $7,060,000 12/11/2006 Comstock Mortgage MTM
141 58.3% $3,700,000 $6,350,000 10/27/2006 Bonfare Markets, Inc. 03/31/2011
142 44.6% $3,076,701 $6,900,000 09/29/2006 Rite-Aid of N.Y. Store 08/31/2011
143 65.4% $2,982,981 $4,560,000 01/01/2007 Branch Banking and Trust 02/28/2037
144 41.2% $2,963,078 $7,200,000 09/28/2006 Research Foundation of the CUNY 07/31/2014
145 65.5% $2,946,371 $4,500,000 12/07/2006 Mar Maxx Operating Corp. 10/31/2011
146 53.8% $2,876,722 $5,350,000 12/14/2006 Blockbuste Video 05/30/2009
147 33.5% $2,793,760 $8,350,000 11/30/2006 Land's End Inc. dba Venice Bistro 05/31/2010
148 63.5% $3,290,000 $5,180,000 11/27/2006 Minyard Food Stores, Inc. 04/30/2020
149 72.2% $2,961,169 $4,100,000 12/15/2006 NAP NAP
150 46.3% $2,822,182 $6,100,000 12/14/2006 St Worth Containers 05/31/2009
151 43.2% $2,680,791 $6,200,000 01/05/2007 Family Dollar Stores of Florida, Inc. 12/31/2008
152 7.0% $2,714,900 $38,900,000 09/05/2006 NAP NAP
153 21.7% $2,453,098 $11,300,000 10/23/2006 Sullivan Moving and Storage Company 11/30/2016
154 51.9% $3,100,000 $5,970,000 10/31/2006 G.I. Joe's, Inc. 02/15/2018
155 67.9% $2,784,383 $4,100,000 11/21/2006 Rite Aid 05/31/2026
156 2.0% $114,482 $5,700,000 12/07/2006 Walgreen Co. 12/31/2060
157 55.5% $2,441,113 $4,400,000 08/30/2006 NAP NAP
158 53.8% $2,821,633 $5,240,000 03/05/2007 Islands NewburyPark, LLC 01/31/2022
159 36.2% $2,822,063 $7,800,000 11/17/2006 City of Las Vegas 11/30/2010
160 60.9% $2,812,849 $4,620,000 12/11/2006 Denny's 04/30/2019
161 53.9% $2,318,369 $4,300,000 12/18/2006 William Milks (The Office) 09/30/2010
162 40.4% $2,543,515 $6,300,000 12/04/2006 Goalmaker Inc. 08/31/2009
163 25.4% $1,978,405 $7,800,000 10/23/2006 SunPlus Home Health 12/31/2009
164 41.7% $1,959,879 $4,700,000 11/10/2006 Cool Springs Wine/Spirits 10/31/2020
165 54.0% $2,296,791 $4,250,000 10/01/2006 Rezik Saqer, M.D. 09/30/2018
166 61.3% $2,451,579 $4,000,000 12/29/2006 NAP NAP
167 62.2% $2,613,350 $4,200,000 12/14/2006 ABC School Supply 10/25/2010
168 39.3% $2,356,236 $6,000,000 01/09/2007 August Supply, Inc 12/31/2021
169 52.3% $2,352,239 $4,500,000 12/27/2005 NAP NAP
170 45.4% $2,270,863 $5,000,000 11/20/2006 Advance Cleaning 09/30/2010
171 44.2% $2,500,000 $5,650,000 11/07/2006 Cost-Plus, Inc. 06/09/2012
172 49.4% $2,122,882 $4,300,000 09/13/2006 Kmart #4390 12/31/2011
173 66.8% $2,338,827 $3,500,000 12/06/2006 CICO Enterprise, LTD 01/31/2019
174 62.4% $2,060,215 $3,300,000 01/03/2007 Eagle Liquor and Tobacco, Inc. 02/28/2008
175 65.9% $2,042,143 $3,100,000 01/26/2007 TD Banknorth 01/31/2017
176 73.2% $2,197,486 $3,000,000 09/12/2006 Cherubim & Seraphim Church of GA MTM
177 38.7% $1,952,881 $5,050,000 11/01/2006 Starbucks 09/30/2016
178 67.6% $2,087,919 $3,090,000 10/10/2006 NAP NAP
179 51.2% $1,908,958 $3,725,000 10/03/2006 The Little Gym 12/31/2009
180 49.8% $1,901,091 $3,820,000 11/15/2006 NAP NAP
181 57.3% $1,977,311 $3,450,000 11/07/2006 Fullerton Collision & Paint 04/30/2009
182 63.5% $1,967,459 $3,100,000 12/07/2006 NAP NAP
183 53.2% $1,863,705 $3,500,000 09/28/2006 Foot Locker Specialty, Inc. 01/31/2017
184 46.2% $1,697,010 $3,675,000 01/16/2007 Golden Corral 07/31/2026
185 65.0% $2,185,000 $3,360,000 10/16/2006 FedEx Freight East, Inc. 09/30/2021
186 57.3% $1,833,672 $3,200,000 10/17/2006 CVS 02/28/2023
187 30.7% $1,643,447 $5,350,000 12/18/2006 Farmington Municipal Liquor Store 12/01/2011
188 43.6% $1,416,475 $3,250,000 10/11/2006 Interstate Companies, Inc. 03/04/2016
189 37.1% $1,780,492 $4,800,000 12/08/2006 Blockbuster Inc. 04/30/2010
190 67.2% $1,781,102 $2,650,000 01/17/2007 Richmond Goodwill Industries, Inc. 01/31/2013
191 55.2% $1,781,695 $3,225,000 10/27/2006 Solyndra, Inc. 01/31/2011
192 64.5% $1,774,290 $2,750,000 10/01/2006 Hertz Equipment Rental Corporation 11/15/2021
193 44.2% $1,700,790 $3,850,000 12/18/2006 NAP NAP
194 15.5% $1,336,923 $8,600,000 01/01/2007 Acqua Beauty Bar NYC Inc. 05/31/2015
195 55.5% $1,587,707 $2,860,000 09/20/2006 The Kansas City Star 05/24/2012
196 50.0% $1,674,773 $3,350,000 11/28/2006 Harvest Meat Company, Inc. 06/26/2016
197 58.7% $1,930,000 $3,290,000 10/01/2006 Staples, Inc. 06/30/2013
198 62.2% $1,616,014 $2,600,000 01/09/2007 NAP NAP
199 48.5% $1,708,122 $3,525,000 01/03/2007 Jos. A Bank Clothiers 01/31/2009
200 28.8% $1,466,800 $5,100,000 01/26/2007 Cathay Bank 12/31/2009
201 63.8% $1,609,002 $2,520,000 11/20/2006 NAP NAP
202 53.1% $1,661,979 $3,130,000 12/28/2006 Magnolia Diner 04/30/2008
203 64.9% $1,850,000 $2,850,000 10/01/2006 Office Depot 08/31/2021
204 17.1% $1,174,385 $6,860,000 11/14/2006 Alcan Products Corporation 05/31/2012
205 64.9% $1,790,000 $2,760,000 11/20/2006 Brinker Chili's Texas, Inc. 11/30/2025
206 28.8% $1,413,564 $4,900,000 01/15/2007 Silverado Hospice, Inc. 02/15/2009
207 0.5% $35,425 $6,950,000 12/28/2006 NAP NAP
208 15.6% $1,148,803 $7,350,000 11/23/2006 Banana Leaf, Inc. 01/30/2014
209 20.6% $1,453,613 $7,050,000 11/16/2006 Accubanc Mortgage Corp. 02/28/2007
210 62.2% $1,276,058 $2,050,000 10/03/2006 NAP NAP
211 58.6% $1,493,352 $2,550,000 01/11/2006 International Paper Company 06/30/2011
212 28.9% $1,259,740 $4,360,000 01/09/2007 PETCO Animal Supplies, Inc. 01/31/2012
213 44.3% $1,350,946 $3,050,000 11/08/2006 Benedetto's Restaurant 02/28/2021
214 1.5% $30,709 $2,075,000 01/16/2007 US Government 08/31/2015
215 45.4% $1,362,539 $3,000,000 10/03/2006 JP Morgan Chase Manhattan Bank 04/30/2011
216 51.1% $699,816 $1,370,000 12/14/2006 Starbucks 08/31/2016
217 51.1% $602,761 $1,180,000 12/13/2006 Autozone Development Corporation 09/26/2026
218 48.8% $1,405,875 $2,880,000 11/30/2006 NAP NAP
219 59.8% $1,243,659 $2,080,000 01/03/2007 Advance Auto 01/31/2022
220 64.6% $1,227,075 $1,900,000 01/08/2007 NAP NAP
221 53.8% $1,210,033 $2,250,000 01/08/2007 Ferguson Enterprises, Inc. 10/30/2009
222 46.4% $1,154,978 $2,490,000 01/15/2007 RV Collision Center MTM
223 43.1% $1,099,322 $2,550,000 12/11/2006 Core Laboratories 08/31/2009
224 55.8% $1,250,000 $2,240,000 11/15/2006 Comerica Bank 12/31/2026
225 55.5% $1,081,857 $1,950,000 10/02/2006 Planet Dry Cleaners #9 12/31/2013
226 44.4% $1,066,076 $2,400,000 09/01/2006 Sunbelt Rentals, Inc. 10/31/2021
227 31.4% $1,059,762 $3,380,000 09/14/2006 Christy Salon 04/30/2010
228 65.3% $1,215,000 $1,860,000 12/21/2006 Advance Stores Company, Inc. 10/31/2021
229 49.9% $1,058,714 $2,120,000 12/18/2006 Wachovia Bank N.A. 07/31/2021
230 62.8% $1,017,058 $1,620,000 12/20/2006 Transmetco Corporation 06/30/2014
231 57.7% $1,024,172 $1,775,000 01/16/2007 Bifferato, Gentilotti, Biden & Balick, L.L.C 01/31/2008
232 60.6% $939,390 $1,550,000 11/01/2006 White Cap Construction Supply 01/31/2013
233 65.9% $922,443 $1,400,000 01/19/2007 NAP NAP
234 67.5% $958,014 $1,420,000 01/10/2007 Starbucks Corporation 04/30/2015
235 55.7% $890,454 $1,600,000 01/09/2007 NAP NAP
236 46.2% $901,190 $1,950,000 12/15/2006 NAP NAP
237 58.5% $877,486 $1,500,000 12/10/2006 Advance Stores Company, Inc. 09/30/2021
238 57.3% $871,223 $1,520,000 12/21/2006 Advance Auto Stores Company 07/31/2020
239 44.6% $847,139 $1,900,000 01/16/2007 Aaron Brothers Art/Framing 02/28/2014
240 33.2% $863,227 $2,600,000 06/29/2006 Pacific Imaging Services Inc 04/15/2018
241 50.1% $850,900 $1,700,000 11/04/2006 Discount Auto Parts 01/31/2020
242 2.3% $32,902 $1,450,000 01/03/2007 Gluck, Allen & Gertner, LLC 12/31/2027
243 48.2% $802,940 $1,665,000 12/29/2006 Jack in the Box 09/30/2015
244 31.2% $806,004 $2,585,000 11/09/2006 NTW Incorporated 09/30/2031
245 63.9% $805,268 $1,260,000 12/23/2006 NAP NAP
246 41.3% $763,769 $1,850,000 01/15/2007 NAP NAP
247 41.2% $470,097 $1,140,000 11/21/2006 Airgas West, Inc 03/03/2013
55.6%
MORTGAGE LEASE
LOAN NO. % NSF SECOND LARGEST TENANT(12) EXPIRATION DATE % NSF THIRD LARGEST TENANT(12)
------------------------------------------------------------------------------------------------------------------------------------
1 34.4% Telerep Inc. 08/31/2018 9.7% Babcock & Brown, L.P.
2 100.0% NAP NAP NAP NAP
3 30.0% Key Energy Services, Inc. 06/14/2016 6.0% Pulse EFT Association
4 15.3% Thompson Hine LLP 12/31/2010 11.0% Ernst and Young U.S. LLP
5 100.0% NAP NAP NAP NAP
6 33.2% LandAmerica Financial Group, Inc. 02/28/2009 12.4% PricewaterhouseCoopers LLP
7 100.0% NAP NAP NAP NAP
8 NAP NAP NAP NAP NAP
9 12.0% Carecentric 08/31/2012 8.6% Insurance Office of America
10 35.0% Barnes & Noble 08/31/2016 19.7% Pier 1 Imports
11 31.7% Old Navy / The Gap 01/31/2018 16.7% New York Sports Club
12 32.1% King Soopers 09/30/2018 21.3% PETSMART, Inc.
13 39.6% Gillette Children's Specialty Healthcare 01/03/2027 33.8% Regions Hospital Surgery Center
14 18.7% Intuit Inc. 07/01/2007 11.6% NTS Technical Systems dba Phase Seven
Laboratories Inc.
15 20.6% Santa Rosa Orthopaedic Medical Group 10/31/2011 12.4% Institute of Reading Development, Inc.
16 34.7% Unigraphics, Inc. 01/31/2014 11.9% Horizon Air Services
17 19.5% Interbank FX 04/30/2013 13.9% Snowbird
18 NAP NAP NAP NAP NAP
19 8.7% Banana Republic 01/01/2010 7.4% Wheatfields
20 NAP NAP NAP NAP NAP
21 NAP NAP NAP NAP NAP
22 17.6% Office Depot 12/31/2007 17.3% Factory Card Outlet of America
23 84.7% Madison Shoe Corp of NY 12/31/2011 15.3% NAP
24 100.0% NAP NAP NAP NAP
25 31.5% AT&T Corp. 10/31/2009 30.9% The McGraw-Hill Companies, Inc.
26 100.0% NAP NAP NAP NAP
27 100.0% NAP NAP NAP NAP
28 13.4% Boomtown 06/30/2016 3.0% Fed Ex/Kinkos
29 NAP NAP NAP NAP NAP
30 59.1% Hartz Mountain Industries-NJ L.L.C. 04/01/2018 40.9% NAP
31 11.9% Fursys USA, Inc. 09/30/2007 7.3% Sheer Management Group, LLC
32 45.7% Fitness First 05/31/2012 12.7% Bombay Cafe, Inc.
33 52.0% Hollywood Video 04/30/2008 5.2% Byram Beverage
34 65.2% Southern Living at Home 04/30/2013 34.8% NAP
35 NAP NAP NAP NAP NAP
36 NAP NAP NAP NAP NAP
37 39.9% Cardiac Disease Specialists 11/30/2016 11.0% Peachtree Fayette Women's
38 100.0% NAP NAP NAP NAP
39 100.0% NAP NAP NAP NAP
40 NAP NAP NAP NAP NAP
41 13.1% South City Kitchen 02/28/2016 11.9% Muss & Turners, Inc.
42 NAP NAP NAP NAP NAP
43 49.7% Stein Mart #033 08/31/2009 20.5% Shoe Carnival
44 100.0% NAP NAP NAP NAP
45 100.0% NAP NAP NAP NAP
46 37.1% Longs Drugs 08/31/2056 19.4% Lane Bryant
47 100.0% NAP NAP NAP NAP
48 100.0% NAP NAP NAP NAP
49 40.0% Kismet Comics Inc. 12/31/2010 15.8% Buy-Rite Bakery LLC
50 29.8% Joann Stores, Inc. 01/31/2016 19.7% Shoe Station of Florida
51 7.7% S.K.I.P. of New York, Inc. 09/30/2009 7.4% Morelle Products
52 32.9% BioEngine Inc. 12/01/2008 19.7% For Eyes Optical, Co.
53 20.0% Tanorama 08/01/2008 20.0% NAP
54 20.0% Luxlash, Inc. 08/01/2007 20.0% NAP
55 40.7% NAP NAP NAP NAP
56 20.0% NAP NAP NAP NAP
57 18.5% Nextel Communications 11/30/2011 16.4% Arete Development, Inc.
58 100.0% NAP NAP NAP NAP
59 43.7% Beall's Outlet Stores 04/30/2012 9.9% Indrio Gym & Fitness
60 39.3% Smitty's Wine and Spirits 02/28/2016 8.5% Dollar General
61 66.9% Warner Brothers Records, Inc. 08/31/2012 33.1% NAP
62 100.0% NAP NAP NAP NAP
63 52.9% Center for Child and Family Health 10/31/2013 11.0% Shaw University
64 42.7% Strauss Discount Auto 07/31/2009 10.3% Dollar Tree Store
65 NAP NAP NAP NAP NAP
66 100.0% NAP NAP NAP NAP
67 NAP NAP NAP NAP NAP
68 NAP NAP NAP NAP NAP
69 19.3% RS Fitness, LLC 08/31/2011 19.0% K&G Men's Center, Inc.
70 100.0% NAP NAP NAP NAP
71 NAP NAP NAP NAP NAP
72 NAP NAP NAP NAP NAP
73 100.0% NAP NAP NAP NAP
74 100.0% NAP NAP NAP NAP
75 25.7% AIDS Center of Queens 06/30/2007 16.7% FEGS
76 100.0% NAP NAP NAP NAP
77 20.5% Under the Sea World, Inc. 04/30/2011 17.4% FedEx Kinko's Office & Printing Service, Inc.
78 74.3% Dollar General 06/30/2015 19.4% Ming Jiang
79 69.3% Dollar General 09/30/2015 20.6% KB Nails
80 72.1% Blockbuster 03/31/2008 6.3% Due Amici Pizzeria
81 29.4% Farm Credit Services of America 09/30/2012 19.0% Alegent Health Property
82 NAP NAP NAP NAP NAP
83 NAP NAP NAP NAP NAP
84 100.0% NAP NAP NAP NAP
85 100.0% NAP NAP NAP NAP
86 48.2% Diversified Title & Escrow Services Co. 10/31/2013 13.3% Aerotek, Inc.
87 NAP NAP NAP NAP NAP
88 NAP NAP NAP NAP NAP
89 9.8% Acme Bag Company MTM 7.8% Oak Land Furniture
90 100.0% NAP NAP NAP NAP
91 100.0% NAP NAP NAP NAP
92 100.0% NAP NAP NAP NAP
93 100.0% NAP NAP NAP NAP
94 100.0% NAP NAP NAP NAP
95 100.0% NAP NAP NAP NAP
96 27.5% Country Buffet 12/31/2013 9.9% Hollywood Entertainment
97 NAP NAP NAP NAP NAP
98 100.0% NAP NAP NAP NAP
99 100.0% NAP NAP NAP NAP
100 68.9% State of Michigan - FIA 02/29/2012 14.4% NAP
101 NAP NAP NAP NAP NAP
102 18.8% Eldorado Tile Marble & Granite 06/30/2011 10.9% Abeba's Spa & Salon
103 100.0% NAP NAP NAP NAP
104 NAP NAP NAP NAP NAP
105 NAP NAP NAP NAP NAP
106 100.0% NAP NAP NAP NAP
107 NAP NAP NAP NAP NAP
108 20.9% First Watch Restaurant, Inc 12/31/2016 16.5% Salsarita's
109 100.0% NAP NAP NAP NAP
110 NAP NAP NAP NAP NAP
111 NAP NAP NAP NAP NAP
112 39.2% Platt Electric 12/14/2015 20.3% Yamhill Office Furniture
113 100.0% NAP NAP NAP NAP
114 39.0% Mothers Work, Inc. 04/30/2008 29.9% Marathon Bank
115 NAP NAP NAP NAP NAP
116 10.4% Linq Marketing, LLC 10/31/2007 4.3% Jackin USA Inc.
117 NAP NAP NAP NAP NAP
118 100.0% NAP NAP NAP NAP
119 NAP NAP NAP NAP NAP
120 20.7% The City Bakery 12/31/2019 16.3% Turpan CA, LP
121 NAP NAP NAP NAP NAP
122 53.5% Carolina Wings 05/16/2011 11.6% Cingular Wireless
123 NAP NAP NAP NAP NAP
124 23.3% Big 5 01/31/2015 23.3% US Army Recruiting
125 31.0% Rockwell Software 07/31/2007 24.6% Blood Center of Wisconsin
126 31.7% Wellness Center 07/31/2011 24.6% Saharas
127 77.7% Catalytica Energy Systems, Inc 12/31/2007 22.3% NAP
128 100.0% NAP NAP NAP NAP
129 21.1% J2 Synergy (Learning Center) 10/31/2011 14.3% Scott & Dolly Ehnstrom (Pet Store)
130 100.0% NAP NAP NAP NAP
131 100.0% NAP NAP NAP NAP
132 57.7% Manufacturers & Traders Company 05/31/2008 42.3% NAP
133 44.6% Xenon Video, Inc. 11/30/2007 23.8% Timberlake Gloal Group
134 100.0% NAP NAP NAP NAP
135 67.1% SunCom 10/31/2009 13.7% Groucho's
136 13.3% Spectrum Motor Sport 05/31/2008 13.0% All Star Glass
137 100.0% NAP NAP NAP NAP
138 100.0% NAP NAP NAP NAP
139 NAP NAP NAP NAP NAP
140 16.3% John Waddell & CO 09/30/2007 13.4% Pan American Underwriters
141 16.6% Shanagan's Pizza 07/31/2007 12.2% Benva Lazar & Berna Sanayei
142 44.4% Interstate Management Corp. 12/31/2106 21.5% Medical & Health Research Assn.
143 100.0% NAP NAP NAP NAP
144 50.0% CVS Corporation 12/31/2016 50.0% NAP
145 100.0% NAP NAP NAP NAP
146 19.8% Las-Cal Corporation 05/18/2018 16.8% U.S. Army
147 34.2% Reza Alai dba Candle Cafe 12/31/2008 25.3% Sheila Fernandez and Jerry Pickett
148 89.9% Hilo Auto Supply, L.P. 06/30/2021 10.1% NAP
149 NAP NAP NAP NAP NAP
150 100.0% NAP NAP NAP NAP
151 25.3% Lab Connection 02/28/2008 11.6% First Coast Lubes Inc.
152 NAP NAP NAP NAP NAP
153 100.0% NAP NAP NAP NAP
154 100.0% NAP NAP NAP NAP
155 100.0% NAP NAP NAP NAP
156 100.0% NAP NAP NAP NAP
157 NAP NAP NAP NAP NAP
158 61.6% Chipotle Mexican Grill, Inc. 01/31/2017 23.9% Comm Club, LLC
159 100.0% NAP NAP NAP NAP
160 36.3% Harry's Watering Hole 12/31/2012 21.1% Exxon In & Out
161 19.1% SE Public Safety Equipment 11/30/2007 14.8% Issac Kwarteng (Ike's)
162 12.5% Leafdale Plumbing 12/31/2009 8.3% Professional Imaging Services Inc.
163 20.3% Kinko's 11/30/2007 14.5% MacDowell & Associates
164 59.5% Cool Tan 10/31/2020 14.5% Criallos Bistro and Bar
165 100.0% NAP NAP NAP NAP
166 NAP NAP NAP NAP NAP
167 100.0% NAP NAP NAP NAP
168 100.0% NAP NAP NAP NAP
169 NAP NAP NAP NAP NAP
170 18.7% NAMI Eastside 12/31/2011 14.3% Northwest Marketing Concepts
171 100.0% NAP NAP NAP NAP
172 97.9% Pollo Tropical Restaurant 01/31/2011 2.1% NAP
173 100.0% NAP NAP NAP NAP
174 31.5% Poblano's Mexican Restaurant, LLC 10/31/2007 14.4% Subway Real Estate Corp.
175 100.0% NAP NAP NAP NAP
176 13.1% Vietnamese Market 09/30/2010 8.4% Beauticians Supply
177 12.5% USA Tobacco 02/19/2013 11.3% Hair Salon
178 NAP NAP NAP NAP NAP
179 33.2% Ned Morris DDS 07/31/2009 16.4% AquaPure, Inc
180 NAP NAP NAP NAP NAP
181 37.5% Springfield Transmission 09/30/2007 12.5% Import Auto Services
182 NAP NAP NAP NAP NAP
183 100.0% NAP NAP NAP NAP
184 100.0% NAP NAP NAP NAP
185 100.0% NAP NAP NAP NAP
186 100.0% NAP NAP NAP NAP
187 25.5% Movie Gallery 01/01/2008 13.4% Ted's Pizza
188 100.0% NAP NAP NAP NAP
189 49.9% Starbucks Corporation 05/30/2010 16.6% Lee Park Cleaners, LLC
190 100.0% NAP NAP NAP NAP
191 100.0% NAP NAP NAP NAP
192 100.0% NAP NAP NAP NAP
193 NAP NAP NAP NAP NAP
194 47.8% Spanish Broadcast System, Inc. 12/31/2008 37.3% Nexus Projects, LLC
195 32.6% Photographx Unlimited 04/30/2010 26.1% First Community Bank
196 100.0% NAP NAP NAP NAP
197 100.0% NAP NAP NAP NAP
198 NAP NAP NAP NAP NAP
199 40.8% Express Cleaners 05/31/2008 19.9% Nail Talk & Tan
200 33.3% Qpixel Technology 06/30/2008 23.7% Mobio Networks
201 NAP NAP NAP NAP NAP
202 18.5% Magnolia Pawn 10/31/2016 14.6% Simply Chic
203 100.0% NAP NAP NAP NAP
204 100.0% NAP NAP NAP NAP
205 100.0% NAP NAP NAP NAP
206 11.0% Frank W. White 03/31/2008 10.3% Preferred Mortgage Group
207 NAP NAP NAP NAP NAP
208 25.2% Verizon Wireless 10/31/2011 20.4% McCarthy Dental
209 13.2% B. Hershman, G. Clower, M. Dire 12/31/2008 12.7% JayRay Ads & PR, Inc.
210 NAP NAP NAP NAP NAP
211 100.0% NAP NAP NAP NAP
212 100.0% NAP NAP NAP NAP
213 31.2% Hollywood Video 10/31/2011 26.3% Metropoli-Tan III, Inc
214 100.0% NAP NAP NAP NAP
215 39.2% T-Mobile 10/31/2016 38.7% God Son Convenience Store
216 100.0% NAP NAP NAP NAP
217 100.0% NAP NAP NAP NAP
218 NAP NAP NAP NAP NAP
219 100.0% NAP NAP NAP NAP
220 NAP NAP NAP NAP NAP
221 100.0% NAP NAP NAP NAP
222 26.7% Monarch Roofing MTM 26.7% Yancy Brothers
223 50.0% DS Waters of America 08/31/2009 31.2% City Electrical Supply
224 100.0% NAP NAP NAP NAP
225 35.4% Coffee Central 01/31/2010 17.7% Philly Connection
226 100.0% NAP NAP NAP NAP
227 37.3% Starbucks 03/31/2010 25.0% Physicians Center
228 100.0% NAP NAP NAP NAP
229 100.0% NAP NAP NAP NAP
230 100.0% NAP NAP NAP NAP
231 76.1% Trolley Square Chiropractic 12/31/2007 23.9% NAP
232 100.0% NAP NAP NAP NAP
233 NAP NAP NAP NAP NAP
234 59.4% Supercuts, Inc. 01/31/2011 40.6% NAP
235 NAP NAP NAP NAP NAP
236 NAP NAP NAP NAP NAP
237 100.0% NAP NAP NAP NAP
238 100.0% NAP NAP NAP NAP
239 100.0% NAP NAP NAP NAP
240 73.3% Dr. William Dodson D.D.S., Inc. 02/28/2016 26.7% NAP
241 100.0% NAP NAP NAP NAP
242 50.8% Andrew K. Knox & Co. 12/31/2027 49.2% NAP
243 100.0% NAP NAP NAP NAP
244 100.0% NAP NAP NAP NAP
245 NAP NAP NAP NAP NAP
246 NAP NAP NAP NAP NAP
247 100.0% NAP NAP NAP NAP
MORTGAGE LEASE INSURANCE TAX CAPITAL EXPENDITURE TI/LC
LOAN NO. EXPIRATION DATE % NSF ESCROW IN PLACE ESCROW IN PLACE ESCROW IN PLACE(13) ESCROW IN PLACE(14)
------------------------------------------------------------------------------------------------------------
1 07/31/2015 6.2% No Yes Yes No
2 NAP NAP No No No No
3 10/31/2010 4.4% No No No No
4 08/31/2013 6.0% No Yes No No
5 NAP NAP No No No No
6 11/30/2009 5.3% Yes No No Yes
7 NAP NAP No No No No
8 NAP NAP Yes Yes Yes No
9 02/28/2017 8.6% No No No No
10 08/31/2016 6.8% No No No No
11 10/31/2018 16.7% No No Yes No
12 01/31/2015 9.3% No No No No
13 01/03/2022 26.6% No Yes Yes No
14 12/31/2009 8.8% No Yes No No
15 01/31/2011 12.0% No Yes No No
16 12/31/2009 9.0% Yes Yes No Yes
17 01/31/2013 11.9% No Yes No Yes
18 NAP NAP Yes Yes Yes No
19 02/01/2014 7.4% No No No No
20 NAP NAP No No No No
21 NAP NAP Yes Yes Yes No
22 06/30/2016 8.3% No No No No
23 NAP NAP No No No No
24 NAP NAP No No No No
25 04/30/2013 23.9% No No No No
26 NAP NAP Yes Yes Yes No
27 NAP NAP Yes Yes Yes No
28 09/30/2008 2.2% Yes Yes Yes Yes
29 NAP NAP Yes Yes Yes No
30 NAP NAP Yes Yes Yes No
31 01/31/2008 6.9% No Yes No No
32 10/31/2009 3.9% Yes Yes Yes No
33 06/30/2023 5.1% No No No No
34 NAP NAP No Yes No Yes
35 NAP NAP No No No No
36 NAP NAP No No No No
37 06/30/2016 8.3% Yes Yes No No
38 NAP NAP No No No Yes
39 NAP NAP No No No No
40 NAP NAP No No No No
41 03/31/2015 8.2% Yes Yes No Yes
42 NAP NAP Yes Yes Yes No
43 03/31/2010 6.9% No No No No
44 NAP NAP No No Yes No
45 NAP NAP No Yes No No
46 01/31/2012 9.5% Yes Yes Yes Yes
47 NAP NAP No No No No
48 NAP NAP No No No No
49 07/31/2015 10.2% No No No No
50 11/30/2011 8.0% No No No No
51 11/30/2014 7.1% Yes Yes Yes No
52 03/01/2009 10.8% No No No No
53 NAP NAP No No No No
54 NAP NAP No No No No
55 NAP NAP No No No No
56 NAP NAP No No No No
57 04/30/2011 14.9% No No No Yes
58 NAP NAP No No No No
59 02/28/2009 5.8% Yes Yes Yes Yes
60 03/31/2012 8.2% No Yes No Yes
61 NAP NAP No Yes Yes Yes
62 NAP NAP No No No No
63 06/30/2007 7.5% Yes Yes Yes Yes
64 01/31/2012 10.3% No Yes Yes Yes
65 NAP NAP Yes Yes No No
66 NAP NAP No No No No
67 NAP NAP Yes Yes Yes No
68 NAP NAP No Yes No No
69 06/03/2007 14.9% Yes Yes No No
70 NAP NAP No No No No
71 NAP NAP Yes Yes Yes No
72 NAP NAP No No No No
73 NAP NAP No No No No
74 NAP NAP No No No No
75 04/14/2009 14.5% Yes Yes Yes Yes
76 NAP NAP No Yes No No
77 11/01/2010 16.7% No Yes Yes Yes
78 10/31/2009 3.2% No No No No
79 02/28/2010 3.3% No No No No
80 06/30/2008 3.9% Yes Yes Yes Yes
81 10/31/2007 13.2% No Yes No Yes
82 NAP NAP Yes Yes No No
83 NAP NAP No Yes No No
84 NAP NAP No No No No
85 NAP NAP No No No No
86 10/31/2011 8.2% No No No No
87 NAP NAP No Yes No No
88 NAP NAP No Yes Yes No
89 MTM 7.4% No No No No
90 NAP NAP No No No No
91 NAP NAP No No No No
92 NAP NAP No No No No
93 NAP NAP No No No No
94 NAP NAP No No No No
95 NAP NAP No No No No
96 05/22/2011 8.3% Yes Yes No Yes
97 NAP NAP Yes Yes Yes No
98 NAP NAP No No No No
99 NAP NAP No No No No
100 NAP NAP No No No No
101 NAP NAP Yes Yes No No
102 11/30/2009 9.6% Yes Yes Yes Yes
103 NAP NAP Yes Yes Yes No
104 NAP NAP No Yes Yes No
105 NAP NAP Yes Yes Yes No
106 NAP NAP No No No No
107 NAP NAP No No No No
108 07/31/2015 12.3% No No No Yes
109 NAP NAP No No Yes No
110 NAP NAP Yes Yes Yes No
111 NAP NAP No No No No
112 07/31/2010 11.2% Yes Yes No No
113 NAP NAP No No No No
114 05/31/2016 15.6% No Yes Yes No
115 NAP NAP No No No No
116 MTM 2.9% No No No No
117 NAP NAP Yes Yes Yes No
118 NAP NAP No No No No
119 NAP NAP No No No No
120 05/31/2011 6.9% No No No No
121 NAP NAP No No No No
122 03/31/2009 3.2% Yes Yes No No
123 NAP NAP No No No No
124 09/14/2008 7.0% Yes Yes No No
125 10/15/2016 22.6% No Yes No Yes
126 05/31/2010 22.4% Yes Yes Yes Yes
127 NAP NAP No No No Yes
128 NAP NAP No No No No
129 10/27/2011 13.8% Yes Yes Yes Yes
130 NAP NAP No No No No
131 NAP NAP No No No No
132 NAP NAP No No Yes Yes
133 10/14/2011 22.9% No No No No
134 NAP NAP No No No No
135 07/01/2010 5.1% Yes Yes No No
136 06/30/2011 8.2% No No No No
137 NAP NAP No No No No
138 NAP NAP No No No No
139 NAP NAP Yes Yes Yes No
140 06/30/2008 8.4% Yes Yes No No
141 10/31/2007 8.3% No No No No
142 03/31/2010 18.8% No Yes No No
143 NAP NAP No No No No
144 NAP NAP No No No No
145 NAP NAP No No No Yes
146 03/14/2011 12.7% Yes Yes Yes No
147 02/28/2012 19.5% No No No No
148 NAP NAP No No No No
149 NAP NAP Yes Yes Yes No
150 NAP NAP No No No No
151 07/31/2011 9.5% Yes Yes No No
152 NAP NAP No No No No
153 NAP NAP No No No No
154 NAP NAP No No No No
155 NAP NAP No No No No
156 NAP NAP No No No No
157 NAP NAP Yes Yes No No
158 02/28/2017 14.5% Yes Yes No No
159 NAP NAP No No No No
160 05/30/2011 16.2% Yes Yes No No
161 03/31/2012 10.8% Yes Yes No Yes
162 04/30/2009 8.3% No No No No
163 05/31/2011 13.3% No No No No
164 10/31/2020 14.1% Yes Yes Yes No
165 NAP NAP Yes Yes Yes Yes
166 NAP NAP Yes Yes No No
167 NAP NAP No No No No
168 NAP NAP No No No No
169 NAP NAP No No No No
170 MTM 10.2% Yes Yes Yes Yes
171 NAP NAP No No No No
172 NAP NAP No No No Yes
173 NAP NAP Yes Yes No Yes
174 02/28/2008 14.3% Yes Yes No Yes
175 NAP NAP No No No No
176 05/31/2008 8.2% Yes Yes Yes Yes
177 02/06/2012 11.0% Yes Yes No Yes
178 NAP NAP No No Yes No
179 06/30/2009 11.7% Yes Yes No No
180 NAP NAP No Yes Yes No
181 10/31/2010 12.5% Yes Yes No No
182 NAP NAP Yes Yes Yes No
183 NAP NAP No No No No
184 NAP NAP No Yes No No
185 NAP NAP No No No No
186 NAP NAP No No No No
187 11/24/2007 7.2% No No No No
188 NAP NAP No No No No
189 04/30/2010 16.6% No No No No
190 NAP NAP Yes Yes No No
191 NAP NAP Yes Yes No No
192 NAP NAP No No No No
193 NAP NAP No No No No
194 05/31/2016 14.9% No No No No
195 02/28/2008 15.4% No No No No
196 NAP NAP No No No No
197 NAP NAP No No No No
198 NAP NAP Yes Yes Yes No
199 08/31/2009 19.8% Yes Yes No No
200 09/30/2007 18.7% No No No Yes
201 NAP NAP Yes Yes Yes No
202 10/31/2009 11.3% No Yes No No
203 NAP NAP No No No No
204 NAP NAP No No No No
205 NAP NAP No No No No
206 12/31/2007 9.7% No No No No
207 NAP NAP No Yes No No
208 11/30/2013 12.9% No No No No
209 MTM 9.2% No No No No
210 NAP NAP No Yes No No
211 NAP NAP No No No No
212 NAP NAP No No No No
213 06/30/2007 11.7% Yes Yes No No
214 NAP NAP No Yes No No
215 03/31/2012 22.1% No Yes No Yes
216 NAP NAP No No No No
217 NAP NAP No No No No
218 NAP NAP No No No No
219 NAP NAP No No No No
220 NAP NAP Yes Yes No No
221 NAP NAP No No No Yes
222 12/31/2008 20.0% Yes Yes No No
223 10/15/2008 18.8% No No No No
224 NAP NAP No No No No
225 10/31/2009 15.9% Yes Yes Yes Yes
226 NAP NAP No No No No
227 04/30/2011 21.1% Yes Yes Yes Yes
228 NAP NAP Yes No No No
229 NAP NAP No No No No
230 NAP NAP Yes Yes Yes Yes
231 NAP NAP Yes Yes Yes Yes
232 NAP NAP Yes Yes No No
233 NAP NAP Yes Yes No No
234 NAP NAP No No No No
235 NAP NAP Yes Yes Yes No
236 NAP NAP Yes Yes Yes No
237 NAP NAP No Yes Yes No
238 NAP NAP No Yes Yes No
239 NAP NAP Yes Yes No No
240 NAP NAP Yes Yes No No
241 NAP NAP No No No No
242 NAP NAP Yes Yes No No
243 NAP NAP No No No No
244 NAP NAP No No No No
245 NAP NAP No No No No
246 NAP NAP Yes Yes No No
247 NAP NAP No No No No
26.7% 45.3% 29.4% 16.4%
MORTGAGE OTHER SPRINGING
LOAN NO. ESCROW DESCRIPTION(15) ESCROW DESCRIPTION(16)
----------------------------------------------------------------------------------------------------------------------
1 Deferred Maintenance (Springing) Insurance, Other
2 NAP RE Tax, Insurance, CapEx
3 Unfunded Tenant Obligations Reserve RE Tax, Insurance, CapEx, TI/LC, Other
4 Free Rent Holdback Insurance, TI/LC
5 NAP RE Tax, Insurance, CapEx
6 NAP RE Tax, Insurance, CapEx, TI/LC
7 NAP RE Tax, Insurance, TI/LC
8 NAP NAP
9 Rent Abatement RE Tax, Insurance
10 Ground Rent Reserve (Springing) RE Tax, Insurance, CapEx, TI/LC, Other
11 NAP RE Tax, Insurance
12 NAP NAP
13 NAP Insurance
14 ACCPAC Rollover Reserves NAP
15 NAP NAP
16 NAP NAP
17 Free Rent Reserve and Operating Reserve TI/LC
18 NAP NAP
19 NAP RE Tax, Insurance, CapEx
20 NAP RE Tax, Insurance, CapEx
21 PIP Reserve NAP
22 Ground Rent Reserve; Deferred Maintenance Reserve (Springing) RE Tax, Insurance, CapEx, Other
23 NAP RE Tax, Insurance, CapEx, TI/LC
24 NAP Other
25 NAP Insurance, TI/LC
26 NAP NAP
27 NAP NAP
28 NAP NAP
29 NAP NAP
30 Ground Rent (Springing) Other
31 Principal Reduction Reserve NAP
32 NAP NAP
33 NAP NAP
34 NAP TI/LC
35 Springing Debt Service Reserve RE Tax, Insurance, CapEx, Other
36 NAP RE Tax, Insurance, CapEx, TI/LC
37 Construction Retainage TI/LC
38 NAP RE Tax, Insurance, CapEx
39 NAP RE Tax, Insurance, CapEx
40 NAP NAP
41 NAP NAP
42 NAP NAP
43 NAP RE Tax, Insurance, CapEx
44 Debt Service Reserve Impound and Minimum Account Balance Impound RE Tax, Insurance, TI/LC
45 NAP Insurance
46 NAP NAP
47 NAP RE Tax, Insurance, Other
48 NAP RE Tax, Insurance, Other
49 NAP RE Tax, Insurance, CapEx, TI/LC
50 NAP RE Tax, Insurance, CapEx
51 NAP TI/LC
52 ALTA Survey Holdback RE Tax, Insurance, CapEx, TI/LC
53 NAP RE Tax, Insurance, CapEx, TI/LC
54 NAP RE Tax, Insurance, CapEx, TI/LC
55 NAP RE Tax, Insurance, CapEx, TI/LC
56 NAP RE Tax, Insurance, CapEx, TI/LC
57 NAP NAP
58 NAP RE Tax, Insurance, CapEx, Other
59 NAP NAP
60 Additional security NAP
61 NAP Insurance
62 NAP RE Tax, Insurance, CapEx
63 NAP TI/LC
64 NAP Insurance, TI/LC
65 NAP CapEx
66 NAP RE Tax, Insurance, TI/LC, Other
67 NAP NAP
68 NAP NAP
69 NAP CapEx, TI/LC
70 NAP RE Tax, Insurance, CapEx
71 Seasonality Reserve (Springing) Other
72 NAP RE Tax, Insurance, CapEx
73 NAP CapEx
74 NAP CapEx
75 NAP TI/LC
76 NAP TI/LC
77 NAP TI/LC
78 NAP TI/LC
79 NAP TI/LC
80 NAP NAP
81 NAP Insurance, TI/LC, Other
82 NAP NAP
83 NAP NAP
84 NAP RE Tax, Insurance, CapEx
85 NAP RE Tax, Insurance, CapEx
86 NAP TI/LC
87 NAP NAP
88 NAP Insurance
89 NAP RE Tax, Insurance
90 NAP RE Tax, Insurance, CapEx
91 NAP RE Tax, Insurance, CapEx
92 NAP RE Tax, Insurance, CapEx
93 NAP RE Tax, Insurance, CapEx
94 NAP RE Tax, Insurance, Other
95 NAP TI/LC, Other
96 Country Buffet Outstanding Obligations Reserve CapEx, TI/LC
97 NAP NAP
98 NAP NAP
99 NAP RE Tax, Insurance, TI/LC, Other
100 NAP RE Tax, Insurance, TI/LC
101 NAP NAP
102 Vacancy Holdback TI/LC
103 NAP NAP
104 NAP NAP
105 NAP NAP
106 NAP RE Tax, Insurance, CapEx, TI/LC
107 NAP RE Tax, Insurance, CapEx, TI/LC
108 NAP NAP
109 NAP RE Tax, Insurance, TI/LC, Other
110 NAP NAP
111 NAP RE Tax, Insurance, CapEx
112 NAP CapEx
113 NAP RE Tax, Insurance, CapEx
114 NAP Insurance
115 NAP RE Tax, Insurance
116 NAP RE Tax, Insurance
117 Debt Service Reserve Other
118 NAP RE Tax, Insurance, CapEx
119 NAP RE Tax, Insurance
120 City Bakery Impound NAP
121 NAP RE Tax, Insurance, CapEx, TI/LC
122 NAP CapEx
123 NAP RE Tax, Insurance, CapEx
124 NAP TI/LC
125 NAP NAP
126 NAP NAP
127 NAP TI/LC
128 NAP RE Tax, Insurance, CapEx
129 NAP TI/LC
130 NAP RE Tax, Insurance, CapEx, TI/LC
131 NAP RE Tax, Insurance, TI/LC
132 NAP RE Tax, Insurance, TI/LC
133 NAP RE Tax, Insurance, CapEx, TI/LC, Other
134 NAP TI/LC
135 NAP CapEx
136 NAP RE Tax, Insurance
137 NAP RE Tax, Insurance, TI/LC, Other
138 NAP RE Tax, Insurance, TI/LC, Other
139 Seasonality Reserve NAP
140 NAP TI/LC
141 NAP RE Tax, Insurance
142 NAP Insurance, CapEx
143 NAP RE Tax, Insurance, CapEx, TI/LC
144 NAP RE Tax, Insurance, CapEx, TI/LC
145 NAP NAP
146 NAP NAP
147 NAP RE Tax, Insurance, CapEx, TI/LC
148 NAP RE Tax, Insurance, CapEx
149 NAP NAP
150 NAP NAP
151 NAP NAP
152 NAP RE Tax, Insurance
153 NAP NAP
154 NAP NAP
155 NAP RE Tax, Insurance, CapEx
156 NAP CapEx, TI/LC
157 NAP NAP
158 Construction Retainage TI/LC
159 NAP RE Tax, Insurance, Other
160 NAP NAP
161 NAP NAP
162 NAP RE Tax, Insurance
163 NAP NAP
164 NAP TI/LC
165 NAP TI/LC
166 NAP NAP
167 NAP NAP
168 NAP RE Tax, Insurance, TI/LC, Other
169 NAP RE Tax, Insurance
170 NAP NAP
171 NAP RE Tax, Insurance
172 NAP RE Tax, Insurance, TI/LC
173 NAP TI/LC, Other
174 NAP NAP
175 NAP TI/LC
176 NAP NAP
177 Holdback Impound NAP
178 NAP RE Tax, Insurance
179 NAP CapEx, TI/LC, Other
180 NAP Insurance
181 NAP NAP
182 NAP NAP
183 NAP RE Tax, Insurance, CapEx, TI/LC
184 NAP NAP
185 NAP RE Tax, Insurance, CapEx
186 NAP RE Tax, Insurance, CapEx, TI/LC
187 NAP RE Tax, Insurance, CapEx, TI/LC
188 NAP RE Tax, Insurance, TI/LC
189 NAP RE Tax, Insurance, CapEx
190 NAP TI/LC
191 NAP TI/LC
192 NAP RE Tax, Insurance, CapEx
193 NAP NAP
194 NAP RE Tax, Insurance, CapEx
195 NAP RE Tax, Insurance, CapEx, TI/LC
196 NAP RE Tax, Insurance, TI/LC
197 NAP RE Tax, Insurance, CapEx
198 NAP NAP
199 NAP TI/LC
200 NAP NAP
201 NAP NAP
202 NAP Insurance, CapEx
203 Office Depot Service Reserve RE Tax, Insurance, CapEx, Other
204 NAP RE Tax, Insurance
205 NAP RE Tax, Insurance, CapEx
206 NAP NAP
207 NAP NAP
208 NAP NAP
209 NAP RE Tax, Insurance
210 NAP Insurance, TI/LC
211 NAP RE Tax, Insurance, CapEx, TI/LC
212 NAP TI/LC
213 NAP CapEx, TI/LC
214 NAP Other
215 NAP Insurance, CapEx
216 NAP RE Tax, Insurance, CapEx, TI/LC
217 NAP RE Tax, Insurance, CapEx, TI/LC
218 NAP NAP
219 NAP NAP
220 NAP CapEx
221 NAP NAP
222 NAP NAP
223 NAP RE Tax, Insurance, CapEx
224 NAP RE Tax, Insurance, TI/LC
225 NAP TI/LC
226 NAP RE Tax, Insurance, CapEx, TI/LC
227 NAP NAP
228 NAP RE Tax, TI/LC
229 NAP NAP
230 NAP TI/LC
231 NAP NAP
232 NAP CapEx, TI/LC
233 NAP NAP
234 NAP TI/LC
235 NAP NAP
236 NAP NAP
237 NAP Insurance, TI/LC
238 NAP Insurance, TI/LC
239 NAP TI/LC
240 NAP TI/LC
241 NAP RE Tax, Insurance, CapEx, TI/LC
242 NAP NAP
243 NAP TI/LC
244 Debt Service Reserve Impound and Minimum Account Balance Impound RE Tax, Insurance, CapEx, TI/LC
245 NAP RE Tax, Insurance, CapEx
246 NAP NAP
247 NAP RE Tax, Insurance, TI/LC
MORTGAGE INITIAL CAPITAL EXPENDITURE MONTHLY CAPITAL EXPENDITURE CURRENT CAPITAL EXPENDITURE
LOAN NO. ESCROW REQUIREMENT(17) ESCROW REQUIREMENT(18) ESCROW BALANCE(19)
-------------------------------------------------------------------------------------------------
1 $15,625 $15,625 $31,261
2 $0 $0 $0
3 $0 $0 $0
4 $0 $0 $0
5 $0 $0 $0
6 $0 $0 $0
7 $0 $0 $0
8 $36,906 $36,906 $110,808
9 $0 $0 $0
10 $0 $0 $0
11 $2,917 $2,917 $11,737
12 $0 $0 $0
13 $0 $2,066 $0
14 $0 $0 $0
15 $0 $0 $0
16 $0 $0 $0
17 $0 $0 $0
18 $0 $3,750 $3,750
19 $0 $0 $0
20 $0 $0 $0
21 $21,162 $21,162 $21,162
22 $0 $0 $0
23 $0 $0 $0
24 $0 $0 $0
25 $0 $0 $0
26 $3,764 $3,764 $7,528
27 $1,777 $1,777 $3,554
28 $0 $2,844 $0
29 $5,833 $5,833 $11,667
30 $1,864 $1,864 $1,864
31 $0 $0 $0
32 $1,440 $1,440 $2,881
33 $0 $0 $0
34 $0 $0 $0
35 $0 $0 $0
36 $0 $0 $0
37 $0 $0 $0
38 $0 $0 $0
39 $0 $0 $0
40 $0 $0 $0
41 $0 $0 $0
42 $6,917 $6,917 $6,917
43 $0 $0 $0
44 $0 $1,322 $0
45 $0 $0 $0
46 $1,244 $1,244 $34,956
47 $0 $0 $0
48 $0 $0 $0
49 $0 $0 $0
50 $0 $0 $0
51 $0 $2,820 $2,820
52 $0 $0 $0
53 $0 $0 $0
54 $0 $0 $0
55 $0 $0 $0
56 $0 $0 $0
57 $0 $0 $0
58 $0 $0 $0
59 $1,638 $1,638 $4,913
60 $0 $0 $0
61 $2,525 $2,525 $7,581
62 $0 $0 $0
63 $3,209 $3,209 $9,627
64 $0 $2,036 $0
65 $0 2% of Monthly Gross Revenues $0
66 $0 $0 $0
67 $0 $8,505 $0
68 $0 $0 $0
69 $0 $0 $0
70 $0 $0 $0
71 $7,864 $7,864 $15,728
72 $0 $0 $0
73 $0 $0 $0
74 $0 $0 $0
75 $0 $897 $15,000
76 $0 $0 $0
77 $0 $300 $600
78 $0 $0 $0
79 $0 $0 $0
80 $808 $808 $808
81 $0 $0 $0
82 $0 $0 $0
83 $0 $0 $0
84 $0 $0 $0
85 $0 $0 $0
86 $0 $0 $0
87 $0 $0 $0
88 $37,688 $8,222 $0
89 $0 $0 $0
90 $0 $0 $0
91 $0 $0 $0
92 $0 $0 $0
93 $0 $0 $0
94 $0 $0 $0
95 $0 $0 $0
96 $0 $0 $0
97 $0 $20,827 $20,827
98 $0 $0 $0
99 $0 $0 $0
100 $0 $0 $0
101 $0 $0 $0
102 $0 $538 $538
103 $0 $510 $1,020
104 $0 $8,548 $8,548
105 $0 $1,225 $0
106 $0 $0 $0
107 $0 $0 $0
108 $0 $0 $0
109 $0 $602 $602
110 $1,050,000 $5,578 $1,050,000
111 $0 $0 $0
112 $0 $0 $0
113 $0 $0 $0
114 $193 $193 $578
115 $0 $0 $0
116 $0 $0 $0
117 $0 $4,355 $0
118 $0 $0 $0
119 $0 $0 $0
120 $0 $0 $0
121 $0 $0 $0
122 $0 $0 $0
123 $0 $0 $0
124 $0 $0 $0
125 $0 $0 $0
126 $0 $461 $922
127 $0 $0 $0
128 $0 $0 $0
129 $0 $190 $190
130 $0 $0 $0
131 $0 $0 $0
132 $0 $176 $0
133 $0 $0 $0
134 $0 $0 $0
135 $0 $0 $0
136 $0 $0 $0
137 $0 $0 $0
138 $0 $0 $0
139 $3,558 $3,558 $3,558
140 $0 $0 $0
141 $0 $0 $0
142 $0 $0 $0
143 $0 $0 $0
144 $0 $0 $0
145 $0 $0 $0
146 $0 $212 $0
147 $0 $0 $0
148 $0 $0 $0
149 $0 $1,177 $1,177
150 $0 $0 $0
151 $0 $0 $0
152 $0 $0 $0
153 $0 $0 $0
154 $0 $0 $0
155 $0 $0 $0
156 $0 $0 $0
157 $0 4% of Monthly Gross Revenues $0
158 $0 $0 $0
159 $0 $0 $0
160 $0 $0 $0
161 $0 $0 $0
162 $0 $0 $0
163 $0 $0 $0
164 $0 $403 $403
165 $0 $188 $375
166 $0 $0 $0
167 $0 $0 $0
168 $0 $0 $0
169 $0 $0 $0
170 $0 $572 $16,125
171 $0 $0 $0
172 $0 $0 $0
173 $0 $0 $0
174 $0 $0 $0
175 $0 $0 $0
176 $29,100 $0 $30,768
177 $0 $0 $0
178 $0 $1,051 $2,102
179 $0 $0 $0
180 $0 $479 $479
181 $0 $0 $0
182 $0 $694 $0
183 $0 $0 $0
184 $0 $0 $0
185 $0 $0 $0
186 $0 $0 $0
187 $0 $0 $0
188 $0 $0 $0
189 $0 $0 $0
190 $0 $0 $0
191 $0 $0 $0
192 $0 $0 $0
193 $0 $0 $0
194 $0 $0 $0
195 $0 $0 $0
196 $0 $0 $0
197 $0 $0 $0
198 $27,300 $0 $27,300
199 $0 $0 $0
200 $0 $0 $0
201 $0 $287 $287
202 $0 $0 $0
203 $0 $0 $0
204 $0 $0 $0
205 $0 $0 $0
206 $0 $0 $0
207 $0 $0 $0
208 $0 $0 $0
209 $0 $0 $0
210 $0 $0 $0
211 $0 $0 $0
212 $0 $0 $0
213 $0 $0 $0
214 $0 $0 $0
215 $0 $0 $0
216 $0 $0 $0
217 $0 $0 $0
218 $0 $0 $0
219 $0 $0 $0
220 $0 $0 $0
221 $0 $0 $0
222 $0 $0 $0
223 $0 $0 $0
224 $0 $0 $0
225 $0 $71 $141
226 $0 $0 $0
227 $0 $113 $0
228 $0 $0 $0
229 $0 $0 $0
230 $0 $168 $0
231 $0 $188 $0
232 $0 $0 $0
233 $0 $0 $0
234 $0 $0 $0
235 $20,700 $0 $0
236 $0 $480 $0
237 $0 $88 $0
238 $0 $88 $88
239 $0 $0 $0
240 $0 $0 $0
241 $0 $0 $0
242 $0 $0 $0
243 $0 $0 $0
244 $0 $0 $0
245 $0 $0 $0
246 $0 $0 $0
247 $0 $0 $0
$1,284,032 $201,274 $1,471,190
MORTGAGE INITIAL TI/LC MONTHLY TI/LC CURRENT TI/LC ENVIRONMENTAL INTEREST
LOAN NO. ESCROW REQUIREMENT(20) ESCROW REQUIREMENT(21) ESCROW BALANCE(22) INSURANCE ACCRUAL METHOD SEASONING(23)
------------------------------------------------------------------------------------------------------------------------------
1 $0 $0 $0 Yes - Individual Actual/360 2
2 $0 $0 $0 No 30/360 3
3 $0 $0 $0 No Actual/360 2
4 $0 $0 $0 No Actual/360 1
5 $0 $0 $0 No Actual/360 2
6 $114,245 $0 $114,245 No Actual/360 4
7 $0 $0 $0 No Actual/360 2
8 $0 $0 $0 No Actual/360 3
9 $0 $0 $0 No Actual/360 1
10 $0 $0 $0 No 30/360 1
11 $0 $0 $0 No Actual/360 4
12 $0 $0 $0 No Actual/360 1
13 $0 $0 $0 No Actual/360 1
14 $0 $0 $0 No 30/360 42
15 $0 $0 $0 No 30/360 42
16 $3,000,000 $0 $3,030,035 Yes - Individual Actual/360 3
17 $1,453,885 $0 $1,455,243 No Actual/360 1
18 $0 $0 $0 No Actual/360 2
19 $0 $0 $0 No Actual/360 1
20 $0 $0 $0 No Actual/360 4
21 $0 $0 $0 No Actual/360 1
22 $0 $0 $0 No 30/360 4
23 $0 $0 $0 No Actual/360 5
24 $0 $0 $0 No Actual/360 0
25 $0 $0 $0 No Actual/360 2
26 $0 $0 $0 No Actual/360 3
27 $0 $0 $0 No Actual/360 3
28 $0 $3,952 $0 No Actual/360 1
29 $0 $0 $0 No Actual/360 2
30 $0 $0 $0 No Actual/360 1
31 $0 $0 $0 No Actual/360 2
32 $0 $0 $0 No Actual/360 2
33 $0 $0 $0 No Actual/360 0
34 $300,000 $18,750 $339,726 No Actual/360 3
35 $0 $0 $0 No Actual/360 2
36 $0 $0 $0 No Actual/360 5
37 $0 $0 $0 No Actual/360 7
38 $632,000 $0 $632,000 No 30/360 1
39 $0 $0 $0 No Actual/360 4
40 $0 $0 $0 No Actual/360 1
41 $0 $1,000 $1,000 No Actual/360 2
42 $0 $0 $0 No Actual/360 1
43 $0 $0 $0 No Actual/360 4
44 $0 $0 $0 No Actual/360 1
45 $0 $0 $0 No Actual/360 3
46 $3,000 $3,000 $84,755 No Actual/360 12
47 $0 $0 $0 No Actual/360 3
48 $0 $0 $0 No Actual/360 2
49 $0 $0 $0 No Actual/360 5
50 $0 $0 $0 No Actual/360 4
51 $0 $0 $0 No Actual/360 3
52 $0 $0 $0 No Actual/360 2
53 $0 $0 $0 No Actual/360 2
54 $0 $0 $0 No Actual/360 2
55 $0 $0 $0 No Actual/360 2
56 $0 $0 $0 No Actual/360 2
57 $1,000,000 $2,500 $1,005,005 No Actual/360 3
58 $0 $0 $0 No Actual/360 2
59 $5,459 $5,459 $16,390 Yes - Individual Actual/360 3
60 $90,000 $0 $90,000 No Actual/360 1
61 $3,367 $3,367 $10,109 No Actual/360 4
62 $0 $0 $0 No Actual/360 3
63 $400,000 $0 $411,167 No Actual/360 3
64 $0 $5,655 $0 No Actual/360 1
65 $0 $0 $0 No Actual/360 2
66 $0 $0 $0 No Actual/360 5
67 $0 $0 $0 No Actual/360 0
68 $0 $0 $0 No Actual/360 2
69 $0 $0 $0 No Actual/360 1
70 $0 $0 $0 No Actual/360 4
71 $0 $0 $0 No Actual/360 2
72 $0 $0 $0 No Actual/360 3
73 $0 $0 $0 No Actual/360 1
74 $0 $0 $0 No Actual/360 1
75 $0 $8,333 $0 No Actual/360 2
76 $0 $0 $0 No Actual/360 1
77 $0 $2,000 $4,002 No Actual/360 4
78 $0 $0 $0 No Actual/360 2
79 $0 $0 $0 No Actual/360 2
80 $2,693 $2,693 $2,693 No Actual/360 1
81 $0 $11,392 $0 No Actual/360 1
82 $0 $0 $0 No Actual/360 1
83 $0 $0 $0 No Actual/360 3
84 $0 $0 $0 No Actual/360 0
85 $0 $0 $0 No Actual/360 2
86 $0 $0 $0 No Actual/360 1
87 $0 $0 $0 No Actual/360 1
88 $0 $0 $0 No Actual/360 1
89 $0 $0 $0 No Actual/360 1
90 $0 $0 $0 No Actual/360 4
91 $0 $0 $0 No Actual/360 4
92 $0 $0 $0 No Actual/360 4
93 $0 $0 $0 No Actual/360 4
94 $0 $0 $0 No Actual/360 2
95 $0 $0 $0 No Actual/360 3
96 $70,725 $0 $70,725 No Actual/360 3
97 $0 $0 $0 No Actual/360 2
98 $0 $0 $0 No Actual/360 0
99 $0 $0 $0 No Actual/360 3
100 $0 $0 $0 No Actual/360 2
101 $0 $0 $0 No Actual/360 3
102 $100,000 $0 $100,000 No Actual/360 3
103 $0 $0 $0 No Actual/360 4
104 $0 $0 $0 No Actual/360 3
105 $0 $0 $0 No 30/360 1
106 $0 $0 $0 No Actual/360 3
107 $0 $0 $0 No Actual/360 5
108 $83,427 $0 $83,427 No Actual/360 0
109 $0 $0 $0 No Actual/360 3
110 $0 $0 $0 No Actual/360 1
111 $0 $0 $0 No Actual/360 3
112 $0 $0 $0 No Actual/360 3
113 $0 $0 $0 No Actual/360 3
114 $0 $0 $0 No Actual/360 3
115 $0 $0 $0 Yes - Group Actual/360 1
116 $0 $0 $0 No Actual/360 2
117 $0 $0 $0 No Actual/360 3
118 $0 $0 $0 No Actual/360 2
119 $0 $0 $0 Yes - Group Actual/360 2
120 $0 $0 $0 Yes - Group Actual/360 2
121 $0 $0 $0 No Actual/360 5
122 $0 $0 $0 No Actual/360 1
123 $0 $0 $0 No Actual/360 1
124 $0 $0 $0 No Actual/360 3
125 $130,000 $1,959 $130,059 No Actual/360 1
126 $100,000 $2,351 $4,702 Yes - Group Actual/360 3
127 $33,885 $0 $33,885 No Actual/360 1
128 $0 $0 $0 No Actual/360 2
129 $0 $1,580 $1,580 No Actual/360 3
130 $0 $0 $0 No Actual/360 2
131 $0 $0 $0 Yes - Group Actual/360 1
132 $0 $1,174 $0 No Actual/360 2
133 $0 $0 $0 No Actual/360 3
134 $0 $0 $0 No Actual/360 1
135 $0 $0 $0 No Actual/360 1
136 $0 $0 $0 Yes - Group Actual/360 2
137 $0 $0 $0 No Actual/360 2
138 $0 $0 $0 No Actual/360 2
139 $0 $0 $0 No Actual/360 1
140 $0 $0 $0 Yes - Group Actual/360 2
141 $0 $0 $0 No Actual/360 3
142 $0 $0 $0 No Actual/360 3
143 $0 $0 $0 No Actual/360 2
144 $0 $0 $0 No Actual/360 2
145 $0 $1,750 $1,750 No Actual/360 2
146 $0 $0 $0 Yes - Group Actual/360 2
147 $0 $0 $0 Yes - Group Actual/360 2
148 $0 $0 $0 Yes - Individual Actual/360 1
149 $0 $0 $0 No Actual/360 2
150 $0 $0 $0 No Actual/360 1
151 $0 $0 $0 No Actual/360 2
152 $0 $0 $0 No Actual/360 4
153 $0 $0 $0 Yes - Group Actual/360 3
154 $0 $0 $0 No Actual/360 4
155 $0 $0 $0 No Actual/360 2
156 $0 $0 $0 No Actual/360 1
157 $0 $0 $0 No Actual/360 2
158 $0 $0 $0 No Actual/360 1
159 $0 $0 $0 No Actual/360 3
160 $0 $0 $0 No Actual/360 2
161 $20,000 $2,000 $20,000 No Actual/360 1
162 $0 $0 $0 No Actual/360 2
163 $0 $0 $0 Yes - Group Actual/360 2
164 $0 $0 $0 No Actual/360 3
165 $0 $1,288 $2,576 No Actual/360 4
166 $0 $0 $0 No Actual/360 1
167 $0 $0 $0 No Actual/360 2
168 $0 $0 $0 Yes - Group Actual/360 1
169 $0 $0 $0 Yes - Group Actual/360 14
170 $0 $1,685 $0 Yes - Group Actual/360 2
171 $0 $0 $0 Yes - Group Actual/360 2
172 $0 $2,431 $0 No Actual/360 4
173 $88,500 $0 $0 No Actual/360 3
174 $1,667 $1,667 $1,672 No Actual/360 2
175 $0 $0 $0 No Actual/360 1
176 $100,000 $1,773 $103,727 No Actual/360 3
177 $0 $1,132 $0 Yes - Group Actual/360 2
178 $0 $0 $0 No Actual/360 4
179 $0 $0 $0 No Actual/360 3
180 $0 $0 $0 No Actual/360 3
181 $0 $0 $0 Yes - Group Actual/360 3
182 $0 $0 $0 Yes - Group Actual/360 1
183 $0 $0 $0 No Actual/360 1
184 $0 $0 $0 No Actual/360 1
185 $0 $0 $0 No Actual/360 4
186 $0 $0 $0 Yes - Group Actual/360 3
187 $0 $0 $0 Yes - Group Actual/360 2
188 $0 $0 $0 Yes - Group Actual/360 3
189 $0 $0 $0 No Actual/360 3
190 $0 $0 $0 No Actual/360 1
191 $0 $0 $0 No Actual/360 3
192 $0 $0 $0 No Actual/360 4
193 $0 $0 $0 Yes - Group Actual/360 1
194 $0 $0 $0 No Actual/360 2
195 $0 $0 $0 No Actual/360 5
196 $0 $0 $0 Yes - Group Actual/360 2
197 $0 $0 $0 No Actual/360 4
198 $0 $0 $0 Yes - Group Actual/360 0
199 $0 $0 $0 No Actual/360 1
200 $100,000 $0 $100,000 No Actual/360 1
201 $0 $0 $0 Yes - Group Actual/360 2
202 $0 $0 $0 Yes - Group Actual/360 2
203 $0 $0 $0 No Actual/360 1
204 $0 $0 $0 No Actual/360 2
205 $0 $0 $0 No Actual/360 3
206 $0 $0 $0 Yes - Group Actual/360 1
207 $0 $0 $0 No Actual/360 1
208 $0 $0 $0 Yes - Group Actual/360 2
209 $0 $0 $0 Yes - Group Actual/360 2
210 $0 $0 $0 No Actual/360 4
211 $0 $0 $0 Yes - Group Actual/360 1
212 $0 $0 $0 Yes - Group Actual/360 1
213 $0 $0 $0 Yes - Group Actual/360 2
214 $0 $0 $0 No Actual/360 1
215 $667 $667 $2,000 No Actual/360 3
216 $0 $0 $0 Yes - Group Actual/360 2
217 $0 $0 $0 Yes - Group Actual/360 2
218 $0 $0 $0 Yes - Group Actual/360 2
219 $0 $0 $0 No Actual/360 2
220 $0 $0 $0 Yes - Group Actual/360 1
221 $50,000 $2,100 $50,063 No Actual/360 1
222 $0 $0 $0 Yes - Group Actual/360 0
223 $0 $0 $0 No Actual/360 2
224 $0 $0 $0 No Actual/360 3
225 $0 $667 $1,333 No Actual/360 4
226 $0 $0 $0 No Actual/360 4
227 $0 $709 $0 No Actual/360 2
228 $0 $0 $0 Yes - Group Actual/360 1
229 $0 $0 $0 No Actual/360 2
230 $0 $800 $0 No Actual/360 1
231 $135,000 (LOC) $0 $0 Yes - Group Actual/360 1
232 $0 $0 $0 No Actual/360 2
233 $0 $0 $0 No Actual/360 1
234 $0 $0 $0 No Actual/360 1
235 $0 $0 $0 Yes - Group Actual/360 0
236 $0 $0 $0 Yes - Group Actual/360 1
237 $0 $0 $0 Yes - Group Actual/360 1
238 $0 $0 $0 Yes - Group Actual/360 2
239 $0 $0 $0 No Actual/360 1
240 $0 $0 $0 Yes - Group Actual/360 3
241 $0 $0 $0 Yes - Group Actual/360 3
242 $0 $0 $0 No Actual/360 2
243 $0 $0 $0 No Actual/360 2
244 $0 $0 $0 Yes - Group Actual/360 3
245 $0 $0 $0 Yes - Group Actual/360 1
246 $0 $0 $0 Yes - Group Actual/360 1
247 $0 $0 $0 Yes - Group Actual/360 2
$7,883,520 $93,834 $7,903,869 3
PREPAYMENT CODE(24)
MORTGAGE ------------------------------------------------------------- YM ADMINISTRATIVE MORTGAGE
LOAN NO. LO DEF DEF/YM1.00 YM3.00 YM1.00 YM0.50 3% 2% 1% OPEN FORMULA(25) COST RATE(26) LOAN NO.
---------------------------------------------------------------------------------------------------------------
1 37 141 2 3.117 1
2 35 83 2 A 3.117 2
3 26 30 4 B 3.117 3
4 25 91 4 C 3.117 4
5 26 90 4 3.117 5
6 28 85 7 D 3.117 6
7 26 90 4 3.117 7
8 47 72 1 3.117 8
9 25 91 4 3.117 9
10 35 83 2 A 3.117 10
11 28 91 1 E 3.117 11
12 25 93 2 3.117 12
13 25 91 4 F 3.117 13
14 23 94 3 G 3.117 14
15 23 94 3 G 3.117 15
16 27 44 13 F 3.117 16
17 25 92 3 C 3.117 17
18 26 30 4 3.117 18
19 25 91 4 3.117 19
20 28 88 4 H 3.117 20
21 25 94 1 3.117 21
22 36 82 2 A 3.117 22
23 119 7 3.117 23
24 24 92 4 3.117 24
25 26 30 4 3.117 25
26 27 29 4 F 3.117 26
27 27 29 4 F 3.117 27
28 35 81 4 3.117 28
29 26 93 1 3.117 29
30 25 106 1 3.117 30
31 26 90 4 C 3.117 31
32 26 92 2 3.117 32
33 24 94 2 3.117 33
34 27 91 2 3.117 34
35 0 24 95 1 I 3.117 35
36 119 7 3.117 36
37 31 111 2 3.117 37
38 35 54 2 A 3.117 38
39 28 88 4 3.117 39
40 25 91 4 C 3.117 40
41 26 92 2 3.117 41
42 25 94 1 7.117 42
43 0 28 28 4 J 3.117 43
44 35 21 4 3.117 44
45 27 86 7 3.117 45
46 36 83 1 3.117 46
47 27 101 4 3.117 47
48 26 90 4 3.117 48
49 119 7 3.117 49
50 0 28 28 4 J 3.117 50
51 27 88 5 3.117 51
52 26 89 5 8.117 52
53 26 89 5 8.117 53
54 26 89 5 8.117 54
55 26 89 5 8.117 55
56 26 89 5 8.117 56
57 27 91 2 3.117 57
58 26 90 4 3.117 58
59 27 91 2 K 3.117 59
60 25 93 2 C 3.117 60
61 28 88 4 3.117 61
62 27 90 3 7.117 62
63 27 28 5 L 3.117 63
64 25 91 4 3.117 64
65 35 83 2 F 3.117 65
66 36 122 4 3.117 66
67 24 94 2 3.117 67
68 26 92 2 3.117 68
69 25 91 4 3.117 69
70 28 89 3 3.117 70
71 26 93 1 3.117 71
72 27 89 4 M 3.117 72
73 25 93 2 3.117 73
74 25 93 2 3.117 74
75 26 92 2 3.117 75
76 25 93 2 N 3.117 76
77 28 88 4 3.117 77
78 26 92 2 N 3.117 78
79 26 92 2 N 3.117 79
80 25 94 1 3.117 80
81 25 91 4 3.117 81
82 25 93 2 3.117 82
83 27 89 4 C 3.117 83
84 24 93 3 7.117 84
85 26 93 1 3.117 85
86 35 81 4 F 3.117 86
87 25 93 2 3.117 87
88 35 81 4 F 3.117 88
89 35 81 4 3.117 89
90 28 88 4 3.117 90
91 28 88 4 3.117 91
92 28 88 4 3.117 92
93 28 88 4 3.117 93
94 26 90 4 3.117 94
95 27 89 4 3.117 95
96 27 89 4 7.117 96
97 26 90 4 F 3.117 97
98 24 92 4 3.117 98
99 36 80 4 3.117 99
100 35 81 4 F 3.117 100
101 27 29 4 F 3.117 101
102 27 89 4 3.117 102
103 28 88 4 3.117 103
104 27 89 4 3.117 104
105 25 93 2 C 3.117 105
106 27 89 4 3.117 106
107 119 7 3.117 107
108 24 92 4 C 3.117 108
109 27 89 4 3.117 109
110 25 93 2 F 3.117 110
111 27 89 4 O 3.117 111
112 27 89 4 3.117 112
113 27 92 1 3.117 113
114 27 89 4 P 3.117 114
115 35 81 4 3.117 115
116 35 81 4 F 3.117 116
117 35 81 4 3.117 117
118 26 90 4 3.117 118
119 35 81 4 3.117 119
120 35 21 4 3.117 120
121 119 7 3.117 121
122 25 94 1 3.117 122
123 35 81 4 3.117 123
124 35 81 4 3.117 124
125 0 56 4 N 3.117 125
126 35 81 4 3.117 126
127 25 93 2 N 3.117 127
128 26 90 4 3.117 128
129 27 89 4 3.117 129
130 26 30 4 Q 3.117 130
131 35 81 4 F 3.117 131
132 14 42 4 M 3.117 132
133 27 88 5 3.117 133
134 25 91 4 N 3.117 134
135 25 94 1 3.117 135
136 35 81 4 3.117 136
137 36 140 4 5.117 137
138 36 140 4 5.117 138
139 25 94 1 7.117 139
140 35 81 4 3.117 140
141 59 57 4 R 12.117 141
142 27 89 4 3.117 142
143 26 90 4 S 3.117 143
144 26 88 6 3.117 144
145 26 87 7 3.117 145
146 35 81 4 F 3.117 146
147 35 81 4 F 3.117 147
148 25 91 4 3.117 148
149 35 81 4 3.117 149
150 25 91 4 N 3.117 150
151 26 92 2 N 3.117 151
152 28 88 4 3.117 152
153 35 81 4 3.117 153
154 28 18 14 C 3.117 154
155 47 72 1 L 3.117 155
156 25 213 2 C 3.117 156
157 35 81 4 3.117 157
158 25 92 3 N 3.117 158
159 27 20 13 3.117 159
160 35 81 4 3.117 160
161 25 93 2 N 3.117 161
162 35 81 4 F 5.117 162
163 35 81 4 F 5.117 163
164 27 89 4 3.117 164
165 28 88 4 3.117 165
166 25 93 2 N 3.117 166
167 26 90 4 N 3.117 167
168 35 81 4 3.117 168
169 38 80 2 3.117 169
170 35 81 4 3.117 170
171 35 81 4 F 10.117 171
172 28 88 4 3.117 172
173 0 12 12 32 4 3.117 173
174 26 90 4 N 3.117 174
175 25 91 4 3.117 175
176 35 21 4 3.117 176
177 35 81 4 F 3.117 177
178 28 88 4 7.117 178
179 27 89 4 12.117 179
180 27 89 4 3.117 180
181 27 89 4 3.117 181
182 35 81 4 3.117 182
183 25 89 6 3.117 183
184 25 93 2 N 3.117 184
185 28 88 4 3.117 185
186 35 81 4 3.117 186
187 35 81 4 F 11.117 187
188 35 81 4 5.117 188
189 27 151 2 3.117 189
190 25 93 2 N 3.117 190
191 35 81 4 F 3.117 191
192 28 88 4 3.117 192
193 35 81 4 F 7.117 193
194 26 93 1 L 3.117 194
195 29 87 4 3.117 195
196 35 81 4 F 7.117 196
197 28 28 4 3.117 197
198 35 81 4 3.117 198
199 25 91 4 C 3.117 199
200 25 93 2 N 3.117 200
201 35 81 4 8.117 201
202 35 81 4 3.117 202
203 25 91 4 3.117 203
204 35 81 4 F 9.117 204
205 27 89 4 3.117 205
206 35 81 4 12.117 206
207 25 153 2 3.117 207
208 35 81 4 F 9.117 208
209 35 45 4 5.117 209
210 28 88 4 3.117 210
211 35 81 4 F 9.117 211
212 35 81 4 F 9.117 212
213 35 81 4 3.117 213
214 25 117 2 N 3.117 214
215 27 89 4 3.117 215
216 35 81 4 12.117 216
217 35 81 4 12.117 217
218 35 21 4 F 14.117 218
219 26 90 4 N 3.117 219
220 25 91 4 3.117 220
221 25 91 4 N 3.117 221
222 35 81 4 F 7.117 222
223 26 90 4 F 12.117 223
224 27 89 4 3.117 224
225 28 88 4 T 7.117 225
226 28 88 4 3.117 226
227 35 81 4 3.117 227
228 35 81 4 7.117 228
229 26 92 2 N 3.117 229
230 35 81 4 F 3.117 230
231 25 93 2 3.117 231
232 35 81 4 F 7.117 232
233 25 93 2 N 3.117 233
234 25 93 2 N 3.117 234
235 35 81 4 3.117 235
236 35 81 4 F 9.117 236
237 35 81 4 7.117 237
238 26 90 4 7.117 238
239 25 91 4 N 3.117 239
240 35 81 4 F 9.117 240
241 35 81 4 12.117 241
242 26 212 2 3.117 242
243 0 118 2 N 3.117 243
244 35 81 4 12.117 244
245 35 83 2 12.117 245
246 35 81 4 F 15.117 246
247 35 81 4 F 20.117 247
3.713
APPENDIX III
CERTAIN CHARACTERISTICS OF THE MULTIFAMILY AND MANUFACTURED HOUSING COMMUNITY
LOANS
% OF % OF APPLICABLE
MORTGAGE MORTGAGE INITIAL POOL LOAN GROUP LOAN GROUP # OF
LOAN NO. LOAN SELLER (1) PROPERTY NAME BALANCE (ONE OR TWO) BALANCE PROPERTIES
-------------------------------------------------------------------------------------------------------------------------------
18 MSMC Newbury Village 1.1% 2 16.0% 1
20 MSMC Rose Hill Apartments 1.1% 2 15.3% 1
29 BSCMI Las Ventanas 0.8% 2 11.7% 1
40 PCFII Benchmark Apartments 0.6% 2 8.3% 1
68 PCFII Butler Ridge Apartments 0.4% 2 5.7% 1
72 MSMC Rye Colony Apartment 0.4% 2 5.4% 1
82 PCFII Villa Santa Fe Apartments 0.3% 2 4.8% 1
83 PCFII Westover Apartments 0.3% 2 4.7% 1
87 PCFII Princeton Hill Apartments 0.3% 2 4.7% 1
105 PCFII The Legends Apartments 0.3% 2 3.7% 1
111 MSMC 36 Sutton Place South 0.2% 2 3.4% 1
149 WFB The Elms MHP 0.2% 2 2.2% 1
152 MSMC Tracy Towers 0.2% 2 2.1% 1
166 PCFII Summertree Park Apartments 0.1% 2 1.9% 1
178 MSMC Walnut Park Apartments/Hempstead Apartments 0.1% 2 1.5% 1
180 MSMC 754 Post Street 0.1% 2 1.5% 1
198 WFB West Dearborn Apartments 0.1% 2 1.3% 1
207 PCFII Lodi Court Apartments 0.1% 2 1.2% 1
210 MSMC Otter Creek Apts. 0.1% 2 1.1% 1
220 WFB Huron Estates Cheboygan 0.1% 2 1.0% 1
235 WFB Oakman Apartments 0.0% 2 0.7% 1
236 WFB Park Street Apartments 0.0% 2 0.7% 1
245 WFB Northside Terrace Senior Apartments 0.0% 2 0.6% 1
246 WFB El Segundo Apartments 0.0% 2 0.6% 1
TOTALS AND WEIGHTED AVERAGES: 7.1% 24
MORTGAGE PROPERTY PROPERTY
LOAN NO. TYPE SUB-TYPE STREET ADDRESS
-------------------------------------------------------------------------------------------------------------------
18 Multifamily Garden 211 Pomeroy Avenue
20 Multifamily Garden 6201 Rose Hill Falls Way
29 Multifamily Garden 2200 E. First Street
40 Multifamily Garden 353 West San Marcos Boulevard
68 Multifamily Garden 1581-1611 Route 23
72 Multifamily Cooperative One Peck Avenue
82 Multifamily Garden 11850 East Florence Avenue
83 Multifamily Mid Rise 519 Bloomfield Avenue
87 Multifamily Garden 101 Princeton Avenue
105 Multifamily Mid Rise 246 Highland Avenue
111 Multifamily Cooperative 36 Sutton Place South
149 Manufactured Housing Community Manufactured Housing Community 871 South Main St
152 Multifamily Cooperative 245 East 24th Street
166 Multifamily Garden 1801 South 15th Street
178 Multifamily Low Rise 5326 Pocusset Street; 5644 Hempstead Road
180 Multifamily Mid Rise 754 Post Street
198 Multifamily Garden 1265 Monroe & 1312 Porter Street
207 Multifamily Garden 126 Route 46
210 Multifamily Garden 4144 Otter Creek Drive
220 Manufactured Housing Community Manufactured Housing Community 1290 South Huron
235 Multifamily Garden 5104 - 5120 Oakman Blvd
236 Multifamily Garden 9746 Park Street
245 Multifamily Assisted Living 1002 North 6th Street
246 Multifamily Garden 321 W. El Segundo Blvd.
CUT-OFF DATE
MORTGAGE CUT-OFF DATE BALANCE PER ORIGINAL TERM REMAINING TERM
LOAN NO. CITY COUNTY STATE ZIP CODE BALANCE ($)(6) UNIT ($) TO MATURITY TO MATURITY
-----------------------------------------------------------------------------------------------------------------------
18 Meriden New Haven CT 06450 $ 24,000,000 $133,333 60 58
20 Alexandria Fairfax VA 22310 $ 23,000,000 $ 87,121 120 116
29 Alamogordo Otero NM 88310 $ 17,574,000 $ 62,764 120 118
40 San Marcos San Diego CA 92069 $ 12,500,000 $ 94,697 120 119
68 Butler Morris NJ 07405 $ 8,579,132 $ 45,634 120 118
72 Rye Westchester NY 10580 $ 8,122,351 $ 50,765 120 117
82 Santa Fe Springs Los Angeles CA 90670 $ 7,200,000 $ 67,290 120 119
83 Caldwell Essex NJ 07006 $ 7,000,000 $ 44,025 120 117
87 Montgomery Somerset NJ 08540 $ 6,993,193 $ 43,707 120 119
105 State College Centre PA 16801 $ 5,500,000 $130,952 120 119
111 New York New York NY 10022 $ 5,075,000 $ 50,750 120 117
149 Fon Du Lac Fond du Lac WI 54935 $ 3,280,000 $ 15,845 120 118
152 New York New York NY 10010 $ 3,187,550 $ 18,861 120 116
166 Tacoma Pierce WA 98405 $ 2,897,468 $ 42,610 120 119
178 Pittsburgh Allegheny PA 15217 $ 2,272,000 $ 56,800 120 116
180 San Francisco San Francisco CA 94109 $ 2,242,998 $ 97,522 120 117
198 Dearborn Wayne MI 48124 $ 1,915,000 $ 21,278 120 120
207 Lodi Bergen NJ 07644 $ 1,743,954 $ 21,799 180 179
210 Amelia Clermont OH 45102 $ 1,640,470 $ 74,567 120 116
220 Cheboygan Cheboygan MI 49721 $ 1,438,828 $ 12,847 120 119
235 Dearborn Wayne MI 48126 $ 1,053,000 $ 15,261 120 120
236 Bellflower Los Angeles CA 90706 $ 1,049,201 $ 65,575 120 119
245 Hawley Clay MN 56549 $ 944,231 $ 31,474 120 119
246 El Segundo Los Angeles CA 90245 $ 894,281 $149,047 120 119
$150,102,659 111 109
FIRST
MORTGAGE ORIGINAL REMAINING INTEREST ONLY NCF NCF POST IO CUT-OFF DATE BALLOON
LOAN NO. AMORT. TERM (8) AMORT. TERM PERIOD DSCR (x)(9) PERIOD DSCR (x)(10) LTV LTV
--------------------------------------------------------------------------------------------------------------
18 360 360 36 1.37 1.15 75.0% 73.2%
20 IO IO 120 1.45 1.45 68.2% 68.2%
29 360 360 60 1.47 1.23 79.5% 74.3%
40 IO IO 120 1.43 1.43 58.4% 58.4%
68 360 358 0 1.64 1.64 59.6% 49.7%
72 360 357 0 4.22 4.22 24.2% 20.3%
82 IO IO 120 2.21 2.21 48.0% 48.0%
83 360 360 60 2.20 1.82 49.0% 45.7%
87 360 359 0 1.96 1.96 36.0% 30.1%
105 360 360 72 1.64 1.37 61.8% 58.5%
111 IO IO 120 9.88 9.88 7.7% 7.7%
149 360 360 36 1.43 1.20 80.0% 72.2%
152 360 356 0 10.05 10.05 8.2% 7.0%
166 360 359 0 1.21 1.21 72.4% 61.3%
178 360 360 48 1.69 1.42 73.5% 67.6%
180 360 357 0 1.21 1.21 58.7% 49.8%
198 360 360 0 1.25 1.25 73.7% 62.2%
207 180 179 0 3.12 3.12 25.1% 0.5%
210 300 296 0 1.23 1.23 80.0% 62.2%
220 360 359 0 1.22 1.22 75.7% 64.6%
235 360 360 0 1.26 1.26 65.8% 55.7%
236 360 359 0 1.20 1.20 53.8% 46.2%
245 360 359 0 1.44 1.44 74.9% 63.9%
246 360 359 0 1.20 1.20 48.3% 41.3%
356 355 2.17 2.07 59.9% 56.0%
STUDIOS 1 BEDROOM 2 BEDROOM 3 BEDROOM
MORTGAGE UTILITIES NO. OF AVG RENT NO. OF AVG RENT NO. OF AVG RENT NO. OF
LOAN NO. PAID BY TENANT UNITS/ROOMS PER MO. ($) UNITS/ROOMS PER MO. ($) UNITS/ROOMS PER MO. ($) UNITS/ROOMS
--------------------------------------------------------------------------------------------------------------------------------
18 Electric 16 952 64 1,209 100 1,476 0
20 Electric, Water, Sewer 0 NAP 156 1,058 96 1,236 12
29 Electric 0 NAP 112 554 116 785 52
40 Electric, Gas 0 NAP 66 950 66 1,300 0
68 None 26 708 130 868 32 907 0
72 Electric, Gas 0 NAP 80 1,500 78 2,000 2
82 Electric 0 NAP 0 NAP 60 1,175 47
83 None 32 938 68 1,161 56 1,449 0
87 Electric 0 NAP 106 1,140 54 1,453 0
105 None 0 NAP 2 990 40 1,790 0
111 Electric 8 2,000 48 3,365 39 5,400 5
149 Electric, Water, Sewer 0 NAP 0 NAP 0 NAP 0
152 Electric 131 1,945 32 2,415 0 NAP 0
166 None 0 NAP 50 547 18 669 0
178 Electric 0 NAP 19 726 21 779 0
180 Electric, Gas 13 950 9 1,800 0 NAP 0
198 None 30 460 54 553 6 650 0
207 None 0 NAP 72 1,038 8 1,317 0
210 Electric 0 NAP 0 NAP 14 790 8
220 Electric, Gas, Water, Sewer 0 NAP 0 NAP 0 NAP 0
235 None 42 425 26 500 1 575 0
236 Electric, Gas 0 NAP 8 814 8 938 0
245 Electric, Gas 0 NAP 28 597 2 726 0
246 Electric, Gas 0 NAP 0 NAP 1 1,400 5
4 BEDROOM 5 BEDROOM 6 BEDROOM
MORTGAGE AVG RENT NO. OF AVG RENT NO. OF AVG RENT NO. OF AVG RENT
LOAN NO. PER MO. ($) UNITS/ROOMS PER MO. ($) UNITS/ROOMS PER MO. ($) UNITS/ROOMS PER MO. ($)
---------------------------------------------------------------------------------------------------
18 NAP 0 NAP 0 NAP 0 NAP
20 1,575 0 NAP 0 NAP 0 NAP
29 951 0 NAP 0 NAP 0 NAP
40 NAP 0 NAP 0 NAP 0 NAP
68 NAP 0 NAP 0 NAP 0 NAP
72 2,250 0 NAP 0 NAP 0 NAP
82 1,475 0 NAP 0 NAP 0 NAP
83 NAP 0 NAP 0 NAP 0 NAP
87 NAP 0 NAP 0 NAP 0 NAP
105 NAP 0 NAP 0 NAP 0 NAP
111 9,150 0 NAP 0 NAP 0 NAP
149 NAP 0 NAP 0 NAP 0 NAP
152 NAP 0 NAP 0 NAP 0 NAP
166 NAP 0 NAP 0 NAP 0 NAP
178 NAP 0 NAP 0 NAP 0 NAP
180 NAP 0 NAP 0 NAP 0 NAP
198 NAP 0 NAP 0 NAP 0 NAP
207 NAP 0 NAP 0 NAP 0 NAP
210 1,010 0 NAP 0 NAP 0 NAP
220 NAP 0 NAP 0 NAP 0 NAP
235 NAP 0 NAP 0 NAP 0 NAP
236 NAP 0 NAP 0 NAP 0 NAP
245 NAP 0 NAP 0 NAP 0 NAP
246 1,665 0 NAP 0 NAP 0 NAP
7 BEDROOM OTHER UNITS
MORTGAGE NO. OF AVG RENT NO. OF AVG RENT NO. OF
LOAN NO. UNITS/ROOMS PER MO. ($) UNITS/ROOMS PER MO. ($) ELEVATORS
-----------------------------------------------------------------------
18 0 NAP 0 NAP 4
20 0 NAP 0 NAP 0
29 0 NAP 0 NAP 0
40 0 NAP 0 NAP 0
68 0 NAP 0 NAP 0
72 0 NAP 0 NAP 0
82 0 NAP 0 NAP 0
83 0 NAP 3 1,258 2
87 0 NAP 0 NAP 0
105 0 NAP 0 NAP 1
111 0 NAP 0 NAP 2
149 0 NAP 207 227 0
152 0 NAP 6 4,142 2
166 0 NAP 0 NAP 0
178 0 NAP 0 NAP 0
180 0 NAP 1 1,203 1
198 0 NAP 0 NAP 0
207 0 NAP 0 NAP 0
210 0 NAP 0 NAP 0
220 0 NAP 112 274 0
235 0 NAP 0 NAP 0
236 0 NAP 0 NAP 0
245 0 NAP 0 NAP 1
246 0 NAP 0 NAP 0
FOOTNOTES TO APPENDIX II AND III
1 "BSCMI," "MSMC," "PCFII," and "WFB," denote Bear Stearns Commercial
Mortgage, Inc., Morgan Stanley Mortgage Capital Inc., Principal Commercial
Funding II, LLC, and Wells Fargo Bank, National Association, respectively,
as Sellers.
2 The following loan pools represent multiple properties securing a single
mortgage loan, and are designated by Roman Numeral coding: Mortgage Loan
Nos. 52-56, 73-74, 90-93, 137-138, 216-217. For the purpose of the
statistical information set forth in this Prospectus Supplement as to such
mortgage loans, a portion of the aggregate Cut-off Date Balance has been
allocated to each mortgaged property based on the respective appraised
values and/or Underwritten Cash Flows. The following loan pools represent
cross-collateralized/cross-defaulted properties securing multiple mortgage
loans and are designated by identical alphabetical coding: Mortgage Loan
Nos. 14-15, 26-27, 78-79. For the purpose of the statistical information
set forth in this Prospectus Supplement as to such
single-loan/multiple-property and cross-collateralized/cross-defaulted loan
pools, certain credit statistics, including NOI DSCR, NCF DSCR, NCF Post IO
Period DSCR, Cut-off Date LTV, Balloon LTV and Cut-off Date Balance per
Unit or SF, are calculated on an aggregate basis.
3 Certain of the mortgage loans that are secured by retail properties include
in-line and/or anchor tenant ground lease parcels in the calculation of the
total square footage of the property.
4 In general for each mortgaged property, "Percent Leased" was determined
based on a rent roll or lease verification letter provided by the borrower.
"Percent Leased as of Date" indicates the date as of which "Percent Leased"
was determined based on such information.
5 Certain mortgage loans are subject to a ground lease. If for any mortgage
loan, the ground lessor has encumbered/subordinated its interest in the
respective mortgaged property to the lien of the leasehold mortgage such
that upon foreclosure, the lease is extinguished, the mortgage loan may be
disclosed as a fee loan.
6 The Cut-off Date is April 1, 2007 for any mortgage loan that has a due date
on the first day of each month. For purposes of the information contained
in this Prospectus Supplement, we present the loans as if scheduled
payments due in April 2007 were due on April 1, 2007, not the actual day on
which such scheduled payments were due. The mortgage loans generally have a
due date on the 1st of the month, except for Mortgage Loan No. 37, Fayette
Medical Office Building, which is due on the 3rd of the month, and Mortgage
Loan No. 3, Fulbright Tower, Mortgage Loan No. 43 Cordova Commons, Mortgage
Loan No. 50, Tradewinds Shopping Center, Mortgage Loan No. 178, Walnut Park
Apartments/Hempstead Apartments, and Mortgage Loan No. 192, HERC Deer Park
which are due on the 8th of the month.
With respect to Mortgage Loan No. 3, Fulbright Tower, the interest rate is
a weighted average of two component notes which are pari passu with each
other, Note A is $82,000,000 with an interest rate of 5.053% and Note B is
a $7,000,000 with an interest rate 6.015%.
With respect to Mortgage Loan No. 108, 3765 A Old Court Road, the borrower
has secured subordinate secondary debt with Baltimore County, Maryland in
the amount of $1,500,000.
With respect to Mortgage Loan No. 163, 3636 Birch Street, existing secured
subordinate debt in the form of seller-financing from Arlene Westley,
Trustee of the Arlene Living Trust, in the amount of $750,000 is in place.
A subordination and standstill agreement has been obtained.
With respect to Mortgage Loan No. 18, Newbury Village, the subject loan has
a $3,500,000 mezzanine loan in place.
With respect to Mortgage Loan No. 6, Viad Corporate Center, the borrower
may incur future additional secured debt subject to restrictions and
subordination as detailed in the loan documents including but not limited
to: (i) there is no event of default, (ii) the combined LTV ratio is not
greater than 75%, (iii) the combined DSCR is not less than 1.25x and (iv)
the additional debt will be subject to a subordination and standstill
agreement acceptable to lender.
With respect to Mortgage Loan No. 11, 503 Broadway, the borrower may incur
future additional secured and unsecured debt subject to restrictions and
subordination as detailed in the loan documents including but not limited
to: (i) there is no event of default, (ii) the combined LTV ratio is not
greater than 70%, (iii) the combined DSCR is not less than 1.35x and (iv)
the additional debt will be subject to a subordination and standstill
agreement acceptable to lender.
II-1
With respect to Mortgage Loan No. 60, Shoppes at Smithville, secured
secondary financing or mezzanine financing is permitted during the first 4
years of the loan, subject to various conditions including (i) the amount
will not result in an aggregate LTV greater than 75% and DSCR less than
1.20x; and (ii) the lender must approve the secondary or mezzanine lender
and financing documents and will enter into an intercreditor agreement with
secondary or mezzanine lender.
With respect to Mortgage Loan No. 101, A-American Lipoa, future secured
subordinate debt is permitted subject to various conditions, including, but
not limited to, (i) a combined DSCR, including the junior loan, greater
than or equal to 1.62x (based on actual mortgage constant); (ii) a combined
LTV, including the junior loan, of 46.2% or less; (iii) the junior loan
shall have a fixed interest rate, be fully amortizing and have maturity
date of January 1, 2012; (iv) intercreditor documentation satisfactory to
lender and applicable rating agencies; and (v) confirmation from applicable
rating agencies of no downgrade, withdrawal or qualification to current
ratings resulting from such subordinate financing.
With respect to Mortgage Loan No. 1, One Dag Hammarskjold Plaza, the
borrower is permitted to incur future mezzanine financing and partnership
debt (such partnership debt is subordinate to the One Dag Hammarskjold
Plaza Loan and may not exceed $10,000,000), subject to the satisfaction of
certain conditions set forth in the mortgage loan documents, including but
not limited to: (i) the debt service coverage ratio on the aggregate debt
must be equal to or greater than 1.25x (based on a 6.82% loan constant);
(ii) the aggregate LTV may not exceed 70% and (iii) the execution of an
acceptable intercreditor agreement (with respect to any mezzanine
financing).
With respect to Mortgage Loan No. 3, Fulbright Tower, future mezzanine
financing is permitted, subject to various conditions including: (i) the
lender is a qualified lender, (ii) the amount will not result in an
aggregate LTV greater than 75%, (iii) the amount will not result in an
aggregate DSCR less than 1.20x (based on a constant equal to the greater of
(a) 7.5% or (b) the blended interest rate of the Fulbright Tower Loan and
the additional mezzanine debt), and (iv) no event of default shall have
occurred.
With respect to Mortgage Loan No. 4, Scripps Center, future mezzanine debt
is permitted subject to various conditions including (i) the amount will
not result in an aggregate LTV greater than 90% and DSCR less than 1.10x;
and (ii) the lender must approve the mezzanine lender and financing
documents and will enter into an intercreditor agreement with mezzanine
lender.
With respect to Mortgage Loan No. 17, Millrock Park II, future mezzanine
debt is permitted subject to various conditions including (i) the amount
will not result in an aggregate LTV greater than 80% and DSCR less than
1.15x; and (ii) the lender must approve the mezzanine lender and financing
documents and will enter into an intercreditor agreement with mezzanine
lender.
With respect to Mortgage Loan No. 40, Benchmark Apartments, future
mezzanine debt is permitted subject to various conditions including (i) the
amount will not result in an aggregate LTV greater than 80% and DSCR less
than 1.20x; (ii) The Mortgaged Property must be 92% leased and occupied;
and (iii) the lender must approve the mezzanine lender and financing
documents and will enter into an intercreditor agreement with mezzanine
lender.
With respect to Mortgage Loan No. 41, Ivy Walk, future mezzanine debt is
permitted subject to various conditions including (i) the amount will not
result in an aggregate LTV greater than 85% and DSCR less than 1.20x; and
(ii) the lender must approve the mezzanine lender and financing documents
and will enter into an intercreditor agreement with mezzanine lender.
With respect to Mortgage Loan No. 42, Inn at Chester Springs, future
mezzanine debt is permitted subject to various conditions including (i) the
amount will not result in an aggregate LTV greater than 75% and DSCR less
than 1.33x; and (ii) the lender must approve the mezzanine lender and
financing documents and will enter into an intercreditor agreement with
mezzanine lender.
With respect to Mortgage Loan No. 43, Cordova Commons, future mezzanine
debt is permitted subject to various conditions including the amount will
not result in an aggregate LTV greater than 75% and DSCR less than 1.15x.
With respect to Mortgage Loan No. 47, Thomson Campus, future mezzanine debt
is permitted subject to various conditions including the amount will not
result in an aggregate LTV greater than 75% and DSCR less than 1.20x.
With respect to Mortgage Loan No. 50, Tradewinds Shopping Center, future
mezzanine debt is permitted subject to various conditions including the
amount will not result in an aggregate LTV greater than 75% and DSCR less
than 1.15x.
II-2
With respect to Mortgage Loan No. 52-56, Newbury Portfolio, future
mezzanine debt is permitted subject to various conditions including (i) the
amount will not result in an aggregate LTV greater than 70% and DSCR less
than 1.55x; and (ii) the lender must approve the mezzanine lender and
financing documents and will enter into a subordination and intercreditor
agreement acceptable to lender with mezzanine lender.
With respect to Mortgage Loan No. 67, Hampton Inn Lexington, future
mezzanine debt is permitted subject to various conditions, including but
not limited to, (i) a combined DSCR greater than or equal to 1.30x (based
on actual mortgage constant); (ii) a combined LTV of 75% or less; (iii)
intercreditor documentation satisfactory to lender; (iv) mezzanine lender
shall be "qualified transferee" (institutional party that owns / manages
$750 million in total assets and, except for pension advisory firm or like
fiduciary, $500 million in shareholder equity and regularly engaged in
business of commercial real estate lending or operations); (v) confirmation
from applicable rating agencies of no downgrade, withdrawal or
qualification to current ratings resulting from such mezzanine financing;
and (vi) if requested by lender, lockbox agreement approved by lender.
With respect to Mortgage Loan No. 72, Rye Colony Apartments, the borrower
may obtain an unsecured line of credit subject to various conditions
including the amount will not result in an aggregate LTV greater than 25%.
With respect to Mortgage Loan No. 73-74, Redstone American Grill Portfolio,
future mezzanine debt is permitted subject to various conditions including
(i) the amount will not result in an aggregate LTV greater than 80% and
DSCR less than 1.20x; and (ii) the lender must approve the mezzanine lender
and financing documents and will enter into an intercreditor agreement with
mezzanine lender.
With respect to Mortgage Loan No. 88, Holiday Inn Express Chester, future
mezzanine debt is permitted subject to various conditions, including but
not limited to, (i) a combined DSCR greater than or equal to 1.20x (based
on actual mortgage constant); (ii) a combined LTV of 80% or less; (iii) an
intercreditor agreement and a subordination and standstill agreement
satisfactory to lender; (iv) mezzanine lender shall be "qualified
transferee" (institutional party that owns / manages $650 million in total
assets and, except for pension advisory firm or like fiduciary, $250
million in shareholder equity and regularly engaged in business of
commercial real estate lending or operations); (v) confirmation from
applicable rating agencies of no downgrade, withdrawal or qualification to
current ratings resulting from such mezzanine financing; and (vi) if
requested by lender, lockbox agreement approved by lender.
With respect to Mortgage Loan No. 97, Radisson Hotel Corning, future
mezzanine debt is permitted subject to various conditions, including but
not limited to, (i) a combined DSCR greater than or equal to 1.20x (based
on actual mortgage constant); (ii) a combined LTV of 75% or less; (iii)
intercreditor documentation satisfactory to lender; (iv) mezzanine lender
shall satisfy rating agency criteria; (v) confirmation from applicable
rating agencies of no downgrade, withdrawal or qualification to current
ratings resulting from such mezzanine financing; and (vi) a lockbox
agreement approved by lender.
With respect to Mortgage Loan No. 111, 36 Sutton Place South, the borrower
may obtain an unsecured line of credit subject to various conditions
including the amount will not result in an aggregate LTV greater than 25%.
With respect to Mortgage Loan No. 132, 342-344 & 354-364 Flatbush Avenue,
future mezzanine debt is permitted subject to various conditions including
the amount will not result in an aggregate DSCR less than 1.15x.
With respect to Mortgage Loan No. 133, 9th Street Office, future mezzanine
debt is permitted subject to various conditions including the amount will
not result in an aggregate LTV greater than 65% and DSCR less than 1.22x.
With respect to Mortgage Loan No. 141, DiBona Village Retail Center, future
mezzanine debt is permitted subject to various conditions including the
amount will not result in an aggregate LTV greater than 80% and DSCR less
than 1.10x.
With respect to Mortgage Loan No. 152, Tracy Towers, subordinate financing
(up to three secured and unsecured loans) is permitted subject to various
conditions including the amount will not result in an aggregate LTV greater
than 20% and DSCR no less than 4.00x.
With respect to Mortgage Loan No. 171, Cost Plus - Torrance, future
mezzanine debt is permitted after the prepayment lockout period subject to
various conditions, including but not limited to, (i) a combined DSCR
greater than or equal to 1.25x (based on actual mortgage constant); (ii) a
combined LTV of 75% or less; (iii) an intercreditor agreement and a
subordination and standstill agreement satisfactory to lender; (iv)
mezzanine lender shall be acceptable to lender and rating agencies (except
for pre-approved affiliates of sponsor); (v) confirmation from applicable
rating agencies of no downgrade, withdrawal or qualification to current
ratings resulting from such mezzanine financing; and (vi) mezzanine loan
documents shall be acceptable to lender and rating agencies.
II-3
With respect to Mortgage Loan No. 210, Otter Creek Apts., after the lockout
period, future mezzanine debt is permitted subject to various conditions
including the amount will not result in an aggregate LTV greater than 75%
and DSCR less than 1.20x.
With respect to Mortgage Loan No. 5, Academy Sports HQ, the borrower is
permitted to release two currently unimproved portions of the Academy
Sports HQ Property, referred to as Tract 3 and Tract 4, subject to the
satisfaction of certain conditions under the mortgage loan documents,
including but not limited to: (i) the payment of the applicable release
amount ($379,500 for Tract 3 and $796,950 for Tract 4) plus a prepayment
premium calculated on the basis of the greater of a yield maintenance
formula and 3.0% of the amount prepaid, (ii) the borrower will provide a
written request for release of (a) Tract 3 no later than September 29, 2011
and (b) Tract 4 no later than April 10, 2008, (iii) the DSCR immediately
following such release is not less than the greater of 1.62x or the DSCR
immediately prior to such release, and (iv) the LTV immediately following
such release is not greater than the lesser of 66% or the LTV immediately
prior to such release.
With respect to Mortgage Loan No. 14, Stony Point East, the borrower may
request the release of the cross-default and cross-collateralization
subject to full prepayment of the Stony Point East Note along with a
prepayment premium equal to the greater of yield maintenance and 1%. The
remaining property must have a LTV no greater than 70% and a DSCR no less
than 1.50x.
With respect to Mortgage Loan No. 15, Stony Point West, the borrower may
request the release of the cross-default and cross-collateralization
subject to full prepayment of the Stony Point West Note along with a
prepayment premium equal to the greater of yield maintenance and 1%. The
remaining property must have a LTV no greater than 70% and a DSCR no less
than 1.65x.
With respect to Mortgage Loan No. 25, DRA - Lake Emma Corporate Park, the
borrower has the option of obtaining the release of an excess land parcel
in conjunction with a loan paydown of up to, but not more than, $1,000,000,
subject to yield maintenance and certain conditions, including, but not
limited to, (i) confirmation via tenant estoppels that no tenants have
contractual rights to use the excess land parcel; (ii) payment of any
applicable prepayment charges; (iii) the LTV of the remaining collateral
must not exceed 75% (subsequent to pay down); (iv) remainder property (or
remainder property and excess land parcel, pursuant to a reciprocal
easement agreement) has no less than 1,219 parking spaces; (v) remainder
property's net cash flow for trailing-12 month period and as adjusted for
typical CMBS underwriting is not less than $1,361,600; (vi) confirmation
from applicable rating agencies of no downgrade, withdrawal or
qualification to current ratings resulting from such excess land release;
and (vii) the borrower will pay all costs associated with the excess land
release.
With respect to Mortgage Loan No. 26, Sierra Trading Post Fulfillment,
after the defeasance lockout period, the borrower is permitted to obtain
the release of the property from the lien of the cross-collateralized loan
if certain conditions are satisfied, including, (i) (a) payment of subject
loan in full, including applicable prepayment charges; (b) loan-to-value
ratio of the Sierra Trading Post Admin Building loan is not greater than
80%; and (c) debt service coverage ratio of the Sierra Trading Post Admin
Building loan is not less than 0.97x based on a 10% mortgage constant; or
(ii) (a) by payment of subject loan in full, including applicable
prepayment charges; (b) by making a principal reduction payment of
$1,600,000 (equal to 25% of the original principal balance of the loan) to
the Sierra Trading Post Admin Building loan, together with applicable
prepayment charges; (c) resulting loan-to-value of the Sierra Trading Post
Admin Building loan is no greater than 60%; (d) the DSCR of the Sierra
Trading Post Admin Building loan (after reamortization after principal
reduction payment) is no less than 1.29x based on a 10% loan constant.
With respect to Mortgage Loan No. 27, Sierra Trading Post Admin Building,
after the defeasance lockout period, the borrower is permitted to obtain
the release of the property from the lien of the cross-collateralized loan
if certain conditions are satisfied, including, (i) (a) payment of subject
loan in full, including applicable prepayment charges; (b) loan-to-value
ratio of the Sierra Trading Post Fulfillment loan is not greater than 80%;
and (c) debt service coverage ratio of the Sierra Trading Post Fulfillment
loan is not less than 0.97x based on a 10% mortgage constant; or (ii) (a)
by payment of subject loan in full, including applicable prepayment
charges; (b) by making a principal reduction payment of $3,000,000 to the
Sierra Trading Post Fulfillment loan, together with applicable prepayment
charges; (c) resulting loan-to-value of the Sierra Trading Post Fulfillment
loan is no greater than 60%; (d) the DSCR of the Sierra Trading Post
Fulfillment loan (after reamortization after principal reduction payment)
is no less than 1.30x based on a 10% loan constant.
II-4
With respect to Mortgage Loan No. 47, Thomson Campus, the borrower is
permitted to release two parcels, "Parcel 1" and "Parcel 2", subject to the
following conditions, among others, (A) Parcel 1 - (i) borrower must pay a
release price calculated as the sum of the greater of (x) $350,000, or (y)
85% of net proceeds from the sale of release Parcel 1. (B) Parcel 2 - (i)
borrower must pay a release price calculated as the sum of the greater of
(x) $50,000, or (y) 85% of net proceeds from the sale of release Parcel 2.
A prepayment premium calculated as the greater of 1% of the amount prepaid
and yield maintenance will be required.
With respect to Mortgage Loan No. 57, Mar Industrial Buildings, the
borrower may request the release of one or more of the parcels at any time
subject to a paydown of 110% of the allocated loan amount as defined in the
loan documents at the time of the release plus a make whole premium. In
aggregate, not more than 50% of the loan amount may be paid down. The
borrower must also meet the specific other requirements in the mortgage
loan documents including in part that the remaining portion of the property
have a DSCR of at least 1.20x.
With respect to Mortgage Loan No. 73, Redstone American Grill - Oakbrook,
the borrower may request the release of a portion of the premises at any
time subject to a paydown of 125% of the allocated loan amount as defined
in the loan documents as $18.29 per square foot of land that is released,
plus a make whole premium. They must also meet the specific other
requirements in the Mortgage document including in part that the remaining
portion of the property have a DSCR of at least 1.20x.
With respect to Mortgage Loan Nos. 90-93, Tractor Supply Portfolio - Texas,
any property may be released through partial defeasance subject to the
satisfaction of certain requirements and conditions set forth in the loan
documents including, but not limited to the following: (i) defeasance of an
amount equal to 115% of the allocated loan amount for the released
property, (ii) the LTV immediately following the release is not greater
than 55%, (iii) the DSCR immediately following the release is at least
equal to or greater than the greater of 1.86x (based on a 5.77% constant)
or the DSCR immediately prior to such release, and (iv) the Livingston
property must be released first.
With respect to Mortgage Loan No. 108, 3765 A Old Court Road, the borrower
may request the release of one of the parcels at any time subject to a
paydown of 105% of the allocated loan amount as defined in the loan
documents (based on a MAI appraisal of both parcels) at the time of the
release plus a make whole premium. They must also meet the specific other
requirements in the Mortgage document including in part that the remaining
portion of the property have a DSCR of at least 1.30x and a LTV not greater
than 65%.
With respect to Mortgage Loan No. 125, West Allis Industrial, the borrower
may request the release of one of the properties at any time, subject to a
paydown of 110% of the allocated loan amount as defined in the loan
documents ($3,036,000 for 2122 & 2152 S. 114th St. and $1,364,000 for 11217
W. Becher St.), plus a make whole premium. They must also meet the specific
other requirements in the Mortgage document including in part that the
remaining portion of the property have a DSCR of at least 1.25x and a LTV
not greater than 80%.
With respect to Mortgage Loan No. 137 Optronics - Flora and Mortgage Loan
No. 138, Optronics - Muskogee, after the defeasance lockout period, the
borrower has the option of obtaining the release of an individual property
in conjunction with partial defeasance or by paying a yield maintenance
premium, subject to certain conditions, including, but not limited to, (i)
payment of 120% of the allocated principal amount; (ii) payment of any
applicable prepayment charges; (iii) the LTV of the remaining collateral
must not exceed 63.51%; (iv) the DSCR of the remaining collateral must be
no less than the greater of 1.52x or the DSCR immediately prior to the
release, based on a 10% loan constant; (v) confirmation from applicable
rating agencies of no downgrade, withdrawal or qualification to current
ratings resulting from such partial release; (vi) the borrower will pay all
costs associated with the partial release; and (vii) the principal and
interest payments will be re-calculated. For the purposes of LTV and DSCR
calculations, the outstanding loan balance after release is assumed to be
the loan balance less the allocated loan balance of the released property
(rather than the loan balance less the release price).
With respect to Mortgage Loan No. 23, 854-864 Madison Ave, a one-time
substitution of collateral is permitted subject to various conditions,
including (i) the substitute property must be apartment building with
ground-floor retail in Manhattan, (ii) the LTV of the substitute property
is equal to or less than the lesser of 65% and LTV of substituted property,
and (iii) the DSCR of the substitute property is equal to or greater than
the greater of 1.25x and the DSCR of the loan immediately prior to
substitution.
With respect to Mortgage Loan No. 36, 165 East 35th Street, a one-time
substitution of collateral is permitted subject to various conditions,
including (i) the substitute property must be apartment building with
ground-floor retail in Manhattan, (ii) the LTV of the substitute property
is equal to or less than the lesser of 65% and LTV of substituted property,
and (iii) the DSCR of the substitute property is equal to or greater than
the greater of 1.25x and the DSCR of the loan immediately prior to
substitution.
II-5
With respect to Mortgage Loan No. 48, Rave Cinemas Baton Rouge, the loan
allows the borrower to substitute collateral to effect release of mortgaged
property once over life of loan, subject to certain conditions, including
(i) LTV is no greater than 61.3% and (ii) replacement property shall (1)
have equal or greater appraised value, (2) have equal or better physical
condition, (3) be a building substantially similar in use and quality to
the substituted property; (4) have lease terms no less favorable than
existing Rave Lease; and (5) be in location having similar or greater
attributes as substituted property, including submarket strength,
population and accessibility; (iii) DSCR shall be at least equal to 1.54x;
and (D) delivery of "no downgrade" confirmation from applicable rating
agency.
With respect to Mortgage Loan No. 49, 38-05 to 38-17 and 37-27/29 Main
Street, a one-time substitution of collateral is permitted subject to
various conditions, including (i) the substitute property must be a retail
property in Manhattan, (ii) the LTV of the substitute property is equal to
or less than the lesser of 65% and LTV of substituted property, and (iii)
the DSCR of the substitute property is equal to or greater than the greater
of 1.25x and the DSCR of the loan immediately prior to substitution.
With respect to Mortgage Loan No. 58, Rave Cinemas Pensacola, the loan
allows the borrower to substitute collateral to effect release of mortgaged
property once over life of loan, subject to certain conditions, including
(i) LTV is no greater than 63.8% and (ii) replacement property shall (1)
have equal or greater appraised value, (2) have equal or better physical
condition, (3) be a building substantially similar in use and quality to
the substituted property; (4) have lease terms no less favorable than
existing Rave Lease; and (5) be in location having similar or greater
attributes as substituted property, including submarket strength,
population and accessibility; (iii) DSCR shall be at least equal to 1.47x;
and (iv) delivery of "no downgrade" confirmation from applicable rating
agency.
With respect to Mortgage Loan No. 66, Provo Craft, the loan allows the
borrower to substitute collateral once over life of loan, subject to
certain conditions, including (i) post-substitution LTV is no greater than
70.87% and (ii) replacement property shall (1) have equal or greater
appraised value, (2) have equal or better physical condition, (3) be a
building substantially similar in size, use and quality to the substituted
property; (4) have lease terms no less favorable than existing Provo Craft
Lease; and (5) be in location having similar or greater attributes as
substituted property, including submarket strength, population and
accessibility; (iii) post-substitution DSCR shall be at least equal to
1.26x; and (iv) delivery of "no downgrade" confirmation from applicable
rating agency.
With respect to Mortgage Loan No. 90-93, Tractor Supply Portfolio, the loan
allows the Tractor Supply Portfolio Borrower to substitute individual
properties a maximum of one time during the loan term. Any proposed
substitution would be subject to satisfying numerous requirements and
conditions including, but not limited to the following: (i) the aggregate
DSCR immediately after the substitution is not less than the greater of the
aggregate DSCR at closing or the aggregate DSCR immediately prior to the
substitution, (ii) the fair market value of the substitute property is not
less than the greater of (a) the fair market value of the substituted
property as of the closing date and (b) the fair market value of the
substituted property immediately preceding the substitution, (iii) the
payment of a fee equal to 0.5% of the substituted property's allocated loan
amount and (iv) lender has received confirmation from the rating agencies
that such substitution will not result in a downgrade of the certificates.
With respect to Mortgage Loan No. 94, Rave Cinemas Port St. Lucie, the loan
allows the borrower to substitute collateral to effect release of mortgaged
property once over life of loan, subject to certain conditions, including
(i) LTV is no greater than 59.05% and (ii) replacement property shall (1)
have equal or greater appraised value, (2) have equal or better physical
condition, (3) be a building substantially similar in use and quality to
the substituted property; (4) have lease terms no less favorable than
existing Rave Lease; and (5) be in location having similar or greater
attributes as substituted property, including submarket strength,
population and accessibility; (iii) DSCR shall be at least equal to 1.55x;
and (iv) delivery of "no downgrade" confirmation from applicable rating
agency.
With respect to Mortgage Loan No. 99, Western Union, the loan allows the
borrower to substitute collateral to effect release of mortgaged property
once over life of loan, subject to certain conditions, including (i) LTV is
no greater than 68.97% and (ii) replacement property shall (1) have equal
or greater appraised value, (2) have equal or better physical condition,
(3) be a building substantially similar in use and quality to the
substituted property; (4) have lease terms no less favorable than existing
Western Union Lease; and (5) be in location having similar or greater
attributes as substituted property, including submarket strength,
population and accessibility; (iii) DSCR shall be at least equal to 1.87x;
and (iv) delivery of "no downgrade" confirmation from applicable rating
agency.
With respect to Mortgage Loan No. 107, 162 E 55th Street, a one-time
substitution of collateral is permitted subject to various conditions,
including (i) the substitute property must be apartment building with
ground-floor retail in Manhattan, (ii) the LTV of the substitute property
is equal to or less than the lesser of 65% and LTV of substituted property,
and (iii) the DSCR of the substitute property is equal to or greater than
the greater of 1.25x and the DSCR of the loan immediately prior to
substitution.
II-6
With respect to Mortgage Loan No. 121, 160 E 55th Street, a one-time
substitution of collateral is permitted subject to various conditions,
including (i) the substitute property must be apartment building with
ground-floor retail in Manhattan, (ii) the LTV of the substitute property
is equal to or less than the lesser of 65% and LTV of substituted property,
and (iii) the DSCR of the substitute property is equal to or greater than
the greater of 1.25x and the DSCR of the loan immediately prior to
substitution.
With respect to Mortgage Loan No. 137, Optronics - Flora and Mortgage Loan
No. 138, Optronics - Muskogee, the loan allows the borrower to substitute
collateral once over life of loan, subject to certain conditions, including
(i) post-substitution LTV is no greater than 63.51% and (ii) replacement
property shall (1) have equal or greater appraised value, (2) have equal or
better physical condition, (3) be a building substantially similar in size,
use and quality to the substituted property; (4) have lease terms no less
favorable to existing Optronics Lease; and (5) be in location having
similar or greater attributes as substituted property, including submarket
strength, population and accessibility; (iii) post-substitution DSCR shall
be at least equal to 1.52x; and (iv) delivery of "no downgrade"
confirmation from applicable rating agency.
7 The "Grace Period" shown is grace period to charge late interest.
8 The "Original Amort. Term" shown is the basis for determining the fixed
monthly principal and interest payment as set forth in the related note.
Due to the Actual/360 interest calculation methodology applied to most
mortgage loans, the actual amortization to a zero balance for such loans
will be longer.
9 The indicated NOI DSCR and NCF DSCR reflect current scheduled payments as
of the Cut-off Date for all mortgage loans.
10 The indicated NCF Post IO Period DSCR reflects scheduled payments after any
applicable partial interest only periods.
11 "Valuation Date" refers to the date as of which the related appraised value
applies (also known as the "value as-of date").
12 "Largest Tenant" refers to the tenant that represents the greatest
percentage of the total square footage at the mortgaged property, "Second
Largest Tenant" refers to the tenant that represents the second greatest
percentage of the total square footage and "Third Largest Tenant" refers to
the tenant that represents the third greatest percentage of the total
square footage at the mortgaged property. In certain cases, the data for
tenants occupying multiple spaces include square footage only from the
primary spaces sharing the same expiration date, and may not include minor
spaces with different expiration dates.
With respect to Mortgage Loan No. 85, Walgreens - St. Petersburg, Walgreen
Co. has a 75-year lease, but has an option to terminate the lease at the
end of year 25 and every 5 years thereafter with 6 months notice.
With respect to Mortgage Loan No. 113, Walgreens - Philadelphia, Walgreen
Co. has a 75-year lease, but has an option to terminate the lease at the
end of year 25 and every 5 years thereafter with 9 months notice.
With respect to Mortgage Loan No. 156, 9937 Garland Road, Walgreen Co. has
a 60-year lease, but has an option to terminate the lease at the end of
year 20 and every 5 years thereafter with 6 months notice.
13 For "Capital Expenditure Escrow in Place" identified as "Yes," collections
may occur at one time or be ongoing. In certain instances, the amount of
the escrow may be capped or collected only for certain periods of such
mortgage loan and/or may not be replenished after a release of funds.
14 For "TI/LC Escrow in Place" identified as "Yes," collections may occur at
one time or be ongoing. In certain instances the amount of the escrow may
be capped or collected only for certain periods of time and/or may not be
replenished after a release of funds. The weighted average percentage of
mortgage loans disclosed as having TI/LC cash or letter of credit balances
in place considers only mortgage loans on commercial-type properties,
excluding hospitality, multifamily, manufactured housing community, self
storage and certain other mortgaged properties.
15 "Other Escrow Description" indicates any other types of escrow required, or
in certain cases letters of credit required, other than Insurance, Tax,
Capital Expenditure and TI/LC. In certain cases, the letter of credit may
represent additional security from a tenant, and may therefore be
relinquished when such tenant leaves the property at lease expiration.
16 "Springing Escrow Description" indicates the type of escrow required to be
funded in the future and/or upon the occurrence of certain future events as
outlined in the respective loan documents.
II-7
17 "Initial Capital Expenditure Escrow Requirement" indicates the amount
designated for Capital Expenditure Escrow, or in certain cases the letter
of credit, that was deposited at loan closing.
18 "Monthly Capital Expenditure Escrow Requirement" indicates the monthly
amount designated for Capital Expenditure Escrow in the loan documents for
such mortgage loan. In certain cases, the amount of the escrow may be
capped or collected only for certain periods of time or under certain
conditions.
19 "Current Capital Expenditure Escrow Balance" indicates the balance or, in
certain cases, a letter of credit, in place as of the February, 2007 due
dates for the MSMC-originated mortgage loans, and as of the March, 2007 due
dates for the WFB, BSCMI and PCFII- originated loans.
20 "Initial TI/LC Escrow Requirement" indicates the amount designated for
Tenant Improvements and Leasing Commissions Escrow or in certain cases the
letter of credit that was deposited at loan closing.
21 "Monthly TI/LC Escrow Requirement" indicates the monthly amount designated
for Tenant Improvements and Leasing Commissions Escrow in the loan
documents for such mortgage loan. In certain instances, the amount of the
escrow may be capped or collected only for certain periods of time or under
certain conditions.
22 "Current TI/LC Escrow Balance" indicates the balance or, in certain cases,
a letter of credit, in place as of the February, 2007 due dates for the
MSMC- originated mortgage loans, and as of the March, 2007 due dates for
the WFB, BSCMI and PCFII- originated loans.
23 "Seasoning" represents the number of payments elapsed from the earlier of
the "First Payment Date (P&I)" or "First Payment Date (IO)" to the Cut-off
Date.
24 The "Prepayment Code" includes the number of loan payments from the first
Due Date to the stated maturity or in the case of and ARD Loan, the
Anticipated Repayment Date. "LO" represents the lockout period. "DEF"
represents defeasance. "DEF/YM1.00" represents either defeasance or the
greater of yield maintenance and 1.00%, generally at the option of the
borrower. "YM3.00" represents the greater of yield maintenance and 3.00%.
"YM1.00" represents the greater of yield maintenance and 1.00%. "YM0.50"
represents the greater of yield maintenance and 0.50%. "3.0%", "2.0%" and
"1.0%" represent the prepayment premiums to be paid of the outstanding
balance at the time the loan is prepaid. "Open" represents the number of
payments, including the maturity date, at which principal prepayments are
permitted without payment of a prepayment premium. For each mortgage loan,
the number set forth under a category of "Prepayment Code" represents the
number of payments in the Original Term to Maturity or ARD for which such
provision applies. See Footnotes 25 and 27 for additional prepayment
information.
25 Mortgage loans with associated Yield Maintenance prepayment premiums are
categorized according to unique Yield Maintenance formulas. There are 20
different Yield Maintenance formulas represented by the loans in the
subject mortgage loan pool. The different formulas are referenced by the
letters "A", "B", "C", "D", "E", "F", "G", "H", "I", "J", "K", "L", "M",
"N", "O", "P", "Q", "R", "S", and "T". Any exceptions to these formulas are
shown below such formulas. Summaries of the 20 formulas are listed
beginning on page II-11.
26 The "Administrative Cost Rate" indicated for each mortgage loan will be
calculated based on the same interest accrual method applicable to each
mortgage loan.
II-8
27 Each of the following mortgage loans is structured with a performance
holdback or letter of credit ("LOC") subject to achievement of certain
release conditions. The release conditions are referenced by numbers 1-7,
which are summarized immediately below the table. The amount of the
holdback was escrowed, or the letter of credit was established, for each
mortgage loan at closing. Many of the loans with reserves and reserve
agreements in place permit or require the amount in the reserve (or
proceeds of the letter of credit) to be applied to outstanding loan amounts
in the event of a default. The mortgage loans referenced in this paragraph
do not include all such loans, but rather only those loans which permit or
require the application of the reserve (or proceeds of the letter of
credit) to the balance of the mortgage loan if the mortgaged property does
not achieve a specified level of financial performance in accordance with
the terms of the respective reserve agreements. Although generally the
mortgage loans prohibit voluntary partial prepayment, the following
mortgage loans may require partial prepayments:
Escrowed Holdback
Mtg. Escrow or LOC or Letter of Outside Date Prepayment Premium
Loan No. Property Name Release Conditions Credit Initial Amount for Release Provisions
-------- -------------------------- ------------------ --------------------- ------------ -------------------
17 Millrock Park II 1 $5,410,000 3/1/2008 Greater of 1% or YM
31 Gateway Business Park 2 $ 580,000 2/1/2008 Greater of 1% or YM
57 Mar Industrial Buildings 3 $1,000,000 1/1/2010 Greater of 1% or YM
87 Princeton Hill Apartments 4 $ 125,000 5/1/2009 Greater of 1% or YM
87 Princeton Hill Apartments 5 $ 500,000 7/1/2008 Greater of 1% or YM
127 North Tech Industrial 6 $ 12,500 2/2/2008 Greater of 1% or YM
166 Summertree Park Apartments 6 $ 34,375 8/15/2007 Greater of 1% or YM
177 Hualapai Village Center 7 $ 260,000 1/4/2009 Greater of 1% or YM
All yield maintenance premiums indicated above are to be paid by the
borrower.
II-9
RELEASE CONDITIONS
1. Borrower furnishes to Lender written disbursement request, information that
will support that the annual net cashflow is equal to or exceeds 1.20 times
the annual debt service of the note.
2. Borrower furnishes to Lender written disbursement request, information that
will support that the annual net cashflow is equal to or exceeds 1.20 times
the annual debt service of the note; fully executed lease(s) with terms
acceptable to Lender; lessee's estoppel certificate, including among other
things, the lessee's occupancy, unconditional acceptance of the
improvements, the expiration of all rental deferrals and the commencement
of consecutive monthly rental payments and a certificate of occupancy.
3. Borrower furnishes to Lender written disbursement request and overall
occupancy reaches a minimum of 90%; lessee's estoppel certificate from
Flowserve U.S., Inc. indicating they have renewed/extended their lease for
a minimum of five years with annual net rent averaging not less than $6.25
per square foot; lessee's estoppel certificate from each new lessee
indicating they have leased for a minimum of five years with annual net
rent averaging not less than $6.00 per square foot.
4. Borrower furnishes to Lender written disbursement request; lien waivers;
title endorsements; all permits, bonds, licenses, approvals required by law
whether for commencement, performance, completion, occupancy, use or
otherwise; a copy of the construction contract and any change orders and a
statement from an architect, contractor or engineering consultant to the
extent and cost of the work completed. In addition, the lender has
inspected or waived right to inspection.
5. Borrower furnishes to Lender written disbursement request; lien waivers;
title endorsements; all permits, bonds, licenses, approvals required by law
whether for commencement, performance, completion, occupancy, use or
otherwise; a copy of the construction contract and any change orders and a
statement from an architect, contractor or engineering consultant to the
extent and cost of the work completed; the lender has inspected or waived
right to inspection. In addition, the lender has received approved an
environmental consultant's tank removal report documenting that New Jersey
Department of Environmental Protection technical requirements have been
met.
6. Borrower furnishes to Lender written disbursement request; lien waivers;
title endorsement; evidence that the work has been completed in accordance
with all permits, bonds, licenses, approvals required by law; and a copy of
the construction contract and any change orders. In addition, the lender
has inspected or waived right to inspection.
7. Borrower furnishes to Lender written disbursement request, upon
satisfaction of certain conditions, including, but not limited to, three of
the four vacant units have been leased, the property has achieved a
physical and economic occupancy of 90% or greater, the DSCR is 1.60x based
on actual mortgage constant and 1.15x based on 10% mortgage loan constant
and borrower has provided written certification to lender that the borrower
has received no notice of termination from any tenants and there have been
no amendments or modifications to any of the leases.
II-10
YIELD MAINTENANCE FORMULAS
A Except as otherwise provided herein, Borrower shall not have the right to
prepay the Loan in whole or in part prior to the Permitted Prepayment Date.
On or after the Permitted Prepayment Date, Borrower may, provided it has
given Lender prior written notice in accordance with the terms of this
Agreement, prepay the unpaid principal balance of the Loan in whole, but
not in part, by paying, together with the amount to be prepaid, (i)
interest accrued and unpaid on the outstanding principal balance of the
Loan being prepaid to and including the date of prepayment, (ii) unless
prepayment is tendered on a Payment Date, an amount equal to the interest
that would have accrued on the amount being prepaid after the date of
prepayment through and including the next Payment Date had the prepayment
not been made (which amount shall constitute additional consideration for
the prepayment), (iii) all other sums then due under this Agreement, the
Note, the Mortgage and the other Loan Documents, and (iv)(1) if prepayment
occurs prior to the Payment Date which is one month prior to the (2)
Anticipated Repayment Date, a prepayment consideration (the "Prepayment
Consideration") equal to the greater of (A) one percent (1%) of the
outstanding principal balance of the Loan being prepaid or (B) the excess,
if any, of (1) the sum of the present values of all then-scheduled payments
of principal and interest under this Agreement including, but not limited
to, principal and interest on the (3) Anticipated Repayment Date (with each
such payment discounted to its present value at the date of prepayment at
the rate which, when compounded monthly, is equivalent to the Prepayment
Rate), over (2) the outstanding principal amount of the Loan. Lender shall
notify Borrower of the amount and the basis of determination of the
required prepayment consideration.
"Prepayment Rate" shall mean the bond equivalent yield (in the secondary
market) on the United States Treasury Security that as of the Prepayment
Rate Determination Date has a remaining term to maturity closest to, but
not exceeding, the remaining term to the Maturity Date, as most recently
published in the "Treasury Bonds, Notes and Bills" section in The Wall
Street Journal as of the date of the related tender of the payment. If more
than one issue of United States Treasury Securities has the remaining term
to the Maturity Date referred to above, the "Prepayment Rate" shall be the
yield on the United States Treasury Security most recently issued as of
such date. If the publication of the Prepayment Rate in The Wall Street
Journal is discontinued, Lender shall determine the Prepayment Rate on the
basis of "Statistical Release H.15 (519), Selected Interest Rates," or any
successor publication, published by the Board of Governors of the Federal
Reserve System, or on the basis of such other publication or statistical
guide as Lender may reasonably select.
"Prepayment Rate Determination Date" shall mean the date which is five (5)
Business Days prior to the prepayment date.
NOTES:
(1) With respect to Mortgage Loan No. 38, HSBC Sioux Falls, delete "if
prepayment occurs prior to the Payment Date which is one month prior
to the Anticipated Repayment Date."
(2) With respect to Mortgage Loan No. 10, The Shops at Sherman Plaza and
Mortgage Loan No. 22, Lincoln Village, delete "Anticipated Repayment"
and insert "Maturity."
(3) With respect to Mortgage Loan No. 10, The Shops at Sherman Plaza and
Mortgage Loan No. 22, Lincoln Village, delete "Anticipated Repayment"
and insert "Maturity."
II-11
B The prepayment shall also be accompanied by a payment equal to the greater
of (i) 1% of the principal amount of the Loan being prepaid and (ii) the
Yield Maintenance Premium. Borrower's sending any Prepayment Notice to
Lender shall create an obligation on the part of Borrower to prepay the
Loan as set forth therein, but may be rescinded with one (1) Business Day's
written notice to Lender (subject to payment of any reasonable
out-of-pocket costs and expenses resulting from such rescission (such costs
and expenses estimated to not exceed $2,500)) or extended, upon one (1)
Business Day's prior written notice, to a date that is not more than thirty
(30) days from the date specified in the original notice, subject to
payment of interest through the end of the Interest Accrual Period in which
the prepayment occurs if the prepayment is not made on a Payment Date;
provided, however, that, if the Debt is paid in full on or before the
Maturity Date, in no event shall interest accrue past the Maturity Date.
"Yield Maintenance Premium" shall mean, with respect to any voluntary
prepayment of the Loan after the Release Date and any payment of principal
during the continuance of an Event of Default, the product of: (a) a
fraction whose numerator is the amount so paid and whose denominator is the
outstanding principal balance of the Loan before giving effect to such
payment, times (b) the excess of (1) the sum of the respective present
values, computed as of the date of such prepayment, of the remaining
scheduled payments of principal and interest at the Interest Rate with
respect to the Loan (assuming no acceleration of the Loan and assuming that
the Loan is prepaid on the Free Prepayment Date, and treating such
prepayment as if it were a scheduled payment of principal), determined by
discounting such payments to the date on which such payments are made at
the Treasury Constant Yield plus fifty (50) basis points, over (2) the
outstanding principal balance of the Loan on such date immediately prior to
such payment; provided that the Yield Maintenance Premium with respect to
any payment of principal prior to the Release Date resulting from an Event
of Default shall not be less than 2% of the amount prepaid. The calculation
of the Yield Maintenance Premium shall be made by Lender and shall, absent
manifest error, be final, conclusive and binding upon all parties.
"Free Prepayment Date" shall mean November 8, 2011 or any Payment Date
thereafter selected by Borrower that is not less than fifteen (15) days (or
such shorter time as is permitted by Lender in its sole discretion)
following Lender's receipt of written notice of such selection by Borrower,
but not later than the Maturity Date.
"Treasury Constant Yield" means the arithmetic mean of the rates published
as "Treasury Constant Maturities" as of 5:00 p.m., New York time, for the
five Business Days preceding the date on which acceleration has been
declared or the date any prepayment of the Loan is scheduled to occur
pursuant to Section 2.1 hereof, as shown on the USD screen of the Telerate
service, or if such service is not available, the Bloomberg service, or if
neither the Telerate nor the Bloomberg service is available, under Section
504 in the weekly statistical release designated H.15(519) (or any
successor publication) published by the Board of Governors of the Federal
Reserve System, for "On the Run" U.S. Treasury obligations corresponding to
the Free Prepayment Date. If no such maturity shall so exactly correspond,
yields for the two most closely corresponding published maturities shall be
calculated pursuant to the foregoing sentence and the Treasury Constant
Yield shall be interpolated or extrapolated (as applicable) from such
yields on a straight-line basis (rounding, in the case of relevant periods,
to the nearest month).
II-12
C "Make Whole Premium" means (1) the greater of (2) one percent (1%) of the
outstanding principal amount of the Loan or a premium calculated as
provided in subparagraphs (1)-(3) below:
(1) Determine the "Reinvestment Yield." The Reinvestment Yield will be
equal to the yield on the * U.S. Treasury Issue ("Primary Issue") published
one week prior to the date of prepayment (3) and converted to an equivalent
monthly compounded nominal yield. In the event there is no market activity
involving the Primary Issue at the time of prepayment, the Lender shall
choose a comparable Treasury Bond, Note or Bill ("Secondary Issue") which
the Lender reasonably deems to be similar to the Primary Issue's
characteristics (i.e., rate, remaining time to maturity, yield).
*At this time there is not a U.S. Treasury Issue for this prepayment
period. At the time of prepayment, Lender shall select in its sole and
absolute discretion a U.S. Treasury Issue with similar remaining time to
maturity as the Note.
(2) Calculate the "Present Value of the Loan." The Present Value of the
Loan is the present value of the payments to be made in accordance with the
Note (all installment payments and any remaining payment due on the
Maturity Date) discounted at the Reinvestment Yield for the number of
months remaining from the date of prepayment to the Maturity Date.
(3) Subtract the amount of the prepaid proceeds from the Present Value of
the Loan as of the date of prepayment. Any resulting positive differential
shall be the premium. (4)(5)(6)
"Open Period" means the period beginning with the payment date in that
month which is (7)(8)(9) three months prior to the Maturity Date.
Borrower shall not have the right or privilege to prepay all or any portion
of the unpaid principal balance of the Note until the Open Period. From and
after such date, provided there is no Event of Default, the principal
balance of the Note may be prepaid, at par, in whole but not in part, upon:
(a) not less than (10) 30 days prior written notice to Lender specifying
the date on which prepayment is to be made, which prepayment must occur no
later than the fifth day of any such month unless Borrower pays to Lender
all interest that would have accrued for the entire month in which the Note
is prepaid absent such prepayment. If prepayment occurs on a date other
than a scheduled monthly payment date, Borrower shall make the scheduled
monthly payment in accordance with the terms of the Note, regardless of any
prepayment; (b) payment of all accrued and unpaid interest on the
outstanding principal balance of the Note to the date on which prepayment
is to be made; and (c) payment of all other Indebtedness then due under the
Loan Documents. Lender shall not be obligated to accept any prepayment of
the principal balance of the Note unless it is accompanied by all sums due
in connection therewith;
(11) In addition, Borrower shall have the right to prepay the unpaid
principal balance after the Lockout Date in accordance with the terms above
provided, however that such prepayment which is prior to the Open Period
will require the payment of the Make Whole Premium.
II-13
NOTES:
(1) With respect to Mortgage Loan No. 156, 9937 Garland Road, insert the
following:
"lesser of: (a) the maximum amount which is allowed under Texas law
limiting the amount of the interest which may be contracted for, charged or
received after considering all other amounts constituting or deemed to
constitute interest and (b)"
(2) With respect to Mortgage Loan No. 154, G.I. Joe's Leasehold, delete:
"one per cent (1%)" and insert: "one-half of one percent (.5%)".
(3) With respect to Mortgage Loan No. 31, Gateway Business Park, insert:
"plus fifty (50) basis points".
(4) With respect to Mortgage Loan No. 60, Shoppes at Smithville, and
Mortgage Loan No. 156, 9937 Garland Road,
insert: "Notwithstanding anything in the above to the contrary, during the
final 90 days prior to the Maturity Date, the Make Whole Premium shall not
be subject to the one percent (1%) minimum and shall be calculated only as
provided in (1) through (3) above."
(5) With respect to Mortgage Loan No. 83, Westover Apartments,
insert: "Notwithstanding anything in the above to the contrary, during the
last 3 months prior to the Open Period in connection with an Event of
Default and acceleration, the Make Whole Premium shall not be subject to
the one percent (1%) minimum and shall be calculated only as provided in
(1) through (3) above. Lender will notify Borrower in writing of the amount
of the Make Whole Premium due and payable."
(6) With respect to Mortgage Loan No. 199, The Crossings At Akers Mill,
insert: "Notwithstanding anything in the above to the contrary, during the
last month prior to the Maturity Date, the Make Whole Premium shall not be
subject to the one percent (1%) minimum as shall be calculated only as
provided in (1) through (3) above."
(7) With respect to Mortgage Loan No. 17, Millrock Park II, delete: "three"
and insert: "two".
(8) With respect to Mortgage Loan No. 60, Shoppes at Smithville, Mortgage
Loan No. 105, The Legends Apartments, and Mortgage Loan No. 156, 9937
Garland Road, delete: "three months" and insert: "one month".
(9) With respect to Mortgage Loan No. 154, G.I. Joe's Leasehold, delete:
"three" and insert: "thirteen".
(10) With respect to Mortgage Loan No. 83, Westover Apartments, Mortgage
Loan No. 156, 9937 Garland Road; Mortgage Loan No. 200, The Crossings At
Akers Mill, delete: "30" and insert: "15".
(11) With respect to Mortgage Loan No. 156, 9937 Garland Road,
delete: "In addition, Borrower shall have the right to prepay the unpaid
principal balance after the Lockout Date in accordance with the terms above
provided, however that such prepayment which is prior to the Open Period
will require the payment of the Make Whole Premium"
insert: "In addition to the Loan Prepayment rights set forth in the above
paragraph, after the Lockout Date but prior to the date which is one (1)
month prior to the Maturity Date, Borrower may prepay the principal balance
of the Note, provided there is no Event of Default, in whole but not in
part, upon (a) not less than 30 days prior written notice to the Lender
specifying the date on which prepayment is to be made, which prepayment
must occur no later than the fifth day of any such month unless Borrower
pays to Lender all interest that would have accrued for the entire month in
which the Note is prepaid, absent such prepayment. If prepayment occurs on
a date other than a scheduled monthly payment date, Borrower shall make the
scheduled monthly payment in accordance with the terms of the Note
regardless of any prepayment; (b) payment of all accrued and unpaid
interest on the outstanding principal balance of the Note to and including
the date on which prepayment is made, (c) payment of all other Indebtedness
then due under the Loan Documents, and (d) payment of a "Make Whole
Premium." Lender shall not be obligated to accept any prepayment of the
principal balance of the Note unless it is accompanied by all sums due in
connection therewith.
II-14
D "Yield Maintenance Premium" shall mean an amount equal to the greater of
(a) one percent (1%) of the outstanding principal of the Loan to be prepaid
or satisfied and (b) the excess, if any, of (i) the sum of the present
values of all then-scheduled payments of principal and interest under the
Note assuming that all outstanding principal and interest on the Loan is
paid on the Optional Prepayment Date (with each such payment and assumed
payment discounted to its present value at the date of prepayment at the
rate which, when compounded monthly, is equivalent to the Prepayment Rate
when compounded semi-annually and deducting from the sum of such present
values any short-term interest paid from the date of prepayment to the next
succeeding Payment Date in the event such payment is not made on a Payment
Date), over (ii) the principal amount being prepaid.
Prepayment Following Prepayment Lockout Expiration Date. Provided no Event
of Default shall then exist, Borrower shall have the right on any date from
and after the Prepayment Lockout Expiration Date and prior to the Optional
Prepayment Date to prepay the Debt in whole (or a portion thereof as
permitted by Section 2.6.2 hereof) upon not less than fifteen (15) days'
prior written notice to Lender specifying the Payment Date on which
prepayment is to be made (a "Prepayment Date") upon payment of an amount
equal to the Yield Maintenance Premium. Lender shall notify Borrower of the
amount and the basis of determination of the required prepayment
consideration. If any notice of prepayment is given, the Debt shall be due
and payable on the Prepayment Date. Lender shall not be obligated to accept
any prepayment of the Debt unless it is accompanied by the prepayment
consideration due in connection therewith. If for any reason Borrower
prepays the Loan on a date other than a Payment Date, Borrower shall pay
Lender, in addition to the Debt, all interest which would have accrued on
the amount of the Loan through and including the Payment Date next
occurring following the date of such prepayment. On any date from and after
the Optional Prepayment Date, provided no Event of Default shall then
exist, Borrower may, at its option and upon thirty (30) days' prior written
notice to Lender, prepay the Debt in whole but not in part without payment
of the Yield Maintenance Premium or any other prepayment premium. If for
any reason Borrower prepays the Loan on a date other than a Payment Date,
Borrower shall pay Lender, in addition to the Debt, all interest which
would have accrued on the amount of the Loan through and including the
Payment Date next occurring following the date of such prepayment.
II-15
E "Yield Maintenance Premium" shall mean an amount equal to the greater of
(a) one percent (1%) of the outstanding principal of the Loan to be prepaid
or satisfied and (b) the excess, if any, of (i) the sum of the present
values of all then-scheduled payments of principal and interest under the
Note assuming that all outstanding principal and interest on the Loan is
paid on the Maturity Date (with each such payment and assumed payment
discounted to its present value at the date of prepayment at the rate
which, when compounded monthly, is equivalent to the Prepayment Rate when
compounded semi-annually and deducting from the sum of such present values
any short-term interest paid from the date of prepayment to the next
succeeding Payment Date in the event such payment is not made on a Payment
Date), over (ii) the principal amount being prepaid.
Permitted Prepayment. If the Permitted Release Date has occurred, the Debt
may be prepaid in whole (but not in part) prior to the date permitted under
Section 2.4.1 hereof upon not less than thirty (30) days prior written
notice to Lender specifying the Payment Date on which prepayment is to be
made (a "Prepayment Date") provided no Event of Default exists and upon
payment of an amount equal to the greater of (a) the Yield Maintenance
Premium and (b) one percent (1%) of the outstanding principal balance of
the Loan as of the Prepayment Date. Lender shall notify Borrower of the
amount and the basis of determination of the required prepayment
consideration. If any notice of prepayment is given, the Debt shall be due
and payable on the Prepayment Date. Lender shall not be obligated to accept
any prepayment of the Debt unless it is accompanied by the prepayment
consideration due in connection therewith. If for any reason Borrower
prepays the Loan on a date other than a Payment Date, Borrower shall pay
Lender, in addition to the Debt, all interest which would have accrued on
the amount of the Loan through and including the Payment Date next
occurring following the date of such prepayment.
II-16
F BASIC CHARGE.
Except as provided below, if this Note is prepaid prior to the Open Period
Start Date, whether such prepayment is voluntary, involuntary or upon
acceleration of the principal amount of this Note by Lender following a
Default, Borrower shall pay to Lender on the prepayment date (in addition
to all other sums then due and owing to Lender under the Loan Documents) a
prepayment charge equal to the greater of the following two amounts:
(i) an amount equal to 1% of the amount prepaid; or
(ii) an amount equal to (a) the amount, if any, by which the sum of the
present values as of the prepayment date of all unpaid principal and
interest payments required under this Note, calculated by discounting
such payments from their respective Due Dates (or, with respect to the
payment required on the Maturity Date(1), from Maturity Date(1)) back
to the prepayment date at a discount rate equal to the Periodic
Treasury Yield (defined below) exceeds the outstanding principal
balance of the Loan as of the prepayment date, multiplied by (b) a
fraction whose numerator is the amount prepaid and whose denominator
is the outstanding principal balance of the Loan as of the prepayment
date.
For purposes of the foregoing, "Periodic Treasury Yield" means (x) the
annual yield to maturity of the actively traded non-callable United States
Treasury fixed interest rate security (other than any such security which
can be surrendered at the option of the holder at face value in payment of
federal estate tax or which was issued at a substantial discount) that has
a maturity closest to (whether before, on or after) the Maturity Date(1)
(or if two or more such securities have maturity dates equally close to the
Maturity Date(1), the average annual yield to maturity of all such
securities), as reported in The Wall Street Journal or other authoritative
publication or news retrieval service on the fifth Business Day preceding
the prepayment date, divided by (y) 12, if the Due Dates are monthly, or 4,
if Due Dates are quarterly.
ADDITIONAL CHARGE.
If this Note is prepaid on any day other than a Due Date, whether such
prepayment is voluntary, involuntary or upon full acceleration of the
principal amount of this Note by Lender following a Default, Borrower shall
pay to Lender on the prepayment date (in addition to the basic prepayment
charge described in the section above and all other sums then due and owing
to Lender under this Note and the other Loan Documents) an additional
prepayment charge equal to the interest which would otherwise have accrued
on the amount prepaid (had such prepayment not occurred during the period
from and including the prepayment date to and including the last day of the
month in which the prepayment occurred.
EXCLUSION.
Notwithstanding the foregoing, no prepayment charge of any kind shall apply
in respect to any prepayment resulting from Lender's application of any
insurance proceeds or condemnation awards to the outstanding principal
balance of the Loan.
NOTES:
(1) For purposes of this footnote, for those loans under which the entire
outstanding amount of the Loan is due and payable on the Anticipated
Maturity Date, the term Maturity Date may also refer to the Anticipated
Maturity Date.
II-17
G This Note may not be prepaid in full or in part before that date which is
twenty-four (24) months from the dated hereof (the "Closed Period").
Commencing on that date which is twenty-four (24) months from the date
hereof, provided there is no Event of Default, Borrower may prepay this
Note in full, but not in part, on the first day of any calendar month, upon
not less than ninety (90) days prior notice to Lender and upon payment in
full of the Debt which will include a payment (the "Prepayment Premium")
equal to the greater of (i) an amount equal to the product of (A) one
percent (1%), times (B) the Prepayment Date Principle or (ii) the amount by
which the sum of (A) the Discounted Values of the Note Payments, derived by
using the Discount Rate, exceeds (B) the Prepayment Date Principal. In
order to calculate the amount described in subsection (ii) of the
immediately preceding sentence, each remaining Note Payment will be
discounted, in accordance with the Discounted Value formula set forth in
subsection 2(a) above, and the resulting Discounted Values will be added
together. Notwithstanding the foregoing, provided there is no Event of
Default, the Note may be prepaid in full without payment of the Prepayment
Premium during the last ninety (90) days of the Term.
"Discount Rate" means the yield on a U.S. Treasury issue selected by
Lender, plus twenty-five (25) basis points, as published in The Wall Street
Journal, two (2) weeks prior to prepayment, having a maturity date
corresponding (or most closely corresponding, if not identical) to the
Maturity Date, and, if applicable a coupon rate corresponding (or most
closely corresponding, if not identical) to the Fixed Interest Rate.
"Discounted Value" means the Discounted Value of a Note Payment based on
the following formula:
NP/(1+R/12)(n) = Discounted Value
NP = Amount of Note Payment
R = Discount Rate or Default Discount Rate as the case may be.
n = The number of months between the date of prepayment and the scheduled
date of the Note Payment being discounted rounded to the nearest integer.
II-18
H The term "Yield Maintenance Premium" as used herein shall mean an amount
equal to the present value as of the Prepayment Date of the Calculated
Payments from the Prepayment Date through the Maturity Date determined by
discounting such payments at the Discount Rate. As used in this definition,
the term "Prepayment Date" shall mean the date on which prepayment is made.
As used in this definition, the term "Calculated payments" shall mean the
monthly payments of interest only which would be due based on the principal
amount of this Note being prepaid on the Prepayment Date and assuming an
interest rate per annum equal to the difference (if such difference is
greater than zero) between (y) the Applicable Interest Rate and (z) the
Yield Maintenance Treasury Rate. As used in this definition, the term
"Discount Rate" shall mean the rate which, when compounded monthly, is
equivalent to the Yield Maintenance Treasury Rate, when compounded
semi-annually. As used in this definition, the term "Yield Maintenance
Treasury Rate" shall mean the yield calculated by Lender by the linear
interpolation of the yields, as reported in the Federal Reserve Statistical
Release H. 15-Selected Interest Rates under the heading U.S. Government
Securities/Treasury Constant Maturities for the week ending prior to the
Prepayment Date, of U.S. Treasury Constant Maturities with maturity dates
(one longer or one shorter) most nearly approximating the Maturity Date. In
the event Release H.15 is no longer published, Lender shall select a
comparable publication to determine the Yield Maintenance Treasury Rate. In
no event, however, shall Lender be required to reinvest any prepayment
proceeds in U.S. Treasury obligations or otherwise.
II-19
I Except as set forth below, Borrower shall not have the right or privilege
to prepay all or any portion of the unpaid principal balance of this Note
until after the fourth anniversary of the Month-End Date.
During the term of the Loan, Borrower may, provided it has given Lender
prior written notice in accordance with the terms of this Note, prepay the
unpaid principal balance of this Note in whole, but not in part, by paying,
together with the amount to be prepaid, (a) interest accrued and unpaid on
the portion of the principal balance of this Note being prepaid to and
including the date of prepayment, (b) unless prepayment is tendered on the
first day of a calendar month, an amount equal to the interest that would
have accrued on the amount being prepaid after the date of prepayment
through and including the last day of the calendar month in which the
prepayment occurs had the prepayment not been made (which amount shall
constitute additional consideration for the prepayment), (c) all other sums
then due under this Note, the Security Instrument and the Other Security
Documents, and (d) a prepayment consideration (the "Prepayment
Consideration") equal to the greater of (i) an amount equal to (x) three
percent (3%) of the principal balance of this Note being prepaid if the
prepayment is made during the period commencing as of the date hereof
through the second (2nd) anniversary of the first Monthly Payment Date or
(y) one percent (1%) of the principal balance of this Note being prepaid if
the prepayment is made thereafter and (ii) the excess, if any, of (A) the
sum of the present values of all then-scheduled payments of principal and
interest under this Note including, but not limited to, principal and
interest on the Maturity Date (with each such payment discounted to its
present value at the date of prepayment at the rate which, when compounded
monthly, is equivalent to the Prepayment Rate (hereinafter defined)), over
(B) the principal amount of this Note being prepaid. .
The term "Prepayment Rate" means the bond equivalent yield (in the
secondary market) on the United States Treasury Security that as of the
Prepayment Rate Determination Date (hereinafter defined) has a remaining
term to maturity closest to, but not exceeding, the remaining term to the
Maturity Date, as most recently published in the "Treasury Bonds, Notes and
Bills" section in The Wall Street Journal as of such Prepayment Rate
Determination Date. If more than one issue of United States Treasury
Securities has the remaining term to the Maturity Date referred to above,
the "Prepayment Rate" shall be the yield on the United States Treasury
Security most recently issued as of the Prepayment Rate Determination Date.
The rate so published shall control absent manifest error. The term
"Prepayment Rate Determination Date" shall mean the date which is five (5)
Business Days prior to the scheduled prepayment date. As used herein,
"Business Day" shall mean any day other than Saturday, Sunday or any other
day on which banks are required or authorized to close in New York, New
York.
Lender shall notify Borrower of the amount and the basis of determination
of the required prepayment consideration. If the publication of the
Prepayment Rate in The Wall Street Journal is discontinued, Lender shall
determine the Prepayment Rate on the basis of "Statistical Release H.15
(519), Selected Interest Rates," or any successor publication, published by
the Board of Governors of the Federal Reserve System, or on the basis of
such other publication or statistical guide as Lender may reasonably
select.
Borrower's right to prepay any portion of the principal balance of this
Note shall be subject to (i) Borrower's submission of a notice to Lender
setting forth the amount to be prepaid and the projected date of
prepayment, which date shall be no less than fifteen (15) or more than
thirty (30) days from the date of such notice, and (ii) Borrower's actual
payment to Lender of the amount to be prepaid as set forth in such notice
on the projected date set forth in such notice or any day following such
projected date occurring in the same calendar month as such projected date.
II-20
J "Yield Maintenance Premium" shall mean an amount equal to the greater of:
(i) one percent (1%) of the principal amount of the Loan being prepaid or
(ii) (a) the present value as of the Prepayment Date of the Monthly Debt
Service Payment Amounts due from the Prepayment Date through the Open Date
plus the present value of the principal balance of the Loan that would be
outstanding on the Open Date determined by discounting such payments and
outstanding principal balance at the Discount Rate minus (b) the
outstanding principal balance of the Loan as of the Prepayment Date. As
used in this definition, the term "Prepayment Date" shall mean the date on
which prepayment is made. As used in this definition, the term "Discount
Rate" shall mean the rate which, when compounded monthly, is equivalent to
the Yield Maintenance Treasury Rate, when compounded semi-annually. As used
in this definition, the term "Yield Maintenance Treasury Rate" shall mean
the yield calculated by Lender by the linear interpolation of the yields,
as reported in the Federal Reserve Statistical Release H.15-Selected
Interest Rates under the heading U.S. Government Securities/Treasury
Constant Maturities for the week ending prior to the Prepayment Date, of
U.S. Treasury Constant Maturities with maturity dates (one longer or one
shorter) most nearly approximating the Open Date, plus 25 basis points. In
the event Release H.15 is no longer published, Lender shall select a
comparable publication to determine the Yield Maintenance Treasury Rate. In
no event, however, shall Lender be required to reinvest any prepayment
proceeds in U.S. Treasury obligations or otherwise.
"Open Date" shall mean September 8, 2011.
II-21
K Except as otherwise provided in Section 2.4.1 and in Sections 2.4.2 and
2.6.1 of the Loan Agreement, Borrower shall not have the right to prepay
the Loan in whole or in part prior to the Maturity Date. From and after the
Optional Prepayment Date, Borrower may, at its option and upon thirty (30)
days prior written notice to Lender, prepay the Debt in whole without the
payment of the Yield Maintenance Premium, provided that, together with the
amount to be prepaid, Borrower pays (a) interest accrued and unpaid on the
outstanding principal balance of the Note to and including the date of
prepayment, (b) unless such prepayment is tendered on a Payment Date, an
amount equal to the interest that would have accrued on the amount being
prepaid after the date of prepayment through and including the last day of
the calendar month in which such prepayment occurs had the prepayment not
been made and (c) all other sums then due under the Note, the Mortgage and
the other Loan Documents. If for any reason Borrower prepays all or a
portion of the Loan on a date other than a Payment Date, Borrower shall pay
Lender, in addition to the Debt being prepaid, all interest which would
have accrued on the amount of the Loan through and including the last day
of the Interest Period related to the Payment Date next occurring following
the date of such prepayment.
On and after the Permitted Release Date, Borrower may, provided it has
given Lender prior written notice in accordance with the terms of this
Agreement, prepay the unpaid principal balance of the Loan in whole, but
not in part, provided that (i) no Event of Default exists; (ii) Borrower
pays Lender, in addition to the outstanding principal amount of the Loan to
be prepaid, (A) all interest which would have accrued on the amount of the
Loan to be paid through and including the date of prepayment; (B) unless
such prepayment is tendered on a Payment Date, an amount equal to the
interest that would have accrued on the amount being prepaid after the date
of prepayment through and including the last day of the calendar month in
which such prepayment occurs had the prepayment not been made (which amount
shall constitute additional consideration for the prepayment, (C) all other
sums due and payable under this Agreement, the Note, and the other Loan
Documents, including, but not limited to all of Lender's costs and expenses
(including reasonable attorney's fees and disbursements) incurred by Lender
in connection with such prepayment; and (C) the Yield Maintenance Premium.
Upon request from Borrower in connection with a contemplated prepayment,
Lender shall provide Borrower with the amount and the basis of
determination of the required Yield Maintenance Premium. If the publication
of the Prepayment Rate in The Wall Street Journal is discontinued, Lender
shall determine the Prepayment Rate on the basis of "Statistical Release
H.15 (519), Selected Interest Rates," or any successor publication,
published by the Board of Govenors of the Federal Reserve System, or on the
basis of such other publication or statistical guide as Lender may
reasonably select.
Notwithstanding anything to the contrary contained in this Section 2.4.1,
Borrower may send a written notice to Lender revoking its notice of
prepayment at least ten (10) days prior to the scheduled prepayment date
set forth in the original prepayment notice, provided Borrower pays to
Lender within three (3) days of receipt of a statement from Lender setting
forth such costs and expenses, all out of pocket costs and expenses
incurred by Lender including, without limitation, reasonable attorney's
fees and expenses and any fees and expenses of any Servicer.
"Optional Prepayment Date" shall mean December 1, 2016.
"Permitted Release Date" shall mean the earlier of (i) the Payment Date
immediately following the date that is two (2) years from the "start up
day" within the meaning of Section 860G(a)(9) of the Code of the REMIC
Trust or (ii) the date that is the forth (4th) anniversary of the first
Payment Date.
"Yield Maintenance Premium" shall mean an amount equal to the greater of
(a) one percent (1%) of the outstanding principal of the Loan to be prepaid
or satisfied and (b) the excess, if any, of (i) the sum of the present
values of all then-scheduled payments of principal and interest under the
Note assuming that all outstanding principal and interest on the Loan is
paid on Maturity Date (with each such payment and assumed payment
discounted to its present value at the date of prepayment at the rate
which, when compounded monthly, is equivalent to the Prepayment Rate when
compounded semi-annually and deducting from the sum of such present values
any short-term interest paid from the date of prepayment to the next
succeeding Payment Date in the event such payment is not made on a Payment
Date), over (ii) the principal amount being prepaid.
II-22
L (1)After the (2)date that is two years after the "startup day," within the
meaning of Section 860G(a)(9) of the Internal Revenue Code of 1986, as
amended (3)from time to time or any successor statute (the "Code"), of a
"real estate mortgage investment conduit," within the meaning of Section
860D of the Code, that holds this Note, Borrower may, provided it has given
Lender prior written notice in accordance with the terms of this Note,
prepay the unpaid principal balance of this Note in whole, but not in part,
by paying, together with the amount to be prepaid, (a) interest accrued and
unpaid on the portion of the principal balance of this Note being prepaid
to and including the date of prepayment, (b) unless prepayment is tendered
on the first day of a calendar month, an amount equal to the interest that
would have accrued on the amount being prepaid after the date of prepayment
through and including the last day of the calendar month in which the
prepayment occurs had the prepayment not been made (which amount shall
constitute additional consideration for the prepayment), (c) all other sums
then due under this Note, the Security Instrument and the Other Security
Documents, and (d) a prepayment consideration (the "Prepayment
Consideration") equal to the greater of (i) one percent (1%) of the
principal balance of this Note being prepaid and (ii) the excess, if any,
of (A) the sum of the present values of all then-scheduled payments of
principal and interest under this Note including, but not limited to,
principal and interest on the Maturity Date (with each such payment
discounted to its present value at the date of prepayment at the rate
which, when compounded monthly, is equivalent to the Prepayment Rate
(hereinafter defined)), over (B) the principal amount of this Note being
prepaid.
NOTES:
(1) With respect to Mortgage Loan No. 194, 39 W 56th Street,
delete "After the date that is two years after the 'startup day,' within
the meaning of" and insert "Following the earlier of (a) two years
following the effective Startup Date (as such term is defined in."
(2) With respect to Mortgage Loan No. 155, Mack Rite Aid,
delete "date that is two years after the 'startup day,' within the meaning
of Section 860G(a)(9) of the Internal Revenue Code of 1986, as amended from
time to time or any successor statute (the 'Code'), of a 'real estate
mortgage investment conduit,' within the meaning of Section 860D of the
Code, that holds this Note" and insert "fourth anniversary of the Month-End
Date."
(3) With respect to Mortgage Loan No. 194, 39 W 56th Street,
delete "from time to time or any successor statute (the 'Code'), of a 'real
estate mortgage investment conduit,' within the meaning of Section 860D of
the Code, that holds this Note" and insert ") of the issuance of Securities
(as defined in Article 12 herein) or (b) the fourth anniversary of the
Month-End Date."
II-23
M The term Yield Maintenance Premium shall mean an amount equal to the
greater of one percent 1% of the outstanding principal amount of this Note
or the present value as of the Prepayment Date of the Calculated Payments
from the Prepayment Date through the Maturity Date determined by
discounting such payments at the Discount Rate. As used in this definition
the term Prepayment Date shall mean the date on which prepayment is made.
As used in this definition the term Calculated Payments shall mean the
monthly payments of interest only which would be due based on the principal
amount of this Note being prepaid on the Prepayment Date and assuming an
interest rate per annum equal to the difference if such difference is
greater than zero between the Applicable Interest Rate and the Yield
Maintenance Treasury Rate. As used in this definition the term Discount
Rate shall mean the rate which when compounded monthly is equivalent to the
Yield Maintenance Treasury Rate when compounded semi-annually. As used in
this definition the term Yield Maintenance Treasury Rate shall mean the
yield calculated by. Lender by the linear interpolation of the yields as
reported in the Federal Reserve Statistical Release H.15-Selected Interest
Rates under the heading U.S. Government Securities/Treasury Constant
Maturities for the week ending prior to the Prepayment Date of U.S.
Treasury Constant Maturities with maturity dates one longer or one shorter
most nearly approximating the Maturity Date. In the event Release H.15 is
no longer published Lender shall select comparable publication to determine
the Yield Maintenance Treasury Rate. In no event however shall Lender be
required to. reinvest any prepayment proceeds in U.S. Treasury obligations
or otherwise.
II-24
N 2. (i) Borrower shall not have the right or privilege to prepay all or any
portion of the unpaid principal balance of this Note until the Open Period.
From and after such date, provided there is no Event of Default, the
principal balance of this Note may be prepaid, at par, in whole but not in
part, upon: (a) not less than 30 days prior written notice to Lender
specifying the date on which prepayment is to be made, which prepayment
must occur no later than the fifth day of any such month unless Borrower
pays to Lender all interest that would have accrued for the entire month in
which this Note is prepaid absent such prepayment; (b) payment of all
accrued and unpaid interest on the outstanding principal balance of this
Note to and including the date on which prepayment is to be made; and (c)
payment of all other Indebtedness then due under the Loan Documents. Lender
shall not be obligated to accept any prepayment of the principal balance of
this Note unless it is accompanied by all sums due in connection therewith.
(ii) "Securitization Transaction" shall mean: the sale, transfer or
assignment of this Note, the other Loan Documents and the Environmental
Indemnity, or the granting of participations or issuance of mortgage
pass-through certificates or other securities evidencing a beneficial
interest in a rated or unrated public offering or private placement, each,
as designated by Lender, a Securitization Transaction.
(iii) In addition to the Loan Prepayment rights set forth hereinabove, (1)
after the Lockout Date (which is the earlier of the date which is two (2)
years after the date of the Securitization Transaction (as hereinafter
defined) or the date which is (2) four (4) years after the date of the
first full debt service payment hereunder) but prior to the Open Period,
Borrower may prepay the principal balance of this Note, as set forth in the
immediately preceding paragraph, provided however, that such prepayment
will require the payment of the Make Whole Premium. (3)
3. Borrower agrees that to the extent of any prepayment permitted herein,
or if Lender accelerates the whole or any part of the principal sum
evidenced hereby after the occurrence of an Event of Default, Borrower
waives any right to prepay said principal sum in whole or in part without
premium and agrees to pay, as yield maintenance protection and not as a
penalty (4), the "Make Whole Premium".
The Make Whole Premium shall (4) be the greater of one percent (1%) of
the outstanding principal amount of the Loan or a premium calculated as
provided in subparagraphs (1)-(3) below (5) :
(1) Determine the "Reinvestment Yield." The Reinvestment Yield will be
equal to the yield on a U.S. Treasury Issue with similar remaining time to
the (6) Maturity Date as reasonably selected by Lender within one week
prior to the date of prepayment and converted to an equivalent monthly
compounded nominal yield, or in the event there is no market activity
involving the U.S. Treasury Issue at the time of prepayment, the Lender
shall choose a comparable Treasury Bond, Note or Bill which the Lender
reasonably deems to be similar to the U.S. Treasury Issue's characteristics
(i.e., rate, remaining time to maturity, yield).
(2) Calculate the "Present Value of the Loan." The Present Value of the
Loan is the present value of the payments to be made hereunder (all
installment payments and any remaining payment due on the (6) Maturity
Date) discounted at the Reinvestment Yield for the number of months
remaining from the date of prepayment to the (6) Maturity Date.
(3) Subtract the outstanding principal amount of the Note from the Present
Value of the Loan as of the date of prepayment. Any resulting positive
differential shall be the premium.
Notwithstanding anything in this section to the contrary, during the "Open
Period" which is the period beginning on the payment date in the month
which is (7)(8) one month prior to the (6) Maturity Date, no Make Whole
Premium shall be payable.
II-25
NOTES:
(1) With respect to Mortgage Loan No. 125, West Allis Industrial and
Mortgage Loan No. 243, 1945 West Main Street,
delete: "after the Lockout Date (which is the earlier of the date which is
two (2) years after the date of the Securitization Transaction (as
hereinafter defined) or the date which is four (4) years after the date of
the first full debt service payment hereunder) but"
(2) With respect to Mortgage Loan No. 134, 111 West Lemon Avenue, delete:
"four (4)" and insert: "three (3)".
(3) With respect to Mortgage Loan No. 78, Summit Pointe, Mortgage Loan No.
79, Cross Pointe NC; Mortgage Loan No. 184, 3240 North Pleasantburg Drive,
Mortgage Loan No. 219, 251 Legris Avenue, and Mortgage Loan No. 229, 845
Eldridge Parkway,
insert: "Following the Anticipated Repayment Date, Borrower shall have the
right to prepay the principal balance of the Note, at par, in whole but not
in part, upon (a) not less than 30 days prior written notice to the Lender
specifying the date on which prepayment is to be made. If prepayment occurs
on a date other than a scheduled monthly payment date, Borrower shall make
the scheduled monthly payment in accordance with the terms of the Note
regardless of any prepayment; (b) payment of all accrued and unpaid
interest on the outstanding principal balance of the Note to and including
the date on which prepayment is to be made, (c) payment of all other
Indebtedness then due under the Loan Documents. Lender shall not be
obligated to accept any prepayment of the principal balance of the Note
unless it is accompanied by all sums due in connection therewith.
Notwithstanding anything hereinabove in this paragraph (iii) to the
contrary, following the Anticipated Repayment Date, payments, and
prepayments, if any, derived solely from Rents, and from no other funds,
shall be made and applied in accordance with paragraph 11 of the Note."
(4) With respect to Mortgage Loan No. 229, 845 Eldridge Parkway; Mortgage
Loan No. 233, KaRon Self Storage, and Mortgage Loan No. 239, 3909 Frankford
Road:
insert: "lesser of: (a) the maximum amount which is allowed under Texas law
limiting the amount of the interest which may be contracted for, charged or
received after considering all other amounts constituting or deemed to
constitute interest and (b)"
(5) With respect to Mortgage Loan No. 134, 111 West Lemon Avenue, insert:
"plus fifty (50) basis points".
(6) With respect to Mortgage Loan No. 78, Summit Pointe, Mortgage Loan No.
79, Cross Pointe NC, Mortgage Loan No. 184, 3240 North Pleasantburg Drive,
Mortgage Loan No. 219, 251 Legris Avenue, and Mortgage Loan No. 229, 845
Eldridge Parkway,
delete: "Maturity Date and insert: "Anticipated Repayment Date".
(7) With respect to Mortgage Loan No. 125, West Allis Industrial, Mortgage
Loan No. 134, 111 West Lemon Avenue, Mortgage Loan No. 150, 727 South
Wanamaker Avenue, Mortgage Loan No. 167, 1020 Railroad Street, Mortgage
Loan No. 174, 730 Apollo Drive, Mortgage Loan No. 219, 251 Legris Avenue,
Mortgage Loan No. 221, 1275 Chatham Parkway, Mortgage Loan No. 239, 3909
Frankford Road,
delete: "one month" and insert: "three months".
(8) With respect to Mortgage Loan No. 158, 935 Broadbeck Drive, delete:
"one month" and insert: "two months".
II-26
O For purposes of this Article 6 only, the term "Yield Maintenance Premium"
shall equal an amount equal to the greater of:
(i) one percent (1 %) of the remaining principal balance of this Note, or
(ii) the product of:
(A) the ratio of the principal amount being repaid over the outstanding
principal balance of this Note on the Prepayment Date (after subtracting
the scheduled principal payment on such Prepayment Date), multiplied by:
(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 (including any balloon payment) determined by discounting
such payments at the Discount Rate (as hereinafter defined) less the amount
of the outstanding principal balance of this Note on the Prepayment Date
(after subtracting the scheduled principal payment on such Prepayment
Date).
The "Discount Rate" is the rate which, when compounded monthly, is
equivalent to the Treasury Rate (as hereinafter defined), when compounded
semi-annually. The "Treasury Rate" is the yield calculated by the linear
interpolation of the yields, as reported in Federal Reserve Statistical
Release H.15-Selected Interest Rates under the heading U.S. government
securities/Treasury constant maturities for the week ending prior to the
Prepayment Date, of U.S. Treasury constant maturities with maturity dates
(one longer and one shorter) most nearly approximating the Maturity Date.
(In the event Release H.15 is no longer published, Lender shall select a
comparable publication to determine the Treasury Rate.) The term "Lockout
Period Expiration Date" shall mean the date which is the earlier of (A) the
second anniversary of the date that is the "startup day," within the
meaning of Section 860G(a) (9) of the IRS Code, of a REMIC that holds this
Note or (B) the five year anniversary of the first day of the first full
calendar month following the date of this Note. Lender shall notify
Borrower of the amount and the basis of determination of the required
prepayment consideration.
II-27
P "Yield Maintenance Premium" shall mean an amount equal to the greater of
(a) one percent (1%) of the outstanding principal of the Loan to be prepaid
or satisfied and (b) the excess, if any, of (i) the sum of the present
values of all then-scheduled payments of principal and interest under the
Note assuming that all outstanding principal and interest on the Loan is
paid on the Maturity Date (with each such payment and assumed payment
discounted to its present value at the date of prepayment at the rate
which, when compounded monthly, is equivalent to the Prepayment Rate when
compounded semi-annually and deducting from the sum of such present values
any short-term interest paid from the date of prepayment to the next
succeeding Payment Date in the event such payment is not made on a Payment
Date), over (ii) the principal amount being prepaid.
Permitted Prepayment. If the Permitted Release Date has occurred, the Debt
may be prepaid in whole (but not in part) prior to the date permitted under
Section 2.4.1 hereof upon not less than thirty (30) days prior written
notice to Lender specifying the Payment Date on which prepayment is to be
made (a "Prepayment Date") provided no Event of Default exists and upon
payment of an amount equal to the Yield Maintenance Premium. Lender shall
notify Borrower of the amount and the basis of determination of the
required prepayment consideration. If any notice of prepayment is given,
the Debt shall be due and payable on the Prepayment Date. Lender shall not
be obligated to accept any prepayment of the Debt unless it is accompanied
by the prepayment consideration due in connection therewith. If for any
reason Borrower prepays the Loan on a date other than a Payment Date,
Borrower shall pay Lender, in addition to the Debt, all interest which
would have accrued on the amount of the Loan through and including the
Payment Date next occurring following the date of such prepayment.
II-28
Q For purposes of this Article 6 only, the term "Yield Maintenance Premium"
shall equal an amount equal to the greater of:
(i) one percent (1 %) of the remaining principal balance of this Note, or
(ii) the product of:
(A) the ratio of the principal amount being repaid over the outstanding
principal balance of this Note on the Prepayment Date (after subtracting
the scheduled principal payment on such Prepayment Date), multiplied by:
(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 (including any balloon payment) determined by discounting
such payments at the Discount Rate (as hereinafter defined) less the amount
of the outstanding principal balance of this Note on the Prepayment Date
(after subtracting the scheduled principal payment on such Prepayment
Date).
The "Discount Rate" is the rate which, when compounded monthly, is
equivalent to the Treasury Rate (as hereinafter defined), when compounded
semi-annually. The "Treasury Rate" is the yield calculated by the linear
interpolation of the yields, as reported in Federal Reserve Statistical
Release H.15-Selected Interest Rates under the heading U.S. government
securities/Treasury constant maturities for the week ending prior to the
Prepayment Date, of U.S. Treasury constant maturities with maturity dates
(one longer and one shorter) most nearly approximating the Maturity Date.
(In the event Release H.15 is no longer published, Lender shall select a
comparable publication to determine the Treasury Rate.) Lender shall notify
Borrower of the amount and the basis of determination of the required
prepayment consideration.
II-29
R The Prepayment Consideration shall equal an amount equal to the greater of
(i) one percent (1%) of the principal balance of this Note being prepaid,
or (ii) the product of (A) the ratio of the amount of the principal balance
of this Note being prepaid over the outstanding principal balance of this
Note on the Prepayment Date (after subtracting the scheduled principal
payment on such Prepayment Date), multiplied by (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 (including any
balloon payment) determined by discounting such payments at the Discount
Rate (as hereinafter defined) less the amount of the outstanding principal
balance of this Note on the Prepayment Date (after subtracting the
scheduled principal payment on such Prepayment Date). The "Discount Rate"
is the rate which, when compounded monthly, is equivalent to the Treasury
Rate (as hereinafter defined), when compounded semi-annually. The "Treasury
Rate" is the yield calculated by the linear interpolation of the yields, as
reported in Federal Reserve Statistical Release H.15-Selected Interest
Rates under the heading U.S. government securities/Treasury constant
maturities for the week ending prior to the Prepayment Date, of U.S.
Treasury constant maturities with maturity dates (one longer and one
shorter) most nearly approximating the Maturity Date. (In the event Release
H.15 is no longer published, Lender shall select a comparable publication
to determine the Treasury Rate.) Lender shall notify Borrower of the amount
and the basis of determination of the required prepayment consideration.
II-30
S "Yield Maintenance Premium" shall mean an amount equal to the present value
as of the Prepayment Date (hereinafter defined) of the Calculated Payments
(hereinafter defined) from the Prepayment Date through the Anticipated
Repayment Date determined by discounting such payments at the Discount Rate
(hereinafter defined). As used in this definition, the term "Prepayment
Date" shall mean the date on which prepayment is made. As used in this
definition, the term "Calculated Payments" shall mean the monthly payments
of interest only which would be due based on the principal amount of this
Note being prepaid on the Prepayment Date and assuming an interest rate per
annum equal to the difference (if such difference is greater than zero)
between (y) the Applicable Interest Rate and (z) the Yield Maintenance
Treasury Rate. As used in this definition, the term "Discount Rate" shall
mean the rate which, when compounded monthly, is equivalent to the Yield
Maintenance Treasury Rate (hereinafter defined), when compounded
semi-annually. As used in this definition, the term "Yield Maintenance
Treasury Rate" shall mean the yield calculated by Lender by the linear
interpolation of the yields, as reported in the Federal Reserve Statistical
Release H.15-Selected Interest Rates under the heading U.S. Government
Securities/Treasury Constant Maturities for the week ending prior to the
Prepayment Date, of U.S. Treasury Constant Maturities with maturity dates
(one longer or one shorter) most nearly approximating the Anticipated
Repayment Date. In the event Release H.15 is no longer published, Lender
shall select a comparable publication to determine the Yield Maintenance
Treasury Rate. In no event, however, shall Lender be required to reinvest
any prepayment proceeds in U.S. Treasury obligations or otherwise.
II-31
T Borrower shall pay to Lender the entire Debt plus a prepayment premium (the
"Yield Maintenance Premium") which shall be equal to the greater of (i) one
percent (1.0%) of the outstanding principal balance of the Note or (ii) an
amount equal to the present value as of the Prepayment Date of the
Calculated Payments from the Prepayment Date through the Maturity Date
determined by discounting such payments at the Discount Rate. As used
herein, the defined terms used herein shall have the following meanings:
(a) "Prepayment Date" shall mean the date on which a prepayment is made or
with respect to subsection (h) below, the date on which a Default
Prepayment is due; (b) "Calculated Payments" shall mean the monthly
payments of interest-only which would be due based on the principal amount
of the Loan being prepaid on the Prepayment Date and assuming an interest
rate per annum equal to the difference (if such difference is greater than
zero) between (y) the Applicable Interest Rate and (2) the Yield
Maintenance Treasury Rate; (c) "Discount Rate" shall mean the rate which,
when compounded monthly, is equivalent to the Yield Maintenance Treasury
Rate, when compounded semi-annually; (d) "Yield Maintenance Treasury Rate"
shall mean the yield calculated by Lender by the linear interpolation of
the yields, as reported in the Federal Reserve Statistical Release
H.15-Selected Interest Rates under the heading U.S. Government
Securities/Treasury Constant Maturities for the week ending prior to the
Prepayment Date, of U.S. Treasury Constant Maturities with maturity dates
(one longer or one shorter) most nearly approximating the term of the Loan.
In the event Release H.15 is no longer published, Lender shall select a
comparable publication to determine the Yield Maintenance Treasury Rate. In
no event, however, shall Lender be required to reinvest any prepayment
proceeds in U.S. Treasury obligations or otherwise.
II-32
[THIS PAGE INTENTIONALLY LEFT BLANK.]
APPENDIX IV
SIGNIFICANT LOAN SUMMARIES
--------------------------------------------------------------------------------
MORTGAGE LOAN NO. 1 - ONE DAG HAMMARSKJOLD PLAZA
--------------------------------------------------------------------------------
[PHOTOS OF ONE DAG HAMMARSKJOLD PLAZA OMITTED]
IV-1
--------------------------------------------------------------------------------
MORTGAGE LOAN NO. 1 - ONE DAG HAMMARSKJOLD PLAZA
--------------------------------------------------------------------------------
[MAP OF ONE DAG HAMMARSKJOLD PLAZA OMITTED]
IV-2
--------------------------------------------------------------------------------
MORTGAGE LOAN NO. 1 - ONE DAG HAMMARSKJOLD PLAZA
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
LOAN INFORMATION
--------------------------------------------------------------------------------
ORIGINAL BALANCE: $150,000,000
CUT-OFF DATE BALANCE: $150,000,000
LOAN PURPOSE: Refinance
SHADOW RATING (S&P/FITCH/DBRS): AA / A- / A (low)
FIRST PAYMENT DATE: March 1, 2007
INTEREST RATE: 5.5140%
AMORTIZATION: Interest Only
ARD: February 1, 2022
HYPERAMORTIZATION: After the ARD, the loan interest
rate steps up to 7.514%.
MATURITY DATE: February 1, 2037
EXPECTED ARD BALANCE: $150,000,000
SPONSOR: Lawrence Ruben Company, Inc.
INTEREST CALCULATION: Actual/360
CALL PROTECTION: Locked out through March 1, 2010,
with U.S. Treasury defeasance
thereafter. Prepayable without
penalty after December 1, 2021.
LOAN PER SF: $191.59
UP-FRONT RESERVES: RE Tax: $1,482,781
Cap Ex: $15,625
ONGOING RESERVES: RE Tax: $741,390 / month
Insurance: Springing
Deferred Maintenance: Springing
Cap Ex: $15,625 / month
LOCKBOX: Hard
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PROPERTY INFORMATION
--------------------------------------------------------------------------------
SINGLE ASSET/PORTFOLIO: Single Asset
PROPERTY TYPE: Office
PROPERTY SUB-TYPE: Urban
LOCATION: New York, NY
YEAR BUILT/RENOVATED: 1971 / 2006-2007
PERCENT LEASED(1): 97.1%
SQUARE FOOTAGE: 782,928
THE COLLATERAL: 48-story urban office building with a
227-space underground parking garage
OWNERSHIP INTEREST: Fee
PROPERTY MANAGEMENT: Lawrence Ruben Company, Inc.
3RD MOST RECENT NOI (AS OF): $15,413,451 (TTM 12/31/2004)
2ND MOST RECENT NOI (AS OF): $16,238,990 (TTM 12/31/2005)
MOST RECENT NOI (AS OF): $19,350,808 (9 mos. Ann. 09/30/2006)
U/W NET OP. INCOME: $19,405,494
U/W NET CASH FLOW: $18,174,647
U/W OCCUPANCY: 94.5%
APPRAISED VALUE: $365,000,000
CUT-OFF DATE LTV: 41.1%
ARD LTV: 41.1%
DSCR: 2.17x
POST IO DSCR: NAP
--------------------------------------------------------------------------------
(1) Percent leased is based on the rent roll dated November 1, 2006.
THE ONE DAG HAMMARSKJOLD LOAN.
THE LOAN. The largest loan (the "One Dag Hammarskjold Plaza Loan") is
evidenced by three pari passu promissory notes and is secured by a first
priority mortgage on the One Dag Hammarskjold Plaza office property located in
New York, New York (the "One Dag Hammarskjold Plaza Property"). The One Dag
Hammarskjold Plaza Loan was originated on January 26, 2007 by Bear Stearns
Commercial Mortgage, Inc.
THE BORROWER. The borrower is Plaza Tower, LLC, a Delaware limited
liability company (the "One Dag Hammarskjold Plaza Borrower") that owns no
material assets other than the One Dag Hammarskjold Plaza Property and related
interests. The One Dag Hammarskjold Plaza Borrower is indirectly owned by
Lawrence Ruben Company, Inc. ("Lawrence Ruben"). Since its founding in 1959,
Lawrence Ruben has been developing properties in America's major cities. In New
York, Washington D.C. and Boston alone, Lawrence Ruben has participated in the
development, acquisition and management of over seven million square feet of
office space and 1000 luxury residential apartments with a total combined
portfolio value in excess of $1.0 billion.
THE PROPERTY. The One Dag Hammarskjold Plaza Property is a class 'A',
48-story, 782,928 square foot urban office building and 227-space underground
parking garage located at 885 Second Avenue between 47th and 48th Streets in the
United Nations ("UN") sub-district of New York City. Developed by the sponsors
in the early 1970s, the One Dag Hammarskjold Plaza Property is currently
approximately 97% leased to over 30 tenants. The property's proximity to the UN
is a primary demand driver with approximately 45% of the total net rentable area
either leased directly to or subleased to UN affiliated entities or foreign
government offices, including the United Nations Pension Fund, the Mission of
Canada, the Permanent Mission of Ireland, the Consulate General of Denmark, and
the International Monetary Fund.
IV-3
The following table presents certain information relating to the lease
rollover at the One Dag Hammarskjold Plaza Property:
------------------------------------------------------------------------------------------------------------------------------------
LEASE ROLLOVER SCHEDULE
% OF TOTAL
AVERAGE UNDERWRITTEN BASE CUMULATIVE % OF TOTAL
# OF LEASES UNDERWRITTEN BASE % OF TOTAL SF CUMULATIVE % OF RENTAL REVENUES UNDERWRITTEN BASE
YEAR ROLLING RENT PER SF ROLLING ROLLING SF ROLLING ROLLING RENTAL REVENUES ROLLING
------------------------------------------------------------------------------------------------------------------------------------
Vacant -- -- 3% 3% -- --
------------------------------------------------------------------------------------------------------------------------------------
MTM 11 $1.33 0% 3% 0% 0%
------------------------------------------------------------------------------------------------------------------------------------
2007 -- -- -- 3% -- 0%
------------------------------------------------------------------------------------------------------------------------------------
2008 6 $56.81 6% 9% 9% 9%
------------------------------------------------------------------------------------------------------------------------------------
2009 2 $35.48 6% 15% 5% 14%
------------------------------------------------------------------------------------------------------------------------------------
2010 3 $41.64 2% 18% 2% 17%
------------------------------------------------------------------------------------------------------------------------------------
2011 1 $47.00 1% 18% 1% 18%
------------------------------------------------------------------------------------------------------------------------------------
2012 4 $53.35 7% 25% 9% 27%
------------------------------------------------------------------------------------------------------------------------------------
2013 4 $49.67 7% 32% 9% 36%
------------------------------------------------------------------------------------------------------------------------------------
2014 (1) 4 $29.22 34% 66% 26% 62%
------------------------------------------------------------------------------------------------------------------------------------
2015 5 $59.80 9% 75% 13% 75%
------------------------------------------------------------------------------------------------------------------------------------
2016 1 $55.88 2% 77% 3% 78%
------------------------------------------------------------------------------------------------------------------------------------
2017 & Beyond 12 $36.88 23% 100% 22% 100%
------------------------------------------------------------------------------------------------------------------------------------
(1) The United Nations Joint Pension Fund, which currently subleases 68,700
square feet (8.8% of the total property NRSF) from Interpublic Group, has
entered into a direct lease with the One Dag Hammarskjold Borrower that is
effective upon expiry of the Interpublic lease in December 31, 2014 and
will expire December 31, 2020.
The following table presents certain information relating to the tenants
at the One Dag Hammarskjold Plaza Property:
------------------------------------------------------------------------------------------------------------------------------------
% OF TOTAL ANNUALIZED
CREDIT RATING ANNUALIZED ANNUALIZED UNDERWRITTEN
(FITCH/ UNDERWRITTEN UNDERWRITTEN BASE RENT LEASE
TENANT NAME MOODY'S/S&P) TENANT NRSF % OF NRSF BASE RENT ($) BASE RENT ($ PER NRSF) EXPIRATION
------------------------------------------------------------------------------------------------------------------------------------
Interpublic Group (1) --/--/-- 269,409 34% $7,871,682 26% $29.22 12/31/2014
------------------------------------------------------------------------------------------------------------------------------------
Telerep Inc. (2) --/--/-- 76,117 10% $3,022,860 10% $39.71 08/31/2018
------------------------------------------------------------------------------------------------------------------------------------
Babcock & Brown, L.P. --/--/-- 48,912 6% $3,126,628 10% $63.92 07/31/2015
------------------------------------------------------------------------------------------------------------------------------------
United Kingdom of Great --/--/-- 46,295 6% $1,642,325 5% $35.48 09/30/2009
Britain and Northern Ireland
------------------------------------------------------------------------------------------------------------------------------------
Population Council, Inc. (3) --/--/-- 45,782 6% $1,488,104 5% $32.50 02/28/2017
------------------------------------------------------------------------------------------------------------------------------------
Gov't of French Republic --/--/-- 32,692 4% $1,574,350 5% $48.16 09/30/2013
------------------------------------------------------------------------------------------------------------------------------------
The Kingdom of Sweden --/--/-- 31,300 4% $1,752,800 6% $56.00 12/31/2012
------------------------------------------------------------------------------------------------------------------------------------
TOTAL/WEIGHTED AVERAGE 550,507 70% $20,478,749 68% $37.20
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Other Tenants NAP 210,031 27% $9,774,119 32% $46.54 Various
------------------------------------------------------------------------------------------------------------------------------------
Vacant Space NAP 22,390 3% $0 0% $0.00 NAP
------------------------------------------------------------------------------------------------------------------------------------
TOTAL/WEIGHTED AVERAGE 782,928 100% $30,252,868 100% $38.64
------------------------------------------------------------------------------------------------------------------------------------
(1) Interpublic Group subleases 129,242 square feet of its space (48.0% of
Interpublic Group's space; 16.5% of total property NRSF) to various
subtenants. The United Nations Joint Pension Fund, which currently
subleases 68,700 square feet from Interpublic Group, has entered into a
direct lease with the One Dag Hammarskjold Borrower that is effective upon
expiry of the Interpublic lease and will expire December 31, 2020.
(2) In addition to the square footage and rent shown in the chart above,
Telerep Inc. leases an additional 20,070 square feet at a rent of $40.00
per square foot under a lease that expires August 31, 2008. 5,070 square
feet of this space is subleased to Gartner and Bloom P.C.
(3) In addition to the square footage and rent shown in the chart above,
Population Council, Inc. leases an additional 15,050 square feet at a rent
of $45.00 per square foot under a lease that expires February 28, 2012.
This space is subleased to BrainReserve, Inc.
ESCROWS AND RESERVES. The One Dag Hammarskjold Plaza Borrower is required
to escrow 1/12 of annual real estate taxes monthly. The amounts shown are the
current monthly collections. Insurance reserves spring upon the occurrence of an
event of default or upon the failure of the One Dag Hammarskjold Plaza Borrower
to provide evidence of payment of insurance premiums. Deferred maintenance
reserves spring if the One Dag Hammarskjold Plaza Borrower does not complete the
required repairs within 180 days, subject to the conditions set forth in the
mortgage loan documents. The One Dag Hammarskjold Plaza Borrower is also
required to reserve $15,625 monthly in a Cap Ex reserve, subject to a cap of
$1,000,000.
LOCKBOX AND CASH MANAGEMENT. A hard lockbox is in place with respect to
the One Dag Hammarskjold Plaza Loan.
PROPERTY MANAGEMENT. The One Dag Hammarskjold Plaza Property is managed by
Lawrence Ruben Company, Inc., an affiliate of the One Dag Hammarskjold Plaza
Borrower.
MEZZANINE LOAN AND PREFERRED EQUITY INTEREST. The One Dag Hammarskjold
Plaza Borrower is permitted to incur future mezzanine financing and partnership
debt (such partnership debt is subordinate to the One Dag Hammarskjold Plaza
Loan and may not exceed $10,000,000), subject to the satisfaction of certain
conditions set forth in the mortgage loan documents, including but not limited
to: (i) the debt service coverage ratio on the aggregate debt must be equal to
or greater than 1.25x (based on a 6.82% loan constant); (ii) the
IV-4
aggregate LTV may not exceed 70% and (iii) the execution of an acceptable
intercreditor agreement (with respect to any mezzanine financing).
ADDITIONAL SECURED INDEBTEDNESS (NOT INCLUDING TRADE DEBTS). Not allowed.
RELEASE OF PARCELS. Not allowed.
Certain additional information regarding the One Dag Hammarskjold Plaza
Loan and the One Dag Hammarskjold Plaza Property is set forth on Appendix II
hereto.
IV-5
[THIS PAGE INTENTIONALLY LEFT BLANK]
IV-6
--------------------------------------------------------------------------------
MORTGAGE LOAN NO. 2 - ONE AT&T CENTER
--------------------------------------------------------------------------------
[PHOTOS OF ONE AT&T CENTER OMITTED]
IV-7
--------------------------------------------------------------------------------
MORTGAGE LOAN NO. 2 - ONE AT&T CENTER
--------------------------------------------------------------------------------
[MAP OF ONE AT&T CENTER OMITTED]
IV-8
--------------------------------------------------------------------------------
MORTGAGE LOAN NO. 2 - ONE AT&T CENTER
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
LOAN INFORMATION
--------------------------------------------------------------------------------
ORIGINAL BALANCE: $112,695,000
CUT-OFF DATE BALANCE: $112,695,000
LOAN PURPOSE: Acquisition
SHADOW RATING (S&P/FITCH/DBRS): NAP
FIRST PAYMENT DATE: February 1, 2007
INTEREST RATE: 5.3425%
AMORTIZATION: Interest Only
ARD: January 1, 2017
HYPERAMORTIZATION: After the ARD, the loan interest
rate steps up to the lesser of (i)
7.3425% or (ii) the maximum rate
permitted by applicable law.
MATURITY DATE: January 1, 2037
EXPECTED ARD BALANCE: $112,695,000
SPONSORS: Minto Builders (Florida), Inc. &
Inland American Real Estate Trust,
Inc.
INTEREST CALCULATION: 30/360
CALL PROTECTION: Locked out through December 31,
2009. In connection with any
voluntary prepayment, the borrower
must pay a premium equal to the
greater of a yield maintenance
premium and 1% of the principal
balance. Prepayable without penalty
from and after December 1, 2016.
LOAN PER SF: $91.90
UP-FRONT RESERVES: None
ONGOING RESERVES: RE Tax: Springing
Insurance: Springing
Cap Ex: Springing
LOCKBOX: Hard
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PROPERTY INFORMATION
--------------------------------------------------------------------------------
SINGLE ASSET/PORTFOLIO: Single Asset
PROPERTY TYPE: Office
PROPERTY SUB-TYPE: Urban
LOCATION: St. Louis, MO
YEAR BUILT/RENOVATED: 1986 / NAP
PERCENT LEASED(1): 100.0%
SQUARE FOOTAGE: 1,226,293
THE COLLATERAL: 42-story urban office building
OWNERSHIP INTEREST: Fee
PROPERTY MANAGEMENT: Inland American Office Management, LLC
3RD MOST RECENT NOI (AS OF): NAP
2ND MOST RECENT NOI (AS OF): NAP
MOST RECENT NOI (AS OF): NAP
U/W NET OP. INCOME: $14,527,552
U/W NET CASH FLOW: $13,503,843
U/W OCCUPANCY: 92.0%
APPRAISED VALUE: $207,260,000
CUT-OFF DATE LTV: 54.4%
ARD LTV: 54.4%
DSCR: 2.24x
POST IO DSCR: NAP
--------------------------------------------------------------------------------
(1) Percent leased is based on the lease expiring in 2017.
THE ONE AT&T CENTER LOAN.
THE LOAN. The second largest loan (the "One AT&T Center Loan") is
evidenced by a promissory note and is secured by a first priority deed of trust
on the One AT&T Center office property located in St. Louis, Missouri (the "One
AT&T Center Property"). The One AT&T Center Loan was originated on December 21,
2006 by Bear Stearns Commercial Mortgage, Inc.
THE BORROWER. The borrower is MB St. Louis Chestnut, L.L.C., a Delaware
limited liability company (the "One AT&T Center Borrower") that owns no material
assets other than the One AT&T Center Property. The sole member of the One AT&T
Center Borrower is Minto Builders (Florida), Inc., a Florida corporation, which
is jointly owned by Minto (Delaware), LLC ("Minto") and Inland American Real
Estate Trust, Inc. ("Inland American"). Minto is in turn owned by Minto
Holdings, Inc. Inland American, an affiliate of The Inland Group, Inc., is a
newly formed real estate investment trust. Inland American owns the controlling
interest in Minto Builders (Florida), Inc. The Inland Group, Inc., together with
its subsidiaries and affiliates, is a fully-integrated real estate company
providing property management, leasing, marketing, acquisition, development,
redevelopment, syndication, renovation, construction finance and other related
services. Currently, the Inland group of companies employs more than 1,000
people and manages over a reported $13 billion in assets and more than 100
million square feet of commercial property. Minto Holdings, Inc. is a real
estate development, construction and management company with operations in
Ottawa, Toronto and Florida.
IV-9
THE PROPERTY. The One AT&T Center Property is a class `A', 42-story,
1,226,293 square foot urban office building located in downtown St. Louis,
Missouri. The property is 100% leased to AT&T Services, Inc. whose lease
obligations are guaranteed by AT&T Inc. (A/A2/A by S&P/Moody's/Fitch). The One
AT&T Center Property is situated on Pine and Chestnut Streets approximately 5
blocks from the St. Louis Convention Center and one block from the St. Louis
MetroLink light railway system. The One AT&T Center Property is part of an AT&T
urban corporate campus and is connected to two adjacent AT&T occupied buildings
and a 1,695 space parking garage by enclosed walkways (all of which are not part
of the collateral). The One AT&T Center Property was constructed in 1986 with
average floor-plates containing approximately 30,000 square feet of net rentable
area.
The following table presents certain information relating to the lease
rollover at the One AT&T Center Property:
------------------------------------------------------------------------------------------------------------------------------------
LEASE ROLLOVER SCHEDULE
% OF TOTAL
AVERAGE UNDERWRITTEN BASE CUMULATIVE % OF TOTAL
# OF LEASES UNDERWRITTEN BASE % OF TOTAL SF CUMULATIVE % OF RENTAL REVENUES UNDERWRITTEN BASE
YEAR ROLLING RENT PER SF ROLLING ROLLING SF ROLLING ROLLING RENTAL REVENUES ROLLING
------------------------------------------------------------------------------------------------------------------------------------
Vacant -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
2007 -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
2008 -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
2009 -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
2010 -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
2011 -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
2012 -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
2013 -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
2014 -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
2015 -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
2016 -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
2017 & Beyond 1 $13.14 100% 100% 100% 100%
------------------------------------------------------------------------------------------------------------------------------------
The following table presents certain information relating to the tenant at
the One AT&T Center Property:
------------------------------------------------------------------------------------------------------------------------------------
% OF TOTAL ANNUALIZED
CREDIT RATING ANNUALIZED ANNUALIZED UNDERWRITTEN
(FITCH/ UNDERWRITTEN UNDERWRITTEN BASE RENT LEASE
TENANT NAME MOODY'S/S&P)(1) TENANT NRSF % OF NRSF BASE RENT ($) BASE RENT ($ PER NRSF) EXPIRATION
------------------------------------------------------------------------------------------------------------------------------------
AT&T Services, Inc. A/A2/A 1,226,293 100% $16,113,079 100% $13.14 09/20/2017
------------------------------------------------------------------------------------------------------------------------------------
TOTAL/WEIGHTED AVERAGE 1,226,293 100% $16,113,079 100% $13.14
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Other Tenants NAP 0 0% $0 0% $0.00 NAP
------------------------------------------------------------------------------------------------------------------------------------
Vacant Space NAP 0 0% $0 0% $0.00 NAP
------------------------------------------------------------------------------------------------------------------------------------
TOTAL/WEIGHTED AVERAGE 1,226,293 100% $16,113,079 100% $13.14
------------------------------------------------------------------------------------------------------------------------------------
(1) Certain ratings are those of the parent company whether or not the parent
guarantees the lease.
ESCROWS AND RESERVES. Real estate tax and insurance reserves spring if the
One AT&T Center Borrower fails to provide evidence of payment. Cap Ex reserve
springs if the One AT&T Center Borrower fails to provide evidence of property
maintenance or an event of default occurs.
LOCKBOX AND CASH MANAGEMENT. A hard lockbox is in place with respect to
the One AT&T Center Loan.
PROPERTY MANAGEMENT. The One AT&T Center Property is managed by Inland
American Office Management, LLC, an affiliate of the One AT&T Center Borrower.
MEZZANINE LOAN AND PREFERRED EQUITY INTEREST. Not allowed.
ADDITIONAL SECURED INDEBTEDNESS (NOT INCLUDING TRADE DEBTS). Not allowed.
RELEASE OF PARCELS. Not allowed.
Certain additional information regarding the One AT&T Center Loan and the
One AT&T Center Property is set forth on Appendix II hereto.
IV-10
--------------------------------------------------------------------------------
MORTGAGE LOAN NO. 3 - FULBRIGHT TOWER
--------------------------------------------------------------------------------
[PHOTOS OF FULBRIGHT TOWER OMITTED]
IV-11
-------------------------------------------------------------------------------
MORTGAGE LOAN NO. 3 - FULBRIGHT TOWER
-------------------------------------------------------------------------------
[MAP OF FULBRIGHT TOWER OMITTED]
IV-12
--------------------------------------------------------------------------------
MORTGAGE LOAN NO. 3 - FULBRIGHT TOWER
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
LOAN INFORMATION
--------------------------------------------------------------------------------
ORIGINAL BALANCE: $89,000,000
CUT-OFF DATE BALANCE: $89,000,000
LOAN PURPOSE: Refinance
SHADOW RATING (S&P/FITCH/DBRS): BBB-/Baa3/BBB (low)
FIRST PAYMENT DATE: March 8, 2007
INTEREST RATE: 5.129%(1)
AMORTIZATION: Interest Only
ARD: NAP
HYPERAMORTIZATION: NAP
MATURITY DATE: February 8, 2012
EXPECTED MATURITY BALANCE: $89,000,000
SPONSORS: Crescent Real Estate Equities, JP Morgan
Fleming Asset Management and GE Asset
Management
INTEREST CALCULATION: Actual/360
CALL PROTECTION: Locked out until the earlier of January
10, 2010 or 2 years after the REMIC
"start-up" day, with U.S. Treasury
defeasance or the payment of the greater
of a yield maintenance premium and 1% of
the principal balance thereafter.
Prepayable without a premium from and
after November 8, 2011.
LOAN PER SF: $71.37
UP-FRONT RESERVES: Other: $10,813,177
ONGOING RESERVES: Cap Ex: Springing
TI/LC: Springing
RE Tax: Springing
Insurance: Springing
Other: Springing
LOCKBOX: Hard
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PROPERTY INFORMATION
--------------------------------------------------------------------------------
SINGLE ASSET/PORTFOLIO: Single Asset
PROPERTY TYPE: Office
PROPERTY SUB-TYPE: Urban
LOCATION: Houston, TX
YEAR BUILT/RENOVATED: 1982 / NAP
PERCENT LEASED(2): 89.0%
SQUARE FOOTAGE: 1,247,061
THE COLLATERAL: 51-story office tower
OWNERSHIP INTEREST: Fee
PROPERTY MANAGEMENT: Crescent Property Services, Inc.
3RD MOST RECENT NOI (AS OF): $3,593,376 (TTM 12/31/2003)
2ND MOST RECENT NOI (AS OF): $5,328,547 (TTM 12/31/2005)
MOST RECENT NOI (AS OF): $5,882,798 (TTM 12/31/2006)
U/W NET OP. INCOME: $12,521,435
U/W NET CASH FLOW: $11,588,498
U/W OCCUPANCY: 94.0%
APPRAISED VALUE: $160,000,000
CUT-OFF DATE LTV: 55.6%
MATURITY DATE LTV: 55.6%
DSCR: 2.50x
POST IO DSCR: NAP
--------------------------------------------------------------------------------
(1) The interest rate is a weighted average of two component notes that are
pari passu with each other, Note A is $82,000,000 with an interest rate of
5.053% and Note B is $7,000,000 with an interest rate 6.015%.
(2) Percent leased is based on the rent roll dated December 15, 2006.
THE FULBRIGHT TOWER LOAN.
THE LOAN. The third largest loan (the "Fulbright Tower Loan"), as
evidenced by two component Promissory Notes (collectively, the "Fulbright Tower
Note"), is secured by a first priority fee Deed of Trust, Assignment of Leases
and Rents, Security Agreement and Fixture Filing (the "Fulbright Tower
Mortgage") encumbering the 1,247,061 square foot office building known as
Fulbright Tower, located in Houston, Texas (the "Fulbright Tower Property"). The
Fulbright Tower Loan was originated on January 10, 2007 by or on behalf of
Morgan Stanley Mortgage Capital Inc.
THE BORROWER. The borrower is Crescent 1301 McKinney, L.P., a Delaware
limited partnership (the "Fulbright Tower Borrower") that owns no material asset
other than the Fulbright Tower Property and related interests. The Fulbright
Tower Borrower is a wholly-owned subsidiary of Crescent Real Estate Equities, JP
Morgan Fleming Asset Management and GE Asset Management, the sponsors of the
Fulbright Tower Loan. Crescent Real Estate Equities was established as a
publicly traded REIT in 1994. It is one of the largest publicly held REITs in
the nation and is reportedly the third largest in Texas. JP Morgan Fleming Asset
Management is a JP Morgan Chase business unit that has been operating for more
than a century, which Robert Fleming Holdings joined after Chase bought it in
2000, before merging with JP Morgan. GE Pension Trust has been in operation and
under the control of GE Asset Management, the private asset management branch of
General Electric Corporation, since its inception in 1927. It is one of the
largest institutional and retail investment managers in the United States.
IV-13
THE PROPERTY. The Fulbright Tower Property is located in Houston, Texas,
at 1301 McKinney Street. The Fulbright Tower Property is located on the east
side of downtown Houston within six blocks south of the court complex and within
three blocks from the George Brown Convention Center. The Fulbright Tower
Property was originally constructed in 1982 and has not been materially
renovated since that date. It consists of a 1,247,061 square foot, 51-story
Class A office tower. The Fulbright Tower Property is situated on approximately
1.4 acres and includes 283 parking spaces.
The following table presents certain information relating to the lease
rollover at the Fulbright Tower Property:
------------------------------------------------------------------------------------------------------------------------------------
LEASE ROLLOVER SCHEDULE
% OF TOTAL CUMULATIVE % OF
AVERAGE UNDERWRITTEN UNDERWRITTEN BASE TOTAL UNDERWRITTEN
# OF LEASES BASE RENT PER SF % OF TOTAL SF CUMULATIVE % OF RENTAL REVENUES BASE RENTAL REVENUES
YEAR ROLLING ROLLING ROLLING SF ROLLING ROLLING ROLLING
------------------------------------------------------------------------------------------------------------------------------------
Vacant -- -- 10% 10% -- --
------------------------------------------------------------------------------------------------------------------------------------
2007 14 $12.02 9% 20% 8% 8%
------------------------------------------------------------------------------------------------------------------------------------
2008 10 $15.37 2% 22% 2% 10%
------------------------------------------------------------------------------------------------------------------------------------
2009 5 $23.22 0% 22% 1% 11%
------------------------------------------------------------------------------------------------------------------------------------
2010 12 $21.98 8% 30% 12% 23%
------------------------------------------------------------------------------------------------------------------------------------
2011 8 $11.47 5% 36% 4% 27%
------------------------------------------------------------------------------------------------------------------------------------
2012 2 $12.08 1% 37% 1% 28%
------------------------------------------------------------------------------------------------------------------------------------
2013 4 $18.73 6% 43% 8% 36%
------------------------------------------------------------------------------------------------------------------------------------
2014 18 $20.86 30% 73% 43% 79%
------------------------------------------------------------------------------------------------------------------------------------
2015 -- -- -- 73% -- 79%
------------------------------------------------------------------------------------------------------------------------------------
2016 12 $11.52 12% 85% 10% 89%
------------------------------------------------------------------------------------------------------------------------------------
2017 & Beyond 8 $10.84 15% 100% 11% 100%
------------------------------------------------------------------------------------------------------------------------------------
The following table presents certain information relating to the major
tenants at the Fulbright Tower Property:
------------------------------------------------------------------------------------------------------------------------------------
% OF TOTAL ANNUALIZED
CREDIT RATING ANNUALIZED ANNUALIZED UNDERWRITTEN
(FITCH/ UNDERWRITTEN BASE UNDERWRITTEN BASE RENT LEASE
TENANT NAME MOODY'S/S&P)(1) TENANT NRSF % OF NRSF RENT ($) BASE RENT ($ PER NRSF) EXPIRATION(2)
------------------------------------------------------------------------------------------------------------------------------------
Fulbright & Jaworski --/--/-- 399,479 32% $8,026,919 44% $20.09 02/28/2014
------------------------------------------------------------------------------------------------------------------------------------
Hydro Gulf of Mexico, LLC --/A2/A- 123,201 10% $1,293,611 7% $10.50 08/31/2017
------------------------------------------------------------------------------------------------------------------------------------
Pulse EFT Association AA-/Aa3/A+ 54,654 4% $1,213,810 7% $22.21 10/31/2010
------------------------------------------------------------------------------------------------------------------------------------
Key Energy Services --/--/-- 82,945 7% $1,016,432 6% $12.25 06/14/2016
------------------------------------------------------------------------------------------------------------------------------------
Chevron USA AA/Aa2/AA 47,962 4% $959,240 5% $20.00 09/30/2007
------------------------------------------------------------------------------------------------------------------------------------
Comptroller of the Currency AAA/Aaa/AAA 37,060 3% $913,317 5% $24.64 05/31/2013
------------------------------------------------------------------------------------------------------------------------------------
Walter P. Moore & Associates --/--/-- 64,540 5% $742,210 4% $11.50 10/31/2017
------------------------------------------------------------------------------------------------------------------------------------
TOTAL/WEIGHTED AVERAGE 809,841 65% $14,165,538 78% $17.49
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Other Tenants Various 307,359 25% $3,909,522 22% $12.72 Various
------------------------------------------------------------------------------------------------------------------------------------
Vacant Space NAP 129,861 10% $0 0% $0.00 NAP
------------------------------------------------------------------------------------------------------------------------------------
TOTAL/WEIGHTED AVERAGE 1,247,061 100.0% $18,075,060 100% $16.18
------------------------------------------------------------------------------------------------------------------------------------
(1) Certain ratings are those of the parent company whether or not the parent
guarantees the lease.
(2) For Fulbright & Jaworski, 374,352 square feet expire on February 28, 2014
and 25,127 square feet expire on December 31, 2007. For Key Energy
Services, 74,451 square feet expire on June 14, 2016 and 8,494 square feet
expire on December 31, 2007.
ESCROWS AND RESERVES. At closing, the Fulbright Tower Borrower deposited
$10,813,177 into an escrow account in respect of unfunded lease obligations, to
be used to make payments under the applicable lease. During a Trigger Period
(described below), the Fulbright Tower Borrower must make monthly escrow
deposits in the amount of (1) 1/12 of annual requirements for taxes, (2) 1/12 of
annual requirements for insurance premiums, (3) $20,785 for replacements and
capital expenditures (up to a cap of $375,000 on deposit in the reserve account
at any time) and (4) $129,903 for tenant improvements and leasing commissions.
Provided no event of default is then occurring, all excess funds after making
the foregoing escrow deposits shall be remitted to the Fulbright Tower Borrower
on a daily basis. Notwithstanding the foregoing, the funds for insurance will
not be subject to escrow if the Fulbright Tower Property is insured under a
blanket policy acceptable to the lender. In addition, the Fulbright Tower
Borrower must deposit into the tenant improvement and leasing commissions
reserve account certain lease termination payments it may receive from tenants.
The Fulbright Tower Borrower may generally post letters of credit instead of
cash deposits at the Fulbright Tower Borrower's option.
LOCKBOX AND CASH MANAGEMENT. A hard lockbox is in place with respect to
the Fulbright Tower Loan. Prior to a Trigger Period, all funds deposited into
the cash management account will be delivered to the Fulbright Tower Borrower on
a daily basis. A "Trigger Period" is defined as the period commencing on any of
the following trigger conditions: (a) an event of default or (b) at any time
that the debt service coverage ratio (based on actual net operating income for
prior quarter) is less than 1.15x. The Trigger Period will end at the time the
event of default has been cured and the debt service coverage ratio for two
fiscal quarters is at least 1.15x. The lockbox will be in place until the
Fulbright Tower Loan has been paid in full.
IV-14
PROPERTY MANAGEMENT. The Fulbright Tower Property is managed Crescent
Property Services, Inc., which is an affiliate of the Fulbright Tower Borrower.
The management agreement is subordinate to the Fulbright Tower Loan.
MEZZANINE LOAN AND PREFERRED EQUITY INTEREST. Mezzanine debt is permitted,
subject to (i) rating agency confirmation, (ii) mezzanine lender meeting the
requirements of a "Qualified Lender" under the loan documents, (iii) the ratio
of the principal amount of the Fulbright Tower Loan and the mezzanine debt to
the value of the Fulbright Tower Property shall not exceed 75% in the aggregate,
(iv) the DSCR (based on a constant equal to the greater of (a) 7.5% or (b) the
blended interest rate of the Fulbright Tower Loan and the additional mezzanine
debt) shall not be less than 1.20x, and (v) receipt of a reasonably acceptable
intercreditor agreement.
ADDITIONAL SECURED INDEBTEDNESS (NOT INCLUDING TRADE DEBTS). Not allowed.
RELEASE OF PARCELS. Not allowed.
Certain additional information regarding the Fulbright Tower Loan and the
Fulbright Tower Property is set forth on Appendix II hereto.
IV-15
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IV-16
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MORTGAGE LOAN NO. 4 - SCRIPPS CENTER
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IV-17
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MORTGAGE LOAN NO. 4 - SCRIPPS CENTER
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IV-18
--------------------------------------------------------------------------------
MORTGAGE LOAN NO. 4 - SCRIPPS CENTER
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
LOAN INFORMATION
--------------------------------------------------------------------------------
ORIGINAL BALANCE: $70,000,000
CUT-OFF DATE BALANCE: $69,933,748
LOAN PURPOSE: Refinance
SHADOW RATING (S&P/FITCH/DBRS): NAP
FIRST PAYMENT DATE: April 1, 2007
INTEREST RATE: 5.480%
AMORTIZATION: 360 Months
ARD: NAP
HYPERAMORTIZATION: NAP
MATURITY DATE: March 1, 2017
EXPECTED MATURITY BALANCE: $58,602,571
SPONSORS: Manuel Mayerson; Neal Mayerson
INTEREST CALCULATION: Actual/360
CALL PROTECTION: Locked out until the earlier of
February 23, 2010 or 2 years after the
REMIC "start-up" day, with U.S.
Treasury defeasance or the payment of
the greater of yield maintenance
premium and 1% of the principal
balance thereafter. Prepayable
without penalty from and after
December 1, 2016.
LOAN PER SF: $128.65
UP-FRONT RESERVES: RE Tax: $266,067
Other: $450,000
ONGOING RESERVES: RE Tax: $155,228 / month
Insurance: Springing
LOCKBOX: Hard
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PROPERTY INFORMATION
--------------------------------------------------------------------------------
SINGLE ASSET/PORTFOLIO: Single Asset
PROPERTY TYPE: Office
PROPERTY SUB-TYPE: Urban
LOCATION: Cincinnati, OH
YEAR BUILT/RENOVATED: 1989 / NAP
PERCENT LEASED(1): 90.2%
SQUARE FOOTAGE: 543,616
THE COLLATERAL: 36-story, multi-tenant office building
and parking garage
OWNERSHIP INTEREST: Fee
PROPERTY MANAGEMENT: The Mayerson Company
3RD MOST RECENT NOI (AS OF): $7,728,899 (TTM 12/31/2003)
2ND MOST RECENT NOI (AS OF): $8,075,888 (TTM 12/31/2004)
MOST RECENT NOI (AS OF): $8,745,254 (TTM 12/31/2005)
U/W NET OP. INCOME: $8,250,803
U/W NET CASH FLOW: $7,712,690
U/W OCCUPANCY: 88.1%
APPRAISED VALUE: $102,000,000
CUT-OFF DATE LTV: 68.6%
MATURITY DATE LTV: 57.5%
DSCR: 1.62x
POST IO DSCR: NAP
--------------------------------------------------------------------------------
(1) Percent leased is based on the rent roll dated February 23, 2007.
THE SCRIPPS CENTER LOAN.
THE LOAN. The fourth largest loan ("Scripps Center Loan") as evidenced by
the Secured Promissory Note ("Scripps Center Note") is secured by a first
priority Deed of Trust, Security Agreement, and Assignment of Rents ("Scripps
Center Mortgage") encumbering the office building containing 543,616 square feet
known as Scripps Center, located in Cincinnati, Ohio (the "Scripps Center
Property"). Scripps Center Loan was originated on February 23, 2007 by or on
behalf of Principal Commercial Funding II, LLC.
THE BORROWER. The borrower is 312 Walnut Limited Partnership. The borrower
is 26% owned by Manuel Mayerson, 50% owned by FAN General Partner LLC (consists
equally of Frederic, Neal and Arlene Mayerson), 1% by Rexford Properties, LLC,
another 6% each by Frederic, Neal and Arlene Mayerson, and 5% by other family
members of Manuel Mayerson. Manuel and Neal Mayerson are the carveout guarantors
and have 72 years of combined real estate experience.
THE PROPERTY. The Scripps Center Property consists of a 36-story,
multi-tenant CBD office building and parking garage, containing 543,616 sf of
net rentable office area and 8 levels of parking (241,362 square feet). Floors 2
through 9 of the subject are a parking garage containing 600 parking spaces
(1.1/1,000). The building was constructed in 1989. The lobby offers a directory
board, comfort seating area, a "Bagel Stop" store, lunch dining area, restrooms,
ATM, 24/7 access, a security desk, public phone, mail drop/pickup and a dry
cleaning drop box. The sub-lobby contains a Children's Day Care Center that
services up to 90 children. There is a drop-off parking and access area for the
daycare. The 10th floor of the building contains a conference room, a fitness
center with locker rooms, a vending room as well as a hair salon. There are two
security guards on-site 24/7, and the controlled access elevators have
restricted access during certain hours
IV-19
of operation. The Scripps Center Property is located at the northeast corner of
Walnut Street and East Third Street, which is situated in the Cincinnati CBD,
just north of the Ohio River. The south side of the building faces the Ohio
River, providing views.
The following table presents certain information relating to the lease
rollover at the Scripps Center Property:
------------------------------------------------------------------------------------------------------------------------------------
LEASE ROLLOVER SCHEDULE
AVERAGE CONTRACT % OF TOTAL CUMULATIVE % OF TOTAL
# OF LEASES BASE RENT PER SF % OF TOTAL SF CUMULATIVE % CONTRACT RENTAL CONTRACT RENTAL REVENUES
YEAR ROLLING ROLLING ROLLING OF SF ROLLING REVENUES ROLLING ROLLING
------------------------------------------------------------------------------------------------------------------------------------
Vacant -- -- 10% 10% -- --
------------------------------------------------------------------------------------------------------------------------------------
2007 7 $9.02 10% 20% 7% 7%
------------------------------------------------------------------------------------------------------------------------------------
2008 5 $16.32 6% 26% 7% 14%
------------------------------------------------------------------------------------------------------------------------------------
2009 3 $15.86 1% 27% 1% 16%
------------------------------------------------------------------------------------------------------------------------------------
2010 2 $18.37 12% 39% 16% 32%
------------------------------------------------------------------------------------------------------------------------------------
2011 6 $13.86 10% 49% 10% 42%
------------------------------------------------------------------------------------------------------------------------------------
2012 3 $15.93 16% 65% 19% 61%
------------------------------------------------------------------------------------------------------------------------------------
2013 2 $15.39 8% 73% 9% 70%
------------------------------------------------------------------------------------------------------------------------------------
2014 5 $17.32 13% 86% 17% 87%
------------------------------------------------------------------------------------------------------------------------------------
2015 -- -- -- 86% -- 87%
------------------------------------------------------------------------------------------------------------------------------------
2016 4 $15.14 9% 96% 10% 97%
------------------------------------------------------------------------------------------------------------------------------------
2017 & Beyond 2 $8.48 4% 100% 3% 100%
------------------------------------------------------------------------------------------------------------------------------------
The following table presents certain information relating to the major
tenants at the Scripps Center Property:
------------------------------------------------------------------------------------------------------------------------------------
CREDIT RATING % OF TOTAL ANNUALIZED
(FITCH/ ANNUALIZED ANNUALIZED CONTRACT RENT LEASE
TENANT NAME MOODY'S/S&P)(1) TENANT NRSF % OF NRSF CONTRACT RENT ($) CONTRACT RENT ($ PER NRSF) EXPIRATION
------------------------------------------------------------------------------------------------------------------------------------
The E.W. Scripps Company --/A2/A 105,745 19% $1,328,995 18% $12.57 Various (2)
------------------------------------------------------------------------------------------------------------------------------------
Thompson Hine LLP --/--/-- 59,926 11% $1,108,631 15% $18.50 12/31/2010
------------------------------------------------------------------------------------------------------------------------------------
Ernst & Young U.S. LLP --/--/-- 32,638 6% $504,257 7% $15.45 8/31/2013
------------------------------------------------------------------------------------------------------------------------------------
UBS Financial Services, Inc. AA+/Aa2/AA+ 18,832 3% $410,947 6% $21.82 4/30/2014
------------------------------------------------------------------------------------------------------------------------------------
TOTAL/WEIGHTED AVERAGE 217,141 40% $3,352,830 46% $15.44
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Other Tenants NAP 273,206 50% $3,982,704 54% $14.58 Various
------------------------------------------------------------------------------------------------------------------------------------
Vacant Space NAP 53,269 10% $0.00 0% $0.00 NAP
------------------------------------------------------------------------------------------------------------------------------------
TOTAL/WEIGHTED AVERAGE 543,616 100% $7,335,534 100% $14.96
------------------------------------------------------------------------------------------------------------------------------------
(1) Certain ratings are those of the parent company whether or not the parent
guarantees the lease.
(2) The E.W Scripps Company has various lease expirations. 83,239 square feet
expiring November 30, 2012; 22,506 square feet expiring April 24, 2007
with the tenant currently negotiating to sign a permanent lease for this
space.
ESCROWS AND RESERVES. At closing the Scripps Center Borrower deposited
$450,000 to cover free rent holdback. Also on May 1, 2010 the Scripps Center
Borrower shall either post a letter of credit in the amount of $1,500,000 or
begin monthly escrow deposits of $34,000 to be capped at $1,500,000 for TI/LC's.
Additionally, upon the occurrence of an event of default, the Scripps Center
Borrower is required to deposit monthly 1/12 of the estimated annual insurance
premium costs.
LOCKBOX AND CASH MANAGEMENT. A hard lockbox is in place with respect to
the Scripps Center Loan.
PROPERTY MANAGEMENT. The Scripps Center Property is managed by The
Mayerson Company, which is an affiliate of the Scripps Center Borrower. The
Mayerson Company (TMC) was founded in 1949 by Manuel Mayerson.
MEZZANINE LOAN AND PREFERRED EQUITY INTEREST. Future mezzanine financing
is permitted subject to various conditions including: (i) the amount will not
result in an aggregate LTV greater than 90% and DSCR less than 1.10x; (ii)
lender must approve the mezzanine lender and financing documents and mortgage
loan lender shall enter into an intercreditor agreement with mezzanine lender;
and (iii) the ability to obtain mezzanine debt is personal to the current
Scripps Center Borrower and any successor or assign of the Scripps Center
Borrower under the Scripps Center Loan.
ADDITIONAL SECURED INDEBTEDNESS (NOT INCLUDING TRADE DEBTS). Not allowed.
RELEASE OF PARCELS. Not allowed.
Certain additional information regarding the Scripps Center Loan and the
Scripps Center Property is set forth on Appendix II hereto.
IV-20
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MORTGAGE LOAN NO. 5 - ACADEMY SPORTS HQ
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IV-21
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MORTGAGE LOAN NO. 5 - ACADEMY SPORTS HQ
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IV-22
--------------------------------------------------------------------------------
MORTGAGE LOAN NO. 5 - ACADEMY SPORTS HQ
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
LOAN INFORMATION
--------------------------------------------------------------------------------
ORIGINAL BALANCE: $68,250,000
CUT-OFF DATE BALANCE: $68,250,000
LOAN PURPOSE: Acquisition
SHADOW RATING (S&P/FITCH/DBRS): NAP
FIRST PAYMENT DATE: March 1, 2007
INTEREST RATE: 5.606%
AMORTIZATION: Interest Only
ARD: February 1, 2017
HYPERAMORTIZATION: After the ARD, the loan interest
rate steps up to the greater of (i)
the 7.606%, and (ii) the then
current Ten Year Treasury Yield
plus two percent (2%) per annum,
provided, however, the interest
rate shall not exceed 10.606%
MATURITY DATE: February 1, 2037
EXPECTED ARD BALANCE: $68,250,000
SPONSOR: The Cole Companies
INTEREST CALCULATION: Actual/360
CALL PROTECTION: Locked out until 2 years after the
REMIC "start-up" date, with U.S.
Treasury defeasance thereafter.
Prepayable without penalty on or
after November 1, 2016.
LOAN PER SF: $46.92
UP-FRONT RESERVES: None
ONGOING RESERVES: RE Tax: Springing
Insurance: Springing
Cap Ex: Springing
LOCKBOX: Springing Hard
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PROPERTY INFORMATION
--------------------------------------------------------------------------------
SINGLE ASSET/PORTFOLIO: Single Asset
PROPERTY TYPE: Industrial
PROPERTY SUB-TYPE: Warehouse
LOCATION: Katy, TX
YEAR BUILT/RENOVATED: 1976-2006 / NAP
PERCENT LEASED(1): 100.0%
SQUARE FOOTAGE: 1,454,563
THE COLLATERAL: Warehouse and distribution facility
OWNERSHIP INTEREST: Fee
PROPERTY MANAGEMENT: Cole Realty Advisors, Inc.
3RD MOST RECENT NOI (AS OF): NAP
2ND MOST RECENT NOI (AS OF): NAP
MOST RECENT NOI (AS OF): NAP
U/W NET OP. INCOME: $6,552,378
U/W NET CASH FLOW: $6,210,294
U/W OCCUPANCY: 95.0%
APPRAISED VALUE: $103,400,000
CUT-OFF DATE LTV: 66.0%
ARD LTV: 66.0%
DSCR: 1.60x
POST IO DSCR: NAP
--------------------------------------------------------------------------------
(1) Percent leased is based on the lease expiring in 2027.
THE ACADEMY SPORTS HQ LOAN.
THE LOAN. The fifth largest loan (the "Academy Sports HQ Loan") is
evidenced by a promissory note and is secured by a first priority deed of trust
on the Academy Sports HQ industrial property located in Katy, Texas (the
"Academy Sports HQ Property"). The Academy Sports HQ Loan was originated on
January 18, 2007 by Bear Stearns Commercial Mortgage, Inc.
THE BORROWER. The borrower is Cole AS Katy TX, LP, a Delaware limited
partnership (the "Academy Sports HQ Borrower") that owns no material assets
other than the Academy Sports HQ Property. The Academy Sports HQ Borrower is
indirectly owned by the Cole Companies, through its private real estate
investment trust, Cole Credit Property Trust II, Inc. The Cole Companies
("Cole"), together with its subsidiaries and affiliates, is a fully-integrated
real estate company providing a variety of services. As of January 31, 2007,
Cole's consolidated portfolio of owned and managed assets includes 229
properties comprising 8.6 million square feet purchased for approximately $1.5
billion.
THE PROPERTY. The Academy Sports HQ Property is a 1,454,563 square foot
warehouse distribution center located in Katy, Texas, approximately 30 miles
west of downtown Houston. The property is situated on North Mason Road
approximately 1/2 mile form the IH-10 (Katy Highway). The Academy Sports HQ
Property is 100% leased by Academy, Ltd. which utilizes the facility as its
headquarters location and sole distribution center. Academy Sports & Outdoors is
a national sporting goods retailer which operates approximately 94 stores in 10
states. The Academy Sports HQ Property consists of four primary buildings
constructed between 1976 through 2006 and includes approximately 7% office
space, 251 loading docks, two drive-in ramps and ceiling heights ranging from 24
to 54 feet.
IV-23
The following table presents certain information relating to the lease
rollover at the Academy Sports HQ Property:
------------------------------------------------------------------------------------------------------------------------------------
LEASE ROLLOVER SCHEDULE
% OF TOTAL
AVERAGE UNDERWRITTEN BASE CUMULATIVE % OF TOTAL
# OF LEASES UNDERWRITTEN BASE % OF TOTAL SF CUMULATIVE % OF RENTAL REVENUES UNDERWRITTEN BASE
YEAR ROLLING RENT PER SF ROLLING ROLLING SF ROLLING ROLLING RENTAL REVENUES ROLLING
------------------------------------------------------------------------------------------------------------------------------------
Vacant -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
2007 -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
2008 -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
2009 -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
2010 -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
2011 -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
2012 -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
2013 -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
2014 -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
2015 -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
2016 -- -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------------
2017 & Beyond 1 $4.84 100% 100% 100% 100%
------------------------------------------------------------------------------------------------------------------------------------
The following table presents certain information relating to the tenant at
the Academy Sports HQ Property:
------------------------------------------------------------------------------------------------------------------------------------
% OF TOTAL ANNUALIZED
CREDIT RATING ANNUALIZED ANNUALIZED UNDERWRITTEN
(FITCH/ UNDERWRITTEN UNDERWRITTEN BASE RENT LEASE
TENANT NAME MOODY'S/S&P) TENANT NRSF % OF NRSF BASE RENT ($) BASE RENT ($ PER NRSF) EXPIRATION
------------------------------------------------------------------------------------------------------------------------------------
Academy, Ltd. --/--/-- 1,454,563 100% $7,038,000 100% $4.84 01/31/2027
------------------------------------------------------------------------------------------------------------------------------------
TOTAL/WEIGHTED AVERAGE 1,454,563 100% $7,038,000 100% $4.84
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Other Tenants NAP 0 0% $0 0% $0.00 NAP
------------------------------------------------------------------------------------------------------------------------------------
Vacant Space NAP 0 0% $0 0% $0.00 NAP
------------------------------------------------------------------------------------------------------------------------------------
TOTAL/WEIGHTED AVERAGE 1,454,563 100% $7,038,000 100% $4.84
------------------------------------------------------------------------------------------------------------------------------------
ESCROWS AND RESERVES. Real estate tax and insurance reserves spring if the
Academy Sports HQ Borrower fails to provide evidence of payment or evidence of
adequate insurance or an event of default occurs. Cap Ex reserve springs if the
Academy Sports HQ Borrower fails to provide evidence of property maintenance or
an event of default occurs.
LOCKBOX AND CASH MANAGEMENT. A springing hard lockbox is in place with
respect to the Academy Sports HQ Loan. A cash management event is triggered upon
(i) the occurrence of an event of default, (ii) the bankruptcy of the Academy
Sports HQ Borrower, property manager or tenant, (iii) the tenant ceasing to
operate its business at the property, or (iv) the failure of the Academy Sports
HQ Borrower to repay the Academy Sports HQ Loan at least one month prior to the
Anticipated Repayment Date.
PROPERTY MANAGEMENT. The Academy Sports HQ Property is managed by Cole
Realty Advisors, Inc., an affiliate of the Academy Sports HQ Borrower.
MEZZANINE LOAN AND PREFERRED EQUITY INTEREST. Not allowed.
ADDITIONAL SECURED INDEBTEDNESS (NOT INCLUDING TRADE DEBTS). Not allowed.
RELEASE OF PARCELS. The Academy Sports HQ Borrower is permitted to release
two currently unimproved portions of the Academy Sports HQ Property, referred to
as Tract 3 and Tract 4, subject to the satisfaction of certain conditions under
the mortgage loan documents, including but not limited to: (i) the payment of
the applicable release amount ($379,500 for Tract 3 and $796,950 for Tract 4)
plus a prepayment premium calculated on the basis of the greater of a yield
maintenance formula and 3.0% of the amount prepaid, (ii) the Academy Sports HQ
Borrower will provide a written request for release of (a) Tract 3 no later than
September 29, 2011 and (b) Tract 4 no later than April 10, 2008, (iii) the DSCR
immediately following such release is not less than the greater of 1.62x or the
DSCR immediately prior to such release, and (iv) the LTV immediately following
such release is not greater than the lesser of 66% or the LTV immediately prior
to such release.
Certain additional information regarding the Academy Sports HQ Loan and
the Academy Sports HQ Property is set forth on Appendix II hereto.
IV-24
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MORTGAGE LOAN NO. 6 - VIAD CORPORATE CENTER
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IV-25
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MORTGAGE LOAN NO. 6 - VIAD CORPORATE CENTER
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[MAP OF VIAD CORPORATE CENTER OMITTED]
IV-26
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MORTGAGE LOAN NO. 6 - VIAD CORPORATE CENTER
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
LOAN INFORMATION
--------------------------------------------------------------------------------
ORIGINAL BALANCE: $65,000,000
CUT-OFF DATE BALANCE: $65,000,000
LOAN PURPOSE: Acquisition
SHADOW RATING (S&P/FITCH/DBRS): NAP
FIRST PAYMENT DATE: January 1, 2007
INTEREST RATE: 6.112%
AMORTIZATION: Interest Only
ARD: NAP
HYPERAMORTIZATION: NAP
MATURITY DATE: December 1, 2016
EXPECTED MATURITY BALANCE: $65,000,000
SPONSORS: JP Morgan Real Estate Growth and
Income Fund and McCarthy Cook & Co.
INTEREST CALCULATION: Actual/360
CALL PROTECTION: Locked out until the earlier of
November 10, 2009 or 2 years after
the REMIC "start-up" date, with
U.S. Treasury defeasance or the
payment of the greater of a yield
maintenance premium and 1% of the
principal balance thereafter.
Prepayable without penalty from and
after June 1, 2016.
LOAN PER SF: $136.43
UP-FRONT RESERVES: Insurance: $250,000
TI/LC: $114,245
ONGOING RESERVES: RE Tax: Springing
Insurance: Springing
Cap Ex: Springing
TI/LC: Springing
LOCKBOX: Hard
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PROPERTY INFORMATION
--------------------------------------------------------------------------------
SINGLE ASSET/PORTFOLIO: Single Asset
PROPERTY TYPE: Office
PROPERTY SUB-TYPE: Urban
LOCATION: Phoenix, AZ
YEAR BUILT/RENOVATED: 1990-1991 / 2004-2006
PERCENT LEASED(1): 88.6%
SQUARE FOOTAGE: 476,424
THE COLLATERAL: 24-story, Class "A" urban office
building
OWNERSHIP INTEREST: Fee
PROPERTY MANAGEMENT: McCarthy Cook & Co.
3RD MOST RECENT NOI (AS OF): $6,060,193 (TTM 12/31/2004)
2ND MOST RECENT NOI (AS OF): $5,992,742 (TTM 12/31/2005)
MOST RECENT NOI (AS OF): $5,619,455 (TTM 12/31/2006)
U/W NET OP. INCOME: $5,552,717
U/W NET CASH FLOW: $4,938,942
U/W OCCUPANCY: 88.5%
APPRAISED VALUE: $105,550,000
CUT-OFF DATE LTV: 61.6%
MATURITY DATE LTV: 61.6%
DSCR: 1.23x
POST IO DSCR: NAP
--------------------------------------------------------------------------------
(1) Percent leased is based on the rent roll dated December 1, 2006.
THE VIAD CORPORATE CENTER LOAN.
THE LOAN. The sixth largest loan (the "Viad Corporate Center Loan") is
evidenced by a promissory note and is secured by a first priority deed of trust
on the Viad Corporate Center office property located in Phoenix, Arizona (the
"Viad Corporate Center Property"). The Viad Corporate Center Loan was originated
on November 10, 2006 by Bear Stearns Commercial Mortgage, Inc.
THE BORROWER. The borrower is MCC/ I&G Viad Office Tower Owner, LLC, a
Delaware limited liability company (the "Viad Corporate Center Borrower") that
owns no material assets other than the Viad Corporate Center Property and
related interests. The Viad Corporate Center Borrower is indirectly owned by JP
Morgan Real Estate Growth and Income Fund ("JP Morgan") and McCarthy Cook & Co.
("MCC"). JP Morgan began its investment activities in February 2002. With four
years of operations, the portfolio had a net asset value of $1.161 billion as of
September 30, 2006. MCC is a real estate investment and development company
focused on the investment in, and management of, commercial and mixed-use
properties in the western United States. Since 1995, MCC has acquired
approximately $1.4 billion of properties with its partners.
THE PROPERTY. The Viad Corporate Center Property is a class 'A', 24-story,
476,424 square foot urban office building located in Phoenix, Arizona.
Originally built between 1990-1991 as Dial Corporation's corporate headquarters,
the property contains finishes and amenities that exceed typical class 'A'
standards in the market. The reported construction costs were approximately $118
million, or $250 per square foot. The Viad Corporate Center Property is located
on North Central Avenue just north of Interstate 10 in the Arts District of the
IV-27
Phoenix Central Business District. Consequently, the property has access to both
the midtown and downtown commercial cores, as well as to major highways, public
transportation and government facilities. It is located across the street from
the Phoenix Art Museum. The building features a polished granite exterior with
dual pane tinted windows and a lobby with a 20-foot ceiling, granite finishes
and expansive glass curtain walls. The landscaping includes a waterfall and a
free-form stream stretching 274 feet through the property. Amenities at the
property include an auditorium and conference facilities for over 150 people, a
dining facility, a multi-level professionally staffed fitness center, an
in-house performing arts theater, a bank branch and 24-hour security. In
addition, there are over 6,000 square feet of specialty retail shops. The total
number of parking spaces at the Viad Corporate Center Property is 1,250 spaces,
of which 1,131 are located in an attached eight level parking garage. The Viad
Corporate Center Property is currently 88.6% leased to over 25 tenants. Major
tenants at the property include Viad Corp., LandAmerica Financial Group, Inc.,
and PricewaterhouseCoopers LLP.
The following table presents certain information relating to the lease
rollover at the Viad Corporate Center Property:
------------------------------------------------------------------------------------------------------------------------------------
LEASE ROLLOVER SCHEDULE
------------------------------------------------------------------------------------------------------------------------------------
% OF TOTAL
AVERAGE UNDERWRITTEN BASE CUMULATIVE % OF TOTAL
# OF LEASES UNDERWRITTEN BASE % OF TOTAL SF CUMULATIVE % OF RENTAL REVENUES UNDERWRITTEN BASE
YEAR ROLLING RENT PER SF ROLLING ROLLING SF ROLLING ROLLING RENTAL REVENUES ROLLING
------------------------------------------------------------------------------------------------------------------------------------
Vacant -- -- 11% 11% -- --
------------------------------------------------------------------------------------------------------------------------------------
MTM 11 $1.63 3% 14% 0% 0%
------------------------------------------------------------------------------------------------------------------------------------
2007 3 $5.10 1% 15% 0% 1%
------------------------------------------------------------------------------------------------------------------------------------
2008 4 $18.69 1% 17% 1% 2%
------------------------------------------------------------------------------------------------------------------------------------
2009 9 $22.48 19% 36% 25% 27%
------------------------------------------------------------------------------------------------------------------------------------
2010 13 $16.76 9% 45% 9% 36%
------------------------------------------------------------------------------------------------------------------------------------
2011 8 $19.97 42% 87% 49% 85%
------------------------------------------------------------------------------------------------------------------------------------
2012 1 $22.50 3% 90% 4% 89%
------------------------------------------------------------------------------------------------------------------------------------
2013 -- -- -- 90% -- 89%
------------------------------------------------------------------------------------------------------------------------------------
2014 -- -- -- 90% -- 89%
------------------------------------------------------------------------------------------------------------------------------------
2015 -- -- -- 90% -- 89%
------------------------------------------------------------------------------------------------------------------------------------
2016 3 $20.21 5% 95% 5% 94%
------------------------------------------------------------------------------------------------------------------------------------
2017 & Beyond 2 $19.85 5% 100% 6% 100%
------------------------------------------------------------------------------------------------------------------------------------
The following table presents certain information relating to the tenants
at the Viad Corporate Center Property:
------------------------------------------------------------------------------------------------------------------------------------
% OF TOTAL ANNUALIZED
CREDIT RATING ANNUALIZED ANNUALIZED UNDERWRITTEN
(FITCH/ UNDERWRITTEN UNDERWRITTEN BASE RENT LEASE
TENANT NAME MOODY'S/S&P)(1) TENANT NRSF % OF NRSF BASE RENT ($) BASE RENT ($ PER NRSF) EXPIRATION
------------------------------------------------------------------------------------------------------------------------------------
Viad Corp (2) --/--/-- 158,222 33% $3,136,000 38% $19.82 08/31/2011
------------------------------------------------------------------------------------------------------------------------------------
LandAmerica Financial Group, Inc. BBB-/--/BBB- 59,126 12% $1,282,393 16% $21.69 02/28/2009
------------------------------------------------------------------------------------------------------------------------------------
PricewaterhouseCoopers LLP --/--/-- 25,421 5% $660,946 8% $26.00 11/30/2009
------------------------------------------------------------------------------------------------------------------------------------
Oce Reprographic Technologies --/--/-- 19,982 4% $419,622 5% $21.00 08/31/2011
------------------------------------------------------------------------------------------------------------------------------------
Cramer-Krasselt Co. --/--/-- 19,650 4% $380,228 5% $19.35 08/31/2017
------------------------------------------------------------------------------------------------------------------------------------
TOTAL/WEIGHTED AVERAGE 282,401 59% $5,879,189 72% $20.82
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Other Tenants NAP 139,922 29% $2,338,351 28% $16.71 Various
------------------------------------------------------------------------------------------------------------------------------------
Vacant Space NAP 54,101 11% $0 0% $0.00 NAP
------------------------------------------------------------------------------------------------------------------------------------
TOTAL/WEIGHTED AVERAGE 476,424 100% $8,217,540 100% $17.25
------------------------------------------------------------------------------------------------------------------------------------
(1) Certain ratings are those of the parent company whether or not the parent
guarantees the lease.
(2) Viad Corp subleases 114,576 square feet of its space (72.4% of Viad Corp's
space; 24% of total property NRSF) to various subtenants. Viad Corp
currently occupies 34,274 square feet of their remaining space while 9,372
square feet are currently dark.
ESCROWS AND RESERVES. Real estate tax and insurance reserves spring if the
Viad Corporate Center Borrower fails to provide evidence of payment or upon the
occurrence of an event of default. Cap Ex reserve springs if the DSCR for the
preceding six month period is less than 1.10x. Upon the occurrence and during
the continuance of an event of default, the Viad Corporate Center Borrower is
required to deposit $41,667 per month in a rollover reserve.
LOCKBOX AND CASH MANAGEMENT. A hard lockbox is in place with respect to
the Viad Corporate Center Loan.
PROPERTY MANAGEMENT. The Viad Corporate Center Property is managed by
McCarthy Cook & Co., an affiliate of the Viad Corporate Center Borrower.
MEZZANINE LOAN AND PREFERRED EQUITY INTEREST. Not allowed.
ADDITIONAL SECURED INDEBTEDNESS (NOT INCLUDING TRADE DEBTS). The Viad
Corporate Center Borrower is permitted to incur future additional secured debt,
subject to the satisfaction of certain conditions set forth in the mortgage loan
documents, including but not limited to: (i) the DSCR on the aggregate debt must
be greater than 1.25x; (ii) the LTV on the aggregate debt must be less than or
equal to 75%;
IV-28
(iii) the execution of an acceptable subordination and standstill agreement, and
(iv) the delivery of a rating agency confirmation of no downgrade of the ratings
on the series 2007-TOP26 certificates.
RELEASE OF PARCELS. Not allowed.
Certain additional information regarding the Viad Corporate Center Loan
and the Viad Corporate Center Property is set forth on Appendix II hereto.
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MORTGAGE LOAN NO. 7 - 909 A STREET
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[PHOTOS OF 909 A STREET OMITTED]
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MORTGAGE LOAN NO. 7 - 909 A STREET
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[MAP OF 909 A STREET OMITTED]
IV-32
--------------------------------------------------------------------------------
MORTGAGE LOAN NO. 7 - 909 A STREET
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
LOAN INFORMATION
--------------------------------------------------------------------------------
ORIGINAL BALANCE: $48,000,000
CUT-OFF DATE BALANCE: $48,000,000
LOAN PURPOSE: Acquisition
SHADOW RATING (S&P/FITCH/DBRS): NAP
FIRST PAYMENT DATE: March 1, 2007
INTEREST RATE: 5.530%
AMORTIZATION: Interest Only
ARD: February 1, 2017
HYPERAMORTIZATION: After the ARD, the loan interest rate
steps up to the greater of (i) 8.03%
or (ii) U.S. Treasury Issue rounded up
to the nearest basis point plus 2.5%.
MATURITY DATE: February 1, 2037
EXPECTED MATURITY BALANCE: $48,000,000
SPONSOR: Ilahie Holding, Inc.
INTEREST CALCULATION: Actual/360
CALL PROTECTION: Locked out until the earlier of March
1, 2011 or 2 years after the REMIC
"start-up" day, with U.S. Treasury
defeasance thereafter. Prepayable
without penalty from and after
November 1, 2016.
LOAN PER SF: $228.37
UP-FRONT RESERVES: None
ONGOING RESERVES: RE Tax: Springing
Insurance: Springing
TI/LC: Springing
LOCKBOX: Hard
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PROPERTY INFORMATION
--------------------------------------------------------------------------------
SINGLE ASSET/PORTFOLIO: Single Asset
PROPERTY TYPE: Office
PROPERTY SUB-TYPE: Urban
LOCATION: Tacoma, WA
YEAR BUILT/RENOVATED: 1988 / NAP
PERCENT LEASED(1): 100.0%
SQUARE FOOTAGE: 210,186
THE COLLATERAL: 13-story office building
OWNERSHIP INTEREST: Fee
PROPERTY MANAGEMENT: Egis Real Estate Services
3RD MOST RECENT NOI (AS OF): NAP
2ND MOST RECENT NOI (AS OF): $4,055,785 (TTM 12/31/2004)
MOST RECENT NOI (AS OF): $4,241,695 (TTM 12/31/2005)
U/W NET OP. INCOME: $4,170,858
U/W NET CASH FLOW: $3,952,266
U/W OCCUPANCY: 96.0%
APPRAISED VALUE: $64,000,000
CUT-OFF DATE LTV: 75.0%
MATURITY DATE LTV: 75.0%
DSCR: 1.47x
POST IO DSCR: NAP
--------------------------------------------------------------------------------
(1) Percent leased is based on the rent roll dated December 20, 2006.
THE 909 A STREET LOAN.
THE LOAN. The seventh largest loan ("909 A Street Loan") as evidenced by
the Secured Promissory Note (the "909 A Street Note") is secured by a first
priority Deed of Trust, Security Agreement, and Assignment of Rents ("909 A
Street Note Mortgage") encumbering the office building containing 210,186 square
feet known as 909 A Street, located in Tacoma, Washington (the "909 A Street
Property"). The 909 A Street Loan was originated on January 5, 2007 by or on
behalf of Principal Commercial Funding II, LLC.
THE BORROWER. The borrower is 909 A Street LLC. The Borrower is 100% owned
by Ilahie Holding, Inc. Saltchuk Resources, Inc. ("Saltchuk") is the sole equity
investor in Ilahie Holding, Inc. Saltchuk is a privately owned family investment
company formed in 1982 and based in the Pacific Northwest. Saltchuk has a
reported $1.2 billion of assets and $900 million in revenues invested in twelve
operating companies in several different business groups, including deep water
shipping, ship management, tug and barge operations, fuel distribution, and real
estate holdings. Combined, Saltchuk employs over 4,000 people.
THE PROPERTY. The 909 A Street Property consists of a 13-story office
building constructed in 1988 containing 210,186 square feet of NRA. The property
has a state of the art trading floor that operates 21 hours a day, a full
service cafeteria and observation decks on the upper floors. There are 230
on-site parking spaces via two levels of underground parking and 253 off-site
parking spaces in an adjacent city parking garage that the tenant leases from
the city (2.30/1,000 square feet total). The 909 A Street Property is located on
909 A Street at the intersection of 9th St and A St. The 909 A Street Property
has access to I-705 via an on ramp at the property's northern boundary. There
are several methods of public transportation in close proximity including the
light rail, The Sounder commuter train, city bus routes and ferry service.
IV-33
The following table presents certain information relating to the lease
rollover at 909 A Street Property:
--------------------------------------------------------------------------------------------------------------------------------
LEASE ROLLOVER SCHEDULE
AVERAGE
# OF CONTRACT BASE CUMULATIVE % OF TOTAL CUMULATIVE % OF TOTAL
LEASES RENT PER SF % OF TOTAL SF % OF SF CONTRACT RENTAL CONTRACT RENTAL
YEAR ROLLING ROLLING ROLLING ROLLING REVENUES ROLLING REVENUES ROLLING
--------------------------------------------------------------------------------------------------------------------------------
Vacant -- -- -- -- -- --
--------------------------------------------------------------------------------------------------------------------------------
2007 -- -- -- -- -- --
--------------------------------------------------------------------------------------------------------------------------------
2008 -- -- -- -- -- --
--------------------------------------------------------------------------------------------------------------------------------
2009 -- -- -- -- -- --
--------------------------------------------------------------------------------------------------------------------------------
2010 -- -- -- -- -- --
--------------------------------------------------------------------------------------------------------------------------------
2011 -- -- -- -- -- --
--------------------------------------------------------------------------------------------------------------------------------
2012 -- -- -- -- -- --
--------------------------------------------------------------------------------------------------------------------------------
2013 1 $21.11 100% 100% 100% 100%
--------------------------------------------------------------------------------------------------------------------------------
2014 -- -- -- 100% -- 100%
--------------------------------------------------------------------------------------------------------------------------------
2015 -- -- -- 100% -- 100%
--------------------------------------------------------------------------------------------------------------------------------
2016 -- -- -- 100% -- 100%
--------------------------------------------------------------------------------------------------------------------------------
2017 & Beyond -- -- -- 100% -- 100%
--------------------------------------------------------------------------------------------------------------------------------
The following table presents certain information relating to the major
tenants at the 909 A Street Property:
--------------------------------------------------------------------------------------------------------------------------------
ANNUALIZED
CREDIT RATING ANNUALIZED % OF TOTAL CONTRACT
(FITCH/ TENANT CONTRACT RENT ANNUALIZED RENT LEASE
TENANT NAME MOODY'S/S&P)(1) NRSF % OF NRSF ($) CONTRACT RENT ($ PER NRSF) EXPIRATION
--------------------------------------------------------------------------------------------------------------------------------
Frank Russell Company AAA/Aaa/AAA 210,186 100% $4,437,894 100% $21.11 11/30/2013
--------------------------------------------------------------------------------------------------------------------------------
TOTAL/WEIGHTED AVERAGE 210,186 100% $4,437,894 100% $21.11
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
Other Tenants NAP 0 0% $0 0% $0.00 NAP
--------------------------------------------------------------------------------------------------------------------------------
Vacant Space NAP 0 0% $0 0% $0.00 NAP
--------------------------------------------------------------------------------------------------------------------------------
TOTAL/WEIGHTED AVERAGE 210,186 100% $4,437,894 100% $21.11
--------------------------------------------------------------------------------------------------------------------------------
(1) Certain ratings are those of the parent company whether or not the parent
guarantees the lease.
ESCROWS AND RESERVES. In the event Frank Russell Company has not renewed
its lease by November 30, 2011, the 909 A Street Borrower is required to either
post a letter of credit in the amount of $2,320,080, to be increased to
$4,640,160 by December 1, 2012 or deposit a monthly escrow in the amount of
$193,340 from December 1, 2011 through November 1, 2013. In the event Frank
Russell Company fails to pay $412,335 (during 2011 lease year) or $421,406 (for
2012 lease year) in rents for any month, then beginning on December 1, 2011
through November 1, 2013 the 909 A Street Borrower is required to pay an amount
equal to the rents received for such month which are not applied to payment of
principal, interest, and other loan charges, less the operating expenses
incurred for the month. Additionally, upon the occurrence of an event of
default, the 909 A Street Borrower is required to deposit monthly 1/12 of the
estimated annual taxes and insurance premium costs.
LOCKBOX AND CASH MANAGEMENT. A hard lockbox is in place with respect to
the 909 A Street Loan.
PROPERTY MANAGEMENT. The 909 A Street Property is managed by Egis Real
Estate Services ("Egis"). Egis has served the Northwest for 35 years. Egis
offers an array of commercial real estate services including development,
property, facilities and construction management, building engineering, owner's
leasing representation, lease administration and receivership services to over
50 clients.
MEZZANINE LOAN AND PREFERRED EQUITY INTEREST. Not allowed.
ADDITIONAL SECURED INDEBTEDNESS (NOT INCLUDING TRADE DEBTS). Not allowed.
RELEASE OF PARCELS. Not allowed.
Certain additional information regarding the 909 A Street Loan and the 909
A Street Property is set forth on Appendix II hereto.
IV-34
--------------------------------------------------------------------------------
MORTGAGE LOAN NO. 8 - DOUBLETREE HOTEL JERSEY CITY
--------------------------------------------------------------------------------
[PHOTOS OF DOUBLETREE HOTEL JERSEY CITY OMITTED]
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MORTGAGE LOAN NO. 8 - DOUBLETREE HOTEL JERSEY CITY
--------------------------------------------------------------------------------
[MAP OF DOUBLETREE HOTEL JERSEY CITY OMITTED]
IV-36
--------------------------------------------------------------------------------
MORTGAGE LOAN NO. 8 - DOUBLETREE HOTEL JERSEY CITY
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
LOAN INFORMATION
--------------------------------------------------------------------------------
ORIGINAL BALANCE: $45,000,000
CUT-OFF DATE BALANCE: $45,000,000
LOAN PURPOSE: Refinance
SHADOW RATING (S&P/FITCH/DBRS): NAP
FIRST PAYMENT DATE: February 1, 2007
INTEREST RATE: 5.684%
AMORTIZATION: Interest Only
ARD: NAP
HYPERAMORTIZATION: NAP
MATURITY DATE: January 1, 2017
EXPECTED MATURITY BALANCE: $45,000,000
SPONSOR: Hartz Mountain Industries,
Inc.
INTEREST CALCULATION: Actual/360
CALL PROTECTION: Locked out until December
31, 2010, with U.S. Treasury
defeasance thereafter.
Prepayable without penalty
on January 1, 2017.
LOAN PER ROOM: $227,273
UP-FRONT RESERVES: RE Tax: $67,900
Insurance: $28,076
FF&E: $36,906
ONGOING RESERVES: RE Tax: $22,633 / month
Insurance: $3,555 / month
FF&E: $36,906 / month
LOCKBOX: Hard
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PROPERTY INFORMATION
--------------------------------------------------------------------------------
SINGLE ASSET/PORTFOLIO: Single Asset
PROPERTY TYPE: Hospitality
PROPERTY SUB-TYPE: Full Service
LOCATION: Jersey City, NJ
YEAR BUILT/RENOVATED: 1998 / NAP
OCCUPANCY(1): 81.7%
ROOMS: 198
THE COLLATERAL: 198-all suite, full service
hotel
OWNERSHIP INTEREST: Fee
PROPERTY MANAGEMENT: DT Management, Inc.
3RD MOST RECENT NOI (AS OF): $3,535,789 (TTM 12/31/2004)
2ND MOST RECENT NOI (AS OF): $4,716,366 (TTM 12/31/2005)
MOST RECENT NOI (AS OF): $5,739,331 (TTM 12/31/2006)
U/W NET OP. INCOME: $5,812,760
U/W NET CASH FLOW: $5,374,802
U/W OCCUPANCY: 81.7%
APPRAISED VALUE: $69,500,000
CUT-OFF DATE LTV: 64.7%
MATURITY DATE LTV: 64.7%
DSCR: 2.07x
POST IO DSCR: NAP
--------------------------------------------------------------------------------
(1) Occupancy is based on the trailing twelve months financials dated December
31, 2006.
THE DOUBLETREE HOTEL JERSEY CITY LOAN.
THE LOAN. The eighth largest loan (the "DoubleTree Hotel Jersey City
Loan") is evidenced by a promissory note and is secured by a first priority
mortgage on the DoubleTree Hotel located in Jersey City, New Jersey (the
"DoubleTree Hotel Jersey City Property"). The DoubleTree Hotel Jersey City Loan
was originated on December 18, 2006 by Bear Stearns Commercial Mortgage, Inc.
THE BORROWER. The borrowers are Hudson Hospitality Services Urban Renewal
Associates, L.L.C. and JC Grandview Hotel, L.L.C., each a New Jersey limited
liability company (collectively the "DoubleTree Hotel Jersey City Borrower")
that owns no material assets other than the DoubleTree Hotel Jersey City
Property. The DoubleTree Hotel Jersey City Borrower is indirectly owned by Hartz
Mountain Industries, Inc. ("Hartz Mountain"). Hartz Mountain is a private owner
of commercial real estate in the U.S. Founded in 1966, the company owns and
operates a portfolio of 200 buildings in the New York/New Jersey area,
representing more than 38 million square feet of retail, hotel, office and
industrial properties. The Chairman and CEO of Hartz Mountain is Mr. Leonard N.
Stern. According to Forbes magazine, in 2006, Mr. Stern had a personal net worth
of $2.7 billion.
THE PROPERTY. The DoubleTree Hotel Jersey City Property is a 13-story,
198-room, all suite full service hotel situated in the downtown section of
Jersey City, New Jersey. The property is located at 455 Washington Boulevard,
with access to the New Jersey Turnpike, the
IV-37
Harborside Ferry, PATH Train, and the Holland Tunnel, all of which provide
access into New York City. Positioned approximately half a mile from the Holland
Tunnel, the DoubleTree Hotel Jersey City Property enjoys views of the Hudson
River and the New York City skyline. The property was originally purchased
vacant in 1996 by the sponsor, and then developed into a 198-room hotel in 1998.
The food and beverage outlet at the property is the 85-seat, 4,200 square feet
4fifty5 Restaurant & Bar, offering breakfast, lunch and dinner. The DoubleTree
Hotel Jersey City Property also includes approximately 2,600 square feet of
meeting space and additional land area with 183 surface parking spaces.
Amenities offered at the hotel include a fitness facility, a business center and
a car rental service. Typical suites feature a living room and bedroom with
microwave, refrigerator, and cable TV, tile/marble bathrooms and a queen, king
or two double beds.
--------------------------------------------------------------------------------------------------------------------------------
SUBJECT AND MARKET HISTORICAL OCCUPANCY, ADR, REVPAR
COMPETITIVE SET (1) DOUBLETREE HOTEL JERSEY CITY (2) PENETRATION FACTOR
YEAR OCCUPANCY ADR REVPAR OCCUPANCY ADR REVPAR OCCUPANCY ADR REVPAR
--------------------------------------------------------------------------------------------------------------------------------
2004 79.1% $128.24 $101.47 81.0% $125.75 $101.82 102.4% 98.1% 100.3%
--------------------------------------------------------------------------------------------------------------------------------
2005 81.7% $145.08 $118.51 82.7% $150.77 $124.61 101.2% 103.9% 105.1%
--------------------------------------------------------------------------------------------------------------------------------
2006 79.7% $162.02 $129.12 81.7% $176.79 $144.43 102.5% 109.1% 111.9%
--------------------------------------------------------------------------------------------------------------------------------
(1) Data provided by Smith Travel Research.
(2) Based on operating statements provided by the DoubleTree Hotel Jersey City
Borrower.
ESCROWS AND RESERVES. The DoubleTree Hotel Jersey City Borrower is
required to escrow 1/12 of annual real estate taxes and insurance premiums
monthly. The DoubleTree Hotel Jersey City Borrower is also required to escrow
1/12 of four percent (4%) of gross revenues for FF&E on a monthly basis. Current
escrows are shown in the table on the previous page.
LOCKBOX AND CASH MANAGEMENT. A hard lockbox is in place with respect to
the DoubleTree Hotel Jersey City Loan.
PROPERTY MANAGEMENT. The DoubleTree Hotel Jersey City Property is managed
by DT Management, Inc., an affiliate of the Hilton Hotels Corporation
("Hilton"). Hilton (NYSE: HLT) is a global hospitality company, with nearly
2,800 hotels and 485,000 rooms in more than 80 countries, with 150,000 team
members worldwide. More than 2,300 hotels are owned, managed or franchised in
the USA with a portfolio of hotel brands including Hilton(R), Conrad(R),
DoubleTree(R), Embassy Suites Hotels(R), Hampton Inn(R), Hampton Inn &
Suites(R), Hilton Garden Inn(R), Hilton Grand Vacations(TM), Homewood Suites by
Hilton(R), Scandic and The Waldorf-Astoria Collection(R).
MEZZANINE LOAN AND PREFERRED EQUITY INTEREST. Not allowed.
ADDITIONAL SECURED INDEBTEDNESS (NOT INCLUDING TRADE DEBTS). Not allowed.
RELEASE OF PARCELS. The DoubleTree Hotel Jersey City Borrower has
converted the DoubleTree Hotel Jersey City Property into four condominium units
(with the hotel as one unit and three high-rise residential buildings, each
comprising a condominium unit). Subject to the conditions set forth in the
mortgage loan documents, the three residential condominium units may be released
by the DoubleTree Hotel Jersey City Borrower without any prepayment of the
DoubleTree Hotel Jersey City Loan. BSCMI attributed no value or income to the
three residential condominium units.
Certain additional information regarding the DoubleTree Hotel Jersey City
Loan and the DoubleTree Hotel Jersey City Property is set forth on Appendix II
hereto.
IV-38
--------------------------------------------------------------------------------
MORTGAGE LOAN NO. 9 - OVERLOOK II
--------------------------------------------------------------------------------
[PHOTOS OF OVERLOOK II OMITTED]
IV-39
--------------------------------------------------------------------------------
MORTGAGE LOAN NO. 9 - OVERLOOK II
--------------------------------------------------------------------------------
[MAP OF OVERLOOK II OMITTED]
IV-40
--------------------------------------------------------------------------------
MORTGAGE LOAN NO. 9 - OVERLOOK II
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
LOAN INFORMATION
--------------------------------------------------------------------------------
ORIGINAL BALANCE: $31,500,000
CUT-OFF DATE BALANCE: $31,500,000
LOAN PURPOSE: Acquisition
SHADOW RATING (S&P/FITCH/DBRS): NAP
FIRST PAYMENT DATE: April 1, 2007
INTEREST RATE: 5.610%
AMORTIZATION: Interest Only
ARD: NAP
HYPERAMORTIZATION: NAP
MATURITY DATE: March 1, 2017
EXPECTED MATURITY BALANCE: $31,500,000
SPONSOR: Parkway Properties Office Fund
L.P.
INTEREST CALCULATION: Actual/360
CALL PROTECTION: Locked out until the earlier of
April 1, 2011 or 2 years after
the REMIC "start-up" day, with
U.S. Treasury defeasance
thereafter. Prepayable without
penalty from and after December
1, 2016.
LOAN PER SF: $123.70
UP-FRONT RESERVES: Other $196,411
ONGOING RESERVES: RE Tax: Springing
Insurance: Springing
LOCKBOX: None
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PROPERTY INFORMATION
--------------------------------------------------------------------------------
SINGLE ASSET/PORTFOLIO: Single Asset
PROPERTY TYPE: Office
PROPERTY SUB-TYPE: Suburban
LOCATION: Atlanta, GA
YEAR BUILT/RENOVATED: 1985 / NAP
PERCENT LEASED(1): 92.7%
SQUARE FOOTAGE: 254,658
THE COLLATERAL: 13-story, multi-tenant office building
OWNERSHIP INTEREST: Fee
PROPERTY MANAGEMENT: Parkway Realty Services, LLC
3RD MOST RECENT NOI (AS OF): NAP
2ND MOST RECENT NOI (AS OF): $1,684,241 (TTM 12/31/2004)
MOST RECENT NOI (AS OF): $1,584,368 (TTM 12/31/2005)
U/W NET OP. INCOME: $2,866,939
U/W NET CASH FLOW: $2,551,221
U/W OCCUPANCY: 90.0%
APPRAISED VALUE: $50,300,000
CUT-OFF DATE LTV: 62.6%
MATURITY DATE LTV: 62.6%
DSCR: 1.42x
POST IO DSCR: NAP
--------------------------------------------------------------------------------
(1) Percent leased is based on the rent roll dated February 9, 2007.
THE OVERLOOK II LOAN.
THE LOAN. The ninth largest loan (the "Overlook II Loan") as evidenced by
the Secured Promissory Note ("Overlook II Note") is secured by a first priority
Deed of Trust, Security Agreement, and Assignment of Rents (the "Overlook II
Mortgage") encumbering the office building containing 254,658 square feet known
as Overlook II, located in Atlanta, Georgia (the "Overlook II Property").
Overlook II Loan was originated on February 9, 2007 by or on behalf of Principal
Commercial Funding II, LLC.
THE BORROWER. The borrower is PKY Fund Atlanta II, LLC (the "Overlook II
Borrower"). The Overlook II Borrower is 100% owned by Parkway Properties Office
Fund LP. Parkway Properties Office Fund, LP is made up of 75% ownership from
PERS Holding Company Limited, LLC (OhioPERS) and 25% ownership from Parkway
Properties, LP ("Parkway"). Parkway is a self-administered REIT specializing in
operations, acquisition, ownership, management and leasing of office properties.
Its focus is the Southeastern and Southwestern United States and Chicago.
Parkway either owns or has an interest in 66 office properties located in 11
states with over 13 million square feet of leasable space.
THE PROPERTY. The Overlook II Property consists of one, 13-story suburban
office building with 254,658 square feet. The subject property was built in
1985. A parking structure is also included as part of the security, which
provides for 850 spaces, a parking ratio of 3.26/1,000 square feet. Onsite
amenities include a full service cafe, fitness center, mail facility, car
detailing service, 24/7 onsite security and camera monitoring with card key
access. The Overlook II Property is located at 2839 Paces Ferry Road in Atlanta
in the Overlook Office Park development. Overlook Office Park includes three
Class A office buildings and a full-service Wyndham Hotel. The site is one half
mile east of the Paces Ferry Road and I-285 interchange and is in historic
Vinings Village.
IV-41
The following table presents certain information relating to the lease
rollover at the Overlook II Property:
--------------------------------------------------------------------------------------------------------------------------------
LEASE ROLLOVER SCHEDULE
AVERAGE
# OF CONTRACT BASE CUMULATIVE % OF TOTAL CUMULATIVE % OF TOTAL
LEASES RENT PER SF % OF TOTAL SF % OF SF CONTRACT RENTAL CONTRACT RENTAL
YEAR ROLLING ROLLING ROLLING ROLLING REVENUES ROLLING REVENUES ROLLING
--------------------------------------------------------------------------------------------------------------------------------
Vacant -- -- 7% 7% -- --
--------------------------------------------------------------------------------------------------------------------------------
2007 7 $22.94 4% 12% 5% 5%
--------------------------------------------------------------------------------------------------------------------------------
2008 7 $23.33 17% 28% 20% 25%
--------------------------------------------------------------------------------------------------------------------------------
2009 3 $23.45 8% 37% 10% 35%
--------------------------------------------------------------------------------------------------------------------------------
2010 4 $21.19 4% 41% 4% 40%
--------------------------------------------------------------------------------------------------------------------------------
2011 9 $19.57 15% 56% 15% 55%
--------------------------------------------------------------------------------------------------------------------------------
2012 3 $18.64 14% 69% 13% 68%
--------------------------------------------------------------------------------------------------------------------------------
2013 2 $16.00 3% 72% 2% 71%
--------------------------------------------------------------------------------------------------------------------------------
2014 3 $21.23 11% 83% 12% 82%
--------------------------------------------------------------------------------------------------------------------------------
2015 1 $21.22 8% 91% 9% 92%
--------------------------------------------------------------------------------------------------------------------------------
2016 -- -- -- 91% -- 92%
--------------------------------------------------------------------------------------------------------------------------------
2017 & Beyond 1 $18.50 9% 100% 8% 100%
--------------------------------------------------------------------------------------------------------------------------------
The following table presents certain information relating to the major
tenants at the Overlook II Property:
--------------------------------------------------------------------------------------------------------------------------------
ANNUALIZED
CREDIT RATING ANNUALIZED % OF TOTAL CONTRACT
(FITCH/ CONTRACT ANNUALIZED RENT LEASE
TENANT NAME MOODY'S/S&P)(1) TENANT NRSF % OF NRSF RENT ($) CONTRACT RENT ($ PER NRSF) EXPIRATION
--------------------------------------------------------------------------------------------------------------------------------
Manugistics --/B1/B+ 30,437 12% $776,752 16% $25.52 03/31/2008
--------------------------------------------------------------------------------------------------------------------------------
Carecentric --/--/-- 21,976 9% $428,532 9% $19.50 08/31/2012
--------------------------------------------------------------------------------------------------------------------------------
Insurance Office of America --/--/-- 21,976 9% $406,556 8% $18.50 02/28/2017
--------------------------------------------------------------------------------------------------------------------------------
Nissan North America, Inc. A-/Baa1/BBB+ 21,506 8% $456,314 9% $21.22 06/30/2015
--------------------------------------------------------------------------------------------------------------------------------
Ayco (Goldman Sachs) AA-/Aa3/AA- 18,941 7% $424,320 9% $22.40 08/31/2014
--------------------------------------------------------------------------------------------------------------------------------
American Appraisal --/--/-- 15,954 6% $384,774 8% $24.12 12/31/2009
--------------------------------------------------------------------------------------------------------------------------------
TOTAL/WEIGHTED AVERAGE 130,790 51% $2,877,248 59% $22.00
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
Other Tenants NAP 105,245 41% $2,035,274 41% $19.34 Various
--------------------------------------------------------------------------------------------------------------------------------
Vacant Space NAP 18,623 7% $0.00 0% $0.00 NAP
--------------------------------------------------------------------------------------------------------------------------------
TOTAL/WEIGHTED AVERAGE 254,658 100% $4,912,522 100% $20.81
--------------------------------------------------------------------------------------------------------------------------------
(1) Certain ratings are those of the parent company whether or not the parent
guarantees the lease.
ESCROWS AND RESERVES. At closing the Overlook II Borrower deposited
$196,411 to cover rent abatement. Upon the occurrence of an event of default,
the Overlook II Borrower is required to deposit monthly 1/12 of the estimated
annual taxes and insurance premium costs.
LOCKBOX AND CASH MANAGEMENT. None.
PROPERTY MANAGEMENT. The Overlook II Property is managed by Parkway Realty
Services, LLC which is an affiliate of the Overlook II Borrower. Parkway Realty
Services, LLC manages and/or leases approximately 2.8 million square feet for
third party clients (including joint ventures and minority interests), in
addition to the properties owned by Parkway.
MEZZANINE LOAN AND PREFERRED EQUITY INTEREST. Not allowed.
ADDITIONAL SECURED INDEBTEDNESS (NOT INCLUDING TRADE DEBTS). Not allowed.
RELEASE OF PARCELS. Not allowed.
Certain additional information regarding the Overlook II Loan and the
Overlook II Property is set forth on Appendix II hereto.
IV-42
--------------------------------------------------------------------------------
MORTGAGE LOAN NO. 10 - THE SHOPS AT SHERMAN PLAZA
--------------------------------------------------------------------------------
[PHOTOS OF THE SHOPS AT SHERMAN PLAZA OMITTED]
IV-43
--------------------------------------------------------------------------------
MORTGAGE LOAN NO. 10 - THE SHOPS AT SHERMAN PLAZA
--------------------------------------------------------------------------------
[MAP OF THE SHOPS AT SHERMAN PLAZA OMITTED]
IV-44
--------------------------------------------------------------------------------
MORTGAGE LOAN NO. 10 - THE SHOPS AT SHERMAN PLAZA
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
LOAN INFORMATION
--------------------------------------------------------------------------------
ORIGINAL BALANCE: $30,275,000
CUT-OFF DATE BALANCE: $30,275,000
LOAN PURPOSE: Acquisition
SHADOW RATING (S&P/FITCH/DBRS): NAP
FIRST PAYMENT DATE: April 1, 2007
INTEREST RATE: 5.569%
AMORTIZATION: Interest Only
ARD: NAP
HYPERAMORTIZATION: NAP
MATURITY DATE: March 1, 2017
EXPECTED ARD BALANCE: $30,275,000
SPONSORS: Minto Builders (Florida), Inc. &
Inland American Real Estate Trust,
Inc.
INTEREST CALCULATION: 30/360
CALL PROTECTION: Locked out through February 28,
2010. In connection with any
voluntary prepayment, the borrower
must pay a premium equal to the
greater of a yield maintenance
premium and 1% of the principal
balance. Prepayable without penalty
from and after February 1, 2017.
LOAN PER SF: $198.93
UP-FRONT RESERVES: Other: $6,025,000
ONGOING RESERVES: RE Tax: Springing
Insurance: Springing
Cap Ex: Springing
Other: Springing
TI/LC: Springing
LOCKBOX: Springing Hard
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PROPERTY INFORMATION
--------------------------------------------------------------------------------
SINGLE ASSET/PORTFOLIO: Single Asset
PROPERTY TYPE: Retail
PROPERTY SUB-TYPE: Anchored
LOCATION: Evanston, IL
YEAR BUILT/RENOVATED: 2006 / NAP
PERCENT LEASED(1): 87.6%
SQUARE FOOTAGE: 152,187
THE COLLATERAL: Anchored retail center
OWNERSHIP INTEREST: Fee/Leasehold
PROPERTY MANAGEMENT: Inland American Retail Management LLC
3RD MOST RECENT NOI (AS OF): NAP
2ND MOST RECENT NOI (AS OF): NAP
MOST RECENT NOI (AS OF): NAP
U/W NET OP. INCOME: $3,372,920
U/W NET CASH FLOW: $3,268,529
U/W OCCUPANCY: 92.5%
APPRAISED VALUE: $55,500,000
CUT-OFF DATE LTV: 54.5%
MATURITY DATE LTV: 54.5%
DSCR: 1.94x
POST IO DSCR: NAP
--------------------------------------------------------------------------------
(1) Percent leased is based on the rent roll dated January 30, 2007.
THE SHOPS AT SHERMAN PLAZA LOAN.
THE LOAN. The tenth largest loan (the "Shops at Sherman Plaza Loan") is
evidenced by a promissory note and is secured by a first priority mortgage on
the Shops at Sherman Plaza retail property located in Evanston, Illinois (the
"Shops at Sherman Plaza Property"). The Shops at Sherman Plaza Loan was
originated on February 12, 2007 by Bear Stearns Commercial Mortgage, Inc.
THE BORROWER. The borrower is MB Evanston Sherman, L.L.C., a Delaware
limited liability company (the "Shops at Sherman Plaza Borrower") that owns no
material assets other than the Shops at Sherman Plaza Property. The sole member
of the Shops at Sherman Plaza Borrower is Minto Builders (Florida), Inc., a
Florida corporation, which is jointly owned by Minto (Delaware), LLC ("Minto")
and Inland American Real Estate Trust, Inc. ("Inland American"). Minto is in
turn owned by Minto Holdings, Inc. Inland American, an affiliate of The Inland
Group, Inc., is a newly formed real estate investment trust. The Inland Group,
Inc., together with its subsidiaries and affiliates, is a fully-integrated real
estate company providing property management, leasing, marketing, acquisition,
development, redevelopment, syndication, renovation, construction finance and
other related services. Currently, the Inland group of companies employs more
than 1,000 people and manages over a reported $13 billion in assets and more
than 100 million square feet of commercial property. Minto Holdings, Inc. is a
real estate development, construction and management company with operations in
Ottawa, Toronto and Florida.
THE PROPERTY. The Shops at Sherman Plaza Property is a 152,187 square foot
anchored retail center located in downtown Evanston, Illinois, approximately 12
miles north of the Chicago Central Business District. The Shops at Sherman Plaza
Property encompasses 3.05
IV-45
acres along Sherman Avenue approximately two blocks from the Northwestern
University campus and one block from the Chicago Transit Authority's Purple Line
subway stop. The Shops at Sherman Plaza Property was constructed in 2006 and is
currently 87.6% occupied to 16 total tenants including L.A. Fitness, Barnes &
Noble, Pier 1 Imports, Jos. Bank, Ann Taylor Loft and Elizabeth Arden Spa.
The following table presents certain information relating to the lease
rollover at the Shops at Sherman Plaza Property:
--------------------------------------------------------------------------------------------------------------------------------
LEASE ROLLOVER SCHEDULE
AVERAGE % OF TOTAL CUMULATIVE % OF
# OF UNDERWRITTEN UNDERWRITTEN TOTAL UNDERWRITTEN
LEASES BASE RENT PER % OF TOTAL SF CUMULATIVE % BASE RENTAL BASE RENTAL
YEAR ROLLING SF ROLLING ROLLING OF SF ROLLING REVENUES ROLLING REVENUES ROLLING
--------------------------------------------------------------------------------------------------------------------------------
Vacant -- -- 12% 12% -- --
--------------------------------------------------------------------------------------------------------------------------------
2007 -- -- -- 12% -- --
--------------------------------------------------------------------------------------------------------------------------------
2008 -- -- -- 12% -- --
--------------------------------------------------------------------------------------------------------------------------------
2009 -- -- -- 12% -- --
--------------------------------------------------------------------------------------------------------------------------------
2010 -- -- -- 12% -- --
--------------------------------------------------------------------------------------------------------------------------------
2011 -- -- -- 12% -- --
--------------------------------------------------------------------------------------------------------------------------------
2012 1 $40.00 1% 13% 1% 1%
--------------------------------------------------------------------------------------------------------------------------------
2013 -- -- -- 13% -- 1%
--------------------------------------------------------------------------------------------------------------------------------
2014 1 $21.75 2% 15% 2% 3%
--------------------------------------------------------------------------------------------------------------------------------
2015 -- -- -- 15% -- 3%
--------------------------------------------------------------------------------------------------------------------------------
2016 10 $32.48 42% 57% 58% 61%
--------------------------------------------------------------------------------------------------------------------------------
2017 & Beyond 5 $21.65 43% 100% 39% 100%
--------------------------------------------------------------------------------------------------------------------------------
The following table presents certain information relating to the tenants
at the Shops at Sherman Plaza Property:
--------------------------------------------------------------------------------------------------------------------------------
ANNUALIZED % OF TOTAL ANNUALIZED
CREDIT RATING UNDERWRITTEN ANNUALIZED UNDERWRITTEN
(FITCH/ TENANT BASE RENT UNDERWRITTEN BASE RENT LEASE
TENANT NAME MOODY'S/S&P) NRSF % OF NRSF ($) BASE RENT ($ PER NRSF) EXPIRATION
--------------------------------------------------------------------------------------------------------------------------------
L.A. Fitness --/--/-- 53,322 35% $1,066,440 30% $20.00 01/21/2022
--------------------------------------------------------------------------------------------------------------------------------
Barnes & Noble --/--/-- 30,034 20% $650,000 18% $21.64 08/31/2016
--------------------------------------------------------------------------------------------------------------------------------
Pier 1 Imports --/--/-- 10,334 7% $260,934 7% $25.25 08/31/2016
--------------------------------------------------------------------------------------------------------------------------------
Elizabeth Arden Red Door
Spa --/--/-- 7,370 5% $552,750 15% $75.00 08/31/2016
--------------------------------------------------------------------------------------------------------------------------------
TOTAL/WEIGHTED AVERAGE 101,060 66% $2,530,124 70% $25.04
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
Other Tenants NAP 32,223 21% $1,068,172 30% $33.15 Various
--------------------------------------------------------------------------------------------------------------------------------
Vacant Space NAP 18,904 12% $0 0% $0.00 NAP
--------------------------------------------------------------------------------------------------------------------------------
TOTAL/WEIGHTED AVERAGE 152,187 100% $3,598,296 100% $23.64
--------------------------------------------------------------------------------------------------------------------------------
ESCROWS AND RESERVES. At loan origination, the Shops at Sherman Plaza
Borrower posted a $6,025,000 Letter of Credit to be held as additional
collateral for the loan until the DSCR is greater than or equal to 1.16x based
on a 9.30% constant. Real estate tax, insurance, and ground rent reserves spring
if the Shops at Sherman Plaza Borrower fails to provide evidence of payment. Cap
Ex reserve springs if the Shops at Sherman Plaza Borrower fails to provide
evidence of property maintenance or an event of default occurs. The Shops at
Sherman Plaza Borrower is required to escrow $10 per square foot for any lease
expiring in 2016 if the tenant does not renew its lease at least 12 months prior
to lease expiration. However, this reserve shall be waived if the DSCR for the
Shops at Sherman Plaza Loan is greater than or equal to 1.16x based on a 9.30%
constant.
LOCKBOX AND CASH MANAGEMENT. A hard lockbox is triggered upon a DSCR less
than or equal to 1.75x or a cash management event. A cash management event is
triggered upon (i) the date the DSCR is less than or equal to 1.25x for the
preceding six months annualized, (ii) the occurrence of an event of default,
(iii) the bankruptcy of the Shops at Sherman Plaza Borrower or the property
manager, or (iv) the failure of the Shops at Sherman Plaza Borrower to deposit
the rollover reserve associated with 2016 rollovers. In such case, all
receivables will be swept daily to a cash management account controlled by the
lender. Such cash sweep may be terminated (not more than twice during the term
of the loan) if the DSCR for the preceding six month period is greater than or
equal to 1.35x for two complete, consecutive calendar quarters.
PROPERTY MANAGEMENT. The Shops at Sherman Plaza Property is managed by
Inland American Retail Management LLC, an affiliate of the Shops at Sherman
Plaza Borrower.
MEZZANINE LOAN AND PREFERRED EQUITY INTEREST. Not allowed.
ADDITIONAL SECURED INDEBTEDNESS (NOT INCLUDING TRADE DEBTS). Not allowed.
RELEASE OF PARCELS. Not allowed.
Certain additional information regarding the Shops at Sherman Plaza Loan
and the Shops at Sherman Plaza Property is set forth on Appendix II hereto.
IV-46
[THIS PAGE INTENTIONALLY LEFT BLANK.]
-----------------------------------------
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC. For Additional Information please contact
[WELLS FARGO LOGO] CTSLink Customer Service
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES (301) 815-6600
WELLS FARGO BANK, N.A. SERIES 2007-TOP26 Reports Available @ www.ctslink.com/cmbs
CORPORATE TRUST SERVICES -----------------------------------------
9062 OLD ANNAPOLIS ROAD
COLUMBIA, MD 21045-1951 PAYMENT DATE: 05/14/2007
RECORD DATE: 04/30/2007
DETERMINATION DATE: 05/07/2007
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
Cash Reconciliation Detail 6
Ratings Detail 7
Current Mortgage Loan and Property Stratification Tables 8 - 16
Mortgage Loan Detail 17
NOI Detail 18
Principal Prepayment Detail 19
Historical Detail 20
Delinquency Loan Detail 21
Specially Serviced Loan Detail 22 - 23
Advance Summary 24
Modified Loan Detail 25
Historical Liquidated Loan Detail 26
Historical Bond / Collateral Realized Loss Reconciliation 27
Interest Shortfall Reconciliation Detail 28 - 29
Defeased Loan Detail 30
Supplemental Reporting 31
DEPOSITOR
Bear Stearns Commercial Mortgage
Securities Inc.
383 Madison Avenue
New York, NY 10179
Contact: General Information Number
Phone Number: (212) 272-2000
MASTER SERVICER
Wells Fargo Bank, N.A.
1320 Willow Pass Road, Suite 300
investorreporting@wellsfargo.com
Concord, CA 94520
Contact: Myung J. Nam
Phone Number:
SPECIAL SERVICER
ARCap Servicing, Inc.
5221 N. O'Connor Blvd., Ste. 600
Irving, TX 75039
Contact: Chris Crouch
Phone Number: (972) 868-5300
This report has been compiled from information provided to Wells Fargo Bank,
N.A. by various third parties, which may include the Master Servicer, Special
Servicer and others. Wells Fargo Bank, N.A. has not independently confirmed the
accuracy of information received from these third parties and assumes no duty to
do so. Wells Fargo Bank, N.A. expressly disclaims any responsibility for the
accuracy or completeness of information furnished by third parties.
Copyright 2007, Wells Fargo Bank, N.A.
Page 1 of 31
-----------------------------------------
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC. For Additional Information please contact
[WELLS FARGO LOGO] CTSLink Customer Service
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES (301) 815-6600
WELLS FARGO BANK, N.A. SERIES 2007-TOP26 Reports Available @ www.ctslink.com/cmbs
CORPORATE TRUST SERVICES -----------------------------------------
9062 OLD ANNAPOLIS ROAD
COLUMBIA, MD 21045-1951 PAYMENT DATE: 05/14/2007
RECORD DATE: 04/30/2007
DETERMINATION DATE: 05/07/2007
CERTIFICATE DISTRIBUTION DETAIL
Pass-Through Original Beginning Principal Interest
Class CUSIP Rate Balance Balance Distribution Distribution
----------------------------------------------------------------------------------
A-1 0.000000% 0.00 0.00 0.00 0.00
A-2 0.000000% 0.00 0.00 0.00 0.00
A-3 0.000000% 0.00 0.00 0.00 0.00
A-AB 0.000000% 0.00 0.00 0.00 0.00
A-4 0.000000% 0.00 0.00 0.00 0.00
A-1A 0.000000% 0.00 0.00 0.00 0.00
A-M 0.000000% 0.00 0.00 0.00 0.00
A-J 0.000000% 0.00 0.00 0.00 0.00
B 0.000000% 0.00 0.00 0.00 0.00
C 0.000000% 0.00 0.00 0.00 0.00
D 0.000000% 0.00 0.00 0.00 0.00
E 0.000000% 0.00 0.00 0.00 0.00
F 0.000000% 0.00 0.00 0.00 0.00
G 0.000000% 0.00 0.00 0.00 0.00
H 0.000000% 0.00 0.00 0.00 0.00
J 0.000000% 0.00 0.00 0.00 0.00
K 0.000000% 0.00 0.00 0.00 0.00
L 0.000000% 0.00 0.00 0.00 0.00
M 0.000000% 0.00 0.00 0.00 0.00
N 0.000000% 0.00 0.00 0.00 0.00
O 0.000000% 0.00 0.00 0.00 0.00
P 0.000000% 0.00 0.00 0.00 0.00
R-I 0.000000% 0.00 0.00 0.00 0.00
R-II 0.000000% 0.00 0.00 0.00 0.00
R-III 0.000000% 0.00 0.00 0.00 0.00
----------------------------------------------------------------------------------
Totals 0.00 0.00 0.00 0.00
==================================================================================
Realized Loss/ Current
Prepayment Additional Trust Total Ending Subordination
Class Premium Fund Expenses Distribution Balance Level (1)
--------------------------------------------------------------------------------
A-1 0.00 0.00 0.00 0.00 0.00
A-2 0.00 0.00 0.00 0.00 0.00
A-3 0.00 0.00 0.00 0.00 0.00
A-AB 0.00 0.00 0.00 0.00 0.00
A-4 0.00 0.00 0.00 0.00 0.00
A-1A 0.00 0.00 0.00 0.00 0.00
A-M 0.00 0.00 0.00 0.00 0.00
A-J 0.00 0.00 0.00 0.00 0.00
B 0.00 0.00 0.00 0.00 0.00
C 0.00 0.00 0.00 0.00 0.00
D 0.00 0.00 0.00 0.00 0.00
E 0.00 0.00 0.00 0.00 0.00
F 0.00 0.00 0.00 0.00 0.00
G 0.00 0.00 0.00 0.00 0.00
H 0.00 0.00 0.00 0.00 0.00
J 0.00 0.00 0.00 0.00 0.00
K 0.00 0.00 0.00 0.00 0.00
L 0.00 0.00 0.00 0.00 0.00
M 0.00 0.00 0.00 0.00 0.00
N 0.00 0.00 0.00 0.00 0.00
O 0.00 0.00 0.00 0.00 0.00
P 0.00 0.00 0.00 0.00 0.00
R-I 0.00 0.00 0.00 0.00 0.00
R-II 0.00 0.00 0.00 0.00 0.00
R-III 0.00 0.00 0.00 0.00 0.00
--------------------------------------------------------------------------------
Totals 0.00 0.00 0.00 0.00 0.00
================================================================================
Original Beginning Ending
Pass-Through Notional Notional Interest Prepayment Total Notional
Class CUSIP Rate Amount Amount Distribution Premium Distribution Amount
---------------------------------------------------------------------------------------------------------
X-1 0.000000% 0.00 0.00 0.00 0.00 0.00 0.00
X-2 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 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).
Copyright 2007, Wells Fargo Bank, N.A.
Page 2 of 31
-----------------------------------------
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC. For Additional Information please contact
[WELLS FARGO LOGO] CTSLink Customer Service
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES (301) 815-6600
WELLS FARGO BANK, N.A. SERIES 2007-TOP26 Reports Available @ www.ctslink.com/cmbs
CORPORATE TRUST SERVICES -----------------------------------------
9062 OLD ANNAPOLIS ROAD
COLUMBIA, MD 21045-1951 PAYMENT DATE: 05/14/2007
RECORD DATE: 04/30/2007
DETERMINATION DATE: 05/07/2007
CERTIFICATE FACTOR DETAIL
Realized Loss/
Beginning Principal Interest Prepayment Additional Trust Ending
Class CUSIP Balance Distribution Distribution Premium Fund Expenses Balance
-----------------------------------------------------------------------------------------------------
A-1 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
A-2 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
A-3 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
A-AB 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
A-4 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
A-1A 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
A-M 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
A-J 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
J 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
O 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000 0.00000000
P 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
Beginning Ending
Notional Interest Prepayment Notional
Class CUSIP Amount Distribution Premium Amount
---------------------------------------------------------------------
X-1 0.00000000 0.00000000 0.00000000 0.00000000
X-2 0.00000000 0.00000000 0.00000000 0.00000000
Copyright 2007, Wells Fargo Bank, N.A.
Page 3 of 31
-----------------------------------------
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC. For Additional Information please contact
[WELLS FARGO LOGO] CTSLink Customer Service
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES (301) 815-6600
WELLS FARGO BANK, N.A. SERIES 2007-TOP26 Reports Available @ www.ctslink.com/cmbs
CORPORATE TRUST SERVICES -----------------------------------------
9062 OLD ANNAPOLIS ROAD
COLUMBIA, MD 21045-1951 PAYMENT DATE: 05/14/2007
RECORD DATE: 04/30/2007
DETERMINATION DATE: 05/07/2007
RECONCILIATION DETAIL
PRINCIPAL RECONCILIATION
Stated Unpaid Stated Unpaid Current
Beginning Beginning Ending Ending Principal
Principal Principal Scheduled Unscheduled Principal Realized Principal Principal Distribution
Loan Group Balance Balance Principal Principal Adjustments Loss Balance Balance Amount
----------------------------------------------------------------------------------------------------------------------------
1 0.00 0.00 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 0.00 0.00
----------------------------------------------------------------------------------------------------------------------------
Total 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
============================================================================================================================
CERTIFICATE INTEREST RECONCILIATION
Net Aggregate
Accrued Prepayment Distributable
Accrual Accrual Certificate Interest Certificate
Class Dates Days Interest Shortfall Interest
------------------------------------------------------------------
A-1 0 0 0.00 0.00 0.00
A-2 0 0 0.00 0.00 0.00
A-3 0 0 0.00 0.00 0.00
A-AB 0 0 0.00 0.00 0.00
A-4 0 0 0.00 0.00 0.00
A-1A 0 0 0.00 0.00 0.00
A-M 0 0 0.00 0.00 0.00
A-J 0 0 0.00 0.00 0.00
X-1 0 0 0.00 0.00 0.00
X-2 0 0 0.00 0.00 0.00
B 0 0 0.00 0.00 0.00
C 0 0 0.00 0.00 0.00
D 0 0 0.00 0.00 0.00
E 0 0 0.00 0.00 0.00
F 0 0 0.00 0.00 0.00
G 0 0 0.00 0.00 0.00
H 0 0 0.00 0.00 0.00
J 0 0 0.00 0.00 0.00
K 0 0 0.00 0.00 0.00
L 0 0 0.00 0.00 0.00
M 0 0 0.00 0.00 0.00
N 0 0 0.00 0.00 0.00
O 0 0 0.00 0.00 0.00
P 0 0 0.00 0.00 0.00
------------------------------------------------------------------
Totals 0 0.00 0.00 0.00
==================================================================
Remaining
Distributable Unpaid
Certificate Additional Distributable
Interest WAC CAP Trust Fund Interest Certificate
Class Adjustment Shortfall Expenses Distribution Interest
------------------------------------------------------------------------
A-1 0.00 0.00 0.00 0.00 0.00
A-2 0.00 0.00 0.00 0.00 0.00
A-3 0.00 0.00 0.00 0.00 0.00
A-AB 0.00 0.00 0.00 0.00 0.00
A-4 0.00 0.00 0.00 0.00 0.00
A-1A 0.00 0.00 0.00 0.00 0.00
A-M 0.00 0.00 0.00 0.00 0.00
A-J 0.00 0.00 0.00 0.00 0.00
X-1 0.00 0.00 0.00 0.00 0.00
X-2 0.00 0.00 0.00 0.00 0.00
B 0.00 0.00 0.00 0.00 0.00
C 0.00 0.00 0.00 0.00 0.00
D 0.00 0.00 0.00 0.00 0.00
E 0.00 0.00 0.00 0.00 0.00
F 0.00 0.00 0.00 0.00 0.00
G 0.00 0.00 0.00 0.00 0.00
H 0.00 0.00 0.00 0.00 0.00
J 0.00 0.00 0.00 0.00 0.00
K 0.00 0.00 0.00 0.00 0.00
L 0.00 0.00 0.00 0.00 0.00
M 0.00 0.00 0.00 0.00 0.00
N 0.00 0.00 0.00 0.00 0.00
O 0.00 0.00 0.00 0.00 0.00
P 0.00 0.00 0.00 0.00 0.00
------------------------------------------------------------------------
Totals 0.00 0.00 0.00 0.00 0.00
========================================================================
Copyright 2007, Wells Fargo Bank, N.A.
Page 4 of 31
-----------------------------------------
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC. For Additional Information please contact
[WELLS FARGO LOGO] CTSLink Customer Service
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES (301) 815-6600
WELLS FARGO BANK, N.A. SERIES 2007-TOP26 Reports Available @ www.ctslink.com/cmbs
CORPORATE TRUST SERVICES -----------------------------------------
9062 OLD ANNAPOLIS ROAD
COLUMBIA, MD 21045-1951 PAYMENT DATE: 05/14/2007
RECORD DATE: 04/30/2007
DETERMINATION DATE: 05/07/2007
OTHER REQUIRED INFORMATION
Available Distribution Amount (1) 0.00
Master Servicing Fee Summary
Current Period Accrued Master Servicing Fees 0.00
Less Delinquent Master Servicing Fees 0.00
Less Reductions to Master Servicing Fees 0.00
Plus Master Servicing Fees for Delinquent Payments Received 0.00
Plus Adjustments for Prior Master Servicing Calculation 0.00
Total Master Servicing Fees Collected 0.00
(1) The Available Distribution Amount includes any Prepayment Premiums.
Appraisal Reduction Amount
Appraisal Cumulative Most Recent
Loan Reduction ASER App. Red.
Number Effected Amount Date
---------------------------------------------
---------------------------------------------
Total
=============================================
Copyright 2007, Wells Fargo Bank, N.A.
Page 5 of 31
-----------------------------------------
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC. For Additional Information please contact
[WELLS FARGO LOGO] CTSLink Customer Service
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES (301) 815-6600
WELLS FARGO BANK, N.A. SERIES 2007-TOP26 Reports Available @ www.ctslink.com/cmbs
CORPORATE TRUST SERVICES -----------------------------------------
9062 OLD ANNAPOLIS ROAD
COLUMBIA, MD 21045-1951 PAYMENT DATE: 05/14/2007
RECORD DATE: 04/30/2007
DETERMINATION DATE: 05/07/2007
CASH RECONCILIATION DETAIL
TOTAL FUNDS COLLECTED
INTEREST:
Interest paid or advanced 0.00
Interest reductions due to Non-Recoverability Determinations 0.00
Interest Adjustments 0.00
Deferred Interest 0.00
Net Prepayment Interest Shortfall 0.00
Net Prepayment Interest Excess 0.00
Extension Interest 0.00
Interest Reserve Withdrawal 0.00
----
TOTAL INTEREST COLLECTED 0.00
PRINCIPAL:
Scheduled Principal 0.00
Unscheduled Principal 0.00
Principal Prepayments 0.00
Collection of Principal after Maturity Date 0.00
Recoveries from Liquidation and Insurance Proceeds 0.00
Excess of Prior Principal Amounts paid 0.00
Curtailments 0.00
Negative Amortization 0.00
Principal Adjustments 0.00
----
TOTAL PRINCIPAL COLLECTED 0.00
OTHER:
Prepayment Penalties/Yield Maintenance 0.00
Repayment Fees 0.00
Borrower Option Extension Fees 0.00
Equity Payments Received 0.00
Net Swap Counterparty Payments Received 0.00
----
TOTAL OTHER COLLECTED 0.00
----
TOTAL FUNDS COLLECTED 0.00
====
TOTAL FUNDS DISTRIBUTED
FEES:
Master Servicing Fee 0.00
Trustee Fee 0.00
Certificate Administration Fee 0.00
Insurer Fee 0.00
Miscellaneous Fee 0.00
----
TOTAL FEES 0.00
ADDITIONAL TRUST FUND EXPENSES:
Reimbursement for Interest on Advances 0.00
ASER Amount 0.00
Special Servicing Fee 0.00
Rating Agency Expenses 0.00
Attorney Fees & Expenses 0.00
Bankruptcy Expense 0.00
Taxes Imposed on Trust Fund 0.00
Non-Recoverable Advances 0.00
Other Expenses 0.00
----
TOTAL ADDITIONAL TRUST FUND EXPENSES 0.00
INTEREST RESERVE DEPOSIT 0.00
PAYMENTS TO CERTIFICATEHOLDERS & OTHERS:
Interest Distribution 0.00
Principal Distribution 0.00
Prepayment Penalties/Yield Maintenance 0.00
Borrower Option Extension Fees 0.00
Equity Payments Paid 0.00
Net Swap Counterparty Payments Paid 0.00
----
TOTAL PAYMENTS TO CERTIFICATEHOLDERS & OTHERS 0.00
----
TOTAL FUNDS DISTRIBUTED 0.00
====
Copyright 2007, Wells Fargo Bank, N.A.
Page 6 of 31
-----------------------------------------
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC. For Additional Information please contact
[WELLS FARGO LOGO] CTSLink Customer Service
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES (301) 815-6600
WELLS FARGO BANK, N.A. SERIES 2007-TOP26 Reports Available @ www.ctslink.com/cmbs
CORPORATE TRUST SERVICES -----------------------------------------
9062 OLD ANNAPOLIS ROAD
COLUMBIA, MD 21045-1951 PAYMENT DATE: 05/14/2007
RECORD DATE: 04/30/2007
DETERMINATION DATE: 05/07/2007
RATINGS DETAIL
Original Ratings Current Ratings (1)
------------------ -------------------
Class CUSIP Fitch S&P DBRS Fitch S&P DBRS
--------------------------------------------------------
A-1
A-2
A-3
A-AB
A-4
A-1A
A-M
A-J
X-1
X-2
B
C
D
E
F
G
H
J
K
L
M
N
O
P
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, Inc.
One State Street Plaza
New York, New York 10004
(212) 908-0500
Standard & Poor's Rating Services
55 Water Street
New York, New York 10041
(212) 438-2430
Dominion Bond Rating Service
200 King Street West, Suite 1304
Toronto, Ontario M5H 3T4
(416) 593-5577
Copyright 2007, Wells Fargo Bank, N.A.
Page 7 of 31
-----------------------------------------
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC. For Additional Information please contact
[WELLS FARGO LOGO] CTSLink Customer Service
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES (301) 815-6600
WELLS FARGO BANK, N.A. SERIES 2007-TOP26 Reports Available @ www.ctslink.com/cmbs
CORPORATE TRUST SERVICES -----------------------------------------
9062 OLD ANNAPOLIS ROAD
COLUMBIA, MD 21045-1951 PAYMENT DATE: 05/14/2007
RECORD DATE: 04/30/2007
DETERMINATION DATE: 05/07/2007
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.
Copyright 2007, Wells Fargo Bank, N.A.
Page 8 of 31
-----------------------------------------
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC. For Additional Information please contact
[WELLS FARGO LOGO] CTSLink Customer Service
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES (301) 815-6600
WELLS FARGO BANK, N.A. SERIES 2007-TOP26 Reports Available @ www.ctslink.com/cmbs
CORPORATE TRUST SERVICES -----------------------------------------
9062 OLD ANNAPOLIS ROAD
COLUMBIA, MD 21045-1951 PAYMENT DATE: 05/14/2007
RECORD DATE: 04/30/2007
DETERMINATION DATE: 05/07/2007
CURRENT MORTGAGE LOAN AND PROPERTY STRATIFICATION TABLES
AGGREGATE POOL
DEBT SERVICE COVERAGE RATIO
% of
Debt Service # of Scheduled Agg. WAM Weighted
CoverageRatio loans Balance Bal. (2) WAC Avg DSCR (1)
-------------------------------------------------------------------
-------------------------------------------------------------------
Totals
===================================================================
NOTE RATE
% of
# of Scheduled Agg. WAM Weighted
Note Rate loans Balance Bal. (2) WAC Avg DSCR (1)
-------------------------------------------------------------------
-------------------------------------------------------------------
Totals
===================================================================
PROPERTY TYPE (3)
% of
# of Scheduled Agg. WAM Weighted
Property Type Props. Balance Bal. (2) WAC Avg DSCR (1)
-------------------------------------------------------------------
------------------------------------------------------------------
Totals
==================================================================
SEASONING
% of
# of Scheduled Agg. WAM Weighted
Seasoning loans Balance Bal. (2) WAC Avg DSCR (1)
-------------------------------------------------------------------
-------------------------------------------------------------------
Totals
===================================================================
See footnotes on last page of this section.
Copyright 2007, Wells Fargo Bank, N.A.
Page 9 of 31
-----------------------------------------
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC. For Additional Information please contact
[WELLS FARGO LOGO] CTSLink Customer Service
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES (301) 815-6600
WELLS FARGO BANK, N.A. SERIES 2007-TOP26 Reports Available @ www.ctslink.com/cmbs
CORPORATE TRUST SERVICES -----------------------------------------
9062 OLD ANNAPOLIS ROAD
COLUMBIA, MD 21045-1951 PAYMENT DATE: 05/14/2007
RECORD DATE: 04/30/2007
DETERMINATION DATE: 05/07/2007
CURRENT MORTGAGE LOAN AND PROPERTY STRATIFICATION TABLES
AGGREGATE POOL
ANTICIPATED REMAINING TERM (ARD AND BALLOON LOANS)
Anticipated % of
Remaining # of Scheduled Agg. WAM Weighted
Term (2) loans Balance Bal. (2) WAC Avg DSCR (1)
-------------------------------------------------------------------
-------------------------------------------------------------------
Totals
===================================================================
REMAINING AMORTIZATION TERM (ARD AND BALLOON LOANS)
Remaining % of
Amortization # of Scheduled Agg. WAM Weighted
Term loans Balance Bal. (2) WAC Avg DSCR (1)
-------------------------------------------------------------------
-------------------------------------------------------------------
Totals
===================================================================
REMAINING STATED TERM (FULLY AMORTIZING LOANS)
% of
Remaining # of Scheduled Agg. WAM Weighted
Stated Term loans Balance Bal. (2) WAC Avg DSCR (1)
-------------------------------------------------------------------
-------------------------------------------------------------------
Totals
===================================================================
AGE OF MOST RECENT NOI
% of
Age of Most # of Scheduled Agg. WAM Weighted
Recent NOI loans Balance Bal. (2) WAC Avg DSCR (1)
-------------------------------------------------------------------
-------------------------------------------------------------------
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
recent 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 each
property as disclosed in the offering document.
Copyright 2007, Wells Fargo Bank, N.A.
Page 10 of 31
-----------------------------------------
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC. For Additional Information please contact
[WELLS FARGO LOGO] CTSLink Customer Service
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES (301) 815-6600
WELLS FARGO BANK, N.A. SERIES 2007-TOP26 Reports Available @ www.ctslink.com/cmbs
CORPORATE TRUST SERVICES -----------------------------------------
9062 OLD ANNAPOLIS ROAD
COLUMBIA, MD 21045-1951 PAYMENT DATE: 05/14/2007
RECORD DATE: 04/30/2007
DETERMINATION DATE: 05/07/2007
CURRENT MORTGAGE LOAN AND PROPERTY STRATIFICATION TABLES
GROUP I
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.
Copyright 2007, Wells Fargo Bank, N.A.
Page 11 of 31
-----------------------------------------
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC. For Additional Information please contact
[WELLS FARGO LOGO] CTSLink Customer Service
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES (301) 815-6600
WELLS FARGO BANK, N.A. SERIES 2007-TOP26 Reports Available @ www.ctslink.com/cmbs
CORPORATE TRUST SERVICES -----------------------------------------
9062 OLD ANNAPOLIS ROAD
COLUMBIA, MD 21045-1951 PAYMENT DATE: 05/14/2007
RECORD DATE: 04/30/2007
DETERMINATION DATE: 05/07/2007
CURRENT MORTGAGE LOAN AND PROPERTY STRATIFICATION TABLES
GROUP I
DEBT SERVICE COVERAGE RATIO
% of
Debt Service # of Scheduled Agg. WAM Weighted
Coverage Ratio loans Balance Bal. (2) WAC Avg DSCR (1)
--------------------------------------------------------------------
--------------------------------------------------------------------
Totals
====================================================================
NOTE RATE
% of
Note # of Scheduled Agg. WAM Weighted
Rate loans Balance Bal. (2) WAC Avg DSCR (1)
--------------------------------------------------------------------
--------------------------------------------------------------------
Totals
====================================================================
PROPERTY TYPE (3)
% of
# of Scheduled Agg. WAM Weighted
Property Type Props. Balance Bal. (2) WAC Avg DSCR (1)
---------------------------------------------------------------------
---------------------------------------------------------------------
Totals
=====================================================================
SEASONING
% of
# of Scheduled Agg. WAM Weighted
Seasoning loans Balance Bal. (2) WAC Avg DSCR (1)
---------------------------------------------------------------------
---------------------------------------------------------------------
Totals
=====================================================================
See footnotes on last page of this section.
Copyright 2007, Wells Fargo Bank, N.A.
Page 12 of 31
-----------------------------------------
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC. For Additional Information please contact
[WELLS FARGO LOGO] CTSLink Customer Service
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES (301) 815-6600
WELLS FARGO BANK, N.A. SERIES 2007-TOP26 Reports Available @ www.ctslink.com/cmbs
CORPORATE TRUST SERVICES -----------------------------------------
9062 OLD ANNAPOLIS ROAD
COLUMBIA, MD 21045-1951 PAYMENT DATE: 05/14/2007
RECORD DATE: 04/30/2007
DETERMINATION DATE: 05/07/2007
CURRENT MORTGAGE LOAN AND PROPERTY STRATIFICATION TABLES
GROUP I
ANTICIPATED REMAINING TERM (ARD AND BALLOON LOANS)
% of
Anticipated Remaining # of Scheduled Agg. WAM Weighted
Term (2) loans Balance Bal. (2) WAC Avg DSCR (1)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Totals
================================================================================
REMAINING AMORTIZATION TERM (ARD AND BALLOON LOANS)
% of
Remaining Amortization # of Scheduled Agg. WAM Weighted
Term loans Balance Bal. (2) WAC Avg DSCR (1)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Totals
================================================================================
REMAINING STATED TERM (FULLY AMORTIZING LOANS)
% of
Remaining Stated # of Scheduled Agg. WAM Weighted
Term loans Balance Bal. (2) WAC Avg DSCR (1)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Totals
================================================================================
AGE OF MOST RECENT NOI
% of
Age of Most # of Scheduled Agg. WAM Weighted
Recent NOI loans Balance Bal. (2) WAC Avg DSCR (1)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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
recent 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 each
property as disclosed in the offering document.
Copyright 2007, Wells Fargo Bank, N.A.
Page 13 of 31
-----------------------------------------
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC. For Additional Information please contact
[WELLS FARGO LOGO] CTSLink Customer Service
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES (301) 815-6600
WELLS FARGO BANK, N.A. SERIES 2007-TOP26 Reports Available @ www.ctslink.com/cmbs
CORPORATE TRUST SERVICES -----------------------------------------
9062 OLD ANNAPOLIS ROAD
COLUMBIA, MD 21045-1951 PAYMENT DATE: 05/14/2007
RECORD DATE: 04/30/2007
DETERMINATION DATE: 05/07/2007
CURRENT MORTGAGE LOAN AND PROPERTY STRATIFICATION TABLES
GROUP II
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.
Copyright 2007, Wells Fargo Bank, N.A.
Page 14 of 31
-----------------------------------------
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC. For Additional Information please contact
[WELLS FARGO LOGO] CTSLink Customer Service
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES (301) 815-6600
WELLS FARGO BANK, N.A. SERIES 2007-TOP26 Reports Available @ www.ctslink.com/cmbs
CORPORATE TRUST SERVICES -----------------------------------------
9062 OLD ANNAPOLIS ROAD
COLUMBIA, MD 21045-1951 PAYMENT DATE: 05/14/2007
RECORD DATE: 04/30/2007
DETERMINATION DATE: 05/07/2007
CURRENT MORTGAGE LOAN AND PROPERTY STRATIFICATION TABLES
GROUP II
DEBT SERVICE COVERAGE RATIO
% of
Debt Service # of Scheduled Agg. WAM Weighted
Coverage Ratio loans Balance Bal. (2) WAC Avg DSCR (1)
---------------------------------------------------------------------
---------------------------------------------------------------------
Totals
=====================================================================
NOTE RATE
% of
Note # of Scheduled Agg. WAM Weighted
Rate loans Balance Bal. (2) WAC Avg DSCR (1)
---------------------------------------------------------------------
---------------------------------------------------------------------
Totals
=====================================================================
PROPERTY TYPE (3)
% of
# of Scheduled Agg. WAM Weighted
Property Type Props. Balance Bal. (2) WAC Avg DSCR (1)
---------------------------------------------------------------------
---------------------------------------------------------------------
Totals
=====================================================================
SEASONING
% of
# of Scheduled Agg. WAM Weighted
Seasoning loans Balance Bal. (2) WAC Avg DSCR (1)
---------------------------------------------------------------------
---------------------------------------------------------------------
Totals
=====================================================================
See footnotes on last page of this section.
Copyright 2007, Wells Fargo Bank, N.A.
Page 15 of 31
-----------------------------------------
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC. For Additional Information please contact
[WELLS FARGO LOGO] CTSLink Customer Service
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES (301) 815-6600
WELLS FARGO BANK, N.A. SERIES 2007-TOP26 Reports Available @ www.ctslink.com/cmbs
CORPORATE TRUST SERVICES -----------------------------------------
9062 OLD ANNAPOLIS ROAD
COLUMBIA, MD 21045-1951 PAYMENT DATE: 05/14/2007
RECORD DATE: 04/30/2007
DETERMINATION DATE: 05/07/2007
CURRENT MORTGAGE LOAN AND PROPERTY STRATIFICATION TABLES
GROUP II
ANTICIPATED REMAINING TERM (ARD AND BALLOON LOANS)
% of
Anticipated Remaining # of Scheduled Agg. WAM Weighted
Term (2) loans Balance Bal. (2) WAC Avg DSCR (1)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Totals
============================================================================
REMAINING AMORTIZATION TERM (ARD AND BALLOON LOANS)
% of
Remaining Amortization # of Scheduled Agg. WAM Weighted
Term loans Balance Bal. (2) WAC Avg DSCR (1)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Totals
============================================================================
REMAINING STATED TERM (FULLY AMORTIZING LOANS)
% of
Remaining Stated # of Scheduled Agg. WAM Weighted
Term loans Balance Bal. (2) WAC Avg DSCR (1)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Totals
============================================================================
AGE OF MOST RECENT NOI
% of
Age of Most # of Scheduled Agg. WAM Weighted
Recent NOI loans Balance Bal. (2) WAC Avg DSCR (1)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
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
recent 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 each
property as disclosed in the offering document.
Copyright 2007, Wells Fargo Bank, N.A.
Page 16 of 31
-----------------------------------------
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC. For Additional Information please contact
[WELLS FARGO LOGO] CTSLink Customer Service
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES (301) 815-6600
WELLS FARGO BANK, N.A. SERIES 2007-TOP26 Reports Available @ www.ctslink.com/cmbs
CORPORATE TRUST SERVICES -----------------------------------------
9062 OLD ANNAPOLIS ROAD
COLUMBIA, MD 21045-1951 PAYMENT DATE: 05/14/2007
RECORD DATE: 04/30/2007
DETERMINATION DATE: 05/07/2007
MORTGAGE LOAN DETAIL
Anticipated
Loan Property Interest Principal Gross Repayment Maturity
Number ODCR Type (1) City State Payment Payment Coupon Date Date
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
Totals
================================================================================================
Neg. Beginning Ending Paid Appraisal Appraisal Res. Mod.
Loan Amort Scheduled Scheduled Thru Reduction Reduction Strat. Code
Number (Y/N) Balance Balance Date Date Amount (2) (3)
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Totals
=====================================================================================
(1) Property Type Code
MF - Multi-Family
RT - Retail
HC - Health Care
IN - Industrial
WH - Warehouse
MH - Mobile Home Park
OF - Office
MU - Mixed Use
LO - Lodging
SS - Self Storage
OT - Other
(2) Resolution Strategy Code
1 - Modification
2 - Foreclosure
3 - Bankruptcy
4 - Extension
5 - Note Sale
6 - DPO
7 - REO
8 - Resolved
9 - Pending Return to Master Servicer
10 - Deed in Lieu Of Foreclosure
11 - Full Payoff
12 - Reps and Warranties
13 - Other or TBD
(3) Modification Code
1 - Maturity Date Extension
2 - Amortization Change
3 - Principal Write-Off
4 - Combination
Copyright 2007, Wells Fargo Bank, N.A.
Page 17 of 31
-----------------------------------------
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC. For Additional Information please contact
[WELLS FARGO LOGO] CTSLink Customer Service
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES (301) 815-6600
WELLS FARGO BANK, N.A. SERIES 2007-TOP26 Reports Available @ www.ctslink.com/cmbs
CORPORATE TRUST SERVICES -----------------------------------------
9062 OLD ANNAPOLIS ROAD
COLUMBIA, MD 21045-1951 PAYMENT DATE: 05/14/2007
RECORD DATE: 04/30/2007
DETERMINATION DATE: 05/07/2007
NOI DETAIL
Ending Most Most Most Recent Most Recent
Loan Property Scheduled Recent Recent NOI Start NOI End
Number ODCR Type City State Balance Fiscal NOI NOI Date Date
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
Total
=====================================================================================================
Copyright 2007, Wells Fargo Bank, N.A.
Page 18 of 31
-----------------------------------------
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC. For Additional Information please contact
[WELLS FARGO LOGO] CTSLink Customer Service
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES (301) 815-6600
WELLS FARGO BANK, N.A. SERIES 2007-TOP26 Reports Available @ www.ctslink.com/cmbs
CORPORATE TRUST SERVICES -----------------------------------------
9062 OLD ANNAPOLIS ROAD
COLUMBIA, MD 21045-1951 PAYMENT DATE: 05/14/2007
RECORD DATE: 04/30/2007
DETERMINATION DATE: 05/07/2007
PRINCIPAL PREPAYMENT DETAIL
----------------------------------------------------------------------------------------------------------------------------------
Principal Prepayment Amount Prepayment Penalties
Offering Document ---------------------------------- ----------------------------------------------
Loan Number Loan Group Cross-Reference Payoff Amount Curtailment Amount Prepayment Premium Yield Maintenance Premium
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
Totals
==================================================================================================================================
Copyright 2007, Wells Fargo Bank, N.A.
Page 19 of 31
-----------------------------------------
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC. For Additional Information please contact
[WELLS FARGO LOGO] CTSLink Customer Service
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES (301) 815-6600
WELLS FARGO BANK, N.A. SERIES 2007-TOP26 Reports Available @ www.ctslink.com/cmbs
CORPORATE TRUST SERVICES -----------------------------------------
9062 OLD ANNAPOLIS ROAD
COLUMBIA, MD 21045-1951 PAYMENT DATE: 05/14/2007
RECORD DATE: 04/30/2007
DETERMINATION DATE: 05/07/2007
HISTORICAL DETAIL
---------------------------------------------------------------------------------------------------------
Delinquencies
---------------------------------------------------------------------------------------------------------
Distribution 30-59 Days 60-89 Days 90 Days or More Foreclosure REO Modifications
Date # Balance # Balance # Balance # Balance # Balance # Balance
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------
Prepayments Rate and Maturities
--------------------------------------------------------------------
Distribution Curtailments Payoff Next Weighted Avg.
Date # Balance # Balance Coupon Remit WAM
--------------------------------------------------------------------
--------------------------------------------------------------------
Note: Foreclosure and REO Totals are excluded from the delinquencies.
Copyright 2007, Wells Fargo Bank, N.A.
Page 20 of 31
-----------------------------------------
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC. For Additional Information please contact
[WELLS FARGO LOGO] CTSLink Customer Service
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES (301) 815-6600
WELLS FARGO BANK, N.A. SERIES 2007-TOP26 Reports Available @ www.ctslink.com/cmbs
CORPORATE TRUST SERVICES -----------------------------------------
9062 OLD ANNAPOLIS ROAD
COLUMBIA, MD 21045-1951 PAYMENT DATE: 05/14/2007
RECORD DATE: 04/30/2007
DETERMINATION DATE: 05/07/2007
DELINQUENCY LOAN DETAIL
Offering # of Current Outstanding Status of Resolution
Document Months Paid Through P & I P & I Mortgage Strategy
Loan Number Cross-Reference Delinq. Date Advances Advances ** Loan (1) Code (2)
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
Totals
========================================================================================================
Actual Outstanding
Servicing Foreclosure Principal Servicing Bankruptcy REO
Loan Number Transfer Date Date Balance Advances Date Date
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
Totals
=======================================================================================
(1) Status of Mortgage Loan
A - Payments Not Received
But Still in Grace Period
B - Late Payment But Less
Than 1 Month Delinquent
0 - Current
1 - One Month Delinquent
2 - Two Months Delinquent
3 - Three or More Months Delinquent
4 - Assumed Scheduled Payment
(Performing Matured Loan)
7 - Foreclosure
9 - REO
(2) Resolution Strategy Code
1 - Modification
2 - Forclosure
3 - Bankruptcy
4 - Extension
5 - Note Sale
6 - DPO
7 - REO
8 - Resolved
9 - Pending Return
to Master Servicer
10 - Deed In Lieu Of
Foreclosure
11 - Full Payoff
12 - Reps and Warranties
13 - Other or TBD
Copyright 2007, Wells Fargo Bank, N.A.
Page 21 of 31
-----------------------------------------
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC. For Additional Information please contact
[WELLS FARGO LOGO] CTSLink Customer Service
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES (301) 815-6600
WELLS FARGO BANK, N.A. SERIES 2007-TOP26 Reports Available @ www.ctslink.com/cmbs
CORPORATE TRUST SERVICES -----------------------------------------
9062 OLD ANNAPOLIS ROAD
COLUMBIA, MD 21045-1951 PAYMENT DATE: 05/14/2007
RECORD DATE: 04/30/2007
DETERMINATION DATE: 05/07/2007
SPECIALLY SERVICED LOAN DETAIL - PART 1
Offering Servicing Resolution
Distribution Loan Document Transfer Strategy Scheduled Property Interest
Date Number Cross-Reference Date Code (1) Balance Type (2) State Rate
-------------------------------------------------------------------------------------------------------------
Net Remaining
Distribution Actual Operating NOI Note Maturity Amortization
Date Balance Income Date DSCR Date Date Term
---------------------------------------------------------------------------------
(1) Resolution Strategy Code
1 - Modification
2 - Foreclosure
3 - Bankruptcy
4 - Extension
5 - Note Sale
6 - DPO
7 - REO
8 - Resolved
9 - Pending Return
to Master Servicer
10 - Deed In Lieu Of
Foreclosure
11 - Full Payoff
12 - Reps and Warranties
13 - Other or TBD
(2) Property Type Code
MF - Multi-Family
RT - Retail
HC - Health Care
IN - Industrial
WH - Warehouse
MH - Mobile Home Park
OF - Office
MU - Mixed use
LO - Lodging
SS - Self Storage
OT - Other
Copyright 2007, Wells Fargo Bank, N.A.
Page 22 of 31
-----------------------------------------
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC. For Additional Information please contact
[WELLS FARGO LOGO] CTSLink Customer Service
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES (301) 815-6600
WELLS FARGO BANK, N.A. SERIES 2007-TOP26 Reports Available @ www.ctslink.com/cmbs
CORPORATE TRUST SERVICES -----------------------------------------
9062 OLD ANNAPOLIS ROAD
COLUMBIA, MD 21045-1951 PAYMENT DATE: 05/14/2007
RECORD DATE: 04/30/2007
DETERMINATION DATE: 05/07/2007
SPECIALLY SERVICED LOAN DETAIL - PART 2
Offering Resolution Site
Distribution Loan Document Strategy Inspection Appraisal Appraisal Other REO
Date Number Cross-Reference Code (1) Date Phase 1 Date Date Value Property Revenue Comment
------------------------------------------------------------------------------------------------------------------------------------
(1) Resolution Strategy Code
1 - Modification
2 - Foreclosure
3 - Bankruptcy
4 - Extension
5 - Note Sale
6 - DPO
7 - REO
8 - Resolved
9 - Pending Return to Master Servicer
10 - Deed In Lieu Of Foreclosure
11 - Full Payoff
12 - Reps and Warranties
13 - Other or TBD
Copyright 2007, Wells Fargo Bank, N.A.
Page 23 of 31
-----------------------------------------
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC. For Additional Information please contact
[WELLS FARGO LOGO] CTSLink Customer Service
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES (301) 815-6600
WELLS FARGO BANK, N.A. SERIES 2007-TOP26 Reports Available @ www.ctslink.com/cmbs
CORPORATE TRUST SERVICES -----------------------------------------
9062 OLD ANNAPOLIS ROAD
COLUMBIA, MD 21045-1951 PAYMENT DATE: 05/14/2007
RECORD DATE: 04/30/2007
DETERMINATION DATE: 05/07/2007
ADVANCE SUMMARY
Current Period Interest
Current P&I Outstanding P&I Outstanding Servicing on P&I and Servicing
Loan Group Advances Advances Advances Advances Paid
--------------------------------------------------------------------------------------------
1 0.00 0.00 0.00 0.00
2 0.00 0.00 0.00 0.00
--------------------------------------------------------------------------------------------
Totals 0.00 0.00 0.00 0.00
============================================================================================
Copyright 2007, Wells Fargo Bank, N.A.
Page 24 of 31
-----------------------------------------
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC. For Additional Information please contact
[WELLS FARGO LOGO] CTSLink Customer Service
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES (301) 815-6600
WELLS FARGO BANK, N.A. SERIES 2007-TOP26 Reports Available @ www.ctslink.com/cmbs
CORPORATE TRUST SERVICES -----------------------------------------
9062 OLD ANNAPOLIS ROAD
COLUMBIA, MD 21045-1951 PAYMENT DATE: 05/14/2007
RECORD DATE: 04/30/2007
DETERMINATION DATE: 05/07/2007
MODIFIED LOAN DETAIL
Offering
Document Pre-Modification Post-Modification Pre-Modification Post-Modification Modification Modification
Loan Number Cross-Reference Balance Balance Interest Rate Interest Rate Date Description
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Totals
====================================================================================================================================
Copyright 2007, Wells Fargo Bank, N.A.
Page 25 of 31
-----------------------------------------
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC. For Additional Information please contact
[WELLS FARGO LOGO] CTSLink Customer Service
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES (301) 815-6600
WELLS FARGO BANK, N.A. SERIES 2007-TOP26 Reports Available @ www.ctslink.com/cmbs
CORPORATE TRUST SERVICES -----------------------------------------
9062 OLD ANNAPOLIS ROAD
COLUMBIA, MD 21045-1951 PAYMENT DATE: 05/14/2007
RECORD DATE: 04/30/2007
DETERMINATION DATE: 05/07/2007
HISTORICAL LIQUIDATED LOAN DETAIL
Beginning Fees, Most Recent Gross Sales Net Proceeds Net Proceeds
Distribution Scheduled Advances, Appraised Proceeds or Received on Available for
Date ODCR Balance and Expenses * Value or BPO Other Proceeds Liquidation Distribution
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
Current Total
===============================================================================================================
Cumulative Total
===============================================================================================================
Date of Current Current Period Cumulative Loss to Loan
Distribution Realized Period Adj. Adjustment Adjustment with Cum
Date Loss to Trust to Trust to Trust to Trust Adj. to Trust
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
Current Total
==============================================================================================
Cumulative Total
==============================================================================================
* Fees, Advances and Expenses also include outstanding P & I advances and
unpaid fees (servicing, trustee, etc.).
Copyright 2007, Wells Fargo Bank, N.A.
Page 26 of 31
-----------------------------------------
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC. For Additional Information please contact
[WELLS FARGO LOGO] CTSLink Customer Service
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES (301) 815-6600
WELLS FARGO BANK, N.A. SERIES 2007-TOP26 Reports Available @ www.ctslink.com/cmbs
CORPORATE TRUST SERVICES -----------------------------------------
9062 OLD ANNAPOLIS ROAD
COLUMBIA, MD 21045-1951 PAYMENT DATE: 05/14/2007
RECORD DATE: 04/30/2007
DETERMINATION DATE: 05/07/2007
HISTORICAL BOND/COLLATERAL LOSS RECONCILIATION DETAIL
Offering Beginning Aggregate Prior Realized Amounts Interest
Distribution Document Balance Realized Loss Loss Applied Covered by (Shortages)/
Date Cross-Reference at Liquidation on Loans to Certificates Credit Support Excesses
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Totals
================================================================================================================
Modification Additional Realized Loss Recoveries of (Recoveries)/
Distribution /Appraisal (Recoveries) Applied to Realized Losses Losses Applied to
Date Reduction Adj. /Expenses Certificates to Date Paid as Cash Certificate Interest
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
Totals
============================================================================================================
Copyright 2007, Wells Fargo Bank, N.A.
Page 27 of 31
-----------------------------------------
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC. For Additional Information please contact
[WELLS FARGO LOGO] CTSLink Customer Service
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES (301) 815-6600
WELLS FARGO BANK, N.A. SERIES 2007-TOP26 Reports Available @ www.ctslink.com/cmbs
CORPORATE TRUST SERVICES -----------------------------------------
9062 OLD ANNAPOLIS ROAD
COLUMBIA, MD 21045-1951 PAYMENT DATE: 05/14/2007
RECORD DATE: 04/30/2007
DETERMINATION DATE: 05/07/2007
INTEREST SHORTFALL RECONCILIATION DETAIL - PART 1
Offering Stated Principal Special Servicing Fees
Document Balance at Current Ending --------------------------------
Cross-Reference Contribution Scheduled Balance Monthly Liquidation Work Out ASER
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
Totals
================================================================================================
Offering Non-Recoverable Modified Interest Additional
Document (Scheduled Interest on Rate (Reduction) Trust Fund
Cross-Reference (PPIS) Excess Interest) Advances /Excess Expense
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
Totals
================================================================================================
Copyright 2007, Wells Fargo Bank, N.A.
Page 28 of 31
-----------------------------------------
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC. For Additional Information please contact
[WELLS FARGO LOGO] CTSLink Customer Service
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES (301) 815-6600
WELLS FARGO BANK, N.A. SERIES 2007-TOP26 Reports Available @ www.ctslink.com/cmbs
CORPORATE TRUST SERVICES -----------------------------------------
9062 OLD ANNAPOLIS ROAD
COLUMBIA, MD 21045-1951 PAYMENT DATE: 05/14/2007
RECORD DATE: 04/30/2007
DETERMINATION DATE: 05/07/2007
INTEREST SHORTFALL RECONCILIATION DETAIL - PART 2
Reimb of Advances to the Servicer
Offering Stated Principal Current Ending ---------------------------------
Document Balance at Scheduled Left to Reimburse Other (Shortfalls)/
Cross-Reference Contribution Balance Current Month Master Servicer Refunds Comments
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
Totals
===================================================================================================================
Interest Shortfall Reconciliation Detail Part 2 Total 0.00
===================================================================================================================
Interest Shortfall Reconciliation Detail Part 1 Total 0.00
===================================================================================================================
Total Interest Shortfall Allocated to Trust 0.00
===================================================================================================================
Copyright 2007, Wells Fargo Bank, N.A.
Page 29 of 31
-----------------------------------------
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC. For Additional Information please contact
[WELLS FARGO LOGO] CTSLink Customer Service
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES (301) 815-6600
WELLS FARGO BANK, N.A. SERIES 2007-TOP26 Reports Available @ www.ctslink.com/cmbs
CORPORATE TRUST SERVICES -----------------------------------------
9062 OLD ANNAPOLIS ROAD
COLUMBIA, MD 21045-1951 PAYMENT DATE: 05/14/2007
RECORD DATE: 04/30/2007
DETERMINATION DATE: 05/07/2007
DEFEASED LOAN DETAIL
Offering Document Ending Scheduled
Loan Number Cross-Reference Balance Maturity Date Note Rate Defeasance Status
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Totals
=============================================================================================
Copyright 2007, Wells Fargo Bank, N.A.
Page 30 of 31
-----------------------------------------
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC. For Additional Information please contact
[WELLS FARGO LOGO] CTSLink Customer Service
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES (301) 815-6600
WELLS FARGO BANK, N.A. SERIES 2007-TOP26 Reports Available @ www.ctslink.com/cmbs
CORPORATE TRUST SERVICES -----------------------------------------
9062 OLD ANNAPOLIS ROAD
COLUMBIA, MD 21045-1951 PAYMENT DATE: 05/14/2007
RECORD DATE: 04/30/2007
DETERMINATION DATE: 05/07/2007
SUPPLEMENTAL REPORTING
Copyright 2007, Wells Fargo Bank, N.A.
Page 31 of 31
[THIS PAGE INTENTIONALLY LEFT BLANK.]
SCHEDULE A
Class A-AB Planned Principal Balance
DISTRIBUTION
DATE BALANCE
------------ --------------
05/12/2007 $78,000,000.00
06/12/2007 $78,000,000.00
07/12/2007 $78,000,000.00
08/12/2007 $78,000,000.00
09/12/2007 $78,000,000.00
10/12/2007 $78,000,000.00
11/12/2007 $78,000,000.00
12/12/2007 $78,000,000.00
01/12/2008 $78,000,000.00
02/12/2008 $78,000,000.00
03/12/2008 $78,000,000.00
04/12/2008 $78,000,000.00
05/12/2008 $78,000,000.00
06/12/2008 $78,000,000.00
07/12/2008 $78,000,000.00
08/12/2008 $78,000,000.00
09/12/2008 $78,000,000.00
10/12/2008 $78,000,000.00
11/12/2008 $78,000,000.00
12/12/2008 $78,000,000.00
01/12/2009 $78,000,000.00
02/12/2009 $78,000,000.00
03/12/2009 $78,000,000.00
04/12/2009 $78,000,000.00
05/12/2009 $78,000,000.00
06/12/2009 $78,000,000.00
07/12/2009 $78,000,000.00
08/12/2009 $78,000,000.00
09/12/2009 $78,000,000.00
10/12/2009 $78,000,000.00
11/12/2009 $78,000,000.00
12/12/2009 $78,000,000.00
01/12/2010 $78,000,000.00
02/12/2010 $78,000,000.00
03/12/2010 $78,000,000.00
04/12/2010 $78,000,000.00
05/12/2010 $78,000,000.00
06/12/2010 $78,000,000.00
07/12/2010 $78,000,000.00
08/12/2010 $78,000,000.00
09/12/2010 $78,000,000.00
10/12/2010 $78,000,000.00
11/12/2010 $78,000,000.00
12/12/2010 $78,000,000.00
01/12/2011 $78,000,000.00
02/12/2011 $78,000,000.00
03/12/2011 $78,000,000.00
04/12/2011 $78,000,000.00
05/12/2011 $78,000,000.00
06/12/2011 $78,000,000.00
07/12/2011 $78,000,000.00
08/12/2011 $78,000,000.00
09/12/2011 $78,000,000.00
10/12/2011 $78,000,000.00
11/12/2011 $78,000,000.00
12/12/2011 $78,000,000.00
01/12/2012 $78,000,000.00
02/12/2012 $78,000,000.00
03/12/2012 $77,920,389.85
04/12/2012 $76,908,000.00
05/12/2012 $75,773,000.00
06/12/2012 $74,750,000.00
07/12/2012 $73,604,000.00
08/12/2012 $72,571,000.00
09/12/2012 $71,533,000.00
10/12/2012 $70,371,000.00
11/12/2012 $69,322,000.00
12/12/2012 $68,150,000.00
01/12/2013 $67,089,000.00
02/12/2013 $66,024,000.00
03/12/2013 $64,600,000.00
04/12/2013 $63,522,000.00
05/12/2013 $62,321,000.00
06/12/2013 $61,232,000.00
07/12/2013 $60,020,000.00
08/12/2013 $58,920,000.00
09/12/2013 $57,813,000.00
10/12/2013 $56,600,000.00
11/12/2013 $55,540,000.00
12/12/2013 $54,359,000.00
01/12/2014 $53,300,000.00
02/12/2014 $52,300,000.00
03/12/2014 $50,862,000.00
04/12/2014 $49,768,000.00
05/12/2014 $48,552,000.00
06/12/2014 $47,447,000.00
07/12/2014 $46,219,000.00
08/12/2014 $45,102,000.00
09/12/2014 $43,979,000.00
10/12/2014 $42,798,000.00
A-1
DISTRIBUTION
DATE BALANCE
------------ --------------
11/12/2014 $41,663,000.00
12/12/2014 $40,407,000.00
01/12/2015 $39,260,000.00
02/12/2015 $38,107,000.00
03/12/2015 $36,605,000.00
04/12/2015 $35,439,000.00
05/12/2015 $34,153,000.00
06/12/2015 $32,974,000.00
07/12/2015 $31,676,000.00
08/12/2015 $30,485,000.00
09/12/2015 $29,288,000.00
10/12/2015 $27,972,000.00
11/12/2015 $26,762,000.00
12/12/2015 $25,434,000.00
01/12/2016 $24,211,000.00
02/12/2016 $20,635,000.00
03/12/2016 $19,181,000.00
04/12/2016 $ 8,172,000.00
05/12/2016 $ 6,835,000.00
06/12/2016 $ 5,601,000.00
07/12/2016 $ 4,251,000.00
08/12/2016 $ 3,004,000.00
09/12/2016 $ 1,750,000.00
10/12/2016 $ 382,000.00
11/12/2016 $ 0.00
A-2
SCHEDULE B
Rates Used in Determination of Class X Pass-Through Rate
DISTRIBUTION
DATE RATES
------------ --------
05/12/07 5.60804%
06/12/07 5.77698%
07/12/07 5.60695%
08/12/07 5.77693%
09/12/07 5.77690%
10/12/07 5.60688%
11/12/07 5.77685%
12/12/07 5.60683%
01/12/08 5.77679%
02/12/08 5.60628%
03/12/08 5.60732%
04/12/08 5.77670%
05/12/08 5.60670%
06/12/08 5.77664%
07/12/08 5.60665%
08/12/08 5.77658%
09/12/08 5.77655%
10/12/08 5.60656%
11/12/08 5.77648%
12/12/08 5.60650%
01/12/09 5.60597%
02/12/09 5.60594%
03/12/09 5.60761%
04/12/09 5.77630%
05/12/09 5.60633%
06/12/09 5.77620%
07/12/09 5.60624%
08/12/09 5.77610%
09/12/09 5.77606%
10/12/09 5.60611%
11/12/09 5.77595%
12/12/09 5.60600%
01/12/10 5.60544%
02/12/10 5.60539%
03/12/10 5.60709%
04/12/10 5.77563%
05/12/10 5.60571%
06/12/10 5.77549%
07/12/10 5.60558%
08/12/10 5.77534%
09/12/10 5.77527%
10/12/10 5.60538%
11/12/10 5.77512%
12/12/10 5.60431%
01/12/11 5.60372%
02/12/11 5.60343%
03/12/11 5.60545%
04/12/11 5.77345%
05/12/11 5.60370%
06/12/11 5.77328%
07/12/11 5.60355%
08/12/11 5.77312%
09/12/11 5.77304%
10/12/11 5.60338%
11/12/11 5.76872%
12/12/11 5.60536%
01/12/12 5.77456%
02/12/12 5.59900%
03/12/12 5.62158%
04/12/12 5.78883%
05/12/12 5.62075%
06/12/12 5.78867%
07/12/12 5.62062%
08/12/12 5.78852%
09/12/12 5.78844%
10/12/12 5.62042%
11/12/12 5.78828%
12/12/12 5.62028%
01/12/13 5.61962%
02/12/13 5.61956%
03/12/13 5.62159%
04/12/13 5.78785%
05/12/13 5.61990%
06/12/13 5.78768%
07/12/13 5.61975%
08/12/13 5.78751%
09/12/13 5.78743%
10/12/13 5.61953%
11/12/13 5.79898%
12/12/13 5.62882%
01/12/14 5.62813%
02/12/14 5.63212%
03/12/14 5.63421%
04/12/14 5.80234%
B-1
[THIS PAGE INTENTIONALLY LEFT BLANK.]
PROSPECTUS
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
(ISSUABLE IN SERIES BY SEPARATE ISSUING ENTITIES)
BEAR STEARNS COMMERCIAL MORTGAGE SECURITIES INC.
(DEPOSITOR)
Consider carefully the risk factors beginning on page 2 in this prospectus.
The securities to be issued are mortgage-backed certificates issued by one
or more issuing entities that are a trust. The securities represent interests
only in the related trust fund and do not represent interests in or obligations
of Bear Stearns Commercial Mortgage Securities Inc.
The applicable prospectus supplement may provide that either the
certificates or the underlying assets may be insured or guaranteed by a
governmental agency or other person.
This prospectus may be used to offer and sell any series of certificates
only if accompanied by the prospectus supplement for that series.
THE TRUST FUNDS--
(1) A new trust fund will be established to issue each series of
certificates.
(2) Each trust fund will consist primarily of loans secured by pledges of
commercial, multifamily residential or mixed use properties.
(3) A new trust fund may also include letters of credit, insurance
policies, guarantees, reserve funds, and interest rate swap agreements, interest
rate cap or floor agreements or currency swap agreements.
THE CERTIFICATES--
(1) Each series of certificates will be issued as part of a designated
series that may include one or more classes.
(2) Each series of certificates will represent the entire beneficial
ownership interest in the related trust fund and will be paid only from the
related trust fund assets.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE CERTIFICATES OR DETERMINED THAT
THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is September 13, 2006.
[THIS PAGE INTENTIONALLY LEFT BLANK]
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS AND THE APPLICABLE PROSPECTUS SUPPLEMENT
We provide information about the certificates in two separate documents
that progressively provide more detail. These documents are:
o this prospectus, which provides general information, some of which may
not apply to a particular series of certificates, including your
series; and
o the prospectus supplement for a series of certificates, which will
describe the specific terms of that series of certificates.
You should rely only on the information provided in this prospectus and the
applicable prospectus supplement, including the information incorporated by
reference. 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 have included cross-references to captions in these materials where you
can find related discussions that we believe will enhance your understanding of
the topic being discussed. The table of contents of this prospectus and the
table of contents included in the applicable prospectus supplement list the
pages on which these captions are located. You can also find references to key
topics in the table of contents on the preceding page.
You can find the definitions of capitalized terms that are used in this
prospectus beginning on page 109 of this prospectus under the caption
"Glossary."
i
TABLE OF CONTENTS
SUMMARY OF PROSPECTUS..................................................... 1
RISK FACTORS.............................................................. 2
Risks Relating to the Certificates..................................... 2
Risks Relating to the Mortgage Loans................................... 6
DESCRIPTION OF THE TRUST FUNDS............................................ 13
General................................................................ 13
Mortgage Loans......................................................... 14
MBS................................................................... 23
Certificate Accounts................................................... 24
Credit Support......................................................... 24
Cash Flow Agreements................................................... 24
YIELD AND MATURITY CONSIDERATIONS......................................... 24
General................................................................ 24
Pass-Through Rate...................................................... 25
Payment Delays......................................................... 25
Shortfalls in Collections of Interest as a Result of Prepayments
of Mortgage Loans................................................... 25
Yield and Prepayment Considerations.................................... 25
Weighted Average Life and Maturity..................................... 27
Controlled Amortization Classes and Companion Classes.................. 28
Other Factors Affecting Yield, Weighted Average Life and Maturity...... 28
THE DEPOSITOR............................................................. 30
THE SPONSOR............................................................... 30
Overview............................................................... 30
BSCMI's Underwriting Standards......................................... 31
USE OF PROCEEDS........................................................... 33
DESCRIPTION OF THE CERTIFICATES........................................... 33
General................................................................ 33
Distributions.......................................................... 33
Distributions of Interest on the Certificates.......................... 34
Distributions of Principal on the Certificates......................... 35
Distributions on the Certificates in Respect of Prepayment Premiums
or in Respect of Equity Participations.............................. 35
Allocation of Losses and Shortfalls.................................... 35
Advances in Respect of Delinquencies................................... 35
Reports to Certificateholders.......................................... 36
Voting Rights.......................................................... 38
Termination............................................................ 38
Book-Entry Registration and Definitive Certificates.................... 38
DESCRIPTION OF THE POOLING AND SERVICING AGREEMENTS....................... 40
General................................................................ 40
Assignment of Mortgage Loans; Repurchases.............................. 41
Representations and Warranties; Repurchases............................ 42
Collection and Other Servicing Procedures.............................. 43
Sub-Servicers.......................................................... 43
Special Servicers...................................................... 44
Certificate Account.................................................... 44
Modifications, Waivers and Amendments of Mortgage Loans................ 47
Realization upon Defaulted Mortgage Loans.............................. 47
Hazard Insurance Policies.............................................. 50
Due-on-Sale and Due-on-Encumbrance Provisions.......................... 50
Servicing Compensation and Payment of Expenses......................... 51
Evidence as to Compliance.............................................. 51
Some Matters Regarding the Servicer and the Depositor.................. 52
ii
Events of Default...................................................... 53
Rights upon Event of Default........................................... 53
Amendment.............................................................. 54
List of Certificateholders............................................. 55
Certain Limitations on the Rights of Certificateholders................ 55
The Trustee............................................................ 56
Eligibility of the Trustee............................................. 56
Duties of the Trustee.................................................. 56
Regarding the Fees, Indemnities and Powers of the Trustee.............. 56
Resignation and Removal of the Trustee................................. 57
DESCRIPTION OF CREDIT SUPPORT............................................. 57
General................................................................ 57
Subordinate Certificates............................................... 58
Cross-Support Provisions............................................... 58
Insurance or Guarantees with Respect to Mortgage Loans................. 58
Letter of Credit....................................................... 59
Certificate Insurance and Surety Bonds................................. 59
Reserve Funds.......................................................... 59
Credit Support with Respect to MBS..................................... 59
LEGAL ASPECTS OF MORTGAGE LOANS........................................... 60
General................................................................ 60
Types of Mortgage Instruments.......................................... 60
Leases and Rents....................................................... 60
Personal Property...................................................... 61
Foreclosure............................................................ 61
Leasehold Risks........................................................ 64
Cooperative Shares..................................................... 64
Bankruptcy Laws........................................................ 65
Environmental Risks.................................................... 67
Due-on-Sale and Due-on-Encumbrance Provisions.......................... 69
Subordinate Financing.................................................. 69
Default Interest and Limitations on Prepayments........................ 69
Adjustable Rate Loans.................................................. 70
Applicability of Usury Laws............................................ 70
Servicemembers Civil Relief Act........................................ 70
Type of Mortgaged Property............................................. 70
Americans with Disabilities Act........................................ 71
Forfeiture for Drug, RICO and Money Laundering Violations.............. 71
MATERIAL FEDERAL INCOME TAX CONSEQUENCES.................................. 71
Federal Income Tax Consequences for REMIC Certificates................. 72
Federal Income Tax Consequences for Certificates as to Which No
REMIC Election Is Made.............................................. 93
STATE AND OTHER TAX CONSIDERATIONS........................................ 100
CERTAIN ERISA CONSIDERATIONS.............................................. 100
General................................................................ 100
Plan Asset Regulations................................................. 101
Administrative Exemptions.............................................. 101
Unrelated Business Taxable Income; Residual Certificates............... 101
LEGAL INVESTMENT.......................................................... 102
METHOD OF DISTRIBUTION.................................................... 104
WHERE YOU CAN FIND MORE INFORMATION....................................... 105
INCORPORATION OF SOME INFORMATION BY REFERENCE............................ 106
REPORTS................................................................... 106
FINANCIAL INFORMATION..................................................... 106
LEGAL MATTERS............................................................. 106
RATINGS................................................................... 106
GLOSSARY.................................................................. 108
iii
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SUMMARY OF PROSPECTUS
This summary includes selected information from this prospectus. It does
not contain all of the information you need to consider in deciding whether to
buy any class of the offered certificates. To understand the terms of the
offering of the offered certificates, you should read carefully this entire
prospectus and the applicable prospectus supplement.
TITLE OF CERTIFICATES......... Commercial/Multifamily Mortgage Pass-Through
Certificates, issuable in series.
DEPOSITOR..................... Bear Stearns Commercial Mortgage Securities
Inc., a Delaware corporation. Our telephone
number is (212) 272-2000.
DESCRIPTION OF CERTIFICATES;
RATINGS.................... The certificates of each series will be issued
pursuant to a pooling and servicing agreement
and may be issued in one or more classes. The
certificates of each series will represent in
the aggregate the entire beneficial ownership
interest in the property of the related trust
fund. Each trust fund will consist primarily of
a segregated pool of commercial or multifamily
mortgage loans, or mortgage-backed securities
that evidence interests in, or that are secured
by commercial or multifamily mortgage loans.
Each class or certificate will be rated not
lower than investment grade by one or more
nationally recognized statistical rating
agencies at the date of issuance.
The prospectus supplement for a series of certificates includes important
information on related trust fund, certificates, and risks, including
information on the following:
(1) the name of the servicer and special
servicer, the circumstances when a special
servicer will be appointed and their
respective obligations (if any) to make
advances to cover delinquent payments on
the assets of the trust fund, taxes,
assessments or insurance premiums;
(2) the assets in the trust fund, including a
description of the pool of mortgage loans
or mortgage-backed securities;
(3) the identity and attributes of each class
within a series of certificates, including
whether (and to what extent) any credit
enhancement benefits any class of a series
of certificates;
(4) the tax status of certificates; and
(5) whether the certificates will be eligible
to be purchased by investors subject to
ERISA or will be mortgage related
securities for purposes of SMMEA.
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1
RISK FACTORS
You should carefully consider, among other things, the following risk
factors and any other factors set forth under the heading "Risk Factors" in the
related prospectus supplement. In general, to the extent that the factors
discussed below pertain to or are influenced by the characteristics or behavior
of mortgage loans included in a particular trust fund, they would similarly
pertain to and be influenced by the characteristics or behavior of the mortgage
loans underlying any mortgage-backed securities included in the trust fund. If
any of the following risks are realized, your investment could be materially and
adversely affected. In addition, other risks unknown to us or which we currently
consider immaterial may also impair your investment.
RISKS RELATING TO THE CERTIFICATES
LACK OF A SECONDARY MARKET FOR THE CERTIFICATES MAY MAKE IT DIFFICULT FOR
YOU TO RESELL YOUR CERTIFICATES AT ALL OR AT AN ATTRACTIVE PRICE. We cannot
assure you that a secondary market will develop for certificates. Even if a
secondary market develops, we cannot assure you that it will provide you with
liquidity of investment or will continue for as long as the offered certificates
remain outstanding. The absence of a secondary market for your certificates
means that you may not be able to find a buyer for your certificates or, if you
find a buyer, that the selling price may be less than it would have been if a
secondary market existed for the certificates. The underwriter for a series of
certificates will not be obligated to make a market for that series of
certificates even if it intends to do so. Even if a secondary market for your
certificates develops, it may provide less liquidity than any comparable market
for securities that evidence interests in single-family mortgage loans.
Insofar as a secondary market does develop with respect to any series of
offered certificates or class of any series of offered certificates, other
factors may affect their market value. These include:
o the perceived liquidity of the offered certificates;
o their anticipated cash flow, which may vary widely depending upon the
prepayment and default assumptions applied in respect of the
underlying mortgage loans; and
o prevailing interest rates.
For example, small fluctuations in prevailing interest rates may affect at
any given time the price payable of some of the classes of offered certificates.
In particular, a class with a relatively long average life, a companion class or
a class of stripped interest certificates or stripped principal certificates may
be extremely sensitive to small fluctuations in prevailing interest rates. In
addition, the relative change in price for an offered certificate in response to
an upward or downward movement in prevailing interest rates may not necessarily
equal the relative change in price for the offered certificate in response to an
equal but opposite movement in the rates. Accordingly, you may only be able to
sell your certificates at a discount from the price that you paid for them even
if a secondary market develops for the certificates. We are not aware of any
source through which holders of the certificates may obtain price information
about the offered certificates on an ongoing basis.
You will have no right to redeem your certificates except to the extent
described in this prospectus and the related prospectus supplement. Offered
certificates are subject to early retirement only under some specified
circumstances described in this prospectus and in the related prospectus
supplement.
You will be entitled to receive periodic reports pursuant to the related
pooling and servicing agreement regarding the status of the related mortgage
assets and any credit support for your certificates and any subordination of
your certificates to other classes of certificates. The periodic reports will be
the primary source of ongoing information regarding the offered certificates of
any series. The certificateholders may not receive any additional information
from any other source. The limited nature of the information may adversely
affect the liquidity of your certificates, even if a secondary market does
develop for them.
SINCE THE MORTGAGE LOANS WILL NOT BE GUARANTEED, YOU MAY NOT RECEIVE FULL
PAYMENT ON YOUR CERTIFICATES TO THE EXTENT THERE IS A SHORTFALL IN PAYMENT ON
THE ASSETS OR THE RELATED TRUST FUND. The only sources of funds for
2
payment on a series of certificates will generally be the assets of the related
trust fund and, to the extent provided in the applicable prospectus supplement,
any credit enhancement. The certificates will not be guaranteed by us or any of
our affiliates, by any governmental agency or instrumentality or by any other
person or entity unless otherwise stated in the related prospectus supplement. A
portion of the amounts remaining in some funds or accounts constituting part of
a trust fund, including any certificate account and any accounts maintained as
credit support, may be withdrawn under conditions described in the applicable
prospectus supplement for purposes other than the payment of principal or
interest in the related series of certificates. A series of certificates will
have no claim against or security interest in the trust fund for any other
series. As a result, you may suffer a loss on your certificates if the sources
for payment are insufficient to pay all the principal of and interest on the
certificates of your series. If you are a holder of a subordinate certificate,
you may bear a portion of the amount of the losses or shortfalls in collections
on the mortgage assets before the holders of the remaining classes of
certificates in the priority and manner and subject to the limitations specified
in the applicable prospectus supplement.
THE RATE OF PRINCIPAL PREPAYMENTS ON THE MORTGAGE LOANS AND THE RATE OF
REPURCHASES OF THE MORTGAGE LOANS MAY ADVERSELY AFFECT THE YIELD ON YOUR
INVESTMENT. In deciding whether to purchase any offered certificates, you should
make an independent decision as to the appropriate prepayment assumptions to be
used. The pre-tax return on your investment will change from time to time for a
number of reasons, including the following:
o The amount of distributions of principal of the certificates and the
times when you receive those distributions depends on the amount and
the times at which borrowers make principal payments of the underlying
mortgage loans, and on whether we or the servicer purchases the
underlying mortgage loans.
o Prepayments of the mortgage loans in any trust fund by the related
borrowers generally will result in a faster rate of principal payments
on one or more classes of the related certificates than if payment on
those mortgage loans are made as scheduled. The prepayment rate on
mortgage loans may be influenced by a variety of economic, tax, legal
and social factors. While one prepayment rate may be used for the
purpose of pricing the certificates, there can be no assurance that
the actual prepayment rate will be faster or slower than any assumed
prepayment rate.
In addition, to the extent described in this prospectus and in the related
prospectus supplement, in order to maximize recoveries on defaulted mortgage
loans, the servicer or a special servicer will be permitted, within prescribed
limits, to extend and modify mortgage loans that are in default or as to which a
payment default is imminent. While the servicer or a special servicer generally
will be required to determine that any extension or modification is reasonably
likely to produce a greater recovery than liquidation, we can give you no
assurance that any extension or modification will increase the present value of
receipts from or proceeds of the affected mortgage loans.
We or the mortgage loan seller or sellers named in the applicable
prospectus supplement will be required to repurchase a mortgage loan from the
trust, or if so specified in the applicable prospectus supplement, substitute
another mortgage loan, if we or such seller or sellers breach the
representations and warranties made with respect to that mortgage loan. In
addition, the servicer may have the option to purchase the mortgage loans in the
trust fund and may be obligated to purchase mortgage loans from the trust fund
under the circumstances described in the prospectus supplement.
If you buy your certificates at a premium or discount your yield to
maturity will be sensitive to prepayments on the mortgage loans in the related
trust fund. If the amount of interest payable with respect to your class is
disproportionately large, as compared to the amount of principal, as with some
classes of stripped interest certificates, you might fail to recover your
original investment under some prepayment scenarios. The extent to which the
yield to maturity of your certificates may vary from the anticipated yield will
depend in part upon the degree to which you purchased them at a discount or
premium and the amount and timing of distributions on those certificates. If you
purchase a certificate at a discount, you should consider the risk that a slower
than anticipated rate of principal payments on the mortgage loans could result
in an actual yield to you that is lower than the anticipated yield, and if you
purchase a certificate at a premium, you should consider the risk that a faster
than anticipated rate of principal payments could result in an actual yield to
you that is lower than the anticipated yield. For more detailed information
regarding these risks, you should refer to the section in this prospectus titled
"Yield and Maturity Considerations."
3
Average Life of Certificates. The terms of your certificates will determine
the extent to which prepayments on the mortgage loans in any trust fund
ultimately affect the average life of your certificates. For example, a class of
certificates, including a class of offered certificates, may provide that on any
distribution date you are entitled to a pro rata share of the prepayments on the
mortgage loans in the related trust fund that are distributable on that date, to
all or a disproportionately large share of the prepayments, or to none or a
disproportionately small share of the prepayments. A class of certificates that
entitles you to a disproportionately large share of the prepayments on the
mortgage loans in the related trust fund increases the likelihood of early
retirement of that class if the rate of prepayment is relatively fast. A class
of certificates that entitles you to a disproportionately small share of the
prepayments on the mortgage loans in the related trust fund increases the
likelihood of an extended average life of that class if the rate of prepayment
is relatively slow. 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 related trust fund may vary based on the occurrence of
some events, e.g., the retirement of one or more classes of certificates of the
series, or subject to some contingencies, e.g., prepayment and default rates
with respect to the mortgage loans.
Controlled Amortization Classes and Companion Classes. A series of
certificates may include one or more controlled amortization classes, which will
entitle you 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 of the mortgage loans in the related trust fund remains relatively
constant at the rate, or within the range of rates, of prepayment used to
establish the specific principal payment schedule for the certificates. However,
prepayment risk will not disappear.
The stability afforded to a controlled amortization class comes at the
expense of one or more companion classes of the same series, any of which
companion classes may also be a class of offered certificates. In general, a
companion class may entitle you to a disproportionately large share of
prepayments on the mortgage loans in the related trust fund when the rate of
prepayment is relatively fast, and/or may entitle you to a disproportionately
small share of prepayments on the mortgage loans in the related trust fund when
the rate of prepayment is relatively slow. A companion class absorbs some, but
not all, of the risk that would otherwise belong to the related controlled
amortization class if all payments of principal of the mortgage loans in the
related trust fund were allocated on a pro rata basis.
Ratings on your certificates do not guarantee that you will receive payment
under the pooling and servicing agreement. Ratings assigned by a rating agency
to a class of certificates reflect the rating agency's assessment of the
likelihood that the holders of certificates of that class will receive all
payments to which they are entitled. The ratings are based on the structural,
legal and issuer-related aspects associated with these certificates, the nature
of the underlying mortgage loans and the extent and quality of any credit
enhancement. Ratings will not constitute an assessment of the following:
o the likelihood that principal prepayments on the related mortgage
loans will be made;
o the degree to which the rate of prepayments might differ from that
originally anticipated;
o the likelihood of early optional termination of the related trust
fund; or
o the possibility that prepayment of the related mortgage loans may be
made at any particular rate.
The amount, type and nature of credit support, if any, provided with
respect to a series of certificates will be determined on the basis of criteria
established by each rating agency rating classes of the certificates of the
series. Those criteria are sometimes based upon an actuarial analysis of the
behavior of mortgage loans in a larger group. However, we cannot assure you that
the historical data supporting any related 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. These criteria may also be
based upon determinations of the values of the mortgaged properties that provide
security for the mortgage loans. However, we cannot assure you that those values
will not decline in the future. For more detailed information regarding these
risks, you should refer to the section in this prospectus titled "Description of
Credit Support" and "Ratings."
4
ERISA IMPOSES LIMITATIONS ON WHO CAN PURCHASE THE CERTIFICATES; FAILURE TO
COMPLY WITH ERISA MAY MATERIALLY AND ADVERSELY AFFECT THE TRUST FUND AND RESULT
IN REDUCED PAYMENTS ON YOUR CERTIFICATES. Generally, ERISA applies to
investments made by employee benefit plans and transactions involving the assets
of those plans. In addition, some other retirement plans and arrangements,
including individual retirement accounts and Keogh plans, are subject to Section
4975 of the Internal Revenue Code. Due to the complexity of regulations that
govern the plans, if you are subject to ERISA or Section 4975 of the Internal
Revenue Code you are urged to consult your own counsel regarding the
consequences under ERISA or the Internal Revenue Code of acquisition, ownership
and disposition of the offered certificates of any series.
For more detailed information regarding ERISA restrictions, you should
review the section in this prospectus titled "Certain ERISA Considerations."
IF YOU ACQUIRE RESIDUAL CERTIFICATES YOU MAY BE SUBJECT TO ADVERSE TAX
CONSEQUENCES. If you are a holder of residual certificates that represents a
residual interest in a real estate investment conduit or "REMIC," you will be
required to report on your federal income tax returns as ordinary income your
pro rata share of the taxable income of the REMIC, regardless of the amount or
timing of your receipt of cash payments, if any. Accordingly, you may have
taxable income and tax liabilities arising from your investment during a taxable
year in excess of the economic income, if any, attributable to your certificate
during that period. While you will have a corresponding amount of the losses
later in the term of the REMIC, the present value of phantom income may
significantly exceed tax losses. Therefore, the after-tax yield on the residual
certificate that you receive may be significantly less than that of a corporate
bond or stripped instrument having similar cash flow characteristics. A residual
certificate may have negative value.
All or a portion of your share of the REMIC taxable income may be treated
under the Internal Revenue Code as an "excess inclusion." You will have to pay
tax on the excess inclusions regardless of whether you have other credits,
deductions or losses. Excess inclusion income:
o generally will not be subject to offset by losses from other
activities;
o will be treated as unrelated business taxable income for a tax-exempt
holder; and
o will not qualify for exemption from withholding tax for a foreign
holder.
In addition, residual certificates are subject to numerous restrictions on
transfer.
INDIVIDUALS AND SOME OTHER ENTITIES SHOULD NOT INVEST IN CERTIFICATES THAT
ARE RESIDUAL INTERESTS. The fees and non-interest expenses of a REMIC will be
allocated pro rata to certificates that are residual interests in the REMIC.
However, individuals will only be able to deduct these expenses as miscellaneous
itemized deductions, which are subject to numerous restrictions and limitations
under the Internal Revenue Code. Therefore, the certificates that are residual
interests generally are not appropriate investments for:
o individuals;
o estates;
o trusts beneficially owned by any individual or estate; and
o pass-through entities having any individual, estate or trust as a
shareholder, member or partner.
In addition, the REMIC residual certificates will be subject to numerous
transfer restrictions. These restrictions will reduce your ability to sell a
REMIC residual certificate. For example, unless we indicate otherwise in the
related prospectus supplement, you will not be able to transfer a REMIC residual
certificate to a foreign person or to a foreign permanent establishment or fixed
base (within the meaning of an applicable income tax treaty) of a "United States
person" within the meaning of the Internal Revenue Code.
IF YOUR CERTIFICATES ARE ISSUED IN BOOK-ENTRY FORM, YOU WILL ONLY BE ABLE
TO EXERCISE YOUR RIGHTS INDIRECTLY THROUGH DTC AND YOU MAY ALSO HAVE LIMITED
ACCESS TO INFORMATION REGARDING THOSE CERTIFICATES. One or more
5
classes of the offered certificates of any series may be issued as book-entry
certificates. Each class of book-entry certificates will be initially
represented by one or more certificates registered in the name of a nominee for
DTC. As a result, unless and until corresponding definitive certificates are
issued, you will be able to exercise your rights only indirectly through DTC and
its participating organizations. In addition, your access to information
regarding the book-entry certificates may be limited. Conveyance of notices and
other communications by DTC to its participating organizations, and directly and
indirectly through these organizations to you, will be governed by arrangements
among them, subject to any statutory or regulatory requirements as may be in
effect from time to time. Furthermore, as described in this prospectus, you may
suffer delays in the receipt of payments on the book-entry certificates. In
addition, your ability to pledge or otherwise take actions with respect to your
interest in the book-entry certificates may be limited due to the lack of a
physical certificate evidencing that interest.
For more detailed information regarding book-entry registration, you should
review the section in this prospectus titled "Description of the
Certificates--Book-Entry Registration and Definitive Certificates."
RISKS RELATING TO THE MORTGAGE LOANS
MORTGAGE LOANS ARE SUSCEPTIBLE TO NUMEROUS RISKS THAT MAY RESULT IN LOSSES
TO YOU.
(1) Mortgage loans made on the security of multifamily or commercial
property may entail risks of delinquency and foreclosure that are greater than
similar risks associated with 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 that property rather than upon the existence of independent income
or assets of the borrower. Thus, the value of an income-producing property is
directly related to the net operating income derived from that property. If the
net operating income of the property is reduced--for example, if rental or
occupancy rates decline or real estate tax rates or other operating expenses
increase--the borrower's ability to repay the loan may be impaired. A number of
the mortgage loans may be secured by liens on owner-occupied mortgaged
properties or on mortgaged properties leased to a single tenant or a small
number of significant tenants. Accordingly, a decline in the financial condition
of the borrower or a significant tenant, as applicable, may have a
disproportionately greater effect on the net operating income from the mortgaged
properties than would be the case with respect to mortgaged properties with
multiple tenants. Furthermore, the value of any mortgaged property may be
adversely affected by risks generally incident to interests in real property,
including the following:
o changes in general or local economic conditions and/or specific
industry segments;
o declines in real estate values;
o declines in rental or occupancy rates;
o increases in interest rates, real estate tax rates and other operating
expenses;
o changes in governmental rules, regulations and fiscal policies,
including environmental legislation; and
o acts of God and other factors beyond the control of the servicer.
(2) The type and use of a particular mortgaged property may present
additional risks. For instance, mortgaged properties that operate as hospitals
and nursing homes may present special risks to lenders due to the significant
governmental regulation of the ownership, operation, maintenance and financing
of health care institutions. Hotel and motel properties are often operated
pursuant to franchise, management or operating agreements that may be terminable
by the franchisor or operator. Moreover, the transferability of a hotel's
operating, liquor and other licenses upon a transfer of the hotel, whether
through purchase or foreclosure, is subject to local law requirements. The
ability of a borrower to repay a mortgage loan secured by shares allocable to
one or more cooperative dwelling units may be dependent upon the ability of the
dwelling units to generate sufficient rental income, which may be subject to
rent control or stabilization laws, to cover both debt service on the loan as
well as maintenance charges to the cooperative. Further, a mortgage loan secured
by cooperative shares is subordinate to the mortgage, if any, on the cooperative
apartment building.
6
(3) Other multifamily and commercial properties located in the areas of the
mortgaged properties and of the same types as the mortgaged properties compete
with the mortgaged properties to attract residents and customers. The leasing of
real estate is highly competitive. The principal means of competition are price,
location and the nature and condition of the facility to be leased. A borrower
under a mortgage loan competes with all lessors and developers of comparable
types of real estate in the area in which the mortgaged property is located. The
lessors or developers could have lower rentals, lower operating costs, more
favorable locations or better facilities. While a borrower under a mortgaged
property may renovate, refurbish or expand the mortgaged property to maintain it
and remain competitive, the renovation, refurbishment or expansion may itself
entail significant risk. Increased competition could adversely affect income
from and market value of the mortgaged properties. In addition, the business
conducted at each mortgaged property may face competition from other industries
and industry segments.
(4) Some or all of the mortgage loans included in any trust fund will be
nonrecourse loans or loans for which recourse may be restricted or
unenforceable. As to any related mortgage loan, recourse in the event of
borrower default will be limited to the specific real property and other assets,
if any, that were pledged to secure the mortgage loan. However, even with
respect to those mortgage loans that provide for recourse against the borrower
and its assets generally, we can give you no assurance that enforcement of the
recourse provisions will be practicable, or that the assets of the borrower will
be sufficient to permit a recovery in respect of a defaulted mortgage loan in
excess of the liquidation value of the related mortgaged property.
(5) The concentration of default, foreclosure and loss risks in individual
mortgage loans in a particular trust fund will generally be greater than for
pools of single-family loans. Mortgage loans in a trust fund will generally
consist of a smaller number of higher balance loans than would a pool of
single-family loans of comparable aggregate unpaid principal balance.
OFFICE PROPERTIES HAVE PARTICULAR RISKS. In addition to risks generally
associated with real estate, office properties are also affected significantly
by:
o adverse changes in population and employment growth, which generally
creates demand for office space,
o local competitive conditions, including the supply of office space or
the existence or construction of new competitive office buildings,
o the quality and management philosophy of management,
o the attractiveness of the properties to tenants and their customers or
clients,
o the attractiveness of the surrounding neighborhood, and
o the need to make major repairs or improvements to the property to
satisfy the needs of major tenants.
Office properties that are not equipped to accommodate the needs of modern
business may become functionally obsolete and thus non-competitive. In addition,
office properties may be adversely affected by an economic decline in the
businesses operated by their tenants. A decline of this sort may result in one
or more significant tenants ceasing operations at the related locations, which
may occur on account of:
o a tenant's voluntary decision not to renew a lease,
o bankruptcy or insolvency of these tenants, or
o these tenant's general cessation of business activities or for other
reasons.
The risk of an economic decline as described above is greater if revenue is
dependent on a single tenant or if there is a significant concentration of
tenants in a particular business or industry.
MORTGAGE LOANS SECURED BY RETAIL PROPERTIES MAY BE ADVERSELY AFFECTED BY
CHANGES IN CONSUMER SPENDING PATTERNS, ALTERNATIVE FORMS OF RETAILING AND
CHANGES IN TENANTS OCCUPYING THE RETAIL PROPERTIES. In addition to risks
7
generally associated with real estate, mortgage loans secured by retail
properties are also affected significantly by a number of factors, including:
o adverse changes in consumer spending patterns;
o local competitive conditions, including the supply of retail space or
the existence or construction of new competitive shopping centers or
shopping malls;
o alternative forms of retailing, including direct mail, television
shopping networks and Internet based sales, which reduce the need for
retail space by retail companies;
o the quality and management philosophy of management;
o the attractiveness of the properties and the surrounding neighborhood
to tenants and their customers;
o the public perception of the safety of customers, at shopping malls
and shopping centers, for example;
o the need to make major repairs or improvements to satisfy the needs of
major tenants; and
o if an anchor or other significant tenant ceases operations at the
locations, which may occur on account of a decision not to renew a
lease, bankruptcy or insolvency of the tenant, the tenant's general
cessation of business activities or for other reasons. Significant
tenants at a shopping center play an important part in generating
customer traffic and making the property a desirable location for
other tenants at the property. In addition, some tenants at retail
properties may be entitled to terminate their leases if an anchor
tenant ceases operations at the property.
SOME RISKS THAT AFFECT OCCUPANCY AND RENT LEVELS OF MULTIFAMILY RENTAL
PROPERTIES SUCH AS ADVERSE ECONOMIC CONDITIONS, CONSTRUCTION OF ADDITIONAL
HOUSING, MILITARY BASE CLOSINGS, COMPANY RELOCATIONS AND RENT CONTROL LAWS MAY
AFFECT THE ABILITY OF THE BORROWER TO MEET ITS OBLIGATIONS UNDER THE MORTGAGE
LOAN. Adverse economic conditions, either local, regional or national, may limit
or reduce the following:
o the amount of rent that can be charged for rental units;
o tenants' ability to pay rent;
o timeliness of rent payments;
o occupancy levels without a corresponding decrease in
expenses--occupancy and rent levels may also be affected by
construction of additional housing units;
o local military base closings;
o construction of additional housing units;
o company relocations and closings; and
o national and local politics, including current or future rent
stabilization and rent control laws and agreements.
Multifamily apartment units are typically leased on a short-term basis, and
consequently, the occupancy rate of a multifamily rental property may be subject
to rapid decline. In addition, the level of mortgage interest rates may
encourage tenants in multifamily rental properties to purchase single-family
housing rather than continue to lease housing or the characteristics of a
neighborhood may change over time or in relation to newer developments. Further,
the cost of operating a multifamily rental property may increase, including the
cost of utilities and the costs of required capital expenditures. Also, rent
control laws could impact the future cash flows of multifamily rental properties
that are subject to rental control laws.
8
Some multifamily rental properties are eligible to receive low-income
housing tax credits pursuant to Section 42 of the Internal Revenue Code.
However, Section 42 properties are subject to some restrictions that may affect
a borrower's ability to meet its obligations under a mortgage loan. This
includes the following:
o rent limitations associated with those properties may adversely affect
the ability of the applicable borrowers to increase rents to maintain
those properties in proper condition during periods of rapid inflation
or declining market value of those properties;
o the income restrictions on tenants imposed by Section 42 of the
Internal Revenue Code may reduce the number of eligible tenants;
o some eligible tenants may not find any differences in rents between
the Section 42 properties and other multifamily rental properties in
the same area to be a sufficient economic incentive to reside at a
Section 42 property; and
o a Section 42 property may also have fewer amenities or otherwise be
less attractive as a residence making it less attractive to eligible
tenants.
All of the foregoing conditions and events may increase the possibility
that a borrower may be unable to meet its obligations under its mortgage loan.
MORTGAGE LOANS SECURED BY COOPERATIVELY OWNED APARTMENT BUILDINGS ARE
SUBJECT TO THE RISK THAT TENANT-SHAREHOLDERS OF A COOPERATIVELY OWNED APARTMENT
BUILDING WILL BE UNABLE TO MAKE THE REQUIRED MAINTENANCE PAYMENTS. Generally, a
tenant-shareholder of a cooperative corporation must make a monthly maintenance
payment to the cooperative corporation that owns the apartment building
representing that tenant-shareholder's pro rata share of the corporation's
payments in respect of the mortgage loan secured by that apartment building. The
tenant-shareholder must also pay its pro rata share of all real property taxes,
maintenance expenses and other capital and ordinary expenses with respect to
that apartment building, less any other income that the cooperative corporation
may realize.
Adverse economic conditions, either local, regional or national, may
adversely affect tenant-shareholders' ability to make required maintenance
payments, either because adverse economic conditions have impaired the
individual financial conditions of the tenant-shareholders or their ability to
sub-let the subject apartments. To the extent that a large number of
tenant-shareholders in a cooperatively owned apartment building rely on
sub-letting their apartments to make maintenance payments, the lender on any
mortgage loan secured by that building will be subject to all the risks that it
would have in connection with lending on the security of a multifamily rental
property. In addition, if in connection with any cooperative conversion of an
apartment building, the sponsor holds the shares allocated to a large number of
the apartment units, any lender secured by a mortgage on the building will be
subject to a risk associated with the sponsor's creditworthiness.
SELF-STORAGE PROPERTIES HAVE PARTICULAR RISKS. Warehouse, mini-warehouse
and self-storage properties ("Storage Properties") are considered vulnerable to
competition because both acquisition costs and break-even occupancy are
relatively low. The conversion of Storage Properties to alternative uses would
generally require substantial capital expenditures. Thus, if the operation of
any of the Storage Properties becomes unprofitable due to decreased demand,
competition, age of improvements or other factors, such that the borrower
becomes unable to meet its obligation on the related mortgage loan, the
liquidation value of that Storage Property may be substantially less, relative
to the amount owing on the mortgage loan, than would be the case if the Storage
Property were readily adaptable to other uses. Tenant privacy, anonymity and
efficient access are important to the success of a Storage Property, as are
building design and location.
HOTEL AND MOTEL PROPERTIES HAVE PARTICULAR RISKS. Hotel and motel
properties are subject to operating risks common to the lodging industry. These
risks include, among other things:
o a high level of continuing capital expenditures to keep necessary
furniture, fixtures and equipment updated,
o competition from other hotels and motels,
9
o increases in operating costs, which increases may not necessarily in
the future be offset by increased room rates and
o dependence on business and commercial travelers and tourism, increases
in energy costs and other expenses of travel and adverse effects of
general and local economic conditions.
These factors could adversely affect the related borrower's ability to make
payments on the related mortgage loans. Since limited service hotels and motels
are relatively quick and inexpensive to construct, an over-building of hotels
and motels could occur in any given region, which would likely adversely affect
occupancy and daily room rates. Further, because hotel and motel rooms are
generally rented for short periods of time, hotel and motel properties tend to
be more sensitive to adverse economic conditions and competition than many other
commercial properties. Furthermore, the financial strength and capabilities of
the owner and operator of a hotel may have a substantial impact on that hotel's
quality of service and economic performances. Additionally, the revenues of
certain hotels and motels, particularly those located in regions whose economies
depend upon tourism, may be highly seasonal in nature.
A hotel or motel property may present additional risks as compared to other
commercial property types in that:
o hotels and motels may be operated pursuant to franchise, management
and operating agreements that may be terminable by the franchisor, the
manager or the operator;
o the transferability of any operating, liquor and other licenses to the
entity acquiring the related hotel and motel, either through purchase
or foreclosure, is subject to local law requirements;
o it may be difficult to terminate an ineffective operator of a hotel or
motel property subsequent to a foreclosure of the related property;
and
o future occupancy rates may be adversely affected by, among other
factors, any negative perception of a hotel or motel based upon its
historical reputation.
Hotel and motel properties may be operated pursuant to franchise
agreements. The continuation of franchise is typically subject to specified
operating standards and other terms and conditions. The franchisor periodically
inspects its licensed properties to confirm adherence to its operating
standards. The failure of the hotel or motel property to maintain these
standards or adhere to other terms and conditions could result in the loss or
cancellation of the franchise license. It is possible that the franchisor could
condition the continuation of a franchise license on the completion of capital
improvements or the making of certain capital expenditures that the related
borrower determines are too expensive or are otherwise unwarranted in light of
general economic conditions or the operating results or prospects of the
affected hotels or motels. In that event, the related borrower may elect to
allow the franchise license to lapse. In any case, if the franchise is
terminated, the related borrower may seek to obtain a suitable replacement
franchise or to operate the related hotel or motel property independently of a
franchise license. The loss of a franchise license could have a material adverse
effect upon the operations or the underlying value of the hotel or motel covered
by the franchise because of the loss of associated name recognition, marketing
support and centralized reservation systems provided by the franchisor.
MANUFACTURED HOUSING COMMUNITY PROPERTIES AND RECREATIONAL VEHICLE PARKS
HAVE PARTICULAR RISKS. The successful operation of a manufactured housing
community or recreational vehicle park will generally depend upon the number of
competing manufactured housing communities or recreational vehicle parks in the
local market, as well as upon other factors, including its age, appearance,
reputation, management and the types of facilities and services it provides.
Manufactured housing communities also compete against alternative forms of
residential housing, including multifamily rental properties,
cooperatively-owned apartment buildings, condominium complexes and single-family
residential developments. Recreational vehicle parks also compete against
alternative forms of recreation and short-term lodging, for example, staying at
a hotel at the beach.
MANUFACTURED HOUSING COMMUNITY PROPERTIES AND RECREATIONAL VEHICLE PARKS
ARE "SPECIAL PURPOSE" PROPERTIES THAT CANNOT BE READILY CONVERTED TO GENERAL
RESIDENTIAL, RETAIL OR OFFICE USE. Thus, if the operation of a
10
manufactured housing community or recreational vehicle park becomes unprofitable
due to competition, age of the improvements or other factors such that the
borrower becomes unable to meet its obligations on the related mortgage loan,
the liquidation value of the mortgaged property may be substantially less,
relative to the amount owing on the related mortgage loan, than would be the
case if the mortgaged property were readily adaptable to other uses.
MORTGAGE LOANS WITH BALLOON PAYMENTS INVOLVE THE RISK THAT BORROWERS MAY
NOT BE ABLE TO REFINANCE THE LOAN OR SELL THE RELATED PROPERTY. Mortgage loans
may be non-amortizing or only partially amortizing over their terms to maturity.
Those mortgage loans will require substantial principal payments--that is,
balloon payments--at their stated maturity. Mortgage loans of this type involve
a greater degree of risk than self-amortizing loans because the ability of a
borrower to make a balloon payment typically will depend upon its ability either
to refinance the loan or to sell the related mortgaged property. The ability of
a borrower to accomplish either of these goals will be affected by a number of
factors, including:
o value of the related mortgaged property;
o the level of available mortgage rates at the time of sale or
refinancing;
o the borrower's equity in the related mortgaged property;
o the financial condition and operating history of the borrower and the
related mortgaged property;
o tax laws and rent control laws, with respect to some residential
properties;
o Medicaid and Medicare reimbursement rates, with respect to hospitals
and nursing homes; and
o prevailing general economic conditions and the availability of credit
for loans secured by multifamily or commercial, as the case may be,
real properties generally.
Neither we nor any of our affiliates will be required to refinance any
mortgage loan.
CREDIT SUPPORT FOR A SERIES OF CERTIFICATES MAY COVER SOME OF YOUR LOSSES
OR RISKS BUT MAY NOT COVER ALL POTENTIAL RISKS TO YOU. The prospectus supplement
for a series of certificates will describe any credit support provided for these
certificates. Use of credit support will be subject to the conditions and
limitations described in this prospectus and in the related prospectus
supplement. Moreover, the available credit support may not cover all potential
losses or risks. For example, credit support may or may not cover fraud or
negligence by a mortgage loan originator or other parties.
A series of certificates may include one or more classes of subordinate
certificates, which may, in turn, include offered certificates. Subordination is
intended to reduce the risk to holders of each more senior class of certificates
of delinquent distributions or ultimate losses on the mortgage assets. However,
the amount of subordination will be limited and may decline. Since the senior
certificateholders are paid principal before subordinate certificateholders,
subordinate certificateholders may not be paid any principal if the available
credit support is exhausted. As a result, if you are a holder of subordinate
certificates, you will primarily experience the impact of losses and shortfalls.
Moreover, if the available credit support covers more than one series of
certificates, you will be subject to the risk that the credit support will be
exhausted by the claims of the holders of certificates of one or more other
series.
Rating agencies rating the certificates will determine the level of credit
support based on an assumed level of defaults, delinquencies and losses on the
underlying mortgage assets and some other factors. We cannot, however, assure
you that the loss experience on the related mortgage assets will not exceed the
assumed levels.
For more detail information regarding credit support of certificates you
should review the sections in this prospectus titled "--Risks Relating to the
Certificates--Ratings on your certificates do not guarantee that you will
receive payment under the pooling and servicing agreement," "Description of the
Certificates" and "Description of Credit Support."
IF THE MORTGAGED PROPERTY IS SUBJECT TO A LEASE, THE LENDER IS SUBJECT TO
THE RISK THAT IF THE BORROWER DEFAULTS, THE MORTGAGE LENDER MAY HAVE TO OBTAIN A
COURT ORDER APPOINTING A RECEIVER BEFORE BEING ABLE TO COLLECT RENTS.
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Each mortgage loan secured by mortgaged property that is subject to leases
typically will be secured by an assignment of leases and rents. This means that
the borrower assigns to the lender its right, title and interest as landlord
under the leases of the related mortgaged property, and the income derived from
it, as further security for the related mortgage loan. The borrower may continue
to collect rents for so long as there is no default. If the borrower defaults,
the lender is entitled to collect rents. Some state laws may require that the
lender take possession of the mortgaged property and obtain a judicial
appointment of a receiver before becoming 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.
For more detailed information regarding leases and rents, you should review
the section in this prospectus titled "Legal Aspects of Mortgage Loans--Leases
and Rents."
OWNERS AND OPERATORS OF A MORTGAGED PROPERTY AND MORTGAGE LENDERS MAY
BECOME LIABLE FOR THE COSTS OF ENVIRONMENTAL CLEANUP. Under federal law and the
laws of some 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 that property. In addition, under
various federal, state and local laws, ordinances and regulations, an owner or
operator of real estate may be liable for the costs of removal or remediation of
hazardous substances or toxic substances on, in, beneath, or emanating from that
property. The owner may become liable without regard to whether the owner knew
of, or was responsible for, the presence of hazardous or toxic substances on the
property. The cost of any required remediation and the owner or operator's
liability as to any property could exceed the value of the mortgaged property
and the aggregate assets of the owner or operator. In addition, owners or
operators of mortgaged properties that generate hazardous substances that are
disposed of at off-site locations may be held strictly, jointly and severally
liable if there are releases or threatened releases of hazardous substances at
the off-site locations where the hazardous substances were disposed.
Lenders whose primary indicia of ownership in a particular property is the
holding of a security interest are exempted from the definition of owner under
the federal Comprehensive Environmental Response, Compensation, and Liability
Act of 1980. However, lenders may forfeit their secured creditor exemption, as a
result of their actions with respect to particular borrowers, and be deemed an
owner or operator of property so that they are liable for remediation costs. A
lender also risks liability for remediation costs on foreclosure of the
mortgage. Unless otherwise specified in the related prospectus supplement, if a
trust fund includes mortgage loans, then the related pooling and servicing
agreement will contain provisions generally to the effect that the servicer,
acting on behalf of the trust fund, may not acquire title to a mortgaged
property or assume control of its operation unless the servicer, based upon a
report prepared by a person who regularly conducts environmental audits, has
made the determination that it is appropriate to do so. We cannot assure you
that any requirements of a pooling and servicing agreement will effectively
insulate the related trust fund from potential liability for a materially
adverse environmental condition at a mortgaged property.
For more detailed information regarding environmental risks, you should
review the section in this prospectus titled "Legal Aspects of Mortgage
Loans--Environmental Risks."
HAZARD INSURANCE POLICIES ON MORTGAGED PROPERTIES MAY NOT FULLY COVER ALL
TYPES OF DAMAGE TO THE MORTGAGED PROPERTIES. Unless otherwise specified in a
prospectus supplement, the servicer will be required to cause the borrower on
each mortgage loan to maintain insurance coverage in respect of the related
mortgaged property, including hazard insurance. However, the servicer may be
able to satisfy its obligation to cause hazard insurance to be maintained
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. The insurance policies 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 insurance policies, however, 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 some other kinds of
risks. Unless the related mortgage specifically requires the mortgagor to insure
against physical damage arising from causes not typically covered by an
insurance policy, then, to the extent any consequent losses are not covered by
the available credit support, you may in part bear the resulting losses.
12
For more detailed information regarding insurance policies, you should
review the section in this prospectus titled "Description of the Pooling and
Servicing Agreements--Hazard Insurance Policies."
THE YIELD ON YOUR CERTIFICATES MAY BE ADVERSELY AFFECTED TO THE EXTENT THAT
THE RELATED TRUST FUND MAY INCLUDE DELINQUENT MORTGAGE LOANS BECAUSE THE
AVAILABLE CREDIT SUPPORT MAY NOT COVER ALL LOSSES RELATED TO THE DELINQUENT
MORTGAGE LOANS. The trust fund for a particular series of certificates may
include mortgage loans that are past-due, i.e., beyond any applicable grace
period. However, delinquent mortgage loans may only constitute up to, but not
including, 20% (by principal balance) of the trust fund. A special servicer may
perform the servicing of delinquent mortgage loans. When a mortgage loan has a
loan-to-value ratio of 100% or more, the related borrower will have no equity in
the related mortgaged property. In these cases, the related borrower may not
have an incentive to continue to perform under that mortgage loan. In addition,
when the debt service coverage ratio of a mortgage loan is below 1.0x, the
revenue derived from the use and operation of the related mortgaged property is
insufficient to cover the operating expenses of the mortgaged property and to
pay debt service on that mortgage loan and all mortgage loans senior to that
mortgage loan. In those cases, the related borrower will be required to pay from
sources other than cash flow from the related mortgaged property. If the related
borrower ceases to use alternative cash sources at a time when operating revenue
from the related mortgaged property is still insufficient to cover all expenses
and debt service, deferred maintenance at the related mortgaged property and/or
a default under the subject mortgage loan may occur. Available credit may not
cover all losses related to delinquent mortgage loans. You should therefore
consider the risk that the inclusion of delinquent mortgage loans in the trust
fund may adversely affect the rate of defaults and prepayments on the mortgage
assets in the trust fund and the yield on the offered certificates.
For more detailed information regarding delinquent mortgage loans, you
should review the section in this prospectus titled "Description of the Trust
Funds--Mortgage Loans--General."
A WORD ABOUT FORWARD LOOKING STATEMENTS. Whenever we use words like
"intends," "anticipates" or "expects" or similar words in this prospectus, we
are making a forward-looking statement, or a projection of what we think will
happen in the future. Forward-looking statements are inherently subject to a
variety of circumstances, many of which are beyond our control that could cause
actual results to differ materially from what we think they might be. Any
forward-looking statements in this prospectus speak only as of the date of this
prospectus. We do not assume any responsibility to update or review any
forward-looking statement or to reflect any change in events, conditions or
circumstances on which we have based any forward-looking statement.
DESCRIPTION OF THE TRUST FUNDS
GENERAL
The primary assets of each trust fund will consist of the following:
o various types of multifamily or commercial mortgage loans;
o 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
o a combination of the foregoing, which we call mortgage assets.
We will establish each trust fund. We will select each mortgage asset for
inclusion in a trust fund from among those purchased, either directly or
indirectly, from a mortgage asset seller, which may or may not be the originator
of a mortgage loan or the issuer of a MBS and may be our affiliate. Unless
otherwise provided in the related prospectus supplement, neither we nor any of
our affiliates and no governmental agency or instrumentality or any other person
will guarantee or insure any of the mortgage assets included in a trust fund.
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.
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MORTGAGE LOANS
General. The mortgage loans will be evidenced by promissory notes or other
evidences of indebtedness called mortgage notes, secured by liens on fee or
leasehold estates in properties called mortgaged properties consisting of the
following:
o 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, called
multifamily properties, and manufactured housing community properties;
o commercial properties consisting of office buildings, retail
facilities related to the sale of goods and products and facilities
related to providing entertainment, recreation or personal services,
hotels and motels, casinos, health care-related facilities,
recreational vehicle parks, convenience and gasoline stores, warehouse
facilities, mini-warehouse facilities, self-storage facilities,
industrial facilities, parking lots, auto parks, golf courses, arenas
and restaurants, or any cooperatively owned units therein; and
o mixed use properties--that is, any combination of the foregoing--and
unimproved land, both called commercial properties.
The multifamily properties may include mixed commercial and residential
structures, and apartment buildings owned by a private cooperative housing
corporation, with shares of the cooperative allocable to one or more dwelling
units occupied by non-owner tenants or to vacant units. The liens may be created
by mortgages, deeds of trust and similar security instruments. Each mortgage
will create a first priority or junior 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 leasehold will exceed the term of the
mortgage note by at least two years. Unless otherwise specified in the related
prospectus supplement, each mortgage loan will have been originated by a person
other than us; however, the originator may be or may have been one of our
affiliates.
Mortgage assets for a series of certificates may include mortgage loans
made on the security of real estate projects under construction. In that case,
the related prospectus supplement will describe the procedures and timing for
making disbursements from construction reserve funds as portions of the related
real estate project are completed. In addition, some of the mortgage loans
included in the trust fund for a particular series of certificates may be
delinquent or non-performing as of the date those certificates are issued. In
that case, the related prospectus supplement will set forth available
information as to the period of the delinquency or non-performance, any
forbearance arrangement then in effect, the condition of the related mortgaged
property and the ability of the mortgaged property to generate income to service
the mortgage debt.
Mortgage Loans Secured by Office Properties. Significant factors affecting
the value of office properties include the quality of the tenants in the
building, the physical attributes of the building in relation to competing
buildings, the location of the building with respect to the central business
district or population centers, demographic trends within the metropolitan area
to move away from or towards the central business district, social trends
combined with space management trends, which may change towards options such as
telecommuting, tax incentives offered to businesses by cities or suburbs
adjacent to or near the city where the building is located and the strength and
stability of the market area as a desirable business location. Office properties
may be adversely affected by an economic decline in the businesses operated by
their tenants. The risk of an economic decline is increased if revenue is
dependent on a single tenant or if there is a significant concentration of
tenants in a particular business or industry.
Office properties are also subject to competition with other office
properties in the same market. Competition is affected by various factors
affecting a building, including:
o its age;
o its condition;
o its design, including floor sizes and layout;
14
o its access to transportation; and
o the availability of parking and the owner's ability to offer
certain amenities to its tenants, including sophisticated
building systems such as
o fiber optic cables,
o satellite communications or
o other base building technological features.
Office properties that are not equipped to accommodate the needs of modern
business may become functionally obsolete and thus non-competitive.
The success of an office property also depends on the local economy. A
company's decision to locate office headquarters in a given area, for example,
may be affected by an array of factors including:
o labor cost and quality;
o tax environment; and
o quality of life matters, such as schools and cultural amenities.
A central business district may have a substantially different economy from
that of a suburb. The local economy will affect an office property's ability to
attract stable tenants on a consistent basis. In addition, the cost of refitting
office space for a new tenant is often higher than for other property types.
Mortgage Loans Secured by Retail Properties. Retail properties generally
derive all or a substantial percentage of their income from lease payments from
commercial tenants. Income from and the market value of retail properties is
dependent on various factors including, but not limited, to the following:
o the ability to lease space in the properties;
o the ability of tenants to meet their lease obligations;
o the possibility of a significant tenant becoming bankrupt or
insolvent; and
o fundamental aspects of real estate such as location and market
demographics.
The correlation between the success of tenant businesses and property value
is more direct with respect to retail properties than other types of commercial
property because a significant component of the total rent paid by retail
tenants is often tied to a percentage of gross sales. Declines in tenant sales
will cause a corresponding decline in percentage rents and may cause these
tenants to become unable to pay their rent or other occupancy costs. The default
by a tenant under its lease could result in delays and costs in enforcing the
lessor's rights. Repayment of the related mortgage loans will be affected by the
expiration of space leases and the ability of the respective borrowers to renew
or relet the space on comparable terms. Even if vacated space is successfully
relet, the costs associated with reletting, including tenant improvements,
leasing commissions and free rent, could be substantial and could reduce cash
flow from the retail properties. The correlation between the success of tenant
businesses and property value is increased when the property is a single tenant
property.
Whether a shopping center is anchored or unanchored is also an important
distinction. Anchor tenants in shopping centers traditionally have been a major
factor in the public's perception of a shopping center. The anchor tenants at a
shopping center play an important part in generating customer traffic and making
a center a desirable location for other tenants of the center. The failure of an
anchor tenant to renew its lease, the termination of an anchor tenant's lease,
the bankruptcy or economic decline of an anchor tenant, or the cessation of the
business of an anchor tenant--notwithstanding any continued payment of rent--can
have a material negative effect on the
15
economic performance of a shopping center. Furthermore, the correlation between
the success of tenant businesses and property value is increased when the
property is a single tenant property.
Retail properties, including quick service restaurants and convenience and
gasoline facilities in particular, can also be significantly dependent on
operational factors, such as the availability of trained labor and changes in
prices for key commodities. In addition, such uses may be subject to franchise
agreement restrictions on transfers or other operational aspects.
Unlike some other types of commercial properties, retail properties also
face competition from sources outside a given real estate market. Catalogue
retailers, home shopping networks, telemarketing, selling through the Internet,
and outlet centers all compete with more traditional retail properties for
consumer dollars. Continued growth of these alternative retail outlets, which
are often characterized by lower operating costs, could adversely affect the
retail properties.
Mortgage Loans Secured by Multifamily Rental Properties. Significant
factors determining the value and successful operation of a multifamily rental
property include the following:
o location of the property;
o the number of competing residential developments in the local market,
such as apartment buildings, manufactured housing communities and
site-built single family homes;
o the physical attributes of the multifamily building, such as its age
and appearance; and
o state and local regulations affecting the property.
In addition, the successful operation of an apartment building will depend
upon other factors such as its reputation, the ability of management to provide
adequate maintenance and insurance, and the types of services it provides.
Some states regulate the relationship of an owner and its tenants.
Commonly, these laws require a written lease, good cause for eviction,
disclosure of fees, and notification to residents of changed land use, while
prohibiting unreasonable rules, retaliatory evictions and restrictions on a
resident's choice of unit vendors. Apartment building owners have been the
subject of suits under state "Unfair and Deceptive Practices Acts" and other
general consumer protection statutes for coercive, abusive or unconscionable
leasing and sales practices. A few states offer more significant protection. For
example, there are provisions that limit the basis on which a landlord may
terminate a tenancy or increase its rent or prohibit a landlord from terminating
a tenancy solely by reason of the sale of the owner's building.
In addition to state regulation of the landlord-tenant relationship,
numerous counties and municipalities impose rent control on apartment buildings.
These ordinances may limit rent increases to fixed percentages, to percentages
of increases in the consumer price index, to increases set or approved by a
governmental agency, or to increases determined through mediation or binding
arbitration. In many cases, the rent control laws do not provide for decontrol
of rental rates upon vacancy of individual units. Any limitations on a
borrower's ability to raise property rents may impair the borrower's ability to
repay its mortgage loan from its net operating income or the proceeds of a sale
or refinancing of the related mortgaged property.
Adverse economic conditions, either local, regional or national, may limit
the amount of rent that can be charged, may adversely affect tenants' ability to
pay rent and may result in a reduction in timely rent payments or a reduction in
occupancy levels. Occupancy and rent levels may also be affected by construction
of additional housing units, local military base closings, company relocations
and closings and national and local politics, including current or future rent
stabilization and rent control laws and agreements.
Multifamily apartment units are typically leased on a short-term basis, and
consequently, the occupancy rate of a multifamily rental property may be subject
to rapid decline, including for some of the foregoing reasons. In addition, the
level of mortgage interest rates may encourage tenants to purchase single-family
housing rather than continue to lease housing. The location and construction
quality of a particular building may affect the occupancy
16
level as well as the rents that may be charged for individual units. The
characteristics of a neighborhood may change over time or in relation to newer
developments.
Mortgage Loans Secured by Cooperatively Owned Apartment Buildings. A
cooperative apartment building and the land under the building are owned or
leased by a non-profit cooperative corporation. The cooperative corporation is
in turn owned by tenant-shareholders who, through ownership of stock, shares or
membership certificates in the corporation, receive proprietary leases or
occupancy agreements. The proprietary leases and occupancy agreements confer
exclusive rights to occupy specific apartments or units. Generally, a
tenant-shareholder of a cooperative corporation must make a monthly maintenance
payment to the corporation representing the tenant-shareholder's pro rata share
of the corporation's payments in respect of any mortgage loan secured by,
including all real property taxes, maintenance expenses and other capital and
ordinary expenses with respect to, the real property owned by the cooperative
corporation, less any other income that the cooperative corporation may realize.
Payments to the cooperative corporation are in addition to any payments of
principal and interest the tenant-shareholder must make on any loans of the
tenant-shareholder secured by its shares in the corporation.
A cooperative corporation is directly responsible for building management
and payment of real estate taxes and hazard and liability insurance premiums. A
cooperative corporation's ability to meet debt service obligations on a mortgage
loan secured by the real property owned by the cooperative corporation, as well
as all other operating expenses of the property, is dependent primarily upon the
receipt of maintenance payments from the tenant-shareholders, together with any
rental income from units or commercial space that the cooperative corporation
might control. Unanticipated expenditures may in some cases have to be paid by
special assessments on the tenant-shareholders. A cooperative corporation's
ability to pay the amount of any balloon payment due at the maturity of a
mortgage loan secured by the real property owned by the cooperative corporation
depends primarily on its ability to refinance the mortgage loan. Neither we nor
any other person will have any obligation to provide refinancing for any of the
mortgage loans.
In a typical cooperative conversion plan, the owner of a rental apartment
building contracts to sell the building to a newly formed cooperative
corporation. The owner or sponsor allocates shares to each apartment unit, and
the current tenants have a fixed period to subscribe at prices discounted from
the prices to be offered to the public after that period. As part of the
consideration for the sale, the owner or sponsor receives all the unsold shares
of the cooperative corporation. The sponsor usually also controls the
corporation's board of directors and management for a limited period of time.
Each purchaser of shares in the cooperative corporation generally enters
into a long-term proprietary lease which provides the shareholder with the right
to occupy a particular apartment unit. However, many cooperative conversion
plans are so-called "non-eviction" plans. Under a non-eviction plan, a tenant at
the time of conversion who chooses not to purchase shares is entitled to reside
in the unit as a subtenant from the owner of the shares allocated to that
apartment unit. Any applicable rent control or rent stabilization laws would
continue to be applicable to that subtenancy. The subtenant may be entitled to
renew its lease for an indefinite number of times, with continued protection
from rent increases above those permitted by any applicable rent control and
rent stabilization laws. The shareholder is responsible for the maintenance
payments to the cooperative without regard to its receipt or non-receipt of rent
from the subtenant, which may be lower than maintenance payments on the unit.
Newly-formed cooperative corporations typically have the greatest concentration
of non-tenant shareholders.
Mortgage Loans Secured by Industrial Properties. Significant factors that
affect the value of industrial properties are:
o the quality of tenants;
o building design and adaptability; and
o the location of the property.
Industrial properties may be adversely affected by reduced demand for
industrial space occasioned by a decline in a particular industry segment and/or
by a general slow-down in the economy, and an industrial property that suited
the particular needs of its original tenant may be difficult to relet to another
tenant or may become functionally obsolete relative to newer properties.
Furthermore, industrial properties may be adversely affected by
17
the availability of labor sources or a change in the proximity of supply
sources. Because industrial properties frequently have a single tenant, any
related property is heavily dependent on the success of the tenant's business.
Aspects of building site, design and adaptability affect the value of an
industrial property. Site characteristics which are valuable to an industrial
property include ceiling heights, column spacing, number of bays and bay depths,
divisibility, floor loading capacities, truck turning radius and overall
functionality and accessibility. Nevertheless, site characteristics of an
industrial property suitable for one tenant may not be appropriate for other
potential tenants, which may make it difficult to relet the property.
Location is also important because an industrial property requires the
availability of labor sources, proximity to supply sources and customers and
accessibility to rail lines, major roadways and other distribution channels.
Further, industrial properties may be adversely affected by economic declines in
the industry segment of their tenants.
Mortgage Loans Secured by Warehouse, Mini-Warehouse and Self-Storage
Facilities. Because of relatively low acquisition costs and break-even occupancy
rates, warehouse, mini-warehouse and self-storage properties ("Storage
Properties") are considered vulnerable to competition. Despite their relatively
low acquisition costs, and because of their particular building characteristics,
Storage Properties would require substantial capital investments in order to
adapt them to alternative uses. Limited adaptability to other uses may
substantially reduce the liquidation value of a Storage Property. In addition to
competition, factors that affect the success of a Storage Property include the
location and visibility of the facility, its proximity to apartment complexes or
commercial users, trends of apartment tenants in the area moving to
single-family homes, services provided, including security and accessibility,
age of improvements, the appearance of the improvements and the quality of
management.
Mortgage Loans Secured by Hotel and Motel Properties. Hotel and motel
properties may include full service hotels, resort hotels with many amenities,
limited service hotels, hotels and motels associated with national franchise
chains, hotels and motels associated with regional franchise chains and hotels
that are not affiliated with any franchise chain but may have their own brand
identity. Various factors, including location, quality and franchise affiliation
affect the economic performance of a hotel or motel. Adverse economic
conditions, either local, regional or national, may limit the amount that can be
charged for a room and may result in a reduction in occupancy levels. The
construction of competing hotels and motels can have similar effects. To meet
competition in the industry and to maintain economic values, continuing
expenditures must be made for modernizing, refurbishing, and maintaining
existing facilities prior to the expiration of their anticipated useful lives.
Because hotel and motel rooms generally are rented for short periods of time,
hotels and motels tend to respond more quickly to adverse economic conditions
and competition than do other commercial properties. Furthermore, the financial
strength and capabilities of the owner and operator of a hotel or motel may have
an impact on quality of service and economic performance. Additionally, the
lodging industry, in certain locations, is seasonal in nature and this
seasonality can be expected to cause periodic fluctuations in room and other
revenues, occupancy levels, room rates and operating expenses. The demand for
particular accommodations may also be affected by changes in travel patterns
caused by changes in energy prices, strikes, relocation of highways, the
construction of additional highways and other factors.
The viability of any hotel or motel property that is part of a national or
regional hotel or motel chain depends in part on the continued existence and
financial strength of the franchisor, the public perception of the franchise
service mark and the duration of the franchise licensing agreement. The
transferability of franchise license agreements may be restricted and, in the
event of a foreclosure on any related hotel or motel property, the consent of
the franchisor for the continued use of the franchise license by the hotel or
motel property would be required. Conversely, a lender may be unable to remove a
franchisor that it desires to replace following a foreclosure. Further, in the
event of a foreclosure on a hotel or motel property, it is unlikely that the
purchaser of the related hotel or motel property would be entitled to the rights
under any associated liquor license, and the purchaser would be required to
apply in its own right for that license. There can be no assurance that a new
license could be obtained or that it could be obtained promptly.
Mortgage Loans Secured by Manufactured Housing Community Properties and
Recreational Vehicle Parks. Manufactured housing community properties consist of
land that is divided into "spaces" or "homesites" that are primarily leased to
manufactured housing community unit owners. Accordingly, the related mortgage
loans will be secured by mortgage liens on the real estate, or a leasehold
interest therein, upon which the manufactured housing community units are
situated, but not the units themselves. The manufactured housing community unit
owner often
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invests in site-specific improvements, including carports, steps, fencing,
skirts around the base of the unit, and landscaping. The park owner typically
provides private roads within the park, common facilities and, in many cases,
utilities. Park amenities may include:
o driveways;
o visitor parking;
o recreational vehicle and pleasure boat storage;
o laundry facilities;
o community rooms;
o swimming pools;
o tennis courts;
o security systems; and
o health clubs.
Due to relocation costs and, in some cases, demand for manufactured housing
community unit spaces, the value of a unit in place in a park is generally
higher, and can be significantly higher, than the value of the same unit not
placed in a park. As a result, a well-operated manufactured housing community
that has achieved stabilized occupancy is typically able to maintain occupancy
at or near that level. For the same reason, a lender that provided financing for
the unit of a tenant who defaulted in his or her space rent generally has an
incentive to keep rental payments current until the mobile home can be resold in
place, rather than to allow the unit to be removed from the park.
Recreational vehicle parks lease spaces primarily or exclusively for motor
homes, travel trailers and portable truck campers primarily designed for
recreational, camping or travel use. In general, parks that lease recreational
vehicle spaces can be viewed as having a less stable tenant population than
parks occupied predominantly by mobile homes. However, it is not unusual for the
owner of a recreational vehicle to leave the vehicle at the park on a year-round
basis or to use the vehicle as low cost housing and reside in the park
indefinitely.
Mortgage loans secured by liens on manufactured housing community
properties and recreational vehicle parks are affected by factors not associated
with loans secured by liens on other types of income-producing real estate. The
successful operation of these types of properties will generally depend upon the
number of competing parks, as well as upon other factors, including its age,
appearance, reputation, the ability of management to provide adequate
maintenance and insurance, and the types of facilities and services it provides.
Manufactured housing community properties also compete against alternative forms
of residential housing, including:
o multifamily rental properties;
o cooperatively-owned apartment buildings;
o condominium complexes; and
o single-family residential developments.
Recreational vehicle parks also compete against alternative forms of
recreation and short-term lodging, for example, staying at a hotel at the beach.
Manufactured housing community properties and recreational vehicle parks are
"special purpose" properties that cannot be readily converted to general
residential, retail or office use. Thus, if the operation of a manufactured
housing community or recreational vehicle park becomes unprofitable due to
competition, age of the improvements or other factors such that the borrower
becomes unable to meet its obligations on the related mortgage loan, the
liquidation value of the manufactured housing community may be substantially
19
less, relative to the amount owing on the mortgage loan, than would be the case
if the manufactured housing community or recreational vehicle park were readily
adaptable to other uses.
Certain states regulate the relationship of a manufactured housing
community owner and its tenants. Commonly, these laws require a written lease,
good cause for eviction, disclosure of fees, and notification to residents of
changed land use, while prohibiting unreasonable rules, retaliatory evictions,
and restrictions on a resident's choice of unit vendors. Manufactured housing
community owners have been the subject of suits under state "Unfair and
Deceptive Practices Acts" and other general consumer protection statutes for
coercive, abusive or unconscionable leasing and sales practices. A few states
offer more significant protection. For example, there are provisions that limit
the basis on which a landlord may terminate a unit owner's tenancy or increase
its rent or prohibit a landlord from terminating a tenancy solely by reason of
the sale of the owner's unit. Certain states also regulate changes in
manufactured housing community use and require that the landlord give written
notice to its tenants a substantial period of time prior to the projected
change.
In addition to state regulation of the landlord-tenant relationship,
numerous counties and municipalities impose rent control on manufactured housing
communities. These ordinances may limit rent increases to fixed percentages, to
percentages of increases in the consumer price index, to increases set or
approved by a governmental agency, or to increases determined through mediation
or binding arbitration. In many cases, the rent control laws either do not
provide for decontrol of rental rates upon vacancy of individual units or permit
decontrol only in the relatively rare event that the unit is removed from the
unit site. Any limitations on a borrower's ability to raise property rents may
impair the related borrower's ability to repay its mortgage loan from its net
operating income or the proceeds of a sale or refinancing of the related
mortgaged property.
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 that property--that is, its
ability to generate income. Moreover, some or all of the mortgage loans included
in a particular trust fund may be non-recourse loans. Absent special facts,
recourse in the case of default of non-recourse loans will be limited to the
mortgaged property and the other assets, if any, that were pledged to secure
repayment of the mortgage loan.
Lenders typically look to the Debt Service Coverage Ratio of a loan secured
by income-producing property as an important factor in evaluating the risk of
default on such a loan. The Net Operating Income of a mortgaged property will
fluctuate over time and may or may not be sufficient to cover debt service on
the related mortgage loan at any given time. As the primary source of the
operating revenues of a non-owner occupied, income-producing property, rental
income--and, with respect to a mortgage loan secured by a cooperative apartment
building, maintenance payments from tenant-stockholders of a cooperative--may be
affected by the condition of the applicable real estate market and/or the
economy of the area in which the mortgaged property is located or the industry
that it services. In addition, properties typically leased, occupied or used on
a short-term basis, such as some healthcare-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 those properties may pose
greater risks 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 risk of default on a mortgage loan. As may
be further described in the related prospectus supplement, in some cases leases
of mortgaged properties may provide that the lessee, rather than the
borrower/landlord, is responsible for payment of operating expenses. However,
the existence of 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.
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Lenders also look to the Loan-to-Value Ratio of a mortgage loan as a factor
in evaluating risk of loss if a property must be liquidated following a default.
The lower the Loan-to-Value Ratio, the greater the percentage of the borrower's
equity in a mortgaged property. This in turn has the following effects:
o it increases the incentive of the borrower to perform under the terms
of the related mortgage loan, in order to protect the equity; and
o it increases 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 risk 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 changes in
economic conditions, the real estate market and other factors described in this
prospectus. Moreover, even when current, an appraisal is not necessarily a
reliable estimate of value. Appraised values of income-producing properties are
generally based on:
o the market comparison method, i.e., recent resale value of comparable
properties at the date of the appraisal;
o the cost replacement method, i.e., the cost of replacing the property
at the date;
o the income capitalization method, i.e., a projection of value based
upon the property's projected net cash flow; or
o upon a selection from or interpolation of the values derived from the
foregoing 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 default and
loss risks, is even more difficult.
While we believe 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
the foregoing 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. For additional information regarding risks associated
with mortgage loans, you should review the sections in this prospectus titled
"Risk Factors--Risks Relating to the Mortgage Loans--Mortgage Loans are
susceptible to numerous risks that may result in losses to you" and "--Mortgage
loans with balloon payments involve the risk that borrowers may not be able to
refinance the loan or sell the related property."
Payment Provisions of the Mortgage Loans. Unless otherwise specified in the
related prospectus supplement, all of the mortgage loans will have the following
characteristics:
o have had individual principal balances at origination of not less than
$25,000;
o have had original terms to maturity of not more than 40 years; and
o provide for scheduled payments of principal, interest or both, to be
made on specified dates, known as due dates, that occur monthly,
quarterly, semi-annually or annually.
A mortgage loan may also have the following characteristics:
o provide for no accrual of interest or for accrual of interest thereon
at an interest rate, known as 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;
21
o 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 some events, and may permit negative
amortization;
o be fully amortizing or partially amortizing or non-amortizing, with a
balloon payment due on its stated maturity date; and
o prohibit over its term or for a certain period prepayments (the period
of the prohibition is known as a lock-out period and its date of
expiration is known as a lock-out date) and/or require payment of a
premium or a yield maintenance penalty, more commonly known as a
prepayment premium) in connection with some 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 the related mortgaged property or the
benefit, if any, resulting from the refinancing of the mortgage loan as
described in the related prospectus supplement. If holders of any class or
classes of offered certificates of a series will be entitled to all or a portion
of an equity participation in addition to payments of interest on and/or
principal of the offered certificates, the related prospectus supplement will
describe the equity participation and the method or methods by which
distributions relating to the equity participation will be made to the holders.
Mortgage Loan Information in Prospectus Supplements. Each prospectus
supplement will contain information pertaining to the mortgage loans in the
related trust fund, which will generally be current as of a date specified in
the related prospectus supplement. To the extent then applicable and
specifically known to us, the prospectus supplement will include the following:
1. the aggregate outstanding principal balance and the largest, smallest
and average outstanding principal balance of the mortgage loans;
2. the type or types of property that provide security for repayment of the
mortgage loans;
3. the earliest and latest origination date and maturity date of the
mortgage loans;
4. the original and remaining terms to maturity of the mortgage loans, or
the respective ranges those terms to maturity, and the weighted average original
and remaining terms to maturity of the mortgage loans;
5. the original Loan-to-Value Ratios of the mortgage loans, or the range of
those Loan-to-Value Ratios, and the weighted average original Loan-to-Value
Ratio of the mortgage loans;
6. the mortgage rates borne by the mortgage loans, or range of those
mortgage rates, and the weighted average mortgage rate borne by the mortgage
loans;
7. with respect to mortgage loans with adjustable mortgage rates ("ARM
Loans"), the index or indices upon which the 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;
8. information regarding the payment characteristics of the mortgage loans,
including, without limitation, balloon payment and other amortization
provisions, lock-out periods and prepayment premiums;
9. the Debt Service Coverage Ratios of the mortgage loans, either at
origination or as of a more recent date, or the range of those Debt Service
Coverage Ratios, and the weighted average of the Debt Service Coverage Ratios;
and
10. the geographic distribution of the mortgaged properties on a
state-by-state basis.
In appropriate cases, the related prospectus supplement will also contain
some information available to us that pertains to the provisions of leases and
the nature of tenants of the mortgaged properties. If we are unable to tabulate
the specific information described above at the time offered certificates of a
series are initially offered, more
22
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
their initial issuance and will be filed as part of a Current Report on Form 8-K
with the SEC within fifteen days following their issuance.
MBS
Mortgage-backed securities included in a trust fund may include:
o mortgage pass-through certificates or other mortgage-backed securities
that are not guaranteed or insured by the United States or any of its
agencies or instrumentalities; or
o certificates insured or guaranteed by FHLMC, FNMA, GNMA or 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 in this prospectus.
Any MBS will have been issued pursuant to a participation and servicing
agreement, a pooling and servicing agreement, an indenture or similar agreement.
The issuer of the MBS and/or the servicer of the underlying mortgage loans will
have entered into the MBS agreement, generally with a 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 in this prospectus.
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.
The MBS either will have been previously registered under the Securities
Act of 1933, as amended, or each of the following will have been satisfied with
respect to the MBS: (1) neither the issuer of the MBS nor any of its affiliates
has a direct or indirect agreement, arrangement, relationship or understanding
relating to the MBS and the related series of securities to be issued; (2)
neither the issuer of the MBS nor any of its affiliates is an affiliate of the
sponsor, depositor, issuing entity or underwriter of the related series of
securities to be issued and (3) the depositor would be free to publicly resell
the MBS without registration under the Securities Act of 1933, as amended.
Reserve funds, subordination or other credit support similar to that
described for the certificates under "Description of Credit Support" in this
prospectus may have been provided with respect to the MBS. The type,
characteristics and amount of 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 following:
1. the aggregate approximate initial and outstanding principal amount and
type of the MBS to be included in the trust fund;
2. the original and remaining term to stated maturity of the MBS, if
applicable;
3. the pass-through or bond rate of the MBS or the formula for determining
those rates;
4. the payment characteristics of the MBS;
5. the MBS issuer, MBS servicer and MBS trustee, as applicable;
6. a description of the credit support, if any;
23
7. the circumstances under which the related underlying mortgage loans, or
the MBS themselves, may be purchased prior to their maturity;
8. the terms on which mortgage loans may be substituted for those
originally underlying the MBS;
9. the type of mortgage loans underlying the MBS and, to the extent
available to us and appropriate under the circumstances, any other information
in respect of the underlying mortgage loans described under "--Mortgage
Loans--Mortgage Loan Information in Prospectus Supplements";
10. the characteristics of any cash flow agreements that relate to the MBS;
11. the market price of the MBS and the basis on which the market price was
determined; and
12. if the issuer of the MBS is required to file reports under the Exchange
Act of 1934, as amended, how to locate such reports of the MBS issuer.
CERTIFICATE ACCOUNTS
Each trust fund will include one or more accounts established and
maintained on behalf of the certificateholders into which the person or persons
designated in the related prospectus supplement will, to the extent described in
this prospectus and in the prospectus supplement, deposit all payments and
collections received or advanced with respect to the mortgage assets and other
assets in the trust fund. A certificate account may be maintained as an interest
bearing or a non-interest bearing account, and funds held in a certificate
account may be held as cash or invested in some obligations acceptable to each
rating agency rating one or more classes of the related series of offered
certificates.
CREDIT SUPPORT
If so provided in the prospectus supplement for a series of certificates,
partial or full protection against some defaults and losses on the mortgage
assets in the related trust fund may be provided to one or more classes of
certificates of that series in the form of subordination of one or more other
classes of certificates of the series or by credit support arrangements that may
include cross-support provisions, letters of credit, insurance policies,
guarantees, certificate insurance or surety bonds or reserve funds, or a
combination. The amount and types of credit support, the identification of the
entity providing it, if applicable, and related information with respect to each
type of credit support, if any, will be set forth in the prospectus supplement
for a series of certificates. For additional information regarding credit
support, you should review the sections in this prospectus titled " Risk
Factors--Risks Relating to the Mortgage Loans--Credit support for a series of
certificates may cover some of your losses or risks but may not cover all
potential risks to you" 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 that series will be
invested at a specified rate. The trust fund may also include interest rate swap
agreements, interest rate cap or floor agreements, or currency swap agreements,
which agreements are designed to reduce the effects of interest rate or currency
swap rate fluctuations on the mortgage assets on one or more classes of
certificates. The principal terms of any guaranteed investment contract or
interest rate swap agreement or interest rate cap or floor agreement or currency
exchange agreement, and the identity of an obligor or counterparty under the
agreement, will be described in the prospectus supplement for a series of
certificates.
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. The following discussion
24
contemplates a trust fund that consists solely of mortgage loans. While the
characteristics and behavior of mortgage loans underlying an MBS can generally
be expected to have the same effect on the yield to maturity and/or weighted
average life of a class of certificates as will the characteristics and behavior
of comparable mortgage loans, the effect may differ due to the payment
characteristics of the MBS. If a trust fund includes MBS, the related prospectus
supplement will discuss the effect that the MBS payment characteristics 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 the series or, in
the case of a class of offered certificates with a variable or adjustable
pass-through rate the prospectus supplement will specify, the method of
determining the pass-through rate. The prospectus supplement will also discuss
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
guaranteed investment contract or other 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 the payments are passed through
to certificateholders. That delay will effectively reduce the yield that would
otherwise be produced if payments on those mortgage loans were distributed to
certificateholders on or near the date they were due.
SHORTFALLS IN COLLECTIONS OF INTEREST AS A RESULT OF PREPAYMENTS OF MORTGAGE
LOANS
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 the prepayment only
through the date of the prepayment, instead of through the due date for the next
succeeding scheduled payment. However, interest accrued on any series of
certificates and distributable on any distribution date will generally
correspond to interest accrued on the mortgage loans to their respective due
dates during the related Due Period. Consequently, if a prepayment on any
mortgage loan is distributable to certificateholders on a particular
distribution date, but the prepayment is not accompanied by interest to the due
date for the mortgage loan in the related Due Period, then the interest charged
to the borrower, net of servicing and administrative fees, may be less than the
corresponding amount of interest accrued and otherwise payable on the
certificates of the related series. If and to the extent that any shortfall is
allocated to a class of offered certificates, the yield on those certificates
will be adversely affected. The prospectus supplement for each series of
certificates will describe the manner in which any prepayment interest
shortfalls will be allocated among the classes of certificates. If so specified
in the prospectus supplement for a series of certificates, the servicer for that
series will be required to apply some or all of its servicing compensation for
the corresponding period to offset the amount of any prepayment interest
shortfalls. The related prospectus supplement will also describe any other
amounts available to offset shortfalls.
For additional information regarding prepayment interest shortfalls, you
should review the section in this prospectus titled "Description of the Pooling
and Servicing Agreements--Servicing Compensation and Payment of Expenses."
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 of
those payments to reduce the principal balance--or notional amount, if
applicable--of that certificate. The rate of principal payments on the mortgage
loans in any trust fund will in turn be affected by their amortization
schedules, the dates on which any balloon payments are due, and the rate of
voluntary and/or involuntary principal prepayments. You should note that the
amortization schedule of an ARM Loan may change periodically to accommodate
adjustments to the mortgage rate thereon and that these changes may affect the
25
rate of principal payments on an ARM loan. 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 more fully below, no assurance can be
given as to the rate at which any one will prepay.
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 the certificates of that series or, in the case
of a class of stripped interest certificates, result in the reduction of its
notional amount. You 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 you 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 the mortgage loans could result
in an actual yield to you that is lower than the anticipated yield. In addition,
if you purchase an offered certificate at a discount, or a premium, and
principal payments are made in reduction of the principal balance or notional
amount of your offered certificates at a rate slower, or faster, than the rate
anticipated by you during any particular period, the consequent adverse effects
on your yield would not be fully offset by a subsequent like increase, or
decrease, in the rate of principal payments.
A class of certificates, including a class of offered certificates, may
provide that on any distribution date the holders of those certificates are
entitled to a pro rata share of the prepayments on the mortgage loans in the
related trust fund that are distributable on the date, to a disproportionately
large share--which, in some cases, may be all--of the prepayments, or to a
disproportionately small share--which, in some cases, may be none--of the
prepayments. As and to the extent described in the related prospectus
supplement, the respective entitlements of the various classes of certificates
of any series to receive distributions in respect of payments and, in
particular, prepayments of principal of the mortgage loans in the related trust
fund may vary based on the occurrence of some events, e.g., the retirement of
one or more classes of certificates of the series, or subject to some
contingencies, e.g., prepayment and default rates with respect to the mortgage
loans.
In general, the notional amount of a class of stripped interest
certificates will either:
o be based on the principal balances of some or all of the mortgage
assets in the related trust fund; or
o equal the certificate balances of one or more of the other classes of
certificates of the same series.
Accordingly, the yield on stripped interest certificates will be inversely
related to the rate at which payments and other collections of principal are
received on mortgage assets or distributions are made in reduction of the
certificate balances of the 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 the mortgage loans will negatively affect the yield to investors
in stripped interest certificates. If the offered certificates of a series
include any of those certificates, the related prospectus supplement will
include a table showing the effect of various assumed levels of prepayment on
yields on those certificates. The tables will be intended to illustrate the
sensitivity of yields to various assumed prepayment rates and will not be
intended to predict, or to provide information that will enable you to predict,
yields or prepayment rates.
We are not aware of any relevant publicly available or authoritative
statistics with respect to the historical prepayment experience of a group of
multifamily or commercial mortgage loans. However, the extent of prepayments of
principal of the mortgage loans in any trust fund may be affected by a number of
factors, including, without limitation, the availability of mortgage credit, the
relative economic vitality of the area in which the mortgaged properties are
located, the quality of management of the mortgaged properties, the servicing of
the mortgage loans, possible changes in tax laws and other opportunities for
investment. In addition, the rate of principal payments on the mortgage loans in
any trust fund may be affected by the existence of lock-out periods and
requirements that principal prepayments be accompanied by prepayment premiums,
and by the extent to which the provisions may be practicably enforced.
26
The rate of prepayment on a pool of mortgage loans is also 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 the ARM Loans
decline in a manner consistent therewith, the related borrowers may have an
increased incentive to refinance for purposes of either:
o converting to a fixed rate loan and thereby locking in the rate; or
o taking advantage of a different index, margin or rate cap or floor on
another adjustable rate mortgage loan.
Depending on prevailing market interest rates, the outlook for market
interest rates and economic conditions generally, some borrowers may sell
mortgaged properties in order to realize their equity therein, to meet cash flow
needs or to make other investments. In addition, some borrowers may be motivated
by federal and state tax laws--which are subject to change--to sell mortgaged
properties prior to the exhaustion of tax depreciation benefits. We will make no
representation as to the particular factors that will affect the prepayment of
the mortgage loans in any trust fund, as to their relative importance, as to the
percentage of the principal balance of mortgage loans that will be paid as of
any date or as to the overall rate of prepayment on those 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 the series. 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 the instrument is
repaid to the investor.
The weighted average life and maturity of a class of certificates of any
series will be influenced by the rate at which principal on the related mortgage
loans, whether in the form of scheduled amortization or prepayments--for this
purpose, the term prepayment includes voluntary prepayments, liquidations due to
default and purchases of mortgage loans out of the related trust fund--is paid
to that class. Prepayment rates on loans are commonly measured relative to a
prepayment standard or model, such as the constant prepayment rate ("CPR")
prepayment model or the standard prepayment assumption ("SPA") prepayment model.
CPR represents an assumed constant rate of prepayment each month, expressed as
an annual percentage, relative to the then outstanding principal balance of a
pool of loans for the life of the related mortgage loans. SPA represents an
assumed variable rate of prepayment each month, expressed as an annual
percentage, relative to the then outstanding principal balance of a pool of
loans, with different prepayment assumptions often expressed as percentages of
SPA. For example, a prepayment assumption of 100% of SPA assumes prepayment
rates of 0.2% per annum of the then outstanding principal balance of the loans
in the first month of the life of the loans and an additional 0.2% per annum in
each month thereafter until the thirtieth month. Beginning in the thirtieth
month, and in each month thereafter during the life of the loans, 100% of SPA
assumes a constant prepayment rate of 6% per annum each month.
Neither CPR nor SPA nor any other prepayment model or assumption purports
to be a historical description of prepayment experience or a prediction of the
anticipated rate of prepayment of any particular pool of loans. Moreover, the
CPR and SPA models were developed based upon historical prepayment experience
for single-family loans. Thus, it is unlikely that the prepayment experience of
the mortgage loans included in any trust fund will conform to any particular
level of CPR or SPA.
The prospectus supplement with respect to each series of certificates will
contain tables, if applicable, setting forth the projected weighted average life
of each class of offered certificates of the series. The prospectus supplement
will also contain the percentage of the initial certificate balance or notional
amount of each class of offered certificates that would be outstanding on
specified distribution dates based on the assumptions stated in that prospectus
supplement, including assumptions that prepayments on the related mortgage loans
are made at rates corresponding to various percentages of CPR or SPA, or at
other rates specified in the prospectus supplement. The 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.
27
CONTROLLED AMORTIZATION CLASSES AND COMPANION CLASSES
A series of certificates may include one or more controlled amortization
classes, which will entitle the holders of those certificates to receive
principal distributions according to a specified principal payment schedule. The
principal payment schedule is supported by creating priorities, as and to the
extent described in the related prospectus supplement, to receive principal
payments from the mortgage loans in the related trust fund. Unless otherwise
specified in the related prospectus supplement, each controlled amortization
class will either be a planned amortization class or a targeted amortization
class. In general, a planned amortization class has a prepayment collar--that
is, a range of prepayment rates that can be sustained without disruption--that
determines the principal cash flow of the certificates. A prepayment collar is
not static, and may expand or contract after the issuance of the planned
amortization class depending on the actual prepayment experience for the
underlying mortgage loans. Distributions of principal on a planned amortization
class would be made in accordance with the specified schedule so long as
prepayments on the underlying mortgage loans remain at a relatively constant
rate within the prepayment collar and, as described below, companion classes
exist to absorb excesses or shortfalls in principal payments on the underlying
mortgage loans. If the rate of prepayment on the underlying mortgage loans from
time to time falls outside the prepayment collar, or fluctuates significantly
within the prepayment collar, especially for any extended period of time, such
an event may have material consequences in respect of the anticipated weighted
average life and maturity for a planned amortization class. A targeted
amortization class is structured so that principal distributions generally will
be payable in accordance with its specified principal payments schedule so long
as the rate of prepayments on the related mortgage assets remains relatively
constant at the particular rate used in establishing the schedule. A targeted
amortization class will generally afford the holders some protection against
early retirement or some protection against an extended average life, but not
both.
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 related trust fund remains relatively constant at the
rate, or within the range of rates, of prepayment used to establish the specific
principal payment schedule for those 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
companion classes of the same series, any of which companion classes may also be
a class of offered certificates. In general, and as more particularly described
in the related prospectus supplement, a companion class will entitle the holders
of certificates in that class to a disproportionately large share of prepayments
on the mortgage loans in the related trust fund when the rate of prepayment is
relatively fast, and will entitle those holders to a disproportionately small
share of prepayments on the mortgage loans in the related trust fund when the
rate of prepayment is relatively slow. A class of certificates that entitles the
holders to a disproportionately large share of the prepayments on the mortgage
loans in the related trust fund enhances the risk of early retirement of that
class, known as call risk, if the rate of prepayment is relatively fast; while a
class of certificates that entitles its holders to a disproportionately small
share of the prepayments on the mortgage loans in the related trust fund
enhances the risk of an extended average life of that class, known as extension
risk, if the rate of prepayment is relatively slow. Thus, as and to the extent
described in the related prospectus supplement, 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 related trust fund were allocated on a pro rata basis.
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 risk 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 servicer or a special servicer,
to the extent and under the circumstances set forth in this prospectus 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
28
on a class of offered certificates and thereby extend the weighted average life
of the certificates and, if the certificates were purchased at a discount,
reduce the yield thereon.
Negative Amortization. The weighted average life of a class of certificates
can be affected by mortgage loans that permit negative amortization to occur. A
mortgage loan that provides for the payment of interest calculated at a rate
lower than the rate at which interest accrues on those mortgage loan 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. A slower rate of mortgage loan amortization would
correspondingly be reflected in a slower rate of amortization for one or more
classes of certificates of the related series. In addition, negative
amortization on one or more mortgage loans in any trust fund may result in
negative amortization on the certificates of the related series. The related
prospectus supplement will describe, if applicable, the manner in which negative
amortization in respect of the mortgage loans in any trust fund is allocated
among the respective classes of certificates of the related series. Negative
amortization allocated to a class of certificates may result in a deferral of
some or all of the interest payable on those certificates, which deferred
interest may be added to the certificate balance of those certificates.
Accordingly, the weighted average lives of mortgage loans that permit negative
amortization, and that of the classes of certificates to which any related
negative amortization would be allocated or that would bear the effects of a
slower rate of amortization on the mortgage loans, may increase as a result of
this feature.
Negative amortization also may occur in respect of an ARM Loan that limits
the amount by which its scheduled payment may adjust in response to a change in
its mortgage rate, provides that its scheduled payment will adjust less
frequently than its mortgage rate or provides for constant scheduled payments
notwithstanding adjustments to its mortgage rate. Conversely, during a period of
declining interest rates, the scheduled payment on a mortgage loan may exceed
the amount necessary to amortize the loan fully over its remaining amortization
schedule thereby resulting in the accelerated amortization of the mortgage loan.
Any related acceleration in amortization of its principal balance will shorten
the weighted average life of a mortgage loan and, correspondingly, the weighted
average lives of those classes of certificates entitled to a portion of the
principal payments on the 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:
o whether the offered certificate was purchased at a premium or a
discount; and
o the extent to which the payment characteristics of those mortgage
loans delay or accelerate the distributions of principal on the
certificate, or, in the case of a stripped interest certificate, delay
or accelerate the amortization of its notional amount.
For additional information on the effects of negative amortization on the
yield of certificates, you should review the section titled "--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, 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 Loans. The yield to holders of the
offered certificates of any series will directly depend on the extent to which
the 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 the losses and shortfalls. In general, the earlier that
any loss or shortfall occurs, the greater will be the negative effect on yield
for any class of certificates that is required to bear its effects.
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,
29
specified in the related prospectus supplement. As described in the related
prospectus supplement, allocations of losses and shortfalls may be effected by a
reduction in the entitlements to interest and/or certificate balances of one or
more classes of certificates, or by establishing a priority of payments among
those 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
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 the series, may provide for
distributions of principal. Distributions may be provided from:
o amounts attributable to interest accrued but not currently
distributable on one or more classes of accrual certificates;
o Excess Funds; or
o any other amounts described in the related prospectus supplement.
The amortization of any class of certificates out of the sources described
in the preceding paragraph would shorten the weighted average life of the
certificates and, if those certificates were purchased at a premium, reduce the
yield on those certificates. 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 any of the foregoing sources would
have any material effect on the rate at which the certificates are amortized.
Optional Early 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 under the circumstances and in the manner set forth in the prospectus
supplement. 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, a party specified therein may
be authorized or required to solicit bids for the purchase of all of the
mortgage assets of the related trust fund, or of a sufficient portion of the
mortgage assets to retire the class or classes, under the circumstances and in
the manner set forth in the related prospectus supplement. In the absence of
other factors, any early retirement of a class of offered certificates would
shorten the weighted average life of the certificates and, if the certificates
were purchased at premium, reduce the yield on those certificates.
THE DEPOSITOR
We are Bear Stearns Commercial Mortgage Securities Inc., a Delaware
corporation organized on April 20, 1987, and we function as the depositor. Our
primary business is to acquire mortgage loans, mortgage-backed securities and
related assets and sell interests therein or bonds secured thereby. We are an
affiliate of Bear, Stearns & Co. Inc. We maintain our principal office at 383
Madison Avenue, New York, New York 10179. Our telephone number is (212)
272-2000. We do not have, nor do we expect in the future to have, any
significant assets.
THE SPONSOR
OVERVIEW
The prospectus supplement for each series of securities will identify the
sponsor or sponsors for the related series. The related prospectus supplement
may identify a sponsor to be Bear Stearns Commercial Mortgage, Inc. ("BSCMI").
BSCMI is a wholly-owned subsidiary of The Bear Stearns Companies Inc. (NYSE:
BSC), and is a New York corporation and an affiliate of Bear, Stearns & Co. Inc.
The principal offices of BSCMI are located at 383 Madison Avenue, New York, New
York 10179. BSCMI's telephone number is (212) 272-2000.
BSCMI's primary business is the underwriting, origination and sale of
mortgage loans secured by commercial or multifamily properties. BSCMI sells the
great majority of the mortgage loans that it originates through commercial
30
mortgage backed securities ("CMBS") securitizations. BSCMI, with its commercial
mortgage lending affiliates and predecessors, began originating commercial
mortgage loans in 1995 and securitizing commercial mortgage loans in 1996.
The commercial mortgage loans originated by BSCMI include both fixed and
floating rate loans and both conduit loans and large loans. BSCMI primarily
originates loans secured by retail, office, multifamily, hospitality, industrial
and self-storage properties, but also originates loans secured by manufactured
housing communities, theaters, land subject to a ground lease and mixed use
properties. BSCMI originates loans in every state and in Puerto Rico, the U.S.
Virgin Islands and Mexico.
As a sponsor, BSCMI originates mortgage loans and, either by itself or
together with other sponsors or loan sellers, initiates their securitization by
transferring the mortgage loans to a depositor, which in turn transfers them to
the issuing entity for the related securitization. In coordination with Bear,
Stearns & Co. Inc. and other underwriters, BSCMI works with rating agencies,
loan sellers and servicers in structuring the securitization transaction. BSCMI
acts as sponsor, originator or mortgage loan seller both in transactions in
which it is the sole sponsor and mortgage loan seller as well as in transactions
in which other entities act as sponsor and/or mortgage loan seller. Multiple
seller transactions in which BSCMI has participated to date include each of the
prior series of certificates issued under the "TOP" program, in which BSCMI,
Wells Fargo Bank, National Association, Principal Commercial Funding, LLC and
Morgan Stanley Mortgage Capital Inc. ("MSMC") generally are mortgage loan
sellers and sponsors, and Bear Stearns Commercial Mortgage Securities Inc., an
affiliate of BSCMI (the "BSCMSI Depositor"), and Morgan Stanley Capital I Inc.,
which is an affiliate of MSMC, have alternately acted as depositor and the "PWR"
program, in which BSCMI, Prudential Mortgage Capital Funding, LLC, Wells Fargo
Bank, National Association, Principal Commercial Funding, LLC and Nationwide
Life Insurance Company generally are mortgage loan sellers, and the BSCMSI
Depositor acts as depositor.
Neither BSCMI nor any of its affiliates acts as servicer of the commercial
mortgage loans in its securitizations. Instead, BSCMI sells the right to be
appointed servicer of its securitized mortgage loans to rating-agency approved
servicers, including Wells Fargo Bank, National Association, the master servicer
in this transaction, and Bank of America, N.A.
BSCMI'S UNDERWRITING STANDARDS
General. All of the BSCMI mortgage loans were originated by BSCMI or an
affiliate of BSCMI, in each case, generally in accordance with the underwriting
criteria summarized below. Each lending situation is unique, however, and the
facts and circumstance surrounding the mortgage loan, such as the quality,
tenancy and location of the real estate collateral, the sponsorship of the
borrower, will impact the extent to which the general criteria are applied to a
specific mortgage loan. The underwriting criteria are general, and there is no
assurance that every mortgage loan will comply in all respects with the
criteria.
Mortgage Loan Analysis. The BSCMI credit underwriting team for each
mortgage loan is comprised of real estate professionals from BSCMI. The
underwriting team for each mortgage loan is required to conduct an extensive
review of the related mortgaged property, including an analysis of the
appraisal, engineering report, environmental report, historical property
operating statements, rent rolls, current and historical real estate taxes, and
a review of tenant leases. The credit and background of the borrower and certain
key principals of the borrower are examined prior to approval of the mortgage
loan. This analysis includes a review of historical financial statements (which
are generally unaudited), historical income tax returns of the borrower and its
principals, third-party credit reports, judgment, lien, bankruptcy and pending
litigation searches. Borrowers generally are required to be special purpose
entities. The credit of key tenants is also examined as part of the underwriting
process. A member of the BSCMI underwriting team visits and inspects each
property to confirm occupancy rates and to analyze the property's market and
utility within the market.
Loan Approval. Prior to commitment, all mortgage loans must be approved by
a loan committee comprised of senior real estate professionals from BSCMI and
its affiliates. The loan committee may either approve a mortgage loan as
recommended, request additional due diligence, modify the terms, or reject a
mortgage loan.
Debt Service Coverage Ratio and LTV Ratio. BSCMI's underwriting criteria
generally require the following minimum debt service coverage ratios and maximum
loan to value ratios for each indicated property type:
31
PROPERTY TYPE DSCR GUIDELINE LTV RATIO GUIDELINE
------------------------------ -------------- --------------------
Multifamily 1.20x 80%
Office 1.25x 75%
Anchored Retail 1.20x 80%
Unanchored Retail 1.30x 75%
Self-storage 1.30x 75%
Hotel 1.40x 70%
Industrial 1.25x 70%
Manufactured Housing Community 1.25x 75%
Debt service coverage ratios are calculated based on anticipated
Underwritten Net Cash Flow at the time of origination. Therefore, the debt
service coverage ratio for each mortgage loan as reported elsewhere in this
prospectus supplement may differ from the amount determined at the time of
origination.
Escrow Requirements. BSCMI generally requires a borrower to fund various
escrows for taxes and insurance, replacement reserves and capital expenses.
Generally, the required escrows for mortgage loans originated by BSCMI are as
follows:
Taxes and Insurance - Typically, a pro rated initial deposit and monthly
deposits equal to 1/12 of the annual property taxes (based on the most recent
property assessment and the current millage rate) and annual property insurance
premium.
REPLACEMENT RESERVES - MONTHLY DEPOSITS GENERALLY BASED ON
THE GREATER OF THE AMOUNT RECOMMENDED PURSUANT TO A BUILDING
CONDITION REPORT PREPARED FOR BSCMI OR THE FOLLOWING
MINIMUM AMOUNTS:
PROPERTY TYPE DSCR GUIDELINE
------------------------------------------------------------ -----------------
Multifamily $250 per unit
Office $0.20 per square
foot
Retail $0.15 per square
foot
Self-storage $0.15 per square
foot
Hotel 5% of gross
revenue
Industrial $0.10 - $0.15 per
square foot
Manufactured Housing Community $50 per pad
Deferred Maintenance/Environmental Remediation - An initial deposit, upon
funding of the mortgage loan, in an amount generally equal to 125% of the
estimated costs of the recommended substantial repairs or replacements pursuant
to the building condition report completed by a licensed engineer and the
estimated costs of environmental remediation expenses as recommended by an
independent environmental assessment.
Re-tenanting - In some cases major leases expire within the mortgage loan
term. To mitigate this risk, special reserves may be funded either at closing
and/or during the mortgage loan term to cover certain anticipated leasing
commissions or tenant improvement costs which may be associated with re-leasing
the space occupied by these tenants.
32
USE OF PROCEEDS
The net proceeds to be received from the sale of the certificates of any
series will be applied by us to the purchase of trust assets or will be used by
us for general corporate purposes. We expect 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 us,
prevailing interest rates, availability of funds and general market conditions.
DESCRIPTION OF THE CERTIFICATES
GENERAL
Each series of certificates will represent the entire beneficial ownership
interest in the trust fund created pursuant to the related pooling and servicing
agreement. As described in the related prospectus supplement, the certificates
of each series, including the offered certificates of any series, may consist of
one or more classes of certificates that, among other things:
o provide for the accrual of interest thereon at a fixed, variable or
adjustable rate;
o are senior or subordinate to one or more other classes of certificates
in entitlement to distributions on the certificates;
o are stripped principal certificates;
o are stripped interest certificates;
o provide for distributions of interest or principal that commence only
after the occurrence of some events, such as the retirement of one or
more other classes of certificates of the series;
o 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
related trust fund;
o provide for distributions of principal to be made, subject to
available funds, based on a specified principal payment schedule or
other methodology; or
o provide for distributions based on collections on the mortgage assets
in the related trust fund attributable to prepayment premiums and
equity participations.
Each class of offered certificates of a series will be issued in minimum
denominations corresponding to the principal balances or, in case of some
classes of stripped interest certificates or 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 or
may be offered in book-entry format 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 with the transfer.
Interests in a class of book-entry certificates will be transferred on the
book-entry records of DTC and its participating organizations.
DISTRIBUTIONS
Distributions on the certificates of each series will be made by or on
behalf of the related trustee or servicer on each distribution date as specified
in the related prospectus supplement from the Available Distribution Amount for
33
the series and the distribution date. The particular components of the Available
Distribution Amount for any series on each distribution date will be more
specifically described in the related prospectus supplement.
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 certificate, will be made to the persons in
whose names the 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 amount of each distribution will be determined as
of the close of business on the 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 that class. 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 or by check mailed to the address of the
certificateholder as it appears in the certificate register. Payment will be
made by wire transfer if the certificateholder has provided the person required
to make payments with wiring instructions, which may be provided in the form of
a standing order applicable to all subsequent distributions, no later than the
date specified in the related prospectus supplement, and, if so provided in the
related prospectus supplement, the certificateholder holds certificates in the
requisite amount or denomination specified therein. If the certificateholder
does not provide any wiring instructions, payments will be made by check mailed
to the address of the certificateholder as it appears on the certificate
register. 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 the certificates at the location specified in
the notice to certificateholders of the final distribution.
DISTRIBUTIONS OF INTEREST ON THE CERTIFICATES
Each class of certificates of each series, other than some classes of
stripped principal certificates and some classes of residual certificates that
have no pass-through rate, may have a different pass-through rate, which in each
case may be fixed, variable or adjustable. The related prospectus supplement
will specify the pass-through rate or, in the case of a variable or adjustable
pass-through rate, the method for determining the pass-through rate, for each
class. Unless otherwise specified in the related prospectus supplement, interest
on the certificates of each series will be calculated on the basis of a 360-day
year consisting of twelve 30-day months.
Distributions of interest in respect of any class of certificates, other
than some classes of accrual certificates, and other than any class of stripped
principal certificates or 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 the class and the distribution date, subject to
the sufficiency of the portion of the Available Distribution Amount allocable to
that class on the distribution date. Prior to the time interest is distributable
on any class of accrual certificates, the amount of Accrued Certificate Interest
otherwise distributable on that class will be added to the certificate balance
of that class on each distribution date. Reference to a notional amount with
respect to a class of stripped interest certificates is solely for convenience
in making appropriate 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 those certificates--one or more classes of
the certificates of a series will be reduced to the extent that any prepayment
interest shortfalls, as described under "Yield and Maturity
Considerations--Shortfalls in Collections of Interest as a Result of Prepayments
of Mortgage Loans," exceed the amount of any sums--including, if and to the
extent specified in the related prospectus supplement, all or a portion of the
servicer's or special servicer's servicing compensation--that are applied to
offset the amount of the shortfalls. The particular manner in which 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 the 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 that class.
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DISTRIBUTIONS OF PRINCIPAL ON THE CERTIFICATES
Each class of certificates of each series, other than some classes of
stripped interest certificates and some classes of residual certificates, will
have a certificate balance which, at any time, will equal the then maximum
amount that the holders of certificates of the class will be entitled to receive
in respect of 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 from time to time and, if so provided in the related prospectus supplement,
will be further reduced by any losses incurred in respect of the related
mortgage assets allocated to these certificates 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 to them 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, reduced as described above. Unless otherwise
provided in the related prospectus supplement, the initial aggregate certificate
balance of all classes of a series of certificates will not be greater than the
aggregate outstanding principal balance of the related mortgage assets as of the
applicable cut-off date, after application of scheduled payments due on or
before the 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 the series who are entitled to receive those distributions until
the certificate balances of the 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 one or more specified events, such as the retirement of one or
more other classes of certificates of the same series, or may be made at a rate
that is slower, and, in some cases, substantially slower, than the rate at which
payments or other collections of principal are received on the mortgage assets
in the related trust fund. Distributions of principal with respect to one or
more classes of certificates--each such class is known as a controlled
amortization class--may be made, subject to available funds, based on a
specified principal payment schedule. Distributions of principal with respect to
one or more classes of certificates--each such class is known as 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 that class.
DISTRIBUTIONS ON THE CERTIFICATES IN RESPECT OF PREPAYMENT PREMIUMS OR IN
RESPECT OF 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 who are
entitled in accordance with the provisions described in the prospectus
supplement.
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, allocations of
losses or shortfalls may be effected by a reduction in the entitlements to
interest and/or certificate balances of one or more classes of certificates, or
by establishing a priority of payments among classes of certificates.
ADVANCES IN RESPECT OF DELINQUENCIES
If and to the extent provided in the related prospectus supplement, if a
trust fund includes mortgage loans, the servicer, a 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, the amount may be
35
advanced 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 the distribution date.
Advances are intended to maintain a regular flow of scheduled interest and
principal payments to holders of the class or classes of certificates who are
entitled, 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 received under any
instrument of credit support, respecting which the advances were made--as to any
mortgage loan, more commonly known as related proceeds. Advances may also be
reimbursed from other specific sources as may be identified in the related
prospectus supplement, including, in the case of a series that includes one or
more classes of subordinate certificates, collections on other mortgage loans in
the related trust fund that would otherwise be distributable to the holders of
one or more classes of those subordinate certificates. No advance will be
required to be made by the servicer, a special servicer or the trustee if, in
the good faith judgment of the servicer, a special servicer or the trustee, as
the case may be, the advance would not be recoverable from related proceeds or
another specifically identified source--any such advance is known as a
nonrecoverable advance. If an advance was previously made by the servicer, a
special servicer or the trustee, a nonrecoverable advance will be reimbursable
from any amounts in the related certificate account prior to any distributions
being made to the related series of certificateholders.
If advances have been made by the servicer, special servicer, trustee or
other entity from excess funds in a certificate account, the servicer, special
servicer, trustee or other entity, as the case may be, will be required to
replace the funds in the certificate account on any future distribution date to
the extent that funds in the certificate account on the distribution date are
less than payments required to be made to the related series of
certificateholders on that date. If so specified in the related prospectus
supplement, the obligation of the 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 related 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 the advances made
by that entity. Interest will be payable for the period that the advances are
outstanding at the rate specified in the related prospectus supplement, and the
entity making advances will be entitled to payment of 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 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, the servicer, the trustee,
or such other party as may be specified in the related prospectus supplement,
will forward or make available to each holder a distribution date statement that
will set forth the items set forth in the related prospectus supplement, which
could include, among other things, in each case to the extent applicable:
1. the amount of distribution to holders of the class of offered
certificates that was applied to reduce the certificate balance of those
certificates;
2. the amount of distribution to holders of the class of offered
certificates that is allocable to Accrued Certificate Interest;
3. the amount, if any, of distribution to holders of that class of offered
certificates that is allocable to both prepayment premiums and payments on
account of equity participations;
4. the amount, if any, by which the distribution is less than the amounts
to which holders of a class of offered certificates are entitled;
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5. if the related trust fund includes mortgage loans, the aggregate amount
of advances included in the distribution;
6. if the related trust fund includes mortgage loans, the amount of
servicing compensation received by the related servicer, and, if payable
directly out of the related trust fund, by any special servicer and any
sub-servicer, and other customary information as the reporting party deems
necessary or desirable, or that a certificateholder reasonably requests, to
enable certificateholders to prepare their tax returns;
7. information regarding the aggregate principal balance of the related
mortgage assets on or about the distribution date;
8. if the related trust fund includes mortgage loans, information regarding
the number and aggregate principal balance of those mortgage loans that are
delinquent in varying degrees, including specific identification of mortgage
loans that are more than 60 days delinquent or in foreclosure;
9. if the related trust fund includes mortgage loans, information regarding
the aggregate amount of losses incurred and principal prepayments made with
respect to those mortgage loans during the related period. The related period is
generally equal in length to the time period between distribution dates, during
which prepayments and other unscheduled collections on the mortgage loans in the
related trust fund must be received in order to be distributed on a particular
distribution date;
10. the certificate balance or notional amount, as the case may be, of each
class of certificates, including any class of certificates not offered hereby,
at the close of business on a distribution date, separately identifying any
reduction in the certificate balance or notional amount due to the allocation of
any losses in respect of the related mortgage assets, any increase in the
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 the balance;
11. if a class of offered certificates has a variable pass-through rate or
an adjustable pass-through rate, the applicable pass-through rate for the
distribution date and, if determinable, for the next succeeding distribution
date;
12. the amount deposited in or withdrawn from any reserve fund on the
distribution date, and the amount remaining on deposit in the reserve fund as of
the close of business on the distribution date;
13. 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 instrument as of the close of business on the
distribution date; and
14. to the extent not otherwise reflected through the information furnished
pursuant to subclauses 10 and 13 above, the amount of credit support being
afforded by any classes of subordinate certificates.
In the case of information furnished pursuant to subclauses 1-3 above, the
amounts will be expressed as a dollar amount per minimum denomination of the
relevant class of offered certificates or per a specified portion of the minimum
denomination. 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 a series.
Within a reasonable period of time after the end of each calendar year, the
servicer or trustee for a series of certificates, as the case may be, will be
required to furnish or make available to you at any time during the calendar
year you were a holder of an offered certificate of a series a statement
containing the information set forth in subclauses 1-3 above. The information
will be aggregated for that calendar year or the applicable portion of that
calendar year during which the person was a certificateholder. The obligation to
furnish information to a certificateholder will be deemed to have been satisfied
to the extent that substantially comparable information is provided pursuant to
any requirements of the Internal Revenue Code as are from time to time in force.
For other information regarding information provided to a
certificateholder, you should review the section in the prospectus titled
"Description of the Certificates--Book-Entry Registration and Definitive
Certificates."
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If the trust fund for a series of certificates includes MBS, the ability of
the related servicer, the trustee or such other party as may be specified in the
applicable prospectus supplement, as the case may be, to include in any
distribution date statement information regarding the mortgage loans underlying
the MBS will depend on the reports received with respect to the MBS. In those
cases, the related prospectus supplement will describe the loan-specific
information to be included in the distribution date Statements that will be
forwarded or made available 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 will be
allocated among the respective classes of that series in the manner described in
the related prospectus supplement.
You will generally not have a right to vote, except with respect to
required consents to some amendments to the related pooling and servicing
agreement and as otherwise specified in the related prospectus supplement. For
additional information, you should review the section in this prospectus titled
"Description of 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
some events which if continuing would constitute an event of default on the part
of the related servicer. For further information, you should also review the
section in this prospectus titled "Description of the 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:
o the final payment or other liquidation of the last mortgage asset or
the disposition of all property acquired upon foreclosure of any
mortgage loan; and
o the payment to the certificateholders of that series of all amounts
required to be paid to them pursuant to that 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 that 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 under the circumstances and in
the manner set forth in that prospectus supplement. 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, a party designated in that prospectus supplement 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 the mortgage assets to retire
the related class or classes.
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 that series will be offered
in book-entry format through the facilities of DTC, and each 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 Internal Revenue 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 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,
38
include securities brokers and dealers, banks, trust companies and clearing
corporations and may include some 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 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. The rules
applicable to DTC and its participants are on file with SEC.
Purchases of book-entry certificates under DTC system must be made by or
through direct participants, which will receive a credit for the book-entry
certificates on DTC's records. Your ownership interest of a book-entry
certificate is in turn to be recorded on the direct and indirect participants'
records. You will not receive written confirmation from DTC of your purchases,
but you are expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the direct
or indirect participant through which you into the transaction. Transfers of
ownership interest in the book-entry certificates are to be accomplished by
entries made on the books of participants acting on your behalf. 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.
To facilitate subsequent transfer, all offered certificates deposited by
participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of offered certificates with DTC and their registration
with Cede & Co. effect no change in beneficial ownership. 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 the
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 that date.
Disbursement of the distributions by participants to you 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 participant--and not of DTC, us as the
depositor, any trustee or servicer--subject to any statutory or regulatory
requirements as may be in effect from time to time. Under a book-entry system,
you may receive payments after the related distribution date.
Unless otherwise provided in the related prospectus supplement, the only
certificateholder, as the term is used in the related pooling and servicing
agreement, will be the nominee of DTC, and you will not be recognized as
certificateholders under the pooling and servicing agreement. You will be
permitted to exercise your rights under the related pooling and servicing
agreement only indirectly through the participants who in turn will exercise
their rights through DTC. We will be informed that DTC will take action
permitted to be taken by a certificateholder under a pooling and servicing
agreement only at the direction of one or more participants to whose account
with DTC interests in the book-entry certificates are credited.
Because DTC can act only on behalf of participants, who in turn act on
behalf of indirect participants and some of you, your ability to pledge your
interest in book-entry certificates to persons or entities that do not
participate in 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 the interest.
Unless otherwise specified in the related prospectus supplement,
certificates initially issued in book-entry form will be issued as definitive
certificates to you or your nominees, rather than to DTC or its nominee, only
if:
o we advise the trustee in writing that DTC is no longer willing or able
to discharge properly its responsibilities as depository with respect
to those certificates and we are unable to locate a qualified
successor; or
39
o we, at our option, notify DTC of our intent to terminate the
book-entry system through DTC with respect to those certificates and,
upon receipt of notice of such intent from DTC, the participants
holding beneficial interests in those certificates agree to initiate
the termination.
Upon the occurrence of either of the events described in the preceding
sentence, DTC will be required to notify all participants of the availability
through DTC of definitive certificates. Upon surrender by DTC of the certificate
or certificates representing a class of book-entry certificates, together with
instructions for registration, the trustee for the related series or other
designated party will be required to issue to the certificate owners identified
in our instructions the definitive certificates to which they are entitled, and
thereafter the holders of those definitive certificates will be recognized as
certificateholders under the related pooling and servicing agreement.
If you hold your offered certificates in book-entry form through DTC, you
may obtain direct access to the monthly reports to certificateholders as if you
were a registered certificateholder, provided that you deliver a written
certification to the trustee or another party to the pooling and servicing
agreement for the related series in a prescribed form confirming your beneficial
ownership in the offered certificates and you agree to keep the subject
information confidential. Otherwise, until definitive certificates are issued
with respect to your offered certificates, if ever, the information contained in
those monthly reports will be available to you only to the extent that it is
made available through DTC and the DTC participants or is available on the
internet website of the trustee or another party to the pooling and servicing
agreement. The parties to each pooling and servicing agreement are required to
recognize as certificateholders only those persons in whose names the
certificates of a series are registered on the books and records of the trustee
or another certificate registrar.
DESCRIPTION OF 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 general, the parties to a pooling and servicing agreement will
include us, the trustee, the servicer and, in some cases, a special servicer
appointed as of the date of the pooling and servicing agreement. However, a
pooling and servicing agreement may include a mortgage asset seller as a party,
and a pooling and servicing agreement that relates to a trust fund that consists
solely of MBS may not include the 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, our affiliate, or the mortgage
asset seller or its affiliate, may perform the functions of servicer or special
servicer. Any party to a pooling and servicing agreement may own certificates
issued under that pooling and servicing agreement. However, except with respect
to required consents to some amendments to a pooling and servicing agreement,
certificates that are held by the servicer or a 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 some 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 contained in
this prospectus. If the related trust fund includes MBS, it will summarize all
of the material provisions of the related pooling and servicing agreement. The
summaries in this prospectus do not purport to be complete and are subject to,
and are qualified in their entirety by reference to the description of the
provisions in the related prospectus supplement. As used in this prospectus with
respect to any series, the term certificate refers to all of the certificates of
that series, whether or not offered hereby and by the related prospectus
supplement, unless the context otherwise requires. We 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
that series addressed to Bear Stearns Commercial Mortgage Securities Inc., 383
Madison Avenue, New York, New York 10179, Attention: J. Christopher Hoeffel.
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ASSIGNMENT OF MORTGAGE LOANS; REPURCHASES
At the time of issuance of any series of certificates, we will assign, or
cause to be assigned, to the designated trustee the mortgage loans to be
included in the related trust fund. Unless otherwise specified in the related
prospectus supplement, we will assign, or cause to be assigned, all principal
and interest to be received on or with respect to those 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 the assignment, deliver the
certificates to or at our direction in exchange for the mortgage loans and the
other assets to be included in the trust fund for the series. Each mortgage loan
will be identified in a schedule appearing as an exhibit to the related pooling
and servicing agreement. The schedule generally will include detailed
information that pertains to each mortgage loan included in the related trust
fund. The information will typically include the address of the related
mortgaged property and type of the property; the mortgage rate and, if
applicable, the applicable index, gross margin, adjustment date and any rate cap
information; the original and remaining term to maturity; the original
amortization term; and the original and outstanding principal balance.
We will deliver, or cause to be delivered, to the related trustee, or to a
custodian appointed by the trustee, some loan documents with respect to each
mortgage loan to be included in a trust fund. Unless otherwise specified in the
related prospectus supplement, the loan documents will include the following:
o the original mortgage note endorsed, without recourse, to the order of
the trustee or a copy of that note together with a lost note affidavit
and indemnity;
o the original or a copy of the mortgage instrument together with
originals or copies of any intervening assignments of that document,
in each case, unless the particular document has not been returned
from the applicable recording office (subject to certification and
certain timing requirements), with evidence of recording on the
document;
o the original or a copy of any separate assignment of leases and rents,
together with originals or copies of any intervening assignments of
that document, in each case, unless the particular document has not
been returned from the applicable recording office (subject to
certification and certain timing requirements), with evidence of
recording on the document;
o an executed assignment of the related mortgage instrument in favor of
the trustee, in recordable form except for missing recording
information relating to that mortgage instrument;
o an executed assignment of any separate related assignment of leases
and rents in favor of the trustee, in recordable form except for
missing recording information relating to that assignment of leases
and rents;
o original or copies of all written assumption, modification and
substitution agreements, if any, in those instances where the terms or
provisions of the mortgage instrument or promissory note have been
materially modified or the mortgage loan has been assumed;
o an original or copy of the lender's title insurance policy or, if a
title insurance policy has not been issued (subject to certain timing
requirements), a written commitment "marked up" at the closing of the
mortgage loan, interim binder or the pro forma title insurance policy
evidencing a binding commitment to issue a policy; and
o in those cases where applicable, the original or a copy of the related
ground lease.
Unless otherwise provided in the prospectus supplement for a series of
certificates, the related pooling and servicing agreement will require that we
or another party to the pooling and servicing agreement promptly cause each
assignment of mortgage to be recorded in the appropriate public office for real
property records.
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. The trustee, or the
custodian, will hold the mortgage loan documents in trust for the benefit of the
certificateholders of that series. Unless otherwise specified in the related
prospectus supplement, if any document is found to be missing or
41
defective, and that omission or defect, as the case may be, materially and
adversely affects the interests of the certificateholders of the related series,
the trustee, or custodian, will be required to notify the servicer and us, and
one of us 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 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 that will be specified in the related prospectus
supplement. 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 the occurrence of conditions, and/or within a specified
period, specified in the pooling and servicing agreement, after initial issuance
of the series of certificates, to replace that 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 loan documentation. Neither we nor, unless
it is the mortgage asset seller, the servicer will be obligated to purchase or
replace a mortgage loan if a mortgage asset seller defaults on its obligation to
do so. Notwithstanding the foregoing, if a document has not been delivered to
the related trustee, or to a custodian appointed by the trustee, because that
document has been submitted for recording, and neither that document nor a
certified copy, in either case with evidence of recording, can be obtained
because of delays on the part of the applicable recording office, then, unless
otherwise specified in the related prospectus supplement, the mortgage asset
seller will not be required to repurchase or replace the affected mortgage loan
on the basis of that missing document so long as it continues in good faith to
attempt to obtain that document or a certified copy of that document.
REPRESENTATIONS AND WARRANTIES; REPURCHASES
Unless otherwise provided in the prospectus supplement for a series of
certificates, we will, with respect to each mortgage loan in the related trust
fund, make or assign, or cause to be made or assigned, some representations and
warranties covering, by way of example:
o the accuracy of the information set forth for the mortgage loan on the
schedule of mortgage loans appearing as an exhibit to the related
pooling and servicing agreement;
o the enforceability of the related mortgage note and mortgage and the
existence of title insurance insuring the lien priority of the related
mortgage;
o the warranting party's title to the mortgage loan and the authority of
the warranting party to sell the mortgage loan; and
o 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 servicer, a special servicer or another person
acceptable to us, or us or our affiliate. 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 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 your interests. If a warranting party cannot
cure the breach within a specified period following the date on which it was
notified of that breach, then, unless otherwise provided in the related
prospectus supplement, it will be obligated to repurchase the related mortgage
loan from the trustee at a price that will be specified in the related
prospectus supplement. 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 some
conditions and/or within a specified period after initial issuance of a series
of certificates, to replace the related mortgage loan with one or more other
mortgage loans. Unless otherwise specified in the related prospectus supplement,
this repurchase or substitution obligation will constitute the sole remedy
available to you or to the related trustee on your behalf for a breach of
representation and warranty by a warranting party. Neither we nor the
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servicer, in either case unless we or the servicer 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. Consequently, those representations and
warranties may not address events that may occur following the date as of which
they were made. However, we will not include any mortgage loan in the trust fund
for any series of certificates if anything has come to our attention that would
cause it to believe that the representations and warranties made in respect of a
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
The servicer for any trust fund, directly or through sub-servicers, will be
required to make reasonable efforts to collect all scheduled payments under the
mortgage loans in a trust fund. The servicer will be required to follow
collection procedures as it would follow with respect to mortgage loans that are
comparable to the mortgage loans in the trust fund and held for its own account,
provided the procedures are consistent with:
o the terms of the related pooling and servicing agreement and any
related instrument of credit support included in the trust fund;
o applicable law; and
o the servicing standard specified in the related pooling and servicing
agreement and prospectus supplement.
The servicer for any trust fund, directly or through sub-servicers, will
also be required to perform as to the mortgage loans in the trust fund various
other customary functions of a servicer of comparable loans. These obligations
include the following:
o 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;
o attempting to collect delinquent payments; supervising foreclosures;
negotiating modifications; conducting property inspections on a
periodic or other basis;
o managing, or overseeing the management of, mortgaged properties
acquired on behalf of the trust fund through foreclosure, deed-in-lieu
of foreclosure or otherwise, each of which is called an REO property;
and
o maintaining servicing records relating to the mortgage loans.
Unless otherwise specified in the related prospectus supplement, the servicer
will be responsible for filing and settling claims in respect of particular
mortgage loans under any applicable instrument of credit support.
For additional information regarding credit support, you should review the
section in this prospectus titled "Description of Credit Support."
SUB-SERVICERS
The servicer may delegate its servicing obligations in respect of the
mortgage loans serviced thereby to one or more third-party servicers. However,
unless otherwise specified in the related prospectus supplement, the servicer
will remain obligated under the related pooling and servicing agreement. A
sub-servicer for any series of certificates may be our affiliate or an affiliate
of the servicer. Unless otherwise provided in the related prospectus supplement,
each sub-servicing agreement between the servicer and a sub-servicer will
provide that, if for any reason the servicer is no longer acting in that
capacity, the trustee or any successor servicer may assume the servicer's rights
and obligations under the sub-servicing agreement. The servicer will be required
to monitor the
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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 the removal of the
sub-servicer to be in your best interest.
Unless otherwise provided in the related prospectus supplement, the
servicer will be solely liable for all fees owed by it to any sub-servicer,
irrespective of whether the servicer's compensation pursuant to the related
pooling and servicing agreement is sufficient to pay the sub-servicer's fees.
Each sub-servicer will be reimbursed by the servicer that retained it for some
expenditures which it makes, generally to the same extent the servicer would be
reimbursed under a pooling and servicing agreement.
For additional information regarding payment of fees and expenses to a
sub-servicer, you should review the sections in this prospectus titled
"--Certificate Account" and "--Servicing Compensation and Payment of Expenses."
SPECIAL SERVICERS
To the extent so specified in the related prospectus supplement, one or
more special servicers may be a party to the related pooling and servicing
agreement or may be appointed by the servicer or another specified party. A
special servicer for any series of certificates may be our affiliate or an
affiliate of the servicer. A special servicer may be entitled to any of the
rights, and subject to any of the obligations, described in this prospectus in
respect of the servicer including the ability to appoint sub-servicers to the
extent specified in the related prospectus supplement. The related prospectus
supplement will describe the rights, obligations and compensation of any special
servicer for a particular series of certificates. The servicer will be liable
for the performance of a special servicer only if, and to the extent, set forth
in the related prospectus supplement.
CERTIFICATE ACCOUNT
General. The servicer, the trustee and/or a special servicer will, as to
each trust fund that includes mortgage loans, establish and maintain or cause to
be established and maintained one or more separate accounts for the collection
of payments on or in respect of the mortgage loans. Those certificate accounts
will be established so as to comply with the standards of each rating agency
that has rated any one or more classes of certificates of the related series. A
certificate account may be maintained as an interest-bearing or a
non-interest-bearing account. The funds held in a certificate account 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. 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
servicer, trustee or special servicer, if any, as additional compensation. A
certificate account may be maintained with the related servicer, special
servicer or mortgage asset seller or with a depository institution that is our
affiliate or an affiliate of any of the foregoing. Any entity that maintains a
certificate account must comply with applicable rating agency standards. If
permitted by the applicable rating agency or Agencies and so specified in the
related prospectus supplement, 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
servicer or special servicer, if any, or serviced by either on behalf of others.
Deposits. Unless otherwise provided in the related pooling and servicing
agreement and described in the related prospectus supplement, the servicer,
trustee or special servicer will be required to deposit or cause 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, the following payments and collections received or made
by the servicer, the trustee or any special servicer subsequent to the cut-off
date, other than payments due on or before the cut-off date:
1. all payments on account of principal, including principal prepayments,
on the mortgage loans;
2. all payments on account of interest on the mortgage loans, including any
default interest collected, in each case net of any portion retained by the
servicer or any special servicer as its servicing compensation or as
compensation to the trustee;
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3. 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 in accordance with the customary
servicing practices of the servicer, or, if applicable, a special servicer,
and/or the terms and conditions of the related Mortgage (collectively, insurance
and condemnation proceeds) and all other amounts received and retained in
connection with the liquidation of defaulted mortgage loans or property acquired
with respect to the liquidation, by foreclosure or otherwise (collectively,
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;
4. any amounts paid under any instrument or drawn from any fund that
constitutes credit support for the related series of certificates as described
under "Description of Credit Support";
5. any advances made as described under "Description of the
Certificates--Advances in Respect of Delinquencies";
6. any amounts paid under any cash flow agreement, as described under
"Description of the Trust Funds--MBS--Cash Flow Agreements";
7. all proceeds of the purchase of any mortgage loan, or property acquired
with respect to the liquidation, by us, any mortgage asset seller or any other
specified person as described under "--Assignment of Mortgage Loans;
Repurchases" and "--Representations and Warranties; Repurchases", all proceeds
of the purchase of any defaulted mortgage loan as described under "--Realization
Upon Defaulted Mortgage Loans", and all proceeds of any Mortgage Asset purchased
as described under "Description of the Certificates--Termination" (all of the
foregoing, also liquidation proceeds);
8. any amounts paid by the servicer to cover prepayment interest shortfalls
arising out of the prepayment of mortgage loans as described under "--Servicing
Compensation and Payment of Expenses";
9. to the extent that any related item does not constitute additional
servicing compensation to the servicer or a special servicer, any payments on
account of modification or assumption fees, late payment charges, prepayment
premiums or equity participations with respect to the mortgage loans;
10. all payments required to be deposited in the certificate account with
respect to any deductible clause in any blanket insurance policy described under
"--Hazard Insurance Policies";
11. any amount required to be deposited by the servicer or the trustee in
connection with losses realized on investments for the benefit of the servicer
or the trustee, as the case may be, of funds held in the certificate account;
and
12. 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, the 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:
1. to make distributions to you on each distribution date;
2. to pay the servicer, the trustee or a special servicer any servicing
fees not previously retained thereby, the payment to be made out of payments on
the particular mortgage loans as to which the fees were earned;
3. to reimburse the servicer, a special servicer, the trustee or any other
specified person for any unreimbursed amounts advanced by it as described under
"Description of the Certificates--Advances in Respect of Delinquencies", the
reimbursement to be made out of amounts received that were identified and
applied by the servicer or a special servicer, as applicable, as late
collections of interest on and principal of the particular mortgage loans with
respect to which the advances were made or out of amounts drawn under any
instrument of credit support with respect to those mortgage loans;
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4. to reimburse the servicer, the trustee or a special servicer for unpaid
servicing fees earned by it and unreimbursed servicing expenses incurred by it
with respect to mortgage loans in the trust fund and properties acquired in
respect thereof, the reimbursement to be made out of amounts that represent
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 their fees were earned or their
expenses were incurred or out of amounts drawn under any instrument of credit
support with respect to the mortgage loans and properties;
5. to reimburse the servicer, a special servicer, the trustee or other
specified person for any advances described in clause (3) above made by it
and/or any servicing expenses referred to in clause (4) above incurred by it
that, in the good faith judgment of the servicer, special servicer, trustee or
other specified person, as applicable, will not be recoverable from the amounts
described in clauses (3) and (4), respectively, the 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 the other mortgage loans that is otherwise distributable on
one or more classes of subordinate certificates of the related series;
6. if and to the extent described in the related prospectus supplement, to
pay the servicer, a special servicer, the trustee or any other specified person
interest accrued on the advances described in clause (3) above made by it and
the servicing expenses described in clause (4) above incurred by it while the
advances remain outstanding and unreimbursed;
7. 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 the
mortgaged properties, as described under "--Realization Upon Defaulted Mortgage
Loans";
8. to reimburse the servicer, the special servicer, the depositor, or any
of their respective directors, officers, employees and agents, as the case may
be, for some expenses, costs and liabilities incurred thereby, as and to the
extent described under "--Some Matters Regarding the Servicer and the
Depositor";
9. if and to the extent described in the related prospectus supplement, to
pay the fees of trustee;
10. to reimburse the trustee or any of its directors, officers, employees
and agents, as the case may be, for some expenses, costs and liabilities
incurred thereby, as and to the extent described under "--Regarding the Fees,
Indemnities and Powers of the Trustee";
11. if and to the extent described in the related prospectus supplement, to
pay the fees of any provider of credit support;
12. if and to the extent described in the related prospectus supplement, to
reimburse prior draws on any instrument of credit support;
13. to pay the servicer, a special servicer or the trustee, as appropriate,
interest and investment income earned in respect of amounts held in the
certificate account as additional compensation;
14. to pay (generally from related income) for costs incurred in connection
with the operation, management and maintenance of any mortgaged property
acquired by the trust fund by foreclosure or otherwise;
15. if one or more elections have been made to treat the trust fund or its
designated portions 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 "Material Federal Income Tax Consequences--Federal Income Tax Consequences
for REMIC Certificates--Taxes That May Be Imposed on the REMIC Pool";
16. to pay for the cost of an independent appraiser or other expert in real
estate matters retained to determine a fair sale price for a defaulted mortgage
loan or a property acquired with respect to a defaulted mortgage loan in
connection with the liquidation of the mortgage loan or property;
46
17. to pay for the cost of various opinions of counsel obtained pursuant to
the related pooling and servicing agreement for the benefit of
certificateholders;
18. to make any other withdrawals permitted by the related pooling and
servicing agreement and described in the related prospectus supplement; and
19. to clear and terminate the certificate account upon the termination of
the trust fund.
MODIFICATIONS, WAIVERS AND AMENDMENTS OF MORTGAGE LOANS
The servicer may agree to modify, waive or amend any term of any mortgage
loan serviced by it in a manner consistent with the applicable servicing
standard set forth in the related pooling and servicing agreement. However,
unless otherwise set forth in the related prospectus supplement, the
modification, waiver or amendment will not do the following:
o affect the amount or timing of any scheduled payments of principal or
interest on the mortgage loan;
o in the judgment of the servicer, materially impair the security for
the mortgage loan or reduce the likelihood of timely payment of
amounts due on that mortgage loan; and
o adversely affect the coverage under any applicable instrument of
credit support.
Unless otherwise provided in the related prospectus supplement, the
servicer also may agree to any other modification, waiver or amendment if, in
its judgment:
o a material default on the mortgage loan has occurred or a payment
default is imminent;
o the 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
o the modification, waiver or amendment will not adversely affect the
coverage under any applicable instrument of credit support.
REALIZATION UPON DEFAULTED MORTGAGE LOANS
A borrower'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 borrower that is unable to make mortgage loan payments may also be
unable to make timely payment of taxes and insurance premiums and to otherwise
maintain the related mortgaged property. In general, the special servicer for a
series of certificates will be required to monitor any mortgage loan in the
related trust fund that is in default, contact the borrower concerning the
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 borrower
if cure is likely, inspect the related mortgaged property and take the other
actions as are consistent with the servicing standard set forth in the pooling
and servicing agreement. A significant period of time may elapse before the
special servicer is able to assess the success of any related 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 additional initiatives, institute foreclosure proceedings and actually
foreclose, or accept a deed to a mortgaged property in lieu of foreclosure on
your behalf may vary considerably depending on the particular mortgage loan, the
mortgaged property, the borrower, 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 borrower files a bankruptcy petition, the special
servicer may not be permitted to accelerate the maturity of the related mortgage
loan or to foreclose on the related mortgaged property for a considerable period
of time, and the mortgage loan may be restructured in the resulting bankruptcy
proceedings. For additional information regarding the restructuring of a
mortgage loan, you should review the Section in this prospectus titled "Legal
Aspects of Mortgage Loans".
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A pooling and servicing agreement may grant to the servicer, a special
servicer, a provider of credit support and/or the holder or holders of one or
more classes of the related series of certificates a right of first refusal to
purchase from the trust fund, at a predetermined purchase price any mortgage
loan as to which a specified number of scheduled payments are delinquent. If the
predetermined purchase price is insufficient to fully fund the entitlements of
certificateholders to principal and interest, it will be so specified in the
related prospectus supplement. 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 the applicable servicing standard, 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. Unless otherwise provided in the related
prospectus supplement, the related pooling and servicing agreement will require
that the special servicer accept the highest cash bid received from any person,
including itself, us or any affiliate of either of us or any certificateholder,
that constitutes a fair price for the defaulted mortgage loan. In the absence of
any bid determined in accordance with the related pooling and servicing
agreement to be fair, the special servicer will generally be required to proceed
against the related mortgaged property, subject to the discussion below.
If a default on a mortgage loan has occurred or, in the special servicer's
judgment, a payment default is imminent, the special servicer, on behalf of the
trustee, may at any time do the following so long as it is consistent with the
servicing standard:
o institute foreclosure proceedings;
o exercise any power of sale contained in the related Mortgage;
o obtain a deed in lieu of foreclosure; or
o otherwise acquire title to the related mortgaged property.
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 the mortgaged
property within the meaning of some federal environmental laws. The special
servicer may do so only if the special servicer has previously determined, based
on a report prepared by a person who regularly conducts environmental audits,
which report will be an expense of the trust fund, that:
o either the mortgaged property is in compliance with applicable
environmental laws and regulations or, if not, that taking the actions
as are necessary to bring the mortgaged property into compliance
therewith is reasonably likely to produce a greater recovery, taking
into account the time value of money, than not taking the actions; and
o 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, if the circumstances or conditions are present for
which any related action could be required, taking the actions with
respect to the mortgaged property is reasonably likely to produce a
greater recovery, taking into account the time value of money, than
not taking the actions.
For additional information regarding environmental risks associated with
mortgage loans, you should review the section in this prospectus titled "Legal
Aspects of Mortgage Loans--Environmental Risks".
Unless otherwise provided in the related prospectus supplement, if title to
any mortgaged property is acquired by a trust fund as to which one or more REMIC
elections have been made, the special servicer, on behalf of the trust fund,
will be required to sell the mortgaged property prior to the close of the third
calendar year following the year of acquisition, unless one of the following
events occurs:
o the Internal Revenue Service grants an extension of time to sell the
property or
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o the trustee receives an opinion of independent counsel to the effect
that the holding of the property by the trust fund for longer than the
period described above will not result in the imposition of a tax on
the trust fund or cause the trust fund or any of its designated
portions to fail to qualify as a REMIC under the Internal Revenue Code
at any time that any certificate is outstanding.
Subject to the foregoing, the special servicer will generally be required
to solicit bids for any mortgaged property so acquired in such a manner as will
be reasonably likely to realize a fair price for the property. The special
servicer will be required to assure that the mortgaged property is administered
so that it constitutes "foreclosure property" within the meaning of Section
860G(a)(8) of the Internal Revenue Code at all times. If the trust fund acquires
title to any mortgaged property, the special servicer, on behalf of the trust
fund, may be required to retain an independent contractor to manage and operate
that property. The retention of an independent contractor, however, will not
relieve the special servicer of its obligation to manage that mortgaged property
in a manner consistent with the servicing standard set forth in the related
pooling and servicing agreement.
In general, the special servicer will be obligated to operate and manage
any mortgaged property acquired as REO property in a manner consistent with the
servicing standard. After the special servicer reviews the operation of that
property and consults with the trustee to determine the trustee's federal income
tax reporting position with respect to the income it is anticipated that the
trust fund would derive from that property, the special servicer could
determine, particularly in the case of REO properties that are operating
businesses, such as hotels, that it would not be consistent with the servicing
standard, to manage and operate such property in a manner that would avoid the
imposition of a tax on "net income from foreclosure property" within the meaning
of Section 857(b)(4)(B) of the Internal Revenue Code (an "REO Tax"). To the
extent that income the trust fund receives from an REO property is subject to an
REO Tax, such income would be subject to federal tax at the highest marginal
corporate tax rate, which is 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. Any REO Tax imposed on the trust fund's income from an REO
property would reduce the amount available for distribution to
certificateholders. Certificateholders are advised to consult their tax advisors
regarding the possible imposition of REO Taxes in connection with the operation
of commercial REO Properties by REMICs. For additional information you should
review the section in this prospectus titled "Material Federal Income Tax
Consequences."
The limitations imposed by the related pooling and servicing agreement and,
if applicable, the REMIC provisions of the Internal Revenue Code on the
operations and ownership of any mortgaged property acquired on behalf of the
trust fund may result in the recovery of an amount less than the amount that
would otherwise be recovered. For additional information you should review the
section in this prospectus titled "Legal Aspects of Mortgage
Loans--Foreclosure."
If recovery on a defaulted mortgage loan under any related instrument of
credit support is not available, the special servicer nevertheless will be
obligated to follow or cause to be followed such normal practices and procedures
as it deems necessary or advisable to realize upon the defaulted mortgage loan.
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 on that mortgage loan and the aggregate amount of
reimbursable expenses incurred by the special servicer in connection with that
mortgage loan, the trust fund will realize a loss in the amount of the
shortfall. The special servicer will be entitled to reimbursement out of the
liquidation proceeds recovered on any defaulted mortgage loan, prior to the
distribution of liquidation proceeds to you. The reimbursement amount will
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.
If any mortgaged property suffers damage such that the proceeds, if any, of
the related hazard insurance policy are insufficient to restore fully the
damaged property, the special servicer will not be required to expend its own
funds to effect the restoration unless, and to the extent not otherwise provided
in the related prospectus supplement, it determines:
o that the restoration will increase the proceeds to certificateholders
on liquidation of the mortgage loan after reimbursement of the special
servicer for its expenses; and
49
o that the expenses will be recoverable by it from related insurance and
condemnation proceeds or liquidation proceeds.
HAZARD INSURANCE POLICIES
Unless otherwise specified in the related prospectus supplement, each
pooling and servicing agreement will require the servicer to cause each mortgage
loan borrower to maintain a hazard insurance policy that provides for the
coverage as is required under the related mortgage. Alternatively, if the
mortgage permits the holder to dictate to the borrower the insurance coverage to
be maintained on the related mortgaged property, the hazard insurance policy
coverage should be consistent with the requirements of the servicing standard.
Unless otherwise specified in the related prospectus supplement, the hazard
insurance policy coverage generally will be in an amount equal to the lesser of
the principal balance owing on the mortgage loan and the replacement cost of the
related mortgaged property. The ability of the servicer to assure that hazard
insurance proceeds are appropriately applied may depend 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
the servicer under any policy will be deposited in the related certificate
account. Amounts to be applied to the restoration or repair of the mortgaged
property or released to the borrower in accordance with the servicer's normal
servicing procedures and/or to the terms and conditions of the related mortgage
and mortgage note will be otherwise distributed. The pooling and servicing
agreement may provide that the servicer may satisfy its obligation to cause each
borrower to maintain a hazard insurance policy by maintaining a blanket policy
insuring against hazard losses on all of the mortgage loans in a trust fund. If
a blanket policy contains a deductible clause, the servicer will be required, in
the event of a casualty covered by that blanket policy, to deposit in the
related certificate account all sums that would have been deposited in that
certificate account but for the 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.
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.
Nevertheless, most of the 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 some other kinds of
risks. Accordingly, a mortgaged property may not be insured for losses arising
from any such cause unless the related mortgage specifically requires, or
permits its holder to require, that type of 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, the clauses generally provide that the insurer's liability
in the event of partial loss does not exceed the lesser of:
o the replacement cost of the improvements less physical depreciation;
and
o the proportion of the loss as the amount of insurance carried bears to
the specified percentage of the full replacement cost of the
improvements.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE PROVISIONS
Some 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.
Some 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 servicer will
determine whether to exercise any right the trustee may have under any related
provision in a manner consistent with the servicing standard set forth in the
related pooling and servicing agreement. Unless otherwise specified in the
related
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prospectus supplement, the servicer will be entitled to retain as
additional servicing compensation any fee collected in connection with the
permitted transfer of a mortgaged property.
For additional information regarding due-on-sale and due-on-encumbrance
clauses relating to mortgage loans, you should review the section in this
prospectus titled "Legal Aspects of Mortgage Loans--Due-on-Sale and
Due-on-Encumbrance".
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
Unless otherwise specified in the related prospectus supplement, the
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. Any
special servicer's compensation with respect to a series of certificates will
come from payments or other collections on or with respect to specially serviced
mortgage loans and REO properties. Because compensation is generally based on a
percentage of the principal balance of each mortgage loan outstanding from time
to time, it will decrease in accordance with the amortization of the mortgage
loans. The prospectus supplement with respect to a series of certificates may
provide that, as additional compensation, the servicer may 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 certificate account. Any sub-servicer will receive a
portion of the servicer's compensation as its sub-servicing compensation.
In addition to amounts payable to any sub-servicer, the servicer may be
required, to the extent provided in the related prospectus supplement, to pay
from amounts that represent its servicing compensation some expenses incurred in
connection with the administration of the related trust fund. Those expenses may
include, without limitation, payment of the fees and disbursements of
independent accountants and payment of expenses incurred in connection with
distributions and reports to certificateholders. Some other expenses, including
some expenses related to mortgage loan defaults and liquidations and, to the
extent so provided in the related prospectus supplement, interest on those
expenses at the rate specified in the related prospectus supplement, and the
fees of any special servicer, may be required to be borne by the trust fund.
If and to the extent provided in the related prospectus supplement, the
servicer may be required to apply a portion of the servicing compensation
otherwise payable to it in respect of any period to prepayment interest
shortfalls. For further information regarding prepayment interest shortfalls,
you should review the section in the prospectus titled "Yield and Maturity
Considerations--Shortfalls in Collections of Interest as a Result of Prepayments
of Mortgage Loans".
EVIDENCE AS TO COMPLIANCE
The related prospectus supplement will identify each party that will be
required to deliver annually to the trustee, master servicer or us, as
applicable, on or before the date specified in the applicable pooling and
servicing agreement, an officer's certificate stating that (i) a review of that
party's servicing activities during the preceding calendar year and of
performance under the pooling and servicing agreement has been made under the
supervision of the officer, and (ii) to the best of the officer's knowledge,
based on the review, such party has fulfilled all its obligations under the
pooling and servicing agreement throughout the year, or, if there has been a
failure to fulfull any such obligation, specifying such failure known to the
officer and the nature and status of the failure.
In addition, each party that participates in the servicing and
administration of more than 5% of the mortgage loans and other assets comprising
a trust for any series will be required to deliver annually to us and/or the
trustee, a report (an "Assessment of Compliance") that assesses compliance by
that party with the servicing criteria set forth in Item 1122(d) of Regulation
AB (17 CFR 229.1122) that contains the following:
(a) a statement of the party's responsibility for assessing compliance
with the servicing criteria applicable to it;
(b) a statement that the party used the criteria in Item 1122(d) of
Regulation AB to assess compliance with the applicable servicing
criteria;
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(c) the party's assessment of compliance with the applicable servicing
criteria during and as of the end of the prior calendar year, setting
forth any material instance of noncompliance identified by the party;
and
(d) a statement that a registered public accounting firm has issued an
attestation report on the party's assessment of compliance with the
applicable servicing criteria during and as of the end of the prior
calendar year.
Each party that is required to deliver an Assessment of Compliance will
also be required to simultaneously deliver a report (an "Attestation Report") of
a registered public accounting firm, prepared in accordance with the standards
for attestation engagements issued or adopted by the Public Company Accounting
Oversight Board, that expresses an opinion, or states that an opinion cannot be
expressed, concerning the party's assessment of compliance with the applicable
servicing criteria.
SOME MATTERS REGARDING THE SERVICER AND THE DEPOSITOR
The entity serving as servicer under a pooling and servicing agreement may
be our affiliate and may have other normal business relationships with us or our
affiliates. Unless otherwise specified in the prospectus supplement for a series
of certificates, the related pooling and servicing agreement will permit the
servicer to resign from its obligations only upon the following conditions:
o the appointment of, and the acceptance of the appointment by, a
successor to it and receipt by the trustee of written confirmation
from each applicable rating agency that the resignation and
appointment will not have an adverse effect on the rating assigned by
the rating agency to any class of certificates of the series; or
o a determination that the servicer's 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 resignation by the servicer will become effective until the trustee or a
successor servicer has assumed the servicer's obligations and duties under the
pooling and servicing agreement. Unless otherwise specified in the related
prospectus supplement, the 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 some 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 servicer,
any special servicer, the depositor 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. However, none of
the servicer, us or any other person will be protected against any of the
following:
o breach of a representation, warranty or covenant made in the pooling
and servicing agreement;
o any expense or liability that that person is specifically required to
bear pursuant to the terms of the pooling and servicing agreement; and
o any liability that would otherwise be imposed by reason of willful
misfeasance, bad faith or gross negligence in the performance of
obligations or duties or by reason of reckless disregard of the
obligations and duties.
Unless otherwise specified in the related prospectus supplement, each
pooling and servicing agreement will further provide that the servicer, the
depositor and any director, officer, employee or agent of either 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 the pooling and servicing agreement or the related series of certificates.
However, indemnification will not extend to any loss, liability or expense:
52
o that the person is specifically required to bear pursuant to the terms
of the agreement, or is incidental to the performance of obligations
and duties thereunder and is not otherwise reimbursable pursuant to
the pooling and servicing agreement;
o those that are incurred in connection with any breach of a
representation, warranty or covenant made in the pooling and servicing
agreement;
o that are incurred by reason of misfeasance, bad faith or gross
negligence in the performance of obligations or duties under the
pooling and servicing agreement, or by reason of reckless disregard of
the obligations or duties; or
o that are incurred in connection with any violation of any state or
federal securities law.
In addition, each pooling and servicing agreement will provide that neither
the servicer nor 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
servicer and the depositor will be permitted, in the exercise of its discretion,
to undertake any 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. In that event, the legal expenses and costs of the action,
and any liability resulting therefrom, will be expenses, costs and liabilities
of the related series of certificateholders, and the servicer or the depositor,
as the case may be, will be entitled to charge the related certificate account
for those expenses, costs and liabilities.
Any person into which the servicer or the depositor may be merged or
consolidated, or any person resulting from any merger or consolidation to which
the servicer or the depositor is a party, or any person succeeding to the
business of the servicer or the depositor, will be the successor of the servicer
or the depositor, as the case may be, under the related pooling and servicing
agreement.
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 the following:
o any failure by the servicer to distribute or cause to be distributed
to the certificateholders of that series, or to remit to the trustee
for distribution to those certificateholders, any amount required to
be so distributed or remitted, which failure continues unremedied for
five days after written notice has been given to the servicer by the
trustee or the depositor, or to the servicer, the depositor and the
trustee by certificateholders entitled to not less than 25%, or the
other percentage specified in the related prospectus supplement, of
the voting rights for that series;
o any failure by the 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 sixty days after written notice of the failure has been given to
the servicer by the trustee or the depositor, or to the servicer, the
depositor and the trustee by certificateholders entitled to not less
than 25%, or the other percentage specified in the related prospectus
supplement, of the voting rights for that series; and
o some events of insolvency, readjustment of debt, marshalling of assets
and liabilities, or similar proceedings in respect of or relating to
the servicer and some actions by or on behalf of the servicer
indicating its insolvency or inability to pay its obligations.
Material variations to the foregoing events of default, other than to add
to it or shorten cure periods or eliminate notice requirements, will be
specified in the related prospectus supplement.
RIGHTS UPON EVENT OF DEFAULT
If an Event of Default occurs with respect to the servicer under a pooling
and servicing agreement and remains unremedied, the depositor or the trustee
will be authorized, and at the direction of certificateholders of the related
53
series entitled to not less than 51%, or the other percentage specified in the
related prospectus supplement, of the voting rights for the series, the trustee
will be required, to terminate all of the rights and obligations of the servicer
under the pooling and servicing agreement. Upon termination of the servicer's
rights and obligations, the trustee will succeed to all of the responsibilities,
duties and liabilities of the servicer under the pooling and servicing agreement
and will be entitled to similar compensation arrangements. However, if the
servicer is required to make advances under the pooling and servicing agreement
regarding delinquent mortgage loans, but the trustee is prohibited by law from
obligating itself to do so, or if the related prospectus supplement so
specifies, the trustee will not be obligated to make the advances. 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 the
other percentage specified in the related prospectus supplement, of the voting
rights for the series, it will be required to, appoint, or petition a court of
competent jurisdiction to appoint, a loan servicing institution that, unless
otherwise provided in the related prospectus supplement, is acceptable to each
applicable rating agency to act as successor to the servicer under the pooling
and servicing agreement. Pending appointment of a successor, the trustee will be
obligated to continue to act in that capacity.
You will not have the right under any pooling and servicing agreement to
institute any proceeding with respect to the pooling and servicing agreement.
You may do so only if the following conditions have been met:
o you previously have given to the trustee written notice of default and
other certificateholders of the same series entitled to not less than
25%, or the other percentage specified in the related prospectus
supplement, of the voting rights for the series shall have made
written request upon the trustee to institute the proceeding in its
own name as trustee;
o you shall have offered to the trustee reasonable indemnity; and
o the trustee for sixty days, or the other period specified in the
related prospectus supplement, shall have neglected or refused to
institute any related proceeding.
The trustee, however, will be under no obligation to exercise any of the
trusts or powers vested in it by the related pooling and servicing agreement or
to make any investigation of matters arising thereunder or to institute, conduct
or defend any litigation thereunder or in relation to it at the request, order
or direction of any of the holders of certificates of the related series, unless
the certificateholders have offered to the trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein or thereby.
AMENDMENT
Each pooling and servicing agreement may be amended by the respective
parties to it, without your consent, to do the following:
o to cure any ambiguity;
o to correct a defective provision therein or to correct, modify or
supplement any provision in the pooling and servicing agreement that
may be inconsistent with any other provision in the pooling and
servicing agreement;
o to add any other provisions with respect to matters or questions
arising under the pooling and servicing agreement that are not
inconsistent with its provisions;
o to comply with any requirements imposed by the Internal Revenue Code;
or
o for any other purpose; provided that the amendment, other than an
amendment for the specific purpose referred to in clause 4 above, may
not, as evidenced by an opinion of counsel to the effect satisfactory
to the trustee, adversely affect in any material respect your
interests; and provided further that the amendment, other than an
amendment for one of the specific purposes referred to in clauses 1
through 4 above, must be acceptable to each applicable rating agency.
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Unless otherwise specified in the related prospectus supplement, each
pooling and servicing agreement may also be amended by the respective parties to
the pooling and servicing agreement, with the consent of the holders of the
related series of certificates entitled to not less than 51%, or another
percentage specified in the related prospectus supplement, of the voting rights
for that series allocated to the affected classes, for any purpose. However,
unless otherwise specified in the related prospectus supplement, no amendment
may:
o reduce in any manner the amount of, or delay the timing of, payments
received or advanced on mortgage loans that are required to be
distributed in respect of any Certificate without the consent of the
holder of that certificate;
o adversely affect in any material respect the interests of the holders
of any class of certificates, in a manner other than as described in
the immediately preceding clause, without the consent of the holders
of all certificates of that class; or
o modify the provisions of the pooling and servicing agreement described
in this paragraph without the consent of the holders of all
certificates of the related series.
However, unless otherwise specified in the related prospectus supplement,
the trustee will be prohibited from consenting to any amendment of a pooling and
servicing agreement pursuant to which one or more REMIC elections are to be or
have been made unless the trustee shall first have received an opinion of
counsel to the effect that the amendment will not result in the imposition of a
tax on the related trust fund or cause the related trust fund, or any of its
designated portions, to fail to qualify as a REMIC at any time that the related
certificates are outstanding.
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 the certificateholders access
during normal business hours to the most recent list of certificateholders of
that series held by the person. If the list is of a date more than 90 days prior
to the date of receipt of the certificateholders' request, then the person, if
not the registrar for that series of certificates, will be required to request
from the registrar a current list and to afford the requesting
certificateholders access to it promptly upon receipt.
CERTAIN LIMITATIONS ON THE RIGHTS OF CERTIFICATEHOLDERS
Except as otherwise specified in the prospectus supplement for a series, no
certificateholders of a series will have the right under the related pooling and
servicing agreement to institute any proceeding with respect to that agreement
unless:
o that holder previously has given to the trustee written notice of
default;
o except in the case of a default by the trustee, certificateholders
entitled to not less than 25% of the voting rights for that series
have made written request upon the trustee to institute that
proceeding in its own name as trustee under the related pooling and
servicing agreement and have offered to the trustee reasonable
indemnity; and
o the trustee for 60 days has neglected or refused to institute any such
proceeding.
No trustee, however, will be under any obligations to exercise any of the
trusts or powers vested in it by a pooling and servicing agreement or to make
any investigation of matters arising under that agreement or to institute,
conduct or defend any litigation under or in relation to that agreement at the
request, order or direction of any of the certificateholders for the related
series, unless in the trustee's opinion, those certificateholders have offered
to the trustee reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred by the trustee as a result.
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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 and/or trustee relationships with us or our affiliates and
with any servicer or special servicer and its affiliates. If and to the extent
specified under the related pooling and servicing agreement, some functions of
the trustee may be performed by a fiscal agent under some circumstances.
ELIGIBILITY OF THE TRUSTEE
Unless otherwise specified in the related prospectus supplement, the
trustee under each pooling and servicing agreement each must at all times be a
corporation, bank, trust company or association that:
o is organized and doing business under the laws of the U.S. or any
state of the U.S. or the District of Columbia;
o has a combined capital and surplus of at least $50,000,000; and
o is subject to supervision or examination by federal or state
authority.
If that corporation, bank, trust company or association publishes reports of
condition at least annually, in accordance with applicable law or the
requirements of the supervising or examining authority, then the combined
capital and surplus of that corporation, bank, trust company or association will
be deemed to be its combined capital and surplus as described in its most recent
published report of condition.
The trustee for each series and any of its respective affiliates may hold
certificates of the related series in their own names. In addition, for purposes
of meeting the legal requirements of some local jurisdictions, each trustee will
have the power to appoint a co-trustee or separate trustee of all or any part of
the assets of the trust fund. All rights, powers, duties and obligations
conferred or imposed upon the trustee for a series will be conferred or imposed
upon that trustee and the separate trustee or co-trustee jointly or, in any
jurisdiction in which that trustee shall be incompetent or unqualified to
perform some acts, singly upon the separate trustee or co-trustee, who will
exercise and perform its rights, powers, duties and obligations solely at the
direction of that trustee.
DUTIES OF THE TRUSTEE
The trustee for each series of certificates will make no representation as
to the validity or sufficiency of the related pooling and servicing agreement,
the certificates or any underlying mortgage loan or related document. The
trustee will not be accountable for the use or application by or on behalf of
the servicer for that series of any funds paid to the servicer or any special
servicer in respect of the certificates or the underlying mortgage loans, or any
funds deposited into or withdrawn from the certificate account or any other
account for that series by or on behalf of the servicer or any special servicer.
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 those documents and
to determine whether they conform to the requirements of the pooling and
servicing agreement.
REGARDING THE FEES, INDEMNITIES AND POWERS OF 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
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 that series. The trustee may be
indemnified for any loss, liability or expense incurred by the trustee in
connection with the trustee's acceptance or
56
administration of its trusts under the related pooling and servicing agreement.
However, the indemnification will not extend to any loss, liability or expense
that:
o constitutes a specific liability imposed on the trustee pursuant to
the related pooling and servicing agreement,
o constitutes 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 or by reason of its
reckless disregard of its obligations or duties; or
o may arise from a breach of any representation, warranty or covenant of
the trustee made in the pooling and servicing agreement.
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 either directly or by or through agents or attorneys. The
trustee will not be responsible for any willful misconduct or gross negligence
on the part of any other agent or attorney appointed by it with due care.
RESIGNATION AND REMOVAL OF THE TRUSTEE
A trustee will be permitted at any time to resign from its obligations and
duties under the related pooling and servicing agreement by giving written
notice to us. Upon receiving a notice of resignation, we, or any other person as
may be specified in the related prospectus supplement, will be required to use
our best efforts to promptly appoint a successor trustee. If no successor
trustee shall have accepted an appointment within a specified period after the
giving of the notice of resignation, the resigning trustee may petition any
court of competent jurisdiction to appoint a successor trustee.
If at any time a trustee ceases to be eligible to continue as the trustee
under the related pooling and servicing agreement, or if at any time the trustee
becomes incapable of acting, or if some events of, or proceedings in respect of,
bankruptcy or insolvency occur with respect to the trustee, we will be
authorized to remove the trustee and appoint a successor trustee. In addition,
holders of the certificates of any series entitled to at least 51%, or the other
percentage specified in the related prospectus supplement, of the voting rights
for the series may at any time, with cause, or if so specified in the related
prospectus supplement, without cause, remove the trustee under the related
pooling and servicing agreement and appoint a successor trustee.
Any resignation or removal of a trustee and appointment of a successor
trustee will not become effective until acceptance of appointment by the
successor trustee.
DESCRIPTION OF CREDIT SUPPORT
GENERAL
Credit support may be provided with respect to one or more classes of the
certificates of any series, or with respect to the related mortgage loans or
mortgage backed securities backing the certificates. Credit support may be in
the form of letters of credit, overcollateralization, the subordination of one
or more classes of certificates, insurance policies, surety bonds, guarantees or
reserve funds, or any combination of the foregoing. If so provided in the
related prospectus supplement, any instrument of credit support may provide
credit enhancement for more than one series of certificates to the extent
described in that instrument.
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 you of all amounts to which you
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 not covered by the credit support, you will bear the share of
deficiencies allocable to your certificates. Moreover, if an instrument of
credit support covers more than one series of certificates, holders of
certificates of one series will be subject to the risk that that credit support
will be exhausted
57
by the claims of the holders of certificates of one or more other series before
they receive their intended share of the credit support coverage.
If credit support is provided with respect to one or more classes of
certificates of a series, or with respect to the related mortgage loans or
mortgage backed securities backing the certificates, the related prospectus
supplement will include a description of the following:
o the nature and amount of coverage under the credit support;
o any conditions to payment thereunder not otherwise described in this
prospectus;
o the conditions, if any, under which the amount of coverage under the
credit support may be reduced and under which the credit support may
be terminated or replaced; and
o the material provisions relating to the credit support.
Additionally, the related prospectus supplement will set forth some information
with respect to the obligor under any instrument of credit support, including
the following:
o a brief description of its principal business activities;
o its principal place of business, place of incorporation and the
jurisdiction under which it is chartered or licensed to do business;
o if applicable, the identity of regulatory agencies that exercise
primary jurisdiction over the conduct of its business; and
o its total assets, and its stockholders' equity or policyholders'
surplus, if applicable, as of a date that will be specified in the
prospectus supplement.
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, or may
be limited to, some 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 the subordination will be available.
CROSS-SUPPORT PROVISIONS
If the mortgage loans or mortgage backed securities 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 loans or mortgage
backed securities prior to distributions on subordinate certificates evidencing
interests in a different group of mortgage loans or mortgage backed securities
within the trust fund. The prospectus supplement for a series that includes a
cross-support provision will describe the manner and conditions for applying the
provisions.
INSURANCE OR GUARANTEES WITH RESPECT TO MORTGAGE LOANS
If so provided in the prospectus supplement for a series of certificates,
mortgage loans included in the related trust fund will be covered for some
default risks by insurance policies or guarantees. To the extent deemed by us to
be material, a copy of each instrument will accompany the Current Report on Form
8-K to be filed with the SEC within 15 days of issuance of the certificates of
the related series.
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LETTER OF CREDIT
If so provided in the prospectus supplement for a series of certificates,
deficiencies in amounts otherwise payable on those certificates or some classes
of those certificates will be covered by one or more letters of credit, issued
by a bank or financial institution specified in the prospectus supplement. Under
a letter of credit, the issuing bank will be obligated to honor draws in an
aggregate fixed dollar amount, net of unreimbursed payments, generally equal to
a percentage specified in the related prospectus supplement of the aggregate
principal balance of the mortgage assets on the related cut-off date or of the
initial aggregate certificate balance of one or more classes of certificates. If
so specified in the related prospectus supplement, the letter of credit may
permit draws only in the event of some 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
issuing 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. A copy of any related letter of credit
will accompany the Current Report on Form 8-K to be filed with the SEC within 15
days of issuance of the certificates of the related series.
CERTIFICATE INSURANCE AND SURETY BONDS
If so provided in the prospectus supplement for a series of certificates,
deficiencies in amounts otherwise payable on those certificates or some classes
of those certificates will be covered by insurance policies and/or surety bonds
provided by one or more insurance companies or sureties. The instruments may
cover, with respect to one or more classes of certificates of the related
series, timely distributions of interest and/or full 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 insurance policies and/or surety bonds. A copy of any insurance
policy or surety bond will accompany the Current Report on Form 8-K to be filed
with the SEC within 15 days of issuance of the certificates of the related
series.
RESERVE FUNDS
If so provided in the prospectus supplement for a series of certificates,
deficiencies in amounts otherwise payable on the certificates or some classes of
those certificates will be covered, to the extent of available funds, by one or
more reserve funds. Cash, a letter of credit, permitted investments, a demand
note or a combination of the following will be deposited into the reserve funds,
in the amounts specified in the 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 the collections received on the related
mortgage assets.
Amounts on deposit in any reserve fund for a series, together with the
reinvestment income thereon, if any, 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 some types of losses and shortfalls.
Following each distribution date, amounts in a reserve fund in excess of any
amount required to be maintained therein may be released from the reserve fund
under the conditions and to the extent specified in the related prospectus
supplement.
If so specified in the related prospectus supplement, amounts deposited in
any reserve fund will be invested in permitted investments. Unless otherwise
specified in the related prospectus supplement, any reinvestment income or other
gain from the investments will be credited to the related reserve fund for the
series, and any loss resulting from the investments will be charged to that
reserve fund. However, any reinvestment income or gain from investments may be
payable to any related servicer or another service provider as additional
compensation for its services. The reserve fund, if any, for a series will not
be a part of the trust fund unless otherwise specified in the related prospectus
supplement.
CREDIT SUPPORT WITH RESPECT TO MBS
If so provided in the prospectus supplement for a series of certificates,
any MBS included in the related trust fund and/or the related underlying
mortgage loans may be covered by one or more of the types of credit support
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described in this prospectus. The related prospectus supplement will specify, as
to each credit support instrument, the information indicated above, to the
extent the information is material and available.
LEGAL ASPECTS OF MORTGAGE LOANS
The following discussion contains general summaries of some legal aspects
of loans secured by commercial and multifamily residential properties. Because
the 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.
For additional information regarding legal aspects of mortgage loans, you
should review the section in this prospectus titled "Description of the Trust
Funds--Mortgage Loans". For purposes of the following discussion, the term
mortgage loan includes a mortgage loan underlying an MBS.
GENERAL
Each mortgage loan will be evidenced by a note or bond and secured by an
instrument granting a security interest in real property, which may be a
mortgage, deed of trust or a deed to secure debt, depending upon the prevailing
practice and law in the state in which the related mortgaged property is
located. Mortgages, deeds of trust and deeds to secure debt are herein
collectively referred to as mortgages. A mortgage creates a lien upon, or grants
a title interest in, the real property covered thereby, and represents the
security for the repayment of the indebtedness customarily evidenced by a
promissory note. The priority of the lien created or interest granted will
depend on the terms of the mortgage and, in some cases, on the terms of separate
subordination agreements or intercreditor agreements with others that hold
interests in the real property, the knowledge of the parties to the mortgage
and, generally, the order of recordation of the mortgage in the appropriate
public recording office. However, the lien of a recorded mortgage will generally
be subordinate to later-arising liens for real estate taxes and assessments and
other charges imposed under governmental police powers.
TYPES OF MORTGAGE INSTRUMENTS
There are two parties to a mortgage: a mortgagor, the borrower and usually
the owner of the subject property, and a mortgagee, the lender. In contrast, a
deed of trust is a three-party instrument, among a trustor, the equivalent of a
borrower, a trustee to whom the real property is conveyed, and a beneficiary,
the lender, for whose benefit the conveyance is made. Under a deed of trust, the
trustor grants the property, irrevocably until the debt is paid, in trust and
generally with a power of sale, to the trustee to secure repayment of the
indebtedness evidenced by the related note. A deed to secure debt typically has
two parties. The grantor, the borrower, conveys title to the real property to
the grantee, the lender, generally with a power of sale, until the 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 executes a separate
undertaking to make payments on the related note. 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, some federal laws, including, without limitation, the
Servicemembers Civil Relief Act, as amended, 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, 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.
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In most states, hotel and motel room revenues are considered accounts
receivable under the UCC; in cases where hotels or motels constitute loan
security, the revenues 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 revenues and must file
continuation statements, generally every five years, to maintain perfection of
its security interest. Even if the lender's security interest in room revenues
is perfected under the UCC, it may be required to commence a foreclosure action
or otherwise take possession of the property in order to collect the room
revenues following a default.
For additional information regarding foreclosure action with respect to
revenue from income-producing properties, you should also review the section in
the prospectus titled "--Bankruptcy Laws".
PERSONAL PROPERTY
In the case of some 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.
FORECLOSURE
General. Foreclosure is a legal procedure that allows the lender to recover
its mortgage debt by enforcing its rights and available legal remedies under the
mortgage. If the borrower defaults in payment or performance of its obligations
under the note or mortgage, the lender has the right to institute foreclosure
proceedings to sell the real property at public auction to satisfy the
indebtedness.
Foreclosure Procedures Vary from State to State. Two primary methods of
foreclosing a mortgage are judicial foreclosure, involving court proceedings,
and non-judicial foreclosure pursuant to a power of sale granted in the mortgage
instrument. Other foreclosure procedures are available in some states, but they
are either infrequently used or available only in limited circumstances.
A foreclosure action is subject to most of the delays and expenses of other
lawsuits if defenses are raised or counterclaims are interposed, and sometimes
requires several years to complete. Moreover, as discussed below, even a
non-collusive, regularly conducted foreclosure sale may be challenged as a
fraudulent conveyance, regardless of the parties' intent, if a court determines
that the sale was for less than fair consideration and the sale occurred while
the borrower was insolvent and within a specified period prior to the borrower's
filing for bankruptcy protection.
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. Public sales of mortgaged property are
made in accordance with procedures that vary from state to state.
Equitable Limitations on Enforceability of Some 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 the 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 that of the lenders
and have required that lenders reinstate loans or recast payment schedules in
order to accommodate borrowers who are suffering from a temporary financial
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disability. In other cases, courts have limited the right of the lender to
foreclose in the case of a non-monetary default, such as a failure to adequately
maintain the mortgaged property or an impermissible further encumbrance of the
mortgaged property. Finally, some courts have addressed the issue of whether
federal or state constitutional provisions reflecting due process concerns for
adequate notice require that a borrower receive notice in addition to
statutorily-prescribed minimum notice. For the most part, these cases have
upheld the reasonableness of the notice provisions or have found that a public
sale under a mortgage providing for a power of sale does not involve sufficient
state action to trigger constitutional protections.
Non-Judicial Foreclosure/Power of Sale. Foreclosure of a deed of trust is
generally accomplished by a non-judicial trustee's sale pursuant to a power of
sale typically granted in the deed of trust. A power of sale may also be
contained in any other type of mortgage instrument if applicable law so permits.
A power of sale under a deed of trust allows a non-judicial public sale to be
conducted generally following a request from the beneficiary/lender to the
trustee to sell the property upon default by the borrower and after notice of
sale is given in accordance with the terms of the mortgage and applicable state
law. In some states, prior to the 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 value of
that property at the time of sale, due to, among other things, redemption rights
which may exist and the possibility of physical deterioration of the property
during the foreclosure proceedings. Potential buyers may be reluctant to
purchase property at a foreclosure sale as a result of the 1980 decision of the
United States Court of Appeals for the Fifth Circuit in Durrett v. Washington
National Insurance Company and other decisions that have followed its reasoning.
The court in Durrett held that even a non-collusive, regularly conducted
foreclosure sale was a fraudulent transfer under the federal Bankruptcy Code
and, therefore, could be rescinded in favor of the bankrupt's estate, if:
o the foreclosure sale was held while the debtor was insolvent; and
o the price paid for the foreclosed property did not represent
(reasonably equivalent value).
Although the reasoning and result of Durrett in respect of the Bankruptcy
Code was rejected by the United States Supreme Court decision of BFP v.
Resolution Trust Corporation in 1994, the case could nonetheless be persuasive
to a court applying a state fraudulent conveyance law which has provisions
similar to those construed in Durrett.
Generally, state law controls the amount of foreclosure costs and expenses
which may be recovered by a lender. Thereafter, subject to the mortgagor's right
in some states to remain in possession during a redemption period, if
applicable, the lender will become the owner of the property and have both the
benefits and burdens of ownership of the mortgaged property. For example, the
lender will have the obligation to pay debt service on any senior mortgages, to
pay taxes, obtain casualty insurance and to make any repairs at its own expense
as are necessary to render the property suitable for sale. Frequently, the
lender employs a third party management company to manage and operate the
property. 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 costs of management and operation of those
mortgaged properties which are hotels, motels or nursing or convalescent homes
or hospitals may be particularly significant because of the expertise, knowledge
and, with respect to nursing or convalescent homes or hospitals, regulatory
compliance, required to run the operations and the effect which foreclosure and
a change in ownership may have on the public's and the industry's, including
franchisors', perception of the quality of the operations. The lender will
commonly obtain the services of a real estate broker and pay the broker's
commission in connection with the sale of the property. Depending upon market
conditions, the ultimate proceeds of the sale of the
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property may not equal the amount of the mortgage against the property.
Moreover, a lender commonly incurs substantial legal fees and court costs in
acquiring a mortgaged property through contested foreclosure and/or bankruptcy
proceedings. Furthermore, a few states require that any environmental
contamination at some types of properties be cleaned up before a property may be
resold. In addition, a lender may be responsible under federal or state law for
the cost of cleaning up a mortgaged property that is environmentally
contaminated. Generally state law controls the amount of foreclosure expenses
and costs, including attorneys' fees, that may be recovered by a lender.
For additional information regarding environmental costs associated with a
mortgaged property, you should review the section in this prospectus titled
"--Environmental Risks".
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.
The proceeds received by the referee or trustee from a foreclosure sale are
generally applied first to the costs, fees and expenses of sale and then in
satisfaction of the indebtedness secured by the mortgage under which the sale
was conducted. Any proceeds remaining after satisfaction of senior mortgage debt
are generally payable to the holders of junior mortgages and other liens and
claims in order of their priority, whether or not the borrower is in default.
Any additional proceeds are generally payable to the borrower. The payment of
the proceeds to the holders of junior mortgages may occur in the foreclosure
action of the senior mortgage or a subsequent ancillary proceeding or may
require the institution of separate legal proceedings by the holders.
Rights of Redemption. The purposes of a foreclosure action are to enable
the lender to realize upon its security and to bar the borrower, and all persons
who have interests in the property that are subordinate to that of the
foreclosing lender, from exercise of their equity of redemption. The doctrine of
equity of redemption provides that, until the property encumbered by a mortgage
has been sold in accordance with a properly conducted foreclosure and
foreclosure sale, those having interests that are subordinate to that of the
foreclosing lender have an equity of redemption and may redeem the property by
paying the entire debt with interest. Those having an equity of redemption must
generally be made parties and joined in the foreclosure proceeding in order for
their equity of redemption to be terminated.
The equity of redemption is a common-law (non-statutory) right which should
be distinguished from post-sale statutory rights of redemption. In some states,
after sale pursuant to a deed of trust or foreclosure of a mortgage, the
borrower and foreclosed junior lienors are given a statutory period in which to
redeem the property. In some states, statutory redemption may occur only upon
payment of the foreclosure sale price. In other states, redemption may be
permitted if the former borrower pays only a portion of the sums due. The effect
of a statutory right of redemption is to diminish the ability of the lender to
sell the foreclosed property because the exercise of a right of redemption would
defeat the title of any purchaser through a foreclosure. Consequently, the
practical effect of the redemption right is to force the lender to maintain the
property and pay the expenses of ownership until the redemption period has
expired. In some states, a post-sale statutory right of redemption may exist
following a judicial foreclosure, but not following a trustee's sale under a
deed of trust.
Anti-Deficiency Legislation. Some or all of the mortgage loans may be
nonrecourse loans, as to which recourse in the case of default will be limited
to the mortgaged property and any other assets 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 some
other states, the lender has the option of bringing a personal action against
the borrower on the debt without first exhausting that security. However, in
some of those states, the lender, following judgment on the 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
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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 RISKS
Mortgage loans may be secured by a mortgage on the borrower's leasehold
interest in a ground lease. Leasehold mortgage loans are subject to some risks
not associated with mortgage loans secured by a lien on the fee estate of the
borrower. The most significant of these risks is that if the borrower's
leasehold were to be terminated upon a lease default, the leasehold mortgagee
would lose its security. This risk may be lessened under some circumstances such
as the following:
o if the ground lease requires the lessor to give the leasehold
mortgagee notices of lessee defaults and an opportunity to cure them;
o if the ground lease permits the leasehold estate to be assigned to and
by the leasehold mortgagee or the purchaser at a foreclosure sale; and
o if the ground lease contains some other protective provisions
typically included in a mortgageable ground lease.
The ground leases that secure the mortgage loans at issue may not contain
some of these protective provisions, and the related mortgages may not contain
the other protections discussed in the next paragraph. Protective ground lease
provisions include the following:
o the right of the leasehold mortgagee to receive notices from the
ground lessor of any defaults by the borrower under the ground lease;
o the right of the leasehold mortgagee to cure the defaults, with
adequate cure periods;
o if a default is not susceptible of cure by the leasehold mortgagee,
the right to acquire the leasehold estate through foreclosure or
otherwise;
o the ability of the ground lease to be assigned to and by the leasehold
mortgagee or purchaser at a foreclosure sale and for the concomitant
release of the ground lessee's liabilities thereunder; and
o the right of the leasehold mortgagee to enter into a new ground lease
with the ground lessor on the same terms and conditions as the old
ground lease in the event of a termination of the ground lease.
In addition to the foregoing protections, a leasehold mortgage may prohibit
the ground lessee from treating the ground lease as terminated in the event of
the ground lessor's bankruptcy and rejection of the ground lease in the lessor's
bankruptcy case, although this provision may not be enforceable. As further
protection, a leasehold mortgage may provide for the assignment of the
debtor-ground lessee's right to reject the lease in a ground lessee bankruptcy
case, such a provision may not be enforceable. Without the protections described
in this and the foregoing paragraph, a leasehold mortgagee may be more likely to
lose the collateral securing its leasehold mortgage. In addition, the terms and
conditions of a leasehold mortgage are subject to the terms and conditions of
the ground lease. Although some rights given to a ground lessee can be limited
by the terms of a leasehold mortgage, the rights of a ground lessee or a
leasehold mortgagee with respect to, among other things, insurance, casualty and
condemnation proceeds will ordinarily be governed by the provisions of the
ground lease, unless otherwise agreed to by the ground lessee and leasehold
mortgagee.
COOPERATIVE SHARES
Mortgage loans may be secured by a security interest on the borrower's
ownership interest in shares, and the proprietary leases appurtenant to those
shares, allocable to cooperative dwelling units that may be vacant or occupied
by non-owner tenants. The loans are subject to some 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,
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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 cancelled in
the event that associated maintenance charges due under the related proprietary
leases are not paid. Typically, a 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. If, following
payment to the lender, there are proceeds remaining, the lender must account to
the tenant-stockholder for the surplus. Conversely, if a portion of the
indebtedness remains unpaid, the tenant-stockholder may be responsible for the
deficiency.
For additional information regarding payment of deficiencies, you should
review the sections in this prospectus titled "--Anti-Deficiency Legislation."
BANKRUPTCY LAWS
Operation of the Bankruptcy Code and related state laws may interfere with
or affect the ability of a secured 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 caused by an
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 the junior lien.
Under the Bankruptcy Code, provided some 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. For example,
the outstanding amount of the secured loan may be reduced to the then-current
value of the property, thus leaving the lender a general unsecured creditor for
the difference between the value and the outstanding balance of the loan. Other
modifications may include the reduction in the amount of each scheduled payment,
a reduction in the rate of interest and/or an alteration of the repayment
schedule and an extension (or shortening) of the term to maturity. The lien of
the lender may be transferred to other collateral or collateral may be released
from the lien of the lender. The priority of a mortgage loan may also be
subordinated to bankruptcy court-approved financing. 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 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.
The bankruptcy court can also reinstate accelerated indebtedness and also,
in effect, invalidate due-on-sale clauses. A trustee for a lessor, or a lessor
as debtor-in-possession, may, despite the provisions of the related mortgage
loan to the contrary, sell the mortgaged property free and clear of all liens,
which liens would then attach to the proceeds of the sale.
The Bankruptcy Code provides that a lender's perfected pre-petition
security interest in leases, rents and hotel revenues continues in the
post-petition rents and hotel revenues, unless a bankruptcy court orders to the
contrary based on the equities of the case. Thus, if the borrower has executed
an assignment of leases, unless a court orders otherwise, revenues from a
mortgaged property generated after the date the bankruptcy petition is filed
will constitute cash collateral under the Bankruptcy Code. Debtors may only use
cash collateral upon obtaining the lender's consent or a prior court order
finding that the lender's interest in the mortgaged properties is adequately
protected. It should be noted, however, that the court may find that the lender
has no security interest in either pre-
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petition or post-petition revenues if the court finds that the loan documents do
not contain language covering accounts, room rents, or other forms of
personality necessary for a security interest to attach to hotel revenues.
Bankruptcies of tenants of the mortgaged properties could have an adverse
impact on the borrowers' ability to meet their obligations. For example, rights
and obligations under an unexpired lease may not be terminated or modified at
any time after the commencement of a case under the Bankruptcy Code solely
because of a provision in the lease conditioned upon the commencement of a case
under the Bankruptcy Code or some other similar events. In addition, there is an
automatic stay of, among other things, any act to obtain possession of property
of or from a debtor's estate, which may delay the borrower's exercise of the
remedies in the event that a lessee becomes the subject of a proceeding under
the Bankruptcy Code.
A trustee or a debtor-in-possession in a case under the Bankruptcy Code has
the power to assume or to reject an executory contract or an unexpired lease of
the debtor, in each case subject to the approval of the bankruptcy court
administering the case. If the trustee or debtor-in-possession rejects an
executory contract or an unexpired lease, the rejection generally constitutes a
breach of the executory contract or unexpired lease immediately before the date
of the filing of the petition. As a consequence, the other party or parties to
the executory contract or unexpired lease, such as the lessor or borrower, as
lessor under a lease, would have only an unsecured claim against the debtor for
damages resulting from the breach, which could adversely affect the security for
the related mortgage loan. Moreover, the claim of a lessor for the damages from
the termination of a lease of real property will be limited to the sum of:
1. the rent reserved by the lease, without acceleration, for the greater of
one year or 15 percent, not to exceed three years, of the remaining term of the
lease, following the earlier of the date of the filing of the petition and the
date on which the leased property was surrendered; and
2. any unpaid rent due under that lease, without acceleration, on the
earlier of those dates.
If a trustee or debtor-in-possession assumes an executory contract or an
unexpired lease of the debtor, the trustee or debtor-in-possession generally may
assign the executory contract or unexpired lease, notwithstanding any provision
in that executory contract or unexpired lease or in applicable law that
prohibits, restricts or conditions the assignment, provided that the trustee or
debtor-in-possession provides adequate assurance of future performance by the
assignee. The Bankruptcy Code specifically provides, however, that adequate
assurance of future performance for purposes of a lease of real property in a
shopping center includes the following:
o adequate assurance of the source of rent due under the lease, and in
the case of an assignment, that the financial condition and operating
performance of the proposed assignee and its guarantors, if any, shall
be similar to the financial condition and operating performance of the
debtor and its guarantors, if any, as of the time the debtor became
the lessee under the lease;
o that any percentage rent due under the lease will not decline
substantially;
o that the assumption and assignment of the lease is subject to all the
provisions in that lease, including, but not limited to, provisions
such as a radius, location, use or exclusivity provision, and will not
breach any provision contained in any other lease, financing
agreement, or master agreement relating to that shopping center; and
o that the assumption or assignment of the lease will not disrupt the
tenant mix or balance in that shopping center.
Thus, an undetermined third party may assume the obligations of the lessee
under a lease in the event of commencement of a proceeding under the Bankruptcy
Code with respect to the lessee.
If a trustee for a lessor as a debtor-in-possession, rejects an unexpired
lease of real property, the lessee may treat that lease as terminated by that
rejection or, in the alternative, may remain in possession of the leasehold for
the balance of the term of the lease and for any renewal or extension of that
term that is enforceable by the lessee under applicable nonbankruptcy law. The
Bankruptcy Code provides that if a lessee elects to remain in possession after a
rejection of a lease, the lessee may offset against rents reserved under the
lease, for the balance of the term after the
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date of rejection of the lease and any renewal or extension thereof, the value
of any damages occurring after the date of rejection caused by the
nonperformance of any obligation of the lessor after that date.
In a bankruptcy or similar proceeding, action may be taken seeking the
recovery as a preferential transfer of any payments made by the mortgagor under
the related mortgage loan to the related trust fund. Payments may be protected
from recovery as preferences if they are payments in the ordinary course of
business made on debts incurred in the ordinary course of business. Whether any
particular payment would be protected depends upon the facts specific to a
particular transaction. In addition, some court decisions suggest that even a
non-collusive, regularly conducted foreclosure sale could be challenged in a
bankruptcy case as a fraudulent conveyance, regardless of the parties' intent,
if a bankruptcy court determines that the mortgaged property has been sold for
less than fair consideration while the mortgagor was insolvent or otherwise
meets the statutory criteria for fraudulent transfer.
A trustee in bankruptcy, in some cases, may be entitled to collect its
costs and expenses in preserving or selling the mortgaged property ahead of
payment to the lender. In some circumstances, a debtor in bankruptcy may have
the power to grant liens senior to the lien of a mortgage, and analogous state
statutes and general principles of equity may also provide a mortgagor with
means to halt a foreclosure proceeding or sale and to force a restructuring of a
mortgage loan on terms a lender would not otherwise accept. Moreover, the laws
of some states also give priority to some tax liens over the lien of a mortgage
or deed of trust. Under the Bankruptcy Code, if the court finds that actions of
the mortgagee have been unreasonable, the lien of the related mortgage may be
subordinated to the claims of unsecured creditors.
Pursuant to the doctrines of substantive consolidation or 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 that is
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 may be extended to the first and the rights of creditors of the first
entity may be impaired in the fashion set forth above in the discussion of
bankruptcy principles. 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.
On February 5, 2001, the United States Bankruptcy Court for the Northern
District of Ohio entered an order refusing to modify an interim cash collateral
order that treated inventory and receivables sold by a chapter 11 debtor to two
special purpose subsidiaries, not in chapter 11, as property of the debtor's
estate. In re LTV Steel Company, case no 0043866 (Bankr. N.D. Ohio). In the
February 5 opinion, the court states, "To suggest that Debtor lacks some
ownership interest in products that it creates with its own labor, as well as
the proceeds to be derived from that labor, is difficult to accept." Entry of a
similar order in a bankruptcy case in which an originator of certain mortgage
loans was the debtor could result in a 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 the mortgagor and its ability to incur debt
are restricted by the applicable Mortgage or the organizational documents of
that mortgagor. The activities of the mortgagor are restricted in a manner as is
intended to make the likelihood of a bankruptcy proceeding being commenced by or
against that mortgagor remote, and that mortgagor has been organized and is
designed to operate in a manner that makes it reasonably likely that its
separate existence will be respected notwithstanding a bankruptcy proceeding in
respect of one or more affiliated entities of that mortgagor. However, we make
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 RISKS
A lender may be subject to unforeseen environmental risks with respect to
loans secured by real or personal property, such as the mortgage loans. The
environmental risks may give rise to:
o a diminution in value of property securing a mortgage loan or the
inability to foreclose against the property; or
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o in some circumstances as more fully described below, liability for
clean-up costs or other remedial actions, which liability could exceed
the value of the property or the principal balance of the related
mortgage loan.
Under federal law and the laws of many states, contamination on a property
may give rise to a lien on the property for cleanup costs. In several states,
such a lien has priority over all existing liens, including those of existing
mortgages. In these states, the lien of the mortgage for any mortgage loan may
lose its priority to that type of lien.
Under the federal Comprehensive Response, Compensation, and Liability Act,
a lender may be liable either to the government or to private parties for
cleanup costs on a property securing a loan, even if the lender does not cause
or contribute to the contamination. CERCLA imposes strict, as well as joint and
several, liability on several classes of potentially responsible parties, or
PRPs, including current owners and operators of the property who did not cause
or contribute to the contamination. Many states have laws similar to CERCLA.
Lenders may be held liable under CERCLA as owners or operators unless they
qualify for the secured creditor exemption to CERCLA. Court decisions applying
the secured-creditor exemption have in the past been inconsistent and confusing.
On September 30, 1996, President Clinton signed into law the "Asset
Conservation, Lender Liability and Deposit Insurance Protection Act of 1996,"
which includes amendments to CERCLA and to the underground storage tank
provisions of the Resource Conservation and Recovery Act and applies to any
claim that was not finally adjudicated as of September 30, 1996. The Act
attempts to clarify the activities in which a lender can engage and still have
the benefit of a secured creditor exemption. However, the secured creditor
exemption is not available to a lender that participates in management of
mortgaged property prior to a foreclosure. 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 be deemed to have participated in management and 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 or disposal practices, or assumes day-to-day
management of environmental compliance or all other 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. However, the protections afforded lenders under the Act are subject to
terms and conditions that have not been clarified by the courts. Moreover, the
CERCLA secured-creditor exemption does not necessarily affect the potential for
liability under other laws that may also impose liability on "owners or
operators".
Environment clean-up costs may be substantial. It is possible that
environmental clean-up costs could become a liability of the related trust fund
and occasion a loss to certificateholders if remedial costs were incurred.
In a few states, transfers of some types of properties are conditioned upon
cleanup of contamination prior to transfer. It is possible that a property
securing a mortgage loan could be subject to transfer restrictions. In such a
case, if the lender becomes the owner upon foreclosure, it may be required to
clean up the contamination before selling the property.
The cost of remediating hazardous substance contamination at a property can
be substantial. If a lender is or becomes liable, it can bring an action for
contribution against the owner or operator that created the environmental
hazard, but that person or entity may be without substantial assets.
Accordingly, it is possible that the costs of remediating hazardous substance
contamination at a property could become a liability of a trust fund and
occasion a loss to certificateholders of the related series.
To reduce the likelihood of such a loss, and unless otherwise provided in
the related prospectus supplement, the related pooling and servicing agreement
will provide that the servicer, acting on behalf of the related trust fund, may
not acquire title to a mortgaged property or take over its operation unless the
servicer, based on a report prepared by a person who regularly conducts
environmental site assessments, has made the determination that it is
appropriate to do so, as described under "Description of the Pooling and
Servicing Agreements--Realization Upon Defaulted Mortgage Loans." There can be
no assurance that any environmental site assessment obtained by the servicer
will detect all possible environmental contamination or conditions or that the
other requirements of the related pooling
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and servicing agreement, even if fully observed by the servicer, will in fact
insulate the related trust fund from liability with respect to environmental
matters.
Even when a lender is not directly liable for cleanup costs on property
securing loans, if a property securing a loan is contaminated, the value of the
security is likely to be affected. In addition, a lender bears the risk that
unanticipated cleanup costs may jeopardize the borrower's repayment. Neither of
these two issues is likely to pose risks exceeding the amount of unpaid
principal and interest of a particular loan secured by a contaminated property,
particularly if the lender declines to foreclose on a mortgage secured by the
property.
If a lender forecloses on a mortgage secured by a property the operations
of which are subject to environmental laws and regulations, the lender will be
required to operate the property in accordance with those laws and regulations.
Compliance may entail some expense.
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. The
disclosure may decrease the amount that prospective buyers are willing to pay
for the affected property and thereby lessen the ability of the lender to
recover its investment in a loan upon foreclosure.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE PROVISIONS
Some 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 the clauses in many states. By virtue,
however, of the Garn-St Germain Depository Institutions Act of 1982, effective
October 15, 1982, which purports to preempt state laws that prohibit the
enforcement of due-on-sale clauses by providing, among other matters, that
due-on-sale clauses in some loans made after the effective date of the Garn Act
are enforceable, within some limitations, as set forth in the Garn Act and the
regulations promulgated thereunder, the 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, regardless of the
servicer's ability to demonstrate that a sale threatens its legitimate security
interest.
SUBORDINATE FINANCING
Some 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. Where a
borrower encumbers a mortgaged property with one or more junior liens, the
senior lender is subjected to additional risk. First, the borrower may have
difficulty servicing and repaying multiple loans. Moreover, if the subordinate
financing permits recourse to the borrower, as is frequently the case, and the
senior loan does not, a borrower may have more incentive to repay sums due on
the subordinate loan. Second, acts of the senior lender that prejudice the
junior lender or impair the junior lender's security may create a superior
equity in favor of the junior lender. For example, if the borrower and the
senior lender agree to an increase in the principal amount of or the interest
rate payable on the senior loan, the senior lender may lose its priority to the
extent any existing junior lender is harmed or the borrower is additionally
burdened. Third, if the borrower defaults on the senior loan and/or any junior
loan or loans, the existence of junior loans and actions taken by junior lenders
can impair the security available to the senior lender and can interfere with or
delay the taking of action by the senior lender. Moreover, the bankruptcy of a
junior lender may operate to stay foreclosure or similar proceedings by the
senior lender.
DEFAULT INTEREST AND LIMITATIONS ON PREPAYMENTS
Notes and mortgages may contain provisions that obligate the borrower to
pay a late charge or additional interest if payments are not timely made, and in
some circumstances, may prohibit prepayments for a specified period and/or
condition prepayments upon the borrower's payment of prepayment fees or yield
maintenance penalties. In some states, there are or may be specific limitations
upon the late charges which a lender may collect from a borrower for delinquent
payments. Some states also limit the amounts that a lender may collect from a
borrower as an additional charge if the loan is prepaid. In addition, the
enforceability of provisions that provide for prepayment fees or penalties upon
an involuntary prepayment is unclear under the laws of many states.
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ADJUSTABLE RATE LOANS
The laws of some states may provide that mortgage notes relating to
adjustable rate loans are not negotiable instruments under the UCC. In that
event, the related trust fund will not be deemed to be a holder in due course
within the meaning of the UCC and may take a mortgage note subject to
restrictions on the ability to foreclose and to contractual defenses available
to a mortgagor.
APPLICABILITY OF USURY LAWS
Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980, as amended, provides that state usury limitations shall not apply
to some types of residential (including multifamily) first mortgage loans
originated by some 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. Some 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:
o the mortgage loan provides for an interest rate, discount points and
charges as are permitted under the laws of the state; or
o the mortgage loan provides that the terms of that mortgage loan are to
be construed in accordance with the laws of another state under which
its interest rate, discount points and charges would not be usurious
and the borrower's counsel has rendered an opinion that the choice of
law provision would be given effect.
SERVICEMEMBERS CIVIL RELIEF ACT
Under the terms of the Servicemembers Civil Relief Act, as amended, a
borrower who enters military service after the origination of the 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 the
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, we cannot give you any information 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 any servicer to collect full amounts of interest
on some 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. The
shortfalls would not be covered by advances or, unless otherwise specified in
the related prospectus supplement, any instrument of credit support provided in
connection with the certificates. In addition, the Relief Act imposes
limitations that would impair the ability of the servicer to foreclose on an
affected mortgage loan during the borrower's period of active duty status, and,
under some circumstances, during an additional three-month period thereafter.
Thus, in the event a mortgage loan goes into default, there may be delays and
losses occasioned by the inability to realize upon the mortgaged property in a
timely fashion.
TYPE OF MORTGAGED PROPERTY
The lender may be subject to additional risk depending upon the type and
use of the mortgaged property in question. For instance, mortgaged properties
which are hospitals, nursing homes or convalescent homes may present special
risks to lenders in large part due to significant governmental regulation of the
operation, maintenance, control and financing of health care institutions.
Mortgages on mortgaged properties which are owned by the borrower under a
condominium form of ownership are subject to the declaration, by-laws and other
rules and
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regulation of the condominium association. Mortgaged properties which
are hotels or motels may present additional risk to the lender in that:
o hotels and motels are typically operated pursuant to franchise,
management and operating agreements which may be terminable by the
operator; and
o the transferability of the hotel's operating, liquor and other
licenses to the entity acquiring the hotel either through purchase or
foreclosure is subject to the vagaries of local law requirements.
In addition, mortgaged properties which are multifamily properties or
cooperatively owned multifamily properties may be subject to rent control laws,
which could impact the future cash flows of the properties.
AMERICANS WITH DISABILITIES ACT
Under Title III of the Americans with Disabilities Act of 1990 and rules
promulgated thereunder, in order to protect individuals with disabilities,
public accommodations (such as hotels, 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" within the meaning of
the ADA. 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, each altered portion is readily accessible to and usable by
individuals with disabilities. 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 the requirements on a foreclosing lender who succeeds to the
interest 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.
FORFEITURE FOR DRUG, RICO AND MONEY LAUNDERING VIOLATIONS
Federal law provides that property purchased or improved with assets
derived from criminal activity or otherwise tainted, or used in the commission
of certain offenses, can be seized and ordered forfeited to the United States of
America. The offenses which can trigger such a seizure and forfeiture include,
among others, violations of the Racketeer Influenced and Corrupt Organizations
Act, the Bank Secrecy Act, the anti-money laundering laws and regulations,
including the USA Patriot Act of 2001 and the regulations issued pursuant to
that Act, as well as the narcotic drug laws. In many instances, the United
States may seize the property even before a conviction occurs.
In the event of a forfeiture proceeding, a lender may be able to establish
its interest in the property by proving that (1) its mortgage was executed and
recorded before the commission of the illegal conduct from which the assets used
to purchase or improve the property were derived or before any other crime upon
which the forfeiture is based, or (2) the lender was, at the time of the
execution of the mortgage, "did not know or was reasonably without cause to
believe that the property was subject to forfeiture." However, there is no
assurance that such a defense will be successful.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of the anticipated material federal
income tax consequences of the purchase, ownership and disposition of
certificates. The discussion below does not purport to address all federal
income tax consequences that may be applicable to particular categories of
investors, some of which, such as banks and insurance companies, may be subject
to special rules. Except as noted below, this discussion applies to United
States persons who hold the certificates as capital assets. The authorities on
which this discussion is based are subject to change or differing
interpretations, and any related change or interpretation could apply
retroactively. This discussion reflects the applicable provisions of the
Internal Revenue Code of 1986, as amended, as well as the REMIC regulations
promulgated by the U.S. Department of Treasury. Investors should consult their
own tax advisors in determining the federal, state, local and other tax
consequences to them of the purchase, ownership and disposition of certificates.
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For purposes of this discussion, references to the mortgage loans include
references to the mortgage loans underlying MBS included in the mortgage assets,
and, where the applicable prospectus supplement provides for a retained yield
(the "Retained Interest") with respect to the mortgage loans underlying a series
of certificates, references to the mortgage loans will be deemed to refer to
that portion of the mortgage loans held by the trust fund which does not include
the Retained Interest. References to a holder or certificateholder in this
discussion generally mean the beneficial owner of a certificate.
FEDERAL INCOME TAX CONSEQUENCES FOR REMIC CERTIFICATES
GENERAL
With respect to a particular series of certificates, an election may be
made to treat the trust fund or one or more segregated pools of assets therein
as one or more REMICs within the meaning of Internal Revenue Code Section 860D.
A trust fund or any of its portions as to which a REMIC election will be made
will be referred to as a REMIC pool. For purposes of this discussion,
certificates of a series as to which one or more REMIC elections are made are
referred to as REMIC certificates and will consist of one or more classes of
regular certificates and one class of residual certificates in the case of each
REMIC pool. Qualification as a REMIC requires ongoing compliance with some
conditions. With respect to each series of REMIC certificates, Cadwalader,
Wickersham & Taft LLP, our counsel, has advised us that in the firm's opinion,
assuming:
o the making of such an election;
o compliance with the pooling and servicing agreement; and
o compliance with any changes in the law, including any amendments to
the Internal Revenue Code or applicable Treasury regulations
thereunder,
each REMIC pool will qualify as a REMIC. The regular certificates will be
considered to be "regular interests" in the REMIC pool within the meaning of
Internal Revenue Code Section 860D and generally will be treated for federal
income tax purposes as if they were newly originated debt instruments, and the
residual certificates will be considered to be the sole class of "residual
interests" in the REMIC pool within the meaning of Internal Revenue Code Section
860D. The prospectus supplement for each series of certificates will indicate
whether one or more REMIC elections will be made with respect to the related
trust fund, in which event references to REMIC or REMIC pool herein shall be
deemed to refer to each such REMIC pool. If so specified in the applicable
prospectus supplement, the portion of a trust fund as to which a REMIC election
is not made may be treated as a grantor trust for federal income tax purposes.
For additional information regarding federal income tax consequences of
holding the certificates, you should also review the section in this prospectus
titled "--Federal Income Tax Consequences for Certificates as to Which No REMIC
Election Is Made."
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)(5)(B) of the Internal Revenue Code and assets described in
Section 7701(a)(19)(C) of the Internal Revenue 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 other prescribed purposes, the REMIC certificates
will not be treated as assets qualifying under Section 7701(a)(19)(C) of the
Internal Revenue Code. Moreover, if 95% or more of the assets of the REMIC
qualify for any of the foregoing treatments 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 regular certificates and income allocated to the residual certificates will
be interest described in Section 856(c)(3)(B) of the Internal Revenue Code to
the extent that such certificates are treated as "real estate assets" within the
meaning of Section 856(c)(5)(B) of the Internal Revenue Code. In addition, the
regular certificates will be, if transferred to a REMIC on its startup day in
exchange for an interest in such REMIC, "qualified mortgages" within the meaning
of Section 860G(a)(3) of the Internal Revenue Code. The determination
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as to the percentage of the REMIC's assets that constitute assets described in
the foregoing sections of the Internal Revenue 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 special servicer,
servicer, or the trustee, as required under the pooling and servicing agreement
will report those determinations to certificateholders in the manner and at the
times required by applicable Treasury regulations.
The assets of the REMIC will include, in addition to mortgage loans,
payments on mortgage loans held pending distribution on the REMIC certificates
and property acquired by foreclosure held pending sale, and may include amounts
in reserve accounts. It is unclear whether property acquired by foreclosure held
pending sale, and amounts in reserve accounts would be considered to be part of
the mortgage loans, or whether such assets, to the extent not invested in assets
described in the foregoing sections, otherwise would receive the same treatment
as the mortgage loans for purposes of all of the foregoing sections. In
addition, in some instances mortgage loans may not be treated entirely as assets
described in the foregoing sections. If so, the related prospectus supplement
will describe the mortgage loans that may not be so treated. The REMIC
regulations do provide, however, that payments on mortgage loans held pending
distribution are considered part of the mortgage loans for purposes of Section
856(c)(5)(B) of the Internal Revenue Code. Furthermore, foreclosure property
will qualify as "real estate assets" under Section 856(c)(5)(B) of the Internal
Revenue Code.
TIERED REMIC STRUCTURES
For some 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. 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 regular certificates or 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)(5)(B) of the Internal
Revenue Code and, "loans secured by an interest in real property" under Section
7701(a)(19)(C) of the Internal Revenue Code, and whether the income on such
certificates is interest described in Section 856(c)(3)(B) of the Internal
Revenue Code, the Tiered REMICs will be treated as one REMIC.
QUALIFICATION AS A REMIC
In order for the REMIC pool to qualify as a REMIC, there must be ongoing
compliance on the part of the REMIC pool with the requirements set forth in the
Internal Revenue Code. The REMIC pool must fulfill an asset test, which requires
that no more than a de minimis portion of the assets of the REMIC pool, as of
the close of the third calendar month beginning after the startup day, which for
purposes of this discussion is the date of issuance of the REMIC certificates,
and at all times thereafter, may consist of assets other than qualified
mortgages and permitted investments. The REMIC regulations provide a safe harbor
pursuant to which the de minimis requirement is met if at all times the
aggregate adjusted basis of the nonqualified assets is less than 1% of the
aggregate adjusted basis of all the REMIC pool's assets. An entity that fails to
meet the safe harbor may nevertheless demonstrate that it holds no more than a
de minimis amount of nonqualified assets. A REMIC also must provide reasonable
arrangements to prevent its residual interest from being held by Disqualified
Organizations and must furnish applicable tax information to transferors or
agents that violate this requirement. The pooling and servicing agreement for
each Series will contain a provision designed to meet this requirement.
For further information, you should review the section in this prospectus
titled "--Taxation of Residual Certificates--Tax-Related Restrictions on
Transfer of Residual Certificates--Disqualified Organizations."
A qualified mortgage is any obligation that is principally secured by an
interest in real property and that is either transferred to the REMIC pool on
the startup day in exchange for regular certificates or residual certificates or
is either purchased by the REMIC pool within a three-month period thereafter or
represents an increase in the loan advanced to the obligor under its original
terms, in either case pursuant to a fixed price contract in effect on the
startup day.
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Qualified mortgages include the following:
o whole mortgage loans, such as the mortgage loans;
o certificates of beneficial interest in a grantor trust that holds
mortgage loans, including some of the MBS;
o regular interests in another REMIC, such as MBS issued by a trust as
to which a REMIC election has been made;
o loans secured by timeshare interests; and
o loans secured by shares held by a tenant stockholder in a cooperative
housing corporation.
However, in general:
o the fair market value of the real property securing the mortgage
(including any buildings and structural components) must be at least
80% of the principal balance of the related mortgage loan or of the
mortgage loan underlying any related MBS either at origination of the
relevant loan or as of the startup day; or
o substantially all the proceeds of the mortgage loan or the underlying
mortgage loan must have been used to acquire, improve or protect an
interest in real property that, at the origination date, was the only
security for the mortgage loan or underlying mortgage loan.
If the mortgage loan has been substantially modified other than in connection
with a default or reasonably foreseeable default, it must meet the real property
value test described in the preceding sentence as of the date of the last
modification or as of the REMIC startup day. A qualified mortgage includes a
qualified replacement mortgage, which is any mortgage loan that would have been
treated as a qualified mortgage if it were transferred to the REMIC pool on the
startup day and that is received either:
o in exchange for any qualified mortgage within a three-month period
thereafter; or
o in exchange for a mortgage loan that is a defective obligation, as
defined immediately below, within a two-year period thereafter.
A defective obligation includes the following:
1. a mortgage in default or as to which default is reasonably foreseeable;
2. a mortgage as to which a customary representation or warranty made at
the time of transfer to the REMIC pool has been breached;
3. a mortgage that was fraudulently procured by the mortgagor; and
4. a mortgage that was not in fact principally secured by real property
(but only if the mortgage is disposed of within 90 days of discovery).
A mortgage loan that is defective as described in clause 4 in the
immediately preceding sentence that is not sold or, if within two years of the
startup day, exchanged, within 90 days of discovery, ceases to be a qualified
mortgage after that 90-day period. A qualified mortgage includes any asset
described above that is transferred to the REMIC pool on the startup day in
exchange for regular certificates or residual certificates, or that is purchased
by the REMIC pool within three months after the startup day pursuant to a fixed
price contract in effect on the startup day.
Permitted investments include cash flow investments, qualified reserve
assets, and foreclosure property. A cash flow investment is an investment,
earning a return in the nature of interest, of amounts received on or with
respect to qualified mortgages for a temporary period, not exceeding 13 months,
until distributed to holders of interests in the REMIC pool. A qualified reserve
asset is any intangible property (other than a REMIC residual interest) held for
investment that is part of any reasonably required reserve maintained by the
REMIC pool to provide for payments of expenses of the REMIC pool or amounts due
on the regular or residual interests in the event of defaults (including
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delinquencies) on the qualified mortgages, lower than expected reinvestment
returns, prepayment interest shortfalls and some other contingencies. In
addition, a reserve fund (limited to not more than 50% of the REMIC's initial
assets) may be used to provide a source of funds for the purchase of increases
in the balances of qualified mortgage pursuant to their terms. The reserve fund
will be disqualified if more than 30% of the gross income from the assets in the
fund for the year is derived from the sale or other disposition of property held
for less than three months, unless required to prevent a default on the regular
interests caused by a default on one or more qualified mortgages. A reserve fund
must be reduced "promptly and appropriately" as payments on the mortgage loans
are received. Foreclosure property is real property acquired by the REMIC pool
in connection with the default or imminent default of a qualified mortgage.
Foreclosure property generally may not be held beyond the close of the third
calendar year following the acquisition of the property by a REMIC pool, with
possible extensions granted by the Internal Revenue Service of up to an
additional three years.
In addition to the foregoing requirements, the various interests in a REMIC
pool also must meet certain requirements. All of the interests in a REMIC pool
must be either of the following:
o one or more classes of regular interests; or
o a single class of residual interests on which distributions, if any,
are made pro rata.
A regular interest is an interest in a REMIC pool that is issued on the
startup day with fixed terms, is designated as a regular interest, and
unconditionally entitles the holder to receive a specified principal amount, or
other similar amount, and provides that interest payments, or other similar
amounts, if any, at or before maturity either are payable based on a fixed rate
or a qualified variable rate, or consist of a specified, nonvarying portion of
the interest payments on qualified mortgages. The specified portion may consist
of a fixed number of basis points, a fixed percentage of the total interest, or
a fixed or qualified variable or inverse variable rate on some or all of the
qualified mortgages minus a different fixed or qualified variable rate. The
specified principal amount of a regular interest that provides for interest
payments consisting of a specified, nonvarying portion of interest payments on
qualified mortgages may be zero. A regular interest in a REMIC pool may have
payments of principal that are subordinated to payments on other regular
interests or the residual interest in the REMIC pool, and that are dependent on
the absence of defaults or delinquencies on qualified mortgages or permitted
investments, lower than reasonably expected returns on permitted investments,
unanticipated expenses incurred by the REMIC pool or prepayment interest
shortfalls. A REMIC pool may issue multiple classes of regular interests.
A residual interest is an interest in a REMIC pool other than a regular
interest that is issued on the startup day and that is designated as a residual
interest. A REMIC may issue only one class of residual interests on which
distributions, if any, are made pro rata.
If an entity, such as the REMIC pool, fails to comply with one or more of
the ongoing requirements of the Internal Revenue Code for REMIC status during
any taxable year, the Internal Revenue Code provides that the entity will not be
treated as a REMIC for that year and thereafter. In this event, an entity with
multiple classes of ownership interests may be treated as a separate association
taxable as a corporation under Treasury regulations, and the regular
certificates may be treated as equity interests therein. The Internal Revenue
Code, however, authorizes the Treasury Department to issue regulations that
address situations where failure to meet one or more of the requirements for
REMIC status occurs inadvertently and in good faith, and disqualification of the
REMIC pool would occur absent regulatory relief. You should be aware, however,
that the Conference Committee Report to the Tax Reform Act of 1986 (the "1986
Act") indicates that the relief may be accompanied by sanctions, such as the
imposition of a corporate tax on all or a portion of the REMIC pool's income for
the period of time in which the requirements for REMIC status are not satisfied.
TAXATION OF REGULAR CERTIFICATES
General. A regular interest will be treated as a newly originated debt
instrument for federal income tax purposes. In general, interest and original
issue discount on a regular certificate will be treated as ordinary income to a
holder of the regular certificate as they accrue, and principal payments on a
regular certificate in excess of accrued market discount will be treated as a
return of capital to the extent of the regular certificateholder's basis in the
regular certificate. Regular certificateholders must use the accrual method of
accounting with regard to regular certificates, regardless of the method of
accounting otherwise used by the regular certificateholders.
75
Original Issue Discount. Accrual certificates, interest only, and
principal-only certificates will be, and other Classes of regular certificates
may be, issued with original issue discount within the meaning of Internal
Revenue Code Section 1273(a). Holders of any Class of regular certificates
having original issue discount generally must include original issue discount in
ordinary income for federal income tax purposes as it accrues, in accordance
with the constant yield method that takes into account the compounding of
interest, in advance of receipt of the cash attributable to the income. The
following discussion is based in part on Treasury regulations under Internal
Revenue Code Sections 1271 through 1273 and 1275 and in part on the provisions
of the 1986 Act, referred to in this document as OID regulations. Regular
certificateholders should be aware, however, that the OID regulations do not
adequately address some issues relevant to prepayable securities, such as the
regular certificates. To the extent the issues are not addressed in the
regulations, we intend to apply the methodology described in the Conference
Committee Report to the 1986 Act. No assurance can be provided that the Service
will not take a different position as to those matters not currently addressed
by the OID regulations. Moreover, the OID regulations include an anti-abuse rule
allowing the Service to apply or depart from the OID regulations where necessary
or appropriate to ensure a reasonable tax result in light of the applicable
statutory provisions. A tax result will not be considered unreasonable under the
anti-abuse rule in the absence of a substantial effect on the present value of a
taxpayer's tax liability. You are advised to consult your own tax advisors as to
the discussion in this prospectus and the appropriate method for reporting
interest and original issue discount with respect to the regular certificates.
Each regular certificate will be treated as a single installment obligation
for purposes of determining the original issue discount includible in a regular
certificateholder's income. The total amount of original issue discount on a
regular certificate is the excess of the stated redemption price at maturity of
the regular certificate over its issue price. The issue price of a Class of
regular certificates offered pursuant to this prospectus generally is the first
price at which a substantial amount of regular certificates of that class is
sold to the public, excluding bond houses, brokers and underwriters. Although
unclear under the OID regulations, we intend to treat the issue price of a class
as to which there is no substantial sale as of the issue date or that is
retained by us as the fair market value of that Class as of the issue date. The
issue price of a regular certificate also includes the amount paid by an initial
regular certificateholder for accrued interest that relates to a period prior to
the issue date of the regular certificate, unless the regular certificateholder
elects on its federal income tax return to exclude that amount from the issue
price and to recover it on the first distribution date. The stated redemption
price at maturity of a regular certificate always includes the original
principal amount of the regular certificate, but generally will not include
distributions of stated interest if the interest distributions constitute
qualified stated interest. Under the OID regulations, qualified stated interest
generally means interest payable at a single fixed rate or a qualified variable
rate, as described below, provided that the interest payments are
unconditionally payable at intervals of one year or less during the entire term
of the regular certificate. Because there is no penalty or default remedy in the
case of nonpayment of interest with respect to a regular certificate, it is
possible that no interest on any Class of regular certificates will be treated
as qualified stated interest. However, except as provided in the following three
sentences or in the applicable prospectus supplement, because the underlying
mortgage loans provide for remedies in the event of default, we intend to treat
interest with respect to the regular certificates as qualified stated interest.
Distributions of interest on an accrual certificate, or on other regular
certificates with respect to which deferred interest will accrue, will not
constitute qualified stated interest, in which case the stated redemption price
at maturity of the regular certificates includes all distributions of interest
as well as principal thereon. Likewise, we intend to treat an interest only
class, or a class on which interest is substantially disproportionate to its
principal amount, as having no qualified stated interest. Where the interval
between the issue date and the first distribution date on a regular certificate
is shorter than the interval between subsequent distribution dates, the interest
attributable to the additional days will be included in the stated redemption
price at maturity.
Under a de minimis rule, original issue discount on a regular certificate
will be considered to be zero if the original issue discount is less than 0.25%
of the stated redemption price at maturity of the regular certificate multiplied
by the weighted average maturity of the regular certificate. For this purpose,
the weighted average maturity of the regular certificate is computed as the sum
of the amounts determined by multiplying the number of full years (i.e.,
rounding down partial years) from the issue date until all distributions in
reduction of are scheduled to be made, presumably taking into account the
prepayment assumption, by a fraction, the numerator of which is the amount of
each distribution included in the stated redemption price at maturity of the
regular certificate and the denominator of which is the stated redemption price
at maturity of the regular certificate. The Conference Committee Report to the
1986 Act provides that the schedule of the distributions should be determined in
accordance with the assumed rate of prepayment of the mortgage loans and the
anticipated reinvestment rate, if any,
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relating to the regular certificates. The prepayment assumption with respect to
a series of regular certificates will be set forth in the related prospectus
supplement. Holders generally must report de minimis original issue discount pro
rata as principal payments are received, and the income will be capital gain if
the regular certificate is held as a capital asset. However, under the OID
regulations, regular certificateholders may elect to accrue all de minimis
original issue discount as well as market discount and market premium under the
constant yield method.
For additional information regarding an election to treat interest under
the constant yield method, you should review the section in this prospectus
titled "--Election to Treat All Interest Under the Constant Yield Method."
A regular certificateholder generally must include in gross income for any
taxable year the sum of the daily portions, as defined below, of the original
issue discount on the regular certificate accrued during an accrual period for
each day on which it holds the regular certificate, including the date of
purchase but excluding the date of disposition. We will treat the monthly period
ending on the day before each distribution date as the accrual period. With
respect to each regular certificate, a calculation will be made of the original
issue discount that accrues during each successive full accrual period, or
shorter period from the date of original issue, that ends on the day before the
related distribution date on the regular certificate. The Conference Committee
Report to the 1986 Act states that the rate of accrual of original issue
discount is intended to be based on the prepayment assumption. Other than as
discussed below with respect to a random lot certificate, the original issue
discount accruing in a full accrual period would be the excess, if any, of:
(a) the sum of:
o the present value of all of the remaining distributions to be
made on the regular certificate as of the end of that accrual
period that are included in the regular certificate's stated
redemption price at maturity; and
o the distributions made on the regular certificate during the
accrual period that are included in the regular certificate's
stated redemption price at maturity;
over:
(b) the adjusted issue price of the regular certificate at the beginning of
the accrual period.
The present value of the remaining distributions referred to in the
preceding sentence is calculated based on:
o the yield to maturity of the regular certificate at the issue date;
o events, including actual prepayments, that have occurred prior to the
end of the accrual period; and
o the prepayment assumption.
For these purposes, the adjusted issue price of a regular certificate at
the beginning of any accrual period equals the issue price of the regular
certificate, increased by the aggregate amount of original issue discount with
respect to the regular certificate that accrued in all prior accrual periods and
reduced by the amount of distributions included in the regular certificate's
stated redemption price at maturity that were made on the regular certificate in
those prior periods. The original issue discount accruing during any accrual
period (as determined in this paragraph) will then be divided by the number of
days in the period to determine the daily portion of original issue discount for
each day in the period. With respect to an initial accrual period shorter than a
full accrual period, the daily portions of original issue discount must be
determined according to an appropriate allocation under any reasonable method.
Under the method described above, the daily portions of original issue
discount required to be included in income by a regular certificateholder
generally will increase to take into account prepayments on the regular
certificates as a result of prepayments on the mortgage loans that exceed the
prepayment assumption. The daily portions generally will decrease, but not below
zero for any period, if the prepayments are slower than the prepayment
assumption. An increase in prepayments on the mortgage loans with respect to a
series of regular certificates can result in both a change in the priority of
principal payments with respect to some classes of regular
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certificates and either an increase or decrease in the daily portions of
original issue discount with respect to the regular certificates.
The Treasury Department proposed regulations on August 24, 2004 that create
a special rule for accruing original issue discount on regular certificates
providing for a delay between record and payment dates, such that the period
over which original issue discount accrues coincides with the period over which
the right of regular certificateholders to interest payment accrues under the
governing contract provisions rather than over the period between distribution
dates. If the proposed regulations are adopted in the same form as proposed,
regular certificateholders would be required to accrue interest from the issue
date to the first record date, but would not be required to accrue interest
after the last record date. The proposed regulations are limited to regular
certificates with delayed payment for periods of fewer than 32 days. The
proposed regulations are proposed to apply to any regular certificate issued
after the date the final regulations are published in the Federal Register.
Acquisition Premium. A purchaser of a regular certificate at a price
greater than its adjusted issue price but less than its stated redemption price
at maturity will be required to include in gross income the daily portions of
the original issue discount on the regular certificate reduced pro rata by a
fraction, the numerator of which is the excess of its purchase price over the
adjusted issue price and the denominator of which is the excess of the remaining
stated redemption price at maturity over the adjusted issue price.
Alternatively, a subsequent purchaser may elect to treat all acquisition premium
under the constant yield method, as described below under the heading
"--Election to Treat All Interest Under the Constant Yield Method."
Variable Rate Regular Certificates. 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:
o the issue price does not exceed the original principal balance by more
than a specified de minimis amount; and
o the interest compounds or is payable at least annually at current
values of;
o one or more qualified floating rates;
o a single fixed rate and one or more qualified floating rates;
o a single objective rate; or
o 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. Two or more qualified floating rates will be treated as a
single qualified floating rate if all the qualified floating rates can
reasonably be expected to have approximately the same values throughout the
terms of the instrument. This requirement will be conclusively presumed to be
satisfied if the values of all the qualified floating rates are within 0.25% of
each other on the issue date. 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 within the control of the issuer or a related party or unique
to the circumstances of the issuer or a related party. A qualified inverse
floating rate is an objective rate that is 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
regular certificates may be issued under this Prospectus that does not have a
variable rate under the OID regulations. For example, a class may be issued that
bears different rates at different times during the period it is outstanding
such that it is considered significantly front-loaded or back-loaded within the
meaning of the OID regulations. It is possible that the class 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 regular certificates. However, if final
regulations dealing with contingent interest with respect to regular
certificates apply the same principles as the OID regulations, the final
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
regular certificates as ordinary income. You should consult your tax advisors
regarding the
78
appropriate treatment of any regular certificate that does not pay
interest at a fixed rate or variable rate as described in this paragraph.
Under the REMIC regulations, a regular floating-rate certificate qualifies
as a regular interest in a REMIC if:
o it bears a rate that qualifies as a variable rate under the OID
regulations:
o 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 the rate (plus or minus a specified number of basis points);
or
o that represents a weighted average of rates on some or all of the
mortgage loans which bear interest at a fixed rate or at a
qualifying variable rate under the REMIC regulations, including
the rate that is subject to one or more caps or floors;
or:
o it bears one or more 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.
Accordingly, unless otherwise indicated in the applicable prospectus
supplement, we intend to treat regular certificates that qualify as regular
interests under this rule 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 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 regular certificate generally to be determined by assuming that interest
will be payable for the life of the regular certificate based on the initial
rate. Unless otherwise specified in the applicable prospectus supplement, we
intend to treat variable interest as qualified stated interest, other than
variable interest on an interest-only or super-premium 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, we intend to treat regular certificates bearing an
interest rate that is a weighted average of the net interest rates on mortgage
loans or mortgage certificates having fixed or adjustable rates, as having
qualified stated interest. The yield on the 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 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 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 rate on the regular certificates.
Deferred Interest. Under the OID regulations, all interest on a regular
certificate as to which there may be Deferred Interest is includible in the
stated redemption price at maturity. Accordingly, any Deferred Interest that
accrues with respect to a class of regular certificates will constitute income
to the holders of those regular certificates prior to the time distributions of
cash with respect to the Deferred Interest are made.
Market Discount. A purchaser of a regular certificate also may be subject
to the market discount rules of Internal Revenue Code Sections 1276 through
1278. Under these Internal Revenue Code sections and the principles applied by
the OID regulations in the context of original issue discount, market discount
is the amount by which the purchaser's original basis in the regular
certificate:
o is exceeded by the then-current principal amount of the regular
certificate; or
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o in the case of a regular certificate having original issue discount,
is exceeded by the adjusted issue price of the regular certificate at
the time of purchase.
The purchaser generally will be required to recognize ordinary income to
the extent of accrued market discount on the regular certificate as
distributions includible in its stated redemption price at maturity are
received, in an amount not exceeding any related distribution. The market
discount would accrue in a manner to be provided in Treasury regulations and
should take into account the prepayment assumption.
The Conference Committee Report to the 1986 Act provides that until the
Treasury regulations are issued, market discount would accrue either:
o on the basis of a constant interest rate or
o in the ratio of stated interest allocable to the relevant period to
the sum of the interest for that period plus the remaining interest as
of the end of the period, or in the case of a regular certificate
issued with original issue discount, in the ratio of original issue
discount accrued for the relevant period to the sum of the original
issue discount accrued for that period plus the remaining original
issue discount as of the end of that period.
The purchaser also generally will be required to treat a portion of any
gain on a sale or exchange of the regular 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 as partial distributions in reduction of the stated redemption
price at maturity were received. The purchaser will be required to defer
deduction of a portion of the excess of the interest paid or accrued on
indebtedness incurred to purchase or carry a regular certificate over the
interest distributable on that certificate. The deferred portion of the interest
expense in any taxable year generally will not exceed the accrued market
discount on the regular certificate for that year. Any deferred interest expense
is, in general, allowed as a deduction not later than the year in which the
related market discount income is recognized or the regular certificate is
disposed of. As an alternative to the inclusion of market discount in income on
the foregoing basis, the regular certificateholder may elect to include market
discount in income currently as it accrues on all market discount instruments
acquired by that regular certificateholder in that taxable year or thereafter,
in which case the interest deferral rule will not apply.
For additional information, you should also review the section in this
prospectus titled "--Election to Treat All Interest Under the Constant Yield
Method" below regarding an alternative manner in which the election may be
deemed to be made.
Market discount with respect to a regular certificate will be considered to
be de minimis if the market discount is less than 0.25% of the remaining stated
redemption price at maturity of that regular certificate multiplied by the
weighted average maturity of the regular certificate (determined as described
above in the third paragraph under "--Original Issue Discount") remaining after
the date of purchase, presumably taking into account prepayment assumptions. It
appears that de minimis market discount should be reported in a manner similar
to de minimis original issue discount. See "--Original Issue Discount" above.
Treasury regulations implementing the market discount rules have not yet been
issued, and therefore investors should consult their own tax advisors regarding
the application of these rules. You should also consult Revenue Procedure 92-67
concerning the elections to include market discount in income currently and to
accrue market discount on the basis of the constant yield method.
Premium. A 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 at maturity generally is considered to be
purchased at a premium. If the regular certificateholder holds the regular
certificate as a capital asset within the meaning of Internal Revenue Code
Section 1221, the regular certificateholder may elect under Internal Revenue
Code Section 171 to amortize the premium under the constant yield method. If
made, such an election will apply to all debt instruments having amortizable
bond premium that the holder owns or subsequently acquires. 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. The
1986 Act indicates a Congressional intent that the same rules that will apply to
the accrual of market discount on installment obligations will also apply to
amortizing bond premium under Internal Revenue Code Section 171 on installment
obligations such as the regular certificates, although it is unclear whether the
alternatives
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to the constant yield method described above under "--Market Discount" are
available. Amortizable bond premium will be treated as an offset to interest
income on a regular certificate rather than as a separate deduction item.
For additional information, you should also review the section in this
prospectus titled "--Election to Treat All Interest Under the Constant Yield
Method" below regarding an alternative manner in which the Internal Revenue Code
Section 171 election may be deemed to be made.
Election to Treat All Interest Under the Constant Yield Method. A holder of
a debt instrument such as a regular certificate may elect to treat all interest
that accrues on the instrument using the constant yield method, with none of the
interest being treated as qualified stated interest. For purposes of applying
the constant yield method to a debt instrument subject to such an election:
o interest includes stated interest, original issue discount, de minimis
original issue discount, market discount and de minimis market
discount, as adjusted by any amortizable bond premium or acquisition
premium; and
o the debt instrument is treated as if the instrument were issued on the
holder's acquisition date in the amount of the holder's adjusted basis
immediately after acquisition.
It is unclear whether, for this purpose, the initial prepayment assumption
would continue to apply or if a new prepayment assumption as of the date of the
holder's acquisition would apply. A holder generally may make an election on an
instrument by instrument basis or for a class or group of debt instruments.
However, if the holder makes such an election with respect to a debt instrument
with amortizable bond premium or with market discount, the holder is deemed to
have made elections to amortize bond premium or to report market discount income
currently as it accrues under the constant yield method, respectively, for all
debt instruments acquired by the holder in the same taxable year or thereafter.
The election is made on the holder's federal income tax return for the year in
which the debt instrument is acquired and is irrevocable except with the
approval of the Service. You should consult your own tax advisors regarding the
advisability of making such an election.
Sale or Exchange of Regular Certificates. If a regular certificateholder
sells or exchanges a regular certificate, the regular certificateholder will
recognize gain or loss equal to the difference, if any, between the amount
realized and its adjusted basis in the regular certificate. The adjusted basis
of a regular certificate generally will equal the cost of the regular
certificate to the seller, increased by any original issue discount or market
discount previously included in the seller's gross income with respect to the
regular certificate and reduced by amounts included in the stated redemption
price at maturity of the regular certificate that were previously received by
the seller, by any amortized premium and by previously recognized losses.
Except as described above with respect to market discount, and except as
provided in this paragraph, any gain or loss on the sale or exchange of a
regular certificate realized by an investor who holds the regular certificate as
a capital asset will be capital gain or loss and will be long-term or short-term
depending on whether the regular certificate has been held for the long-term
capital gain holding period, currently more than one year. The gain will be
treated as ordinary income in the following instances:
o if a regular certificate is held as part of a conversion transaction
as defined in Internal Revenue Code Section 1258(c), up to the amount
of interest that would have accrued on the regular certificateholder's
net investment in the conversion transaction at 120% of the
appropriate applicable Federal rate under Internal Revenue Code
Section 1274(d) in effect at the time the taxpayer entered into the
transaction minus any amount previously treated as ordinary income
with respect to any prior distribution of property that was held as a
part of the transaction;
o in the case of a non-corporate taxpayer, to the extent the taxpayer
has made an election under Internal Revenue Code Section 163(d)(4) to
have net capital gains taxed as investment income at ordinary rates;
or
o to the extent that the gain does not exceed the excess, if any, of:
o the amount that would have been includible in the gross income of
the holder if its yield on the regular certificate were 110% of
the applicable Federal rate as of the date of purchase; over
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o the amount of income actually includible in the gross income of
the holder with respect to the regular certificate.
In addition, gain or loss recognized from the sale of a regular certificate
by banks or thrift institutions will be treated as ordinary income or loss
pursuant to Internal Revenue Code Section 582(c). Capital gains of non-corporate
taxpayers are subject to a lower maximum tax rate than is the ordinary income of
those taxpayers. The maximum tax rate for corporations is the same with respect
to both ordinary income and capital gains.
Holders that recognize a loss on a sale or exchange of a regular
certificate for federal income tax purposes in excess of certain threshold
amounts should consult their tax advisors as to the need to file IRS Form 8886
(disclosing certain potential tax shelters) on their federal income tax returns.
Treatment of Losses. Holders of regular certificates will be required to
report income with respect to regular certificates on the accrual method of
accounting, without giving effect to delays or reductions in distributions
attributable to defaults or delinquencies on the mortgage loans allocable to a
particular class of regular certificates, except to the extent it can be
established that the losses are uncollectible. Accordingly, the holder of a
regular certificate may have income, or may incur a diminution in cash flow as a
result of a default or delinquency, but may not be able to take a deduction
(subject to the discussion below) for the corresponding loss until a subsequent
taxable year. In this regard, you are cautioned that while you may generally
cease to accrue interest income if it reasonably appears that the interest will
be uncollectible, the Service may take the position that original issue discount
must continue to be accrued in spite of its uncollectibility until the debt
instrument is disposed of in a taxable transaction or becomes worthless in
accordance with the bad debt rules of Internal Revenue Code Section 166. Under
Internal Revenue Code Section 166, it appears that holders of regular
certificates that are corporations or that otherwise hold the regular
certificates in connection with a trade or business should in general be allowed
to deduct as an ordinary loss any loss sustained during the taxable year on
account of any regular certificates becoming wholly or partially worthless. In
general, holders of regular certificates that are not corporations and do not
hold the regular certificates in connection with a trade or business will be
allowed to deduct as a short-term capital loss any loss with respect to
principal sustained during the taxable year on account of a portion of any class
or subclass of the regular certificates becoming wholly worthless. Although the
matter is not free from doubt, non-corporate holders of regular certificates
should be allowed a bad debt deduction at the time as the principal balance of
any class or subclass of the regular certificates is reduced to reflect losses
resulting from any liquidated mortgage loans. The Service, however, could take
the position that non-corporate holders will be allowed a bad debt deduction to
reflect those losses only after all mortgage loans remaining in the trust fund
have been liquidated or the class of regular certificates has been otherwise
retired. The Service could also assert that losses on the regular certificates
are deductible based on some other method that may defer the deductions for all
holders, such as reducing future cash flow for purposes of computing original
issue discount. This may have the effect of creating negative original issue
discount which would be deductible only against future positive original issue
discount or otherwise upon termination of the class. Holders of regular
certificates are urged to consult their own tax advisors regarding the
appropriate timing, amount and character of any loss sustained with respect to
the regular certificates. While losses attributable to interest previously
reported as income should be deductible as ordinary losses by both corporate and
non-corporate holders, the Service may take the position that losses
attributable to accrued original issue discount may only be deducted as
short-term capital losses by non-corporate holders not engaged in a trade or
business. Special loss rules are applicable to banks and thrift institutions,
including rules regarding reserves for bad debts. You are advised to consult
your tax advisors regarding the treatment of losses on regular certificates.
TAXATION OF RESIDUAL CERTIFICATES
Taxation of REMIC Income. Generally, the daily portions of REMIC taxable
income or net loss will be includible as ordinary income or loss in determining
the federal taxable income of holders of residual certificates, and will not be
taxed separately to the REMIC pool. The daily portions of REMIC taxable income
or net loss of a residual certificateholder are determined by allocating the
REMIC pool's taxable income or net loss for each calendar quarter ratably to
each day in the quarter and by allocating the daily portion among the residual
certificateholders in proportion to their respective holdings of residual
certificates in the REMIC pool on the day. REMIC taxable income is generally
determined in the same manner as the taxable income of an individual using the
accrual method of accounting, except for the following:
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o the limitations on deductibility of investment interest expense and
expenses for the production of income do not apply;
o all bad loans will be deductible as business bad debts; and
o the limitation on the deductibility of interest and expenses related
to tax-exempt income will apply.
The REMIC pool's gross income includes interest, original issue discount
income and market discount income, if any, on the mortgage loans, reduced by
amortization of any premium on the mortgage loans, plus income from amortization
of issue premium, if any, on the regular certificates, plus income on
reinvestment of cash flows and reserve assets, plus any cancellation of
indebtedness income upon allocation of realized losses to the regular
certificates. The REMIC pool's deductions include interest and original issue
discount expense on the regular certificates, servicing fees on the mortgage
loans, other administrative expenses of the REMIC pool and realized losses on
the mortgage loans. The requirement that residual certificateholders report
their pro rata share of taxable income or net loss of the REMIC pool will
continue until there are no certificates of any class of the related series
outstanding.
The taxable income recognized by a residual certificateholder in any
taxable year will be affected by, among other factors, the relationship between
the timing of recognition of interest and original issue discount or market
discount income or amortization of premium with respect to the mortgage loans,
on the one hand, and the timing of deductions for interest (including original
issue discount) on the regular certificates or income from amortization of issue
premium on the regular certificates, on the other hand. In the event that an
interest in the mortgage loans is acquired by the REMIC pool at a discount, and
one or more of the mortgage loans is prepaid, the residual certificateholder may
recognize taxable income without being entitled to receive a corresponding
amount of cash because the prepayment may be used in whole or in part to make
distributions in reduction of principal on the regular certificates and the
discount on the mortgage loans which is includible in income may exceed the
deduction allowed upon the distributions on those regular certificates on
account of any unaccrued original issue discount relating to those regular
certificates. When there is more than one class of regular certificates that
distribute principal sequentially, this mismatching of income and deductions is
particularly likely to occur in the early years following issuance of the
regular certificates when distributions in reduction of principal are being made
in respect of earlier classes of regular certificates to the extent that those
classes are not issued with substantial discount. If taxable income attributable
to the mismatching is realized, in general, losses would be allowed in later
years as distributions on the later classes of regular certificates are made.
Taxable income may also be greater in earlier years than in later years as a
result of the fact that interest expense deductions, expressed as a percentage
of the outstanding principal amount of the series of regular certificates, may
increase over time as distributions in reduction of principal are made on the
lower yielding classes of regular certificates, whereas to the extent that the
REMIC pool includes fixed rate mortgage loans, interest income with respect to
any given mortgage loan will remain constant over time as a percentage of the
outstanding principal amount of that loan. Consequently, residual
certificateholders must have sufficient other sources of cash to pay any
federal, state or local income taxes due as a result of the mismatching. In
general, unrelated deductions will not be available to offset some or all of
such "phantom" income, as discussed below under "--Limitations on Offset or
Exemption of REMIC Income." The timing of the mismatching of income and
deductions described in this paragraph, if present with respect to a series of
certificates, may have a significant adverse effect upon the residual
certificateholder's after-tax rate of return. In addition, a residual
certificateholder's taxable income during some periods may exceed the income
reflected by the residual certificateholder for the periods in accordance with
generally accepted accounting principles. You should consult your own
accountants concerning the accounting treatment of your investment in residual
certificates.
Basis and Losses. The amount of any net loss of the REMIC pool that may be
taken into account by the residual certificateholder is limited to the adjusted
basis of the residual certificate as of the close of the quarter (or time of
disposition of the residual certificate if earlier), determined without taking
into account the net loss for the quarter. The initial adjusted basis of a
purchaser of a residual certificate is the amount paid for that residual
certificate. The adjusted basis will be increased by the amount of taxable
income of the REMIC pool reportable by the residual certificateholder and will
be decreased, but not below zero, first, by a cash distribution from the REMIC
pool and, second, by the amount of loss of the REMIC pool reportable by the
residual certificateholder. Any loss that is disallowed on account of this
limitation may be carried over indefinitely with respect to the residual
83
certificateholder as to whom the loss was disallowed and may be used by the
residual certificateholder only to offset any income generated by the same REMIC
pool.
A residual certificateholder will not be permitted to amortize directly the
cost of its residual certificate as an offset to its share of the taxable income
of the related REMIC pool. However, that taxable income will not include cash
received by the REMIC pool that represents a recovery of the REMIC pool's basis
in its assets. The recovery of basis by the REMIC pool will have the effect of
amortization of the issue price of the residual certificates over their life.
However, in view of the possible acceleration of the income of residual
certificateholders described above under "Taxation of REMIC Income", the period
of time over which the issue price is effectively amortized may be longer than
the economic life of the residual certificates.
A residual certificate may have a negative value if the net present value
of anticipated tax liabilities exceeds the present value of anticipated cash
flows. The REMIC regulations appear to treat the issue price of a residual
interest as zero rather than the negative amount for purposes of determining the
REMIC pool's basis in its assets. Regulations have been issued addressing the
tax treatment of "inducement fees" received by transferees of no economic REMIC
residual interests. These regulations require inducement fees to be included in
income over a period reasonably related to the period in which the related REMIC
residual interest is expected to generate taxable income or net loss to its
holder. Under two safe harbor methods, inducement fees are permitted to be
included in income (a) in the same amounts and over the same period that the
taxpayer uses for financial reporting purposes, provided that such period is not
shorter than the period the REMIC is expected to generate taxable income, or (b)
ratably over the remaining anticipated weighted average life of all the regular
and residual interests issued by the REMIC, determined based on actual
distributions projected as remaining to be made on such interests under the
prepayment assumption. If a residual certificateholder sells or otherwise
disposes of its residual interest, any unrecognized portion of the inducement
fee generally is required to be taken into account at the time of the sale or
disposition. Prospective purchasers of REMIC residual certificates should
consult with their own tax advisors regarding the effect of these regulations.
Further, to the extent that the initial adjusted basis of a residual
certificateholder (other than an original holder) in the residual certificate is
greater that the corresponding portion of the REMIC pool's basis in the mortgage
loans, the residual certificateholder will not recover a portion of the basis
until termination of the REMIC pool unless future Treasury regulations provide
for periodic adjustments to the REMIC income otherwise reportable by the holder.
The REMIC regulations currently in effect do not so provide.
You should review the sections titled "--Treatment of Certain Items of
REMIC Income and Expense--Market Discount" below regarding the basis of mortgage
loans to the REMIC pool and "--Sale or Exchange of a Residual Certificate" below
regarding possible treatment of a loss upon termination of the REMIC pool as a
capital loss.
TREATMENT OF CERTAIN ITEMS OF REMIC INCOME AND EXPENSE
Although we intend to compute REMIC income and expense in accordance with
the Internal Revenue Code and applicable regulations, the authorities regarding
the determination of specific items of income and expense are subject to
differing interpretations. We make no representation as to the specific method
that we will use for reporting income with respect to the mortgage loans and
expenses with respect to the regular certificates, and different methods could
result in different timing of reporting of taxable income or net loss to
residual certificateholders or differences in capital gain versus ordinary
income.
Original Issue Discount and Premium. Generally, the REMIC pool's deductions
for original issue discount and income from amortization of issue premium will
be determined in the same manner as original issue discount income on regular
certificates as described above under "Taxation of Regular
Certificates--Original Issue Discount" and "--Variable Rate Regular
Certificates," without regard to the de minimis rule described therein, and
"--Premium."
Deferred Interest. Any Deferred Interest that accrues with respect to any
adjustable rate mortgage loans held by the REMIC pool will constitute income to
the REMIC pool and will be treated in a manner similar to the Deferred Interest
that accrues with respect to regular certificates as described above under
"Taxation of Regular Certificates--Deferred Interest."
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Market Discount. The REMIC pool will have market discount income in respect
of mortgage loans if, in general, the basis of the REMIC pool allocable to the
mortgage loans is exceeded by their unpaid principal balances. The REMIC pool's
basis in the mortgage loans is generally the fair market value of the mortgage
loans immediately after its transfer to the REMIC pool. The REMIC regulations
provide that the basis is equal in the aggregate to the issue prices of all
regular and residual interests in the REMIC pool, or its fair market value at
the Closing Date, in the case of a retained class. In respect of mortgage loans
that have market discount to which Internal Revenue Code Section 1276 applies,
the accrued portion of the market discount would be recognized currently as an
item of ordinary income in a manner similar to original issue discount,
regardless of whether any payments of amounts included in the stated redemption
price are received. The computation of accrued market discount income generally
should be made in the manner described above under "Taxation of Regular
Certificates--Market Discount."
Premium. Generally, if the basis of the REMIC pool in the mortgage loans
exceeds their unpaid principal balances, the REMIC pool will be considered to
have acquired the mortgage loans at a premium equal to the amount of the excess.
As stated above, the REMIC pool's basis in mortgage loans is the fair market
value of the mortgage loans, based on the aggregate of the issue prices, or the
fair market value of retained Classes, of the regular and residual interests in
the REMIC pool immediately after their transfer to the REMIC pool. In a manner
analogous to the discussion above under "Taxation of Regular
Certificates--Premium," a REMIC pool that holds a mortgage loan as a capital
asset under Internal Revenue Code Section 1221 may elect under Internal Revenue
Code Section 171 to amortize premium on whole mortgage loans or mortgage loans
underlying MBS that were originated after September 27, 1985 or MBS that are
REMIC regular interests under the constant yield method. Amortizable bond
premium will be treated as an offset to interest income on the mortgage loans,
rather than as a separate deduction item. To the extent that the mortgagors with
respect to the mortgage loans are individuals, Internal Revenue Code Section 171
will not be available for premium on mortgage loans (including underlying
mortgage loans) originated on or prior to September 27, 1985. The allocation of
the premium pro rata among principal payments should be considered a reasonable
method; however, the Service may argue that the premium should be allocated in a
different manner, such as allocating the premium entirely to the final payment
of principal.
LIMITATIONS ON OFFSET OR EXEMPTION OF REMIC INCOME
A portion, and often all, of the REMIC taxable income includible in
determining the federal income tax liability of a residual certificateholder
will be subject to special treatment. That portion, referred to as the excess
inclusion, is equal to the excess of REMIC taxable income for the calendar
quarter allocable to a residual certificate over the daily accruals for the
quarterly period of:
o 120% of the long-term applicable Federal rate that would have applied
to the residual certificate, if it were a debt instrument, on the
startup day under Internal Revenue Code Section 1274(d); multiplied by
o the adjusted issue price of the residual certificate at the beginning
of the quarterly period.
For this purpose, the adjusted issue price of a residual certificate at the
beginning of a quarter is the issue price of the residual certificate, plus the
amount of the daily accruals of REMIC income described in this paragraph for all
prior quarters, decreased by any distributions made with respect to that
residual certificate prior to the beginning of the quarterly period.
Accordingly, the portion of the REMIC pool's taxable income that will be treated
as excess inclusions will be a larger portion of the income as the adjusted
issue price of the residual certificates diminishes and all such taxable income
will be so treated if the adjusted issue price of the residual certificates is
zero.
The portion of a residual certificateholder's REMIC taxable income
consisting of the excess inclusions generally may not be offset by other
deductions, including net operating loss carryforwards, on the residual
certificateholder's return. However, net operating loss carryforwards are
determined without regard to excess inclusion income. Further, if the residual
certificateholder is an organization subject to the tax on unrelated business
income imposed by Internal Revenue Code Section 511, the residual
certificateholder's excess inclusions will be treated as unrelated business
taxable income of that residual certificateholder for purposes of Internal
Revenue Code Section 511. In addition, REMIC taxable income is subject to 30%
withholding tax with respect to some persons who are not U.S. Persons, as
defined below under "--Tax-Related Restrictions on Transfer of Residual
Certificates--Foreign Investors", and its portion attributable to excess
inclusions is not eligible for any reduction in the rate of withholding tax, by
treaty or otherwise. See "--Taxation of Foreign Investors--Residual
Certificates"
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below. Finally, if a real estate investment trust or a regulated investment
company owns a residual certificate, a portion (allocated under Treasury
regulations yet to be issued) of dividends paid by the real estate investment
trust or a regulated investment company could not be offset by net operating
losses of its shareholders, would constitute unrelated business taxable income
for tax-exempt shareholders, and would be ineligible for reduction of
withholding to some persons who are not U.S. Persons.
In addition, three rules determine the effect of excess inclusions on the
alternative minimum taxable income of a residual certificateholder. First,
alternative minimum taxable income for a residual certificateholder is
determined without regard to the special rule, discussed above, that taxable
income cannot be less than excess inclusions. Second, a residual
certificateholder's alternative minimum taxable income for a taxable year cannot
be less than the excess inclusions for the year. Third, the amount of any
alternative minimum tax net operating loss deduction must be computed without
regard to any excess inclusions. These rules have the effect of preventing
non-refundable tax credits reducing a taxpayer's income tax to an amount less
than the alternative minimum tax on excess inclusions.
TAX-RELATED RESTRICTIONS ON TRANSFER OF RESIDUAL CERTIFICATES
Disqualified Organizations. If any legal or beneficial interest in a
residual certificate is transferred to a Disqualified Organization, a tax would
be imposed in an amount equal to the product of:
o the present value of the total anticipated excess inclusions with
respect to the residual certificate for periods after the transfer;
and
o the highest marginal federal income tax rate applicable to
corporations.
The REMIC regulations provide that the anticipated excess inclusions are based
on actual prepayment experience to the date of the transfer and projected
payments based on the prepayment assumption. The present value rate equals the
applicable Federal rate under Internal Revenue Code Section 1274(d) as of the
date of the transfer for a term ending with the last calendar quarter in which
excess inclusions are expected to accrue. The tax generally would be imposed on
the transferor of the residual certificate, except that where the transfer is
through an agent (including a broker, nominee or other middleman) for a
Disqualified Organization, the tax would instead be imposed on the agent.
However, a transferor of a residual certificate would in no event be liable for
the 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 the
affidavit is false. The tax also may be waived by the Treasury Department if the
Disqualified Organization promptly disposes of the residual interest and the
transferor pays income tax at the highest corporate rate on the excess
inclusions for the period the residual certificate is actually held by the
Disqualified Organization.
In addition, if a Pass-Through Entity has excess inclusion income with
respect to a residual certificate during a taxable year and a Disqualified
Organization is the record holder of an equity interest in the entity, then a
tax is imposed on the entity equal to the product of the amount of excess
inclusions on the residual certificate that are allocable to the interest in the
Pass-Through Entity during the period the interest is held by the Disqualified
Organization, and the highest marginal federal corporate income tax rate. The
tax would be deductible from the ordinary gross income of the Pass-Through
Entity for the taxable year. The Pass-Through Entity would not be liable for the
tax if it has received an affidavit from the record holder that it is not a
Disqualified Organization or stating the holder's taxpayer identification number
and, during the period the person is the record holder of the residual
certificate, the Pass-Through Entity does not have actual knowledge that the
affidavit is false.
If an electing large partnership holds a residual certificate, all
interests in the electing large partnership are treated as held by Disqualified
Organizations for purposes of the tax imposed on Pass-Through Entities described
in the preceding paragraph. This tax on electing large partnerships must be paid
even if each record holder of an interest in that partnership provides the
affidavit mentioned in the prior paragraph.
The pooling and servicing agreement with respect to a series of
certificates will provide that no legal or beneficial interest in a residual
certificate may be transferred unless the following occurs:
o the proposed transferee provides to the transferor and the trustee an
affidavit providing its taxpayer identification number and stating
that the transferee is the beneficial owner of the residual
certificate, is not
86
a Disqualified Organization and is not purchasing the residual
certificates on behalf of a Disqualified Organization (i.e., as a
broker, nominee or middleman on its behalf); and
o the transferor provides a statement in writing to us and the trustee
that it has no actual knowledge that the affidavit is false.
Moreover, the pooling and servicing agreement will provide that any
attempted or purported transfer in violation of these transfer restrictions will
be null and void and will vest no rights in any purported transferee. Each
residual certificate with respect to a series will bear a legend referring to
the restrictions on transfer, and each residual certificateholder will be deemed
to have agreed, as a condition of ownership, to any amendments to the related
pooling and servicing agreement required under the Internal Revenue Code or
applicable Treasury regulations to effectuate the foregoing restrictions.
Information necessary to compute an applicable excise tax must be furnished to
the Service and to the requesting party within 60 days of the request, and we or
the trustee may charge a fee for computing and providing the information.
Noneconomic Residual Interests. The REMIC regulations would disregard some
transfers of residual certificates, in which case the transferor would continue
to be treated as the owner of the residual certificates and thus would continue
to be subject to tax on its allocable portion of the net income of the REMIC
pool. Under the REMIC regulations, a transfer of a noneconomic residual
interest, as defined below, to a residual certificateholder, other than a
residual certificateholder who is not a U.S. Person, is disregarded for all
federal income tax purposes if a significant purpose of the transferor is to
impede the assessment or collection of tax. A residual interest in a REMIC,
including a residual interest with a positive value at issuance, is a
noneconomic residual interest unless, at the time of the transfer:
o the present value of the expected future distributions on the residual
interest at least equals the product of the present value of the
anticipated excess inclusions and the highest corporate income tax
rate in effect for the year in which the transfer occurs; and
o the transferor reasonably expects that the transferee will receive
distributions from the REMIC at or after the time at which taxes
accrue on the anticipated excess inclusions in an amount sufficient to
satisfy the accrued taxes.
The anticipated excess inclusions and the present value rate are determined in
the same manner as set forth above under "--Disqualified Organizations." The
REMIC regulations explain that a significant purpose to impede the assessment or
collection of tax exists if the transferor, at the time of the transfer, either
knew or should have known that the transferee would be unwilling or unable to
pay taxes due on its share of the taxable income of the REMIC. A safe harbor is
provided if:
o the transferor conducted, at the time of the transfer, a reasonable
investigation of the financial condition of the transferee and found
that the transferee historically had paid its debts as they came due
and found no significant evidence to indicate that the transferee
would not continue to pay its debts as they came due in the future;
o the transferee represents to the transferor that it understands that,
as the holder of the noneconomic residual interest, the transferee may
incur tax liabilities in excess of cash flows generated by the
interest and that the transferee intends to pay taxes associated with
holding the residual interest as they become due; and
o the transferee represents that it will not cause the income with
respect to the residual interest to be attributable to a foreign
permanent establishment or fixed base, within the meaning of an
applicable income tax treaty, of a transferee or of any other United
States Person.
The pooling and servicing agreement with respect to each series of certificates
will require the transferee of a residual certificate to certify to the matters
in the preceding sentence as part of the affidavit described above under the
heading "--Disqualified Organizations." The transferor must have no actual
knowledge or reason to know that the statements are false.
87
In addition to the three conditions set forth above 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, a fourth requirement must be satisfied in one of
two alternative ways. The first way such fourth requirement may be satisfied is
that the present value of the anticipated tax liabilities associated with
holding the noneconomic residual interest not exceed the sum of:
o the present value of any consideration given to the transferee to
acquire the interest;
o the present value of the expected future distributions on the
interest; and
o 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 alternative, the transferee is
assumed to pay tax at the highest corporate tax rate (currently 35%) or, in
certain circumstances, the alternative minimum tax rate. Further, present values
generally are computed using a discount rate equal to the short-term Federal
rate set forth in Internal Revenue Code Section 1274(d) at the time of the
transfer and the compounding method of the transferee.
The second way such fourth requirement may be satisfied is:
o the transferee must be a domestic "C" corporation (other than a
corporation exempt from taxation or a regulated investment company or
real estate investment trust) that meets certain gross and net asset
tests (generally, $100 million of gross assets and $10 million of net
assets for the current year and the two preceding fiscal years,
excluding certain related party obligations);
o the transferee must agree in writing that it will transfer the
residual interest only to a subsequent transferee that is an eligible
corporation and meets the requirements for this safe harbor transfer;
and
o the facts and circumstances known to the transferor on or before the
date of the transfer must not reasonably indicate that the taxes
associated with ownership of the residual interest will not be paid by
the transferee.
Foreign Investors. The REMIC regulations provide that the transfer of a
residual certificate that has tax avoidance potential to a foreign person will
be disregarded for all federal tax purposes. This rule appears intended to apply
to a transferee who is not a U.S. Person, unless the transferee's income is
effectively connected with the conduct of a trade or business within the United
States. A residual certificate is deemed to have tax avoidance potential unless,
at the time of the transfer:
o the future value of expected distributions equals at least 30% of the
anticipated excess inclusions after the transfer; and
o the transferor reasonably expects that the transferee will receive
sufficient distributions from the REMIC pool at or after the time at
which the excess inclusions accrue and prior to the end of the next
succeeding taxable year for the accumulated withholding tax liability
to be paid.
If the non-U.S. Person transfers the residual certificate back to a U.S. Person,
the transfer will be disregarded and the foreign transferor will continue to be
treated as the owner unless arrangements are made so that the transfer does not
have the effect of allowing the transferor to avoid tax on accrued excess
inclusions.
In addition, under temporary and final Treasury regulations, effective
August 1, 2006, a U.S. partnership having a partner who is not a U.S. Person
will be required to pay withholding tax in respect of excess inclusion income
allocable to such non-U.S. partner, even if no cash distributions are made to
such partner. Unless otherwise stated in the related prospective supplement, a
residual certificate may not be purchased by or transferred to any person that
is not a U.S. Person.
88
SALE OR EXCHANGE OF A RESIDUAL CERTIFICATE
Upon the sale or exchange of a residual certificate, the residual
certificateholder will recognize gain or loss equal to the excess, if any, of
the amount realized over the adjusted basis, as described above under "Taxation
of Residual Certificates--Basis and Losses," of the residual certificateholder
in the residual certificate at the time of the sale or exchange. In addition to
reporting the taxable income of the REMIC pool, a residual certificateholder
will have taxable income to the extent that any cash distribution to it from the
REMIC pool exceeds the adjusted basis on that distribution date. The income will
be treated as gain from the sale or exchange of the residual certificate. It is
possible that the termination of the REMIC pool may be treated as a sale or
exchange of a residual certificateholder's residual certificate, in which case,
if the residual certificateholder has an adjusted basis in the residual
certificateholder's residual certificate remaining when its interest in the
REMIC pool terminates, and if the residual certificateholder holds the residual
certificate as a capital asset under Internal Revenue Code Section 1221, then
the residual certificateholder will recognize a capital loss at that time in the
amount of the remaining adjusted basis.
Any gain on the sale of a residual certificate will be treated as ordinary
income if one or both of the following conditions are met:
o if a residual certificate is held as part of a conversion transaction
as defined in Internal Revenue Code Section 1258(c), up to the amount
of interest that would have accrued on the residual
certificateholder's net investment in the conversion transaction at
120% of the appropriate applicable Federal rate in effect at the time
the taxpayer entered into the transaction minus any amount previously
treated as ordinary income with respect to any prior disposition of
property that was held as a part of the transaction; or
o in the case of a non-corporate taxpayer, to the extent the taxpayer
has made an election under Internal Revenue Code Section 163(d)(4) to
have net capital gains taxed as investment income at ordinary income
rates.
In addition, gain or loss recognized from the sale of a residual certificate by
banks or thrift institutions will be treated as ordinary income or loss pursuant
to Internal Revenue Code Section 582(c).
The Conference Committee Report to the 1986 Act provides that, except as
provided in Treasury regulations yet to be issued, the wash sale rules of
Internal Revenue Code Section 1091 will apply to dispositions of residual
certificates where the seller of the residual certificate, during the period
beginning six months before the sale or disposition of the residual certificate
and ending six months after the sale or disposition, acquires (or enters into
any other transaction that results in the application of Section 1091) any
residual interest in any REMIC or any interest in a taxable mortgage pool (such
as a non-REMIC owner trust) that is economically comparable to a residual
certificate.
MARK-TO-MARKET REGULATIONS
Regulations under Internal Revenue Code Section 475, relating to the
requirement that a securities dealer mark-to-market securities held for sale to
customers, provide that, for purposes of the mark-to-market requirement, a
residual certificate is not treated as a security and thus may not be
marked-to-market.
TAXES THAT MAY BE IMPOSED ON THE REMIC POOL
Prohibited Transactions. Income from some transactions by the REMIC pool,
called prohibited transactions, will not be part of the calculation of income or
loss includible in the federal income tax returns of residual
certificateholders, but rather will be taxed directly to the REMIC pool at a
100% rate. Prohibited transactions generally include:
1. the disposition of a qualified mortgage other than pursuant to:
o a substitution within two years of the startup day for a
defective (including a defaulted) obligation (or repurchase in
lieu of substitution of a defective (including a defaulted)
obligation at any time) or for any qualified mortgage within
three months of the startup day;
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o foreclosure, default or imminent default of a qualified mortgage;
o bankruptcy or insolvency of the REMIC pool; or
o qualified (complete) liquidation;
2. the receipt of income from assets that are not the type of mortgages or
investments that the REMIC pool is permitted to hold;
3. the receipt of compensation for services; or
4. the receipt of gain from disposition of cash flow investments other than
pursuant to a qualified liquidation.
Notwithstanding (1) and (4), it is not a prohibited transaction to sell
REMIC pool property to prevent a default on regular certificates as a result of
a default on qualified mortgages or to facilitate a clean-up call (generally, an
optional termination to save administrative costs when no more than a small
percentage of the certificates is outstanding). The REMIC regulations indicate
that the modification of a mortgage loan generally will not be treated as a
disposition if it is occasioned by a default or reasonably foreseeable default,
an assumption of the mortgage loan, the waiver of a due-on-sale or
due-on-encumbrance clause or the conversion of an interest rate by a mortgagor
pursuant to the terms of a convertible adjustable rate mortgage loan.
Contributions to the REMIC Pool After the Startup Day. In general, the
REMIC pool will be subject to a tax at a 100% rate on the value of any property
contributed to the REMIC pool after the startup day. Exceptions are provided for
cash contributions to the REMIC pool made under the following circumstances:
o during the three months following the startup day;
o if made to a qualified reserve fund by a residual certificateholder;
o if in the nature of a guarantee;
o if made to facilitate a qualified liquidation or clean-up call; and
o if as otherwise permitted in Treasury regulations yet to be issued.
Net Income from Foreclosure Property. The REMIC pool will be 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. Generally, property acquired by deed in lieu of foreclosure
would be treated as foreclosure property until the close of the third calendar
year following the year of acquisition, with possible extensions of up to an
additional three years. 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.
It is not anticipated that the REMIC pool will receive income or gain
subject to prohibited transactions taxes or contributions subject to tax. As
described in "Description of the Pooling and Servicing Agreements -- Realization
upon Defaulted Mortgage Loans" with respect to net income from foreclosure
property from a property that secured a mortgage loan, in some circumstances
income from such a property may be subject to taxation when it is held by the
REMIC pool.
Liquidation of the REMIC Pool. If a REMIC pool adopts a plan of complete
liquidation, within the meaning of Internal Revenue Code Section
860F(a)(4)(A)(i), which may be accomplished by designating in the REMIC pool's
final tax return a date on which the adoption is deemed to occur, and sells all
of its assets, other than cash, within a 90-day period beginning on the date of
the adoption of the plan of liquidation, the REMIC pool will not be subject to
the prohibited transaction rules on the sale of its assets, provided that the
REMIC pool credits or distributes in liquidation all of the sale proceeds plus
its cash, other than amounts retained to meet claims, to holders of regular
certificates and residual certificateholders within the 90-day period.
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Administrative Matters. The REMIC pool will be required to maintain its
books on a calendar year basis and to file federal income tax returns for
federal income tax purposes in a manner similar to a partnership. The form for
the income tax return is Form 1066, U.S. Real Estate Mortgage Investment Conduit
Income Tax Return. The trustee will be required to sign the REMIC pool's
returns. Treasury regulations provide that, except where there is a single
residual certificateholder for an entire taxable year, the REMIC pool will be
subject to the procedural and administrative rules of the Internal Revenue Code
applicable to partnerships, including the determination by the Service of any
adjustments to, among other things, items of REMIC income, gain, loss, deduction
or credit in a unified administrative proceeding. The residual certificateholder
owning the largest percentage interest in the residual certificates will be
obligated to act as tax matters person, as defined in the applicable Treasury
regulations, with respect to the REMIC pool. Each residual certificateholder
will be deemed, by acceptance of the residual certificates, to have agreed to:
o the appointment of the tax matters person as provided in the preceding
sentence; and
o the irrevocable designation of the servicer as agent for performing
the functions of the tax matters person.
LIMITATIONS ON DEDUCTION OF SOME EXPENSES
An investor who is an individual, estate or trust will be subject to
limitation with respect to some itemized deductions described in Internal
Revenue Code Section 67, to the extent that the itemized deductions, in the
aggregate, do not exceed 2% of the investor's adjusted gross income. In
addition, Internal Revenue Code Section 68 provides that itemized deductions
otherwise allowable for a taxable year of an individual taxpayer will be reduced
by the lesser of (1) 3% of the excess, if any, of adjusted gross income over a
statutory threshold or (2) 80% of the amount of itemized deductions otherwise
allowable for that year. Under current law, the applicable limitation is reduced
by one third for taxable years beginning in 2006 and 2007, and by two thirds in
taxable years beginning in 2008 and 2009. For taxable years beginning after
December 31, 2009 the overall limitation on itemized deductions is repealed.
In the case of a REMIC pool, the deductions may include deductions under
Internal Revenue Code Section 212 for the servicing fee and all administrative
and other expenses relating to the REMIC pool, or any similar expenses allocated
to the REMIC pool with respect to a regular interest it holds in another REMIC.
Investors who hold REMIC certificates either directly or indirectly through
pass-through entities may have their pro rata share of the expenses allocated to
them as additional gross income, but may be subject to the limitation on
deductions. In addition, those expenses are not deductible at all for purposes
of computing the alternative minimum tax, and may cause investors to be subject
to significant additional tax liability. Temporary Treasury regulations provide
that the additional gross income and corresponding amount of expenses generally
are to be allocated entirely to the holders of residual certificates in the case
of a REMIC pool that would not qualify as a fixed investment trust in the
absence of a REMIC election. However, the additional gross income and limitation
on deductions will apply to the allocable portion of the expenses to holders of
regular certificates, as well as holders of residual certificates, where regular
certificates are issued in a manner that is similar to pass-through certificates
in a fixed investment trust. In general, the allocable portion will be
determined based on the ratio that a REMIC certificateholder's income,
determined on a daily basis, bears to the income of all holders of regular
certificates and residual certificates with respect to a REMIC pool. As a
result, individuals, estates or trusts holding REMIC certificates, either
directly or indirectly through a grantor trust, partnership, S corporation,
REMIC, or other pass-through entities described in the foregoing temporary
Treasury regulations, may have taxable income in excess of the interest income
at the pass-through rate on regular certificates that are issued in a single
Class or otherwise consistently with fixed investment trust status or in excess
of cash distributions for the related period on residual certificates. Unless
otherwise indicated in the applicable prospectus supplement, all the expenses
will be allocable to the residual certificates.
TAXATION OF FOREIGN INVESTORS
A regular certificateholder that is not a "United States Person" (as
defined below) and is not subject to federal income tax as a result of any
direct or indirect connection to the United States in addition to its ownership
of a 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 regular certificate To avoid withholding
tax, that holder must provide certain documentation. The appropriate
documentation includes Form W-8BEN, if the
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foreign person is a corporation or individual eligible for the benefits of the
portfolio interest exemption or an exemption based on a treaty; Form W-8ECI if
the foreign person is eligible for an exemption on the basis of its income from
the REMIC certificate being effectively connected to a United States trade or
business; Form W-8BEN or Form W-8IMY if the foreign person is a trust, depending
on whether such trust is classified as the beneficial owner of the regular
certificate; and Form W-8IMY, with supporting documentation as specified in the
Treasury Regulations, required to substantiate exemptions from withholding on
behalf of its partners, if the foreign person is a partnership. An intermediary
(other than a partnership) must provide Form W-8IMY, revealing all required
information, including its name, address, taxpayer identification number, the
country under the laws of which it is created, and certification that it is not
acting for its own account. A "qualified intermediary" must certify that it has
provided, or will provide, a withholding statement as required under Treasury
Regulations Section 1.1441-1(e)(5)(v), but need not disclose the identity of its
account holders on its Form W-8IMY, and may certify its account holders' status
without including each beneficial owner's certification. A non-"qualified
intermediary" must additionally certify that it has provided, or will provide, a
withholding statement that is associated with the appropriate Forms W-8 and W-9
required to substantiate exemptions from withholding on behalf of its beneficial
owners. The term "intermediary" means a person acting as a custodian, a broker,
nominee or otherwise as an agent for the beneficial owner of a regular
certificate. A "qualified intermediary" is generally a foreign financial
institution or clearing organization or a non-United States branch or office of
a United States financial institution or clearing organization that is a party
to a withholding agreement with the IRS. For these purposes, "United States
Person" means a citizen or resident of the United States, a corporation or
partnership (except as may be provided in Treasury regulations) 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, an estate whose income 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
the trust and one or more United States Persons have the authority to control
all substantial decisions of the trust. It is possible that the IRS may assert
that the foregoing tax exemption should not apply with respect to a regular
certificate held by a 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. It is possible, under regulations promulgated
under Section 881 of the Internal Revenue Code concerning conduit financing
transactions, that the exemption from withholding taxes described above may not
be available to a holder who is not a United States Person and owns 10% or more
of one or more underlying mortgagors or, if the holder is a controlled foreign
corporation, it is related to one or more underlying mortgagors.
Further, it appears that a regular certificate would not be included in the
estate of a non-resident alien individual and would not be subject to United
States estate taxes. However, certificateholders who are non-resident alien
individuals should consult their tax advisors concerning this question.
Unless otherwise stated in the related prospectus supplement, transfers of
residual certificates to investors that:
o are not United States Persons; or
o are United States Persons and classified as partnerships under the
Internal Revenue Code, if any of their direct or indirect beneficial
owners (other than through a U.S. corporation) are (or are permitted
to be under the related partnership agreement) not United States
Persons,
will be prohibited under the related pooling and servicing agreement.
Backup Withholding. Distributions made on the regular certificates, and
proceeds from the sale of the regular certificates to or through some brokers,
may be subject to a backup withholding tax under Internal Revenue Code Section
3406 at a rate of 28% (increasing to 31% after 2010) on reportable payments
(including interest distributions, original issue discount, and, under some
circumstances, principal distributions) unless the regular certificateholder is
a U.S. Person and provides IRS Form W-9 with the correct taxpayer identification
number; is a
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Non-U.S. Person and provides IRS Form W-8BEN identifying the Non-U.S. Person and
stating that the beneficial owner is not a U.S. Person; or can be treated as an
exempt recipient within the meaning of Treasury Regulations Section
1.6049-4(c)(1)(ii). Information reporting requirements may also apply regardless
of whether withholding is required. Any amounts to be withheld from distribution
on the regular certificates would be refunded by the Service or allowed as a
credit against the regular certificateholder's federal income tax liability.
Reporting Requirements. Reports of accrued interest, original issue
discount and information necessary to compute the accrual of any market discount
on the regular certificates will be made annually to the Service and to
individuals, estates, non-exempt and non-charitable trusts, and partnerships who
are either holders of record of regular certificates or beneficial owners who
own regular certificates through a broker or middleman as nominee. All brokers,
nominees and all other non-exempt holders of record of regular certificates
(including corporations, non-calendar year taxpayers, securities or commodities
dealers, real estate investment trusts, investment companies, common trust
funds, thrift institutions and charitable trusts) may request the information
for any calendar quarter by telephone or in writing by contacting the person
designated in Service Publication 938 with respect to a particular series of
regular certificates. Holders through nominees must request information from the
nominee.
The Service's Form 1066 has an accompanying Schedule Q, Quarterly Notice to
Residual Interest Holders of REMIC Taxable Income or Net Loss Allocation.
Treasury regulations require that Schedule Q be furnished by the REMIC pool to
each residual certificateholder by the end of the month following the close of
each calendar quarter, 41 days after the end of a quarter under proposed
Treasury regulations, in which the REMIC pool is in existence.
Treasury regulations require that, in addition to the foregoing
requirements, information must be furnished quarterly to residual
certificateholders, furnished annually, if applicable, to holders of regular
certificates, and filed annually with the Service concerning Internal Revenue
Code Section 67 expenses (see "Limitations on Deduction of Some Expenses" above)
allocable to the holders. Furthermore, under the regulations, information must
be furnished quarterly to residual certificateholders, furnished annually to
holders of regular certificates, and filed annually with the Service concerning
the percentage of the REMIC pool's assets meeting the qualified asset tests
described above under "--Federal Income Tax Consequences for REMIC
Certificates--Qualification as a REMIC."
FEDERAL INCOME TAX CONSEQUENCES FOR CERTIFICATES AS TO WHICH NO REMIC
ELECTION IS MADE
STANDARD CERTIFICATES
General. In the event that no election is made to treat a trust fund or a
segregated pool of assets therein with respect to a series of certificates that
are not designated as stripped certificates, or as a REMIC, the trust fund will
be classified as a grantor trust under subpart E, Part 1 of subchapter J of the
Internal Revenue Code and not as a partnership, an association taxable as a
corporation or a taxable mortgage pool within the meaning of Internal Revenue
Code Section 7701(i). Where there is no fixed retained yield with respect to the
mortgage loans underlying the standard certificates, the holder of each standard
certificate in the series will be treated as the owner of a pro rata undivided
interest in the ordinary income and corpus portions of the trust fund
represented by its standard certificate and will be considered the beneficial
owner of a pro rata undivided interest in each of the mortgage loans, subject to
the discussion below under "--Premium and Discount--Recharacterization of
Servicing Fees." Accordingly, the holder of a standard certificate of a
particular series will be required to report on its federal income tax return
its pro rata share of the entire income from the mortgage loans represented by
its standard certificate, including interest at the coupon rate on the mortgage
loans, original issue discount, if any, prepayment fees, assumption fees, and
late payment charges received by the servicer, in accordance with the standard
certificateholder's method of accounting. A standard certificateholder generally
will be able to deduct its share of the servicing fee and all administrative and
other expenses of the trust fund in accordance with its method of accounting,
provided that the amounts are reasonable compensation for services rendered to
that trust fund. However, investors who are individuals, estates or trusts who
own standard certificates, either directly or indirectly through some
pass-through entities, will be subject to limitation with respect to some
itemized deductions described in Internal Revenue Code Section 67, including
deductions under Internal Revenue Code Section 212 for the servicing fee and all
the administrative and other expenses of the trust fund, to the extent that the
deductions, in the aggregate, do not exceed two percent of an investor's
adjusted gross income. In addition, Internal Revenue Code Section 68 provides
that itemized deductions otherwise allowable for a taxable year of an individual
taxpayer will be reduced by the lesser of (1) 3% of the excess, if any, of
adjusted gross income over a statutory threshold or (2) 80% of the amount of
itemized deductions
93
otherwise allowable for that year. Under current law, the applicable limitation
is reduced by one third for taxable years beginning in 2006 and 2007, and by two
thirds in taxable years beginning in 2008 and 2009. For taxable years beginning
after December 31, 2009 the overall limitation on itemized deductions is
repealed. As a result, investors holding standard certificates, directly or
indirectly through a pass-through entity, may have aggregate taxable income in
excess of the aggregate amount of cash received on the standard certificates
with respect to interest at the pass-through rate on the standard certificates.
In addition, the expenses are not deductible at all for purposes of computing
the alternative minimum tax, and may cause the investors to be subject to
significant additional tax liability. Moreover, where there is fixed retained
yield with respect to the mortgage loans underlying a series of standard
certificates or where the servicing fee is in excess of reasonable servicing
compensation, the transaction will be subject to the application of the stripped
bond and stripped coupon rules of the Internal Revenue Code, as described below
under "Stripped Certificates" and "--Premium and Discount--Recharacterization of
Servicing Fees," respectively.
Tax Status.
Standard certificates will have the following status for federal income tax
purposes:
1. A standard certificate owned by a domestic building and loan association
within the meaning of Internal Revenue Code Section 7701(a)(19) will be
considered to represent "loans ... secured by an interest in real property which
is ... residential real property" within the meaning of Internal Revenue Code
Section 7701(a)(19)(C)(v), provided that the real property securing the mortgage
loans represented by that standard certificate is of the type described in the
section of the Internal Revenue Code.
2. A standard certificate owned by a real estate investment trust will be
considered to represent real estate assets within the meaning of Internal
Revenue Code Section 856(c)(5)(B) to the extent that the assets of the related
trust fund consist of qualified assets, and interest income on the assets will
be considered interest on obligations secured by mortgages on real property to
the extent within the meaning of Internal Revenue Code Section 856(c)(3)(B).
3. A standard certificate owned by a REMIC will be considered to represent
an "obligation ... which is principally secured by an interest in real property"
within the meaning of Internal Revenue Code Section 860G(a)(3)(A) to the extent
that the assets of the related trust fund consist of qualified mortgages within
the meaning of Internal Revenue Code Section 860G(a)(3).
Premium and Discount
Standard certificateholders are advised to consult with their tax advisors
as to the federal income tax treatment of premium and discount arising either
upon initial acquisition of standard certificates or thereafter.
Premium. The treatment of premium incurred upon the purchase of a standard
certificate will be determined generally as described above under "--Federal
Income Tax Consequences for REMIC Certificates--Taxation of Residual
Certificates--Treatment of Certain Items of REMIC Income and Expense--Premium."
Original Issue Discount. The original issue discount rules will be
applicable to a standard certificateholder's interest in those mortgage loans as
to which the conditions for the application of those sections are met. Rules
regarding periodic inclusion of original issue discount income are applicable to
mortgages of corporations originated after May 27, 1969, mortgages of
noncorporate mortgagors, other than individuals, originated after July 1, 1982,
and mortgages of individuals originated after March 2, 1984. Under the OID
regulations, the original issue discount could arise by the charging of points
by the originator of the mortgages in an amount greater than a statutory de
minimis exception, including a payment of points currently deductible by the
borrower under applicable Internal Revenue Code provisions or, under some
circumstances, by the presence of teaser rates on the mortgage loans.
Original issue discount must generally be reported as ordinary gross income
as it accrues under a constant interest method that takes into account the
compounding of interest, in advance of the cash attributable to the income.
Unless indicated otherwise in the applicable prospectus supplement, no
prepayment assumption will be assumed for purposes of the accrual. However,
Internal Revenue Code Section 1272 provides for a reduction in the amount of
original issue discount includible in the income of a holder of an obligation
that acquires the obligation
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after its initial issuance at a price greater than the sum of the original issue
price and the previously accrued original issue discount, less prior payments of
principal. Accordingly, if the mortgage loans acquired by a standard
certificateholder are purchased at a price equal to the then unpaid principal
amount of the mortgage loans, no original issue discount attributable to the
difference between the issue price and the original principal amount of the
mortgage loans (i.e., points) will be includible by the holder.
Market Discount. Standard certificateholders also will be subject to the
market discount rules to the extent that the conditions for application of those
sections are met. Market discount on the mortgage loans will be determined and
will be generally reported as ordinary income generally in the manner described
above under "--Federal Income Tax Consequences for REMIC Certificates--Taxation
of Regular Certificates--Market Discount," except that it is unclear whether a
prepayment assumption would apply. Rather, the holder will accrue market
discount pro rata over the life of the mortgage loans, unless the constant yield
method is elected. Unless indicated otherwise in the applicable prospectus
supplement, no prepayment assumption will be assumed for purposes of the
accrual.
Recharacterization of Servicing Fees. If the servicing fee paid to the
servicer were deemed to exceed reasonable servicing compensation, the amount of
the excess would represent neither income nor a deduction to certificateholders.
In this regard, there are no authoritative guidelines for federal income tax
purposes as to either the maximum amount of servicing compensation that may be
considered reasonable in the context of this or similar transactions or whether,
in the case of the standard certificate, the reasonableness of servicing
compensation should be determined on a weighted average or loan-by-loan basis.
If a loan-by-loan basis is appropriate, the likelihood that the amount would
exceed reasonable servicing compensation as to some of the mortgage loans would
be increased. Service guidance indicates that a servicing fee in excess of
reasonable compensation, known as excess servicing, will cause the mortgage
loans to be treated under the stripped bond rules. The guidance provides safe
harbors for servicing deemed to be reasonable and requires taxpayers to
demonstrate that the value of servicing fees in excess of the amounts is not
greater than the value of the services provided.
Accordingly, if the Service's approach is upheld, a servicer who receives a
servicing fee in excess of the amounts would be viewed as retaining an ownership
interest in a portion of the interest payments on the mortgage loans. Under the
rules of Internal Revenue Code Section 1286, the separation of ownership of the
right to receive some or all of the interest payments on an obligation from the
right to receive some or all of the principal payments on the obligation would
result in treatment of the mortgage loans as stripped coupons and stripped
bonds. Subject to the de minimis rule discussed below under "--Stripped
Certificates," each stripped bond or stripped coupon could be considered for
this purpose as a non-interest bearing obligation issued on the date of issue of
the standard certificates, and the original issue discount rules of the Internal
Revenue Code would apply to its holder. While standard certificateholders would
still be treated as owners of beneficial interests in a grantor trust for
federal income tax purposes, the corpus of the trust could be viewed as
excluding the portion of the mortgage loans the ownership of which is attributed
to the servicer, or as including the portion as a second class of equitable
interest. Applicable Treasury regulations treat such an arrangement as a fixed
investment trust, since the multiple classes of trust interests should be
treated as merely facilitating direct investments in the trust assets and the
existence of multiple classes of ownership interests is incidental to that
purpose. In general, the recharacterization should not have any significant
effect upon the timing or amount of income reported by a standard
certificateholder, except that the income reported by a cash method holder may
be slightly accelerated.
You should also review "--Stripped Certificates" below for a further
description of the federal income tax treatment of stripped bonds and stripped
coupons.
Sale or Exchange of Standard Certificates. Upon sale or exchange of a
standard certificate, a standard certificateholder will recognize gain or loss
equal to the difference between the amount realized on the sale and its
aggregate adjusted basis in the mortgage loans and the other assets represented
by the standard certificate. In general, the aggregate adjusted basis will equal
the standard certificateholder's cost for the standard certificate, increased by
the amount of any income previously reported with respect to the standard
certificate and decreased by the amount of any losses previously reported with
respect to the standard certificate and the amount of any distributions received
thereon. Except as provided above with respect to market discount on any
mortgage loans, and except for some financial institutions subject to the
provisions of Internal Revenue Code Section 582(c), any related gain or loss
would be capital gain or loss if the standard certificate was held as a capital
asset. However, gain on the sale of a standard certificate will be treated as
ordinary income:
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o if a standard certificate is held as part of a conversion transaction
as defined in Internal Revenue Code Section 1258(c), up to the amount
of interest that would have accrued on the standard
certificateholder's net investment in the conversion transaction at
120% of the appropriate applicable federal rate in effect at the time
the taxpayer entered into the transaction minus any amount previously
treated as ordinary income with respect to any prior disposition of
property that was held as a part of the transaction; or
o in the case of a non-corporate taxpayer, to the extent the taxpayer
has made an election under Internal Revenue Code Section 163(d)(4) to
have net capital gains taxed as investment income at ordinary income
rates.
Capital gains of non-corporate taxpayers are subject to a lower maximum tax
rate than ordinary income of those taxpayers. The maximum tax rate for
corporations is the same with respect to both ordinary income and capital gains.
Holders that recognize a loss on a sale or exchange of a standard
certificate for federal income tax purposes in excess of certain threshold
amounts should consult their tax advisors as to the need to file IRS Form 8886
(disclosing certain potential tax shelters) on their federal income tax returns.
STRIPPED CERTIFICATES
General. Pursuant to Internal Revenue Code Section 1286, the separation of
ownership of the right to receive some or all of the principal payments on an
obligation from ownership of the right to receive some or all of the interest
payments results in the creation of stripped bonds with respect to principal
payments and stripped coupons with respect to interest payments. For purposes of
this discussion, certificates that are subject to those rules will be referred
to as stripped certificates. Stripped certificates include stripped interest
certificates and stripped principal certificates as to which no REMIC election
is made.
The certificates will be subject to those rules if the following occur:
o we retain, for our own account or for purposes of resale, in the form
of fixed retained yield or otherwise, an ownership interest in a
portion of the payments on the mortgage loans;
o the servicer is treated as having an ownership interest in the
mortgage loans to the extent it is paid, or retains, servicing
compensation in an amount greater than reasonable consideration for
servicing the mortgage loans (see "--Standard
Certificates--Recharacterization of Servicing Fees" above); and
o certificates are issued in two or more classes or subclasses
representing the right to non-pro rata percentages of the interest and
principal payments on the mortgage loans.
In general, a holder of a stripped certificate will be considered to own
stripped bonds with respect to its pro rata share of all or a portion of the
principal payments on each mortgage loan and/or stripped coupons with respect to
its pro rata share of all or a portion of the interest payments on each mortgage
loan, including the stripped certificate's allocable share of the servicing fees
paid to the servicer, to the extent that the fees represent reasonable
compensation for services rendered. See discussion above under "--Standard
Certificates--Recharacterization of Servicing Fees." Although not free from
doubt, for purposes of reporting to stripped certificateholders, the servicing
fees will be allocated to the stripped certificates in proportion to the
respective entitlements to distributions of each class or subclass of stripped
certificates for the related period or periods. The holder of a stripped
certificate generally will be entitled to a deduction each year in respect of
the servicing fees, as described above under "--Standard Certificates--General,"
subject to the limitation described therein.
Internal Revenue Code Section 1286 treats a stripped bond or a stripped
coupon as an obligation issued at an original issue discount on the date that
the stripped interest is purchased. Although the treatment of stripped
certificates for federal income tax purposes is not clear in some respects at
this time, particularly where the stripped certificates are issued with respect
to a mortgage pool containing variable-rate mortgage loans, in the opinion of
Cadwalader, Wickersham & Taft LLP, our counsel that the trust fund will be
treated as a grantor trust under subpart E, Part 1 of subchapter J of the
Internal Revenue Code and not as an association taxable as a corporation or a
taxable mortgage pool within the meaning of Internal Revenue Code Section
7701(i).
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Each stripped certificate should be treated as a single installment
obligation for purposes of calculating original issue discount and gain or loss
on disposition. This treatment is based on the interrelationship of Internal
Revenue Code Section 1286, Internal Revenue Code Sections 1272 through 1275, and
the OID regulations. While under Internal Revenue Code Section 1286 computations
with respect to stripped certificates arguably should be made in one of the ways
described below under "--Taxation of Stripped Certificates--Possible Alternative
Characterizations," the OID regulations state, in general, that two or more debt
instruments issued by a single issuer to a single investor in a single
transaction should be treated as a single debt instrument for original issue
discount purposes. The pooling and servicing agreement requires that the trustee
make and report all computations described below using this aggregate approach,
unless substantial legal authority requires otherwise.
Furthermore, Treasury regulations assume that a stripped certificate will
be treated as a single debt instrument issued on the date it is purchased for
purposes of calculating any original issue discount and that the interest
component of the stripped certificate would be treated as qualified stated
interest under the OID regulations. Further pursuant to these final regulations
the purchaser of the stripped certificate will be required to account for any
discount as market discount rather than original issue discount unless either:
o the initial discount with respect to the stripped certificate was
treated as zero under the de minimis rule of Internal Revenue Code
Section 1273(a)(3); or
o no more than 100 basis points in excess of reasonable servicing is
stripped off the related mortgage loans. Any related market discount
would be reportable as described under "--Federal Income Tax
Consequences for REMIC Certificates--Taxation of Regular
Certificates--Market Discount," without regard to the de minimis rule
therein, assuming that a prepayment assumption is employed in the
computation.
Status of Stripped Certificates. No specific legal authority exists as to
whether the character of the stripped certificates, for federal income tax
purposes, will be the same as that of the mortgage loans. Although the issue is
not free from doubt, our counsel has advised us that stripped certificates owned
by applicable holders should be considered to represent real estate assets
within the meaning of Internal Revenue Code Section 856(c)(5)(B), "obligation[s]
principally secured by an interest in real property" within the meaning of
Internal Revenue Code Section 860G(a)(3)(A), and "loans ... secured by an
interest in real property which is ... residential real property" within the
meaning of Internal Revenue Code Section 7701(a)(19)(C)(v), and interest
(including original issue discount) income attributable to stripped certificates
should be considered to represent interest on obligations secured by mortgages
on real property within the meaning of Internal Revenue Code Section
856(c)(3)(B), provided that in each case the mortgage loans and interest on the
mortgage loans qualify for that treatment.
Original Issue Discount. Except as described above under "--General," each
stripped certificate will be considered to have been issued at an original issue
discount for federal income tax purposes. Original issue discount with respect
to a stripped certificate must be included in ordinary income as it accrues, in
accordance with a constant interest method that takes into account the
compounding of interest, which may be prior to the receipt of the cash
attributable to that income. Based in part on the OID regulations and the
amendments to the original issue discount sections of the Internal Revenue Code
made by the 1986 Act, the amount of original issue discount required to be
included in the income of a holder of a stripped certificate, referred to in
this discussion as a stripped certificateholder, in any taxable year likely will
be computed generally as described above under "--Federal Income Tax
Consequences for REMIC Certificates--Taxation of Regular Certificates--Original
Issue Discount" and "--Variable Rate Regular Certificates." However, with the
apparent exception of a stripped certificate qualifying as a market discount
obligation, as described above under "--General," the issue price of a stripped
certificate will be the purchase price paid by each holder of a stripped
certificate, and the stated redemption price at maturity will include the
aggregate amount of the payments, other than qualified stated interest to be
made on the stripped certificate to the stripped certificateholder, presumably
under the prepayment assumption.
If the mortgage loans prepay at a rate either faster or slower than that
under the prepayment assumption, a stripped certificateholder's recognition of
original issue discount will be either accelerated or decelerated and the amount
of the original issue discount will be either increased or decreased depending
on the relative interests in principal and interest on each mortgage loan
represented by the stripped certificateholder's stripped certificate. While the
matter is not free from doubt, the holder of a stripped certificate should be
entitled in the year that it becomes certain, assuming no further prepayments,
that the holder will not recover a portion of its adjusted basis in the stripped
certificate to recognize an ordinary loss equal to the portion of unrecoverable
basis.
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As an alternative to the method described above, the fact that some or all
of the interest payments with respect to the stripped certificates will not be
made if the mortgage loans are prepaid could lead to the interpretation that the
interest payments are contingent 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 prepayable securities such as the stripped
certificates. However, if final regulations dealing with contingent interest
with respect to the stripped certificates apply the same principles as the OID
regulations, the regulations may lead to different timing of income inclusion
that would be the case under the OID regulations. Furthermore, application of
the principles could lead to the characterization of gain on the sale of
contingent interest stripped certificates as ordinary income. You should consult
your tax advisors regarding the appropriate tax treatment of stripped
certificates.
Sale or Exchange of Stripped Certificates. Sale or exchange of a stripped
certificate prior to its maturity will result in gain or loss equal to the
difference, if any, between the amount received and the stripped
certificateholder's adjusted basis in the stripped certificate, as described
above under "--Federal Income Tax Consequences for REMIC Certificates--Taxation
of Regular Certificates--Sale or Exchange of Regular Certificates." To the
extent that a subsequent purchaser's purchase price is exceeded by the remaining
payments on the stripped certificates, the subsequent purchaser will be required
for federal income tax purposes to accrue and report the excess as if it were
original issue discount in the manner described above. It is not clear for this
purpose whether the assumed prepayment rate that is to be used in the case of a
stripped certificateholder other than an original stripped certificateholder
should be the prepayment assumption or a new rate based on the circumstances at
the date of subsequent purchase.
Holders that recognize a loss on a sale or exchange of a stripped
certificate for federal income tax purposes in excess of certain threshold
amounts should consult their tax advisors as to the need to file IRS Form 8886
(disclosing certain potential tax shelters) on their federal income tax returns.
Purchase of More than One Class of Stripped Certificates. Where an investor
purchases more than one class of stripped certificates, it is currently unclear
whether for federal income tax purposes the classes of stripped certificates
should be treated separately or aggregated for purposes of the rules described
above.
Possible Alternative Characterizations. The characterizations of the
stripped certificates discussed above are not the only possible interpretations
of the applicable Internal Revenue Code provisions. For example, the stripped
certificateholder may be treated as the owner of any of the following:
o one installment obligation consisting of the Stripped Certificate's
pro rata share of the payments attributable to principal on each
mortgage loan and a second installment obligation consisting of the
Stripped Certificate's pro rata share of the payments attributable to
interest on each mortgage loan;
o as many stripped bonds or stripped coupons as there are scheduled
payments of principal and/or interest on each mortgage loan; or
o a separate installment obligation for each mortgage loan, representing
the Stripped Certificate's pro rata share of payments of principal
and/or interest to be made with respect to it.
Alternatively, the holder of one or more classes of stripped certificates
may be treated as the owner of a pro rata fractional undivided interest in each
mortgage loan to the extent that the Stripped Certificate, or classes of
stripped certificates in the aggregate, represent the same pro rata portion of
principal and interest on each mortgage loan, and a stripped bond or stripped
coupon, as the case may be, treated as an installment obligation or contingent
payment obligation, as to the remainder. Final regulations regarding original
issue discount on stripped obligations make the foregoing interpretations less
likely to be applicable. The preamble to those regulations states that they are
premised on the assumption that an aggregation approach is appropriate for
determining whether original issue discount on a stripped bond or stripped
coupon is de minimis, and solicits comments on appropriate rules for aggregating
stripped bonds and stripped coupons under Internal Revenue Code Section 1286.
Because of these possible varying characterizations of stripped
certificates and the resultant differing treatment of income recognition,
stripped certificateholders are urged to consult their own tax advisors
regarding the proper treatment of stripped certificates for federal income tax
purposes.
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Grantor Trust Reporting. Unless otherwise provided in the related
prospectus supplement, the related tax administrator will furnish or make
readily available through electronic means to each holder of a grantor trust
certificate with each payment a statement setting forth the amount of the
payment allocable to principal on the underlying mortgage loans and to interest
on those loans at the related pass-through rate. In addition, the related tax
administrator will furnish, within a reasonable time after the end of each
calendar year, to each person or entity that was the holder of a grantor trust
certificate at any time during that year, information regarding:
o the amount of servicing compensation received by a master servicer or
special servicer, and
o all other customary factual information the reporting party deems
necessary or desirable to enable holders of the related grantor trust
certificates to prepare their tax returns.
The reporting party 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 grantor trust certificates are uncertain in various respects, there is no
assurance the IRS will agree with the information reports of those items of
income and expense. Moreover, those 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 the reports.
On January 24, 2006, the IRS published final regulations which establish a
reporting framework for interests in "widely held fixed investment trusts" and
place the responsibility of reporting on the person in the ownership chain who
holds an interest for a beneficial owner. A widely-held fixed investment trust
is defined as an arrangement classified as a "trust" under Treasury regulation
section 301.7701-4(c), in which any interest is held by a middleman, which
includes, but is not limited to (i) a custodian of a person's account, (ii) a
nominee and (iii) a broker holding an interest for a customer in street name.
The trustee, or its designated agent, will be required to calculate and provide
information to requesting persons with respect to the trust fund in accordance
with these new regulations beginning with respect to the 2007 calendar year. The
trustee (or its designated agent), or the applicable middleman (in the case of
interests held through a middleman), will be required to file information
returns with the IRS and provide tax information statements to
certificateholders in accordance with these new regulations after December 31,
2007.
REPORTING REQUIREMENTS AND BACKUP WITHHOLDING
The trustee will furnish, within a reasonable time after the end of each
calendar year, to each standard certificateholder or stripped certificateholder
at any time during the year, the information, prepared on the basis described
above, as the trustee deems to be necessary or desirable to enable the
certificateholders to prepare their federal income tax returns. The information
will include the amount of original issue discount accrued on certificates held
by persons other than certificateholders exempted from the reporting
requirements. The amounts required to be reported by the trustee may not be
equal to the proper amount of original issue discount required to be reported as
taxable income by a certificateholder, other than an original certificateholder
that purchased at the issue price. In particular, in the case of stripped
certificates, unless provided otherwise in the applicable prospectus supplement,
the reporting will be based upon a representative initial offering price of each
class of stripped certificates. The trustee will also file the original issue
discount information with the Service. If a certificateholder fails to supply an
accurate taxpayer identification number or if the Secretary of the Treasury
determines that a certificateholder has not reported all interest and dividend
income required to be shown on his federal income tax return, backup withholding
at a rate of 28% (increasing to 31% after 2010) may be required in respect of
any reportable payments, as described above under "--Federal Income Tax
Consequences for REMIC Certificates--Backup Withholding."
TAXATION OF FOREIGN INVESTORS
To the extent that a Certificate evidences ownership in mortgage loans that
are issued on or before July 18, 1984, interest or original issue discount paid
by the person required to withhold tax under Internal Revenue Code Section 1441
or 1442 to nonresident aliens, foreign corporations, or other Non-United States
Persons generally will be subject to 30% United States withholding tax, or the
lower rate as may be provided for interest by an applicable tax treaty. Accrued
original issue discount recognized by the standard certificateholder or stripped
certificateholder
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on original issue discount recognized by the standard certificateholder or
stripped certificateholders on the sale or exchange of the Certificate also will
be subject to federal income tax at the same rate.
Treasury regulations provide that interest or original issue discount paid
by the trustee or other withholding agent to a Non-United States Person
evidencing ownership interest in mortgage loans issued after July 18, 1984 will
be portfolio interest and will be treated in the manner, and the persons will be
subject to the same certification requirements, described above under "--Federal
Income Tax Consequences for REMIC Certificates--Taxation of Foreign
Investors--Regular Certificates."
STATE AND OTHER TAX CONSIDERATIONS
In addition to the federal income tax consequences described in "Material
Federal Income Tax Consequences," you 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, you should consult
your own tax advisors with respect to the various tax consequences of
investments in the offered certificates.
CERTAIN ERISA CONSIDERATIONS
GENERAL
The Employee Retirement Income Security Act of 1974, as amended, and
Section 4975 of the Internal Revenue Code impose certain requirements on
employee benefit plans, and on other retirement plans and arrangements,
including individual retirement accounts and annuities, Keogh plans, collective
investment funds, insurance company separate accounts and some insurance company
general accounts in which the plans, accounts or arrangements are invested, and
on persons who are fiduciaries with respect to plans in connection with the
investment of plan assets.
ERISA generally imposes on Plan fiduciaries 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, ERISA and Section 4975 of the Internal Revenue Code prohibit
a broad range of transactions involving assets of a Plan and parties in interest
who have specified relationships to the Plan, unless a statutory or
administrative exemption is available. Parties in interest that participate in a
prohibited transaction may be subject to an excise tax imposed pursuant to
Section 4975 of the Internal Revenue Code, 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 Internal Revenue Code. Special
caution should be exercised before the assets of a Plan are used to purchase a
Certificate if, with respect to the assets, we, the servicer, a special servicer
or any sub-servicer or the trustee or an affiliate thereof, either:
o has discretionary authority or control with respect to the investment
of the assets of the Plan; or
o has authority or responsibility to give, or regularly gives,
investment advice with respect to the assets of the Plan for a fee and
pursuant to an agreement or understanding that the advice will serve
as a primary basis for investment decisions with respect to the assets
and that the advice will be based on the particular investment needs
of the Plan.
Before purchasing any offered certificates, a Plan fiduciary should consult
with its counsel and determine whether there exists any prohibition to the
purchase under the requirements of ERISA, whether any statutory exemption, any
prohibited transaction class exemption or any individual prohibited transaction
exemption, as described below, applies, including whether the appropriate
conditions set forth therein would be met, or whether any statutory prohibited
transaction exemption is applicable, and further should consult the applicable
prospectus supplement relating to the series of certificates.
Some employee benefit plans, such as governmental plans, as defined in
Section 3(32) of ERISA, and, if no election has been made under Section 410(d)
of the Internal Revenue Code, church plans, as defined in
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Section 3(33) of ERISA, are not subject to ERISA requirements. However, such
plans may be subject to the provisions of other applicable federal and state law
materially similar to the foregoing provisions of ERISA and the Internal Revenue
Code. Moreover, any governmental or church plan which is qualified and exempt
from taxation under Sections 401(a) and 501(a) of the Internal Revenue Code is
subject to the prohibited transaction rules set forth in Section 503 of the
Internal Revenue Code.
PLAN ASSET REGULATIONS
A Plan's investment in offered certificates may cause the trust assets to
be deemed plan assets. Section 2510.3-101 of the regulations of the Department
of Labor, as modified by Section 3(42) of ERISA, provides that, when a Plan
acquires an equity interest in an entity, the Plan's assets include both the
equity interest and an undivided interest in each of the underlying assets of
the entity, unless some exceptions not applicable to this discussion apply, or
unless the equity participation in the entity by benefit plan investors, i.e.,
Plans, that are subject to ERISA or Section 4975 of the Code, and entities whose
underlying assets include plan assets, is not significant. For this purpose, the
plan asset regulations provide, in general, that participation in an entity,
such as a trust fund, is significant if, immediately after the most recent
acquisition of any equity interest, 25% or more of any class of equity
interests, such as certificates, is held by benefit plan investors. Unless
restrictions on ownership of and transfer to plans apply with respect to a
series of certificates, we cannot assure you that benefit plan investors will
not own at least 25% of a class of certificates.
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 the assets for a fee, is a fiduciary of the investing
Plan. If the trust assets constitute plan assets, then any party exercising
management or discretionary control regarding those assets, such as a servicer,
a special servicer or any sub-servicer, may be deemed to be a Plan fiduciary
with respect to the investing Plan, and thus, except as described above in the
case of governmental plans and church plans, subject to the fiduciary
responsibility provisions and prohibited transaction provisions of ERISA and
Section 4975 of the Internal Revenue Code. In addition, if the trust assets
constitute plan assets, the purchase of certificates by a Plan, as well as the
operation of the trust fund, may constitute or involve one or more prohibited
transactions under ERISA, Section 4975 of the Internal Revenue Code or Similar
Law.
ADMINISTRATIVE EXEMPTIONS
Several underwriters of mortgage-backed securities have applied for and
obtained from the Department of Labor individual prohibited transaction
exemptions that apply to the purchase and holding of mortgage-backed securities
which, among other conditions, are sold in an offering with respect to which
that underwriter serves as the sole or a managing underwriter or as a selling or
placement agent. If such an exemption may be applicable to a series of
certificates, the related prospectus supplement will refer to the possibility,
as well as provide a summary of the conditions to the exemption's applicability.
UNRELATED BUSINESS TAXABLE INCOME; RESIDUAL CERTIFICATES
The purchase of a residual certificate by any employee benefit plan
qualified under Section 401(a) of the Internal Revenue Code and exempt from
taxation under Section 501(a) of the Internal Revenue Code Section, including
most Plans, may give rise to unrelated business taxable income as described in
Sections 511-515 and 860E of the Internal Revenue Code. Further, prior to the
purchase of residual certificates, a prospective transferee may be required to
provide an affidavit to a transferor that it is not, nor is it purchasing a
residual certificate on behalf of, a Disqualified Organization, which term as
defined above includes some tax-exempt entities not subject to Section 511 of
the Internal Revenue Code including some governmental plans, as discussed above
under the caption "Material Federal Income Tax Consequences--Federal Income Tax
Consequences for REMIC Certificates--Taxation of Residual
Certificates--Tax-Related Restrictions on Transfer of Residual
Certificates--Disqualified Organizations."
Due to the complexity of these rules and the penalties that may be imposed
upon persons involved in prohibited transactions, it is particularly important
that potential investors who are Plan fiduciaries consult with their counsel
regarding the consequences under ERISA, Section 4975 of the Internal Revenue
Code and Similar Law, of their acquisition and ownership of certificates.
101
LEGAL INVESTMENT
If so specified in the Prospectus Supplement, certain classes of
certificates will constitute "mortgage related securities" for purposes of the
Secondary Mortgage Market Enhancement Act of 1984, as amended ("SMMEA").
Generally, only classes of offered certificates that meet the following
criteria will be "mortgage related securities" for purposes of SMMEA:
o are rated in one of the two highest rating categories by one or more
nationally recognized statistical rating organizations;
o are part of a series evidencing interests in a trust fund consisting
of loans originated by those types of originators specified in SMMEA;
and
o are part of a series evidencing interests in a trust fund consisting
of mortgage loans each of which is secured by a first lien on real
estate.
The appropriate characterization of those certificates not qualifying as
"mortgage related securities" for purposes of SMMEA ("Non-SMMEA Certificates)
under various legal investment restrictions, and thus the ability of investors
subject to these restrictions to purchase those certificates, may be subject to
significant interpretive uncertainties. Accordingly, all investors whose
investment activities are subject to legal investment laws and regulations,
regulatory capital requirements, or regulatory review by regulatory authorities
should consult their own legal advisors in determining whether and to what
extent the non-SMMEA certificates constitute legal investments for them.
Those 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 companies, trustees 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 of its agencies or instrumentalities constitute
legal investments for those entities.
Under SMMEA, a number of states enacted legislation, on or prior to the
October 3, 1991 cut-off for those enactments, limiting to various extents the
ability of some 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" 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 those types
of certificates. Accordingly, the investors affected by any state legislation
overriding the preemptive effect of SMMEA will be authorized to invest in
offered certificates qualifying as "mortgage related securities" only to the
extent provided in that legislation.
SMMEA also amended the legal investment authority of federally-chartered
depository institutions as follows:
o 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;
o federal credit unions may invest in those securities; and
o national banks may purchase those securities for their own account
without regard to the limitations generally applicable to investment
securities set forth in 12 U.S.C. Section 24 (Seventh), subject in
each case to those regulations as the applicable federal regulatory
authority may prescribe.
102
In this connection, the Office of the Comptroller of the Currency, called 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 general standards in 12
C.F.R. Section 1.5 concerning "safety and soundness" and retention of credit
information, certain "Type IV securities," defined in 12 C.F.R. Section 1.2(m)
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 the 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, or NCUA, has adopted rules,
codified at 12 C.F.R. Part 703, which permit federal credit unions to invest in
"mortgage related securities" other than stripped mortgage related securities
(unless the credit union complies with the requirements of 12 C.F.R. Section
703.16(e) for investing in those securities), residual interests in mortgage
related securities, and commercial mortgage related securities, subject to
compliance with general rules governing investment policies and practices;
however, credit unions approved for the NCUA's "investment pilot program" under
12 C.F.R. Section 703.19 may be able to invest in those prohibited forms of
securities, while "RegFlex credit unions" may invest in commercial mortgage
related securities under certain conditions pursuant to 12 C.F.R. Section
742.4(b)(2).
The Office of Thrift Supervision, or OTS, has issued Thrift Bulletin 13a
(December 1, 1998), "Management of Interest Rate Risk, Investment Securities,
and Derivatives Activities," and Thrift Bulletin 73a (December 18, 2001),
"Investing in Complex Securities," 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 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.
Investors whose investment activities are subject to regulation by federal
or state authorities should review rules, policies and guidelines adopted from
time to time by those authorities before purchasing any class of the offered
certificates, as some classes may be deemed unsuitable investments, or may
otherwise be restricted, under those rules, policies or guidelines, in some
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 class of the
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 some classes of offered certificates as
"mortgage related securities", no representations are made as to the proper
characterization of any class of offered certificates for legal investment
purposes, financial institution regulatory purposes, or other purposes, or as to
the ability of particular investors to purchase any class of 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 any class of offered
certificates.
103
Accordingly, if your investment activities are subject to legal investment
laws and regulations, regulatory capital requirements or review by regulatory
authorities, you should consult with your own 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 you.
METHOD OF DISTRIBUTION
The certificates offered hereby and by 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 us
from that sale.
We intend that 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 a particular series of offered
certificates may be made through a combination of two or more of these methods.
The methods are as follows:
o by negotiated firm commitment underwriting and public offering by one
or more underwriters specified in the related prospectus supplement;
o by placements through one or more placement agents specified in the
related prospectus supplement primarily with institutional investors
and dealers; and
o through direct offerings by us.
If specified in the prospectus supplement relating to a series of offered
certificates, we or any of our affiliates or any other person or persons
specified in the prospectus supplement (including originators of mortgage loans)
may purchase some or all of one or more classes of offered certificates of that
series from the underwriter or underwriters or any other person or persons
specified in the prospectus supplement. Pursuant to this prospectus and the
related prospectus supplement, a purchaser may thereafter from time to time
offer and sell some or all of the certificates directly, or through one or more
underwriters to be designated at the time of the offering of the certificates,
or through dealers (whether acting as agent or as principal) or in any other
manner that may be specified in the related prospectus supplement. The offering
may be restricted in the manner specified in the related prospectus supplement.
The transactions may be effected at market prices prevailing at the time of
sale, at negotiated prices or at fixed prices.
If underwriters are used in a sale of any offered certificates, other than
in connection with an underwriting on a best efforts basis, the 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 therefore. The
underwriters may be broker-dealers affiliated with us whose identities and
relationships to us will be as set forth in the related prospectus supplement.
The managing underwriter or underwriters with respect to the offer and sale of a
particular series of offered certificates will be set forth in the cover of the
prospectus supplement relating to that series and the members of the
underwriting syndicate, if any, will be named in the prospectus supplement.
In connection with the sale of the offered certificates, underwriters may
receive compensation from us or from purchasers of the offered certificates in
the form of discounts, concessions or commissions. Underwriters and dealers
participating in the distribution of the certificates will be deemed to be
underwriters in connection with those certificates, and any discounts or
commissions received by them from us and any profit on the resale of
certificates by them will 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
any series of certificates will provide that the obligations of the underwriters
will be subject to some conditions precedent, including the following:
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o that the underwriters will be obligated to purchase all certificates
if any are purchased, other than in connection with an underwriting on
a best efforts basis; and
o that we will indemnify the several underwriters, and each person, if
any, who controls any related underwriters within the meaning of
Section 15 of the Securities Act, against some civil liabilities,
including liabilities under the Securities Act, or will contribute to
payments required to be made in respect of the Securities Act.
The prospectus supplement with respect to any series offered by placements
through dealers will contain information regarding the nature of the offering
and any agreements to be entered into between us and purchasers of certificates
of those series.
In no event will 10% or more of any trust fund include mortgage loans
secured by properties located outside of the United States or its territories or
possessions.
We anticipate that the certificates offered hereby will be sold primarily
to institutional investors. Purchasers of offered certificates, may, depending
on the facts and circumstances of their purchases, and in the case of purchasers
that are dealers, will, be deemed to be underwriters within the meaning of the
Securities Act in connection with reoffers and sales by them of offered
certificates. Certificateholders should consult with their legal advisors in
this regard prior to any related reoffer or sale.
As to each series of certificates, only those classes rated in an
investment grade rating category by any rating agency will be offered hereby.
Any unrated class may be initially retained by us, and may be sold by us at any
time to one or more institutional investors.
If and to the extent required by applicable law or regulation, this
prospectus will be used by Bear, Stearns & Co. Inc., our affiliate, in
connection with offers and sales related to market-making transactions in the
offered certificates previously offered hereunder in transactions in which Bear,
Stearns & Co. Inc. acts as principal. Bear, Stearns & Co. Inc. may also act as
agent in those transactions. Sales may be made at negotiated prices determined
at the time of sale.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement, including this
prospectus and a form of the prospectus supplement, under the Securities Act of
1933, as amended, with respect to the offered certificates. This prospectus and
the applicable prospectus supplement relating to each series of offered
certificates contain summaries of the material terms of the documents referred
to, but do not contain all of the information contained in the registration
statement. For further information regarding the documents referred to in this
prospectus and the applicable prospectus supplement, you should refer to the
registration statement and the exhibits to the registration statement. Copies of
the Registration Statement and other filed materials, including annual reports
on Form 10-K, distribution reports on Form 10-D, current reports on Form 8-K,
may be read and copied at the Public Reference Section of the Securities and
Exchange Commission, 450 Fifth Street N.W., Washington, D.C. 20549. Information
regarding the operation of the Public Reference Section may be obtained by
calling the Securities and Exchange Commission at 1-800-SEC-0330. The Securities
and Exchange Commission also maintains a site on the World Wide Web at
"http://www.sec.gov" at which you can view and download copies of reports, proxy
and information statements and other information filed electronically through
the Electronic Data Gathering, Analysis and Retrieval ("EDGAR") system. The
Depositor has filed the Registration Statement, including all exhibits thereto,
through the EDGAR system, so the materials should be available by logging onto
the Securities and Exchange Commission's Web site. The Securities and Exchange
Commission maintains computer terminals providing access to the EDGAR system at
each of the offices referred to above.
If so specified in the related prospectus supplement, copies of all filings
through the EDGAR system of the related issuing entity on Form 10-D, Form 10-K
and Form 8-K will be made available on the applicable trustee's or other
identified party's website.
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INCORPORATION OF SOME INFORMATION BY REFERENCE
The SEC allows us to incorporate by reference information that we file with
the SEC, which allows us to disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be part of this prospectus and the applicable prospectus supplement.
Information that we file later with the SEC (other than annual reports on Form
10K) will automatically update the information in this prospectus and the
applicable prospectus supplement. In all cases, you should rely on the later
information over different information included in this prospectus or the
applicable prospectus supplement. As a recipient of this prospectus, you may
request a copy of any document we incorporate by reference, except exhibits to
the documents (unless the exhibits are specifically incorporated by reference),
at no cost, by writing or calling: Bear Stearns Commercial Mortgage Securities
Inc., 383 Madison Avenue, New York, New York 10179, Attention: J. Christopher
Hoeffel (212) 272-2000. We have determined that our financial statements will
not be material to the offering of any offered certificates.
REPORTS
We have not authorized anybody to give you any information or to make any
representation not contained in this prospectus and any related prospectus
supplement and you should not rely on any related information or representation
that is not contained in this document. This prospectus and any related
prospectus supplement do not constitute an offer to sell or a solicitation of an
offer to buy any securities other than the certificates being offered pursuant
to the related prospectus supplement. They also do not constitute an offer of
the offered certificates to any person in any state or other jurisdiction in
which the offer would be unlawful. The delivery of this prospectus to you at any
time does not imply that information contained in this document is correct as of
any time subsequent to the date of this document; however, if any material
change occurs while this prospectus is required by law to be delivered, we will
amend or supplement this prospectus accordingly.
The servicer or trustee for each series will be required to mail to holders
of the certificates of each series periodic unaudited reports concerning the
related trust fund. If holders of beneficial interests in a class of offered
certificates are holding and transferring in book-entry form through the
facilities of DTC, then unless otherwise provided in the related prospectus
supplement, the 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 the 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. We will file or cause to be filed with the
SEC the periodic reports with respect to each trust fund as are required under
the Securities Exchange Act of 1934, as amended, and the rules and regulations
of the SEC thereunder.
FINANCIAL INFORMATION
A new trust fund will be formed with respect to each series of
certificates. 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.
LEGAL MATTERS
The validity of the certificates of each series will be passed upon for us
by Cadwalader, Wickersham & Taft LLP, New York, New York, or other counsel
identified in the prospectus supplement for that series.
RATINGS
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.
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Ratings on mortgage pass-through certificates address the likelihood of
receipt by you of all collections on the underlying mortgage assets to which you
are entitled. Ratings address the structural, legal and issuer-related aspects
associated with those certificates, the nature of the underlying mortgage loans
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 prepayments might
differ from those originally anticipated. As a result, you might suffer a lower
than anticipated yield, and, in addition, holders of stripped interest
certificates in extreme cases might fail to recoup their initial investments.
A security rating is not a recommendation to buy, sell or hold securities
and may be subject to revision or withdrawal at any time by the assigning rating
organization. Each security rating should be evaluated independently of any
other security rating.
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GLOSSARY
Accrued Certificate Interest -- With respect to each class of certificates
(other than some classes of stripped interest certificates and some classes of
residual certificates), the "Accrued Certificate Interest" for each distribution
date will be equal to interest at the applicable pass-through rate accrued for a
specified period (generally equal to the time period between distribution dates)
on the outstanding certificate balance of the class of certificates immediately
prior to the distribution date. Unless otherwise provided in the related
prospectus supplement, the Accrued Certificate Interest for each distribution
date on a class of stripped interest certificates will be similarly calculated
except that it will accrue on a notional amount that is either based on the
principal balances of some or all of the mortgage assets in the related trust
fund or equal to the certificate balances of one or more other classes of
certificates of the same series.
ARM Loans -- mortgage loans with adjustable mortgage rates.
Available Distribution Amount -- 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 the series on
the date.
Debt Service Coverage Ratio -- 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 the Net Operating Income derived from the related
mortgaged property for a twelve-month period to the annualized scheduled
payments on the mortgage loan and any other loans senior to it that are secured
by the related mortgaged property.
Disqualified Organization -- any of the following:
o the United States, any of its state or political subdivisions;
o any foreign government;
o any international organization;
o any agency or instrumentality of any of the foregoing, provided that
the term does not include an instrumentality if all of its activities
are subject to tax and, except in the case of the Federal Home Loan
Mortgage Corporation, a majority of its board of directors is not
selected by any related governmental entity;
o any cooperative organization furnishing electric energy or providing
telephone service to persons in rural areas as described in Internal
Revenue Code Section 1381(a)(2)(C); and
o any organization, other than a farmers' cooperative described in
Internal Revenue Code Section 521, that is exempt from taxation under
the Internal Revenue Code unless the organization is subject to the
tax on unrelated business income imposed by Internal Revenue Code
Section 511.
Due Period -- Unless otherwise specified in the prospectus supplement for a
series of certificates, a "Due Period" is a specified time period generally
corresponding in length to the time 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,
called the determination date, or otherwise advanced by the related servicer or
other specified person, be distributed to the holders of the certificates of the
series on the next succeeding distribution date.
ERISA -- The Employee Retirement Income Security Act of 1974, as amended.
Excess Funds -- 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
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distribution date that represent 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 or 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 or principal.
Internal Revenue Code -- The Internal Revenue Code of 1986, as amended.
Loan-to-Value Ratio -- 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 the then outstanding principal balance
of the mortgage loan and any other loans senior to it that are secured by the
related mortgaged property to the Value of the related mortgaged property.
MBS -- pass-through certificates or other mortgage-backed securities that
evidence interests in, or that are secured by pledges of, one or more of various
types of multifamily or commercial mortgage loans.
Net Operating Income -- 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 the period, minus
the total operating expenses incurred in respect of the mortgaged property
during the period other than non-cash items such as depreciation and
amortization, capital expenditures, and debt service on the related mortgage
loan or on any other loans that are secured by the mortgaged property.
Non-U.S. Person -- The term "Non-U.S. Person" means any person who is not a
U.S. Person.
Pass-Through Entity -- "Pass-Through Entity" means any regulated investment
company, real estate investment trust, common trust fund, partnership, trust or
estate and some corporations operating on a cooperative basis. Except as may be
provided in Treasury regulations, any person holding an interest in a
Pass-Through Entity as a nominee for another will, with respect to the interest,
be treated as a Pass-Through Entity.
Plan -- Any retirement plan or other employee benefit plan or arrangement
subject to Title I of ERISA, Section 4975 of the Internal Revenue Code or
applicable Similar Law.
Service -- The Internal Revenue Service.
Similar Law -- Any applicable federal, state or local law materially
similar to Title I of ERISA or Section 4975 of the Internal Revenue Code.
SMMEA -- The Secondary Market Mortgage Enhancement Act of 1984, as amended.
U.S. Person -- The term "U.S. Person" means a citizen or resident of the
United States, a corporation, partnership or other entity created or organized
in or under the laws of the United States or any State, an estate that is
subject to United States federal income tax regardless of the source of its
income or a trust if:
o for taxable years beginning after December 31, 1996 (or for taxable
years ending after August 20, 1996, if the trustee has made an
applicable election), a court within the United States is able to
exercise primary supervision over the administration of the trust, and
one or more United States persons have the authority to control all
substantial decisions of the trust; or
o for all other taxable years, the trust is subject to United States
federal income tax regardless of the source of its income (or, to the
extent provided in applicable Treasury Regulations, some trusts in
existence on August 20, 1996 which are eligible to elect to be treated
as U.S. Persons).
Value -- The "Value" of a mortgaged property is generally its fair market
value determined in an appraisal obtained by the originator at the origination
of the loan.
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